Signed into law by Gov. Tom Corbett on Feb. 14, House Bill 1950 was designed to update Title 58 - Oil and Gas - of the Pennsylvania Consolidated Statues, which were previously untouched since the 1980s.
Responding to the booming Marcellus Shale industry across the commonwealth, the law, commonly known as Act 13, enacted stricter regulations on operators and imposed an unconventional gas well fee on the oil and natural gas industry in Pennsylvania.
By providing a uniform set of rules and regulations across the commonwealth, legislators hoped the law would allow the industry to develop with confidence.
But some municipalities claim the law overstepped the traditional zoning rights of local government - and they intend to challenge the constitutional right of Act 13.
How it's intended to work
Legislators used a three-level approach with input from existing legislation enacted in other states to create a comprehensive law aimed at regulating the Marcellus Shale industry, State Rep. Brian Ellis said.
"We wanted to hold the drilling companies responsible for any impacts they may create, which is why we included an impact fee," Ellis, R-Butler County, said. "We also wanted to, at the same time, take a look at the regulations that are involved with the drilling industry that haven't been updated since 1984."
Ellis, the primary sponsor of the bill, said the law increased environmental regulations on Marcellus operators. Increased setbacks of drill sites from waterways, increased bonding limits at well sites and other safety requirements imposed on the drilling industry were necessary to update Pennsylvania's laws, he said.
"What we wanted for this business is not only to survive, but to thrive," Pennsylvania Energy executive Patrick Henderson said. "[Operators] have to have consistent rules."
Act 13 imposes "world-class standards" in safety and regulations for Marcellus Shale operators, Henderson said. The laws are uniform across all 67 counties, he said.
For the 37 counties with "unconventional gas wells" typically used in the Marcellus industry, the impact fee imposed by Act 13 provides predictability for both operators and local government.
The Pennsylvania Public Utility Commission collects the fee after a well is "spud," or drilled for the first time, and distributes it among state agencies involved in oversight of the industry, Henderson said.
After earmarks, about 60 percent of the fee goes to the counties.
Each of the 37 counties with current Marcellus activity must use the money in 13 key areas, such as road development, environmental protection or emergency management services directly related to the industry, Henderson said.
But counties are capped at the amount of money the impact fee can generate.
The fee paid out to counties cannot top $500,000 or 50 percent of the municipality's total budget from the previous fiscal year, according to the PUC.
The remaining 40 percent of the fee after earmarks is spent on state programs such as emergency management, the state fire commissioner, the Fish and Boat Commission and any other agencies that have seen an increase in spending or services directly related to the drilling industry.
"We also, for the first time, required [operators] to publicly disclose all the chemicals being used [in fracking fluid] and make it available to medical professionals," Ellis said.
Modeled after a Colorado hydraulic fracturing disclosure law with similar language, the medical community can now have access to proprietary secrets used by the industry in fracking fluid, Ellis said.
Fracking fluid used to fracture the shale and allow gas to flow into wells consists of several million gallons of water mixed with sand and a variety of chemical additives, according to the Penn State Marcellus Center for Outreach and Research.
Any doctor treating a patient that may have come into contact with fracking fluid can now access the exact chemical breakdown of the water in order to accurately treat patients.
Doctors must sign a confidentiality agreement to access the proprietary information, but as long as the information is used solely to treat affected patients, doctors can share that information with their colleagues, Henderson said.
"There are some others who may need to see this information and we need to be respectful of that," Henderson said.
Oil and natural gas operators would be forced to release that information to an entity other than the state Department of Environmental Protection for the first time under Act 13, Ellis said.
"We believe that our law went above what the Colorado law required," Ellis said.
Legal battle
While legislators hail Act 13 as a necessary set of regulations imposed on the Marcellus Shale industry, a group of municipalities has banded together to fight the law.
Seven municipalities in Washington, Bucks and Allegheny counties filed a legal suit claiming Act 13 violates both the Pennsylvania and U.S. constitutions.
The suit claims citizens' rights are "egregiously infringed upon" under Act 13.
"Act 13, what it does, in essence, is it creates a special law for one industry and it does it at the expense of everyone else," Robinson Township Supervisor Brian Coppola said. "You no longer have equal zoning or land use in Pennsylvania."
Robinson Township, which is in Washington County in the southwestern part of the state, is one of the municipalities named in the suit. Coppola said Act 13 restricts municipalities' right to zoning and forces the Marcellus Shale industry into their communities.
Zoning is typically handled at the municipal level, Coppola said. But the law is equivalent to state-wide zoning - and parts of the Marcellus industry such as chemical ponds, compressor stations and drilling operations can be located in areas once zoned residential and devoid of heavy industrial development.
The 1984 gas laws were never intended to cover the scope and scale of the Marcellus industry, Coppola said. Any comparisons to older, conventional well drilling versus the current unconventional well drilling - the kind utilized by Marcellus operators - is unfair, he said.
"It's a very complicated, shrewdly written bill," Coppola said. "I've read that thing 20 times and it still amazes me how well-written it is."
"It's a free-for-all for the gas industry," he added.
A judge placed an injunction on the legislation, Coppola said. The bill was supposed to take effect April 14 but parts of it are on hold until June 6, when the suit will be heard before all nine judges of the Commonwealth Court, he said.
Act 13 is broken into two different chapters, Pennsylvania Public Utility Commission Press Secretary Jennifer Kocker said.
The first part deals with the impact fee imposed on drillers and the implementation, collection and distribution of that fee, Kocker said. The PUC has moved forward with implementing the impact fee, she said.
What is on hold, Kocker said, is the second half of Act 13, the part specifically aimed at the municipal ordinances.
"The portion of the law dealing with municipal ordinances regulating oil and gas drilling are on hold at this time, due to pending litigation," she said.
All 37 counties where Marcellus Shale drilling is currently active have passed the impact fee, and the PUC's implementation of the fee is under way in those counties, Kocker said.
Representatives from the seven municipalities, in addition to a Monroeville doctor and the Delaware Riverkeeper Network also named in the suit, will be in court June 6 to state their case.
Municipalities' rights
"Act 13 provides some authority for municipalities to regulate oil and gas operations, but it imposes limitations on that authority," Ross Pifer said.
Pifer, director of the Agricultural Law Resource and Reference Center at the Penn State Dickinson School of Law, described Act 13 as a series of three hurdles municipalities must overcome to enact a lawful ordinance regulating gas drilling.
Municipalities cannot regulate features of oil or natural gas operations already regulated under Act 13 legislation. Those same municipalities are also limited to enacting regulations that are not already addressed by state or federal environmental statutes, he said.
"Finally, [municipalities] must ensure they are providing for the reasonable development of the resource," Pifer said.
"If they do exceed their lawful authority in enacting an ordinance, then that municipality will forfeit any funds that they would receive through the impact fee," he added.
As written, the law grants special abilities to Marcellus operators and undermines the authority of local municipal governments, Coppola said.
"You can't make special laws for one industry; everyone has equal rights," Coppola said. "They stripped away equal rights with Act 13."
Municipal leaders are "powerless" to stop the industry from setting up operations in areas previously zoned as off-limits, he said.
Legislators maintain the law is necessary for the continued development and investment of the Marcellus Shale resource.
The law provides predictability for drilling companies that previously negotiated complex and changing laws on a county-by-county basis, Henderson said. The stability of a uniform set of laws will provide new jobs and energy independence for the state.
New statutes enacted under Act 13, such as the disclosure of chemicals used in fracking for medical treatments, is beneficial to citizens of the commonwealth, he added.
"We think it's a good thing. We don't shy away or apologize for it," he said.
While Ellis acknowledges that the law is not without its opponents - including a group of protesters outside his Lyndora office last Monday - legislators had to act. And Ellis maintains his support for the bill and met with the opponents of Act 13 via video chat from his office in Harrisburg.
"What I kept reiterating to [the protesters] was, 'the option of doing nothing was no longer acceptable,'" Ellis said.
"What we're putting in place is working."
Mirror Staff Writer Zach Geiger is at 946-7535.
