LOCAL GOVERNMENT REGULATIONOF THE ENERGY INDUSTRY

Blaine A. Lucas, Esquire

University of PittsburghEnergy Law and Policy Institute

August 2013

Pennsylvania Local Government Units

• Number of counties – 67

• Number of municipalities – 2,562o Cities (1, 2, 2A, 3)o Boroughso Townships (1 & 2)o Home Rule

Legal Framework: Three Basic Issues

1. Does the municipality have the statutory authorization to regulate the use?

2. Is this authorization limited or “preempted” by state environmental regulations?

3. The procedural and substantive content of local regulation.

Pennsylvania: Local Authority to Regulate the Energy Industry

• Municipalities Planning Code (MPC)

• Municipal Codes

• Nuisance Law

• Vehicle Code

Primary Forms of Local Government Regulation

• Zoning Ordinance • Subdivision and Land Development Ordinance (SALDO)• Stormwater Management Ordinance • Noise Ordinance • Seismic Testing Ordinance • Roads

o Excess Weighto Driveway Accesso Crossings/Encroachments

Zoning Ordinances:Washington County

Municipally Zoned Unzoned

Zoning Ordinances:Lycoming County

Municipally Zoned County Zoned

Zoning Ordinances: Jefferson County

Municipally Zoned Unzoned

Regulation via Zoning: Permitted as

Permitted Use (Use by Right)

Zoning Officer

Conditional Uses/Special Exceptions

• More scrutiny in public hearing

• Longer time for decision

• Ability to impose conditions

Regulation via SALDO

• Is the lease or use of all or portion of the property a “subdivision”?

• Does the facility constitute a “land development” (includes a single non-residential building)

• If the answer to either is yes, normal SALDO review and approval process

Preemption: Defined

“The matter of preemption is a judicially created principal based on the proposition that a municipality, as an agent of the state, cannot act contrary to the state.”

Types of Preemption

• Express

• Implied or “field”

• Conflict

Tenets of Preemption

• Preemption not presumed

• Case-by-case analysis, based on state statute at issue

• Cannot regulate operational aspects of state regulated facility

Tenets of Preemption

• Cannot regulate engineering/geological standards

• Regulate location?

• Regulate setbacks, heights and buffers unless in conflict with state regulations?

Preemption: Wind Energy Facilities

• No express preemption

• No comprehensive statewide regulation

• Conflict preemption?

Preemption: Oil and Gas Prior Law: Oil and Gas Act §602

• All ordinances preempted except per MPC or Floodplain Acto Zoningo Subdivision and Land Development

• Not same features or purposes of Oil & Gas Act• Range Resources v. Salem Township

o Can’t have “comprehensive regulatory scheme”o Can’t single out oil and gas

• Huntley & Huntley v. Oakmont Borougho Where v. how questiono Designation of zoning districts in which oil & gas facilities can (and

cannot) be located not preempted

Municipal Reaction to the Supreme Court Decisions

Wave of ordinance activity

• 2009 – present • Over 275 ordinances• Over 210 municipalities • Mostly zoning ordinance amendments

Types of ordinance restrictions • Exclusionary zoning• Excessive setbacks• Noise• Well features/environmental

restrictions• Excessive fees

• Mid-stream restrictions• Road restrictions • Seismic testing limits • Constitutional problems• Other limits

Local Government Regulation of Oil and Gas Under Act 13 of 2012

• Places additional limits on local ordinances

• Changes the forum/process for resolution of legal challenges

Preemption of Local Ordinances (Chapter 33)

• Section 3302: All ordinances preempted except those adopted pursuant to the MPC and the Flood Plain Management Act (same as existing law)o Ordinances cannot address same features or purposes of Chapter

32 (same as existing law)

• Section 3303: Environmental acts also preempt local regulation (new)

Reasonable Development (§3304)(New)

Use/Distance Restrictions:

• Well/Pipeline Assessment/Seismic: Permitted – all areas

• Subterranean Operations: No limits

• Oil and Gas Operations: Permitted – all districts o In Residential – may prohibit/require conditional use for wells – if less than 500 feet

from well bore to existing buildingo In Residential – outer edge of well pad at least 300 feet from existing buildingo In Residential – all operations other than access roads, pipelines and security at

least 300 feet from existing building

• Impoundments: Permitted – all zoning districtso At least 300 feet from outer edge to existing building

Reasonable Development (§3304)(New)

Use/Distance Restrictions:

• Compressor Stations: Permitted – agricultural and industrial; Conditional Use other districts o Greater of 750 feet from existing building or 200 feet from property line, unless

waived o Noise: lesser of 60dBA at property line or Federal limit

• Processing Plants: Permitted – industrial; Conditional Use – agriculturalo Greater of 750 feet from existing building or 200 feet from property line, unless

waived o Noise: lesser of 60dBA at property line or Federal limit

• Setbacks o No greater than Chapters 32 and 33 o No greater than other industrial uses

Reasonable Development (§3304)(New)

No Limits on Hours of Operation:

• Compressor stations

• Processing plants

• Well drilling

• Rig construction/disassembly

Reasonable Development (§3304)(New)

• Requires Uniform Regulation of: o Construction activities

o Permanent facilities (height, screening, fencing, lighting, noise)

o Overweight vehicles

• Maximum Review Periods: o 30 Days: Permitted Use

o 120 Days: Conditional Use

Zoning Hearing Board

Process for Legal Challenges:Prior Law

Governing Body

(Curative Amendment)

Common Pleas Court

Pennsylvania Commonwealth Court

Pennsylvania Supreme Court (not by right)

Public Utility Commission

Process for Legal Challenges:Act 13

Commonwealth Court

Pennsylvania Supreme Court

(not by right)

Commonwealth Court

Pennsylvania Supreme Court

(by right)

Penalty for Violation: Loss of Well Fees

Municipalities found to violate Act 13 shall not receive any well fee funds until the ordinance is amended, repealed or the order that ordinance is unlawful is reversed on appeal

Act 13 Lawsuit

• Suit: By 7 municipalities/others challenging (primarily) local ordinance provisions of Chapter 33.

Act 13 Lawsuit

July 26, 2012 Ruling (4-3 vote): Majority Opinion

• Holding: Requiring all oil and gas operations in all zoning districts, including residential zoning districts, as a matter of law, violates substantive due process because it:

– Allows incompatible uses in zoning districts; – Does not protect the interests of neighboring property owners from harm;– Alters the character of the neighborhood; and – Makes irrational classifications.

• Result: Permanently enjoined the Commonwealth from enforcing Section 3304, and any remaining provisions of Chapter 33 which enforce it.

Act 13 Lawsuit

July 26, 2012 Ruling (4-3 vote): Dissenting Opinion

• Natural resources exist where they are, without regard to any municipality’s comprehensive plan.

• Section 3304 recognizes various forms of oil and gas operations, and limits where and under what circumstances they may be allowed in a particular zoning district.

• Bad planning does not itself render ordinance, or law, constitutionally infirm.

• Conclusion: Section 3304 is a valid exercise of the police power and, establishes zoning guidance to local municipalities that ensures uniform and optimum development of oil and gas resources.

Act 13 Lawsuit: Current Status

• Appeals: By all parties

• Expedited Consideration: October 17 Argument

• Resolution?

FOR ADDITIONAL INFORMATION, PLEASE CONTACT:

Blaine A. Lucas Attorney at Law blucas@BabstCalland.com

Two Gateway Center Pittsburgh, PA 15222 Direct 412.394.5657

Main 412.394.5400 Fax 412.586.1074 www.babstcalland.com