Act 13 Ruling Could End Gas Well Impact Fees
The Pennsylvania Supreme Court's ruling striking down the uniform zoning ordinance provision of the Act 13 of 2012 amendments to the state Oil and Gas Act was widely considered a win for local governments, but another potential ramification of the ruling could put a damper on their victory celebration.
While the justices tossed out several provisions of Act 13, they remanded the case to the Commonwealth Court to determine whether some or all of the remaining amendments must also be tossed out.
One of the remaining provisions requires oil and gas operations to pay impact fees to the state government, which then disburses a portion of that money to certain counties and municipalities. Under the measure, the state also retains a portion for itself.
If the Commonwealth Court chooses to invalidate either that provision or Act 13 in its entirety, attorneys told the Law Weekly, those impact fees will cease. It's all a matter of how much the Commonwealth Court chooses to tackle in its review of Act 13 on remand.
"I do believe that [issue] is going to be litigated before the Commonwealth Court," said Michael K. Vennum, a partner in Burleson LLP's oil and gas title, land use and regulatory practice in Pittsburgh who is not involved in the case. "If I'm one of the E&P [exploration and production] companies who's a party to that, I'm going to say, 'No, we're not going pay any more impact fees. Impact fees were part and parcel of being assured we had uniform rules throughout all the municipalities in the state. Now you've taken that certainty out.'"
But some attorneys told the Law Weekly there is another school of thought that says the industry may not be so quick to push for the demise of the impact fee provision for fear that the legislature would then enact a severance tax in its place, which could possibly end up costing the industry more.
Meanwhile, attorneys said, the invalidation of the impact fee provision would also create logistics problems.
Jeffrey J. Norton, an energy lawyer at Eckert Seamans Cherin & Mellott in Harrisburg, said that if the lower court does overturn the impact fee provision, the question then becomes whether the fees that have already been paid must be refunded to the oil and gas companies.
A determination that the money must be refunded would present perhaps the most perplexing issue, Norton said: How do you recover money that's already been disbursed and, in many cases, already spent?
"It'll be opening up a can of worms or Pandora's box," Norton said.