Following Court Ruling, PA Drillers Must Pay Millions In Outstanding Fees

More

STATEIMPACT PENNSYLVANIA – Natural gas companies must pay millions of dollars in outstanding impact fees to the state, following a recent Pennsylvania Supreme Court ruling.

FILE: Dead vegetation around a conventional well site in Warren County indicates a possible brine spill. Conventional drillers say they should not be lumped in with regulations directed at the newer, bigger Marcellus Shale wells. (Courtesy Pennsylvania Department of Environmental Protection)

Pennsylvania’s impact fees are collected annually from natural gas drillers — but certain low-producing wells, known as stripper wells, are exempt. In the first year of the life of a well, the impact fees can range from about $40,000 to $60,000, depending on the price of gas. Most of the money goes back to communities where drilling is occurring.

State law defines a stripper well as one that is “incapable of producing more than 90,000 cubic feet of gas per day during any calendar month.”

But there was disagreement on how to define that threshold. Drillers, including gas producer Snyder Brothers Inc. and the Pennsylvania Independent Oil and Gas Association, a trade group, had argued for a more expansive interpretation. But the Supreme Court disagreed, ruling late last month for a narrower definition favored by the Public Utility Commission — meaning more wells must pay the fees.

The PUC now says it’s generating invoices for 17 companies with outstanding balances and expects the payments will amount to millions of dollars.

“We estimate that the recent PA Supreme Court decision will involve hundreds of wells with outstanding Impact Fees totaling millions of dollars,” PUC spokesman Nils Hagen-Frederiksen said in an email. “At this time, we do not have a final total, but those figures will become clearer in the coming weeks.”

PIOGA general counsel Kevin Moody said they will be asking the court to reconsider.

“The PUC’s legal position the Court adopted was not the PUC’s position when it issued its four impact fee implementation orders and its impact fee [notice of proposed rulemaking],” Moody said in an email.