1Amending Title 72 (Taxation and Fiscal Affairs) of the
2Pennsylvania Consolidated Statutes, providing for a natural
3gas drilling tax; establishing the Natural Gas Drilling Tax
4Account, the Unconventional Gas Well Impact Fund and the
5Marcellus Legacy Fund; and providing for use of revenue.

6The General Assembly of the Commonwealth of Pennsylvania
7hereby enacts as follows:

8Section 1. Title 72 of the Pennsylvania Consolidated 
9Statutes is amended by adding chapters to read:

10CHAPTER 15

11NATURAL GAS DRILLING TAX AND INVESTMENT

12Subchapter

13A. Preliminary Provisions

14B. Tax

15C. Natural Gas Drilling Tax Account

16SUBCHAPTER A

17PRELIMINARY PROVISIONS

1Sec.

21501. Definitions.

3§ 1501. Definitions.

4The following words and phrases when used in this chapter
5shall have the meanings given to them in this section unless the
6context clearly indicates otherwise:

7"Account." The Natural Gas Drilling Tax Account.

8"Association." A partnership, limited partnership or any
9other form of unincorporated enterprise owned or conducted by
10two or more persons.

11"Coal bed methane." Gas that can be produced from coal beds,
12coal seams, mined-out areas or gob wells.

13"Commission." The Pennsylvania Public Utility Commission.

14"Corporation." A corporation, joint stock association,
15limited liability company, business trust or any other
16incorporated enterprise organized under the laws of the United
17States, this Commonwealth or any other state, territory or
18foreign country or dependency.

19"Department." The Department of Revenue of the Commonwealth.

20"Fund." The Unconventional Gas Well Impact Fund.

21"Meter." A device that measures the passage of volumes of
22gases or liquids past a certain point.

23"Natural gas." A fossil fuel consisting of a mixture of
24hydrocarbon gases, primarily methane, possibly including ethane,
25propane, butane, pentane, carbon dioxide, oxygen, nitrogen and
26hydrogen sulfide and other gas species. The term includes
27natural gas from oil fields known as associated gas or casing
28head gas, natural gas fields known as nonassociated gas, coal
29beds, shale beds and other formations. The term does not include
30coal bed methane.

1"Natural gas well." A bore hole drilled or being drilled for
2the purpose of producing natural gas from subsurface geological
3formations.

4"Nonproducing well." An unconventional natural gas well that
5produces natural gas of not more than 60,000 cubic feet per day.

6"Operator." A person who engages in the business of severing
7natural gas for sale, profit or commercial use within this
8Commonwealth. The term does not include a person who severs
9natural gas from a storage field.

10"Person." A natural person or a corporation, fiduciary,
11association or other entity, including the Commonwealth and any
12of its political subdivisions, instrumentalities and
13authorities. If the term is used in a provision prescribing and
14imposing a penalty or imposing a fine or imprisonment, or both,
15the term shall include a member of an association and an officer
16of a corporation.

17"Producing well." An unconventional natural gas well that
18produces natural gas in excess of 60,000 cubic feet per day.

19"Rate." The rate under section 1511(c) (relating to
20imposition of tax).

21"Records." Every person liable for the tax shall maintain
22the following records:

23(1) Wellhead meter charts for each reporting period,
24along with the meter calibration and maintenance records. If
25turbine meters are in use, the maintenance records shall be
26made available to the department upon request.

27(2) Records, statements and other instruments furnished
28to an operator by a person to whom the operator delivers for
29sale, transport or delivery of natural gas.

30(3) Records, statements and other instruments as the

1department may prescribe by regulation.

2"Reporting period." A calendar month in which natural gas is
3severed.

4"Secretary." The Secretary of Revenue of the Commonwealth.

5"Sever." To extract or otherwise remove natural gas through
6the soil or water of this Commonwealth.

7"Severance." The extraction or other removal of natural gas
8through the soil or water of this Commonwealth.

9"Storage field." A natural formation or other site that is
10used to store natural gas that did not originate from, but has
11been injected into, the formation or site.

12"Tax." The natural gas drilling tax imposed under this
13chapter.

14"Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
15known as the Tax Reform Code of 1971.

16"Taxpayer." A person, including a well operator, who is
17subject to the tax imposed by this chapter.

18"Unconventional gas well." A bore hole drilled for the
19purpose of producing oil or gas from a geologic formation
20existing below the base of the Elk Sandstone or its geologic
21equivalent stratigraphic interval where oil or gas generally
22cannot be produced at economic flow rates or in economic volumes
23except by wells stimulated by hydraulic fracture treatments, a
24horizontal well bore or by using multilateral well bores or
25other techniques to expose more of the formation of the well
26bore.

27"Unit." An amount equal to 1,000 cubic feet of natural gas
28measured at a wellhead at a temperature of 60 degrees Fahrenheit
29and an absolute pressure of 14.73 pounds per square inch in
30accordance with American Gas Association Standards and according

1to Boyle's Law for the measurement of gas under varying
2pressures with deviations as follows:

3(1) The average absolute atmospheric pressure shall be
4assumed to be 14.4 pounds to the square inch, regardless of
5elevation or location of point of delivery above sea level or
6variations in atmospheric pressure from time to time.

7(2) The temperature of the gas passing a wellhead meter
8shall be determined by the continuous use of a recording
9thermometer installed to properly record the temperature of
10gas flowing through the wellhead meter. The arithmetic
11average of the temperature recorded each 24-hour day shall be
12used in computing gas volumes. If a recording thermometer is
13not installed or is installed and not operating properly, an
14average flowing temperature of 60 degrees Fahrenheit shall be
15used in computing gas volume.

16(3) The specific gravity of the gas shall be determined
17by annual tests made by the use of an Edwards or Acme gravity
18balance, or at intervals as found necessary in practice.
19Specific gravity determinations shall be used in computing
20gas volumes.

21(4) The deviation of the natural gas from Boyle's Law
22shall be determined by annual tests or at other shorter
23intervals as found necessary in practice. The apparatus and
24method used in making the test shall be in accordance with
25recommendations of the National Bureau of Standards or Report
26No. 3 of the Gas Measurement Committee of the American Gas
27Association, or amendments to the recommendations or report.
28The results of the tests shall be used in computing the
29volume of gas delivered under this chapter.

30"Wellhead meter." A meter placed at a producing or

1nonproducing well to measure the volume of natural gas severed
2for which a wellhead meter certification has been issued.

3"Wellhead meter certification." A report issued by an
4accredited laboratory certifying the accuracy of a wellhead
5meter.

6SUBCHAPTER B

7TAX

8Sec.

91511. Imposition of tax.

101512. Return and payment.

111513. Natural gas drilling tax registration.

121514. Assessments.

131515. Time for assessment.

141516. Extension of assessment period.

151517. Reassessments.

161518. Interest.

171518.1. Recordkeeping.

181519. Penalties.

191520. Criminal acts.

201521. Abatement of additions or penalties.

211522. Bulk and auction sales.

221523. Collection upon failure to request reassessment, review
23or appeal.

241524. Tax liens.

251525. Tax suit reciprocity.

261526. Service.

271527. Refunds.

281528. Refund petition.

291529. Rules and regulations.

301530. Recordkeeping and meters.

11531. Examinations.

21532. Unauthorized disclosure.

31533. Cooperation with other governments.

41534. Bonds.

5§ 1511. Imposition of tax.

6(a) Establishment.--Except as provided under subsection (b),
7a natural gas drilling tax shall be levied on every operator
8that severs natural gas from a producing well in this
9Commonwealth.

10(b) Exemptions.--The tax shall not be imposed on the
11following:

12(1) Units severed, sold and delivered by an operator
13within five miles of a producing well for the processing or
14manufacturing of tangible personal property, as defined under
15section 201 of the Tax Reform Code, within this Commonwealth.

16(2) Units provided free of charge to the owner of the
17surface under which the gas is severed, if the surface owner
18is the end user of the gas.

19(c) Rate.--The tax imposed under subsection (a) shall be
204.9% of the gross value of units severed at the wellhead during
21a reporting period thereafter for each producing well.

22(d) Application of rate determinations.--This section shall
23affect only the determination of the rate of the tax on the
24units severed. This section is not intended, nor shall be
25construed, to affect any other determination, including the
26determination of royalty due under mineral leases.
27Notwithstanding any other provision of law, the tax imposed
28under this chapter shall not reduce any royalty payments due
29under mineral leases and the producer may not recover any
30portion of the paid tax from the royalty owner through other

1means of deduction or reallocation, notwithstanding any
2provision in the lease, contract or agreement.

3§ 1512. Return and payment.

4(a) Requirement.--An operator shall file a return with the
5department, on a form prescribed by the department, which shall
6include the number of natural gas units severed by the operator
7for the reporting period and the amount of tax due.

8(b) Filing.--The return required under subsection (a) shall
9be filed with the department within 30 days following the end of
10a reporting period.

11(c) Deadline.--The tax shall be due on the day the return is
12required to be filed and becomes delinquent if not remitted to
13the department by that date.

14§ 1513. Natural gas drilling tax registration.

15(a) Application.--Before an operator severs natural gas in
16this Commonwealth, the operator shall apply to the department
17for a natural gas severance tax registration certificate.

18(b) Application fee.--The department may charge an
19application fee to cover the administrative costs associated
20with the application and registration process. If the department
21charges a fee, it may not issue a registration certificate until
22the operator has paid the application fee.

23(c) Declaration.--An operator shall:

24(1) Include in its application a declaration of all
25producing wells and nonproducing wells used by the operator
26for the severance of natural gas. The declaration shall
27include copies of wellhead meter certifications for each
28site.

29(2) Update the declaration when:

30(i) the operator adds or removes a producing well or

1nonproducing well in this Commonwealth;

2(ii) there is a change in the status of a producing
3well or nonproducing well; or

4(iii) the operator uses a different accredited
5laboratory to issue a wellhead meter certification.

6(3) Update the declaration within 30 days after a
7calendar month in which a change to the declaration occurs.

8(d) Issuance.--

9(1) Except as provided under subsection (e), after the
10receipt of an application, the department shall issue a
11registration certificate under subsection (a). The
12registration certificate shall be nontransferable.

13(2) All registrants shall renew their registration
14certificates and wellhead meter certifications on a staggered
15renewal system established by the department.

16(3) After the initial staggered renewal period, a
17registration certificate or a wellhead meter certification
18shall be valid for a period of five years.

19(e) Suspension, revocation or refusal.--

20(1) The department may suspend, revoke or refuse to
21issue a registration certificate if the applicant or
22registrant has not filed required State tax reports or paid
23State taxes not subject to a timely perfected administrative
24or judicial appeal or a duly authorized deferred payment
25plan.

26(2) The department shall notify the applicant or
27registrant of any refusal, suspension or revocation. The
28notice shall be made by first class mail and contain a
29statement that the refusal, suspension or revocation may be
30made public.

1(3) An applicant or registrant aggrieved by the
2determination of the department may file an appeal under the
3provisions for administrative appeals provided under the Tax
4Reform Code.

5(4) If a suspension or revocation is appealed, the
6registration certificate shall remain valid pending a final
7outcome of the appeals process.

8(5) Notwithstanding sections 274, 353(f), 408(b), 603,
9702, 802, 904 and 1102 of the Tax Reform Code or any other
10provision of law, if no appeal is taken or if an appeal is
11taken and denied at the conclusion of the appeal process, the
12department may disclose, by publication or otherwise, the
13identity of an operator and that the operator's registration
14certificate has been refused, suspended or revoked under this
15subsection. Disclosure may include the basis for refusal,
16suspension or revocation.

17(f) Violation.--

18(1) A person severing natural gas in this Commonwealth
19without holding a valid registration certificate under
20subsection (d) commits a summary offense and shall, upon
21conviction, be sentenced to pay a fine of not less than $300
22nor more than $1,500.

23(2) If a person convicted under paragraph (1) defaults
24in the payment of the fine, the person shall be sentenced to
25a term of imprisonment of not less than five days nor more
26than 30 days.

27(3) The penalties imposed under this subsection shall be
28in addition to any other penalties imposed under this
29chapter.

30(4) For purposes of this subsection, the severing of

1natural gas during any calendar day shall constitute a
2separate violation.

3(5) The secretary may designate employees of the
4department to enforce this subsection. The employees shall
5exhibit proof of and be within the scope of the designation
6when instituting proceedings as provided by the Pennsylvania
7Rules of Criminal Procedure.

8(g) Failure to obtain registration certificate.--Failure to
9obtain or hold a valid registration certificate shall not
10relieve a person from liability for the tax.

11§ 1514. Assessments.

12(a) Authorization and requirement.--The department shall
13make any inquiries, determinations and assessments of the tax,
14including interest, additions and penalties imposed under this
15chapter.

16(b) Notice.--The notice of assessment and demand for payment
17shall be mailed to the taxpayer and shall state the basis of the
18assessment. The department shall send the notice of assessment
19to the taxpayer by regular mail or, if the assessment increases
20the taxpayer's tax liability by at least $300, to its registered
21address by certified mail.

22§ 1515. Time for assessment.

23(a) Requirement.--

24(1) An assessment provided under section 1514 (relating
25to assessments) shall be made within three years of the date
26when the return provided for under section 1512 (relating to
27return and payment) is filed.

28(2) For the purposes of this subsection and subsection
29(b), a return filed before the last day prescribed for the
30filing period shall be considered filed on the last day.

1(b) Exception.--If the taxpayer underpays the correct amount
2of the tax due by 25% or more, the tax may be assessed not later
3than six years after the date the return was filed.

4(c) Intent to evade.--If no return is filed or if the
5taxpayer files a false or fraudulent return with intent to evade
6the tax, the assessment may be made at any time.

7(d) Erroneous credit or refund.--The department may issue an
8assessment to recover a refund or credit made or allowed
9erroneously in either of the following time periods, whichever
10occurs later:

11(1) Within three years of the granting of a refund or
12credit.

13(2) Within the period in which an assessment or
14reassessment may have been issued by the department for the
15taxable period for which the refund was granted.

16§ 1516. Extension of assessment period.

17Notwithstanding any other provision of this chapter, the
18assessment period may be extended if a taxpayer has provided
19written consent before the expiration of the period provided
20under section 1515 (relating to time for assessment) for a tax
21assessment. The amount of tax due may be assessed at any time
22within the extended period. The period may be extended further
23by providing a subsequent written consent before the expiration
24of the extended period.

25§ 1517. Reassessments.

26A taxpayer against whom an assessment is made may petition
27the department for a reassessment under Article XXVII of the Tax
28Reform Code.

29§ 1518. Interest.

30The department shall assess interest on any delinquent tax at

1the rate prescribed under section 806 of the act of April 9,
21929 (P.L.343, No.176), known as The Fiscal Code.

3§ 1518.1. Recordkeeping.

4(a) Duty to maintain records.--

5(1) Every person liable for the tax or for the
6collection of the tax shall:

7(i) Keep records, including those enumerated under
8subsection (b).

9(ii) Render statements.

10(iii) Make returns.

11(iv) Comply with the rules and regulations the
12department may prescribe regarding matters pertinent to
13the person's business.

14(2) Whenever necessary to demonstrate whether a person
15is liable to pay the tax, the department may require a
16person, by notice served upon the person or by regulations,
17to:

18(i) Make returns.

19(ii) Render statements.

20(iii) Keep records as the department deems
21sufficient.

22(b) Records of nonresidents.--

23(1) In addition to the requirements under subsection
24(a), a nonresident who does business in this Commonwealth as
25an operator shall keep adequate records of that business and
26of the tax due as a result. The records shall be retained
27within this Commonwealth unless retention outside this
28Commonwealth is authorized by the department.

29(2) The department may require a taxpayer who desires to
30retain records outside this Commonwealth to assume reasonable

1out-of-State audit expenses.

2(c) Keeping of separate records.--

3(1) An operator who is engaged in another business which
4does not involve the severing of natural gas taxable under
5this chapter shall keep separate books and records of the
6businesses showing the taxable severing of natural gas under
7this chapter separately from other business activities.

8(2) If any person fails to keep separate books and
9records under paragraph (1), the person shall be liable for a
10penalty equaling 100% of tax due for the period that separate
11records were not maintained.

12§ 1519. Penalties.

13The department shall enforce the following penalties:

14(1) The penalty against an operator for severing natural
15gas without a natural gas severance tax registration
16certificate shall be $1 for every unit severed without a
17valid registration certificate. The department may assess the
18penalty separately from, or in conjunction with, any
19assessment of the natural gas tax.

20(2) The penalty against an operator for failure to
21timely file a return as required under section 1512 (relating
22to return and payment) or for failure to timely pay the tax
23as required by section 1512(c) shall be 5% of the tax
24liability to be reported on the return for each day beyond
25the due date that the return is not filed or tax is not paid.

26(3) In addition to the penalty prescribed under
27paragraph (2), the penalty against an operator for a willful
28failure to file a timely return shall be 200% of the tax
29liability required to be reported on the return.

30§ 1520. Criminal acts.

1(a) Fraudulent return.--Any person, with intent to defraud
2the Commonwealth, who willfully makes or causes to be made a
3return required under this chapter which is false or incomplete
4commits a misdemeanor of the third degree and shall, upon
5conviction, be sentenced to pay a fine of not more than $2,000
6or to imprisonment for not more than three years, or both.

7(b) Other crimes.--

8(1) Except as provided under subsection (a), a person
9commits a misdemeanor of the third degree and shall, upon
10conviction, be sentenced to pay a fine of not more than
11$1,000 and costs of prosecution or to imprisonment for not
12more than one year, or both, for any of the following:

13(i) Willfully failing to timely remit the tax to the
14department.

15(ii) Willfully failing or neglecting to timely file
16a return or report required under this chapter.

17(iii) Refusing to timely pay a tax, penalty or
18interest imposed or provided for under this chapter.

19(iv) Willfully failing to preserve books, papers and
20records as directed by the department.

21(v) Refusing to permit the department or its
22authorized agents to examine the person's books, records
23or papers.

24(vi) Knowingly making any incomplete, false or
25fraudulent report.

26(vii) Preventing or attempting to prevent the full
27disclosure of the amount of tax due.

28(viii) Providing any person with a false statement
29as to the payment of the tax with respect to any
30pertinent facts.

1(ix) Making, uttering or issuing a false or
2fraudulent statement.

3(2) The penalties imposed under this section shall be in
4addition to other penalties imposed under this chapter.

5§ 1521. Abatement of additions or penalties.

6Upon the filing of a petition for reassessment or a petition
7for refund by a taxpayer as provided under this chapter,
8additions or penalties imposed on the taxpayer under this
9chapter may be waived or abated, in whole or in part, upon a
10showing that the taxpayer acted in good faith, without
11negligence and with no intent to defraud.

12§ 1522. Bulk and auction sales.

13The following persons shall be subject to section 1403 of the
14act of April 9, 1929 (P.L.343, No.176), known as The Fiscal
15Code:

16(1) A person who sells or causes to be sold at auction
17or sells or transfers in bulk 51% or more of a stock of:

18(i) goods;

19(ii) wares or merchandise of any kind;

20(iii) fixtures;

21(iv) machinery;

22(v) equipment; or

23(vi) buildings or real estate

24involved in a business for which the person holds a
25registration certificate.

26(2) A person who is required to obtain a registration
27certificate under this chapter.

28§ 1523. Collection upon failure to request reassessment, review
29or appeal.

30(a) Power of department to collect tax.--The department may

1collect the tax:

2(1) If, after notice to the taxpayer, an assessment of
3the tax is not paid within 30 days and no petition for
4reassessment has been filed.

5(2) Within 60 days of a reassessment, if no petition for
6review has been filed.

7(3) If no appeal has been made, within 30 days of:

8(i) the Board of Finance and Revenue's decision of a
9petition for review; or

10(ii) the expiration of the Board of Finance and
11Revenue's time for acting upon a petition for review.

12(4) In all cases of judicial sales, receiverships,
13assignments or bankruptcies.

14(b) Limitation of defense.--In a case for the collection of
15taxes under subsection (a), a taxpayer may not assert a defense
16that might have been determined by the department, the Board of
17Finance and Revenue or the courts, except for the following
18defenses in a proceeding for collection by a motion to stay the
19proceedings:

20(1) failure of the department to mail notice of
21assessment or reassessment to the taxpayer; and

22(2) payment of assessment or reassessment.

23§ 1524. Tax liens.

24(a) Lien imposed.--

25(1) If a taxpayer neglects or refuses to pay the tax for
26which the taxpayer is liable under this chapter, the amount,
27including interest, addition or penalty, together with
28additional costs that may accrue, shall be a lien in favor of
29the Commonwealth upon the real and personal property of the
30taxpayer but only after the lien has been entered and

1docketed of record by the prothonotary of the county where
2the property is situated.

3(2) The department may, at any time, transmit to the
4prothonotaries of the respective counties certified copies of
5all liens imposed by this section.

6(3) The following shall apply:

7(i) The prothonotary who receives the lien shall
8enter and docket the same of record to the office of the
9prothonotary. The lien shall be indexed the same as a
10judgment.

11(ii) No prothonotary shall require the payment of
12costs incidental to the entry.

13(b) Priority of lien and effect on judicial sale.--Except
14for the costs of the sale, the writ upon which the sale was made
15and real estate taxes and municipal claims against the property,
16a lien imposed under this section shall:

17(1) Have priority from the date of its recording and
18shall be fully paid and satisfied out of the proceeds of any
19judicial sale of property subject to the lien before any
20other obligation, judgment, claim, lien or estate to which
21the property may subsequently become subject.

22(2) Be subordinate to mortgages and other liens existing
23and duly recorded or entered of record prior to the recording
24of the lien.

25(c) No discharge by sale on junior lien.--

26(1) In the case of a judicial sale of property subject
27to a lien or claim over which the lien imposed under this
28section has priority, the sale shall discharge the lien
29imposed under this section to the extent only that the
30proceeds are applied to its payment and the lien shall

1continue in full force and effect as to the remaining unpaid
2balance.

3(2) There shall be no inquisition or condemnation upon
4any judicial sale of real estate made by the Commonwealth
5under this chapter. The lien shall continue as provided under
6the act of April 9, 1929 (P.L.343, No.176), known as The
7Fiscal Code. A writ of execution may issue upon the lien
8without the issuance and prosecution to judgment of a writ of
9scire facias, subject to the following:

10(i) Not less than ten days before issuance of any
11execution on the lien, notice of the filing and the
12effect of the lien shall be sent by registered mail to
13the taxpayer at its last known post office address.

14(ii) The lien shall have no effect upon any stock of
15goods, wares or merchandise regularly sold or leased in
16the ordinary course of business by the taxpayer against
17whom the lien has been entered, unless and until a writ
18of execution has been issued and a levy made upon the
19stock of goods, wares and merchandise.

20(d) Violation by prothonotary.--A willful failure of a
21prothonotary to carry out a duty imposed under this section
22shall be a misdemeanor of the third degree and, upon conviction,
23the prothonotary shall be sentenced to pay a fine of not more
24than $1,000 and costs of prosecution or to imprisonment for not
25more than one year, or both.

26(e) Priority.--

27(1) Except as provided under this chapter, upon the
28distribution in receivership, bankruptcy or otherwise of the
29property or estate of any person, all taxes which are due and
30unpaid and are not collectible under section 225 of the Tax

1Reform Code shall be paid from the first money available for
2distribution in priority to all other claims and liens,
3except as the laws of the United States may give priority to
4a claim to the Federal Government.

5(2) A person required to administer or distribute the
6property or estate who violates this section shall be
7personally liable for the taxes which are accrued, unpaid and
8chargeable against the person whose property or estate is
9being administered or distributed.

10(f) Construction.--Subject to the limitations contained
11under this chapter, nothing contained under this section shall
12be construed to restrict, prohibit or limit the use of another
13remedy or procedure available at law or equity by the department
14in collecting taxes due and payable.

15§ 1525. Tax suit reciprocity.

16The courts of this Commonwealth shall recognize and enforce
17liabilities for natural gas severance or extraction taxes
18lawfully imposed by any other state that recognizes and enforces
19the tax imposed under this chapter.

20§ 1526. Service.

21(a) Rule.--

22(1) Service shall be made upon the operator.

23(2) If service cannot be made upon the operator as
24provided under law, service may be made upon the Secretary of
25the Commonwealth.

26(3) If service is made under paragraph (2), a copy of
27the process or notice shall be personally served upon any
28agent or representative of the operator who may be found
29within this Commonwealth or, if no agent or representative
30can be found, a copy of the process or notice shall be sent

1by registered mail to the operator at the last known address
2of its principal place of business, home office or residence.

3(b) Appointment of Secretary of the Commonwealth.--An
4operator shall be deemed to have appointed the Secretary of the
5Commonwealth its agent for the acceptance of service of process
6or notice in a proceeding for the enforcement of the civil
7provisions of this chapter. Service made upon the Secretary of
8the Commonwealth as agent shall be of the same legal force and
9validity as personal service on the operator.

10§ 1527. Refunds.

11(a) Duty.--Under Article XXVII of the Tax Reform Code, the
12department shall refund all taxes, interest and penalties paid
13to the Commonwealth under this chapter to which the Commonwealth
14is not rightfully entitled.

15(b) Payment of refunds.--

16(1) Except as provided under paragraph (2), a refund
17under subsection (a) shall be paid to the person or the
18person's heirs, successors, assigns or other personal
19representatives who paid the tax.

20(2) No refund shall be made under this section for a
21payment made by reason of an assessment if a taxpayer has
22filed a petition for reassessment under section 2702 of the
23Tax Reform Code and the petition is adverse to the taxpayer
24by a decision which is no longer subject to further review or
25appeal.

26(c) Construction.--Nothing under this chapter shall be
27construed to prohibit a taxpayer who has filed a timely petition
28for reassessment from amending it to a petition for refund where
29the petitioner paid the tax assessed.

30§ 1528. Refund petition.

1(a) General rule.--Except as provided under subsection (b),
2a taxpayer shall receive a refund or credit of tax, interest or
3penalty provided for under section 1527 (relating to refunds) if
4the taxpayer files a petition for refund with the department
5under Article XXVII of the Tax Reform Code within the time
6limits of section 3003.1 of the Tax Reform Code.

7(b) Natural gas drilling tax refund.--

8(1) A taxpayer shall receive a refund or credit of tax,
9interest or penalty paid as a result of an assessment under
10section 1513 (relating to natural gas drilling tax
11registration) if the taxpayer files with the department a
12petition for a refund under Article XXVII of the Tax Reform
13Code within the time limits of section 3003.1 of the Tax
14Reform Code.

15(2) Filing a petition for a refund under this subsection
16shall not affect the abatement of interest, additions or
17penalties to which the person may be entitled by reason of
18the person's payment of the assessment.

19§ 1529. Rules and regulations.

20(a) Enforcement.--The department shall enforce this chapter
21and may prescribe, adopt, promulgate and enforce rules and
22regulations not inconsistent with this chapter relating to the:

23(1) Administration and enforcement of this chapter.

24(2) Collection of taxes, penalties and interest imposed
25under this chapter.

26(b) Application.--The department may prescribe the extent to
27which any of the rules and regulations shall be applied without
28retroactive effect.

29§ 1530. Meters.

30An operator shall provide for and maintain, according to

1industry standards, a discrete wellhead meter where natural gas
2is severed. Any wellhead meter installed after the effective
3date of this section must be a digital meter.

4§ 1531. Examinations.

5(a) Powers of department.--The department or any of its
6authorized agents may:

7(1) Examine the books, papers and records of any
8taxpayer in order to verify the accuracy and completeness of
9any return made or, if no return was made, to ascertain and
10assess the tax.

11(2) Require the preservation of all books, papers and
12records for any period deemed proper, but the period may not
13exceed three years from the end of the calendar year to which
14the records relate.

15(3) Examine any person, under oath, concerning the
16taxable severing of natural gas by any taxpayer or any other
17matter relating to the enforcement or administration of this
18chapter. The department may compel the production of books,
19papers and records and the attendance of all persons, whether
20as parties or witnesses, believed to have knowledge of
21relevant matters to accomplish its powers under this
22paragraph. The procedure for the hearings or examinations
23shall be the same as provided under the act of April 9, 1929
24(P.L.343, No.176), known as The Fiscal Code.

25(b) Duties of taxpayers.--Every taxpayer shall provide the
26department or its agent with the means, facilities and
27opportunity for examinations and investigations under this
28section.

29§ 1532. Unauthorized disclosure.

30(a) General rule.--Any information gained by the department

1as a result of any return, examination, investigation, hearing
2or verification required or authorized under this chapter shall
3be confidential except for official purposes and except in
4accordance with proper judicial order or as otherwise provided
5by law.

6(b) Penalty for violation.--Any person unlawfully divulging
7information collected by the department commits a misdemeanor of
8the third degree and shall, upon conviction, be sentenced to pay
9a fine of not more than $1,000 and costs of prosecution or to a
10term of imprisonment for not more than one year, or both.

11§ 1533. Cooperation with other governments.

12(a) General rule.--Notwithstanding section 1525 (relating to
13tax suit reciprocity), the department may do any of the
14following with regard to the Office of the Commissioner of the
15Internal Revenue Service, the proper officer of any state or the
16authorized representative of either of them:

17(1) Permit the inspection of the tax returns of any
18taxpayer.

19(2) Furnish an abstract of the return of a taxpayer.

20(3) Supply information concerning any item contained in
21a return or disclosed by the report of an examination or
22investigation of the return of a taxpayer.

23(b) Applicability.--Subsection (a) shall apply if the laws
24of the United States or another state grant substantially
25similar privileges to the proper officer of the Commonwealth
26charged with the administration of this chapter.

27§ 1534. Bonds.

28(a) Taxpayer to file bond.--

29(1) The department may require the following entities
30subject to the tax to file a bond issued by a surety company

1authorized to do business in this Commonwealth and approved
2by the Insurance Commissioner as to solvency and
3responsibility, in amounts the department may fix, to secure
4the payment of any tax or penalties due or which may become
5due if the department deems it necessary to protect the
6revenues obtained under this chapter:

7(i) A nonresident.

8(ii) A foreign corporation, association, fiduciary
9or other entity not authorized to do business within this
10Commonwealth or not having an established place of
11business in this Commonwealth.

12(2) The department may require a bond of a person
13petitioning the department for reassessment in the case of an
14assessment over $500 or if, in the department's opinion, the
15ultimate collection is in jeopardy.

16(3) For a period of three years, the department may
17require a bond of any person who has, on three or more
18occasions within a 12-month period, either filed a return or
19made payment to the department more than 30 days late.

20(4) The following apply:

21(i) If the department determines a taxpayer must
22file a bond, the department shall give notice to the
23taxpayer specifying the amount of the bond required.

24(ii) The taxpayer shall file the bond within five
25days after receiving notice unless, within five days of
26receiving the notice, the taxpayer requests in writing a
27hearing before the secretary or the secretary's
28representative.

29(iii) At the hearing under subparagraph (ii), the
30necessity, propriety and amount of the bond shall be

1determined by the secretary or the secretary's
2representative.

3(iv) The determination under subparagraph (iii)
4shall be final and the taxpayer shall comply with the
5determination no later than 15 days after notice is
6mailed to the taxpayer.

7(b) Securities in lieu of bond.--

8(1) A taxpayer may deposit a security approved by the
9department or cash in a prescribed amount in lieu of a bond
10required under this section.

11(2) The security or cash shall be kept in the custody of
12the department. The department may apply the security or cash
13to the tax and interest or penalties due without notice to
14the depositor. The security may be sold at public or private
15sale by the department to pay the tax, interest or penalties,
16or any combination of tax, interest or penalties, due upon
17five days' written notice to the depositor.

18(c) Failure to file bond.--

19(1) The department may file a lien under section 1524
20(relating to tax liens) against a taxpayer who fails to file
21a bond when required to do so under this section.

22(2) All funds received upon execution of the judgment on
23the lien shall be refunded to the taxpayer with 3% interest
24if the department makes a final determination that the
25taxpayer does not owe any payment to the department.

26SUBCHAPTER C

27NATURAL GAS DRILLING TAX ACCOUNT

28Sec.

291541. Natural Gas Drilling Tax Account.

301542. Initial transfer to Unconventional Gas Well Impact Fund.

11543. Transfer to Housing Trust Fund.

21544. Distribution of remaining tax revenue.

3§ 1541. Natural Gas Drilling Tax Account.

4(a) Establishment.--The Natural Gas Drilling Tax Account is
5established as a restricted account within the State Treasury.

6(b) Source of funds.--The proceeds of the tax, penalties and
7interest imposed under this chapter shall be deposited into the
8account.

9(c) Use.--The money in the account may only be used in
10accordance with this chapter and Chapter 23 (relating to
11Unconventional Gas Well Impact Fund).

12§ 1542. Initial transfer to Unconventional Gas Well Impact
13Fund.

14Before any other funds from the Natural Gas Drilling Tax
15Account are expended in any fiscal year, the commission shall
16calculate and make a request to the department for the funds
17necessary to satisfy the annual obligations of the
18Unconventional Gas Well Impact Fund as required in Chapter 23
19(relating to Unconventional Gas Well Impact Fund). The
20department shall then distribute from the account an amount of
21money sufficient to fulfill the request of the commission.

22§ 1543. Transfer to Housing Trust Fund.

23The State Treasurer shall transfer from the account to the
24Housing Trust Fund the amounts as follows:

25(1) For the 2014-2015 fiscal year, $3,000,000 shall be
26transferred.

27(2) For the 2015-2016 fiscal year, $4,000,000 shall be
28transferred.

29(3) For the 2016-2017 fiscal year, $5,000,000 shall be
30transferred.

1(4) For 2017-2018 fiscal year, and each year thereafter,
2$6,000,000 shall be transferred.

3§ 1544. Distribution of remaining tax revenue.

4(a) General rule.--After making the distribution and
5transfer required under sections 1542 (relating to initial
6transfer to Unconventional Gas Well Impact Fund) and 1543
7(relating to transfer to Housing Trust Fund), the balance of
8moneys in the Natural Gas Drilling Tax Account shall be
9allocated in the following amounts and for the following
10purposes:

11(1) Forty percent shall be transferred to the Department
12of Education for basic education funding of school districts,
13including supplemental payments for certain distressed school
14districts.

15(2) Ten percent shall be transferred to the
16Environmental Stewardship Fund.

17(3) Ten percent shall be transferred to the Department
18of Conservation and Natural Resources to be used exclusively
19for conservation, recreation, dams or flood control, or to
20match any Federal grants which may be made for any of the
21aforementioned purposes. The Department of Conservation and
22Natural Resources shall give preference to projects that
23contribute to the operation and maintenance of State parks
24and State forests. No funds shall be expended on operations
25by the Department of Conservation and Natural Resources.

26(4) Four percent shall be transferred to the Department
27of Environmental Protection for the Pennsylvania Sunshine
28Solar Program.

29(5) Eight percent shall be transferred to the Department
30of Drug and Alcohol Programs for drug and alcohol programs.

1(6) Eight percent shall be transferred to the Department
2of Public Welfare for intellectual disability programs.

3(7) Five percent shall be transferred to the Department
4of Public Welfare for behavioral health services.

5(8) Five percent shall be transferred to the Department
6of Public Welfare for the Human Services Development Fund.

7(9) Three percent shall be transferred to the
8Pennsylvania Housing Finance Agency for the Homeowners
9Emergency Mortgage Assistance Program.

10(10) Two percent shall be transferred to the Department
11of Public Welfare for use for victims of rape and domestic
12violence in accordance with section 2333 of the act of April
139, 1929 (P.L.177, No.175), known as the Administrative Code
14of 1929.

15(11) Two percent shall be transferred to the Department
16of Military and Veterans Affairs for the operation and
17maintenance of veterans homes.

18(12) Three percent shall be transferred to the
19Department of Labor and Industry for the Industry
20Partnerships Program.

21(b) Appropriation required.--No allocation under subsection
22(a) shall be expended from the Natural Gas Drilling Tax Account
23except upon an annual appropriation of the General Assembly.

24CHAPTER 23

25UNCONVENTIONAL GAS WELL IMPACT FUND

26Sec.

272301. Definitions.

282302. Unconventional gas well impact fee-equivalent
29calculation.

302303. Administration.

12304. Well information.

22305. (Reserved).

32306. (Reserved).

42307. Commission and powers.

52308. (Reserved).

62309. (Reserved).

72310. (Reserved).

82311. (Reserved).

92312. Recordkeeping.

102313. Examinations.

112314. Unconventional Gas Well Impact Fee Fund.

122315. Statewide initiatives.

132316. Small business participation.

142317. Applicability.

15§ 2301. Definitions.

16The following words and phrases when used in this chapter
17shall have the meanings given to them in this section unless the
18context clearly indicates otherwise:

19"Average annual price of natural gas." The arithmetic mean
20of the New York Mercantile Exchange (NYMEX) settled price for
21the near-month contract, as reported by the Wall Street Journal
22for the last trading day of each month of a calendar year for
23the 12-month period ending December 31.

24"Company." An entity doing business within this Commonwealth
25and subject to tax under Article III, IV or VI of the act of
26March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
271971.

28"Commission." The Pennsylvania Public Utility Commission.

29"Department." The Department of Environmental Protection of
30the Commonwealth.

1"Eligible applicant." Any of the following:

2(1) A county, municipality, council of governments,
3watershed organization, institution of higher education or
4nonprofit organization.

5(2) An authorized organization as defined in 27 Pa.C.S.
6§ 6103 (relating to definitions).

7(3) A company, other than a producer.

8"Fund." The Unconventional Gas Well Impact Fund.

9"Highway mileage." The number of miles of public roads and
10streets most recently certified by the Department of
11Transportation as eligible for distribution of liquid fuels
12funds under the act of June 1, 1956 (1955 P.L.1944, No.655),
13referred to as the Liquid Fuels Tax Municipal Allocation Law.

14"Municipality." A borough, city, town or township.

15"Natural gas." A fossil fuel consisting of a mixture of 
16hydrocarbon gases, primarily methane, and possibly including 
17ethane, propane, butane, pentane, carbon dioxide, oxygen, 
18nitrogen and hydrogen sulfide and other gas species. The term 
19includes natural gas from oil fields known as associated gas or 
20casing head gas, natural gas fields known as nonassociated gas, 
21coal beds, shale beds and other formations. The term does not 
22include coal bed methane.

23"Nonproducing well." An unconventional natural gas well that
24produces natural gas of not more than 60,000 cubic feet per day.

25"Number of spud unconventional gas wells." The most recent
26numerical count of spud unconventional gas wells on the
27inventory maintained and provided to the commission by the
28department as of the last day of each month.

29"Population." As follows:

30(1) Population of the Commonwealth and population of a

1county shall be determined using the United States Census
2Bureau's most recently released Annual Estimates of the
3Resident Population for Counties of Pennsylvania.

4(2) Population of a municipality shall be determined
5using the United States Census Bureau's most recently
6released Annual Estimates for the Resident Population for
7Incorporated Places in Pennsylvania.

8(3) Population of municipalities not included in the
9report referenced under paragraph (2) shall be determined
10using the United States Census Bureau's most recently
11released Annual Estimates of the Resident Population for
12Minor Civil Divisions in Pennsylvania.

13"Producer." A person or its subsidiary, affiliate or holding
14company that holds a permit or other authorization to engage in
15the business of severing natural gas for sale, profit or
16commercial use from an unconventional gas well in this
17Commonwealth. The term shall not include a producer that severs
18natural gas from a site used to store natural gas that did not
19originate from the site.

20"Producing well." An unconventional natural gas well that
21produces natural gas in excess of 60,000 cubic feet per day.

22"Records." Every person liable for the tax shall maintain
23the following records:

24(1) Wellhead meter charts for each reporting period,
25along with the meter calibration and maintenance records. If
26turbine meters are in use, the maintenance records shall be
27made available to the department upon request.

28(2) Records, statements and other instruments furnished
29to an operator by a person to whom the operator delivers for
30sale, transport or delivery of natural gas.

1(3) Records, statements and other instruments as the
2department may prescribe by regulation.

3"Reporting period." A calendar month in which natural gas is
4severed.

5"Sever." To extract or otherwise remove natural gas through
6the soil or water of this Commonwealth.

7"Spud." The actual start of drilling of an unconventional
8gas well.

9"Stripper well." An unconventional gas well incapable of
10producing more than 90,000 cubic feet of gas per day during any
11calendar month, including production from all zones and
12multilateral well bores at a single well, without regard to
13whether the production is separately metered.

14"Unconventional formation." A geological shale formation
15existing below the base of the Elk Sandstone or its geologic
16equivalent stratigraphic interval where natural gas generally
17cannot be produced at economic flow rates or in economic volumes
18except by vertical or horizontal well bores stimulated by
19hydraulic fracture treatments or by using multilateral well
20bores or other techniques to expose more of the formation to the
21well bore.

22"Unconventional gas well." A bore hole drilled or being
23drilled for the purpose of or to be used for the production of
24natural gas from an unconventional formation.

25"Vertical gas well." An unconventional gas well which
26utilizes hydraulic fracture treatment through a single vertical
27well bore and produces natural gas in quantities greater than
28that of a stripper well.

29§ 2302. Unconventional gas well impact fee-equivalent
30calculation.

1(a) General rule.--The commission shall annually make an
2unconventional gas well impact fee-equivalent calculation and
3transmit that calculation to the Department of Revenue.

4(b) Components.--The unconventional gas well impact fee-
5equivalent calculation shall be determined by using every
6producer and shall apply to unconventional gas wells spud in
7this Commonwealth regardless of when spudding occurred. Prior to
8adjustment under subsection (c), the unconventional gas well
9impact fee-equivalent calculation for each unconventional gas
10well shall be determined as follows:

11(1) Year one:

12(i) If the average annual price of natural gas is
13not more than $2.25, the unconventional gas well impact
14fee-equivalent calculation shall be $40,000 for the
15calendar year in which the unconventional gas well is
16spud.

17(ii) If the average annual price of natural gas is
18greater than $2.25 and less than $3.00, the
19unconventional gas well impact fee-equivalent calculation
20shall be $45,000 for the calendar year in which the
21unconventional gas well is spud.

22(iii) If the average annual price of natural gas is
23greater than $2.99 and less than $5.00, the
24unconventional gas well impact fee-equivalent calculation
25shall be $50,000 for the calendar year in which the
26unconventional gas well is spud.

27(iv) If the average annual price of natural gas is
28greater than $4.99 and less than $6.00, the
29unconventional gas well impact fee-equivalent calculation
30shall be $55,000 for the calendar year in which the

1unconventional gas well is spud.

2(v) If the average annual price of natural gas is
3more than $5.99, the unconventional gas well impact fee-
4equivalent calculation shall be $60,000 for the calendar
5year in which the unconventional gas well is spud.

6(2) Year two:

7(i) If the average annual price of natural gas is
8not more than $2.25, the unconventional gas well impact
9fee-equivalent calculation shall be $30,000 for the
10calendar year following the year in which the
11unconventional gas well is spud.

12(ii) If the average annual price of natural gas is
13greater than $2.25 and less than $3.00, the
14unconventional gas well impact fee-equivalent calculation
15shall be $35,000 for the calendar year following the year
16in which the unconventional gas well is spud.

17(iii) If the average annual price of natural gas is
18greater than $2.99 and less than $5.00, the
19unconventional gas well impact fee-equivalent calculation
20shall be $40,000 for the calendar year following the year
21in which the unconventional gas well is spud.

22(iv) If the average annual price of natural gas is
23greater than $4.99 and less than $6.00, the
24unconventional gas well impact fee-equivalent calculation
25shall be $45,000 for the calendar year following the year
26in which the unconventional gas well is spud.

27(v) If the average annual price of natural gas is
28more than $5.99, the unconventional gas well impact fee-
29equivalent calculation shall be $55,000 for the calendar
30year following the year in which the unconventional gas

1well is spud.

2(3) Year three:

3(i) If the average annual price of natural gas is
4not more than $2.25, the unconventional gas well impact
5fee-equivalent calculation shall be $25,000 for the
6second calendar year following the year in which the
7unconventional gas well is spud.

8(ii) If the average annual price of natural gas is
9greater than $2.25 and less than $3.00, the
10unconventional gas well impact fee-equivalent calculation
11shall be $30,000 for the second calendar year following
12the year in which the unconventional gas well is spud.

13(iii) If the average annual price of natural gas is
14greater than $2.99 and less than $5.00, the
15unconventional gas well impact fee-equivalent calculation
16shall be $30,000 for the second calendar year following
17the year in which the unconventional gas well is spud.

18(iv) If the average annual price of natural gas is
19greater than $4.99 and less than $6.00, the
20unconventional gas well impact fee-equivalent calculation
21shall be $40,000 for the second calendar year following
22the year in which the unconventional gas well is spud.

23(v) If the average annual price of natural gas is
24more than $5.99, the unconventional gas well impact fee-
25equivalent calculation shall be $50,000 for the second
26calendar year following the year in which the
27unconventional gas well is spud.

28(4) Years four, five, six, seven, eight, nine and ten:

29(i) If the average annual price of natural gas is
30not more than $2.25, the unconventional gas well impact

1fee-equivalent calculation shall be $10,000 for the third
2through ninth calendar years following the year in which
3the unconventional gas well is spud.

4(ii) If the average annual price of natural gas is
5greater than $2.25 and less than $3.00, the
6unconventional gas well impact fee-equivalent calculation
7shall be $15,000 for the third through ninth calendar
8years following the year in which the unconventional gas
9well is spud.

10(iii) If the average annual price of natural gas is
11greater than $2.99, the unconventional gas well impact
12fee-equivalent calculation shall be $20,000 for the third
13through ninth calendar years following the year in which
14the unconventional gas well is spud.

15(5) Years 11, 12, 13, 14 and 15:

16(i) If the average annual price of natural gas is
17less than $3.00, the unconventional gas well impact fee-
18equivalent calculation shall be $5,000 for the 10th
19through 14th calendar years following the year in which
20the unconventional well is spud.

21(ii) If the average annual price of natural gas is
22greater than $2.99, the unconventional gas well impact
23fee-equivalent calculation shall be $10,000 for the 10th
24through 14th calendar years following the year in which
25the unconventional well is spud.

26(6) For purposes of this subsection, the unconventional
27gas well impact fee-equivalent calculation shall be
28determined using the average annual price of natural gas for
29the calendar year in which the unconventional gas well impact
30fee-equivalent is calculated.

1(b.1) Nonproducing wells.--The following shall apply to spud
2nonproducing wells:

3(1) If a spud unconventional gas well is included under
4the unconventional gas well impact fee-equivalent calculated
5under this section and is subsequently capped or does not
6produce natural gas in quantities greater than that of a
7stripper well within two years, then the well shall not be
8included in the calculation.

9(2) The unconventional gas well impact fee-equivalent
10shall be calculated for a calendar year during which the
11unconventional gas well produces natural gas in quantities
12greater than that of a stripper well.

13(3) Each calendar year during which the unconventional
14gas well impact fee-equivalent is not calculated shall not be
15considered a calendar year following spud for purposes of
16determining the amount of the calculation under subsection
17(b).

18(c) Annual adjustment.--

19(1) Beginning January 1, 2015, the commission shall
20annually adjust the unconventional gas well impact fee-
21equivalent calculation amounts under subsection (b) to
22reflect any upward changes in the Consumer Price Index for
23all Urban Consumers for the Pennsylvania, New Jersey,
24Delaware and Maryland area in the preceding 12 months and
25shall immediately submit the adjusted amount to the
26Legislative Reference Bureau for publication as a notice in
27the Pennsylvania Bulletin.

28(2) The unconventional gas well impact fee-equivalent
29calculation shall be adjusted by multiplying the annual
30unconventional gas well impact fee-equivalent calculation

1amount by any percentage increase to the Consumer Price Index
2for all Urban Consumers for the Pennsylvania, New Jersey,
3Delaware and Maryland area, rounded to the nearest $100.

4(3) The resultant product shall be added to the
5unconventional gas well impact fee-equivalent calculation
6amount and the sum shall become the unconventional gas well
7impact fee-equivalent calculation under subsection (b).

8(4) The annual adjustment under this subsection shall
9take effect if the total number of unconventional gas wells
10spud in the adjustment year exceeds the total number of
11unconventional gas wells spud in the prior year.

12(d) Restimulated unconventional gas wells.--

13(1) An unconventional gas well which after restimulation
14qualifies as a stripper well shall not be subject to this
15subsection.

16(2) The year in which the restimulation occurs shall be
17considered the first year of spudding for purposes of the
18unconventional gas well impact fee-equivalent calculation
19under this section if:

20(i) a producer restimulates a previously stimulated
21unconventional gas well following the tenth year after
22being spud by:

23(A) hydraulic fracture treatments;

24(B) using additional multilateral well bores;

25(C) drilling deeper into an unconventional
26formation; or

27(D) other techniques to expose more of the
28formation to the well bore; and

29(ii) the restimulation results in a substantial
30increase in production.

1(3) As used in this subsection, the term "substantial
2increase in production" means an increase in production
3amounting to more than 90,000 cubic feet of gas per day
4during a calendar month.

5(e) Cessation.--Calculations of the unconventional gas well
6impact fee-equivalent shall cease upon certification to the
7department by the producer that the unconventional gas well has
8ceased production and has been plugged according to the
9regulations established by the department.

10(f) Vertical unconventional gas well impact fee-equivalent
11calculation.--The unconventional gas well impact fee-equivalent
12calculation for a vertical unconventional gas well shall be 20%
13of the unconventional gas well impact fee-equivalent calculation
14established in subsections (b) and (c), except that the
15unconventional gas well impact fee-equivalent calculation under
16subsection (b)(5) shall not apply.

17§ 2303. Administration.

18(a) Costs of commission.--

19(1) To pay for the actual costs of the commission to
20administer and enforce this chapter, the commission may
21include in its calculation of the unconventional gas well
22impact fee-equivalent an annual administrative charge not to
23exceed $50 per spud unconventional gas well on each producer.

24(2) Within 30 days of the effective date of this
25chapter, the commission shall estimate its expenditures
26through June 30, 2015, that will be directly attributable to
27the administration and enforcement of this chapter.

28(3) No later than June 30, 2016, and each June 30
29thereafter, the commission shall estimate its expenditures
30for the next fiscal year that will be directly attributable

1to the administration and enforcement of this chapter.

2§ 2304. Well information.

3(a) List.--Within 14 days of the effective date of this
4section, the department shall provide the commission and, upon
5request, a county, with a list of all spud unconventional gas
6wells. The department shall update the list and provide it to
7the commission on a monthly basis.

8(b) Updates.--A producer subject to the unconventional gas
9well impact fee-equivalent calculation shall notify the
10commission of any of the following within 30 days after a
11calendar month in which the change occurs:

12(1) the spudding of an unconventional gas well;

13(2) the initiation of production at an unconventional
14gas well; or

15(3) the removal of an unconventional gas well from
16production.

17§ 2305. (Reserved).

18§ 2306. (Reserved).

19§ 2307. Commission and powers.

20The commission shall have the authority to make all inquiries
21and determinations necessary to calculate the unconventional gas
22well impact fee-equivalent under this chapter.

23§ 2308. (Reserved).

24§ 2309. (Reserved).

25§ 2310. (Reserved).

26§ 2311. (Reserved).

27§ 2312. Recordkeeping.

28A producer that falls under the unconventional gas well
29impact fee-equivalent calculation under this chapter shall keep
30records, make reports and comply with the regulations of the

1commission. The commission may require a producer to make
2reports, render statements or keep records as the commission
3deems sufficient to determine the calculations.

4§ 2313. Examinations.

5(a) Access.--The commission or its authorized agents or
6representatives shall:

7(1) Have access to the relevant books, papers and
8records of any producer in order to verify the accuracy and
9completeness of a report filed or unconventional gas well
10impact fee-equivalent calculated under this chapter.

11(2) Require the preservation of all relevant books,
12papers and records for an appropriate period not to exceed
13three years from the end of the calendar year to which the
14records relate.

15(3) Examine any employee of a producer under oath
16concerning the severing of natural gas subject to the
17unconventional gas well impact fee-equivalent calculation or
18any matter relating to the enforcement of this chapter.

19(4) Compel the production of relevant books, papers and
20records and the attendance of all individuals who the
21commission believes to have knowledge of relevant matters in
22accordance with 66 Pa.C.S. (relating to public utilities).

23(b) Unauthorized disclosure.--

24(1) Any information obtained by the commission as a
25result of any report, examination, investigation or hearing
26under this chapter shall be confidential and shall not be
27disclosed, except for official purposes, in accordance with
28judicial order or as otherwise provided by law.

29(2) A commissioner or an employee of the commission who
30divulges confidential information without authorization shall

1be subject to disciplinary action by the commission.

2§ 2314. Unconventional Gas Well Impact Fee Fund.

3(a) Establishment.--The Unconventional Gas Well Impact Fund
4is established in the State Treasury and shall be administered
5by the commission.

6(b) Deposit.--An amount equal to the unconventional gas well
7impact fee-equivalent calculation shall be deposited into the
8fund in accordance with Chapter 15 (relating to natural gas
9drilling tax and investment) and shall be distributed in the
10amounts and for the purposes set forth in this section.

11(c) Conservation districts.--

12(1) An amount equal to $7,500,000 shall be distributed
13from the fund to county conservation districts in accordance
14with paragraphs (2) and (3).

15(2) Beginning July 1, 2014, and each July 1 thereafter,
16the amount distributed under paragraph (1) shall be increased
17by any percentage increase in the Consumer Price Index for
18All Urban Consumers for the most recent 12-month period for
19which figures have been officially reported by the Bureau of
20Labor Statistics immediately prior to July 1.

21(3) Funds shall be distributed under this subsection in
22accordance with the following:

23(i) One-half shall be distributed by dividing the
24amount equally among conservation districts for any use
25consistent with the act of May 15, 1945 (P.L.547,
26No.217), known as the Conservation District Law.

27(ii) One-half shall be distributed by the State
28Conservation Commission in a manner consistent with the
29Conservation District Law and the provisions of the State
30Conservation Commission's Conservation District Fund

1Allocation Program—Statement of Policy under 25 Pa. Code
2Ch. 83 Subch. B (relating to Conservation District Fund
3Allocation Program—Statement of Policy).

4(c.1) Additional distributions.--In addition to the
5distribution under subsection (c), the fund shall be subject to
6the following annual distributions:

7(1) An amount equal to $1,000,000 to the Pennsylvania
8Fish and Boat Commission for costs relating to the review of
9applications for permits to drill unconventional gas wells.

10(2) An amount equal to $1,000,000 to the Public Utility
11Commission for costs to administer this chapter and 58
12Pa.C.S. Ch. 33 (relating to local ordinances relating to oil
13and gas operations).

14(3) An amount equal to $6,000,000 to the department for
15the administration of this act and the enforcement of acts
16relating to clean air and clean water.

17(4) An amount equal to $750,000 to the Pennsylvania
18Emergency Management Agency for emergency response planning,
19training and coordination related to natural gas production
20from unconventional gas wells.

21(5) An amount equal to $750,000 to the Office of the
22State Fire Commissioner for the development, delivery and
23sustainment of training and grant programs for first
24responders and the acquisition of specialized equipment for
25response to emergencies relating to natural gas production
26from unconventional gas wells.

27(6) An amount equal to $1,000,000 to the Department of
28Transportation for rail freight assistance.

29(c.2) Report.--All agencies or organizations receiving funds
30under subsections (c) and (c.1) shall submit a report by

1December 31, 2014, and December 31 of each year thereafter to
2the Secretary of the Budget and the Appropriations Committee of
3the Senate and the Appropriations Committee of the House of
4Representatives. The report shall include an itemization and
5explanation of the use of all funds received under subsections
6(c) and (c.1)

7(d) Distribution.--Following the distribution of funds under
8subsections (c) and (c.1), 60% of the revenue remaining in the
9fund from fees collected for the prior year shall be allocated
10to counties and municipalities for purposes authorized under
11subsection (g). Counties and municipalities are encouraged,
12where appropriate, to jointly fund projects that cross
13jurisdictional lines. The commission, after making a
14disbursement under subsection (f), shall distribute the
15remaining funds as follows within three months after the date
16the fee is due:

17(1) Thirty-six percent shall be distributed to counties
18in which spud unconventional gas wells are located. The
19amount to be distributed to each county shall be determined
20using a formula that divides the number of spud
21unconventional gas wells in the county by the number of spud
22unconventional gas wells in this Commonwealth and multiplies
23the resulting percentage by the amount available for
24distribution under this paragraph.

25(2) Thirty-seven percent shall be distributed to
26municipalities in which spud unconventional gas wells are
27located. The amount to be distributed for each municipality
28shall be determined using a formula that divides the number
29of spud unconventional gas wells in the municipality by the
30number of spud unconventional gas wells in this Commonwealth

1and multiplies the resulting percentage by the amount
2available for distribution under this paragraph.

3(3) Twenty-seven percent shall be distributed to
4municipalities located in a county in which spud
5unconventional gas wells are located. The amount available
6for distribution in such municipalities shall be determined
7by dividing the number of spud unconventional gas wells in
8the county by the number of spud unconventional gas wells in
9this Commonwealth and multiplying the resulting percentage by
10the amount available for distribution under this paragraph.
11The resulting amount available for distribution to each
12municipality in the county shall be distributed as follows:

13(i) Fifty percent of the amount available under this
14paragraph shall be distributed to municipalities in which
15spud unconventional gas wells are located and to
16municipalities that are either contiguous with a
17municipality in which spud unconventional gas wells are
18located or are located within five linear miles of a spud
19unconventional gas well. The distribution shall be made
20as follows:

21(A) One-half shall be distributed to each
22municipality using a formula that divides the
23population of the eligible municipality within the
24county by the total population of all eligible
25municipalities within the county and multiplies the
26resulting percentage by the amount allocated to the
27county under this subparagraph.

28(B) One-half shall be distributed to each
29municipality using a formula that divides the highway
30mileage of the eligible municipality within the

1county by the total highway mileage of all eligible
2municipalities within the county and multiplies the
3resulting percentage by the amount allocated to the
4county under this subparagraph.

5(ii) Fifty percent of the amount available under
6this paragraph shall be distributed to each municipality
7in the county, regardless of whether an unconventional
8gas well is located in the municipality, as follows:

9(A) One-half shall be distributed to each
10municipality using a formula that divides the
11population of the municipality within the county by
12the total population of the county and multiplies the
13resulting percentage by the amount allocated to the
14county under this subparagraph.

15(B) One-half shall be distributed to each
16municipality using a formula that divides the highway
17mileage of the municipality within the county by the
18total highway mileage of the county and multiplies
19the resulting percentage by the amount allocated to
20the county under this subparagraph.

21(e) Restriction.--The amount allocated to each municipality
22under subsection (d) shall not exceed the greater of $500,000 or
2350% of the total budget for the prior fiscal year beginning with
24the 2014 budget year and continuing every year thereafter, and
25shall be adjusted to reflect any upward changes in the Consumer
26Price Index for all Urban Consumers for the Pennsylvania, New
27Jersey, Delaware and Maryland area in the preceding 12 months.
28Any remaining money shall be retained by the commission and
29transferred to the Housing Affordability and Rehabilitation
30Enhancement Fund for the uses specified under subsection (f).

1(f) Housing Affordability and Rehabilitation Enhancement
2Fund.--

3(1) From fees collected for 2012, and each year 
4thereafter, $5,000,000 from the fund shall be distributed to 
5the Housing Affordability and Rehabilitation Enhancement Fund 
6under the act of November 23, 2010 (P.L.1035, No.105), 
7entitled "An act amending the act of December 3, 1959 
8(P.L.1688, No.621), entitled, as amended, 'An act to promote 
9the health, safety and welfare of the people of the 
10Commonwealth by broadening the market for housing for persons 
11and families of low and moderate income and alleviating 
12shortages thereof, and by assisting in the provision of 
13housing for elderly persons through the creation of the 
14Pennsylvania Housing Finance Agency as a public corporation 
15and government instrumentality; providing for the 
16organization, membership and administration of the agency, 
17prescribing its general powers and duties and the manner in 
18which its funds are kept and audited, empowering the agency 
19to make housing loans to qualified mortgagors upon the 
20security of insured and uninsured mortgages, defining 
21qualified mortgagors and providing for priorities among 
22tenants in certain instances, prescribing interest rates and 
23other terms of housing loans, permitting the agency to 
24acquire real or personal property, permitting the agency to 
25make agreements with financial institutions and Federal 
26agencies, providing for the purchase by persons of low and 
27moderate income of housing units, and approving the sale of 
28housing units, permitting the agency to sell housing loans, 
29providing for the promulgation of regulations and forms by 
30the agency, prescribing penalties for furnishing false
 

1information, empowering the agency to borrow money upon its 
2own credit by the issuance and sale of bonds and notes and by 
3giving security therefor, permitting the refunding, 
4redemption and purchase of such obligations by the agency, 
5prescribing remedies of holders of such bonds and notes, 
6exempting bonds and notes of the agency, the income 
7therefrom, and the income and revenues of the agency from 
8taxation, except transfer, death and gift taxes; making such 
9bonds and notes legal investments for certain purposes; and 
10indicating how the act shall become effective,' providing for 
11the Pennsylvania Housing Affordability and Rehabilitation 
12Enhancement Program; and establishing the Housing 
13Affordability and Rehabilitation Enhancement Fund."

14(2) Funds under paragraph (1) shall be allocated to
15counties in which producing wells are located for the
16following purposes:

17(i) To provide support to projects that increase the
18availability of quality, safe and affordable housing for
19low-income and moderate-income individuals or families,
20persons with disabilities and elderly persons.

21(ii) To provide rental assistance to persons or
22families whose household income does not exceed the area
23median income.

24(3) No less than 50% of the funds available under this
25subsection shall be used in fifth, sixth, seventh and eighth
26class counties.

27(g) Use of funds.--A county or municipality receiving funds
28under subsection (d) shall use the funds for the following
29purposes associated with natural gas production from
30unconventional gas wells within the county or municipality:

1(1) Construction, reconstruction, maintenance and repair
2of roadways, bridges and public infrastructure.

3(2) Water, storm water and sewer systems, including
4construction, reconstruction, maintenance and repair.

5(3) Emergency preparedness and public safety, including
6law enforcement and fire services, hazardous material
7response, 911, equipment acquisition and other services.

8(4) Environmental programs, including trails, parks and
9recreation, open space, flood plain management, conservation
10districts and agricultural preservation.

11(5) Preservation and reclamation of surface and
12subsurface waters and water supplies.

13(6) Tax reductions, including homestead exclusions.

14(7) Projects to increase the availability of safe and
15affordable housing to residents.

16(8) Records management, geographic information systems
17and information technology.

18(9) The delivery of social services.

19(10) Judicial services.

20(11) For deposit into the county's or municipality's
21capital reserve fund if the funds are used solely for a
22purpose set forth in this subsection.

23(12) Career and technical centers for the training of
24workers in the oil and gas industry.

25(13) Local or regional planning initiatives under the
26act of July 31, 1968 (P.L.805, No.247), known as the
27Pennsylvania Municipalities Planning Code.

28(h) Reporting.--

29(1) The commission shall submit an annual report on all
30moneys in the fund. The report shall include a detailed

1listing of all deposits and expenditures of the fund and
2shall be submitted to the following officers by December 30,
32014, and by September 30 of each year thereafter:

4(i) The chairman and the minority chairman of the
5Appropriations Committee of the Senate.

6(ii) The chairman and the minority chairman of the
7Environmental Resources and Energy Committee of the
8Senate.

9(iii) The chairman and the minority chairman of the
10Appropriations Committee of the House of Representatives.

11(iv) The chairman and the minority chairman of the
12Environmental Resources and Energy Committee of the House
13of Representatives.

14(2) All counties and municipalities receiving funds
15under this section shall submit information to the commission
16on a form prepared by the commission that sets forth:

17(i) the amount and use of the funds received in the
18prior calendar year; and

19(ii) that the funds received were committed to a
20specific project or use as authorized in this section.

21The reports shall be published annually on the county's or
22municipality's publicly accessible Internet website.

23(i) Availability of funds.--Distribution of funds under this
24section and section 2315 (relating to Statewide initiatives) are
25contingent on availability of moneys in the fund. If sufficient
26funds are not available, the commission shall disburse funds on
27a pro rata basis.

28§ 2315. Statewide initiatives.

29(a) Establishment.--The Marcellus Legacy Fund is established
30in the State Treasury.

1(a.1) Deposit and distribution.--Following distribution
2under section 2314(c) and (c.1) (relating to Unconventional Gas
3Well Impact Fee Fund), 40% of the remaining revenue in the fund
4shall be deposited into the Marcellus Legacy Fund and shall be
5annually appropriated to the commission. Moneys in the fund
6shall be distributed within three months after the date the fee
7is due as follows:

8(1) Twenty percent shall be disbursed to the
9Commonwealth Financing Authority for grants to eligible
10applicants for the following:

11(i) Damage, abatement and cleanup and reclamation of
12acid mines, with priority given to projects which recycle
13and treat water for use in drilling operations.

14(ii) Orphan or abandoned oil and gas well plugging.

15(iii) Complying with the act of January 24, 1966
16(1965 P.L.1535, No.537), known as the Pennsylvania Sewage
17Facilities Act.

18(iv) Planning acquisition, development,
19rehabilitation and repair of greenways, recreational
20trails, open space, parks and beautification projects.

21(v) Programs to establish baseline water quality
22data on private water supplies.

23(vi) Watershed programs and related projects.

24(vii) Up to 25% for flood-control projects.

25(2) Ten percent to the Environmental Stewardship Fund.

26(3) Twenty-five percent shall be transferred to the
27Highway Bridge Improvement Restricted Account in the Motor
28License Fund to provide payments to counties to fund the cost
29of the replacement or repair of locally owned at-risk
30deteriorated bridges. Funds shall be distributed to counties

1proportionately based on the population of the county as
2follows:

3(i) In each county, the distribution shall be
4according to the following formula:

5(A) Divide:

6(I) the total population of the county; by

7(II) the total population of the
8Commonwealth.

9(B) Express the quotient under clause (A) as a
10percentage.

11(C) Multiply:

12(I) the percentage under clause (B); by

13(II) the amount of money to be distributed
14under this paragraph.

15(ii) Each county shall receive a minimum of $40,000
16to the extent funds are available.

17(iii) The Department of Transportation shall release
18money under this paragraph upon approval of a plan
19submitted by a county or municipality to repair an at-
20risk deteriorated bridge. The plan must include funding
21for replacement or repair.

22(iv) A county of the first or second class may
23submit a plan to use its funds under this paragraph for
24at-risk deteriorated bridges owned by a public
25transportation authority.

26(4) Twenty-five percent shall be disbursed for water and
27sewer projects as follows:

28(i) Fifty percent of the amount distributed under
29this paragraph shall be allocated to the Pennsylvania
30Infrastructure Investment Authority to be used in

1accordance with the act of March 1, 1988 (P.L.82, No.16),
2known as the Pennsylvania Infrastructure Investment
3Authority Act.

4(ii) Fifty percent of the amount allocated under
5this paragraph shall be distributed to the H2O PA program
6to be used by the Commonwealth Financing Authority in
7accordance with section 301 of the act of July 9, 2008
8(P.L.908, No.63), known as the H2O PA Act. The
9prohibition on grants for projects located in a city or
10county of the first or second class under section 301 of
11the H2O PA Act shall not apply to funds distributed to
12the H2O PA Program under this subparagraph.

13(5) Fifteen percent shall be allocated for the planning,
14acquisition, development, rehabilitation and repair of
15greenways, recreational trails, open space, natural areas,
16community conservation and beautification projects, community
17and heritage parks and water resource management. Funds may
18be used to acquire lands for recreational or conservation
19purposes and land damaged or prone to drainage by storms or
20flooding. Funds shall be distributed to counties
21proportionately based on the population of the county as
22follows:

23(i) In each county, the distribution shall be
24according to the following formula:

25(A) Divide:

26(I) the total population of the county; by

27(II) the total population of the
28Commonwealth.

29(B) Express the quotient under clause (A) as a
30percentage.

1(C) Multiply:

2(I) the percentage under clause (B); by

3(II) the amount of funds available under
4this paragraph.

5(ii) Each county shall receive a minimum of $25,000
6to the extent funds are available.

7(6) Five percent shall be distributed to:

8(i) The Department of Community and Economic
9Development for projects to provide for the planning,
10development, remodeling, remediation and construction of
11projects relating to oil, natural gas or other chemical
12substances. Projects under this subparagraph may include
13blending facilities to liquefy or refine natural gas or
14to convert natural gas to ethane, propane or other
15substances; facilities to refine oil; or facilities to
16refine or process oil, heating oil, jet fuel or any other
17chemical substance. After December 31, 2014, funds not
18utilized by the Department of Community and Economic
19Development under this subparagraph shall be deposited in
20the Hazardous Sites Cleanup Fund.

21(ii) The Hazardous Sites Cleanup Fund.

22(b) Restriction on use of proceeds.--

23(1) Funds distributed under subsection (a.1) shall not
24be used for the purpose of public relations, outreach not
25directly related to project implementation, communications,
26lobbying or litigation.

27(2) Funds distributed under subsection (a.1) may not be
28used by an authorized organization as defined in 27 Pa.C.S. §
296103 (relating to definitions) for land acquisition unless
30the authorized organization has obtained the written consent

1of the county and municipality in which the land is situated.

2(c) Coordination.--The department and the Department of
3Conservation and Natural Resources shall review applications for
4funding as requested by the Commonwealth Financing Authority and
5provide recommendations on priority of projects and project
6approval.

7§ 2316. Small business participation.

8(a) Requirement.--Producers shall provide maximum
9practicable contracting opportunities for diverse small
10businesses.

11(b) Duties.--Producers shall do all of the following:

12(1) Maintain a policy prohibiting discrimination in
13employment and contracting based on gender, race, creed or
14color.

15(2) Use the database available on the publicly
16accessible Internet website of the Department of General
17Services to identify certified diverse small businesses as
18potential contractors, subcontractors and suppliers for
19opportunities related to unconventional natural gas
20extraction.

21(3) Respond to the survey under subsection (c) within 90
22days.

23(c) Survey.--Within one year of the effective date of this
24section, the Department of General Services shall send all
25producers a survey to report the producers' efforts to provide
26maximum practicable contracting opportunities related to
27unconventional natural gas extraction for diverse small business
28participation.

29(d) Reports.--The Department of General Services shall
30compile the results and submit an annual report to the State

1Government Committee of the Senate and the State Government
2Committee of the House of Representatives on the utilization of
3diverse small business participation related to unconventional
4natural gas extraction. The report shall be submitted no later
5than 150 days after the Department of General Services
6disseminated the survey to producers.

7(e) Definition.--As used in this section, the term "diverse
8small business" means any minority-owned business, women-owned
9business and veteran-owned business as determined by the
10Department of General Services.

11§ 2317. Applicability.

12The provisions of this chapter shall not negate or limit the
13responsibilities of any producer under this title, 74 Pa.C.S.
14(relating to transportation) or 75 Pa.C.S. (relating to
15vehicles).

16Section 2. All acts and parts of acts are repealed insofar
17as they are inconsistent with this act.

18Section 3. This act shall take effect in 90 days.