In February 2012, the Pennsylvania legislature passed Act 13, which provided a comprehensive regulatory scheme for oil and gas operations throughout the Commonwealth. In December 2013, the Pennsylvania Supreme Court ruled that Act 13’s preemption of local zoning ordinances and institution of mandatory statewide zoning rules for oil and gas operations violated the Pennsylvania Constitution’s seldom invoked Environmental Rights Amendment. The Supreme Court subsequently remanded the case to the court below to consider whether its ruling invalidated other challenged portions of the Act, most crucially the Act’s provision giving the Pennsylvania Public Utility Commission (“PUC”) authority to review local zoning ordinances and withhold impact fees from municipalities whose local zoning ordinances do not comply with the Act.
On July 17, 2014, the Commonwealth Court of Pennsylvania ruled that, because the mandatory statewide oil and gas zoning regime was unconstitutional, those parts of the Act giving the PUC enforcement powers to ensure compliance with that mandatory statewide regime, including the withholding of impact fees, were likewise invalid. Robinson Tp. v. Com., No. 284 M.D. 2012, --- A.3d ---- (Pa.Cmwlth.July 17, 2014). Because the Supreme Court returned zoning power to the municipalities, local zoning ordinances would revert to being reviewed in the same manner as before the enactment of Act 13—in the courts of common pleas, not the PUC.
The Commonwealth Court’s decision did, however, uphold several portions of the Act. The Court held that Act 13’s requirement that the Pennsylvania Department of Environmental Protection (“DEP”) notify public drinking water facilities of spills and contamination but not private well owners did not violate equal protection because this difference in treatment was grounded in the practical fact that DEP does not regulate private well owners and therefore lacks information on private well location or ownership, making it “impossible for DEP to provide notice to…unknown private well owners.” Robinson at pp. 10-11.
Similarly, the Commonwealth Court found that Act 13’s quid pro quo requiring oil and gas companies to disclose the chemical composition of hydraulic fracturing liquids to physicians to assist in medical treatment in exchange for that physician’s confidentiality agreement did not violate equal protection or constitute preferential treatment to the industry, but rather “reflect[ed] the balance struck by the General Assembly between the need to disclose confidential and proprietary information for medical treatment, the public's interest in protecting these trade secrets, and the industry's interest in protecting its proprietary information.” Robinson at p. 15.
Finally, the Court found that giving public utilities eminent domain power to condemn property for natural gas storage facilities was not an unlawful taking for a private purpose because it could only be done where the gas stored was for “later public use,” not a private one.
While the Supreme Court’s decision only invalidated a part of Act 13, its reasoning served to doom many of the other significant provisions in the Act, according to the Commonwealth Court. Though the Commonwealth Court’s decision will be appealed, its tenor is consistent with the Supreme Court’s prior holding, making it likely that allocatur will be denied or, if granted, granted only in part and limited to very narrow grounds. The core premise of the Act—to establish a uniform set of rules across the state to maximize the benefits of the oil and gas boom and minimize its potential costs—has been frustrated, leaving behind continued uncertainty across the state.
This article was authored by Daniel R. Michelmore, Jackson Kelly PLLC. For more information on the author, see here.
Jackson Kelly continues to grow and expand services in Indiana and Ohio
Jackson Kelly expands presence in Illinois Basin through merger with Evansville, Indiana, law firm.
In response to the continued growth of the region and its local businesses, Rudolph, Fine, Porter & Johnson, LLP, of Evansville, Indiana, has elected to merge its 20 attorney practice into the Firm. For more information please click here.
Jackson Kelly relocates and expands Ohio office: Addition of three attorneys focused on oil & gas highlights demand in market.
To serve its growing energy practice, Jackson Kelly has moved its Ohio office from Canton to Akron and added established Akron attorneys Mark Bernlohr, Clay Keller and J. Alex Quay who will practice in the Firm’s Industrial, Environmental and Complex Litigation Practice Group. Working with Sandra Zerrusen, who joined Jackson Kelly in 2012, and the Firm’s other Ohio attorneys, the group will continue to offer clients the dedicated service they have come to expect from Jackson Kelly. Click here to continue reading.