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Act 13 Fallout Still Posing Challenges for Pennsylvania Operators

Nearly one year after a landmark court decision diminished Pennsylvania's regulatory authority and gave more power back to municipalities, new challenges against the oil and gas industry are setting the stage for key legal decisions across the state that could affect how townships handle development.

Drilling opponents don’t like the local ordinances either. From the northeast to the southwest part of the state, several townships are facing similar challenges to drilling permits issued under local residential and agricultural zoning ordinances. In most of the cases, opponents are claiming that residential and agricultural zones are not suitable for unconventional well sites. Challengers are claiming that natural gas development in these areas threatens homes, businesses, public safety and the legal rights afforded to residents under an environmental amendment included in the state's constitution.

"More broadly, in the context of a lot of these challenges, people are asserting that these residential and agricultural ordinances that allowed drilling are invalid, based on an interpretation of the Robinson Township Act 13 case," said attorney Blaine Lucas of  Pittsburgh-based law firm Babst Calland, who specializes in land-use issues. "There's a relatively small group of attorneys so far -- several of whom were involved in the Act 13 litigation -- that are basically reversing their argument, which said provisions of Act 13 stripped local government's authority to regulate drilling.

"Now they're turning that on its head with their interpretation of the plurality decision and using it as a weapon to say these local ordinances aren't strict enough," he added. "They're making two arguments."

Last December, the Pennsylvania Supreme Court struck down parts of Act 13 that was passed in 2012 to update the state's aging energy laws (see Shale Daily, Dec. 20, 2013; Feb. 15, 2012). Essentially, the court returned to municipalities their right to change or enforce local zoning laws. But the high court's ruling also hinged largely on a reading of Article I, Section 27 in the state's constitution, which reads in part, "The people have a right to clean air, pure water and to the preservation of the natural scenic, historic and esthetic values of the environment."

A plurality of the court found that the centralized zoning regulations in Act 13, which gave most power to the state, violated the amendment. At the time the ruling was issued, sources said it could open the floodgates for further litigation against the oil and gas industry (see Shale Daily, Jan. 6; Dec. 27, 2013).

According to sources and court documents, current challenges against local zoning ordinances, and the permits issued under them, are being heard by townships and lower courts in Butler, Beaver, Allegheny, Westmoreland, Lycoming and Lawrence counties.

Most of the cases have yet to be decided. But in September, a common pleas court judge cited the Act 13 case in his decision to invalidate a conditional-use permit issued in a residential-agricultural zone in Lycoming County for a well pad planned there, siding with residents concerned about health hazards and their safety (see Shale Daily, Sept. 4). In another contentious case in Butler County, two environmental groups have filed a challenge against a township for modifying a zoning ordinance that they claimed facilitated plans for oil and gas drilling near a school there (see Shale Daily, Sept. 18).

The Lycoming County decision effectively ended Denver-based Inflection Energy LLC's bid to drill there, while the Butler County case has forced Rex Energy Corp. to suspend its operations until the zoning appeal has been decided (see Shale Daily, Nov. 20; Nov. 12)

"I don't think it's emboldened these challenges, but what the Act 13 ruling did is it clarified the rights of residents in these areas,” said attorney John Smith, who represented townships that won the Act 13 case. “In other words, permitting wells everywhere was declared unconstitutional and that applied to how local governments approach this, which is how we envisioned it. The reason it was declared unconstitutional is so it could be utilized at the local level. You can imagine why they're using this case law to say you can't zone an area that otherwise wouldn't be for drilling."

Smith, who's currently representing a challenger in Beaver County that owns an organic farm near a recently permitted compressor station in an agricultural zone, said the state Supreme Court has already decided upon the issue of where operators can drill and who approves their plans. He noted, however, that similar cases will continue to arise throughout the state until there's more clarity on the zoning issue.

"The justices did decide on this and that's what's unique about it," he said. "Until we get a couple more rounds of court decisions these issues are going to create tension and litigation, but I think you'll find more municipalities falling in line with what the courts have decided. A lot of it depends on where you live; is the hearing board, the town, made up of leaseholders who wouldn't generally be opposed to drilling, or others that might think twice about it."

One source told NGI’s Shale Daily the zoning challenges were "ridiculous," while another said a small group of attorneys and environmental groups were largely responsible for them and would likely continue to be.

"Our industry is deeply committed to working collaboratively with all stakeholders, especially those in local government, to ensure that we continue to safely and responsibly maximize the clear and undeniable benefits associated with tightly-regulated shale development," said Marcellus Shale Coalition spokesman Travis Windle. "Pennsylvania has some of the nation's most rigorous energy production laws and regulations, and our member companies are squarely focused on carrying out their operations to the highest standards, utilizing industry-leading best practices to continue to ensure that we protect our environment and the communities where we are privileged to work."

Lucas, like Smith, said more zoning appeals will undoubtedly be filed throughout the state.

"I think you'll see more of these until we get some kind of clarity from zoning boards and lower court decisions, which could take years to play out," he said. "Taken to an extreme, if you accept the argument that oil and gas drilling is incompatible with agriculture-related land uses, that would effectively ban most drilling in the state, where all these drilling sites are primarily located -- they're out on farms."

Lucas estimated that only about 1-2% of the land mass in industrial zones across the state -- where industry opponents in some of the zoning cases have indicated they'd like wells to be located -- are home to natural gas wells.

"The thrust of a lot of these [challenges] is municipalities have an obligation to do their due diligence and undertake a number of studies as a predicate to adopting an ordinance for drilling," Lucas added. "The arguments being raised, in some instances, would bankrupt these small towns. The level of studies that advocates are pursuing would involve substantial costs." 

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