Marcellus Legacy Fund a lesser-known funding source

January 11, 2014
This old, leaking gas well in the basement of a Charleroi home was plugged using a $147,000 grant Charleroi Borough received from the Marcellus Legacy Fund.

The Marcellus Legacy Fund, a lesser-known byproduct of the state’s Act 13, is a gold mine in its own right.

Since Act 13 was signed into law in 2012, the fund – a combination of impact fees and natural gas royalties – has dispersed nearly $144.3 million throughout Pennsylvania in the form of competitive grants, environmental initiatives and infrastructure projects.

Over the past two years, the legacy fund has brought more than $65,000 into Greene County and more than $350,000 into Washington County for bridges and improvement projects alone. In July, local governments can look forward to another round of distributions from both the impact fee and legacy fund.

In essence, the legacy fund is “one of the ways to drive out the dollars collected from the impact fee” on unconventional gas wells, said Patrick Henderson, deputy chief of staff and energy executive in Gov. Tom Corbett’s office.

After state distributions, 40 percent of revenues in the state’s Oil and Gas Lease Fund are deposited into the Marcellus Legacy Fund, which is further broken down and distributed among various state agencies.

In 2013, $20 million was transferred from the state’s Oil and Gas Lease Fund into the legacy fund, and $35 million will be transferred this year. The largest chunk of the legacy fund, at 25 percent, goes into an account for highway bridge improvements to repair at-risk or deteriorated bridges. Funds are distributed to each county in the state based on population, with each receiving at least $40,000.

Competitive grants a key

In the legacy fund breakdown, 20 percent is allotted to the Commonwealth Financing Authority for a number of competitive grants.

The CFA, which is housed within the state Department of Community and Economic Development, uses some legacy fund monies to supplement programs that “have been on the books and administered for several years,” Henderson said.

Yet over the past two years, the legacy fund also contributed $28.5 million to six CFA programs that were created entirely “from scratch.” These programs provide community grants in six categories: greenways, trails and recreation; watershed restoration and protection; baseline water quality data; abandoned mine drainage abatement and treatment; orphan or abandoned well plugging; and flood mitigation programs.

Within these six programs, more than $340,000 was awarded in November for Washington County projects, as well as more than $100,000 in Greene County. Charleroi Borough also received a $147,000 grant through the Legacy Fund to plug a well inside a home that had been leaking dangerous levels of natural gas. Another grant, within the recreation category, provided $200,000 to Cokeburg Borough for its reservoir dam rehabilitation project. The estimated cost of needed repairs to the dam’s breastwork has fluctuated, but the small borough has now raised over $400,000 for the project.

“Hopefully we’ll be able to move ahead with the project,” said council member Barbara Kubena.

The extent of drilling activity in a municipality is not a factor in the consideration of grant recipients, Henderson said. Yet, state agencies do take into consideration the number of applicants in a particular category. Henderson said the majority of applications in the first round of legacy fund grants were for greenway, trail and recreation projects. As a result, the highest dollar amount of grants – at $16 million statewide – was awarded in that category.

Within that category, Greene County officials received a $101,214 grant to help restore Mon View Pool. State Rep. Pam Snyder, D-Jefferson, said there were several other Greene County recipients of legacy fund monies.

“I think it’s had a very positive effect on Greene County,” Snyder said of grants made possible through the legacy fund. “Is it enough? I don’t know. I think that remains to be seen. We’re just into the second year and we’re going to see how that money is being utilized.”

Money for environmental projects

In addition to impact fees, 15 percent of the legacy fund is directly distributed to counties for environmental purposes through a population-based formula. Counties can use this money in several different ways, including development, trails, community conservation and beautification projects.

Ten percent of the legacy fund goes toward the Environmental Stewardship Fund, or Growing Greener, to address farmland preservation, water and sewer loans/grants, oil and gas well plugging, mine drainage treatment, state park infrastructure and conservation grants.

Nearly 13 percent of legacy fund monies also are used in accordance with the Pennsylvania Infrastructure Investment Authority, and another 12.5 percent of funds are used for the CFA’s H20 PA Program, which provides grants for water and sewer, high hazard dam and flood control projects. In Washington County, both the Mid Mon Valley Water Pollution Control Authority and the South Strabane Township Sanitary Authority received a combined $662,498 in grants through the H20 PA program for a new pump station and a redevelopment project, respectively.

State Sen. Tim Solobay, D-Canonsburg, said programs like the legacy fund are providing direct help to communities that need it most.

“Trying to create opportunities based on this revenue share program,” Solobay said, “and funding these grant programs through this kind of funding mechanism as opposed to general fund dollars, is kind of what this is all about.”

Emily Petsko joined the Observer-Reporter as a staff writer in June 2013. She graduated from Point Park University with a dual bachelor's degree in journalism and global cultural studies.

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