Marcellus Shale Impact Fee Proposal Office of the Governor

Authorizes counties to impose a Shale Impact Fee upon passage of an ordinance Fee limited to unconventional wells (Marcellus, Utica and other shale resources) Highest fee shall be imposed in Year 1; reduced annual fees in subsequent years Fee per well shall not exceed: Year 1 $40,000 Year 2 $30,000 Year 3 $20,000 Years 4-10$10,000 No fee shall be assessed if well production drops below 90 MCF/day Operators shall remit fee to county by March 1st of each year, to be retained in a restricted account and allocated according to law County may provide for a fee credit of up to 30% for approved investments in natural gas use infrastructure (i.e. natural gas fueling infrastructure or public transit vehicles) Fee revenue shall be allocated as follows: 25% shall be remitted to the state and further allocated for the following purposes: 4.5% to PEMA for emergency response planning, training and coordination and other emergency response activities associated with shale development. (Cap at $2 million) 3.75% to Office of State Fire Commissioner for development, delivery and sustainment of training programs for first responders and acquisition of specialized equipment necessary for emergency response. (Cap at $2 mil) 3.75% to Dept. of Health for collecting and disseminating information, preparing and conducting health care and citizen provider outreach and education, investigating health complaints and other activities associated with shale development. (Cap at $2 million) 7.5% to the Public Utility Commission for the enhancement, inspection and enforcement of pipeline standards as required by law related to the safe transport of gas and hazardous liquids. (Cap at $2 million) 10.5% to DEPs restricted account for plugging of abandoned and orphaned oil and gas legacy wells and administration and enforcement of oil and gas program and other permits related to natural gas development (ie water impoundments, air permitting, etc.). (Cap at $10 million) 70% to PENNDOT for road and bridge maintenance and repair, rail and other transportation infrastructure improvements within counties hosting unconventional natural gas development. (Balance of funds) 75% shall be retained at the local level and further allocated for eligible uses: 36% retained by county 37% distributed to host municipalities 27% (no more than) distributed to all municipalities within a host county, utilizing a formula based on population and highway miles

 Eligible uses by counties and municipalities related to impacts from natural gas development include: Construction, repair and maintenance of roads, bridges and other public infrastructure; Water, storm water and sewer system construction and repair; Emergency response preparedness, training, equipment, responder recruitment; Preservation and reclamation of surface and subsurface water supplies; Records management, geographic information systems and information technology Projects which increase the availability of affordable housing to low-income residents; Delivery of social services, including domestic relations, drug and alcohol treatment, job training and counseling; Offsetting increased judicial system costs, including training and processing; Assistance to county conservation districts for inspection, oversight and enforcement of natural gas development; County or municipal planning. Counties and municipalities shall publish annual reports on the amount expended, purpose and relationship to natural gas drilling conducted in the prior year and post the reports online.

Next Steps in the Environmentally Safe and Economically Efficient Development of the Marcellus Shale
JOBS FOR PENNSYLVANIANS Partner with academic institutions and industry to develop and disseminate curriculum and training needed for present and future job opportunities and better align unemployed residents with existing job opportunities Expand relationships with regional economic development partners to help suppliers adapt and market their products and meet industry standards Highlight and encourage job opportunities for returning Armed Forces veterans, such as Hiring Our Heroes and Troops to Roughnecks

SECURING OUR ENERGY INDEPENDENCE Develop Green Corridors in PA for natural gas-fueled vehicles with refueling stations at least every 50 miles and within 2 miles of key highways Amend the PA Clean Vehicles Program to include bi-fuel vehicles (diesel and natural gas) Assist schools and mass transit systems convert fleets to natural gas vehicles Promote the end-use of natural gas through combined heat and power, ethylene cracker plants, transportation, base and peak load power generation and other uses

WORLD CLASS STANDARDS FOR DRILLING

Increase well bonding from $2,000 up to $10,000 Increase blanket bonds from $25,000 up to $250,000 Triple well setback distance from 100 feet to 300 feet for streams, rivers, ponds and other water bodies Increase well setback distance from private water wells from 200 feet to 500 feet and to 1,000 feet for public drinking water systems Expand a gas operators presumed liability for impairing water quality from 1,000 feet to 2,500 feet from a gas well, and extend the duration of presumed liability from 6 months after well completion to 12 months Enable DEP to take action against bad actors in a more efficient manner Uniform and consistent statewide standards

ENHANCING & PROTECTING OUR NATURAL RESOURCES Utilize non-freshwater sources for well development Condition a well permit based on its impact on public resources like parks, wildlife areas, natural landmarks, special plant and species habitat and other resources Limit drilling activities within floodplains; and prohibit where appropriate

Utilize state of the art management practices for well site construction and operation. Prevent spread of invasive plant species

PROTECTING PUBLIC HEALTH & SAFETY

Double penalties for civil violations from $25,000 to $50,000 Double daily penalties from $1,000/day to $2,000/day Authorize DEP, rather than Environmental Hearing Board, to assess civil penalties Provide education to health care providers and public on potential health impacts associated with drilling activity Provide for the timely and thorough investigation of public health complaints from citizens and health care providers Assign 911 addresses and GPS coordinates to well sites and facilities. Create regional safety task forces Establish specialized team of emergency responders Provide comprehensive training for local responders Expand Public Utility Commission oversight of pipeline safety standards and inspections

MITIGATING COMMUNITY IMPACTS Enhance citizen, local government and water supplier notification of permit and drilling activities Foster better communication with local residents through agency outreach Authorize counties to adopt a reasonable impact fee for use by counties, municipalities and state agencies affected by natural gas development Develop an equitable formula to distribute proceeds among local governments which host or are near well sites Ensure revenue is used to address real impacts associated with wells Address legacy impacts of abandoned oil and gas wells