Energy firms want role in next phase of shale case

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HARRISBURG – The energy industry wants a Pennsylvania state court to let it play a formal role in sorting out the loose ends left to resolve after a landmark court decision on a new state law designed to modernize oil and gas drilling regulations.


A hearing is scheduled today in Commonwealth Court in Harrisburg over the request to intervene by the Pennsylvania Independent Oil and Gas Association, the Marcellus Shale Coalition and the American Petroleum Institute.


The loose ends are left over after the state Supreme Court late last year struck down new restrictions on local governments’ ability to control drilling activity in the Marcellus Shale natural gas formation.


Meanwhile, the state and other parties that are already in the case filed briefs last week that lay out their arguments about what should happen next, in advance of a hearing before the full Commonwealth Court May 14.


Last month, Commonwealth Court Judge Dan Pellegrini ordered the sides to lay out the issues that remain to be resolved: whether people who use water wells should be notified if there are nearby chemical spills related to drilling; whether the Public Utility Commission must review local ordinances on the logistics of drilling; if gas transportation or storage companies still have authority to take private land; and if doctors can disclose the contents of chemicals used in the hydraulic fracturing process to their patients and others.


None of the parties are currently claiming that the entire law must be thrown out because of the high court ruling, an issue known as severability. That means the impact fee that has been generating more than $200 million annually for drilling communities and state agencies and grant programs is likely to remain in place.


In a statement Tuesday, the American Petroleum Institute said it is seeking to intervene in the case because “there are significant questions regarding the certainty of investments and ability for the natural gas industry to develop across the commonwealth.”


Jordan Yeager, a lawyer for the municipalities and others who successfully challenged the law, said that if the energy industry is allowed to join the case it will have a limited impact.


“If they do intervene, they’re not going to be able to undo orders that have been entered, and they’re not going to be able to delay the consideration of the rest of the case,” Yeager said Tuesday.


The utility commission’s role in reviewing local ordinances as they pertain to the logistics of drilling – as opposed to the location of wells – is important because the agency’s decisions would affect the ability of municipalities to collect their share of the impact fees.


The Supreme Court ruling means local governments will be able to determine where drilling can occur, but there remains a question about who will determine technical regulations.


“We think the statute still requires the PUC to do some review of some local ordinances, and it’s a question of whether we do or don’t, or which ones,” said the commission’s lawyer, Matt Haverstick.


The Department of Environmental Protection argued in its filing last week the utility commission still has an important role to play under authority that dates to a previously existing law, the Oil and Gas Act.


Commonwealth Court, the agency’s lawyers argued, “has repeatedly recognized that state law may, and frequently does, pre-empt municipalities from exercising control over operations where the statutory scheme controls or otherwise reserves those powers unto the commonwealth.”


In its brief on behalf of the commonwealth, the attorney general’s office argued that the companies’ eminent domain power and the restrictions on physicians are both constitutional.


“The Supreme Court’s decision affirms the right of municipalities to engage in zoning to protect their interests and the interests of their residents under the Environmental Rights Amendment,” the attorney general’s office wrote. “However, it does not negate the commonwealth’s concurrent power to establish statewide rules and regulations governing the oil and gas industry so long as it does not interfere with the right of municipalities to engage in zoning.”


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