Pennsylvania Court Precedent on Fracking and How It Relates to Protecting Michigan’s Commons: PA State Supreme Court rules municipalities can limit what gas drillers can do

From the desk of FLOW founder Jim Olson: thoughts on the recent Pennsylvania Supreme Court ruling on how municipalities can limit gas drilling in their community (you can also read the full text of the TribLive.com article at the bottom of this post).

In a show of judicial analysis and sympathy toward the importance of land use stability and values of local communities, the recent Pennsylvania Supreme Court’s ruling upholding local government regulation of the risks of fracking sends a strong message: courts will look with skepticism and scrutinize attempts by state legislators to help special interests overrun local communities’ traditional land use and police powers to pass ordinances that address fracking for oil and gas. The decision is especially important in consideration of mainly vacuous federal regulation and tepid state regulation, where fracking’s substantial effects on land use, water, health, and quality of life are largely ignored.

In sum, the court’s decision refuses to allow a state legislature to take away local governments’ zoning or local power regarding expectations of their community and residents, thus upholding and retaining local governments’ ability to have a say in the location of land uses and the stability of their community, including regulation of industrial uses like fracking through land use districts and special use permits. This precedent is important for other Great Lakes states like Michigan with a long and strong history of enabling local governments with zoning powers because it protects their ability to use zoning powers as a legal and useful tool for protecting land uses, water, air, and health from the impacts and risks of fracking. Click here for more about FLOW’s local government ordinance program to address fracking impacts at the community level.

In December 2013, the Pennsylvania Supreme Court tossed out controversial portions of the state’s oil and gas law changes, letting municipalities retain control over where and when to allow gas drilling (fracking) in their jurisdictions. This is great news for Pennsylvania, and can be good news for local governments in other states as well. However, from state-to-state the laws are somewhat different, so while the ruling reveals a trend that is positive for empowering local governments to address fracking, it is not on “all fours” as we say in terms of useful precedent, and may not necessarily apply verbatim to other states. Thus, it is important that citizens and communities understand the differences of their own state and local government structures and laws so that communities can tailor their ordinances and regulation of various aspects of fracking and ancillary oil and gas uses and activities.

Basically, Pennsylvania’s prohibition on local regulations/ordinances was general in nature as to “oil and gas operations.” Since zoning power was and is delegated by states as a “state delegated specific power” and Pennsylvania zoning law does not exempt regulating the location of oil and gas operations or wells as land uses through districts and permitting schemes, the Pennsylvania court properly found that a general law prohibiting exercise of local governmental police power cannot be used to trump or limit a specific delegation of power like zoning. The Pennsylvania court also chastised the legislature for an overly general and vague prohibition, thus leaving room for local governments to exercise some power, and specifically their delegated zoning power. However, the Court also refused to allow the state legislature, by a broad sweeping law, to remove or take away zoning or the general exercise of local ordinance powers regarding expectations and reliance of communities and their residents on the stability of their land use plan and ordinances. This general reasoning is very important in states like Pennsylvania, Ohio, and Michigan, with strong local government traditions and involvement, including specified powers or preferences toward local governments in state constitutional provisions.

Here are five key points (with a few nuances) about how the Pennsylvania ruling relates to Michigan:

  1. In Michigan, there is no general prohibition on local governments to pass “police power” ordinances to address risks and harms and protect property, health, safety and general welfare. Hence, local governments in Michigan are free to regulate to the point that the ordinance does not outright prohibit a use but addresses the risks of harm or concern for protection of the public health, safety and welfare.
  2. Unlike Pennsylvania, in Michigan the state-delegated zoning statute to counties and townships specifically exempts “oil and gas wells, drilling, completion, production, and closure or abandonment.” However, the exemption is a narrow one. The Michigan Supreme Court has ruled that the “oil and gas well” exemption does not apply to ancillary uses and facilities related to oil and gas wells, such as pipelines, access roads, haul and transfer facilities, storage, sweetening facilities, pumps, and high-volume water wells such as those required for horizontal fracturing. At least as to the location of such wells and related facilities, a special use permit or other zoning regulation to assure compatibility with existing land uses, water uses essential to a land use district such as farming, residential, or park and recreation, could be required.
  3. On the other hand, like Pennsylvania, in Michigan there is no such specific exemption for “oil and gas wells” in the state delegated zoning power to cities. So, unlike townships and counties in Michigan, cities are similar to the Pennsylvania situation. If the legislature attempts to prohibit generally what the zoning power to cities specifically allows, i.e. does not exempt, the Pennsylvania case would be useful precedent
  4. In Michigan there are limitations, although not outright prohibitions, on local government police power ordinances that regulate the location of public utilities or natural gas or other pipelines that are certified by the Michigan Public Service Commission (with the exception of interstate federally certified lines, which are not subject to local ordinances). However, local governments, in these instances, may require by ordinance essential or critical information concerning:
    • use and safety of roads,
    • environmental and hazardous substances disclosures,
    • including chemicals,
    • bonds, indemnities, and insurance,
    • site plans,
    • reporting and inspection reports, and
    • action plans in the case of spills or emergency.
  5. Michigan’s 2008 water withdrawal law, with its corollary Water Withdrawal Assessment Tool (WWAT) contains a provision that prohibits local ordinances from regulating water withdrawals. However, this law does not regulate or address land use or zoning, such as the location, site plan, and facilities themselves. It follows that local communities could, through their state-delegated zoning power, regulate the location of water wells to assure they are harmonious and not incompatible with existing land uses.
    • It would be quite reasonable for a local community to restrict high-volume water wells, pumps, and facilities and pipelines through land use districts or special use permits. Indeed, the Pennsylvania court decision would provide solid precedent for this, because, as described above, a general prohibition on local ordinances would not preempt or limit the scope of specifically state-delegated zoning power.
    • So when it comes to high-volume water wells for oil and gas development, local communities should be able to regulate them through zoning. Why? Because for townships or counties, water wells are “ancillary” to the oil and gas well and therefore not within the “oil and gas well” zoning exemption, and for cities because there is no oil and gas exemption in the city zoning law.
    • Finally, in a somewhat ironic twist, the 2008 water withdrawal law expressly exempts oil and gas development from having to comply with the WWAT or 2008 water withdrawal law. Hence, arguably it would be inconsistent for an oil and gas company to argue that local governments could regulate their water withdrawals when they do not need a permit or fall with the regulatory purview of the water withdrawal law in the first place.
    • But there is another twist to the irony. The Michigan Department of Environmental Quality (DEQ) by internal directive requires oil and gas companies to comply with the WWAT to show no adverse environmental impacts. However, no permit is required under the 2008 water law, and the DEQ directive is more lenient in its application than the WWAT and its application and permitting requirements. Despite these twists, local governments, in any event, have the zoning power to restrict or require special use permits for high-volume water wells based on location and land use issues as opposed to withdrawal issues.

In conclusion, Michigan law already empowers local governments with a broader and more effective ability to address fracking impacts via municipal zoning and police power ordinances. However, this Pennsylvania Supreme Court case is still very relevant for supporting the broader effort throughout the Great Lakes and Midwest region to protect our land, water and common resources, and community well-being from a loosely regulated in terms of land use and impacts of fracking oil and gas development.

-Jim Olson

Read on for the full story from TribLive.com

PA State Supreme Court rules municipalities can limit what gas drillers can do

December 19, 2013

By: Timothy Puko, Pittsburgh Tribune-Review

After nine years of drilling, three years of debate and 14 months of court deliberation, Pennsylvania is back where it started, with shale gas companies and municipal governments at odds over how to manage the Marcellus shale natural gas boom.

The State Supreme Court ended more than a year of uneasy stalemate on Thursday when it struck down oil and gas law reforms that were supposed to limit municipal powers on drilling. The 4-2 decision allows municipal governments to keep blocking off some, though not all, of their neighborhoods from drilling, and subjecting drillers to reviews before permitting drilling.

The long-awaited decision undoes a key element of Gov. Tom Corbett’s signature legislation: It strips the oil and gas law reforms known as Act 13 of the biggest benefit they gave drilling companies. It gives environmentalists and municipal governments a potentially historic precedent to challenge drilling all over the state, reigniting legal battles that were brewing before the case went to state courts last year.

“It’s a great day for all the residents here in Pennsylvania,” said Deron Gabriel, commissioner in South Fayette, one of five Pittsburgh suburbs to lead the legal challenge that started in March 2012. “Fundamentally, we’re vindicated. … We’re able to continue to zone and keep industrial activities where they should be — in industrial areas.”

Both Corbett and members of the Marcellus Shale Coalition industry group called the decision a disappointment. Officials of the coalition and the Pennsylvania Independent Oil and Gas Association said they want to work with municipal groups to find solutions to their conflicts.

“We must not allow (Thursday’s) ruling to send a negative message to job creators and families who depend on the energy industry,” Corbett said. “I will continue to work with members of the House and Senate to ensure that Pennsylvania’s thriving energy industry grows and provides jobs while balancing the interests of local communities.”

The passage of Act 13 culminated three years of debate on how to modernize the state’s rules to manage the new rush of shale gas drilling. Horizontal drilling and hydraulic fracturing began in the Marcellus shale about nine years ago, booming to more than 7,400 unconventional wells statewide, according to state records.

Passed in February 2012, Act 13 was supposed to have a three-pronged effect. Two — an update to environmental protections and a fee on deep-shale wells — remain. But the effort to help drillers by making uniform land-use laws in all 2,500 municipalities was part of the challenge and the part the court struck down.

The rules would have required municipalities to allow drilling, wastewater pits and seismic-testing explosives even in residential areas, which Chief Justice Ronald D. Castille called a “remarkable … revolution” on existing law. It would have allowed pads within 300 feet of existing buildings, which Castille said effectively stripped municipalities’ ability to plan for development.

Municipalities previously had the power to decide where and when drilling could happen, and South Fayette, Cecil, Peters, Mt. Pleasant and Robinson in Washington County sued to keep that power. The law put them in conflict with a constitutional mandate to protect residents and property rights by not allowing them to keep drilling away from schools, parks and businesses, they argued.

The Supreme Court heard the case in October 2012 and took 14 months to craft a broad, 162-page decision. Castille wrote it for three members of the majority, and a fourth wrote a concurring opinion. Castille, a Republican Vietnam War veteran and former Philadelphia prosecutor, wrote at length about the state’s history of environmental degradation.

He quoted a passage on deforestation from the timber industry, listed a series of local environmental disasters including the 1948 Donora smog tragedy and noted the billions needed to repair decades of environmental damage from coal mining, which he later said may be rivaled by shale gas extraction. The state has a “notable history of what appears retrospectively to have been a shortsighted exploitation of its bounteous environment,” Castille wrote.

His argument attempts to re-establish the importance of the state Constitution’s Environmental Rights Amendment, the pivotal law cited in his opinion. That amendment empowers municipalities to protect the environment, and the state overstepped its powers by ignoring it, forcing them to accept uniform rules for gas drilling, Castille said.

“A new regulatory regime permitting industrial uses as a matter of right in every type of pre-existing zoning district is incapable of conserving or maintaining the constitutionally protected aspects of the public environment and of a certain quality of life,” he wrote. “Protection of environmental values … is a quintessential local issue that must be tailored to local conditions.”

The ruling is likely to trigger a flurry of activity from drilling industry lobbyists and lawyers, experts said as they awaited the high court’s decision.

The industry may pressure state lawmakers to try again to streamline rules. One option may be to write a model ordinance for municipalities, then pass a law that allows them to collect impact fees only if they use that ordinance, said Ken Komoroski, an attorney at Downtown-based Morgan, Lewis & Bockius LLP.

“If they can’t do it with a sledgehammer, they’re going to have to do it with a carrot,” attorney Kevin McKeegan, a land-use law expert with Meyer, Unkovic & Scott LLP, Downtown, said last December.

Timothy Puko is a staff writer for Total Trib Media. Reach him at 412-320-7991 or tpuko@tribweb.com.

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