THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY HANNA, DERMODY, DeLUCA, BRENNAN, BRIGGS, BROWNLEE, CALTAGIRONE, CARROLL, D. COSTA, DAVIS, FABRIZIO, GEORGE, GOODMAN, HALUSKA, HARKINS, HORNAMAN, JOSEPHS, KIRKLAND, MARKOSEK, MIRABITO, MULLERY, MUNDY, MURPHY, M. O'BRIEN, SANTARSIERO, STABACK, STURLA, WATERS, YOUNGBLOOD AND KULA, MAY 31, 2012

REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, MAY 31, 2012  

AN ACT

Amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated

Statutes, in unconventional gas well fee, further providing

for definitions, for fee, for administration, for well

information, for duties of the Department of Environmental

Protection and the Pennsylvania Public Utility Commission,

for enforcement, for enforcement orders, for administrative

penalties, for recordkeeping, for examinations, for

distribution of fee and for Statewide initiatives; providing

for duties of the Department of Revenue; and making editorial

changes.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definitions of "commission" and "number of

spud unconventional gas wells" in section 2301 of Title 58 of 

the Pennsylvania Consolidated Statutes, added February 14, 2012

(P.L.87, No.13), are amended and the section is amended by

adding a definition to read:

§ 2301.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

["Commission."  The Pennsylvania Public Utility Commission.]

* * *

"Number of spud unconventional gas wells."  The most recent

numerical count of spud unconventional gas wells on the

inventory maintained and provided to the [commission] Department

of Revenue by the department as of the last day of each month.

* * *

"Price adjustment factor."  One of a range of numerical

values used to compute the adjusted fee under section 2302(c)

(relating to unconventional gas well fee).

* * *

Section 2.  Sections 2302, 2303, 2304, 2305(b) and (c),

2307(a), (b) and (d), 2308(a) and (c), 2309, 2310(a), 2312,

2313, 2314(a), (c.1), (d), (e), (h) and (i), 2315(a.1)

introductory paragraph and 3211(e.1)(6) of Title 58, added

February 14, 2012 (P.L.87, No.13), are amended to read:

§ 2302.  Unconventional gas well fee.

[(a)  General rule.--The governing body of a county that has

a spud unconventional gas well located within its borders may

elect whether to impose a fee on unconventional gas wells that

have been spud in the county.

(a.1)  Passage of ordinance.--Within 60 days after the

effective date of this section, the governing body of a county

under subsection (a) may adopt an ordinance to impose an

unconventional gas well fee. The governing body of a county must

notify the commission and give public notice of its intent to

adopt the ordinance.

(a.2)  County ordinance.--The ordinance imposing a fee under

subsection (a.1) shall be clear and in language that is readily

understandable by a layperson and shall be in the following

form:

The county of (insert name) hereby imposes an

unconventional gas well fee on each unconventional gas

well spud in this county.

(a.3)  Prohibition.--

(1)  A county subject to this section, in which the

governing body does not adopt an ordinance imposing an

unconventional gas well fee within 60 days of the effective

date of this section, shall be prohibited from receiving

funds under sections 2314(d)(1) (relating to distribution of

fee) and 2315(a.1)(3) and (5) (relating to Statewide

initiatives).

(2)  The prohibition on receiving funds shall remain in

effect until the county adopts an ordinance imposing an

unconventional gas well fee. The prohibition shall expire and

funds may be received for the calendar year following the

adoption of an ordinance imposing the fee under this section.

(a.4)  Alternate imposition.--

(1)  If the governing body of a county does not impose an

unconventional gas well fee under subsection (a), the

municipalities in the county may compel the imposition of an

unconventional gas well fee on each unconventional gas well

spud in the county by adopting resolutions under paragraphs

(2), (3) and (4).

(2)  Following 60 days but not more than 120 days after

the effective date of this section, if the governing bodies

of at least half of the municipalities located in a county or

municipalities representing at least 50% of the population of

the county adopt resolutions to impose unconventional gas

well fees on all unconventional gas wells spud in the county,

the fee shall take effect. If a resolution is adopted, a copy

of the resolution shall be transmitted to the governing body

of the county and the commission. The governing body of a

municipality that is located in more than one county shall

transmit a copy of a resolution adopted under this paragraph

to the governing body of each county in which the

municipality is located.

(3)  The transmittal of resolutions by governing bodies

under paragraph (2) shall constitute an imposition of the fee

in that county. The population of a municipality that is

located in more than one county shall be determined

separately for each county on the basis of the municipality's

population within each county.

(4)  Resolutions adopted under this subsection must be

framed in the following form:

The (insert name) in the county of (insert name)

hereby resolves to have the county impose an

unconventional gas well fee on each unconventional

gas well spud in the county.

(5)  A municipality which is located in a county that

does not adopt an ordinance imposing an unconventional gas

well fee and which does not adopt a resolution under

paragraphs (2), (3) and (4) shall be prohibited from

receiving funds under section 2314(d).

(b)  Components.--The fee adopted under subsection (a), (a.1)

or (a.4) is imposed on every producer and shall apply to

unconventional gas wells spud in this Commonwealth regardless of

when spudding occurred. Unconventional gas wells spud before

the fee is imposed shall be considered to be spud in the

calendar year prior to the imposition of the fee for purposes of

determining the fee under this subsection. Prior to adjustment

under subsection (c), the fee for each unconventional gas well

shall be determined as follows:

(1)  Year one:

(i)  If the average annual price of natural gas is

not more than $2.25, the fee shall be $40,000 for the

calendar year in which the unconventional gas well is

spud.

(ii)  If the average annual price of natural gas is

greater than $2.25 and less than $3.00, the fee shall be

$45,000 for the calendar year in which the unconventional

gas well is spud.

(iii)  If the average annual price of natural gas is

greater than $2.99 and less than $5.00, the fee shall be

$50,000 for the calendar year in which the unconventional

gas well is spud.

(iv)  If the average annual price of natural gas is

greater than $4.99 and less than $6.00, the fee shall be

$55,000 for the calendar year in which the unconventional

gas well is spud.

(v)  If the average annual price of natural gas is

more than $5.99, the fee shall be $60,000 for the

calendar year in which the unconventional gas well is

spud.

(2)  Year two:

(i)  If the average annual price of natural gas is

not more than $2.25, the fee shall be $30,000 for the

calendar year following the year in which the

unconventional gas well is spud.

(ii)  If the average annual price of natural gas is

greater than $2.25 and less than $3.00, the fee shall be

$35,000 for the calendar year following the year in which

the unconventional gas well is spud.

(iii)  If the average annual price of natural gas is

greater than $2.99 and less than $5.00, the fee shall be

$40,000 for the calendar year following the year in which

the unconventional gas well is spud.

(iv)  If the average annual price of natural gas is

greater than $4.99 and less than $6.00, the fee shall be

$45,000 for the calendar year following the year in which

the unconventional gas well is spud.

(v)  If the average annual price of natural gas is

more than $5.99, the fee shall be $55,000 for the

calendar year following the year in which the

unconventional gas well is spud.

(3)  Year three:

(i)  If the average annual price of natural gas is

not more than $2.25, the fee shall be $25,000 for the

second calendar year following the year in which the

unconventional gas well is spud.

(ii)  If the average annual price of natural gas is

greater than $2.25 and less than $3.00, the fee shall be

$30,000 for the second calendar year following the year

in which the unconventional gas well is spud.

(iii)  If the average annual price of natural gas is

greater than $2.99 and less than $5.00, the fee shall be

$30,000 for the second calendar year following the year

in which the unconventional gas well is spud.

(iv)  If the average annual price of natural gas is

greater than $4.99 and less than $6.00, the fee shall be

$40,000 for the second calendar year following the year

in which the unconventional gas well is spud.

(v)  If the average annual price of natural gas is

more than $5.99, the fee shall be $50,000 for the second

calendar year following the year in which the

unconventional gas well is spud.

(4)  Years 4, 5, 6, 7, 8, 9 and 10:

(i)  If the average annual price of natural gas is

not more than $2.25, the fee shall be $10,000 for the

third through ninth calendar years following the year in

which the unconventional gas well is spud.

(ii)  If the average annual price of natural gas is

greater than $2.25 and less than $3.00, the fee shall be

$15,000 for the third through ninth calendar years

following the year in which the unconventional gas well

is spud.

(iii)  If the average annual price of natural gas is

greater than $2.99, the fee shall be $20,000 for the

third through ninth calendar years following the year in

which the unconventional gas well is spud.

(5)  Years 11, 12, 13, 14 and 15:

(i)  If the average annual price of natural gas is

less than $3.00, the fee shall be $5,000 for the 10th

through 14th calendar years following the year in which

the unconventional well is spud.

(ii)  If the average annual price of natural gas is

greater than $2.99, the fee shall be $10,000 for the 10th

through 14th calendar years following the year in which

the unconventional well is spud.

(6)  For purposes of this subsection, the fee shall be

determined using the average annual price of natural gas for

the calendar year in which the fee is imposed.]

(a)  Imposition.--Beginning January 1, 2011, there shall be

imposed a shale impact fee on each unconventional well that has

been spud in this Commonwealth. The fee under this section shall

not apply to a stripper well.

(b)  Annual base fees.--Prior to the adjustment under

subsection (c), the fee shall consist of an annual base fee for

each unconventional well as follows:

(1)  For the first year of production, the fee shall be

$75,000.

(2)  For the second year of production, the fee shall be

$70,000.

(3)  For the third year of production, the fee shall be

$65,000.

(4)  For the fourth year of production, the fee shall be

$60,000.

(5)  For the fifth year of production, the fee shall be

$55,000.

(6)  For the sixth year of production, the fee shall be

$50,000.

(7)  For the seventh year of production, the fee shall be

$45,000.

(8)  For the eighth year of production, the fee shall be

$40,000.

(9)  For the ninth year of production, the fee shall be

$35,000.

(10)  For the tenth year of production, the fee shall be

$30,000.

(11)  For the eleventh year of production, the fee shall

be $25,000.

(12)  For the twelfth year of production, the fee shall

be $20,000.

(13)  For the thirteenth year of production, the fee

shall be $15,000.

(14)  For the fourteenth year of production and each year

thereafter, the fee shall be $10,000.

(b.1)  Nonproducing unconventional gas wells.--If a spud

unconventional gas well begins paying the fee imposed under this

section and is subsequently capped or does not produce natural

gas in quantities greater than that of a stripper well within

two years after paying the initial fee, then the fee shall be

suspended:

(1)  The fee shall be reinstated for a calendar year

during which the unconventional gas well produces natural gas

in quantities greater than that of a stripper well.

(2)  Each calendar year during which a fee is suspended

shall not be considered a calendar year following spud for

purposes of determining the amount of the fee under

subsection (b).

[(c)  Annual adjustment.--Beginning January 1, 2013, the

commission shall annually adjust the fee amounts under

subsection (b) to reflect any upward changes in the Consumer

Price Index for all Urban Consumers for the Pennsylvania, New

Jersey, Delaware and Maryland area in the preceding 12 months

and shall immediately submit the adjusted fee amount to the

Legislative Reference Bureau for publication as a notice in the

Pennsylvania Bulletin. The fee shall be adjusted by multiplying

the annual fee amount by any percentage increase to the Consumer

Price Index for all Urban Consumers for the Pennsylvania, New

Jersey, Delaware and Maryland area, rounded to the nearest $100.

The resultant product shall be added to the fee amount, and the

sum shall become the new annual fee amount under subsection (b).

The annual adjustment under this subsection shall take effect if

the total number of unconventional gas wells spud in the

adjustment year exceeds the total number of unconventional gas

wells spud in the prior year.]

(c)  Annual adjustment.--

(1)  The fee shall be adjusted by multiplying the base

fee amount times the price adjustment factor rounded to the

nearest $100. The price adjustment factor shall be determined

as follows:

(i)  If the average annual price of natural gas is

less than $5.01, the price adjustment factor shall be

1.0.

(ii)  If the average annual price of natural gas is

$5.01 to $6, the price adjustment factor shall be 1.25.

(iii)  If the average annual price of natural gas is

$6.01 to $7, the price adjustment factor shall be 1.75.

(iv)  If the average annual price of natural gas is

$7.01 to $8, the price adjustment factor shall be 2.25.

(v)  If the average annual price of natural gas is

greater than $8, the price adjustment factor shall be

2.75.

(2)  The fee for a vertical gas well shall not be subject

to adjustment under paragraph (1) and shall be computed as

follows:

(i)  The fee for a vertical gas well capable of

producing more than 180,000 cubic feet of gas per day

during a calendar month shall be one-half of the amounts

under subsection (b).

(ii)  The fee for a vertical gas well capable of

producing more than 90,000 but less than 180,000 cubic

feet of gas per day during a calendar month shall be one-

fourth of the amounts under subsection (b).

(c.1)  Components.--The fee adopted under subsection (b) is

imposed on every producer and shall apply to unconventional gas

wells spud in this Commonwealth regardless of when spudding

occurred. Unconventional gas wells spud before the fee is

imposed shall be considered to be spud in 2011 for purposes of

determining the fee under this subsection.

(d)  Restimulated unconventional gas wells.--

(1)  An unconventional gas well which after restimulation

qualifies as a stripper well shall not be subject to this

subsection.

(2)  The year in which the restimulation occurs shall be

considered the first year of spudding for purposes of

imposing the fee under this section if:

(i)  a producer restimulates a previously stimulated

unconventional gas well following the tenth year after

being spud by:

(A)  hydraulic fracture treatments;

(B)  using additional multilateral well bores;

(C)  drilling deeper into an unconventional

formation; or

(D)  other techniques to expose more of the

formation to the well bore; and

(ii)  the restimulation results in a substantial

increase in production.

(3)  As used in this subsection, the term "substantial

increase in production" means an increase in production

amounting to more than 90,000 cubic feet of gas per day

during a calendar month.

(e)  Cessation.--Payments of the fee shall cease upon

certification to the department by the producer that the

unconventional gas well has ceased production and has been

plugged according to the regulations established by the

department.

(f)  Vertical unconventional gas well fee.--The fee for a

vertical unconventional gas well shall be 20% of the fee

established in subsections (b) and (c)[, except that the fee

under subsection (b)(5) shall not apply].

§ 2303.  Administration.

[(a)  Fee due date.--

(1)  Except as provided under paragraph (2), the fee

imposed under this chapter shall be due by April 1, 2013, and

each April 1 thereafter. The fee shall become delinquent if

not remitted to the commission on the reporting date.

(2)  For wells spud before January 1, 2012, a fee imposed

under this chapter shall be due by September 1, 2012.

(b)  Report.--By September 1, 2012, and April 1 of each year

thereafter, each producer shall submit payment of the fee to the

commission and a report on a form prescribed by the commission

for the previous calendar year. The report shall include the

following:

(1)  The number of spud unconventional gas wells of a

producer in each municipality within each county that has

imposed a fee under this chapter.

(2)  The date that each unconventional gas well

identified under paragraph (1) was spud or ceased the

production of natural gas.

(c)  Costs of commission.--

(1)  The commission may impose an annual administrative

charge not to exceed $50 per spud unconventional gas well on

each producer, to be paid with the submission under

subsection (a), to pay for the actual costs of the commission

to administer and enforce this chapter.

(2)  Within 30 days of the effective date of this

subsection, the commission shall estimate its expenditures

through June 30, 2012, that will be directly attributable to

the administration and enforcement of this chapter. The

commission shall subtract the amount of the administrative

charges imposed under paragraph (1) and assess any remaining

balance on all producers subject to the administrative charge

in proportion to the number of wells owned by each producer.

Producers shall pay the assessments within 30 days of receipt

of notice from the commission. The amount of the assessment

may be challenged by a producer consistent with 66 Pa.C.S. §

510(c), (d) and (e) (relating to assessment for regulatory

expenses upon public utilities). Any collections that exceed

any of the following shall be used to offset the

administrative charges or other funds received for fiscal

year 2012-2013:

(i)  The budget amount approved by the General

Assembly and the Governor for administration and

enforcement of this chapter and Chapter 33 (relating to

local ordinances relating to oil and gas operations).

(ii)  The actual expenditures directly attributable

to the administration and enforcement of this chapter and

Chapter 33.

(3)  By June 30, 2012, and each June 30 thereafter, the

commission shall estimate its expenditures for the next

fiscal year that will be directly attributable to the

administration and enforcement of this chapter. After

subtracting any annual administrative charges imposed under

paragraph (1), amounts received by the commission under

section 2314(c.1)(2) (relating to distribution of fee) and

any amounts collected during the prior fiscal year that

exceeded actual expenditures directly attributable to the

administration and enforcement of this chapter, the

commission shall assess the remaining balance on all

producers subject to the unconventional gas well fee in

proportion to the number of wells owned by each producer.

Producers shall pay the assessments within 30 days of the

receipt of notice from the commission. The amount of the

assessment may be challenged by a producer consistent with 66

Pa.C.S. § 510(c), (d) and (e). Any collections that exceed

any of the following shall be used to offset administrative

charges or assessments for the next fiscal year:

(i)  The budget amount approved by the General

Assembly and the Governor for administration and

enforcement of this chapter and Chapter 33.

(ii)  Actual expenditures directly attributable to

the administration and enforcement of this chapter and

Chapter 33.]

(a)  Calculation.--On or before January 31 of each year, the

Department of Revenue shall calculate and determine the average

annual price of natural gas for the previous calendar year.

(b)  Notice.--Notice of the average annual price and the

annual fee schedule per well shall be provided to producers

operating unconventional wells and shall be published on the

Department of Revenue's Internet website.

(c)  Method.--If publication of the New York Mercantile

Exchange (NYMEX) Henry Hub settled price is discontinued, the

average annual price of natural gas then in effect shall not be

adjusted until a comparable method to determine the average

annual price of natural gas is adopted by Department of Revenue

rule. If the base data of the NYMEX Henry Hub settled price is

substantially revised, the Department of Revenue shall make

appropriate changes to ensure that the average annual price of

natural gas is reasonably consistent with the result that would

have been attained had the substantial revision not been made.

(d)  Report.--By March 1, 2013, and each March 1 thereafter,

each producer shall submit a production report to the Department

of Revenue on a form prescribed by the Department of Revenue for

the previous calendar year. The report shall include the

following:

(1)  Annual units of production severed by the producer

for each unconventional well for the reporting period.

(2)  The number of producing unconventional wells of a

producer in each county and municipality.

(e)  Fee for 2011.--For calendar year 2011, the fee due shall

be paid as follows:

(1)  Fifty percent of the fee shall be paid by September

1, 2012.

(2)  Fifty percent of the fee shall be paid by November

1, 2012.

(f)  Fee due date.--Except as provided under subsection (e),

the fee shall be due on March 1 and each year thereafter. The

fee shall become delinquent if not remitted to the Department of

Revenue by the due date.

(g)  Costs of revenue.--

(1)  Within 30 days of the effective date of this

subsection, and each year thereafter, the Department of

Revenue may impose an annual fee not to exceed $100 per well

on each reporting producer to pay for the actual costs of the

Department of Revenue to administer and enforce this chapter

and Chapter 27 (relating to natural gas energy development

program).

(2)  By March 31, 2013, and each year thereafter, the

Department of Revenue shall determine for the preceding

calendar year the amount of its actual expenditures directly

attributable to the administration and enforcement of this

chapter and Chapter 27. The Department of Revenue shall

subtract the amount of fees collected under paragraph (1) in

that calendar year and assess any remaining balance on all

producers subject to the impact fee in proportion to the

number of wells owned by each producer.

(3)  Each producer shall be assessed for and shall pay to

the Department of Revenue that proportion of the amount

determined under paragraph (2) and allocated to the producer

for that year.

§ 2304.  Well information.

(a)  List.--Within 14 days of the effective date of this

section, the department shall provide the [commission and, upon

request, a county,] Department of Revenue with a list of all

spud unconventional gas wells from the department. The

department shall update the list and provide it to the

[commission] Department of Revenue on a monthly basis.

(b)  Updates.--A producer subject to the fee shall notify the

[commission] Department of Revenue of the following within 30

days after a calendar month in which the change occurs:

(1)  The spudding of an unconventional gas well.

(1.1)  The initiation of production at an unconventional

gas well.

(2)  The removal of an unconventional gas well from

production.

§ 2305.  Duties of department.

* * *

(b)  Prohibition.--The department shall not issue a permit to

drill an unconventional gas well until all unconventional gas

well fees owed under section 2302 that are not in dispute have

been paid to the [commission] Department of Revenue.

(c)  Payment of fees.--The [commission] Department of Revenue 

shall provide the department with information necessary to

determine that the producer has paid all unconventional gas well

fees owed for an unconventional gas well under section 2302.

§ 2307.  [Commission] Department of Revenue.

(a)  Powers.--The [commission] Department of Revenue shall

have the authority to make all inquiries and determinations

necessary to calculate and collect the fee, administrative

charges or assessments imposed under this chapter, including, if

applicable, interest and penalties.

(b)  Notice.--If the [commission] Department of Revenue 

determines that the unconventional gas well fee has not been

paid in full, it may issue a notice of the amount due and demand

for payment and shall set forth the basis for the determination.

* * *

(d)  Time period.--Except as set forth in subsection (e), the

[commission] Department of Revenue may challenge the amount of a

fee paid within three years after the date the report under

section [2303(b)] 2303(d) (relating to administration) is filed.

* * *

§ 2308.  Enforcement.

(a)  Assessment.--The [commission] Department of Revenue 

shall assess interest on any delinquent fee at the rate

determined under section 2307(a) (relating to [commission]

Department of Revenue).

* * *

(c)  Timely payment.--If the [commission] Department of

Revenue determines that a producer has not made a timely payment

of the fee, the [commission] Department of Revenue shall send

written notice of the amount of the deficiency to the producer

within 30 days from the date of determining the deficiency. The

[commission] Department of Revenue shall notify the department

of a producer that has failed to pay the fee for any

unconventional gas well under section 2302 (relating to

unconventional gas well fee). If the producer does not have a

pending appeal related to payment of the fee in process, the

department shall suspend the permit for that well until the fee

has been paid.

* * *

§ 2309.  Enforcement orders.

(a)  Issuance.--The [commission] Department of Revenue may

issue an order as necessary to enforce this chapter. An order

issued under this section shall take effect upon notice, unless

the order specifies otherwise. A person aggrieved by an order

under this section may appeal to Commonwealth Court under 42

Pa.C.S. § 763 (relating to direct appeals from government

agencies).

(b)  Compliance.--A producer has the duty to comply with an

order issued under subsection (a). If a producer fails to

proceed diligently to comply with an order within the time

required, the producer shall be guilty of contempt and shall be

punished by the court in an appropriate manner. The [commission]

Department of Revenue shall apply to Commonwealth Court, which

shall have jurisdiction over matters relating to contempt.

§ 2310.  Administrative penalties.

(a)  Civil penalties.--In addition to any other proceeding

authorized by law, the [commission] Department of Revenue may

assess a civil penalty not to exceed $2,500 per violation upon a

producer for the violation of this chapter. In determining the

amount of the penalty, the [commission] Department of Revenue 

shall consider the willfulness of the violation and other

relevant factors.

* * *

§ 2312.  Recordkeeping.

A producer liable for the fee under this chapter shall keep

records, make reports and comply with regulations of the

[commission] Department of Revenue. The [commission] Department

of Revenue may require a producer to make reports, render

statements or keep records as the [commission] Department of

Revenue deems sufficient to determine liability for the fee.

§ 2313.  Examinations.

(a)  Access.--The [commission] Department of Revenue or its

authorized agents or representatives shall:

(1)  Have access to the relevant books, papers and

records of any producer in order to verify the accuracy and

completeness of a report filed or fee paid under this

chapter.

(2)  Require the preservation of all relevant books,

papers and records for an appropriate period not to exceed

three years from the end of the calendar year to which the

records relate.

(3)  Examine any employee of a producer under oath

concerning the severing of natural gas subject to a fee or

any matter relating to the enforcement of this chapter.

(4)  Compel the production of relevant books, papers and

records and the attendance of all individuals who the

[commission] Department of Revenue believes to have knowledge

of relevant matters in accordance with 66 Pa.C.S. (relating

to public utilities).

(b)  Unauthorized disclosure.--Any information obtained by

the [commission] Department of Revenue as a result of any

report, examination, investigation or hearing under this chapter

shall be confidential and shall not be disclosed, except for

official purposes, in accordance with judicial order or as

otherwise provided by law. [A commissioner or an] An employee of

the [commission] Department of Revenue who without authorization

divulges confidential information shall be subject to

disciplinary action by the [commission] Department of Revenue.

§ 2314.  Distribution of fee.

(a)  Establishment.--There is established a fund in the State

Treasury to be known as the Unconventional Gas Well Fund to be

administered by the [commission] Department of Revenue.

* * *

(c.1)  Additional distributions.--From fees collected under

this chapter and deposited in the fund for 2011 and each year

thereafter:

(1)  One million dollars shall be distributed to the

Pennsylvania Fish and Boat Commission for costs relating to

the review of applications for permits to drill

unconventional gas wells.

(2)  One million dollars shall be distributed to the

[commission] Department of Revenue for costs to administer

this chapter and Chapter 33 (relating to local ordinances

relating to oil and gas operations).

(3)  Six million dollars to the department for the

administration of this act and the enforcement of acts

relating to clean air and clean water.

(4)  Seven hundred fifty thousand dollars to the

Pennsylvania Emergency Management Agency for emergency

response planning, training and coordination related to

natural gas production from unconventional gas wells.

(5)  Seven hundred fifty thousand dollars to the Office

of State Fire Commissioner for the development, delivery and

sustainment of training and grant programs for first

responders and the acquisition of specialized equipment for

response to emergencies relating to natural gas production

from unconventional gas wells.

(6)  One million dollars to the Department of

Transportation for rail freight assistance.

* * *

(d)  Distribution.--[Except as provided in section 2302(a.3)

and (a.4) (relating to unconventional gas well fee), following]

Following fee distribution under subsections (c), (c.1) and

(c.2), from fees collected for 2011 and each year thereafter,

60% of the revenue remaining in the fund from fees collected for

the prior year are hereby appropriated to counties and

municipalities for purposes authorized under subsection (g).

Counties and municipalities are encouraged, where appropriate,

to jointly fund projects that cross jurisdictional lines. The

[commission] Department of Revenue, after making a disbursement

under subsection (f), shall distribute the remaining funds

appropriated as follows within three months after the date the

fee is due:

(1)  [Except as provided in section 2302(a.3), 36%]

Thirty-six percent shall be distributed to counties in which

spud unconventional gas wells are located. The amount for

each county to which funds will be distributed shall be

determined using a formula that divides the number of spud

unconventional gas wells in the county by the number of spud

unconventional gas wells subject to the impact fee in this

Commonwealth and multiplies the resulting percentage by the

amount available for distribution under this paragraph.

(2)  [Except as provided in section 2302(a.4), 37%]

Thirty-seven percent shall be distributed to municipalities

in which spud unconventional gas wells are located. The

amount for each municipality to which funds will be

distributed shall be determined using a formula that divides

the number of spud unconventional gas wells in the

municipality by the number of spud unconventional gas wells

subject to the impact fee in this Commonwealth and multiplies

the resulting percentage by the amount available for

distribution under this paragraph.

(3)  [Except as provided in section 2302(a.4), 27%]

Twenty-seven percent shall be distributed to municipalities

located in a county in which spud unconventional gas wells

are located. The amount available for distribution in each

county shall be determined by dividing the number of spud

unconventional gas wells in the county by the number of spud

unconventional gas wells subject to the impact fee in this

Commonwealth and multiplying the resulting percentage by the

amount available for distribution under this paragraph. The

resulting amount available for distribution in each county in

which spud unconventional gas wells are located shall be

distributed to each municipality in the county to which funds

will be distributed as follows:

(i)  [Except as provided in section 2302(a.4), 50%]

Fifty percent of the amount available under this

paragraph shall be distributed to municipalities in which

spud unconventional gas wells are located and to

municipalities that are either contiguous with a

municipality in which spud unconventional gas wells are

located or are located within five linear miles of a spud

unconventional gas well. The distribution shall be made

as follows:

(A)  One-half shall be distributed to each

municipality using a formula that divides the

population of the eligible municipality within the

county by the total population of all eligible

municipalities within the county and multiplies the

resulting percentage by the amount allocated to the

county under this subparagraph.

(B)  One-half shall be distributed to each

municipality using a formula that divides the highway

mileage of the eligible municipality within the

county by the total highway mileage of all eligible

municipalities within the county and multiplies the

resulting percentage by the amount allocated to the

county under this subparagraph.

(ii)  [Except as provided in section 2302(a.4), 50%]

Fifty percent of the amount available under this

paragraph shall be distributed to each municipality in

the county regardless of whether an unconventional gas

well is located in the municipality as follows:

(A)  One-half shall be distributed to each

municipality using a formula that divides the

population of the municipality within the county by

the total population of the county and multiplies the

resulting percentage by the amount allocated to the

county under this subparagraph.

(B)  One-half shall be distributed to each

municipality using a formula that divides the highway

mileage of the municipality within the county by the

total highway mileage of the county and multiplies

the resulting percentage by the amount allocated to

the county under this subparagraph.

(e)  Restriction.--The amount allocated to each municipality

under subsection (d) shall not exceed the greater of $500,000 or

50% of the total budget for the prior fiscal year beginning with

the 2010 budget year and continuing every year thereafter,

adjusted to reflect any upward changes in the Consumer Price

Index for all Urban Consumers for the Pennsylvania, New Jersey,

Delaware and Maryland area in the preceding 12 months. Any

remaining money shall be retained by the [commission] Department

of Revenue and deposited in the Housing Affordability and

Rehabilitation Enhancement Fund for the uses specified under

subsection (f).

* * *

(h)  Reporting.--

(1)  The [commission] Department of Revenue shall submit

an annual report on all funds in the fund. The report shall

include a detailed listing of all deposits and expenditures

of the fund and be submitted to the chairman and the minority

chairman of the Appropriations Committee of the Senate, the

chairman and the minority chairman of the Environmental

Resources and Energy Committee of the Senate, the chairman

and the minority chairman of the Appropriations Committee of

the House of Representatives and the chairman and the

minority chairman of the Environmental Resources and Energy

Committee of the House of Representatives. The report shall

be submitted by December 30, 2012, and by September 30 of

each year thereafter.

(2)  All counties and municipalities receiving funds from

the fund under this section shall submit information to the

[commission] Department of Revenue on a form prepared by the

[commission] Department of Revenue that sets forth the amount

and use of the funds received in the prior calendar year. The

form shall set forth that the funds received were committed

to a specific project or use as authorized in this section.

The reports shall be published annually on the county or

municipality's publicly accessible Internet website.

(i)  Availability of funds.--Distribution of funds under this

section and section 2315 (relating to Statewide initiatives) are

contingent on availability of funds in the fund. If sufficient

funds are not available, the [commission] Department of Revenue 

shall disburse funds on a pro rata basis.

§ 2315.  Statewide initiatives.

* * *

(a.1)  Deposit and distribution.--Following distribution

under section 2314(c), (c.1) and (c.2) (relating to distribution

of fee) from fees collected for 2011 and each year thereafter,

40% of the remaining revenue in the fund shall be deposited into

the Marcellus Legacy Fund and appropriated to the [commission]

Department of Revenue and distributed within three months after

the date the fee is due as follows:

* * *

§ 3211.  Well permits.

* * *

(e.1)  Denial of permit.--The department may deny a permit

for any of the following reasons:

* * *

(6)  The applicant failed to pay the fee or file a report

under section [2303(c)] 2303(d) (relating to administration),

unless an appeal is pending. The commission shall notify the

department of any applicant who has failed to pay the fee or

file a report and who does not have an appeal pending.

* * *

Section 3.  This act shall take effect immediately.