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Wednesday, June 23, 2010

Pittsburgh blow-up masks real challenge in regulating gas industry

Posted By on Wed, Jun 23, 2010 at 1:11 PM

At city council yesterday, an argument broke out -- surprise! -- over efforts to regulate drilling of the Marcellus Shale within city limits. 

City councilor Patrick Dowd, whose district is rife with talk about future drilling, has proposed an early draft of a bill to try and regulate such operations within city limits. The measure envisions such modest demands as requiring a minimum lot size of 15 acres for any drilling operation, and a 1,000-foot buffer separating such operations from any public building. 

Dowd's measure was not embraced by the gas industry, nor by more strident councilors Bill Peduto and Doug Shields, who want an outright ban. 

But unfortunately. both sides have something in common. The worrisome truth is that whether you want an outright ban or something less ambitious, the law isn't on Pittsburgh's side. In fact, due to a legal loophole I'll explain toward the end of this post, even a miniscule community like, say, Lower Burrell may have more control of its destiny than we do. 

Gas drilling is regulated by the state's Oil and Gas Act. And  Section 602 of the act makes clear that "No [local] ordinances or enactments ... shall contain provisions which impose conditions, requirements or limitations on the same features of oil and gas well operations regulated by this act."

This is what the lawyers call pre-emption: When the state passes a law govering some activity, those regulations trump any local ordinances that might try to regulate the same activity. 

Section 602 does make one notable exception to the preemption: zoning. By law, municipal zoning rules can apply to gas drilling. So a city could, for example, preclude a gas driller from putting a well in a residential community. (Unless, again, that city is Pittsburgh. Like I say -- more on that in a bit.) But there are some real limits to that power.

Generally speaking, zoning focuses on what the courts have called "how-versus-where" matters. Local officials can use zoning law to determine where a gas well can be installed ... but once a valid site is chosen, local officials have only limited say in how it does business. 

In fact, the state Supreme Court has already rejected one community's efforts to limit the growth of the gas industry. In a 2009 ruling, the court held that Salem Township had overstepped its authority in trying to set rules for gas drillers. The Westmoreland County community required, for example, that gas drillers seek permits from the township itself before drilling began. It set requirements for restoring drilling sites once the job was over. And it established rules for building gas lines and water-treament facilities while the drilling was going on.

The Supreme Court tossed out all those rules -- largely because they were pre-empted by the state law. "[T]he Ordinance reflects an attempt by the Township to enact a comprehensive regulatory scheme relative to oil and gas development," the ruling held. And that, see, is a bad thing. 

Dowd's legislation is still in its very early stages, of course, and seems less stringent than the Salem ordinance. Some of its rules would almost certainly pass muster -- like its ban on lighting that shines into residential homes. But I can already imagine a lawyer making a stink about other provisions.

For example, Dowd's bill calls on a gas-driller to do soil testing before drilling begins and after it ends -- and mandates environmental remediation to repair any damage. That's a great idea, but it also seems duplicative of the Oil and Gas Act's provisions on well-site restoration.

So if even Dowd's fairly tepid bill might run into trouble, you can probably imagine how an outright ban -- a la Shields and Peduto -- would fare. Using zoning for such purposes, anyway, is always problematic. A 1967 state Supreme Court rulng, for example, held  that "[a] zoning ordinance which totally excludes a particular business from an entire municipality must bear a more substantial relationship to the public health, safety, morals and general welfare than an ordinance which merely confines that business to a certain area."

Of course, drilling critics argue, that's just the point: There really IS a "substantial relationship" at stake here. And drilling is arguably so dangerous that in a densely populated city, only an outright ban makes sense.

As a matter of fact, some of those critics are probably wondering where I'm getting my legal knowledge from. Some industry front-group? The city solicitor?

God forbid. The analysis above is largely informed by a conversation with John Bailllie, the senior attorney for the environmental group PennFuture. Baillie and I didn't discuss the merits of Dowd's bill, and he's not an expert in zoning per se. But he says that in general, "Municipalities have very little control over gas-drilling." 

In fact, Baillie says, Pittsburgh may have less control than almost anyone else. Remember up above, when I said state law makes an exception for zoning ordinances? That was only partly true. It makes exceptions for ordinances "adopted pursuant to the act of July 31, 1968 (P.L. 805, No. 247), known as the Pennsylvania Municipalities Planning Code." That law established zoning rules for every municipality -- every township and borough in the state -- except for two. One was Philadelphia. Can you guess which the other is? 

That's right: Pittsburgh's zoning law was created by a separate state law, in 1927. And that law is not mentioned in the Oil and Gas Act. Which Baillie says could be construed to mean that "Pittsburgh has less protection than almost anywhere else." (As for Philly, no one's really talking about drilling for gas there anyway.) 

Baillie says that the omission was "probably just an oversight." But it's one that needs to be fixed. And in fact, House Bill 2213 -- a key reform measure currently idling in committee -- closes that loophole. 

Even so, Baillie says that for environmentalists, "Increasing local control can be a double-edged sword." Sure, "some muncipalities would use it to go in the right direction," he says. "But for others, it could be a race to the bottom" -- with local politicos whoring out their communities to gas companies. 

Which is something to think about. I'm not counselling resigned despair by Pittsburgh's city council. (Like I said, I didn't get my legal advice from the city solicitor.) Local zoning controls are clearly important. But let's say Pittsburgh does manage to keep its own water pristine, its land unsullied by drilling. What happens if Rankin, say, or Fox Chapel, or some other desperate place rolls over for a gas-driller ... and that driller then pollutes the Mon or the Allegheny? Sadly, zoning regulations don't apply to pollution.

HB2213 does a lot more than fix a quirky loophole for Pittsburgh's benefit. It would implement far stricter environmental protections throughout the state. I'm all for city officials focusing on city stuff. That's what we pay these guys for, and as I wrote recently, cities have special concerns when it comes to gas drilling. But for good or evil, the real action here is to be found in Harrisburg. 

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