1Amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated
2Statutes, further providing for well permits, for well
3location restrictions, for protection of water supplies, for
4notification to public drinking water systems, for well
5reporting requirements, for hydraulic fracturing chemical
6disclosure, for bonding and for penalties; providing for
7local ordinances and moratorium; repealing provisions
8relating to local ordinances relating to oil and gas
9operations; further providing for declaration of policy and
10for prohibition; and providing for a natural gas severance
11tax.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. Sections 3211(b), (e.1)(6), (k) and (m)(2),
153215(a), (b), (c) and (e), 3218(b.4), (c)(2) and (d)(2)(iii),
163218.1, 3222(b.2), 3222.1(b)(10) and (11), 3225(a)(1), 3255(a)
17and (b) and 3272 of Title 58 of the Pennsylvania Consolidated
18Statutes are amended to read:

19§ 3211. Well permits.

20* * *

21(b) Plat.--

22(1) The permit application shall be accompanied by a

1plat prepared by a competent engineer or a competent
2surveyor, on forms furnished by the department, showing the
3political subdivision and county in which the tract of land
4upon which the well to be drilled, operated or altered is
5located; a list of municipalities adjacent to the well site;
6the name of the surface landowner of record and lessor; the
7name of all surface landowners and water purveyors whose
8water supplies are within 1,000 feet of the proposed well
9location or, in the case of an unconventional well, within
10[3,000 feet from the vertical well bore] 5,000 feet of the 
11outer boundary of the proposed well pad; the name of the
12owner of record or operator of all known underlying workable
13coal seams; the acreage in the tract to be drilled; the
14proposed location of the well determined by survey, courses
15and distances of the location from two or more permanent
16identifiable points or landmarks on the tract boundary
17corners; the proposed angle and direction of the well if the
18well is to be deviated substantially from a vertical course;
19the number or other identification to be given the well; the
20workable coal seams underlying the tract of land upon which
21the well is to be drilled or altered and which shall be cased
22off under section 3217 (relating to protection of fresh
23groundwater and casing requirements); and any other
24information needed by the department to administer this
25chapter.

26(2) The applicant shall forward by certified mail a copy
27of the plat to the surface landowner; the municipality in
28which the tract of land upon which the well to be drilled is
29located; each municipality within 3,000 feet of the proposed
30unconventional vertical well bore; the municipalities

1adjacent to the well; all surface landowners and water
2purveyors, whose water supplies are within 1,000 feet of the
3proposed well location or, in the case of an unconventional
4well, within [3,000 feet] 5,000 feet of the outer boundary of
5the proposed unconventional vertical well bore; storage
6operators within 3,000 feet of the proposed unconventional
7vertical well bore; the owner and lessee of any coal seams;
8and each coal operator required to be identified on the well
9permit application.

10* * *

11(e.1) Denial of permit.--The department may deny a permit
12for any of the following reasons:

13* * *

14(6) The applicant failed to pay the [fee] tax or file a
15[report] return under section [2303(c) (relating to
16administration)] 4404 (relating to return and payment),
17unless an appeal is pending. The [commission] Department of 
18Revenue shall notify the department of any applicant who has
19failed to pay the [fee] tax or file a [report] return and who
20does not have an appeal pending.

21* * *

22(k) No transfer permitted.--No permit issued under this
23section or registration issued under section 3213 (relating to
24well registration and identification) may be transferred without
25prior approval of the department. A request for approval of a
26transfer shall be on the forms, and in the manner, prescribed by
27the department. The department shall approve or deny a transfer
28request within 45 days of receipt of a complete and accurate
29application. The department may deny a request only for reasons
30set forth in subsection (e.1)(4) [and] , (5) and (6). Approval

1of a transfer request shall permanently transfer responsibility
2to plug the well under section 3220 to the recipient of the
3transferred permit or registration.

4* * *

5(m) Water management.--The following shall apply to water
6management:

7* * *

8(2) The department shall review and approve water
9management plans based upon a determination that the proposed
10withdrawal, when operated in accordance with the proposed
11withdrawal operating conditions set forth in the plan,
12including conditions relating to quantity, withdrawal rate
13and timing and any passby flow conditions, will:

14(i) not adversely affect the quantity or quality of
15water available to other users of the same water sources;

16(ii) protect and maintain the designated and
17existing uses of water sources;

18(iii) not cause adverse impact to water quality in
19the watershed considered as a whole; [and]

20(iv) include a reuse plan for fluids that will be
21used to hydraulically fracture wells; and

22(v) not cause adverse impact to ecosystems and 
23wildlife in the surrounding area.

24* * *

25§ 3215. Well location restrictions.

26(a) General rule.--Wells may not be drilled within 200 feet,
27or, in the case of an unconventional gas well, [500] 1,500 feet,
28measured horizontally from the vertical well bore to a building
29or water well, existing when the copy of the plat is mailed as
30required by section 3211(b) (relating to well permits) without

1written consent of the owner of the building or water well.
2Unconventional gas wells may not be drilled within [1,000] 2,500
3feet measured horizontally from the vertical well bore to any
4existing water well, surface water intake, reservoir or other
5water supply extraction point used by a water purveyor without
6the written consent of the water purveyor. If consent is not
7obtained and the distance restriction would deprive the owner of
8the oil and gas rights of the right to produce or share in the
9oil or gas underlying the surface tract, the well operator
10[shall] may be granted a variance from the distance restriction
11upon submission of a plan identifying the additional measures,
12facilities or practices as prescribed by the department to be
13employed during well site construction, drilling and operations.
14[The] If the variance is granted, the variance shall include
15additional terms and conditions required by the department to
16ensure safety and protection of affected persons and property,
17including insurance, bonding, indemnification and technical
18requirements. Notwithstanding section 3211(e), if a variance
19request has been submitted, the department may extend its permit
20review period for up to 15 days upon notification to the
21applicant of the reasons for the extension. If a variance is not 
22granted, the well operator shall not be permitted to drill, 
23operate or alter a well within the required boundaries.

24(b) Limitation.--

25(1) No well site may be prepared or well drilled within
26100 feet or, in the case of an unconventional well, [300] 500
27feet from the vertical well bore or [100] 300 feet from the
28edge of the well site, whichever is greater, measured
29horizontally from any solid blue lined stream, spring or body
30of water as identified on the most current 7 1/2 minute

1topographic quadrangle map of the United States Geological
2Survey.

3(2) The edge of the disturbed area associated with any
4unconventional well site must maintain a [100-foot] 300-foot
5setback from the edge of any solid blue lined stream, spring
6or body of water as identified on the most current 7 1/2
7minute topographic quadrangle map of the United States
8Geological Survey.

9(3) No unconventional well may be drilled within [300]
10500 feet of any wetlands greater than one acre in size, and
11the edge of the disturbed area of any well site must maintain
12a [100-foot] 300-foot setback from the boundary of the
13wetlands.

14(4) The department [shall] may waive the distance
15restrictions upon submission of a plan identifying additional
16measures, facilities or practices to be employed during well
17site construction, drilling and operations necessary to
18protect the waters of this Commonwealth. The waiver, if
19granted, shall include additional terms and conditions
20required by the department necessary to protect the waters of
21this Commonwealth. Notwithstanding section 3211(e), if a
22waiver request has been submitted, the department may extend
23its permit review period for up to 15 days upon notification
24to the applicant of the reasons for the extension.

25(c) Impact.--On making a determination on a well permit, the
26department shall consider whether the proposed well location is 
27within a floodplain, including the requirements of subsection 
28(f), and may deny or condition a well permit based on that 
29consideration or based on the impact of the proposed well on
30public resources, including, but not limited to:

1(1) Publicly owned parks, forests, game lands and
2wildlife areas.

3(2) National or State scenic rivers.

4(3) National natural landmarks.

5(4) Habitats of rare and endangered flora and fauna and
6other critical communities.

7(5) Historical and archaeological sites listed on the
8Federal or State list of historic places.

9(6) Sources used for public drinking supplies in
10accordance with subsection (b).

11(7) Bodies of water and watercourses, including
12wetlands, wild trout streams and wilderness trout streams.

13* * *

14(e) Regulation criteria.--The Environmental Quality Board
15shall develop by regulation criteria:

16(1) For the department to utilize for denying or
17conditioning a well permit based on its impact to the public
18resources identified under subsection (c) and for ensuring
19optimal development of oil and gas resources and respecting
20property rights of oil and gas owners.

21(2) For appeal to the Environmental Hearing Board of a
22permit [containing] that was denied or that contains 
23conditions imposed by the department. The regulations shall
24also provide that the department has the burden of proving
25that the denial or conditions were necessary to protect
26against a probable harmful impact of the public resources.

27* * *

28§ 3218. Protection of water supplies.

29* * *

30(b.4) Website.--The department shall publish, on its

1Internet website, lists of confirmed cases of [subterranean]
2water supply contamination that result from hydraulic
3fracturing.

4* * *

5(c) Presumption.--Unless rebutted by a defense established
6in subsection (d), it shall be presumed that a well operator is
7responsible for pollution of a water supply if:

8* * *

9(2) in the case of an unconventional well:

10(i) the water supply is within [2,500] 5,000 feet of
11the unconventional vertical well bore; and

12(ii) the pollution occurred within 12 months of the
13later of completion, drilling, stimulation or alteration
14of the unconventional well.

15* * *

16(d) Defenses.--To rebut the presumption established under
17subsection (c), a well operator must affirmatively prove any of
18the following:

19* * *

20(2) in the case of an unconventional well:

21* * *

22(iii) the water supply is not within [2,500] 5,000
23feet of the unconventional vertical well bore;

24* * *

25§ 3218.1. Notification to public or private drinking water
26systems.

27Upon receiving notification of a spill, the department shall,
28after investigating the incident, notify any public or private
29drinking water facility or well owner that could be affected by
30the event that the event occurred. The notification shall

1contain a brief description of the event and any expected impact
2on water quality.

3§ 3222. Well reporting requirements.

4* * *

5(b.2) Trade secret or confidential proprietary 
6information.--When an operator submits its stimulation record 
7under subsection (b.1), the operator may designate specific 
8portions of the stimulation record as containing a trade secret 
9or confidential proprietary information. The department shall 
10prevent disclosure of a designated trade secret or confidential 
11proprietary information to the extent permitted by the act of 
12February 14, 2008 (P.L.6, No.3), known as the Right-to-Know Law 
13or other applicable State law. Notwithstanding this subsection, 
14in the event of an emergency at the well site, the department 
15shall make the entire completion report available to emergency 
16personnel upon request.

17* * *

18§ 3222.1. Hydraulic fracturing chemical disclosure
19requirements.

20* * *

21(b) Required disclosures.--

22* * *

23(10) A vendor, service company or operator shall
24identify the specific identity and amount of any chemicals
25claimed to be a trade secret or confidential proprietary
26information to any health professional who requests the
27information in [writing if the health professional executes a
28confidentiality agreement and provides a written statement of
29need for the information indicating all of the following] any 
30of the following instances:

1(i) The information is needed for the purpose of
2diagnosis or treatment of an individual.

3(ii) The individual being diagnosed or treated may
4have been exposed to a hazardous chemical.

5(iii) Knowledge of information will assist in the
6diagnosis or treatment of an individual.

7(11) [If a health professional determines that a medical
8emergency exists and the specific identity and amount of any
9chemicals claimed to be a trade secret or confidential
10proprietary information are necessary for emergency
11treatment, the vendor, service provider or operator shall
12immediately disclose the information to the health
13professional upon a verbal acknowledgment by the health
14professional that the information may not be used for
15purposes other than the health needs asserted and that the
16health professional shall maintain the information as
17confidential. The vendor, service provider or operator may
18request, and the health professional shall provide upon
19request, a written statement of need and a confidentiality
20agreement from the health professional as soon as
21circumstances permit, in conformance with regulations
22promulgated under this chapter.] A health professional may 
23not disseminate the trade secret or confidential proprietary 
24information disclosed under paragraph (10), except in the 
25following instances:

26(i) The disclosure relates to the diagnosis or
27treatment of a patient and the disclosure is provided to
28another health professional, the patient or designee of
29the patient or any other person whose knowledge the
30health professional deems important to the diagnosis or

1treatment of the patient or the prevention of future
2health issues.

3(ii) The disclosure occurs during procurement of
4payment for services rendered or planned.

5(iii) The disclosure is provided to a public health
6official or is intended to further public health.

7(iv) The disclosure is used for the study of any
8chemical involved.

9* * *

10§ 3225. Bonding.

11(a) General rule.--The following shall apply:

12(1) Except as provided in subsection (d), upon filing an
13application for a well permit and before continuing to
14operate an oil or gas well, the owner or operator of the well
15shall file with the department a bond covering the well and
16well site on a form to be prescribed and furnished by the
17department. A bond filed with an application for a well
18permit shall be payable to the Commonwealth and conditioned
19upon the operator's faithful performance of all drilling,
20water supply replacement, restoration and plugging
21requirements of this chapter. A bond for a well in existence
22on April 18, 1985, shall be payable to the Commonwealth and
23conditioned upon the operator's faithful performance of all
24water supply replacement, restoration and plugging
25requirements of this chapter. The amount of the bond required
26shall be in the following amounts and may be adjusted by the
27Environmental Quality Board every two years to reflect the
28projected costs to the Commonwealth of plugging the well:

29(i) For wells with a total well bore length less
30than 6,000 feet:

1(A) For operating up to [50] 25 wells, [$4,000]
2$5,000 per well, but no bond may be required under
3this clause in excess of [$35,000] $70,000.

4(B) For operating [51] 26 to [150] 50 wells,
5[$35,000] $70,000 plus [$4,000] $5,000 per well for
6each well in excess of [50] 25 wells, but no bond may
7be required under this clause in excess of [$60,000]
8$120,000.

9(C) For operating [151] 51 to [250] 100 wells,
10[$60,000] $120,000 plus [$4,000] $5,000 per well for
11each well in excess of [150] 50 wells, but no bond
12may be required under this clause in excess of
13[$100,000] $200,000.

14(D) For operating more than [250] 100 wells,
15[$100,000] $200,000 plus [$4,000] $5,000 per well for
16each well in excess of [250] 100 wells, but no bond
17may be required under this clause in excess of
18[$250,000] $500,000.

19(ii) For wells with a total well bore length of at
20least 6,000 feet:

21(A) For operating up to 25 wells, [$10,000]
22$12,500 per well, but no bond may be required under
23this clause in excess of [$140,000] $220,000.

24(B) For operating 26 to 50 wells, [$140,000]
25$220,000 plus [$10,000] $12,500 per well for each
26well in excess of 25 wells, but no bond may be
27required under this clause in excess of [$290,000]
28$375,000.

29(C) For operating 51 to [150] 100 wells,
30[$290,000] $375,000 plus [$10,000] $12,500 per well

1for each well in excess of 50 wells, but no bond may
2be required under this clause in excess of [$430,000]
3$625,000.

4(D) For operating more than [150] 100 wells,
5[$430,000] $625,000 plus [$10,000] $12,500 per well
6for each well in excess of [150] 100 wells, but no
7bond may be required under this clause in excess of
8[$600,000] $1,000,000.

9* * *

10§ 3255. Penalties.

11(a) General violation.--A person violating a provision of
12this chapter commits a summary offense and, upon conviction,
13shall be sentenced to pay a fine of not more than [$1,000]
14$5,000 or to imprisonment of not more than 90 days, or both.
15Each day during which the violation continues is a separate and
16distinct offense.

17(b) Willful violation.--A person willfully violating a
18provision of this chapter or an order of the department issued
19under this chapter commits a misdemeanor and, upon conviction,
20shall be sentenced to pay a fine of not more than [$5,000]
21$25,000 or to imprisonment of not more than one year, or both.
22Each day during which the violation continues is a separate and
23distinct offense.

24* * *

25§ 3272. [(Reserved).] Local ordinances.

26Except with respect to ordinances adopted under the act of

27July 31, 1968 (P.L.805, No.247), known as the Pennsylvania

28Municipalities Planning Code, the act of October 4, 1978

29(P.L.851, No.166), known as the Flood Plain Management Act, and 
30the act of March 31, 1927 (P.L.98, No.69), referred to as the
 

1Second Class City Zoning Law, all local ordinances and 
2enactments purporting to regulate oil and gas well operations 
3regulated by this chapter are superseded by this chapter to the 
4extent the ordinances or enactments regulate the method of oil 
5and gas well operations. No ordinances or enactments adopted
6under the Pennsylvania Municipalities Planning Code, the Flood 
7Plain Management Act or the Second Class City Zoning Law shall 
8impose conditions, requirements or limitations that are 
9inconsistent with this part. Nothing in this part shall affect 
10the traditional power of local government to regulate zoning and 
11land development of oil and gas activities as well as other 
12aspects, such as the time and the place of operations, to 
13protect the health safety and welfare of the general public 
14through local ordinances and enactments.

15Section 2. Title 58 is amended by adding a section to read:

16§ 3272.1. Moratorium.

17(a) General rule.--Notwithstanding any other provision of
18law, there is hereby established a moratorium on the new leasing
19and the issuance of new well permits under this chapter for any
20State forest and park land not under a lease agreement by
21September 1, 2014, for the natural gas drilling on State forest
22and park lands in the Marcellus Shale formation in this
23Commonwealth. The purpose of the moratorium shall be to provide
24additional time to review the permitting process and guidelines
25and regulations to protect the public land, health and safety.

26(b) Expiration.--The moratorium shall expire two years after
27the effective date of this section.

28Section 3. The heading of Chapter 33 of Title 58 is
29repealed:

30[CHAPTER 33

1LOCAL ORDINANCES RELATING TO

2OIL AND GAS OPERATIONS]

3Section 4. Sections 3301, 3302, 3303, 3304, 3305, 3306,
43307, 3308 and 3309 of Title 58 are repealed:

5[§ 3301. Definitions.

6The following words and phrases when used in this chapter
7shall have the meanings given to them in this section unless the
8context clearly indicates otherwise:

9"Building." An occupied structure with walls and a roof
10within which individuals live or customarily work.

11"Commission." The Pennsylvania Public Utility Commission.

12"Environmental acts." All statutes enacted by the
13Commonwealth relating to the protection of the environment or
14the protection of public health, safety and welfare, that are
15administered and enforced by the department or by another
16Commonwealth agency, including an independent agency, and all
17Federal statutes relating to the protection of the environment,
18to the extent those statutes regulate oil and gas operations.

19"Local government." A county, city, borough, incorporated
20town or township of this Commonwealth.

21"Local ordinance." An ordinance or other enactment,
22including a provision of a home rule charter, adopted by a local
23government that regulates oil and gas operations.

24"MPC." The act of July 31, 1968 (P.L.805, No.247), known as
25the Pennsylvania Municipalities Planning Code.

26"Oil and gas operations." The term includes the following:

27(1) well location assessment, including seismic
28operations, well site preparation, construction, drilling,
29hydraulic fracturing and site restoration associated with an
30oil or gas well of any depth;

1(2) water and other fluid storage or impoundment areas
2used exclusively for oil and gas operations;

3(3) construction, installation, use, maintenance and
4repair of:

5(i) oil and gas pipelines;

6(ii) natural gas compressor stations; and

7(iii) natural gas processing plants or facilities
8performing equivalent functions; and

9(4) construction, installation, use, maintenance and
10repair of all equipment directly associated with activities
11specified in paragraphs (1), (2) and (3), to the extent that:

12(i) the equipment is necessarily located at or
13immediately adjacent to a well site, impoundment area,
14oil and gas pipeline, natural gas compressor station or
15natural gas processing plant; and

16(ii) the activities are authorized and permitted
17under the authority of a Federal or Commonwealth agency.

18"Permitted use." A use which, upon submission of written
19notice to and receipt of a permit issued by a zoning officer or
20equivalent official, is authorized to be conducted without
21restrictions other than those set forth in section 3304
22(relating to uniformity of local ordinances).

23§ 3302. Oil and gas operations regulated pursuant to Chapter
2432.

25Except with respect to local ordinances adopted pursuant to 
26the MPC and the act of October 4, 1978 (P.L.851, No.166), known 
27as the Flood Plain Management Act, all local ordinances 
28purporting to regulate oil and gas operations regulated by 
29Chapter 32 (relating to development) are hereby superseded. No 
30local ordinance adopted pursuant to the MPC or the Flood Plain
 

1Management Act shall contain provisions which impose conditions, 
2requirements or limitations on the same features of oil and gas 
3operations regulated by Chapter 32 or that accomplish the same 
4purposes as set forth in Chapter 32. The Commonwealth, by this 
5section, preempts and supersedes the regulation of oil and gas 
6operations as provided in this chapter.

7§ 3303. Oil and gas operations regulated by environmental acts.

8Notwithstanding any other law to the contrary, environmental
9acts are of Statewide concern and, to the extent that they
10regulate oil and gas operations, occupy the entire field of
11regulation, to the exclusion of all local ordinances. The
12Commonwealth by this section, preempts and supersedes the local
13regulation of oil and gas operations regulated by the
14environmental acts, as provided in this chapter.

15§ 3304. Uniformity of local ordinances.

16(a) General rule.--In addition to the restrictions contained
17in sections 3302 (relating to oil and gas operations regulated
18pursuant to Chapter 32) and 3303 (relating to oil and gas
19operations regulated by environmental acts), all local
20ordinances regulating oil and gas operations shall allow for the
21reasonable development of oil and gas resources.

22(b) Reasonable development of oil and gas resources.--In
23order to allow the for the reasonable development of oil and gas
24resources, a local ordinance:

25(1) Shall allow well and pipeline location assessment
26operations, including seismic operations and related
27activities conducted in accordance with all applicable
28Federal and State laws and regulations relating to the
29storage and use of explosives throughout every local
30government.

1(2) May not impose conditions, requirements or
2limitations on the construction of oil and gas operations
3that are more stringent than conditions, requirements or
4limitations imposed on construction activities for other
5industrial uses within the geographic boundaries of the local
6government.

7(3) May not impose conditions, requirements or
8limitations on the heights of structures, screening and
9fencing, lighting or noise relating to permanent oil and gas
10operations that are more stringent than the conditions,
11requirements or limitations imposed on other industrial uses
12or other land development within the particular zoning
13district where the oil and gas operations are situated within
14the local government.

15(4) Shall have a review period for permitted uses that
16does not exceed 30 days for complete submissions or that does
17not exceed 120 days for conditional uses.

18(5) Shall authorize oil and gas operations, other than
19activities at impoundment areas, compressor stations and
20processing plants, as a permitted use in all zoning
21districts.

22(5.1) Notwithstanding section 3215 (relating to well
23location restrictions), may prohibit, or permit only as a
24conditional use, wells or well sites otherwise permitted
25under paragraph (5) within a residential district if the
26well site cannot be placed so that the wellhead is at least
27500 feet from any existing building. In a residential
28district, all of the following apply:

29(i) A well site may not be located so that the outer
30edge of the well pad is closer than 300 feet from an

1existing building.

2(ii) Except as set forth in paragraph (5) and this
3paragraph, oil and gas operations, other than the
4placement, use and repair of oil and gas pipelines, water
5pipelines, access roads or security facilities, may not
6take place within 300 feet of an existing building.

7(6) Shall authorize impoundment areas used for oil and
8gas operations as a permitted use in all zoning districts,
9provided that the edge of any impoundment area shall not be
10located closer than 300 feet from an existing building.

11(7) Shall authorize natural gas compressor stations as a
12permitted use in agricultural and industrial zoning districts
13and as a conditional use in all other zoning districts, if
14the natural gas compressor building meets the following
15standards:

16(i) is located 750 feet or more from the nearest
17existing building or 200 feet from the nearest lot line,
18whichever is greater, unless waived by the owner of the
19building or adjoining lot; and

20(ii) the noise level does not exceed a noise
21standard of 60dbA at the nearest property line or the
22applicable standard imposed by Federal law, whichever is
23less.

24(8) Shall authorize a natural gas processing plant as a
25permitted use in an industrial zoning district and as
26conditional uses in agricultural zoning districts if all of
27the following apply:

28(i) The natural gas processing plant building is
29located at the greater of at least 750 feet from the
30nearest existing building or at least 200 feet from the

1nearest lot line unless waived by the owner of the
2building or adjoining lot.

3(ii) The noise level of the natural gas processing
4plant building does not exceed a noise standard of 60dbA
5at the nearest property line or the applicable standard
6imposed by Federal law, whichever is less.

7(9) Shall impose restrictions on vehicular access routes
8for overweight vehicles only as authorized under 75 Pa.C.S.
9(relating to vehicles) or the MPC.

10(10) May not impose limits or conditions on subterranean
11operations or hours of operation of compressor stations and
12processing plants or hours of operation for the drilling of
13oil and gas wells or the assembly and disassembly of drilling
14rigs.

15(11) May not increase setback distances set forth in
16Chapter 32 (relating to development) or this chapter. A local
17ordinance may impose setback distances that are not regulated
18by or set forth in Chapter 32 or this chapter if the setbacks
19are no more stringent than those for other industrial uses
20within the geographic boundaries of the local government.

21§ 3305. Commission.

22(a) Advisory opinions to municipalities.--

23(1) A municipality may, prior to the enactment of a
24local ordinance, in writing, request the commission to review
25a proposed local ordinance to issue an opinion on whether it
26violates the MPC, this chapter or Chapter 32 (relating to
27development).

28(2) Within 120 days of receiving a request under
29paragraph (1), the commission shall, in writing, advise the
30municipality whether or not the local ordinance violates the

1MPC, this chapter or Chapter 32.

2(3) An opinion under this subsection shall be advisory
3in nature and not subject to appeal.

4(b) Orders.--

5(1) An owner or operator of an oil or gas operation, or
6a person residing within the geographic boundaries of a local
7government, who is aggrieved by the enactment or enforcement
8of a local ordinance may request the commission to review the
9local ordinance of that local government to determine whether
10it violates the MPC, this chapter or Chapter 32.

11(2) Participation in the review by the commission shall
12be limited to parties specified in paragraph (1) and the
13municipality which enacted the local ordinance.

14(3) Within 120 days of receiving a request under this
15subsection, the commission shall issue an order to determine
16whether the local ordinance violates the MPC, this chapter or
17Chapter 32.

18(4) An order under this subsection shall be subject to
19de novo review by Commonwealth Court. A petition for review
20must be filed within 30 days of the date of service of the
21commission's order. The order of the commission shall be made
22part of the record before the court.

23(c) Exemptions.--An opinion under subsection (a) and an
24order under subsection (b) shall not be subject to:

25(1) 2 Pa.C.S. Ch. 5 Subch. A (relating to practice and
26procedure of Commonwealth agencies);

27(2) 65 Pa.C.S. Ch. 7 (relating to open meetings); or

28(3) 66 Pa.C.S. Ch. 3 Subch. B (relating to
29investigations and hearings).

30(d) Authority.--The commission has the following powers to

1carry out this chapter:

2(1) Employ individuals.

3(2) Issue orders.

4(3) Promulgate regulations.

5(4) Until January 1, 2013, promulgate temporary
6regulations. Regulations under this paragraph:

7(i) shall expire no later than two years following
8the effective date of this section; and

9(ii) are exempt from:

10(A) sections 201, 202 and 203 of the act of July
1131, 1968 (P.L.769, No.240), referred to as the
12Commonwealth Documents Law; and

13(B) the act of June 25, 1982 (P.L.633, No.181),
14known as the Regulatory Review Act.

15§ 3306. Civil actions.

16The following shall apply:

17(1) Notwithstanding any provision of 42 Pa.C.S. Ch. 85
18Subch. C (relating to actions against local parties), any
19person who is aggrieved by the enactment or enforcement of a
20local ordinance that violates the MPC, this chapter or
21Chapter 32 (relating to development) may bring an action in
22Commonwealth Court to invalidate the ordinance or enjoin its
23enforcement.

24(2) An aggrieved person may proceed under this section
25without first obtaining review of the ordinance by the
26commission.

27(3) In an action relating to the enactment or
28enforcement of a local ordinance, a determination of the
29commission made under section 3305(b) (relating to
30commission) shall become part of the record before the court.

1§ 3307. Attorney fees and costs.

2In an action brought under section 3306 (relating to civil
3actions), the court may do any of the following:

4(1) If the court determines that the local government
5enacted or enforced a local ordinance with willful or
6reckless disregard of the MPC, this chapter or Chapter 32
7(relating to development), it may order the local government
8to pay the plaintiff reasonable attorney fees and other
9reasonable costs incurred by the plaintiff in connection with
10the action.

11(2) If the court determines that the action brought by
12the plaintiff was frivolous or was brought without
13substantial justification in claiming that the local
14ordinance in question was contrary to the MPC, this chapter
15or Chapter 32, it may order the plaintiff to pay the local
16government reasonable attorney fees and other reasonable
17costs incurred by the local government in defending the
18action.

19§ 3308. Ineligibility.

20If the commission, Commonwealth Court or the Supreme Court
21issues an order that a local ordinance violates the MPC, this
22chapter or Chapter 32 (relating to development), the
23municipality enacting or enforcing the local ordinance shall be
24immediately ineligible to receive any funds collected under
25Chapter 23 (relating to unconventional gas well fee). The local
26government shall remain ineligible to receive funds under
27Chapter 23 until the local government amends or repeals its
28ordinance in accordance with this chapter or the order or
29determination that the local ordinance is unlawful is reversed
30on appeal.

1§ 3309. Applicability.

2(a) Ordinances.--This chapter shall apply to the enforcement
3of local ordinances existing on the effective date of this
4chapter and to the enactment or enforcement of a local ordinance
5enacted on or after the effective date of this chapter.

6(b) Local governments.--A local government that has enacted
7a local ordinance relating to oil and gas operations prior to
8the effective date of this chapter shall have 120 days from the
9effective date of this chapter to review and amend an ordinance
10in order to comply with this chapter.]

11Section 5. The heading of Chapter 35 of Title 58 is amended
12to read:

13CHAPTER 35

14RESPONSIBILITY FOR [FEE] TAX

15

16Section 6. Sections 3501 and 3502 of Title 58 are amended to
17read:

18§ 3501. Declaration of policy.

19The General Assembly finds and declares as follows:

20(1) The enactment of this chapter is an exercise of the
21authority of the Commonwealth to safeguard the vital
22interests of its citizens.

23(2) This chapter is intended to advance the significant
24and legitimate public purpose of ensuring that entities
25responsible for the impacts of unconventional oil and gas
26well development are solely responsible for payment of
27[impact fees] a severance tax.

28§ 3502. Prohibition.

29A producer may not make the [fee] tax authorized under
30[Chapter 23 (relating to unconditional gas well fee)] Chapter 44
 

1(relating to natural gas severance tax) an obligation,
2indebtedness or liability of a landowner, leaseholder or other
3person in possession of real property, upon which the removal or
4extraction occurs.

5Section 7. Title 58 is amended by adding a part to read:

6PART IV

7TAXATION

8Chapter

944. Natural Gas Severance Tax

10CHAPTER 44

11NATURAL GAS SEVERANCE TAX

12Sec.

134401. Short title of chapter.

144402. Definitions.

154403. Imposition of tax.

164403.1. Tax rate adjustment.

174404. Return and payment.

184405. Natural gas severance tax registration.

194405.1. Meters.

204406. Assessments.

214407. Time for assessment.

224408. Extension of assessment period.

234409. Reassessments.

244410. Interest.

254411. Penalties.

264412. Criminal acts.

274413. Abatement of additions or penalties.

284414. Bulk and auction sales.

294415. Collection upon failure to request reassessment, review
30or appeal.

14416. Tax liens.

24417. Tax suit reciprocity.

34418. Service.

44419. Refunds.

54420. Refund petition.

64421. Rules and regulations.

74422. Recordkeeping.

84423. Examinations.

94424. Unauthorized disclosure.

104425. Cooperation with other governments.

114426. Bonds.

124427. Unconventional Gas Well Fund.

134428. Marcellus Legacy Fund.

144429. Additional revenue.

15§ 4401. Short title of chapter.

16This chapter shall be known and may be cited as the Natural 
17Gas Severance Tax Act.

18§ 4402. Definitions.

19The following words and phrases when used in this chapter
20shall have the meanings given to them in this section unless the
21context clearly indicates otherwise:

22"Accredited laboratory." A facility engaged in the testing
23and calibration of scientific measurement devices and certified
24by the Department of Environmental Protection as having met the
25department's standards for accreditation.

26"Association." A partnership, limited partnership or any
27other form of unincorporated enterprise owned or conducted by
28two or more persons.

29"Base rate." The rate under section 4403(a) (relating to
30imposition of tax).

1"Coal bed methane." Gas which can be produced from coal
2beds, coal seams, mined-out areas or gob wells.

3"Corporation." A corporation, joint stock association,
4limited liability company, business trust or any other
5incorporated enterprise organized under the laws of the United
6States, this Commonwealth or any other state, territory or
7foreign country or dependency.

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

9"First responder." Professional and volunteer fire service
10personnel, emergency medical personnel, law enforcement
11personnel or State, county or local emergency management
12personnel.

13"Marcellus Legacy Fund." The fund established under the
14former section 2315 (relating to Statewide initiatives).

15"Meter." A device to measure the passage of volumes of gases
16or liquids past a certain point.

17"Municipality." A city, borough, incorporated town or
18township.

19"Natural gas." A fossil fuel consisting of a mixture of
20hydrocarbon gases, primarily methane, possibly including ethane,
21propane, butane, pentane, carbon dioxide, oxygen, nitrogen and
22hydrogen sulfide and other gas species. The term includes
23natural gas from oil fields known as associated gas or casing
24head gas, natural gas fields known as nonassociated gas, coal
25beds, shale beds and other formations. The term does not include
26coal bed methane.

27"Nonproducing site." A point of severance that is not
28capable of producing natural gas in paying quantities.

29"Paying quantities." Profit to the producer, however small,
30over the producer's current operating expenses.

1"Person." A natural person or a corporation, fiduciary,
2association or other entity, including the Commonwealth, its
3political subdivisions, instrumentalities and authorities. When
4the term is used in a clause prescribing and imposing a penalty
5or imposing a fine or imprisonment, or both, the term shall
6include the members, as applied to an association, and the
7officers, as applied to a corporation.

8"Producer." A person who engages or continues within this
9Commonwealth in the business of severing natural gas for sale,
10profit or commercial use. The term does not include a person who
11severs natural gas from a storage field.

12"Producing site." A point of severance capable of producing
13natural gas in paying quantities.

14"Reporting period." A calendar month in which natural gas is
15severed.

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

17"Sever." To extract or otherwise remove natural gas from the
18soil or water of this Commonwealth.

19"Severance." The extraction or other removal of natural gas
20from the soil or water of this Commonwealth.

21"Severing." Extracting or otherwise removing natural gas
22from the soil or water of this Commonwealth.

23"Storage field." A natural formation or other site that is
24used to store natural gas that did not originate from and has
25been injected into the formation or site.

26"Stripper well." A producing site or a nonproducing site
27that is not capable of producing and does not produce more than
2860,000 cubic feet of natural gas per day.

29"Tax." The tax imposed under this chapter.

30"Tax rate adjustment index." The amount calculated under

1section 4403(b) (relating to imposition of tax) by which the
2rate of the tax imposed under section 4403(a) is adjusted
3annually.

4"Taxpayer." A person subject to the tax imposed by this
5chapter.

6"Unconventional Gas Well Fund." The fund established under
7the former section 2314 (relating to distribution of fee).

8"Unit." One thousand cubic feet of natural gas measured at
9the wellhead at a temperature of 60 degrees Fahrenheit and an
10absolute pressure of 14.73 pounds per square inch in accordance
11with American Gas Association Standards and according to Boyle's
12Law for the measurement of gas under varying pressures with
13deviations as follows:

14(1) The average absolute atmospheric pressure shall be
15assumed to be 14.4 pounds to the square inch, regardless of
16elevation or location of point of delivery above sea level or
17variations in atmospheric pressure from time to time.

18(2) The temperature of the gas passing the meters shall
19be determined by the continuous use of a recording
20thermometer installed to properly record the temperature of
21gas flowing through the meters. The arithmetic average of the
22temperature recorded each 24-hour day shall be used in
23computing gas volumes. If a recording thermometer is not
24installed, or is installed and not operating properly, an
25average flowing temperature of 60 degrees Fahrenheit shall be
26used in computing gas volume.

27(3) The specific gravity of the gas shall be determined
28annually by tests made by the use of an Edwards or Acme
29gravity balance, or at intervals as found necessary in
30practice. Specific gravity determinations shall be used in

1computing gas volumes.

2(4) The deviation of the natural gas from Boyle's Law
3shall be determined by annual tests or at other shorter
4intervals as found necessary in practice. The apparatus and
5method used in making the test shall be in accordance with
6recommendations of the National Bureau of Standards or Report
7No. 3 of the Gas Measurement Committee of the American Gas
8Association, or amendments thereto. The results of the tests
9shall be used in computing the volume of gas delivered under
10this chapter.

11"Wellhead meter." A meter placed at a producing or
12nonproducing site to measure the volume of natural gas severed
13for which a wellhead meter certification has been issued.

14"Wellhead meter certification." A report issued by an
15accredited laboratory certifying the accuracy of a wellhead
16meter.

17§ 4403. Imposition of tax.

18(a) Establishment.--Beginning January 1, 2015, there shall 
19be levied a natural gas severance tax on every producer. The tax 
20shall not be imposed on units severed from a stripper well 
21unless the following are true:

22(1) The stripper well is one of multiple producing sites
23or nonproducing sites, the combined volumes of gas produced
24by all of which sites are measured by a single wellhead meter
25as provided in section 4405.1 (relating to meters).

26(2) The combined volumes of gas produced by all the
27producing sites or nonproducing sites described in paragraph
28(1) is more than 60,000 cubic feet of natural gas per day.

29(b) Rate.--Subject to the provisions of section 4403.1 
30(relating to tax rate adjustment), the rate shall be 25¢ per
 

1unit severed at the wellhead.

2§ 4403.1. Tax rate adjustment.

3(a) Annual adjustment.--The tax rate shall be adjusted
4annually by the amount of the tax rate adjustment index as
5calculated under subsection (c), provided that the tax rate
6shall never be less than the base rate. The adjusted tax rate
7shall be effective for the next year.

8(b) Determination of adjustment.--On or before April 30 of
9each year following the effective date of this section, the
10secretary shall calculate and determine the amount of the tax
11rate adjustment index.

12(c) Calculation of adjustment.--The base rate adjustment
13index shall be determined as follows:

14(1) If 5% of the average of New York Mercantile Exchange 
15(NYMEX) Henry Hub settled price on the last trading day of 
16the month, as reported by the Wall Street Journal for the 
17previous 12-month period ending March 31, is less than the 
18base rate, the tax rate shall be the base rate.

19(2) If 5% of the average of the NYMEX Henry Hub settled 
20price on the last trading day of the month, as reported by 
21the Wall Street Journal for the previous 12-month period 
22ending March 31, is greater than the base rate, the tax rate 
23shall be 5% of the average of the NYMEX Henry Hub settled 
24price on the last trading day of the month, as reported in 
25the Wall Street Journal for the previous 12-month period 
26ending March 31.

27(d) Publication of adjustment.--The secretary shall forward
28the amount of the tax rate adjustment index and the adjusted tax
29rate, as determined under subsection (c), to the Legislative
30Reference Bureau for publication in the Pennsylvania Bulletin by

1May 1 of each year and shall simultaneously provide the
2information to producers by written notice. Failure of the
3amount of the tax rate adjustment index and the adjusted tax
4rate to be published or provided to producers as required by
5this subsection shall not affect the effectiveness of the
6adjusted tax rate under subsection (b).

7(e) Discontinuance of data.--If publication of the NYMEX
8Henry Hub average monthly gas price data is discontinued, the
9tax rate then in effect shall not be adjusted until a comparable
10method for determining the tax rate adjustment index is adopted
11by the General Assembly in legislation.

12(f) Other adjustments.--If the base data of the NYMEX Henry
13Hub average monthly gas price is substantially revised, the
14secretary shall, when determining the amount of the tax rate
15adjustment index under subsection (c), make appropriate changes
16to ensure that the tax rate adjustment index is reasonably
17consistent with the result which would have been attained had
18the substantial revision not been made. If the secretary is
19unable to make reasonable changes sufficient to ensure a
20consistent result, the tax rate then in effect shall not be
21adjusted until a comparable method for determining the tax rate
22adjustment index is adopted by the General Assembly in
23legislation.

24(g) Application of rate determinations.--The provisions of
25this section shall affect only the determination of the rate of
26the tax on the severance units of natural gas imposed in section
274403 (relating to imposition of tax). The provisions of this
28section are not intended, nor shall they be construed, to affect
29any other determination whatsoever, including, but not limited
30to, the determination of royalty due under mineral leases.

1Notwithstanding any other provision of law, the tax imposed by
2this chapter shall not reduce any royalty payments due under
3mineral leases and the producer may not recover any portion of
4the tax paid from the royalty owner through other means of
5deduction or reallocation, notwithstanding any provision in the
6lease, contract or agreement.

7§ 4404. Return and payment.

8(a) Requirement.--Every producer is required to file a
9return with the department, on a form prescribed by the
10department, which shall include all of the following:

11(1) The number of natural gas units severed by the
12producer for the reporting period.

13(2) The number of producing sites used by the producer
14for the severance of natural gas in each county and
15municipality.

16(3) The amount of tax due under section 4403 (relating
17to imposition of tax).

18(b) Filing.--The return required by subsection (a) shall be
19filed with the department within 15 days following the end of a
20reporting period.

21(c) Deadline.--The tax imposed under section 4403 is due on
22the day the return is required to be filed and becomes
23delinquent if not remitted to the department by that date.

24§ 4405. Natural gas severance tax registration.

25(a) Application.--Within three months of the effective date
26of this section, a producer that has severed natural gas prior
27to the effective date of this section shall apply to the
28department for a natural gas severance tax registration
29certificate. A producer that begins to sever natural gas after
30the effective date of this section shall apply to the department

1for a natural gas severance tax registration certificate before
2severing any natural gas.

3(a.1) Application fee.--The department may charge an
4application fee to cover the administrative costs associated
5with the application and registration process. If the department
6charges an application fee, the department shall not issue a
7registration certificate until the producer has paid the
8application fee.

9(a.2) Declaration.--The producer shall include in its 
10application a declaration of all producing sites and 
11nonproducing sites used by the producer for the severance of 
12natural gas. The declaration shall include copies of wellhead 
13meter certifications for each site. The producer is required to 
14update the declaration when the producer adds or removes a 
15producing site or nonproducing site in this Commonwealth or when 
16there is a change in the status of a producing site or 
17nonproducing site or when the producer uses a different 
18accredited laboratory to issue a wellhead meter certification. 
19The producer shall update the declaration within 30 days after a 
20calendar month in which a change to the declaration occurs.

21(b) Issuance.--Except as provided in subsection (c), after
22the receipt of an application, the department shall issue a
23registration certificate under subsection (a). The registration
24certificate shall be nonassignable. All registrants shall be
25required to renew their registration certificates and wellhead 
26meter certifications on a staggered renewal system established
27by the department. After the initial staggered renewal period, a 
28registration certificate or a wellhead meter certification
29issued shall be valid for a period of five years.

30(c) Refusal, suspension or revocation.--The department may
 

1refuse to issue, suspend or revoke a registration certificate if 
2the applicant or registrant has not filed required State tax 
3reports and paid State taxes not subject to a timely perfected 
4administrative or judicial appeal or subject to a duly 
5authorized deferred payment plan. The department shall notify 
6the applicant or registrant of any refusal, suspension or 
7revocation. The notice shall contain a statement that the 
8refusal, suspension or revocation may be made public. The notice 
9shall be made by first class mail. An applicant or registrant 
10aggrieved by the determination of the department may file an 
11appeal under the provisions for administrative appeals in the 
12act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code 
13of 1971. In the case of a suspension or revocation which is 
14appealed, the registration certificate shall remain valid 
15pending a final outcome of the appeals process. Notwithstanding 
16sections 274, 353(f), 408(b), 603, 702, 802, 904 and 1102 of the 
17Tax Reform Code of 1971 or any other provision of law, if no
18appeal is taken or if an appeal is taken and denied at the 
19conclusion of the appeal process the department may disclose, by 
20publication or otherwise, the identity of a producer and the 
21fact that the producer's registration certificate has been 
22refused, suspended or revoked under this subsection. Disclosure 
23may include the basis for refusal, suspension or revocation.

24(d) Violation.--A person severing natural gas in this
25Commonwealth without holding a valid registration certificate
26under subsection (b) shall be guilty of a summary offense and
27shall, upon conviction, be sentenced to pay a fine of not less
28than $300 nor more than $1,500. In the event the person
29convicted defaults in the payment of the fine, he shall be
30sentenced to imprisonment for not less than five days nor more

1than 30 days. The penalties imposed by this subsection shall be
2in addition to any other penalties imposed by this chapter. For
3purposes of this subsection, the severing of natural gas during
4any calendar day shall constitute a separate violation. The
5secretary may designate employees of the department to enforce
6the provisions of this subsection. The employees shall exhibit
7proof of and be within the scope of the designation when
8instituting proceedings as provided by the Pennsylvania Rules of
9Criminal Procedure.

10(e) Failure to obtain registration certificate.--Failure to
11obtain or hold a valid registration certificate does not relieve
12a person from liability for the tax imposed by this chapter.

13§ 4405.1. Meters.

14(a) General rule.--Except as provided in subsection (b), a
15producer shall provide for and maintain a discrete wellhead
16meter where natural gas is severed. A producer shall ensure that
17the meters are maintained according to industry standards. Any 
18wellhead meter installed after the effective date of this 
19section shall be a digital meter.

20(b) Exception.--If a producer has multiple producing sites
21or nonproducing sites, the combined volumes of gas produced by
22all of which sites are measured by a single wellhead meter, the
23producer shall not be required to provide for a discrete
24wellhead meter at any of those producing sites or nonproducing
25sites that is also a stripper well.

26§ 4406. Assessments.

27(a) Authorization and requirement.--The department is
28authorized and shall make the inquiries, determinations and
29assessments of the tax imposed under this chapter, including
30interest, additions and penalties imposed under this chapter.

1(b) Notice.--The notice of assessment and demand for payment
2shall be mailed to the taxpayer. The notice shall set forth the
3basis of the assessment. The department shall send the notice of
4assessment to the taxpayer at its registered address via
5certified mail if the assessment increases the taxpayer's tax
6liability by $300. Otherwise, the notice of assessment may be
7sent via regular mail.

8§ 4407. Time for assessment.

9(a) Requirement.--An assessment as provided under section
104406 (relating to assessments) shall be made within three years
11after the date when the return provided for by section 4404
12(relating to return and payment) is filed or the end of the year
13in which the tax liability arises, whichever shall occur last.
14For the purposes of this subsection and subsection (b), a return
15filed before the last day prescribed for the filing period shall
16be considered as filed on the last day.

17(b) Exception.--If the taxpayer underpays the correct amount
18of the tax due by 25% or more, the tax may be assessed within
19six years after the date the return was filed.

20(c) Intent to evade.--Where no return is filed or where the
21taxpayer files a false or fraudulent return with intent to evade
22the tax imposed by this chapter, the assessment may be made at
23any time.

24(d) Erroneous credit or refund.--Within three years of the
25granting of a refund or credit or within the period in which an
26assessment or reassessment may have been issued by the
27department for the taxable period for which the refund was
28granted, whichever period shall last occur, the department may
29issue an assessment to recover a refund or credit made or
30allowed erroneously.

1§ 4408. Extension of assessment period.

2Notwithstanding the provisions of this chapter, the 
3assessment period may be extended in the event a taxpayer has 
4provided written consent before the expiration of the period 
5provided in section 4407 (relating to time for assessment) for a 
6tax assessment. The amount of tax due may be assessed at any 
7time within the extended period. The period may be extended 
8further by subsequent written consents made before the 
9expiration of the extended period.

10§ 4409. Reassessments.

11A taxpayer against whom an assessment is made may petition 
12the department for a reassessment under Article XXVII of the act 
13of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 
141971.

15§ 4410. Interest.

16The department shall assess interest on any delinquent tax at
17the rate prescribed under section 806 of the act of April 9,
181929 (P.L.343, No.176), known as The Fiscal Code.

19§ 4411. Penalties.

20The department shall enforce the following penalties:

21(1) A penalty against a producer without a natural gas
22severance tax registration certificate. The penalty shall be
23$1 for every unit severed without a valid registration
24certificate. The department may assess this penalty
25separately from or in conjunction with any assessment of the
26natural gas severance tax.

27(2) A penalty against a producer for failure to timely
28file a return as required under section 4404 (relating to
29return and payment). The penalty shall be 5% of the tax
30liability to be reported on the return for each day beyond

1the due date that the return is not filed.

2(3) In addition to the penalty under paragraph (2), a
3penalty against the producer for a willful failure to timely
4file a return. The penalty shall be 200% of the tax liability
5required to be reported on the return.

6(4) A penalty against a producer for failure to timely
7pay the tax as required by section 4404(c). The penalty shall
8be 5% of the amount of tax due for each day beyond the
9payment date that the tax is not paid.

10§ 4412. Criminal acts.

11(a) Fraudulent return.--Any person with intent to defraud
12the Commonwealth, who willfully makes or causes to be made a
13return required by this chapter which is false, is guilty of a
14misdemeanor and shall, upon conviction, be sentenced to pay a
15fine of not more than $2,000 or to imprisonment for not more
16than three years, or both.

17(b) Other crimes.--

18(1) Except as otherwise provided by subsection (a), a 
19person is guilty of a misdemeanor and shall, upon conviction, 
20be sentenced to pay a fine of not more than $1,000 and costs 
21of prosecution or to imprisonment for not more than one year, 
22or both, for any of the following:

23(i) Willfully failing to timely remit the tax to the
24department.

25(ii) Willfully failing or neglecting to timely file
26a return or report required by this chapter.

27(iii) Refusing to timely pay a tax, penalty or
28interest imposed or provided for by this chapter.

29(iv) Willfully failing to preserve its books, papers
30and records as directed by the department.

1(v) Refusing to permit the department or its
2authorized agents to examine its books, records or
3papers.

4(vi) Knowingly making any incomplete, false or
5fraudulent return or report.

6(vii) Preventing or attempting to prevent the full
7disclosure of the amount of natural gas severance tax
8due.

9(viii) Providing any person with a false statement
10as to the payment of the tax imposed under this chapter
11with respect to any pertinent facts.

12(ix) Making, uttering or issuing a false or
13fraudulent statement.

14(2) The penalties imposed by this section shall be in
15addition to other penalties imposed by this chapter.

16§ 4413. Abatement of additions or penalties.

17Upon the filing of a petition for reassessment or a petition
18for refund by a taxpayer as provided under this chapter,
19additions or penalties imposed upon the taxpayer by this chapter
20may be waived or abated in whole or in part where the petitioner
21establishes that he acted in good faith, without negligence and
22with no intent to defraud.

23§ 4414. Bulk and auction sales.

24A person that sells or causes to be sold at auction, or that 
25sells or transfers in bulk, 51% or more of a stock of goods, 
26wares or merchandise of any kind, fixtures, machinery, 
27equipment, buildings or real estate involved in a business for 
28which the person holds a registration certificate or is required 
29to obtain a registration certificate under the provisions of 
30this chapter shall be subject to the provisions of section 1403
 

1of the act of April 9, 1929 (P.L.343, No.176), known as The 
2Fiscal Code.

3§ 4415. Collection upon failure to request reassessment, review
4or appeal.

5(a) Power of department.--The department may collect the tax
6imposed under this chapter:

7(1) If an assessment of the tax is not paid within 30
8days after notice to the taxpayer when no petition for
9reassessment has been filed.

10(2) Within 60 days of the reassessment, if no petition
11for review has been filed.

12(3) If no appeal has been made, within 30 days of:

13(i) the Board of Finance and Revenue's decision of a
14petition for review; or

15(ii) the expiration of the board's time for acting
16upon the petition.

17(4) In all cases of judicial sales, receiverships,
18assignments or bankruptcies.

19(b) Prohibition.--In a case for the collection of taxes 
20under subsection (a), the taxpayer against whom they were 
21assessed shall not be permitted to set up a ground of defense 
22that might have been determined by the department, the Board of 
23Finance and Revenue or the courts, provided that the defense of 
24failure of the department to mail notice of assessment or 
25reassessment to the taxpayer and the defense of payment of 
26assessment or reassessment may be raised in proceedings for 
27collection by a motion to stay the proceedings.

28§ 4416. Tax liens.

29(a) Lien imposed.--If any taxpayer neglects or refuses to
30pay the tax imposed under this chapter for which the taxpayer is

1liable under this chapter after demand, the amount, including
2interest, addition or penalty, together with additional costs
3that may accrue, shall be a lien in favor of the Commonwealth
4upon the real and personal property of the taxpayer but only
5after the same has been entered and docketed of record by the
6prothonotary of the county where the property is situated. The
7department may, at any time, transmit to the prothonotaries of
8the respective counties certified copies of all liens imposed by
9this section. It shall be the duty of the prothonotary receiving
10the lien to enter and docket the same of record to the office of
11the prothonotary. The lien shall be indexed as judgments are now
12indexed. No prothonotary shall require as a condition precedent
13to the entry of the lien the payment of costs incidental to its
14entry.

15(b) Priority of lien and effect on judicial sale.--Except
16for the costs of the sale and the writ upon which the sale was
17made and real estate taxes and municipal claims against the
18property, a lien imposed under this section shall have priority
19from the date of its recording and shall be fully paid and
20satisfied out of the proceeds of any judicial sale of property
21subject to the lien, before any other obligation, judgment,
22claim, lien or estate to which the property may subsequently
23become subject, but shall be subordinate to mortgages and other
24liens existing and duly recorded or entered of record prior to
25the recording of the lien.

26(c) No discharge by sale on junior lien.--In the case of a
27judicial sale of property subject to a lien imposed under this
28section, upon a lien or claim over which the lien imposed under
29this section has priority, the sale shall discharge the lien
30imposed under this section to the extent only that the proceeds

1are applied to its payment, and the lien shall continue in full
2force and effect as to the balance remaining unpaid. There shall
3be no inquisition or condemnation upon any judicial sale of real
4estate made by the Commonwealth under the provisions of this
5chapter. The lien shall continue as provided in the act of April
69, 1929 (P.L.343, No.176), known as The Fiscal Code, and a writ
7of execution may directly issue upon the lien without the
8issuance and prosecution to judgment of a writ of scire facias,
9provided that not less than ten days before issuance of any
10execution on the lien, notice of the filing and the effect of
11the lien shall be sent by registered mail to the taxpayer at its
12last known post office address, provided further that the lien
13shall have no effect upon any stock of goods, wares or
14merchandise regularly sold or leased in the ordinary course of
15business by the taxpayer against whom the lien has been entered,
16unless and until a writ of execution has been issued and a levy
17made upon the stock of goods, wares and merchandise.

18(d) Duty of prothonotary.--Any willful failure of any
19prothonotary to carry out any duty imposed upon him by this
20section shall be a misdemeanor. Upon conviction, he shall be
21sentenced to pay a fine of not more than $1,000 and costs of
22prosecution or to imprisonment for not more than one year, or
23both.

24(e) Priority.--Except as provided in this chapter, the
25distribution, voluntary or compulsory, in receivership,
26bankruptcy or otherwise of the property or estate of any person,
27all taxes imposed by this chapter which are due and unpaid and
28are not collectible under the provisions of section 225 of the
29act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
30of 1971, shall be paid from the first money available for

1distribution in priority to all other claims and liens, except
2as the laws of the United States may give priority to a claim to
3the Federal Government. A person charged with the administration
4or distribution of the property or estate who violates the
5provisions of this section shall be personally liable for the
6taxes imposed by this chapter which are accrued and unpaid and
7chargeable against the person whose property or estate is being
8administered or distributed.

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

15§ 4417. 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, provided that the other 
19state recognizes and enforces the tax imposed under this 
20chapter.

21§ 4418. Service.

22A producer is deemed to have appointed the Secretary of the 
23Commonwealth its agent for the acceptance of service of process 
24or notice in a proceeding for the enforcement of the civil 
25provisions of this chapter and service made upon the Secretary 
26of the Commonwealth as agent shall be of the same legal force 
27and validity as if the service had been personally made upon the 
28producer. Where service cannot be made upon the producer in the 
29manner provided by other laws of this Commonwealth relating to 
30service of process, service may be made upon the Secretary of
 

1the Commonwealth. In that case, a copy of the process or notice 
2shall be personally served upon any agent or representative of 
3the producer who may be found within this Commonwealth or, where 
4no agent or representative may be found, a copy of the process 
5or notice shall be sent via registered mail to the producer at 
6the last known address of its principal place of business, home 
7office or residence.

8§ 4419. Refunds.

9Under Article XXVII of the act of March 4, 1971 (P.L.6,
10No.2), known as the Tax Reform Code of 1971, the department
11shall refund all taxes, interest and penalties paid to the
12Commonwealth under the provisions of this chapter to which the
13Commonwealth is not rightfully entitled. The refunds shall be
14made to the person or the person's heirs, successors, assigns or
15other personal representatives who paid the tax, provided that
16no refund shall be made under this section regarding a payment
17made by reason of an assessment where a taxpayer has filed a
18petition for reassessment under section 2702 of the Tax Reform
19Code of 1971 to the extent the petition is adverse to the
20taxpayer by a decision which is no longer subject to further
21review or appeal. Nothing in this chapter shall prohibit a
22taxpayer who has filed a timely petition for reassessment from
23amending it to a petition for refund where the petitioner paid
24the tax assessed.

25§ 4420. Refund petition.

26(a) General rule.--Except as provided for in subsection (b),
27the refund or credit of tax, interest or penalty provided for by
28section 4419 (relating to refunds) shall be made only where the
29person who has paid the tax files a petition for refund with the
30department under Article XXVII of the act of March 4, 1971

1(P.L.6, No.2), known as the Tax Reform Code of 1971, within the
2time limits of section 3003.1 of the Tax Reform Code of 1971.

3(b) Natural gas severance tax.--A refund or credit of tax, 
4interest or penalty paid as a result of an assessment made by 
5the department under section 4405 (relating to natural gas 
6severance tax registration) shall be made only where the person 
7who has paid the tax files with the department a petition for a 
8refund with the department under Article XXVII of the Tax Reform 
9Code of 1971 within the time limits of section 3003.1 of the Tax 
10Reform Code of 1971. The filing of a petition for refund, under 
11the provisions of this subsection, shall not affect the 
12abatement of interest, additions or penalties to which the 
13person may be entitled by reason of his payment of the 
14assessment.

15§ 4421. Rules and regulations.

16The department is charged with the enforcement of the
17provisions of this chapter and is authorized and empowered to
18prescribe, adopt, promulgate and enforce rules and regulations
19not inconsistent with the provisions of this chapter relating to
20any matter or thing pertaining to the administration and
21enforcement of the provisions of this chapter and the collection
22of taxes, penalties and interest imposed by this chapter. The
23department may prescribe the extent, if any, to which any of the
24rules and regulations shall be applied without retroactive
25effect.

26§ 4422. Recordkeeping.

27(a) General rule.--Every person liable for any tax imposed
28by this chapter, or for the collection of the tax, shall keep
29records, including those enumerated in subsection (b), render
30statements, make returns and comply with the rules and

1regulations as the department may prescribe regarding matters
2pertinent to the person's business. Whenever it is necessary,
3the department may require a person, by notice served upon the
4person or by regulations, to make returns, render statements or
5keep records as the department deems sufficient to show whether
6or not a person is liable to pay tax under this chapter.

7(a.1) Records.--Records to be maintained are:

8(1) Wellhead meter charts for each reporting period and
9the meter calibration and maintenance records. If turbine
10meters are in use, the maintenance records will be made
11available to the department upon request.

12(2) Records, statements and other instruments furnished
13to a producer by a person to whom the producer delivers for
14sale, transport or delivery of natural gas.

15(3) Records, statements and other instruments as the
16department may prescribe by regulation.

17(b) Records of nonresidents.--A nonresident who does
18business in this Commonwealth as a producer shall keep adequate
19records of the business and of the tax due as a result. The
20records shall be retained within this Commonwealth unless
21retention outside this Commonwealth is authorized by the
22department. The department may require a taxpayer who desires to
23retain records outside this Commonwealth to assume reasonable
24out-of-State audit expenses.

25(c) Keeping of separate records.--A producer who is engaged
26in another business or businesses which do not involve the
27severing of natural gas taxable under this chapter shall keep
28separate books and records of the businesses so as to show the
29taxable severing of natural gas under this chapter separately
30from other business activities not taxable hereunder. If any

1person fails to keep separate books and records, the person
2shall be liable for a penalty equaling 100% of tax due under
3this chapter for the period where separate records were not
4maintained.

5§ 4423. Examinations.

6The department or any of its authorized agents are authorized
7to examine the books, papers and records of any taxpayer in
8order to verify the accuracy and completeness of any return made
9or, if no return was made, to ascertain and assess the tax
10imposed by this chapter. The department may require the
11preservation of all books, papers and records for any period
12deemed proper by it but not to exceed three years from the end
13of the calendar year to which the records relate. Every taxpayer
14is required to give to the department or its agent the means,
15facilities and opportunity for examinations and investigation
16under this section. The department is further authorized to
17examine any person, under oath, concerning the taxable severing
18of natural gas by any taxpayer or concerning any other matter
19relating to the enforcement or administration of this chapter,
20and to this end may compel the production of books, papers and
21records and the attendance of all persons whether as parties or
22witnesses whom it believes to have knowledge of relevant
23matters. The procedure for the hearings or examinations shall be
24the same as that provided by the act of April 9, 1929 (P.L.343,
25No. 176), known as The Fiscal Code.

26§ 4424. Unauthorized disclosure.

27Any information gained by the department as a result of any
28return, examination, investigation, hearing or verification
29required or authorized by this chapter shall be confidential
30except for official purposes and except in accordance with

1proper judicial order or as otherwise provided by law, and any
2person unlawfully divulging the information shall be guilty of a
3misdemeanor and shall, upon conviction, be sentenced to pay a
4fine of not more than $1,000 and costs of prosecution or to
5imprisonment for not more than one year, or both.

6§ 4425. Cooperation with other governments.

7Notwithstanding the provisions of section 4417 (relating to 
8tax suit reciprocity), the department may permit the 
9Commissioner of the Internal Revenue Service of the United 
10States, the proper officer of any state or the authorized 
11representative of either of them to inspect the tax returns of 
12any taxpayer, or may furnish to the commissioner or officer or 
13to either of their authorized representative an abstract of the 
14return of any taxpayer, or supply him with information 
15concerning any item contained in any return or disclosed by the 
16report of any examination or investigation of the return of any 
17taxpayer. This permission shall be granted only if the laws of 
18the United States or another state grant substantially similar 
19privileges to the proper officer of the Commonwealth charged 
20with the administration of this chapter.

21§ 4426. Bonds.

22(a) Taxpayer to file bond.--The department may require a 
23nonresident natural person or any foreign corporation, 
24association, fiduciary or other entity, not authorized to do 
25business within this Commonwealth or not having an established 
26place of business in this Commonwealth and subject to the tax 
27imposed by section 4403 (relating to imposition of tax), to file 
28a bond issued by a surety company authorized to do business in 
29this Commonwealth and approved by the Insurance Commissioner as 
30to solvency and responsibility, in amounts as it may fix, to
 

1secure the payment of any tax or penalties due or which may 
2become due from a nonresident natural person, corporation, 
3association, fiduciary or other entity whenever it deems it 
4necessary to protect the revenues obtained under this chapter. 
5The department may also require a bond of a person petitioning 
6the department for reassessment in the case of any assessment 
7over $500 or where, in its opinion, the ultimate collection is 
8in jeopardy. For a period of three years, the department may 
9require a bond of any person who has, on three or more occasions 
10within a 12-month period, either filed a return or made payment 
11to the department more than 30 days late. In the event the 
12department determines a taxpayer is required to file a bond, it 
13shall give notice to the taxpayer specifying the amount of the 
14bond required. The taxpayer shall file the bond within five days 
15after notice is given by the department unless, within five 
16days, the taxpayer shall request in writing a hearing before the 
17secretary or his representative. At the hearing, the necessity, 
18propriety and amount of the bond shall be determined by the 
19secretary or the secretary's representative. The determination 
20shall be final and the taxpayer shall comply with it within 15 
21days after notice is mailed to the taxpayer.

22(b) Securities in lieu of bond.--In lieu of the bond 
23required by this section securities approved by the department 
24or cash in a prescribed amount may be deposited. The securities 
25or cash shall be kept in the custody of the department. The 
26department may apply the securities or cash to the tax imposed 
27by this chapter and interest or penalties due without notice to 
28the depositor. The securities may be sold by the department to 
29pay the tax and/or interest or penalties due at public or 
30private sale upon five days' written notice to the depositor.

1(c) Failure to file bond.--The department may file a lien 
2under section 4416 (relating to tax liens) against any taxpayer 
3who fails to file a bond when required to do so under this 
4section. All funds received upon execution of the judgment on 
5the lien shall be refunded to the taxpayer with 3% interest, 
6should a final determination be made that it does not owe any 
7payment to the department.

8§ 4427. Unconventional Gas Well Fund.

9(a) Deposit.--One hundred-twenty million dollars of the 
10taxes imposed and collected under this chapter shall be 
11deposited into the Unconventional Gas Well Fund, to be 
12administered by the department, and are hereby appropriated for 
13the purpose set forth in this section.

14(b) Conservation districts.--In 2015, and each year
15thereafter, $7,500,000 from the fund shall be distributed to
16county conservation districts as follows:

17(1) One-half shall be distributed by dividing the amount
18equally among conservation districts for any use consistent
19with the act of May 15, 1945 (P.L.547, No.217), known as the
20Conservation District Law.

21(2) One-half shall be distributed by the State
22Conservation Commission in a manner consistent with the
23Conservation District Law and the provisions of the State
24Conservation Commission's Conservation District Fund
25Allocation Program-Statement of Policy under 25 Pa. Code Ch.
2683 Subch. B (relating to Conservation District Fund
27Allocation Program-Statement of Policy).

28(c) Additional distributions.--In fiscal year 2015-2016 and
29each year thereafter:

30(1) One million dollars shall be distributed to the

1Pennsylvania Fish and Boat Commission for costs relating to
2the review of applications for permits to drill
3unconventional gas wells.

4(2) Six million dollars to the Department of
5Environmental Protection for the administration of this act
6and the enforcement of acts relating to clean air and clean
7water.

8(3) Seven hundred fifty thousand dollars to the
9Pennsylvania Emergency Management Agency for emergency
10response planning, training and coordination related to
11natural gas production from unconventional gas wells.

12(4) Seven hundred fifty thousand dollars to the Office
13of State Fire Commissioner for the development, delivery and
14sustainment of training and grant programs for first
15responders and the acquisition of specialized equipment for
16response to emergencies relating to natural gas production
17from unconventional gas wells.

18(5) One million dollars to the Department of
19Transportation for rail freight assistance.

20(d) Report.--All agencies or organizations receiving funds
21under subsections (b) and (c) and shall submit a report by
22December 31, 2015, and December 31 of each year thereafter to
23the Secretary of the Budget and the Appropriations Committee of
24the Senate and the Appropriations Committee of the House of
25Representatives. The report shall include an itemization and
26explanation of the use of all funds received under subsections
27(b) and (c).

28(e) Distribution.--Following the distribution under
29subsections (b) and (c), revenue remaining in the fund is hereby
30appropriated to counties and municipalities for purposes

1authorized under subsection (h). Counties and municipalities are
2encouraged, where appropriate, to jointly fund projects that
3cross jurisdictional lines. The funds shall be appropriated by
4July 1 of each year as follows:

5(1) Thirty-six percent shall be distributed to counties
6in which spud unconventional gas wells are located. The
7amount for each county to which funds will be distributed
8shall be determined using a formula that divides the number
9of spud unconventional gas wells in the county by the number
10of spud unconventional gas wells in this Commonwealth and
11multiplies the resulting percentage by the amount available
12for distribution under this paragraph.

13(2) Thirty-seven percent shall be distributed to
14municipalities in which spud unconventional gas wells are
15located. The amount for each municipality to which funds will
16be distributed shall be determined using a formula that
17divides the number of spud unconventional gas wells in the
18municipality by the number of spud unconventional gas wells
19in this Commonwealth and multiplies the resulting percentage
20by the amount available for distribution under this
21paragraph.

22(3) Twenty-seven percent shall be distributed to
23municipalities located in a county in which spud
24unconventional gas wells are located. The amount available
25for distribution in each county shall be determined by
26dividing the number of spud unconventional gas wells in the
27county by the number of spud unconventional gas wells in this
28Commonwealth and multiplying the resulting percentage by the
29amount available for distribution under this paragraph. The
30resulting amount available for distribution in each county in

1which spud unconventional gas wells are located shall be
2distributed to each municipality in the county to which funds
3will be distributed as follows:

4(i) Fifty percent of the amount available under this
5paragraph shall be distributed to municipalities in which
6spud unconventional gas wells are located and to
7municipalities that are either contiguous with a
8municipality in which spud unconventional gas wells are
9located or are located within five linear miles of a spud
10unconventional gas well. The distribution shall be made
11as follows:

12(A) One-half shall be distributed to each
13municipality using a formula that divides the
14population of the eligible municipality within the
15county by the total population of all eligible
16municipalities within the county and multiplies the
17resulting percentage by the amount allocated to the
18county under this subparagraph.

19(B) One-half shall be distributed to each
20municipality using a formula that divides the highway
21mileage of the eligible municipality within the
22county by the total highway mileage of all eligible
23municipalities within the county and multiplies the
24resulting percentage by the amount allocated to the
25county under this subparagraph.

26(ii) Fifty percent of the amount available under
27this paragraph shall be distributed to each municipality
28in the county regardless of whether an unconventional gas
29well is located in the municipality as follows:

30(A) One-half shall be distributed to each

1municipality using a formula that divides the
2population of the municipality within the county by
3the total population of the county and multiplies the
4resulting percentage by the amount allocated to the
5county under this subparagraph.

6(B) One-half shall be distributed to each
7municipality using a formula that divides the highway
8mileage of the municipality within the county by the
9total highway mileage of the county and multiplies
10the resulting percentage by the amount allocated to
11the county under this subparagraph.

12(f) Restriction.--The amount allocated to each municipality 
13under subsection (e) shall not exceed the lesser of $500,000 or 
1450% of the total budget for the prior fiscal year beginning with 
15the 2014 budget year and continuing every year thereafter, 
16adjusted to reflect any upward changes in the Consumer Price 
17Index for all Urban Consumers for the Pennsylvania, New Jersey, 
18Delaware and Maryland area in the preceding 12 months. Any 
19remaining money shall be retained by the department and
20deposited in the Housing Affordability and Rehabilitation 
21Enhancement Fund for the uses specified under subsection (g).

22(g) Housing Affordability and Rehabilitation Enhancement
23Fund.--

24(1) Five million dollars from the fund shall be
25distributed to the Housing Affordability and Rehabilitation
26Enhancement Fund under the act of November 23, 2010
27(P.L.1035, No.105), entitled "An act amending the act of
28December 3, 1959 (P.L.1688, No.621), entitled, as amended,
29'An act to promote the health, safety and welfare of the
30people of the Commonwealth by broadening the market for

1housing for persons and families of low and moderate income
2and alleviating shortages thereof, and by assisting in the
3provision of housing for elderly persons through the creation
4of the Pennsylvania Housing Finance Agency as a public
5corporation and government instrumentality; providing for the
6organization, membership and administration of the agency,
7prescribing its general powers and duties and the manner in
8which its funds are kept and audited, empowering the agency
9to make housing loans to qualified mortgagors upon the
10security of insured and uninsured mortgages, defining
11qualified mortgagors and providing for priorities among
12tenants in certain instances, prescribing interest rates and
13other terms of housing loans, permitting the agency to
14acquire real or personal property, permitting the agency to
15make agreements with financial institutions and Federal
16agencies, providing for the purchase by persons of low and
17moderate income of housing units, and approving the sale of
18housing units, permitting the agency to sell housing loans,
19providing for the promulgation of regulations and forms by
20the agency, prescribing penalties for furnishing false
21information, empowering the agency to borrow money upon its
22own credit by the issuance and sale of bonds and notes and by
23giving security therefor, permitting the refunding,
24redemption and purchase of such obligations by the agency,
25prescribing remedies of holders of such bonds and notes,
26exempting bonds and notes of the agency, the income
27therefrom, and the income and revenues of the agency from
28taxation, except transfer, death and gift taxes; making such
29bonds and notes legal investments for certain purposes; and
30indicating how the act shall become effective,' providing for

1the Pennsylvania Housing Affordability and Rehabilitation
2Enhancement Program; and establishing the Housing
3Affordability and Rehabilitation Enhancement Fund."

4(2) Funds under paragraph (1) shall be used for the
5following purposes:

6(i) To provide support to projects in a county in
7which producing unconventional gas wells are located that
8increase availability of quality, safe, affordable
9housing for low-income and moderate-income individuals or
10families, persons with disabilities or elderly persons.

11(ii) To provide rental assistance in a county in
12which producing unconventional gas wells are located to
13persons or families whose household income does not
14exceed the area median income.

15(3) No less than 50% of the funds available under this
16subsection shall be used in fifth, sixth, seventh and eighth
17class counties.

18(h) Use of funds.--A county or municipality receiving funds
19under subsection (e) shall use the funds received only for the
20following purposes associated with natural gas production from
21unconventional gas wells within the county or municipality:

22(1) Construction, reconstruction, maintenance and repair
23of roadways, bridges and public infrastructure.

24(2) Water, storm water and sewer systems, including
25construction, reconstruction, maintenance and repair.

26(3) Emergency preparedness and public safety, including
27law enforcement and fire services, hazardous material
28response, 911, equipment acquisition and other services.

29(4) Environmental programs, including trails, parks and
30recreation, open space, flood plain management, conservation

1districts and agricultural preservation.

2(5) Preservation and reclamation of surface and
3subsurface waters and water supplies.

4(6) Tax reductions, including homestead exclusions.

5(7) Projects to increase the availability of safe and
6affordable housing to residents.

7(8) Records management, geographic information systems
8and information technology.

9(9) The delivery of social services.

10(10) Judicial services.

11(11) For deposit into the county or municipality's
12capital reserve fund if the funds are used solely for a
13purpose set forth in this subsection.

14(12) Career and technical centers for training of
15workers in the oil and gas industry.

16(13) Local or regional planning initiatives under the
17act of July 31, 1968 (P.L.805, No.247), known as the
18Pennsylvania Municipalities Planning Code.

19(i) Reporting.--

20(1) The department shall submit an annual report on all
21funds in the fund. The report shall include a detailed
22listing of all deposits and expenditures of the fund and be
23submitted to the chairman and the minority chairman of the
24Appropriations Committee of the Senate, the chairman and the
25minority chairman of the Environmental Resources and Energy
26Committee of the Senate, the chairman and the minority
27chairman of the Appropriations Committee of the House of
28Representatives and the chairman and the minority chairman of
29the Environmental Resources and Energy Committee of the House
30of Representatives. The report shall be submitted by

1September 30, 2015, and by September 30 of each year
2thereafter.

3(2) All counties and municipalities receiving funds from
4the fund under this section shall submit information to the
5department on a form prepared by the department that sets
6forth the amount and use of the funds received in the prior
7calendar year. The form shall set forth that the funds
8received were committed to a specific project or use as
9authorized in this section. The reports shall be published
10annually on the county or municipality's publicly accessible
11Internet website.

12§ 4428. Marcellus Legacy Fund.

13(a) Deposit and distribution.--Eighty million dollars of the
14taxes imposed and collected under this chapter shall be
15deposited into the Marcellus Legacy Fund and appropriated by
16July 1 of each year as follows:

17(1) Twenty percent to the Commonwealth Financing
18Authority for grants to eligible applicants for the
19following:

20(i) Acid mines: damage, abatement and cleanup and
21mine reclamation, with priority given to projects which
22recycle and treat water for use in drilling operations.

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

24(iii) Complying with the act of January 24, 1966
25(1965 P.L.1535, No.537), known as the Pennsylvania Sewage
26Facilities Act.

27(iv) Planning acquisition, development,
28rehabilitation and repair of greenways, recreational
29trails, open space, parks and beautification projects.

30(v) Programs to establish baseline water quality

1data on private water supplies.

2(vi) Watershed programs and related projects.

3(vii) Up to 25% of funds distributed to the
4Commonwealth Financing Authority under this paragraph may
5be utilized for flood control projects.

6(2) Ten percent to the Environmental Stewardship Fund.

7(3) Twenty-five percent to the Highway Bridge
8Improvement Restricted Account in the Motor License Fund to 
9counties to be distributed to fund the cost of the 
10replacement or repair of locally owned at-risk deteriorated 
11bridges. Funds shall be distributed to counties 
12proportionately based on the population of the county as 
13follows:

14(i) In each county, the distribution shall be
15according to the following formula:

16(A) Divide:

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

18(II) the total population of the
19Commonwealth;

20(B) Express the quotient under clause (A) as a
21percentage.

22(C) Multiply:

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

24(II) the amount of money to be distributed
25under this paragraph.

26(ii) Each county shall receive a minimum of $40,000
27to the extent funds are available.

28(iii) The Department of Transportation shall release
29money under this paragraph upon approval of a plan
30submitted by a county or municipality to repair an at-

1risk deteriorated bridge. The plan must include funding
2for replacement or repair.

3(iv) A county of the first or second class may
4submit a plan to use its funds under this paragraph for
5at-risk deteriorated bridges owned by a public
6transportation authority.

7(4) Twenty-five percent for water and sewer projects.
8Fifty percent of the amount distributed under this paragraph
9shall be transmitted to the Pennsylvania Infrastructure
10Investment Authority to be used in accordance with the act of
11March 1, 1988 (P.L.82, No.16), known as the Pennsylvania
12Infrastructure Investment Authority Act. Fifty percent of the
13amount distributed under this paragraph shall be distributed
14to the H2O PA program to be used by the Commonwealth
15Financing Authority in accordance with section 301 of the act
16of July 9, 2008 (P.L.908, No.63), known as the H2O PA Act.
17The prohibition on grants for projects located in a city or
18county of the first or second class under section 301 of the
19H2O PA Act shall not apply to funds distributed to the H2O PA
20Program under this paragraph.

21(5) Fifteen percent for the planning, acquisition,
22development, rehabilitation and repair of greenways,
23recreational trails, open space, natural areas, community
24conservation and beautification projects, community and
25heritage parks and water resource management. Funds may be
26used to acquire lands for recreational or conservation
27purposes and land damaged or prone to drainage by storms or
28flooding. Funds shall be distributed to counties
29proportionately based on the population of the county as
30follows:

1(i) In each county, the distribution shall be
2according to the following formula:

3(A) Divide:

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

5(II) the total population of the
6Commonwealth.

7(B) Express the quotient under clause (A) as a
8percentage.

9(C) Multiply:

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

11(II) the amount of funds available under
12this paragraph.

13(ii) Each county shall receive a minimum of $25,000
14to the extent funds are available.

15(6) Five percent to the Hazardous Sites Cleanup Fund.

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

17(1) Funds distributed under subsection (a) shall not be
18used for the purpose of public relations, outreach not
19directly related to project implementation, communications,
20lobbying or litigation.

21(2) Funds distributed under subsection (a) may not be
22used by an authorized organization as defined in 27 Pa.C.S. §
236103 (relating to definitions) for land acquisition unless
24the authorized organization has obtained the written consent
25of the county and municipality in which the land is situated.

26(c) Coordination.--The Department of Environmental 
27Protection and the Department of Conservation and Natural
28Resources shall review applications for funding as requested by 
29the Commonwealth Financing Authority and provide recommendations 
30on priority of projects and project approval.

1§ 4429. Additional revenue.

2All taxes imposed and collected under this chapter in excess 
3of the amounts deposited in the Unconventional Gas Well Fund 
4under section 4427 (relating to Unconventional Gas Well Fund) 
5and the Marcellus Legacy Fund under section 4428 (relating to 
6Marcellus Legacy Fund) shall be deposited in the General Fund.

7Section 8. This act shall take effect immediately.