Marcellus Gas Play Generates Political Skirmishing in PA

The Marcellus shale gas play in Pennsylvania has generated abundant natural gas, stimulated economic activity in several regions that have been struggling and created fertile arenas for political skirmishing. These skirmishes crisscross the state and involve a variety of political combatants.

In September 2013, Democrat Attorney General Kathleen Kane filed criminal charges against XTO Energy Inc., a subsidiary of ExxonMobil, claiming that the company spilled more than 50,000 gallons of hydraulic fracturing wastewater from storage tanks at a gas well site in Lycoming County. On June 9, 2014, XTO filed a motion to dismiss based on “selective prosecution” arguing that Ms. Kane campaigned promising to “fight to ensure hydraulic fracturing is ended” and such a politically motivated purpose is unconstitutional since there has been no effort to prosecute similar situated companies.   On July 9, 2014, the Attorney General’s office filed a reply acknowledging that Ms. Kane has voiced opposition to hydraulic fracturing but denying the prosecution was improper since she would seek to prosecute other companies and had not singled out XTO for improper reasons. The court has not yet ruled on the motion.

On July 22, 2014, Auditor General Eugene DePasquale (a Democrat from Pittsburgh) released a report concluding “Rapid Shale Gas Development Outpaced DEP’s Ability to Oversee Industry, Protect Water Quality.” The News Release on the Auditor General’s website explains that the purpose of the audit was “to assess DEP’s ability to protect the water quality in the wake of greatly escalated shale gas drilling.” The report concluded that DEP failed to properly respond to and track complaints and take enforcement action due to inadequate resources. DEP disagreed with the audit findings but agreed with 22 of the auditor’s recommendations (what agency would not agree that more resources would be helpful?). DEP Secretary Abruzzo defended his agency, stating: “DEP’s goals are to determine if oil and gas activities contaminated a water supply and to ensure restoration of that water supply if it is warranted. If an operator voluntarily replaces or restores an impacted water supply prior to DEP’s determination, negating the need for an order, our goals are still achieved.”

On July 17, 2014, the Commonwealth Court of Pennsylvania issued its decision considering various issues on remand from the Pennsylvania Supreme Court regarding Pennsylvania’s Act 13, which significantly revised the Oil and Gas Act through a Republican led collaborative effort by Governor Corbett and the General Assembly. Commonwealth Court ruled that the Pennsylvania Public Utility Commission (PUC) does not have authority to review local zoning ordinances, thereby giving municipalities greater influence in the oil and gas permitting process. While this decision invalidated an important provision of Act 13 (no local zoning of oil and gas operations to assure statewide uniformity in exchange for impact fees going to localities), Governor Corbett’s office announced it was pleased with the ruling.

On July 30, 2014, the PUC rejected Sunoco Logistics’ request to seek exemption from local zoning requirements based on an argument it should be recognized as a “public utility” in connection with its plans to construct a pipeline that would transport natural gas from the Marcellus and Utica plays in western PA, WV and OH to its refinery at Marcus Hook near Philadelphia. State Senator Andy Dinniman (Democrat-Chester) released a statement observing “This ruling recognizes local control and the important role local zoning plays in protecting the quality of life or our residents, and such recognition is most welcome. Now it’s our job to continue to stand up for residents’ rights as this initial decision goes through its upcoming reviews.”

In the wake of the Pennsylvania Supreme Court’s decision declaring portions of Act 13 to be unconstitutional, some people expected municipalities to exercise their apparent powers by enacting ordinances addressing oil and gas operations. Indeed, in June 2014, Grant Township (Indiana County) enacted a “Community Bill of Rights” ordinance which bars corporations from depositing waste from oil and gas extraction and purports to invalidate permits that conflict with it.   On August 8, 2014, Pennsylvania General Energy, an oil and gas exploration and production company, filed a complaint in federal court against Grant Township challenging the ordinance. In April 2014, US EPA had issued an underground injection control well permit to PGE for a well in Grant Township which would enable PGE to inject production fluids into the well.   PGE argues that the ordinance is unconstitutional in several respects and is also preempted by state law.

As we approach the gubernatorial election in November, we can expect more political jousting. The election will not end the political skirmishing over hydraulic fracturing but the game board may be reset.

Stephen Smith focuses his practice on environmental and energy-related matters including regulatory counseling and litigation, administrative law, governmental affairs and lobbying. He represents clients before federal and state courts and administrative agencies. He provides client counseling and advice on compliance, permitting and agency communications as well as business transactions.
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