Articles, Alerts & Perspectives

Pipeline & Gas Journal 

2015 has been a busy year of new challenges and issues facing the Appalachian oil and gas industry whose rig count in the Appalachian Basin and elsewhere is down substantially compared to the previous two years. A significant challenge ahead for shale developers in a lower price environment is to continue to be productive and active in finding land, drilling wells, and getting the natural resource to market. The following is a summary of our most recent report (published in May) on the issues and challenges facing midstream operators in the Appalachian Basin.

The Legal Intelligencer

The Pennsylvania Supreme Court recently rendered a decision in Reading Area Water Authority v. Schuylkill River Greenway Association, 100 A.3d 572 (Pa. 2014), further narrowing the definition of what constitutes a “public purpose” for a taking by eminent domain in Pennsylvania. The Reading opinion is significant, as it constitutes yet another Pennsylvania decision favoring the protection of private property rights from seizure by the government. The decision is particularly noteworthy in the context of the U.S. Supreme Court’s controversial expansive view of the eminent domain power in Kelo v. City of New London, 454 U.S. 469, from 2005.

Kelo involved a city’s use of its eminent domain power to take privately owned property to enable its redevelopment by a private developer, who proposed a higher-yielding economic use for the property. In Kelo, the Supreme Court held in a divided 5-4 opinion that such economic development projects can qualify as a “public purpose” under the “public use” provision of the takings clause of the Fifth Amendment of the U.S. Constitution, even where private enterprise drives the development-state and local governments can, for the purpose of improving the community, seize private property via eminent domain to enable private development.

In the wake of the Kelo decision, several states, including Pennsylvania, passed legislation restricting the use of eminent domain for private business. Specifically, on May 4, 2006, the Pennsylvania General Assembly enacted the Property Rights Protection Act, which amended Title 26 (eminent domain) of the Pennsylvania Consolidated Statutes by adding a new Chapter 2, titled “Limitations on Use of Eminent Domain.” In pertinent part, Section 204(a) of the Property Rights Protection Act expressly prohibits, with only a few limited exceptions, state and local governments from condemning private property for use by private entities. …

The PIOGA Press

Wastewater management remains a significant challenge for conventional and unconventional oil and natural gas producers in the Commonwealth. The recent slow-down in the pace of new drilling is reducing opportunities for beneficial reuse of produced fluid from operating wells. According to the Pennsylvania Department of Environmental Protection’s oil and gas reporting website, exploration and production companies reported producing 45 million barrels of flowback and produced fluid in 2014, an increase of nearly 5 million barrels from the amount reported in 2013. The increase in wastewater created by extraction highlights the importance of several state and federal regulatory efforts that could affect the handling and disposal of such material in 2016.

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The Legal Intelligencer

On Oct. 29, the Pennsylvania Supreme Court rendered a decision in Scott v. City of Philadelphia, 2015 Pa. LEXIS 2510 (Pa. 2015), clarifying the difference in the law related to standing before a zoning hearing board governed by the Pennsylvania Municipalities Planning Code, 53 P.S. Section 10101 et seq., (MPC) and standing before a zoning board of adjustment governed by the Pennsylvania First Class City (i.e., Philadelphia) Home Rule Act, 53 P.S. Section 13131.1, (“Home Rule Act). Attention to the intricacies of the law governing standing is critical because a failure to challenge an objector’s standing at the appropriate stage of a proceeding can result in the use of an applicant’s property being interrupted or prevented by an objector who may not be directly impacted by that use.

The law regulating standing to appear before, present evidence to, and thereafter appeal a decision from a zoning hearing board governed by the MPC differs at each stage of a proceeding. First, standing to initiate an appeal to a zoning hearing board is limited by Section 913.3 of the MPC to: (1) affected landowners; (2) officers or agencies of the municipality; and (3) persons aggrieved. Once an appeal is filed, standing to appear before the board (i.e., standing to respond to and present evidence, advance arguments and cross-examine adverse witnesses on all relevant issues) is limited by Section 908(3) of the MPC to “parties,” which are defined as: the municipality; any person affected by the application who has made timely appearances of record before the zoning hearing board; and any other person, including civic or community organizations, permitted to appear before the board. Once a person becomes a party before a zoning hearing board without objection by the applicant, the person is considered “necessarily aggrieved” …

The Bureau of National Affairs, Inc. (BNA) Expert Evidence Report®

A growing number of courts have addressed the applicability of methodologies that attempt to predict the impact of alleged contamination on property values through models that are not based on actual sales in the relevant market, attorney Kathy K. Condo and economist Louis L. Wilde say.

The authors discuss this trend, and examine in depth a July ruling by the Western District of Oklahoma that rejected an expert’s proposed meta-analysis—a process that ‘‘attempts systematically to integrate the results of various published and unpublished studies on a specific research topic.’’ That exclusion was correct, the authors say, because the rejected models didn’t fit the facts of the case and weren’t based on the relevant market.

The American Oil & Gas Reporter

In less than two months, courts in three Pennsylvania jurisdictions rendered decisions addressing the appropriate scope and application of local government ordinances to the oil and gas industry. All three were decided in favor of the energy industry. The first reversed a controversial lower court decision that had invalidated a local government’s approval of an unconventional natural gas well pad development.

The second declared invalid a “community bill of rights ordinance” that banned underground injection wells and in all likelihood any unconventional well development. The last case, conversely, rejected a substantive validity challenge to a local zoning ordinance that authorized oil and gas wells in all zoning districts.

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The Environmental Law360 100 showcases the 100 U.S.-based firms with the most environmental partners globally. Read the full article (subscription required) “The 100 Law Firms With the Most Environmental Partners” (Law360, New York (November 18, 2015).

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The Legal Intelligencer

The Commonwealth Court recently rendered a decision in Lyons Borough v. Township of Maxatawny, 2015 Pa. Commw. LEXIS 310 (Pa. Commw. Ct. 2015), addressing the scope of a municipal governing body’s authority under the Pennsylvania Municipalities Planning Code to impose conditions on a developer’s final land development plan approval. The court’s decision in Lyons is an important development because it significantly restricts the type of conditions a municipality may impose on a final land development approval, finding several conditions routinely imposed by municipalities at that stage to be improper.

In Lyons, Apollo Point L.P. and Saucony Creek L.P. applied to the township of Maxatawny for preliminary land development approval to construct a 192-unit apartment complex on approximately 37.7 acres of land zoned for multi-family housing. The Township Board of Supervisors approved the landowners’ preliminary land development plan subject to 161 conditions relating to, among other things: (1) compliance with the stormwater management requirements under the township’s subdivision and land development ordinance (SALDO); (2) compliance with sanitary sewer and water distribution system requirements under the SALDO; (3) compliance with additional miscellaneous zoning ordinance and SALDO requirements, such as completion of a transportation impact study; and (4) securing necessary permits and approvals from the state and county, including permits and approvals from the county planning commission, the Pennsylvania Department of Environmental Protection, and the Pennsylvania Department of Transportation. Shortly thereafter, the board approved the landowners’ final land development plan, conditioned upon the landowners’ compliance with all of the outstanding conditions cited in the board’s preliminary plan approval.

Concerned with the landowners’ ability to comply with the requirements of the township’s SALDO and zoning ordinance, Lyons Borough, which is located adjacent to the township, and Lyons Borough Municipal Authority, which entered into an agreement with the landowners to accommodate sewage flow from the proposed development, appealed the board’s conditional final plan approval to the trial court. …

Employment Bulletin

A little-noticed provision in the recently-enacted federal budget permits the Occupational Safety and Health Administration (OSHA) to raise its monetary penalties – which have remained unchanged since 1990 – by nearly 80 percent.

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The PIOGA Press

On October 14, the United States District Court for the Western District of Pennsylvania invalidated several sections of a Grant Township, Indiana County, local ordinance that was enacted in an attempt to prevent an oil and gas operator from operating an underground injection well that had been permitted by the United States Environmental Protection Agency (EPA). In Pennsylvania General Energy Company, L.L.C. v. Grant Township, Civil Action No. 14-209, 2015 U.S. Dist. LEXIS 139921 (W.D. Pa. Oct. 14, 2015), Pennsylvania General Energy Company, L.L.C. (PGE) filed a federal complaint against Grant Township to challenge the constitutionality, validity and enforceability of a self-described Community Bill of Rights Ordinance. Babst, Calland, Clements and Zomnir, P.C. in Pittsburgh represents PGE in this case.

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The PIOGA Press

On September 14, the Commonwealth Court of Pennsylvania issued a much-anticipated ruling in Gorsline v. Board of Supervisors of Fairfield Township, 1735 C.D. 2014. The Commonwealth Court reversed a decision of the Lycoming County Court of Common Pleas which found that the development of an unconventional natural gas well pad in a residential and agricultural zoning district was not similar to and compatible with other uses in that zoning district. The decision in Gorsline addressed the compatibility of natural gas development in a zoning district consisting of mixed residential and agricultural uses. This ruling is significant because a considerable amount of natural gas development in the Commonwealth takes place in similarly situated zoning districts.

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Employment Bulletin

Pittsburgh recently joined the wave of localities across the nation to pass a new sick leave law. The Paid Sick Days Act (the Ordinance) (found at http://apps. pittsburghpa.gov/co/Paid_Sick_Time_Legislation_Text.pdf), approved by the Pittsburgh City Council and signed into law by Mayor Bill Peduto in August 2015, requires all employers within the city to create and implement paid sick time policies for their part-time and full-time employees. Although a pending lawsuit threatens to nullify the law, Pittsburgh employers should begin now to familiarize themselves with the basic requirements of the Ordinance, which is anticipated to take effect in March of 2016.

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The American Oil & Gas Reporter

HARRISBURG, PA.– Pennsylvania’s oil and gas industry is facing one of the most stringent regulatory environments in the country, energy leaders there suggest. And if present trends continue, the situation likely will worsen. Pennsylvania Independent Oil & Gas Association Chairman Gary Slagel comments that the commonwealth’s Department of Environmental Protection seems to respond to every complaint or concern it receives about the industry with new requirements or policies. The DEP appears to want to regulate all aspects of the industry, rather than allowing companies and industry groups to develop their own best practices, he says.

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