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Pennsylvania Township Enacts Ordinance to Regulate Pipelines

In an unusual reach by local government, the Forward Township Board of Supervisors voted unanimously to enact an ordinance regulating natural gas transmission and gathering pipelines built in the municipality, located in Allegheny County, PA.

According to the Shale Energy Law Blog, the ordinance is similar to a conditional use permit. Companies interested in building a pipeline would first need to apply to the township's zoning commission. Final approval for any pipeline project would be granted by the supervisors, who may decide to place additional conditions or restrictions on permits, citing public health and safety.

The pipeline ordinance also requires companies to pay, upon project approval, an application fee of $3,000 per mile, up to a maximum of $15,000. The companies would also pay for a performance bond of $25,000 per mile and put $50,000 into escrow to cover costs from the pipeline's closure or abandonment, property restoration, or to mitigate any air or environmental issues.

Township officials and their general counsel, Matthew Racunas of the White Oak, PA-based law firm Patricia McGrail LLC, could not be reached for comment Friday.

Kevin Moody, general counsel for the Pennsylvania Independent Oil and Gas Association, was surprised to hear about Forward's ordinance and expressed doubt that it would survive a legal challenge.

"I don't see how anything like that is going to stand," Moody told NGI's Shale Daily on Friday. "FERC [the Federal Energy Regulation Commission] regulates interstate transmission lines, and as far as safety goes, the federal government regulates most gathering lines.

"Only in the most rural areas do they not have authority, but there are a couple rulemaking proceedings under consideration at the federal level to do so, to reach into the so-called Class 1 areas, which are in the most rural areas."

Moody said that after Pennsylvania passed Act 127, the state Public Utility Commission (PUC) became the "state agent" for the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) for most pipelines in Pennsylvania (see Shale Daily, April 30, 2012; Dec. 19, 2011). While PHMSA does not inspect Class 1 gathering lines, Act 127 requires the PUC to create a registry of all gathering lines in the state, including Class 1 gathering lines.

"The PUC has the authority to enforce federal rules on gathering lines and intrastate transmission lines that are not public utilities," Moody said. "So the safety of these lines is already regulated by the state and the federal government."

Moody said Forward Township, by enacting local ordinances on natural gas development, was following the lead of other municipalities which are now locked in a legal challenge to Act 13, the state's omnibus Marcellus Shale law (see Shale Daily, Oct. 18, 2012). A state Supreme Court ruling on the Act 13 case -- also known as Robinson Township et al v. Commonwealth et al, (No. 284-MD-2012) -- is not expected before June.

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