On February 13, 2012, Pennsylvania Governor Tom Corbett signed House Bill No. 1950 into law, approving major changes to the Pennsylvania Oil and Gas Act, most notably an impact fee on unconventional drilling operations. Along with the impact fee, the receipts of which will be distributed among local governments, state agencies and several new programs, the new legislation also increases the administrative powers of the Public Utility Commission ("PUC") and the Department of Environmental Protection ("DEP"). The following sets forth highlights of the new legislation.

Unconventional Gas Well Fee

While the legislation does not contain a severance tax sought by some groups, it does contain an impact fee on unconventional wells drilled in the Commonwealth. The legislation does not provide for a fee for conventional or shallow wells. The impact fee delegates numerous responsibilities to the county where the well is located, including whether or not that county will impose an impact fee. The governing body of a county containing spud unconventional gas wells may elect whether to impose a fee on each unconventional gas well spud in that county. A county electing to impose the fee must pass an ordinance within 60 days after the legislation becomes law. If the county does not pass an ordinance imposing the fee, it cannot share in the funds collected by the state. If the county elects not to impose the fee, the fee may still apply in that county if at least half of the municipalities within that county, or municipalities representing at least 50% of the population of the county, vote to impose the fee, and the fee will then be imposed on a county-wide level.