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Pa. Supreme Court decision keeps gas industry regulation in local hands

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Pa. Supreme Court decision keeps gas industry regulation in local hands

The Pennsylvania Supreme Court on Sept. 28 struck down asunconstitutional more portions of the state's Act 13 governing the natural gasindustry and reaffirmed the right of towns and villages to use their zoningcodes to regulate where the gas industry could operate.

Following the decision, private gas storage operators cannotexercise eminent domain for projects and doctors cannot be forced to signnondisclosure agreements to obtain chemical trade secret information to treatpatients exposed to fracking chemicals.

The court also eliminated any distinction betweennotification of chemical spills for private water users and public waterdrinking facilities. Under Act 13, only public water operators were required tobe informed of a chemical spill. The court's latest decision called for allwater users to be notified but stayed the decision for 180 days to give the Legislaturetime to develop legal language and procedures that includes all water users.

In addition, the court made final its prohibition on thePublic Utilities Commission's blessing of local zoning ordinances to ensurethey allowed gas industry operations and determining whether municipalities'zoning codes keep them eligible for natural gas impact fees.

Challenges to gas operations will start in local venues suchas zoning boards and will not be fast-tracked, as they were under Act 13, tothe state's Commonwealth Court or the PUC, Babst Calland energy attorney BlaineLucas said Sept. 29. "This is a minor ruling in comparison with 2013,"Lucas said, "It really doesn't change the status quo."

But Curtin & Heefner LLP attorney Jordan Yeager hailedthe Supreme Court ruling. "I think the court's decision is a vindicationof the rights of Pennsylvanians." Yeager argued the original 2013 case tovictory for seven Pennsylvania towns, one doctor and Delaware Riverkeeper. "Itshows the gas companies aren't entitled to special treatment."

The gas industry liked Act 13's attempt to put an overlay ofuniformity across the more than 2,000 municipal jurisdictions statewide butvowed to keep working with whomever it needs to keep the gas flowing.

"We're disappointed in aspects of the court's ruling,which will make investing and growing jobs in the commonwealth more — not less— difficult without realizing any environmental or public safety benefits,"David Spigelmyer, president of the industry's state trade group, the MarcellusShale Coalition, said in a statement. "Despite this ruling, our industryremains deeply committed to adhering to the high bar set by Act 13, a commonsense bipartisan law that modernized our oil and natural gas regulatoryframework and serves as a national model for other states."

Blank Rome LLP attorney Michael Krancer, who was thesecretary of environmental protection when Act 13 was written and passed in theLegislature, warned against making too much of the latest court decision. "Theeminent domain provision regarding gas storage facilities was not part of somespecial deal for industry in 2012," Krancer said. "That provision hadbeen the law of Pennsylvania since 1984. It was part of the Oil and GasAct carried forward into Act 13."

Further, Krancer said, the chemical spill notificationrequirements did not come from the environmental community but from hisDepartment of Environmental Protection, or DEP. "The whole matter is muchado about nothing since DEP requires notice to all affected water users anyway."

The tragic flaw of Act 13 is that it ran contrary to decadesof Pennsylvania law and tradition calling for local control of local land, saidAndrew Levine, a Stradley Ronon energy and environmental attorney. "Thelaw tried to take away the power of localities to control land use. The partsthat caused political upheaval violated a central tenant of Pennsylvania law:Land use is controlled at a local level," he said.

"That's a cornerstone of Pennsylvania consciousness,"Levine said. "All land use is local, but the tradeoff is you can't excludeany land use. You can't say, 'You cannot have any drilling sites.'"