Some Counties May go without a Shale Fee

Allegheny County Council has the Marcellus Shale Fee legislation on the agenda for its meeting this week. It was passed out of Council’s Committee on Economic Development and Housing and now goes back before the entire Council.

The County Commissioners’ Association of PA has been tracking the activity on the shale fee permitted under Act 13 and their survey shows that 21 of the state’s 67 counties enacted a shale fee as of March 30th. About a dozen others, including Allegheny County, have the fee on their agenda for this week. Only one county, York, is identified by the Association as "not planning to enact the fee", but there are twenty others that have not passed the fee as of March 30th and have no specific course of action identified in the survey as to having the fee on an upcoming agenda.

As of this writing the counties in southwestern PA surrounding Allegheny-Beaver, Butler, Washington, and Westmoreland-have all passed an ordinance authorizing a shale fee.

Shale Fee for Allegheny County

One of the items on the agenda for County Council this week is to levy the fee on Marcellus Shale activity permitted to counties under Act 13 of 2012. Our Brief outlined the specifics of the Act and how the fee will be distributed. The legislation before County Council states that the fee "…will be to the benefit of the citizens of the county because the revenues generated from the imposition of an unconventional gas well fee will be appropriated in part to counties and municipalities within the Commonwealth for important public purposes…"

The ordinance also points out that the County has spud wells now and "is likely to have more in the future". Based on our analysis-factoring the price of natural gas, the number of wells in the County (4) and statewide (just over 4,100), along with the distribution formula for the revenue-Allegheny County and its municipalities within the County stand to share around $112,000 in 2013 from the fee. For comparison’s sake the County collects more in the "fees" it levies on recording and filing ($19.1 million), copying and printing ($603k), swimming ($1 million), and landfills ($217K) than it would take from the shale fee initially.

The Act spells out how the proceeds will have to be used. It is not sure where the County will place this money when it is received. In the 2011 budget, when revenues are broken into object code, there are "taxes" which cover property, Regional Asset, drink and car rental taxes but also the gaming host "fee"; there are no "fees" in the object code "licenses and permits" and there are several "fees" in the code "charges for services"; there is one "fee" in the code "fines and forfeitures". All that is left after that is "state revenues" which could be a landing spot for the money since the Public Utility Commission will be remitting the revenue to local governments.