Municipal Madness

It’s been said by many for many years that Pennsylvania has too many municipalities within its boarders. The natural gas industry is learning the hard way the truth that resides behind those kinds of statements.
Generally speaking, in the Commonwealth, all oil and gas extraction issues are governed by the Pennsylvania Oil and Gas Act. In short, only the state, through DEP, has the right to police oil and gas operations. Since development of the Marcellus Shale began in earnest, many municipalities have found that they don’t care much for the Oil and Gas Act.
A little over a year ago, one court case, which involved the Borough of Oakmont in Southwestern Pennsylvania and drilling interest Huntley & Huntley, gave municipalities a small window of opportunity for a say so about where drilling can take place, based on zoning. The decision was quite specific, and still requires all municipalities to make room for drilling to occur within their boundaries.
But as someone wise once said, give them and inch, and they’ll take a yard. Since the Huntley & Huntley case was decided, municipalities all over the Shale fairway have been attempting to pass ordinances that do exactly what the Oil and Gas Act still does not allow them to do – govern oil and gas operations.
Few who should be seem to paying attention to this. But the industry is – and since Huntley and Huntley was decided has been winning cases against municipalities that have been misinterpreting their governing prevue, or trying to see what they can get away with in attempts to appease residents who have caught the drilling fear encouraged by anti-drilling activists.
Whatever the reasons, some municipalities are throwing the anti-drilling spaghetti at the wall to see what will stick. For instance, attempting to establish their own set back distances for rigs/water pits/equipment; requiring occupancy permits for on-site crew trailers; requiring sewage permits and fees for on-site trailers (most use port-a-johns); demanding to know the exact number of trucks that will visit a site; asking for well site pad designs; forcing drillers to appear before land use boards for every well; expecting the right to approve all on-site equipment; and requiring that inbound and outbound trucks use specific routes.
However, in the rush to find ways to stop drilling, municipalities haven’t been thinking all that hard. First of all, their continual efforts can hurt more than they help. For instance, in efforts to change the weight restrictions on various township and borough roads, some local leaders didn’t stop to think that other heavy trucks – like milk trucks from local dairies – wouldn’t be able to meet those restrictions either. Apparently, its ok to hurt local taxpayers when the goal is to restrict the rights of mineral owners.
On a larger scale, different rules in different municipalities simply underline the reason the Pennsylvania wide Oil and Gas Act was needed in the first place. The regulations placed on drillers on the state level are complicated, overlapping in some cases, and can be difficult to interpret – especially now, as they are being revised regularly in response to lessons learned in the Marcellus. Adding varying municipal rules on top is more than a frustration for drillers – its enough to make some throw their hands up in disgust, as trying to satisfy everyone’s ordinances simply ensures that somewhere along the line, even the most careful company will fall into non-compliance.
Let’s not forget the fact that the modern horizontal Marcellus well can include laterals that reach thousands of feet. In some cases, they straddle municipal lines. Who’s ordinances take precedence?
Some municipalities, however, see things in a more constructive manner. A Marcellus well that produces can result in a significant royalties, now that most leases are signed for more than the standard 12.5 percent. Added to the initial bonus payment, there can be quite a windfall for a lessor.
The number of municipalities with their hands out has been putting a great strain on the state budget. Many of the cuts that have been seen in terms of payments to municipal programs are indicative of the fact that Pennsylvania cannot afford to sustain all of these local governments. Those interested in keeping their jurisdiction intact need to find money. Some municipalities have been smart – they’re leasing their public lands for drilling in order to fill their local coffers to fund the things Harrisburg no longer can. Others, interestingly enough, have dropped their ordinances when they realized they could cash in as well as their residents. Either way, these local governments have recognized the benefits the industry offers. They may have also noticed that when they cooperate with drillers, roads are fixed quicker, donations to local charities are bigger, local response teams receive pertinent training, and their residents accumulate well-related wealth faster.
But for those insistent on keeping drillers from exercising their right to extract their minerals, or those who keep putting off decisions to lease in order to keep activists at bay, be sure, attempts to somehow govern oil and gas extraction activities from the municipal level will only result in disappointing decisions from judges around the Commonwealth.