Mar 10, 2016 3 min read

The state auditor general announced Thursday he will investigate whether municipalities are properly spending their Act 13 natural gas drilling impact fee money and if the state Public Utility Commission should be the agency tasked with overseeing distribution of the funds.

The announcement that Auditor General Eugene DePasquale will review Act 13 comes three months after an Observer-Reporter series revealed nearly $30 million in Marcellus Shale natural gas impact fee money given to communities across the state is unaccounted for because how the cash was used was never reported to the PUC as the law requires.

“It was always on the radar,” DePasquale said of the audit. “But (the Observer-Reporter’s) information moved it forward on the schedule and made it a lot more urgent for us to look at. But it was definitely something we were planning to look at.”

He said his review, which is expected to take at least seven months, will focus on three key issues involving impact fees. DePasquale said the audit will begin with the PUC and “move backward” toward spending by the municipalities.

The audit will try to determine whether the PUC accurately calculated and distributed the fees from unconventional gas well drilling given to towns and counties across the state. It will also examine if all required reports were filed by those counties and municipalities that receive the funding, and if they’re using the money properly.

DePasquale said his auditors will visit some, but not all, communities that receive impact fee money.

The PUC disbursed $856 million to various towns, counties and other Marcellus Shale legacy funds in the four-year history of the impact fee program that authorizes the PUC to collect and distribute the fees.

The Observer-Reporter series revealed numerous communities failed to file the annual reports explaining to the PUC how the money was used. There are 13 categories, which range from police services to infrastructure upgrades, for which the money can be spent. However, the Act 13 law, signed into law by former Gov. Tom Corbett in 2012, lacks provisions to penalize any communities or counties that fail to submit their reports.

DePasquale said he wants to see how “well equipped” the PUC is to handle the distribution and oversight. State Rep. Brandon Neuman, D-North Strabane Township, said in December he thought the program’s administration might be better suited within another state agency, such as the Department of Community and Economic Development, which delivers a variety of local grants.

DePasquale was not prepared to go that far and said the audit is the natural progression of his overall review of the Marcellus Shale industry.

“I did an audit of (the state Department of Environmental Protection) about how effective they were on shale oversight and this was the next thing to look at with drilling,” DePasquale said.