2. LOCAL GOVERNMENT REGULATION OF THE ENERGY INDUSTRY University of Pittsburgh Energy Law and Policy Institute LOCAL GOVERNMENT REGULATION OF THE ENERGY INDUSTRY Blaine A. Lucas, Esquire University of Pittsburgh Energy Law and Policy Institute August 2013

3. Pennsylvania Local Government Units Number of counties – 67 Number of municipalities – 2,562 o Cities (1, 2, 2A, 3) o Boroughs o Townships (1 & 2) o Home Rule

4. 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.

5. Pennsylvania: Local Authority to Regulate the Energy Industry Municipalities Planning Code (MPC) Municipal Codes Nuisance Law Vehicle Code

6. 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 Weight o Driveway Access o Crossings/Encroachments

7. Zoning Ordinances: Washington County Municipally Zoned Unzoned

8. Zoning Ordinances: Lycoming County Municipally Zoned County Zoned

9. Zoning Ordinances: Jefferson County Municipally Zoned Unzoned

10. Regulation via Zoning: Permitted as Permitted Use (Use by Right) Zoning Officer Conditional Use Governing Body Special Exception Zoning Hearing Board

11. Conditional Uses/Special Exceptions More scrutiny in public hearing Longer time for decision Ability to impose conditions

12. 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

13. 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.”

14. Types of Preemption Express Implied or “field” Conflict

15. Tenets of Preemption Preemption not presumed Case-by-case analysis, based on state statute at issue Cannot regulate operational aspects of state regulated facility

16. Tenets of Preemption Cannot regulate engineering/geological standards Regulate location? Regulate setbacks, heights and buffers unless in conflict with state regulations?

17. Preemption: Wind Energy Facilities No express preemption No comprehensive statewide regulation Conflict preemption?

18. Preemption: Oil and Gas Prior Law: Oil and Gas Act §602 All ordinances preempted except per MPC or Floodplain Act o Zoning o 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 Borough o Where v. how question o Designation of zoning districts in which oil & gas facilities can (and cannot) be located not preempted

19. 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

20. 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

21. 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)

22. 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 building o In Residential – outer edge of well pad at least 300 feet from existing building o In Residential – all operations other than access roads, pipelines and security at least 300 feet from existing building Impoundments: Permitted – all zoning districts o At least 300 feet from outer edge to existing building

23. 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 – agricultural 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 Setbacks o No greater than Chapters 32 and 33 o No greater than other industrial uses

24. Reasonable Development (§3304)(New) No Limits on Hours of Operation: Compressor stations Processing plants Well drilling Rig construction/disassembly

25. 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

26. 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)

27. Public Utility Commission Process for Legal Challenges: Act 13 Commonwealth Court Pennsylvania Supreme Court (not by right) Commonwealth Court Pennsylvania Supreme Court (by right)

28. 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

29. Act 13 Lawsuit Suit: By 7 municipalities/others challenging (primarily) local ordinance provisions of Chapter 33.

30. 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.

31. 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.

32. Act 13 Lawsuit: Current Status Appeals: By all parties Expedited Consideration: October 17 Argument Resolution?

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