Friday, April 15, 2011

PA Marcellus Shale Local Zoning Not Pre-empted by Oil and Gas Act

Pennsylvania Commonwealth Court Upholds Fayette County Zoning Ordinance
Posted: August 15, 2010
Outcome of a Fayette County court case involving a zoning ordinance
by Michael A. Magee, Research Assistant
On July 22, the Commonwealth Court ruled that Fayette County’s (Fayette) zoning ordinance was not preempted by Pennsylvania’s Oil and Gas Act (OGA). Penneco Oil Co., Inc. v. County of Fayette, No. 18 C.D. 2010, 2010 WL 2853639. Fayette’s ordinance allows wells in residential, industrial, and airport zones, but only by special exception upon the satisfaction of specified conditions.
OGA expressly preempts local regulation of oil and gas operations except for ordinances passed under the Municipalities Planning Code (MPC) or the Flood Plain Management Act. Further, MPC-based enactments like Fayette’s ordinance are preempted if they share OGA’s purposes or if they regulate features of oil and gas operations addressed by OGA. 58 PA. STAT. § 601.602. In 2009, the Pennsylvania Supreme Court addressed OGA preemption of municipal ordinances in Huntley & Huntley v. Borough Council, 964 A.2d 855, and Range Res. v. Salem Twp., 964 A.2d 869. These cases established the framework under which all OGA preemption issues are analyzed. In Penneco, the Commonwealth Court found Fayette’s ordinance to be generally applicable, affecting oil and gas wells only with regard to their location. Furthermore, the court found that although Fayette’s zoning ordinance overlapped with OGA’s purposes to a certain degree, its primary effect on oil and gas operations was to ensure the continued vitality of neighborhoods and to encourage compatible land use. These traditional zoning purposes, the court determined, were distinct from OGA’s purposes. For more information on this case, please visit the Case Law section of the Natural Gas Resource Area on the Agricultural Law Center Web site.
From the August 2010 edition of the Penn State Dickinson School of Law, Agricultural Law Brief

Ruling gives towns power over drillers Published: August 23, 2010 By Elizabeth Skrapits

Would local officials be powerless to stop a natural gas company from drilling a natural gas well in the middle of a housing development?

Not according to a new state court ruling, which affirms the right of municipal and county officials to limit natural gas drilling to certain districts, such as agricultural, mining or manufacturing, and out of residential neighborhoods.

Three new court decisions were outlined by attorney Jeffrey Malak during a recent meeting of the Back Mountain Community Partnership in Luzerne County.

The latest decision, Penneco Oil Co. Inc. v. the County of Fayette, "...opens up the floodgates and says municipal zoning is not pre-empted" by the state Oil and Gas Act, Mr. Malak said. The case was decided in Commonwealth Court on July 22.

Traditionally, local officials have limited say when it comes to natural gas drilling. Technical aspects, such as what kind of materials to use and how the well is drilled, are governed by the state Oil and Gas Act. But local officials are gaining more and more say in where wells can be drilled.

Two previous cases, Huntley & Huntley v. Oakmont Borough and Range Resources v. Salem Twp. (Westmoreland County) set precedents allowing local officials some leeway in regulating where natural gas companies can drill.

Now the Penneco Oil Co. Inc. v. the County of Fayette decision says the state Oil & Gas Act does not trump local zoning ordinances, and that local officials can take steps to protect the residential character of neighborhoods, Mr. Malak said.

In the case, Penneco, Range Resources Appalachia LLC and the Independent Oil and Gas Association of Pennsylvania took Fayette County office of planning, zoning and community development to court, saying it did not have to follow the county's zoning ordinance because the state Oil and Gas Act made it invalid. The court ruled in favor of the county.

The Penneco case allows that gas wells cannot be located within the flight path of an airport runway; that they must be at least 200 feet from a residential dwelling; and that officials can require fencing and shrubs around the well site. It also allows zoning hearing boards to impose any other provisions to protect the health, safety and welfare of residents.

Mr. Malak also said local officials can require a land development plan from natural gas companies, and they can require special exceptions, meaning there has to be a hearing in front of the zoning hearing board to grant permission and to impose any standard planning and zoning fees, in response to another question.

But, he said, there are still aspects of natural gas drilling that will have to be decided in court, such as whether there can be restrictions on hours drillers can operate and whether they can be barred from using roads at certain times.

Contact the writer:

Penneco Oil Company, Inc. v. County of Fayette, 2010 WL
2853639 (Pa. Cmwlth. 2010)
On November 1, 2006, Fayette County adopted a Zoning Ordinance.
On or about August 7, 2007, Penneco filed a complaint against
Fayette County and on or about May 5, 2008, Penneco filed, by
consent, an amended complaint primarily alleging that the Zoning
Ordinance is preempted by the Oil & Gas Act and requesting that the
trial court declare the Zoning Ordinance invalid.

Penneco Oil Company, Inc. v. County of Fayette
• Fayette’s Zoning Ordinance allowed oil and gas wells by “special exception” in
five zoning districts. The extent of Zoning Ordinance provisions that dealt
specifically with the granting of a special exception for oil and gas wells were the
A. An oil or gas well shall not be located within the flight path of a runway
facility of an airport.
B. An oil or gas well shall not be located closer than two-hundred (200) feet
from residential dwelling or fifty-(50) feet from any property line or right-ofway.
C. An oil or gas well shall provide fencing and shrubbery around perimeter of
the pump head and support frame.
D. The Zoning Hearing Board may attach additional conditions pursuant to
this section, in order to protect the public's health, safety, and welfare. These
conditions may include but are not limited to increased setbacks.

Penneco Oil Company, Inc. v. County of Fayette
Penneco and its co-plaintiffs, Range Resources – Appalachia, LLC
and the Independent Oil and Gas Association of Pennsylvania,
argued that the Zoning Ordinance was pre-empted.

Penneco Oil Company, Inc. v. County of Fayette
• The Fayette Zoning Ordinance did not pertain to the technical aspects
of well functioning and ancillary matters, but rather to “preserving
the character of residential neighborhoods, and encouraging
beneficial and compatible land uses.”
• “The fact that the zoning hearing board may attach additional
conditions to a grant of a special exception does not result in the
conclusion that the Zoning Ordinance provides arbitrary authority to
deny permission to drill.”
• “[T]hat the provisions of the Zoning Ordinance do not reflect an
attempt by Fayette County to enact a comprehensive regulatory
scheme relative to the oil and gas development within the county but
instead reflect traditional zoning regulations that identify which uses
are permitted in different areas of the locality. The Zoning Ordinance,
on its face, is clearly a zoning ordinance of general applicability like
the ordinance in Huntley.

Therefore, the Zoning Ordinance is not preempted by the Act.”

more on pre-emption

Company files suit over gas ordinance By Scott Beveridge, Staff writer

This article has been read 4879 times.

A company wanting to drill Marcellus Shale natural gas wells in North Bethlehem Township is suing the municipality in Washington County Court, claiming its zoning ordinance is unconstitutional and prohibiting the firm from doing business.
Delaware-based Rice Drilling, with local offices in Southpointe, is asking the court for an injunction to declare invalid the township's new ordinance regulating the oil and gas well industry, court records show.
The company claims the ordinance sets the locations of wells near houses, public buildings and streams in distances beyond the scope of those set in the state Oil and Gas Act. The company also claims the state Department of Environmental Protection oversees the industry, not local municipalities, according to the lawsuit filed Tuesday. The five-count lawsuit further claims the ordinance is unreasonable and had been drafted and approved in March without proper public notice.

The Law : 4/7/2011
Perhaps I am not aware of more recent developments, but in at least 3 separate cases, the Pennsylvania Supreme Court has ruled that local zoning ordinances take precedence over the State's Oil and Gas Act in reference to various aspects of oil/gas wells. A quote from The Times-Tribune (August 23, 2010) is as follows: Now the Penneco Oil Co. Inc. v. the County of Fayette decision says the state Oil & Gas Act does not trump local zoning ordinances.... The full article is available online.

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