State Supreme Court decision unsettles oil, gas drilling industry
With the Supreme Court's decision on the state's oil and gas law reforms, the spotlight turns back to town halls and municipal buildings statewide — even as the specter of more court wrangling looms.
Gas drillers will be looking for communities they can cooperate with in order to drill, industry experts said. And many municipalities will be reviewing their laws on when and where they allow drilling.
They'll have to figure out how they fit in with constitutional powers affirmed on Thursday in a 4-2 Supreme Court decision, said John Smith, solicitor for Cecil and Peters, two of the winning parties in the case.
“A lot of it is going to depend on how municipalities react to the decision. They're the ones making the rules,” said Blaine A. Lucas, a Downtown attorney at Babst Calland Clements and Zomnir PC who represents energy companies in local regulatory cases. “Whether you liked (the law) or not, what it did was put some pretty bright-line rules on what municipalities could do. And that's all out the window now.”
Lawyers, lawmakers and businessmen across Pennsylvania were still trying on Friday to digest the lengthy, landmark ruling that the Supreme Court took 14 months to craft.
In a case that pitted five Pittsburgh suburbs and others against the state, the high court sided with the suburbs, ruling that the state put unconstitutional limits on municipal powers as part of the oil and gas law reforms known as Act 13.
Those limits were a critical part of the law that could have helped drilling by streamlining rules for 2,500 municipalities, supporters said. Many drilling companies will respond to that loss by reaching out to municipal governments to try to smooth over their relationships and ensure they can work together, observers said. Others are pushing state leaders for a fix.
“While there is no doubt that this decision is a significant setback, we remain confident that the Legislature will revisit this issue swiftly to provide a clear and predictable framework to encourage continued development of this generational opportunity for our region and the commonwealth,” Consol Energy Inc. spokeswoman Kate O'Donovan said in an emailed statement.
Several drilling companies working in the area either declined to comment or said they are reviewing the ruling and could not go into the specifics of their response.
Lawmakers are in the same situation, and they aren't likely to react swiftly, said Drew Crompton, chief counsel for Senate President Pro Tempore Joe Scarnati, R-Jefferson County. While some Supreme Court decisions lay out a map for the Legislature to follow, this one did not, he said.
There are still probably months to go before the case is finalized, and lawmakers won't act before that, Crompton said. The Supreme Court sent parts of the case back to Commonwealth Court. It told the lower appeals court to decide whether the remaining parts of Act 13 — a fee on each deep-shale well and tougher environmental standards — can stand while severed from the parts that the high court struck down.
“The fee (and) the environmental portions of the bill are all at least at risk,” Crompton said. “Perhaps at the end of the day they're sustained ... but there're people who are going to make the argument that all the sections of the act were built with all the other sections of the act in mind.”
Even on the municipal level, court fights are likely, experts said. While many municipalities had fine relationships with drillers, several did not. Dozens of communities had moved to put conditions on when and where drilling could happen — conditions that drillers often fought — and that's still within a municipality's power in light of the Supreme Court decision.
Before Act 13, the state had no clear rules, only court precedents that set fuzzy parameters for how far municipalities could go in regulating things such as which neighborhoods drillers could work in, whether they could work at night and how much noise they could make. Without clear guidelines, it led to rule-making that often took months for municipalities, followed by a permitting process that could be just as lengthy and then subject to all sorts of court appeals.
One of those battles between South Fayette and Range Resources Corp. is pending, having gone into limbo while the Supreme Court deliberated.
Those kinds of cases can stretch on for two to four years, Lucas, the industry lawyer, said. And the legal fees can go from five figures to six for each side once the appeals start, he added.
If a local ordinance is well-written, it does not have to lead to that much fighting, said David M. Ball, a councilman in Peters who was one of several plaintiffs in the Supreme Court case. Their townships passed rules in part to draw clear boundaries for drillers to work in without costly legal battles, he said.
“We very much hope we can avoid that,” Ball said. “All the townships involved here are not at all interested in another round of contentious legal fights. That's why we worked in good faith to put together very clear and conscientious ordinances.”
Timothy Puko is a staff writer for Trib Total Media. He can be reached at 412-320-7991 or firstname.lastname@example.org.
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