Court ruling on gas ‘stripper wells’ has lawmaker asking about their impact
Commonwealth Court has ruled that an oil and gas production company does not have to pay impact fees for about two dozen wells that produce small amounts of natural gas during the year.
The ruling, handed down Wednesday, reverses an earlier decision by the state Public Utility Commission that Snyder Brothers Inc. of Kittanning failed to pay about $500,000 in fees on what the commission said were improperly identified wells.
The ruling Wednesday has at least one lawmaker wondering if the decision will have a negative effect on impact fee collections locally.
The reversal, a 5-2 decision in favor of SBI and the Pennsylvania Independent Oil and Gas Association, found that SBI does not owe fees on 24 “stripper wells,” defined as those that produce less than 90,000 cubic feet of gas per day during at least one month of the year.
Impact fees, which were established under Act 13, are not levied on stripper wells, which the law defines as “unconventional gas wells that are incapable of producing more than 90,000 cf per day during any calendar month.”
The majority decision was based largely on how Act 13 quantifies the production time frame with its use of the word “any.”
“We conclude that the word “any” in the term “stripper well” unambiguously means “any” or “one” and not “all” or “every,” Judge Patricia McCullough wrote in the majority opinion. “With there being no violation of Act 13, we also reverse the commission’s imposition of interest and penalties on SBI.”
The two dissenting judges, Joseph Cosgrove and Michael Wojcik, wrote that McCullough’s interpretation could encourage drillers to suppress production during one month to avoid paying impact fees for the year.
State Rep. Brandon Neuman, D-North Strabane, said Thursday he was looking into whether the court’s reversal would affect the amount of impact fee money collected from drillers in Washington County.
“We don’t want our communities affected by this in an unpredictably negative way,” he said.
In 2015, the most recent year for available data, Act 13 impact fees paid by drillers amounted to nearly $188 million statewide. The fee is intended to help municipalities most impacted by natural gas drilling in the state’s Marcellus Shale fairway.
In 2015, Washington County was listed as having the most unconventional shale wells (1,327), followed by Susquehanna (1,239), Bradford (1,213) and Greene (985).
“It’s too early to tell if the PUC is going to appeal” the court’s ruling, Neuman said, adding that he would continue to gather data to determine if there are any unconventional stripper wells in Washington County that would not have to pay an impact fee based on the court’s decision.