Editor & Publisher, Marcellus Drilling News (MDN)
PA Supreme Court yesterday ruled against the natural gas industry friendly Act 13 Drilling Law, in what could be essentially called a win for fractivists.
The Pennsylvania Supreme Court ruled yesterday in another (hopefully final) decision on the 2012 Act 13 Marcellus drilling law passed and signed by then Gov. Tom Corbett. Four left-leaning judges have just struck down more of Act 13, leaving not much left except the part that raises money and gives it away (called an impact fee, otherwise known as a severance tax).
You will recall that seven selfish towns sued the state over the Act 13 law and it’s provision that would substitute a statewide, uniform and fair set of zoning ordinances for drilling in place of a patchwork, crazy quilt system of local ordinances for oil and gas drilling. These seven selfish towns wanted their own ordinances and sued, ultimately winning at the Supreme Court. The PA Supremes couldn’t, however, be bothered with deciding every tiny bit of nuance and sent some items back to the lower Commonwealth Court for final decisions. Following several cases in the lower courts, some of it came back to the Supreme Court for a final decision, and that just happened.
The Supreme’s ruling affects the use of eminent domain, what information can be shared by doctors as it relates to privileged trade secrets for drillers, and most importantly, a decision that ends the right of the PA Public Utility Commission (PUC) to keep an eye on the zoning regulations passed by towns, to ensure those regulations don’t supersede state oil and gas regulations. Most of Act 13 is now down the toilet, thanks to four left-wing Democrat judges.
Under the original Act 13 law, the PUC has the right and responsibility to review local oil and gas ordinances for compliance with state standards, making the award of impact fee money to a town based on such compliance. A lower Commonwealth Court decision gutted that right, taking it away from the PUC in a July 2014 decision. The PUC appealed that decision back up to the Supremes, and this case definitely answered the question. PUC, you’re screwed. Towns can make any arbitrary, half-baked regulation they want with regard to oil and gas drilling and still get their grubby hands on impact fee money and use it for whatever they want. There are no checks and balances. The tax survived the court system–but virtually nothing else.
Pennsylvania’s highest court on Wednesday blocked industry-friendly provisions of a major 2012 state law designed to modernize natural gas drilling regulations, the latest in a string of court decisions striking down key portions of the law.
Four of the court’s six participating justices agreed in an 88-page decision stripping out provisions that a lawyer for a handful of municipalities described as “gifts” to the ascendant gas industry given amid the Marcellus Shale natural gas drilling boom.
“It generally was, in a lot of respects, an unconstitutional special law,” said lawyer Jordan Yeager. “It was carving out a unique set of benefits for the gas drilling industry that no other industry enjoyed. … Our constitution says you can’t do that.”
For the most part, the law’s provisions being challenged in court had been unused. But Yeager said the threat had remained that a municipality could be punished financially by state utility regulators if a gas drilling company complained that it had enacted an ordinance that was stricter than state law.
This decision will give those municipalities “breathing room” to enact tougher ordinances on the natural gas industry, Yeager said.
The Marcellus Shale Coalition, a natural gas exploration industry trade group, warned of the economic consequences of the decision.
“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,” the organization’s president, David Spigelmyer, said in a statement.
The plaintiffs included several townships in heavily drilled southwestern Pennsylvania — Peters, Cecil and Mount Pleasant in Washington County, and Robinson and South Fayette in Allegheny County — and Nockamixon Township and Yardley Borough in southeastern Pennsylvania’s Bucks County, where officials had been worried about their inability to control future natural gas exploration.
The lawsuit was filed in 2012, weeks after the legislation passed the Republican-controlled Legislature and was signed by then-Gov. Tom Corbett, a Republican.
In late 2013, the Supreme Court struck down perhaps the most controversial aspect: provisions that limited the power of local governments to determine where the industry can operate. The industry had sought the rules as one of its top priorities in Pennsylvania.
Then in 2014, a lower court blocked a related provision that had allowed state utility regulators to review how local zoning restrictions affect the natural gas industry, and punish municipalities whose restrictions were more stringent than the state’s.
On Wednesday, the high court upheld the lower court’s 2014 ruling, but went farther, in striking down two other elements. One was essentially a 1980s-era law effectively reprinted in the 2012 law that the justices say amounts to illegal eminent domain for a private purpose, natural gas storage.
Also struck down were provisions referred to as the “medical gag rule.”
Those provisions required drilling or service companies to disclose the proprietary content of hydraulic fracturing solutions to doctors who may have been treating patients who came into contact with, but it allowed the companies to require doctors to agree to keep the information confidential.
The ruling did not appear to leave intact any requirement for the companies to disclose proprietary information to health professionals.
Incidentally, the lawyer quoted, Jordan Yeager, is not just “some lawyer”—he’s the lawyer for the radical Delaware Riverkeeper, along with representing the seven selfish towns. Huge conflict of interest if you ask us.
The state is obligated “to act as trustee to conserve and maintain these and other natural resources for the benefit of all the people in this and future generations,” according to the ruling.
In Robinson Township v. Commonwealth, the court found the following parts of Act 13 to be unconstitutional:
* Notification. If you are a state resident who has a private water well, you don’t have to be notified of a toxic spill at an industry site that may affect your drinking water, according to a section of Act 13. The Pennsylvania Department of Environmental Protection only has to notify public water users. Residents using private water wells have to rely on industry to tell them if there’s been a spill. The state Supreme Court said that’s unconstitutional. There are more than 3 million Pennsylvanians who rely on private wells for their drinking water, and many of them live in the rural areas of the state where oil and gas drilling takes place.
* Medical gag order. Two sections of Act 13 prohibit doctors and other health care professionals from disclosing information that oil and gas companies consider to be trade secrets. The state Supreme Court said the statute gives the industry special treatment.
* Eminent Domain. If a gas company has rights to a majority of a Pennsylvania resident’s land, Act 13 allows it to take the final portion through eminent domain for gas storage wells. Attorney Jonathan Kamin argued private land taken through eminent domain has to be used for the public good, and the statute doesn’t require companies to give anything to the public once it has been taken.
* Severability. The Supreme Court has already struck down parts of Act 13. Because of those decisions, there are some other sections of the act that no longer apply, attorneys said. Attorneys previously won arguments that zoning decisions should be made locally instead of statewide.
Some parts of the original Act 13 allowed the PUC to withhold impact fees if the agency found townships did not comply with local ordinances in the act.
Funds have only been withhold against four townships, and they are four of the plaintiffs in this case: Cecil, Robinson, Mount Pleasant and South Fayette.
Commonwealth Court in July 2014 said the law couldn’t stay in place without uniform zoning, which also got kicked out of the act by the court.
Now, the state Supreme Court agrees with those Pennsylvania townships. At numerous points in its 88-page opinion, the court said Act 13 gave the oil and gas industry “special laws.”
The four Supreme Court justices (all Democrat) who ruled to gut the rest of Act 13 are: Debra Todd, Christine Donohue, Kevin Dougherty and David Wecht. Chief Justice Thomas Saylor, the lone Republican who heard the case, dissented.