Pa.’s natural gas impact fee revenue drops

by Ian Karbal, Pennsylvania Capital-Star
June 23, 2025

Pennsylvania’s tax on natural gas development and fracking brought in $164.5 million in 2024 – about $15 million less than the previous year. 

The state Public Utility Commission attributes the decline to a decrease in new wells, which are subject to the highest fees, and natural gas prices that remained roughly even to the previous year. It’s also around $100 million less than in 2022, which saw record revenue.

The tax on new fracking and gas drilling, called an impact fee, was created in 2012 to generate money from energy companies to distribute to communities seeking to address environmental impacts or infrastructure needs created by drilling. Drilling companies pay for each well they own based on the average cost of natural gas and the age of the well, with older wells costing less.

Drilling for natural gas can create environmental issues and pollution, as well as health problems for the surrounding community. Those can be exacerbated if wells are abandoned and land isn’t reclaimed after their use. 

The PUC says the bulk of the money, about $86.5 million, will go to counties and municipalities affected by drilling. Some $57.7 million is earmarked for  the Marcellus Legacy Fund, which supports statewide environmental initiatives and infrastructure projects. Another $20.4 million will be distributed to state agencies like the Department of Environmental Protection, the Emergency Management Agency and others.

“The impact fee continues to provide significant and sustained support for Pennsylvania communities – especially those directly affected by natural gas development,” PUC Chair Stephen M. DeFrank said in a statement.

Jim Welty, president of the Marcellus Shale Coalition, also weighed in. 

“Natural gas development delivers real, measurable benefits for Pennsylvania communities – driving job creation, powering economic growth and strengthening energy security,” he said in a statement. ““Beyond these core advantages, this industry continues to invest in projects that improve quality of life across the Commonwealth.”

The announcement comes roughly a month after the state Senate Environmental Resources and Energy Committee approved a bill that would withhold funds raised through impact fees from counties and municipalities that “unreasonably limit” natural gas development, regardless of the impact of nearby wells. As it stands, counties and municipalities with active natural gas development generally receive a larger share of funds.

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