Natural gas impact fee revenue up 19% as capacity issues remain

By Anthony Hennen | The Center Square

HARRISBURG, PA — The natural gas impact fee that brings in revenue to local and state governments in Pennsylvania hit a new high of nearly $279 million.

Rather than a severance tax imposed by many states, Pennsylvania levies an impact fee on natural gas-producing wells. The $279 million collected in 2022 is a 19% increase from 2021.

Since 2011, $2.5 billion has been raised through the fee.

County and municipal governments will get about $157 million; almost $104 million will go toward state environmental and infrastructure projects; and state agencies will receive about $18 million.

The $279 million is slightly above the estimate made by the Independent Fiscal Office in November, as The Center Square previously reported. Rising commodity and natural gas prices helped drive up revenues.

“The impact tax continues to be a smart policy that provides county and local governments the flexibility to support projects tailored to individual community needs,” Marcellus Shale Coalition President David Callahan said in a press release.

The most money will go to the southwestern, north central, and northeastern parts of the state.

Washington, Susquehanna, Greene, Bradford, and Butler Counties will receive the largest payments to county and municipal governments, ranging from $8 million to about $25 million.

Payment totals were down during the pandemic, with only $146 million in 2020. With the exception of that year, however, the impact fee has generated at least $200 million in revenue since 2017.

Pennsylvania is the second-largest natural gas producer in America behind Texas, with about 20% of total national production. However, gas production has fallen in recent years while other states have grown; pipeline capacity issues have limited development, as The Center Square previously reported.