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ACT 13 Information for Centre County Municipalities May 21, 2012 ---PAGE BREAK--- Three Broad Areas of Focus: Industry Regulations Municipal Zoning / Land Use Controls Impact Fees HB 1950 / Act 13 Act 13 essentially rewrote the 1984 Oil and Gas Act. ---PAGE BREAK--- Immediate Municipal Responsibilities 1) Certify Annual 2010 Budget WHY: Municipal fee distribution is limited to the greater of $500,000 or 50% of a municipality’s total budget for prior fiscal year (2010). What: Report the originally approved total budget for the 2010 fiscal year. By further definition, the budget should include all planned expenditures for the 2010 calendar year, funded by whatever sources of revenues the local government had anticipated for that calendar year. The actual 2010 expenditure may be greater than or less than the originally budgeted amount. WHEN: Deadline is July 6, 2012. WHO: All Centre County Municipalities ---PAGE BREAK--- Check PA PUC Website for current copy http://www.puc.state.pa.us/naturalgas/naturalgas_marcellus_Shale.aspx ---PAGE BREAK--- Anticipated Municipal Responsibilities 2) Review Local Ordinances Due to uncertainty surrounding pending litigation, municipal responsibilities related to local ordinance compliance are unclear at this time. ACT 13, when enacted, stipulated that the distribution of fees to a local municipality was dependent upon ordinance compliance. More specifically, no zoning or flood plain ordinance could contain provisions which imposed conditions, requirements or limitations on oil and gas operations. WHEN: Compliance date to be announced – tentatively, December 2012. WHO: All Centre County municipalities. ---PAGE BREAK--- Later Municipal Responsibilities 3) File Impact Fee Disbursement Report HOW: Reporting procedures require: Filing with the PUC Annual posting on county and/or municipal website WHEN: Annual basis. April 15 of each year. WHO: All Centre County municipalities ---PAGE BREAK--- Act 13 Land Use / Ordinances “Oil and gas operations” are now permitted uses in ALL zoning districts. “Oil and gas operations” as defined in Act 13 include the following activities. Underlined activities have exceptions relative to setback distances. Seismic operations Well site preparation, construction, drilling, fracking and site restoration Water and other fluid storage or impoundment areas Pipelines Compressor Stations Natural Gas Processing Plants or Facilities Construction, installation, use, maintenance and repair of all equipment associated with the above activities provided it is located at or immediately adjacent to a well site, impoundment area, pipeline, compressor station or natural gas processing plant. ---PAGE BREAK--- ACT 13 Municipal Provisions 1) Municipalities will now receive maps showing the proposed location of a well. It is likely that the county will NO LONGER receive permit information. 2) If a municipality deems that there are local conditions or circumstances which should be considered by DEP in rendering a well permit, they must submit written comments within 15 days of receiving the information. (page 66) 3) These comments must also be sent to the applicant submitting the map for review: engineering firm / drilling company, etc. 4) Surface owners will receive 24 hours’ notice of the date that drilling will begin. ---PAGE BREAK--- ACT 13 Increased Environmental Safeguards Distance in Feet Setback Type Shale Well Shallow Well USGS-Designated Stream to Well Bore 300’ previously 100’ 100’ USGS-Designated Stream to Edge of Well Pad 100’ 100’ Wetlands greater than 1 acre to well 300’ previously 100’ N/A Wetlands to edge of well pad disturbed area 100’ N/A Building to well bore 500’ – previously 200’ 200’ Drinking water source to well bore 500’ 200’ Public Water sources to well bore 1,000’ N/A Rebuttable presumption for contamination of public and private water supplies was substantially increased from 1000 feet for 6 months to 2,500 feet for 12 months. ---PAGE BREAK--- Act 13 Impact Fee Assessment The fee is levied on all unconventional wells regardless of start date. For those wells started before 2011, they are assumed to be spud in 2011 for purposes of determining the fee. Capped wells are included. Wells producing less that 90,000 cubic feet per day are included. Vertical wells are assessed at a lesser rate, $10,000 per well (20%) Each well on a pad is counted separately. Subsequent Year Provisions: Fees will be suspended on capped wells, after three annual payments. Fees will be suspended on wells producing less than 90,000 cubic feet per day, after three annual payments. Provides for fees to be re-instated when production resumes at 90,000 cf/day. Provides for fees to be levied on wells that reach beyond the Marcellus Formation. Restarts the fee schedule at year one for restimulated wells. ---PAGE BREAK--- Act 13 Fee Payment Plan Year of Production Average Natural Gas Price for Prior Calendar Year < $2.25 $2.25 - 99 2011 Price $3.00 - $4.99 $5.00 - $5.99 > $5.99 Year 1 $40,000 $45,000 $50,000 $55,000 $60,000 Year 2 $30,000 $35,000 $40,000 $45,000 $55,000 Year 3 $25,000 $30,000 $30,000 $40,000 $50,000 Years 4 - 10 $10,000 per year $15,000 per year $20,000 per year $20,000 per year $20,000 per year Years 11 - 15 $5,000 per year $5,000 per year $10,000 per year $10,000 per year $10,000 per year Total per Well $190,000 $240,000 $310,000 $330,000 $355,000 ---PAGE BREAK--- PA Public Utility Commission 40% Statewide Initiatives 60% Local Governments $23 million off the top to Selected State Agencies • County Conservation Districts • Fish and Boat Commission • PUC (administration) • DEP • PEMA • Office of State Fire Commissioner • PennDOT for rail freight • Marcellus Legacy Fund • Housing Affordability and Rehabilitation Enhancement Fund HB 1950 / Act 13 – Impact Fee Distribution 2 Updated May 11, 2012 ---PAGE BREAK--- PA Public Utility Commission 40% Statewide Initiatives $23 million off the top to Selected State Agencies 20% Commonwealth Financing Authority 25% Highway Bridge Improvement Restricted Account 10% Environmental Stewardship Fund 25% Water & Sewer Projects 15% Greenways, Recreation and Open Space Initiatives 5% DCED** (2011-2013 only) 5% Hazardous Sites Cleanup Fund (2014 and after) Act 13 Statewide Initiatives 3 AMD treatment, well plugging, greenways, baseline water quality data on private sources, flood control . . . $40,000 minimum to county to replace or repair locally owned at- risk bridges Half to Pennvest and half to H2O program Minimum $25,000 to county for greenways, community conservation and beautification No specifics provided **Projects to build capacity for use of NG Updated May 11, 2012 ---PAGE BREAK--- PA Public Utility Commission 60% Impacted Local Governments $23 million off the top to Selected State Agencies 36% Host Counties (based on wells) 37% Host Municipalities (based on wells) 27% Host & Non-Host Municipalities in Host Counties 50% All Municipalities** 50% Host and Contiguous Municipalities** 13 Act 13 Local Initiatives 4 Updated May 11, 2012 Calculations based on road mileage and population ---PAGE BREAK--- 30 28 3 1 Total Wells in Centre County = 62 (as of March 8, 2012) ---PAGE BREAK--- Act 13 – Qualifying Municipalities Updated May 11, 2012 Listing based on current PUC Spud Report. Host Municipalities: Burnside Township Curtin Township Rush Township Snow Shoe Township Contiguous Municipalities: Boggs Township Howard Township Huston Township Liberty Township Philipsburg Borough Snow Shoe Borough Taylor Township Union Township Worth Township Non-Host Municipalities: Bellefonte Borough Benner Township Centre Hall Borough College Township Ferguson Township Gregg Township Haines Township Halfmoon Township Harris Township Howard Borough Marion Township Miles Township Milesburg Borough Millheim borough Patton Township Penn Township Port Matilda Borough Potter Township Spring Township State College Borough Unionville Borough Walker Township ---PAGE BREAK--- Act 13 13 Eligible Uses of Funds Roads, Bridges, and Public Infrastructure: construction, reconstruction and maintenance. Water, Storm Water and Sewer Systems: construction, reconstruction, maintenance and repair. Emergency Preparedness and Public Safety: law enforcement, fire services, hazardous material response, 9-1-1, equipment acquisition. Environmental Programs: trails, parks, recreation, open space, floodplain management, conservation districts and agriculture preservation Surface Water and Groundwater: supply preservation and reclamation. Tax Reductions, including homestead exclusions Affordable Housing Projects that increase availability Records Management, GIS, and Information Technology Social Services Judicial Services Planning Initiatives under the MPC Career and Technical Centers for oil and gas industry training Capital Reserve Fund if funds used solely for an eligible project. Counties and municipalities are encouraged to jointly fund projects that cross jurisdictional lines. Funds are to be used for the following purposes “associated with natural gas production”. Reporting required. ---PAGE BREAK--- Act 13 Assumptions Used to Development Possible $ Distribution Scenario In order to estimate the local fee distribution for Centre County we assumed this basic information: DEP / PUC Well Count both statewide and local All Drilling Companies will pay by deadline Total Collected Statewide Fee Population is based on 2010 Census, and not on projections beyond 2010. Total Road Miles Used (includes both state and local road miles) ---PAGE BREAK--- SPUD Well Count by Host Municipality Host Municipality Horizontal Wells Vertical Wells Total Burnside Township 28 2 30 Curtin Township 3 3 Rush Township 1 1 Snowshoe Township 27 1 28 Total 58 4 62 Data Source: PUC Spud Report – May 11, 2012. Municipal location is based on county boundary information. ---PAGE BREAK--- Act 13 – Estimated Fee Distributions – Year 1 Number of Shale Wells in State (estimated) 4808 Estimated Fee Collected for 2011 $220,000,000 Statewide Set-Aside $23,000,000 Statewide Set-Aside for Affordable Housing $2,500,000 40% Statewide Allocation $77,800,000 60% Local Allocation to Host Counties $116,700,000 Number of Shale Wells in County 62 Centre County $541,752 Total Municipal Distribution in Centre County $963,115 Centre County Host Municipalities $556,801 Burnside Township $279,262 Curtin Township $38,758 Rush Township $54,848 Snow Shoe Township $275,934 Data Updated 5.11.2012 ---PAGE BREAK--- For More Information Centre County Planning and Community Development Office [PHONE REDACTED] Centre County Natural Gas Impact Fee Web Site http://www.co.centre.pa.us PUC Implementation Order www.puc.state.pa.us Click on Natural Gas / Act 13 (Impact Fee)