Fracking, home rule and sports related development all rolled into one

In 2010 the City of Pittsburgh became the first municipality to ban fracking within its city limits. Gas companies had acquired subsurface mineral rights and had been poised to begin drilling throughout the city including under parks and cemeteries. The ordinance, which was drafted by the Community Environmental Legal Defense Fund (CELDF), takes the somewhat novel approach of enacting a bill of rights not only for the residents of Pittsburgh but also for “natural communities and ecosystems”. It goes beyond even that by stripping corporations of their “personhood” status under the Pennsylvania and U.S. Constitutions. The ordinance, which was passed unanimously, became effective despite the mayor’s refusal to sign the measure. It is worth nothing that Pittsburgh sits at the epicenter of the Marcellus Shale gas drilling frenzy.

Two years later numerous communities have enacted tracking bans though in most cases by way of zoning actions not the kind of rights-based ordinance that Pittsburgh and a few other communities have enacted. Recently the Pennsylvania Legislature adopted Act 13 which strips local governments of the authority to regulate or prohibit any gas drilling or related activities through zoning. This legislation was aimed at overturning a 2009 Pennsylvania Supreme Court opinion which held that local zoning could regulate gas drilling and such efforts were not in conflict with the state’s oil and gas laws.

Seven Pennsylvania municipalities have filed action to overturn the law, and Pittsburgh’s City Council has voted unanimously to support that legal challenge. A lower court has already issued a preliminary injunction delaying the implementation of Act 13 and at least for the moment leaving in place local fracking bans.

Back in Pittsburgh some developers are raising concerns about the possible impact of that city’s ban on downtown office development. The concern is that major energy and gas drilling companies will be reluctant to lease office space in a city that officially opposes their core business. Apparently, the mayor has tried to no avail to get the City Council to reconsider its ban. The Penguins’ 3 million square foot mixed-use project is one of those  that is potentially affected.

Since the Marcellus Shale formation does not extend into Vermont, I was only dimly aware of the controversy swirling around fracking in states to our west. However, since starting to follow the coverage of the issue, it is clear to me this is a matter of great significance not only in terms of exploiting a new, domestic source of energy but in terms of environmental protection and local versus state land use regulation.

 

 

 

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A landowner’s right to frack

Since beginning this forum several months ago, one of the biggest surprises to me is the extent of the controversy over tapping into the Marcellus shale formations for trapped natural gas. The land rush to acquire drilling rights and the ensuing energy boom throughout much of the northern Appalachian region has generated concerns in the environmental community regarding the impact of tracking on water supplies and air quality. Approximately 25,000 wells are being cracked annually and 4 million gallons of fluid were injected under pressure into each of those wells.

Hydraulic fracturing

Regulators have been caught off-guard by the explosion of activity in this area and have sought to play catch up for the past several years.

EPA has just issued the first regulations regarding air pollution emissions at fracking sites. However, the agency is prevented from addressing the more serious concerns about fracking’s impact on water because in 2005 Congress at the urging of Vice President Cheney exempted gas drilling from the Clean Water Act.

Some 200 local governments have stepped into the regulatory void and banned fracking in their jurisdictions. This movement is likely to grow with the recent New York court decision upholding the Town of Dryden’s ban on tracking there. That decision in turn generated a reaction by the Joint Landowners Coalition of New York. The JLCNY’s Declaration of Landowner Rights calls for “a uniform standard for natural gas development” arguing that local bans such as the one in Dryden result in “a confusing legal patchwork that impedes private property rights, hinders progress and limits viable economic opportunity”.

It will be interesting to see how the struggle to manage this latest energy boom plays out among the local, state and federal levels of government. If history is any guide, the gas drilling industry will prefer the certainty and uniformity available only from the federal government.

 

 

 

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Marcellus Shale – gas or mineral?

Much of the northern Appalachian region is in the midst of an energy boom as companies race to exploit the region’s Marcellus Shale formation which contains vast quantities of natural gas. The government’s estimate of the amount of gas increased 150-fold over the past decade. You have undoubtedly read about the environmental concerns starting to be raised about hydraulic fracturing which requires the injection of large quantities of water and chemicals to release the trapped gas.

Marcellus Shale - concentrations of gas

Energy companies have invested billions of dollars in acquiring mineral rights and putting in place the necessary infrastructure to access the gas reserves. The validity of at least some of those mineral rights has been called into question by the Pennsylvania Supreme Court’s decision to review whether the long established Dunham Rule applies to Marcellus Shale gas. That rule required the landowner to expressly state it was transferring mineral rights and oil and gas in the deed of conveyance. In this case the party holding the mineral and oil (but not gas) rights under a parcel is arguing that the Marcellus Shale gas is not free flowing and therefore should be treated like a mineral not like a gas.

Until the Court rules, there will be a great deal of uncertainty among holders of mineral rights that did not include the word “gas” whether or not they also hold gas rights. Holders of mineral rights that expressly included oil and gas clearly own the right to the Marcellus Shale gas whether the Court finds it to be a gas or a mineral.

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