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Judge Delays Part of Pennsylvania Impact Fee

As the clock was winding down for counties to sign on to the Pennsylvania Marcellus Shale impact fee, also known as Act 13, a Commonwealth Court judge pushed back the start date for portions of the law to give local governments more time to adopt its standardized zoning measures.

The ruling is an early victory for the municipalities that brought the case, but it does not address their ultimate goal of having those zoning measures tossed.

The law was originally scheduled to take effect on Saturday, but after hearing testimony Judge Keith B Quigley pushed the effective date of a portion of the measure back 120 days. The remainder will still go into effect on Saturday and the counties still have until Monday (April 16) to adopt the impact fee.

The seven municipalities that brought the case in Commonwealth Court in Harrisburg, PA, asked for a temporary injunction of the law to give them more time to update their zoning codes to meet the provisions of Act 13 and prepare to challenge the constitutionality of those provisions in court. The municipalities said that the 120-day window to amend their zoning codes after the law went into effect would create a period without set regulations.

While noting that the constitutionality question was not before the court, Quigley essentially agreed, saying the municipaities needed time to change their zoning laws without having to worry that oil and gas operations taking place in the meantime would be inconsistent with those laws in the future.

"The court agrees with petitioners that 120 days is not sufficient time to allow for amendments of local ordinances," Quigley wrote. The 120-delay does not directly impact other portions of the law, such as environmental provisions.

In a filing Tuesday, the state noted that municipalities were given 180 days to amend their zoning codes -- measuring from the day the law passed, as opposed to when it goes into effect -- and that the Pennsylvania General Assembly didn't "envision a process which would take more than six months to comply with" when it outlined the changes municipalities must make.

The state argued that the municipalities couldn't challenge the law because they didn't have the authority to override state rules on land use. A brief filed by the Commonwealth on Tuesday argued that the municipalities in the lawsuit had not shown how they would be harmed if the law went into effect. It described their legal claims as "nothing more than a broad criticism of the [law's] scope and effectiveness, rather than examples of unconstitutional actions."

The hearing kicked off a larger case concerning the constitutionality of Act 13, the omnibus shale law that imposes an impact fee on unconventional gas drilling, enhances environmental legislation and restricts local zoning powers. Generally speaking, the municipalities claim Act 13 created predictability for the gas industry at the expense of the health and safety of the public, making it in violation of the constitutional laws protecting the public well being.

The Marcellus Shale Coalition issued a statement following the ruling saying, “While it remains very early in the judicial review process, we remain confident that the legal merits of this law -- aimed at ensuring the safe and responsible development of clean-burning American natural gas in the Commonwealth -- will be recognized and upheld accordingly.”

The state claims that uniformity allows for better enforce of environmental protections because the state has more expertise and resources.

Robinson Township, Township of Nockamixon, South Fayette Township, Peters Township, Cecil Township, Mt. Please Township and the Borough of Yardley brought the lawsuit with the Delaware Riverkeeper Network, a few township officials and a doctor from Monroeville, PA (see Shale Daily, April 2). Although the lawsuit is is directed at the state, a collection of industry groups is asking to intervene into the case. A hearing for that request is scheduled Tuesday (April 17) (see Shale Daily, April 10).

With the Monday deadline approaching for Pennsylvania counties to decide whether to collect the impact fee, Bradford County, the state's heavyweight Marcellus producer, is set to vote Thursday. With 1,008 wells, Bradford accounts for around 20% of the 4,982 horizontal unconventional wells believed to be in play through the end of 2011.

Three holdouts from southwestern Pennsylvania -- Fayette with 185 wells, Armstrong with 112 wells and Indiana with 43 wells -- recently approved the fee. However, Luzerne, a county in northeastern Pennsylvania with only two wells in play, tabled its decision until after the court ruled on the municipalities' case.

The rig count in the Marcellus Shale has declined as of late, though there are more rigs active in the play than there were last year. The number of rigs actively drilling for oil and gas in the Marcellus for the week ending April 6 dropped two rigs from the previous week to 153, according to NGI's Shale Daily Unconventional Rig Count. That's also seven rigs fewer than last month, but a 9% increase compared with the 140 rigs in operation last year.

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