PA High Court Strikes Fracking Provision: Fracking in Pennsylvania . . . A Necessary Evil or Just Evil?

By: Marc Pugsley, Staffwriter

Recently, on December 19 2013, the Pennsylvania Supreme Court struck down a provision of a pro-fracking law enacted by the Pennsylvania Legislature in 2012.[1]  The Court ruled 4-2 that the law, known as Act 13, violated the Pennsylvania Constitution’s guarantee “to clean air and pure water, and to the preservation of natural, scenic, historic and esthetic values of the environment” because Act 13 favored the natural gas industry’s exploitation of Pennsylvania resources.[2]  The struck provision had limited the power of local municipalities to restrict drilling by setting statewide standards for drilling and prohibiting separate local zoning requirements for drilling.  Notably, a bipartisan faction of the Pennsylvania Legislature supported and approved Act 13.[3]  Nonetheless, many state legislators view the Court’s ruling favorably, calling it a “victory” for affirming local government’s ability to control development in their community.[4]

Furthermore, the ruling stands out because neighboring states with large Marcellus Shale deposits like Ohio and West Virginia each have state statutes entirely or partially preempting local zoning.[5] Environmental groups and activists applaud the rulings as a possible “watershed moment” for the people of Pennsylvania that could lead towards a complete moratorium on Marcellus Shale fracking.[6] For example, New York State, which also has Marcellus Shale deposits, is in its sixth year of a legislatively enforced statewide moratorium on Marcellus Shale drilling and fracking while the state studies the environmental impacts of fracking.[7]

In Pennsylvania and other states fracking is a hot-buttoned issue.  Marcellus Shale covers a large portion of Pennsylvania and neighboring states and contains vast quantities of natural gas, as well as petroleum-based resources.[8]  Instead of a large pool of natural gas or oil, the Marcellus Shale natural gas is embedded within the porous rock layer, requiring breaking up the rock to release the valuable natural gas.[9]

Proponents of fracking assert fracking’s economic benefits, including increased tax revenue for the state and job growth: both directly from fracking and indirectly from the economic benefits to related and associated industries locally, regionally, and nationally.[10]  Likewise, proponents stress the abundance of untapped natural gas in Marcellus Shale and other similar formations and that natural gas burns clean, is inexpensive, and can reduce domestic reliance on foreign oil.[11]  A recent Department of Energy Order asserted that Marcellus Shale has the potential to be the second largest natural gas field in the world with more than enough natural gas to meet growing domestic demands.[12]  The order further states that Marcellus Shale contains sufficient natural gas to facilitate natural gas exports that can improve the United States’ balance of payments deficit.[13]

On the other hand, parties opposed to fracking strongly contend that fracking involves significant environmental risks and consequences, lacks appropriate regulatory oversight, and the alleged economic benefits fail to consider the negative environmental externalities.[14]  Moreover, opponents state that fracking unjustly takes advantage of persons in impoverished areas to inexpensively acquire land, remove the valuable resources, and leave the location without any long term investment in the surrounding community.[15]

Although fracking often appears in newspapers or news headlines, most people are unaware of what fracking is and why fracking is a contentious issue.  Instead, most people view fracking in the same broad light that fracking is presented in the news – as “good or bad.”  Fracking is a diminutive term for hydraulic fracturing.  Hydraulic fracturing is a process to remove oil and natural gas from areas where conventional drilling techniques are ineffective.[16]  To remove natural gas from shale, first a vertical well is drilled and then subsurface horizontal wells are drilled extending from the vertical well into the shale.  Next, a solution consisting of water, sand, salts, and other chemicals (“fracturing fluids” or “pumping fluids”) are pumped into the rock formation to separate gas and oil from the rock and the gas and oil are retrieved.[17]

So, some say fracking is good while others say fracking is bad, but what laws are in play concerning natural gas?  And what are the consequences, good or bad, of these laws?  Together, federal and state laws regulate the natural gas industry.  In the energy sector, the Federal Energy Regulatory Commission oversees interstate natural gas pipeline siting and construction, as well as regulating the wholesale market for the sale of natural gas.  State agencies, like the Pennsylvania Utilities Commission, oversee and regulate intrastate natural gas pipelines, retail pricing of natural gas, and importantly, state law regulates issues concerning siting of fracking wells.  When significant economic wealth is concerned, state oversight raises the concerns of forum shopping, such that corporations will take advantage of disparate state laws and conduct business in states where the business environment is most favorable despite environmental concerns.  For example, fracking proliferates in Pennsylvania while gas deposits in the same rock formation just across the border in New York State remain untouched.

Interestingly, instead of overseeing fracking, many federal and state laws expressly exempt fracking activities from compliance with existing environmental laws.[18]  Federal law exempts oil and gas drilling and hydraulic fracking from numerous important federal environmental laws (and what many consider leading federal environmental law), including the Safe Water Drinking Act, Clean Water Act, the Emergency Planning and Community Right to Know Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation, and Liability Act (Superfund), and the Clean Air Act.[19]  Likewise, the Pennsylvania Oil and Gas Conservation Act does not apply to “[a]ny well or wells which do not penetrate the Onondaga horizon.”[20]  Essentially, this exemption expressly excludes Marcellus drilling because Marcellus Shale sits directly above the Onondaga horizon.

Despite the recent Pennsylvania Supreme Court ruling, fracking remains open for business in Pennsylvania. The legislature, the public utilities commission, and, ultimately, the courts will decide if fracking will continue in Pennsylvania and weigh fracking’s real financial benefits with fracking’s alleged negative environmental externalities.  One thing for certain is that current domestic energy policy survives on nonrenewable fossil fuels, which may play a significant role in pursuing Marcellus drilling in Pennsylvania and elsewhere, but this failure of the federal government to construct a cohesive national energy policy with an eye on the future is a discussion for another day.

——
[1] Robinson Twp., Washington Cnty. v. Com., No. 63 MAP 2012, 2013 WL 6687290, at *1 (Pa. Dec. 19, 2013), available at http://www.pacourts.us/assets/opinions/Supreme/out/J-127A-D-2012oajc.pdf?cb=1 (striking provisions of Pennsylvania Act 13, which exempted drillers from local zoning ordinances).

[2] 58 P.S.C.A. §§ 2301–3504 (2012) [hereinafter “Act 13”] (prohibiting, inter alia, “any local regulation of oil and gas operations, including via environmental legislation, and requires statewide uniformity among local zoning ordinances with respect to the development of oil and gas resources”); PA Const. art. I, § 27 (“The people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment. Pennsylvania’s public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people.”).

[3] Sophia Pearson, Jeff Feeley, and Mark Drajem, Pennsylvania High Court Strikes Down Part of Fracking Law, Bloomberg.com (Dec. 20, 2013), http://www.bloomberg.com/news/2013-12-19/pennsylvania-high-court-strikes-down-part-of-fracking-law.html (noting contention among state legislators concerning bill’s original enactment and subsequent judicial review).

[4] Id. (noting the importance of local governments playing a role in hydraulic fracturing siting).

[5] Associated Press of Harrisburg, Pennsylvania Supreme court strikes part of industry-friendly fracking law, THEGUARDIAN.COM (Dec. 20, 2013), http://www.theguardian.com/world/2013/dec/20/pennsylvania-supreme-court-industry-fracking-law (noting Ohio, West Virginia, and New York contain vast amounts of Marcellus Shale, but have legislated distinctly with New York specifically banning fracking).

[6] Id. (noting Pennsylvania’s neighbor to the north, New York, currently has a legislative moratorium on fracking).

[7] NY Post Editorial Board, Energy firm threatens suit over Cuomo fracking moratorium, NYPOST.COM (Dec. 7, 2013), http://nypost.com/2013/12/07/energy-firm-threatens-suit-over-cuomo-fracking-moratorium/ (describing statewide fracking moratorium). For more instances where local bans on fracking have been upheld in New York Courts, see Cooperstown Holstein Corp. v. Town of Middlefield, 943 N.Y.S.2d 722, 780 (Sup. Ct. 2012), aff’d, 964 N.Y.S.2d 431 (2013), leave to appeal granted, 21 N.Y.3d 863 (2013); see also Anschutz Exploration Corp. v. Town of Dryden, 940 N.Y.S.2d 458, 471 (Sup. Ct. 2012).

[8] See infra, note 16 (describing size and scope of Marcellus Shale).

[9] See infra, note 16 (describing process of extracting natural gas from Marcellus Shale deposits).

[10] DOE/FE Order 3331 Conditionally Granting Long-Term Multi-Contract Authorization To Export Liquefied Natural Gas By Vessel From The Cove Point LNG Terminal To Non-Free Trade Agreement Nations, September 11, 2013, available at http://energy.gov/sites/prod/files/2013/09/f2/Order%203331.pdf (providing statistical benefits of increasing natural gas production, including job growth, national deficit reduction, and corresponding tax revenue).

[11] Id. (promoting increased domestic energy policy as a national security issue).

[12] Id. (providing estimates of natural gas deposits contained within Marcellus Shale, including projections that show Marcellus alone could meet the entire United States’ natural gas needs for decades).

[13] Id. (explaining export potential of natural gas as liquefied natural gas “LNG”).

[14] Stephen G. Osborne et al., Methane contamination of drinking water accompanying gas-well drilling and hydraulic fracturing, Duke University: Center on Global Change (2011), available at http://www.pnas.org/content/early/2011/05/02/1100682108.full.pdf+html (providing scientific, technical look at negative impacts of hydraulic fracturing).

[15] But see John Harpole, Poverty and Fracking, The Denver Post (Sept. 28, 2013), http://www.denverpost.com/opinion/ci_24184876/poverty-and-fracking (contending fracking actually benefits the poor rather than takes advantage of them).

[16] For a general overview of the hydraulic fracturing process, see Energy From Shale, How Hydraulic Fracturing Works, ENERGYFROMSHALE.ORG, http://www.energyfromshale.org/hydraulic-fracturing/how-hydraulic-fracturing-works (last visited Jan. 23, 2014).

[17] See id. (demonstrating the technological process of fracking).

[18] Fracking—Federal Law: Loopholes and Exemptions, Environmental Defense Center, http://www.edcnet.org/learn/current_cases/fracking/federal_law_loopholes.html (last visited Jan. 23, 2014) (noting various fracking exemptions under federal law).

[19] 42 U.S.C. 300h(d)(1)(B)(ii) (excluding section that concerns “the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities.”).

[20] Pennsylvania Oil and Gas Conservation Act, 58 P.S. § 403 (exempting Marcellus Shale drilling from the Act’s provisions).

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