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Pennsylvania miscalculated shale gas impact money for local governments

| Friday, Oct. 26, 2012, 3:24 p.m.

The state Public Utility Commission said on Friday that it miscalculated how much drilling-impact fee money it will dole out to local governments by up to $1 million.

The commission also learned it does not have a right to withhold impact fee payments to municipalities because of their drilling ordinances, according to a Commonwealth Court ruling.

“This is the first time running through this, but (the PUC) is handling this and they're fixing it,” said Eric Shirk, spokesman for Gov. Tom Corbett.

The PUC said this month that the new impact fee on Marcellus shale gas drillers raised $204.4 million by collecting $50,000 for each horizontal well and $10,000 for each vertical well. About 60 percent of the money is going to more than 1,500 municipal and county governments.

“While we are still reviewing the issues, at this point we anticipate this (miscalculation) will affect less than half of 1 percent of the $204.4 million disbursement,” PUC spokeswoman Jennifer Kocher said.

The miscalculation resulted from a data-entry error, Kocher said. The commission discovered the error after several unidentified municipalities questioned the payments they were slated to receive, she said.

Kocher could not say how many municipalities and counties are affected by the issue. All should receive their payments by the state-mandated deadline of Dec. 1, she said.

“The whole process has been a little bit curious,” said Deron Gabriel, president of the South Fayette board of commissioners.

South Fayette and several other municipalities fought the state in an effort to preserve local zoning power over drilling. The municipalities sued, arguing that the state overstepped its authority in the Act 13 law regulating Marcellus shale drilling by allowing drilling in all land-use zones, including residential areas. They did not challenge the part of the law that imposed the impact fees.

Commonwealth Court sided with the municipalities. The state Supreme Court is considering the law.

The PUC ordered the townships and boroughs to change their drilling ordinances or risk losing their impact fee payments. Commonwealth Court on Friday said the commission cannot do that.

Only about $2,700 is coming to South Fayette, Gabriel said, so the PUC's decision to withhold the money did not have much of an effect there, Gabriel said.

But the timing raised Gabriel's suspicion, he said. The PUC announced it was withholding South Fayette's share a day after township lawyers argued against the state before the Supreme Court, he said.

“It did seem like it was retribution,” Gabriel said.

“There was nothing curious about the timing,” Kocher said.

The commission withheld payments to the municipalities with pending legal cases, she said, noting it had until Dec. 1 to release the money, but there is no “refund mechanism” in the law.

Of the Commonwealth Court's decision, Kocher said: “The order, its implications and any further actions are currently under review.”

Tom Fontaine and Mike Wereschaign are staff writers for Trib Total Media. Fontaine can be reached at 412-320-7847 or tfontaine@tribweb.com. Wereschagin can be reached at 412-320-7900 or mwereschagin@tribweb.com.

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