How is Act 13 money being spent?
The road department of West Bethlehem Township used funds from oil and gas revenue received under Act 13 to purchase heavy equipment.
Observer-Reporter
The road department of West Bethlehem Township used funds from oil and gas revenue received under Act 13 to purchase heavy equipment.
An example of blight in rural West Bethlehem Township
MARIANNA – A poor, rural and isolated township in Washington County didn’t have money for an anti-skid spreader for its workers to use on winter roads in the 1970s.
“We had to use a shovel to spread it from the back of the truck,” said H. Duane Piatt, a supervisor in West Bethlehem Township, where there was a shrinking tax base and no industry to bolster its tax revenues until the Marcellus Shale natural gas drilling boom arrived a decade ago.
Over the past four years, Marcellus drillers have been pouring new money into municipalities in the state under Act 13, which gives the state Public Utilities Commission power to set and collect oil and gas drilling impact fees and distribute the money to counties and local governments without much oversight.
A total of $35.08 million in impact fees was divided among the municipalities in Washington and Greene counties between 2011 and 2014, money that was distributed without any state audits to ensure it’s being spent correctly.
“We don’t have enforcement authority,” said Nils Hagen-Frederiksen, the PUC’s press secretary. “Enforcement is not spelled out in the regulations.”
The state auditor general’s office is required by statute to visit Pennsylvania’s municipalities every two years to audit how they spend money they receive every year under the liquid fuels program.
Hagen-Frederiksen said the burden is on the municipality to spend the money under 13 categories that were approved under Act 13, and they range from offering real estate tax relief to property owners to public infrastructure construction. Any disagreements on how the money is spent is left to the taxpayers and elected officials, Hagen-Fredericksen said.
West Bethlehem Township has been under pressure from a group of local taxpayers who want the Act 13 money to be spent on more than the road department.
“We ask at the meetings. They told us they were using it on roads,” said Paulette Benard, one of the local residents who are putting pressure on West Beth supervisors over this and a number of other issues.
Benard claims to have taken 80 photos of blight throughout the community and would like to see money from the impact fees also spent on cleaning the area and creating recreational opportunities.
“You can’t be spending all of that money on roads,” Benard said.
Act 13 was signed into law in February 2012 by then-Gov. Tom Corbett, and it did not call for a Pennsylvania severance tax on Marcellus drillers, as is levied by other drilling states in the nation.
The law charges drillers an unconventional gas well fee based on a multi-year schedule and the average annual price of natural gas. In 2013, for example, the PUC charged drillers $50,000 per well in its first year of operation, a price that drops $10,000 each year until new rates are set in 2016.
The municipalities are required to file with PUC each March 1 a statement listing which categories received their impact fee money.
Washington County municipalities shared $21 million between 2011 and 2014 under the act, and those in Greene realized $14 million over that same time, PUC records show.
Washington attorney Gary Sweat, who is solicitor for many of the gas-rich communities in northwestern Washington County, agrees there doesn’t appear to be “close attention” given to oversight of the money, and there were questions raised in some places about how it’s being spent.
“It’s a black hole,” said Sweat, adding some communities receive a lot more money from gas-drilling fees than they do from such traditional revenue sources as property taxes.
Cumberland Township, Greene County, received $918,000 in Act 13 fees in 2014, more than any other municipality in Pennsylvania, PUC records show.
Cumberland supervisors voted earlier this month to give $307,000 of that income to the township’s police department of three full-time and nine part-time officers. Board of Supervisors Chairman Bill Groves said it would otherwise be difficult to fund the police department in Cumberland, which is one of only two municipalities in Greene that offer 24-hour police protection.
Another $120,000 of Cumberland’s money was given to the three volunteer fire departments in the township. But the largest allocation of $373,147 was placed in the township’s capital reserve fund.
The account is scrutinized annually by an auditor, Groves said.
“We choose to do it because there’s a lot of money in it,” Groves said. “I’m not handling a couple million dollars without it getting audited. That’s crazy.”
West Beth typically receives about $100,000 a year in traditional revenues. The municipality received $252,935 in income from Act 13 in 2013, money the township deposited into a capital reserve fund, PUC records show.
Morris Township, Washington County, received a total of $1.2 million over the four reporting years, $720,599 of which was in a capital reserve account in 2013.
West Beth Board of Supervisors Chairman Bob Mercante said the local audits performed annually by a firm the township hires confirms where the impact fee money is being spent.
“That’s enough. Everything is in the books,” Mercante said.
The township has to maintain 42 miles of local roads and 16 miles of state roads, and that work was behind the decision to use the Marcellus money to modernize the road department by purchasing new trucks, one of which cost $180,000.
“We never had money before. Why should we use that money to tear down blight and allow people to drive around on bumpy roads?” Piatt said.
Much of the Act 13 money that was spent locally went to repairing roads damaged by the heavy Marcellus-related trucks driven to and from drilling pads, state Sen. Camera Bartolotta said.
“Center Township (in Greene County) received $588,000 in 2014, and they spend every penny of it to repair roads. I have no problem with that,” said Bartolotta, R-Carroll.
She said she was unaware that enforcement of how the money is spent was left out of the Act 13 regulations.
“I agree there could be more eyes on it to make sure it’s not being misused,” Bartolotta said. “I’ll have to look into it.”
Greene County Bureau Chief Mike Jones contributed to this report.