HARRISBURG - The energy industry and policy makers in Pennsylvania, the heart of the nation's gas drilling boom, are thinking about their next moves after the state's highest court threw out significant portions of a law that limited the power of cities and counties to regulate the industry.
The state Supreme Court voted 4-2 on Thursday to strike down portions of a 2012 law that had been crafted by Gov. Tom Corbett and his industry-friendly allies in the Legislature.
Republican leaders in the General Assembly said the decision raised more questions than it answered and could damage the growing industry. They said they were not sure, for example, what the ruling would mean for the millions in impact fees being collected under the law.
Pennsylvania has seen a boom in drilling and related industries rushing to exploit the deposits in the rock formation known as the Marcellus Shale, which lies deep underneath several Eastern states.
The high court's decision comes as the energy industry is increasingly able to harvest oil and gas from those previously unreachable formations and, as a result, is bumping up against suburban and urban expectations of land use in states including Colorado, Ohio and Texas, where a similar legal challenge is underway.
The court majority said the law violated the state constitution, although they issued different opinions about why.
The state Department of Environmental Protection and Marcellus Shale Coalition are reviewing the decision.
"DEP is currently studying the opinion from the Act 13 ruling by the Pennsylvania Supreme Court. In the meantime, the department will continue the regulatory process to develop the Chapter 78 proposed regulations that address a multitude of critical reforms at oil and gas well sites across Pennsylvania," said spokeswoman Lisa Kasianowitz.
MSC President Dave Spigelmyer issued the following statement on Thursday's Supreme Court of Pennsylvania's ruling:
"We are reviewing the Supreme Court's decision in full to evaluate its impact on our operations across Pennsylvania. As we did prior to enactment of Act 13 and have done during this period of review by the state Supreme Court, Penn
sylvania's natural gas industry will continue to work collaboratively with the communities in which we operate to ensure shale development moves forward and we continue to realize the benefits at the local level and statewide. Although we will continue to collaborate with communities across the Commonwealth, the decision is a disappointment and represents a missed opportunity to establish a standard set of rules governing the responsible development and operation of shale gas wells in Pennsylvania."
Meanwhile, supervisor David Kane of Juniata Township, the only municipality in Blair County which has gas wells, said he is pleased with the ruling.
"We had no control. They could go where they want. Now it sounds like we have some control," Kane said. "I think it is a good thing if the township, gas companies and DEP work together."
A local business, New Pig Energy, said the ruling would not have an impact on its business.
"It doesn't have an impact on us. They didn't overturn the environmental part of it," said vice president and general manager Beth Powell. "It does have a big impact on the oil and gas people. They lost a significant part of land where they can drill. It will make it more difficult for them on the permitting side."
The company manufactures secondary containment liners and other related products, including a patent-pending well-pad liner that protects workers by providing traction while dealing with slick materials that can also stand up to rig and other heavy-equipment traffic.
Seven municipalities had challenged the law that grew out of the state's need to modernize 20-year-old drilling laws to account for a Marcellus Shale drilling boom made possible by innovations in technology, most notably horizontal drilling and hydraulic fracturing.
The process, popularly called fracking, has drawn widespread criticism from environmentalists and many residents living near drilling operations.
"Few could seriously dispute how remarkable a revolution is worked by this legislation upon the existing zoning regimen in Pennsylvania, including residential zones,"
wrote Chief Justice Ron Castille. He said the law's rules represented an unprecedented "displacement of prior planning, and derivative expectations, regarding land use, zoning and enjoyment of property."
After the industry began descending on the Marcellus Shale in earnest in 2008, state Supreme Court decisions expanded the legal gray area surrounding the extent of municipal authority over the operation and location of oil and gas wells, critics of the decisions said.
Some companies complained that municipalities, mostly in southwestern Pennsylvania, had tried to use zoning rules to unreasonably limit drilling.
As a result, many in the industry made it a top priority to secure a law that eliminated any municipal authority over how drilling companies could operate. Corbett took office in 2011 and backed the industry, believing that a 1984 state law had intended to do that anyway.
Ohio and Colorado have recently passed such laws.
In New York, where state officials essentially put Marcellus Shale drilling on hold, state courts are currently deciding whether local governments have the right to ban the industry from operating within their borders.
The law restricted local municipalities' ability to control where companies may place rigs, waste pits, pipelines and compressor and processing stations. The new zoning rules never went into effect because of a court order.
A narrowly divided lower court struck them down in 2012, but Corbett appealed, saying lawmakers have clear authority to override local zoning.