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Shale gas rules bill heads to governor

| Thursday, Feb. 9, 2012

After more than three years of political debate and seven years into the shale gas rush, state legislators on Wednesday passed a comprehensive set of rules for the industry, including a fee on drilling and standards for municipal land use that may keep the fight going.

Drillers will have to start paying between $190,000 and $355,000 per well over 15 years starting from 2011, depending on the price of natural gas, under the bill's language.

The 174-page bill creates sweeping reforms, including new disclosure standards for the chemicals used to tap the gas, lengthened setbacks to keep wells more distant from homes and waterways, and standards for emergency containment.

But even some of its supporters have expressed concern about the bill's implications for local land-use rules. The state will now set the standards for where and when drilling can happen, giving drillers and gas processors broad access for their work. That may lead to lawsuits from several Pittsburgh-area communities trying to retain long-standing power over those decisions.

"When you remove zoning and land use at the local level, there's really nothing else for a municipal government to do," said Brian Coppola, a supervisor in Robinson in Washington County, one of the municipalities considering legal action. "You've turned a whole system upside down, not just the drilling. ... It's gutting our entire system. It's a big deal."

Gov. Tom Corbett helped push those rules through the General Assembly in an effort to create more uniform rules for drillers and to court their business across the state. He will sign the legislation, he said in a statement released less than 15 minutes after the House approved the bill 101-90 yesterday. It took nearly three months for the House and Senate to merge different bills, with the Senate approving it 31-19 on Tuesday.

"I am very pleased with the cooperative spirit shown by the General Assembly and their staffs while working to resolve this complex issue," Corbett wrote in his emailed statement. "This legislation reaffirms our strong commitment to safe and responsible natural gas development here in Pennsylvania."

Environmental groups were split over the bill, and the industry has been largely silent on it, though industry officials have repeatedly complained about a lack of statewide rules. One exploration company, Range Resources Corp., which has regional headquarters in Cecil and is one of the most active Marcellus shale drillers, said the legislation would provide strong, more predictable regulations that are nevertheless more costly.

The vote came a day before federal Energy Secretary Steven Chu plans to visit the Pittsburgh area today to highlight federal research in Clairton into safe and efficient gas drilling and as more states and industries go deeper into the natural gas boom.

Corbett initially said the state should not benefit from the drilling fee -- that it should be used only to pay for local impacts from drilling. Counties will still set the levy, but 40 percent of the money will go to the state to pay for programs including sewage treatment, water quality and highway and bridge improvements.

His original position was untenable because statewide public support for a tax on drillers was just too high, said Christopher Borick, a political science professor at Muhlenberg College in Allentown.

"So he slowly shifted on this -- you could use the word 'acquiesced' -- because he really didn't have much choice," Borick said. "There was pressure among legislators, even on the Republican side, to get some type of concessions regarding revenue to the state. In the end, there are very few people in the natural gas industry who are going to be upset about this bill."

In four years of drilling from the beginning of 2008 to the end of 2011, drillers had about three state environmental violations for every four wells, according to an analysis released yesterday by PennEnvironment, an environmental advocacy group. Of drillers with more than 100 wells, XTO Energy, which Exxon Mobil Corp. now owns, had the highest rate of three violations per well drilled. Consol Energy, including its subsidiary CNX Gas, had the lowest with 0.09.

While many of the bill's supporters lauded the new environmental rules, several joined protesters in complaining about the municipal provisions. Local governments should be able to account for local circumstances in helping set controls on drilling, said Paul M. King, president of the Pennsylvania Environment Council, who endorsed the bill on Monday saying the state could not wait a year for something stronger.

State courts have affirmed that municipalities have some control over where and when drilling can occur. But this bill would largely strip that, allowing the right to drill everywhere, including residential areas, as long as drill pads are at least 300 feet from a house and wellheads are 500 feet away.

The bill essentially erases the rules on which court precedent had relied, said Ross Pifer, director of the Agricultural Law Resource and Reference Center at Penn State's Dickinson School of Law. The municipalities rely on the Municipal Planning Code for their land-use controls, but the state Legislature has a right to pass new codes limiting those controls, he said.

"I don't know how they're going to challenge it," Pifer added, saying the new rules could be especially important in the Pittsburgh region. "In Allegheny County, you're looking at a completely different environment than in Tioga County, and those municipalities have more to balance. Creating a one-size-fits-all (system) is going to create more conflicts in those areas."

Additional Information:

Shale gas rules bill

-- Will produce an estimated $190 million to $355 million in impact fees annually over 15 years.

-- Allows the right to drill in all neighborhoods, including residential, as long as well pads are 300 feet from homes and wellheads are 500 feet from homes.

-- Requires formal water management plans.

-- Requires some participation in disclosing chemicals used in drilling on the industry's national public database, , and to health professionals as needed.

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