LLCs in Iowa August 17, 2010 Des Moines, Iowa By Jason M. Stone, J.D., LL.M. [email protected].
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![Page 1: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/1.jpg)
Municipal Regulation of Oil and Gas Operations
Agricultural Law Resource and Reference CenterRoss H. Pifer, J.D., LL.M., Director
![Page 2: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/2.jpg)
History of the Agricultural Law Center
• Established through enactment of the Agricultural Law Resource and Reference Center Act on January 29, 1998– House Bill 1345 (Act 11 of 1998)– Codified at 3 P.S. 2201-2209
Agricultural Law Resource and Reference CenterRoss H. Pifer, J.D., LL.M., Director
![Page 3: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/3.jpg)
Legislative Findings
• “The legal issues affecting agriculture . . . are becoming increasingly complex”
• “At present there exists no central and effective system for compiling agricultural law materials . . . and disseminating this information to affected parties . . .”
• “The alliance between [DSL and PSU CAS] . . . creates a unique opportunity.”
Agricultural Law Resource and Reference CenterRoss H. Pifer, J.D., LL.M., Director
![Page 4: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/4.jpg)
Purpose of Ag Law Center
• Section 2205– “to serve as a resource on agricultural law
and related issues for farmers and agribusinesses, attorneys, officials at all levels of government, community groups, and the public.”
Agricultural Law Resource and Reference CenterRoss H. Pifer, J.D., LL.M., Director
![Page 5: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/5.jpg)
Dissemination of Information
• Presentations
• Educational Programs
• Publications
• The Agricultural Law Brief
• Web site Resources
Agricultural Law Resource and Reference CenterRoss H. Pifer, J.D., LL.M., Director
![Page 6: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/6.jpg)
The Agricultural Law Brief
• Monthly e-newsletter
• Addresses 5 legal developments from prior month that impact agricultural law in Pennsylvania
Agricultural Law Resource and Reference CenterRoss H. Pifer, J.D., LL.M., Director
![Page 7: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/7.jpg)
Web-based Resources• www.law.psu.edu/aglaw • Resource Areas
– Natural Gas– ACRE– Right to Farm– Clean and Green– Agricultural Area Security Law
• Center Publications Library
Agricultural Law Resource and Reference CenterRoss H. Pifer, J.D., LL.M., Director
![Page 8: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/8.jpg)
• Pennsylvania Statutes
• Regulatory Agencies
• Municipal Regulation of Oil and Gas Operations
• Legislative Issues
Agricultural Law Resource and Reference Center
Overview of Presentation
![Page 9: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/9.jpg)
• Statutory authority– 58 Pa. Stat.
• Regulatory authority– 25 Pa. Code, chapters 78 and 79
• Case law
Agricultural Law Resource and Reference Center
PA Oil and Gas Law Library
![Page 10: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/10.jpg)
• Pennsylvania Statutes
• Regulatory Agencies
• Municipal Regulation of Oil and Gas Operations
• Legislative Issues
Agricultural Law Resource and Reference Center
Overview of Presentation
![Page 11: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/11.jpg)
• 58 P.S. §§ 1-701.7– Chapter 1: Oil and Gas Wells– Chapter 2: Test of Illuminating Oil– Chapter 5: Interstate Conservation Compact
– Chapter 7: Oil and Gas Conservation Law– Chapter 8: Underground Storage Act– Chapter 9: Pennsylvania Used Oil Recycling Act– Chapter 10: Coal and Gas Resource Coordination Act
– Chapter 11: Oil and Gas Act– Chapter 12: Dormant Oil and Gas Act
Agricultural Law Resource and Reference Center
Pennsylvania Oil and Gas Laws
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• Organization of Oil and Gas Act– Chapter 1: Preliminary Provisions
– Chapter 2: General Requirements– Chapter 3: Underground Gas Storage– Chapter 4: Eminent Domain– Chapter 5: Enforcement and Remedies– Chapter 6: Miscellaneous Provisions
Agricultural Law Resource and Reference Center
Pennsylvania Oil and Gas Act
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• Declaration of Purpose – Section 102– Permit optimal development . . . consistent with
protection of health, safety, environment, and property;
– Protect safety of employees and facilities;– Protect safety and property of those near
development; and– Protect natural resources
Agricultural Law Resource and Reference Center
Preliminary Provisions
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• Section 201 – Well permits• Section 202 – Permit objections• Section 203 – Well registration and identification• Section 205 – Well location restrictions• Section 206 – Well site restoration• Section 207 – Casing requirements• Section 208 – Protection of water supplies• Section 210 – Plugging requirements• Section 212 – Well reporting requirements• Section 215 – Bonding
Agricultural Law Resource and Reference Center
General Requirements
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• Permitting Requirements – Section 201– DEP permit is required prior to drilling.– Notice must be provided to:
• Surface owner; • Surface landowner or water purveyors who
have water supply within 1000 feet of proposed well location; and
• Owner / operator of underlying coal seams.
Agricultural Law Resource and Reference Center
General Requirements
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• Permitting Objections – Section 202– Surface owner has right to object to
permit.– Objection must be filed with DEP within 15
days of receipt of notice and plat.• Objection can be based upon improper
location of well or inaccurate information in permit application.
Agricultural Law Resource and Reference Center
General Requirements
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• Well Location Restrictions – Section 205– Wells cannot be drilled:
• Within 200 feet from building or water well• Within 100 feet from spring, stream, body or water, or
wetland larger than one acre
– Waiver from location restrictions can be granted.• DEP may impose conditions to protect people, property,
and waters.
Agricultural Law Resource and Reference Center
General Requirements
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• Ground Water Protection – Section 207– Casing is required when:
• Drilling through fresh water strata;• Certain coal seams;
– Brines must be disposed of in compliance with Clean Streams Law.
Agricultural Law Resource and Reference Center
General Requirements
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• Protection of Water Supplies – Section 208– Well operator must restore or replace a water supply
that is polluted or diminished.– Presumption of liability
• Well is presumed to have caused pollution of water supply located within 1000 feet of well.
• Presumption can be rebutted by demonstrating pollution existed prior to drilling.
• Presumption also is rebutted if landowner refuses permission to perform a predrill test.
Agricultural Law Resource and Reference Center
General Requirements
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• Well Site Restoration – Section 206– Surface estate must be restored from disturbances
caused by drilling activities.– Well operator must follow erosion and sediment
control plan at all times during drilling.– Equipment must be removed and well site restored
within nine months of completion of activity.• Time period can be extended for six months.• Equipment can be stored on-site with landowner permission.
Agricultural Law Resource and Reference Center
General Requirements
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• Reporting Requirements – Section 212– Completion report must be filed with 30 days
of the completion of drilling.– AMENDED REQUIREMENT:
• Report containing production data must be filed with DEP every six months.
• Report is published on DEP Web site.
Agricultural Law Resource and Reference Center
General Requirements
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• Well Plugging – Section 210
• Bonding – Section 215
• Registration – Section 203
Agricultural Law Resource and Reference Center
General Requirements
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• Declaration of Purpose– “[F]oster, encourage, and promote the
development, production, and utilization” of Pennsylvania’s oil and gas resources;
– Prevent the waste of oil and natural gas;– Permit the Commonwealth to “realize and enjoy
the maximum benefit of these natural resources.”
Agricultural Law Resource and Reference Center
Oil and Gas Conservation Law
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Image by: Robert Milici and Christopher Swezey, 2006, Assessment of Appalachian Basin Oil and Gas Resources: Devonian Shale–Middle and Upper Paleozoic Total Petroleum System. Open-File Report Series 2006-1237. United States Geological Survey.
Depth of Marcellus Shale
Depth of Onondaga Horizon
The Oil and Gas Conservation Law does not apply to wells that do not penetrate the Onondaga horizon, meaning wells drilled into the Marcellus Shale generally are not covered by this law.
Agricultural Law Resource and Reference Center
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• Well Spacing– When a well is drilled into, or below, the
Onondaga horizon, those “directly and immediately affected by the drilling” of the well can apply to DEP for a well spacing order.
Agricultural Law Resource and Reference Center
Oil and Gas Conservation Law
![Page 26: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/26.jpg)
• Pennsylvania Statutes
• Regulatory Agencies
• Municipal Regulation of Oil and Gas Operations
• Legislative Issues
Agricultural Law Resource and Reference Center
Overview of Presentation
![Page 27: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/27.jpg)
• Department of Environmental Protection (DEP)– Bureau of Oil and Gas Management
• Department of Conservation and Natural Resources (DCNR)
• Public Utility Commission (PUC)• Department of Transportation (PennDOT)• Department of Agriculture (PDA)
Agricultural Law Resource and Reference Center
State Agencies
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• Susquehanna River Basin Commission (SRBC)
• Delaware River Basin Commission (DRBC)• Federal Energy Regulatory Commission
(FERC)• Environmental Protection Agency (EPA)
Agricultural Law Resource and Reference Center
Federal Agencies
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• Pennsylvania Statutes
• Regulatory Agencies
• Municipal Regulation of Oil and Gas Operations
• Legislative Issues
Agricultural Law Resource and Reference Center
Overview of Presentation
![Page 30: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/30.jpg)
• “Except with respect to ordinances adopted pursuant to the . . . Municipalities Planning Code, and the . . . Flood Plain Management Act, all local ordinances and enactments purporting to regulate oil and gas well operations regulated by this act are hereby superseded. No ordinances or enactments adopted pursuant to the aforementioned acts shall contain provisions which impose conditions, requirements or limitations on the same features of oil and gas well operations regulated by this act or that accomplish the same purposes as set forth in this act.”
Agricultural Law Resource and Reference Center
Oil and Gas Act § 602
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• “Except with respect to ordinances adopted pursuant to the . . . Municipalities Planning Code, and the . . . Flood Plain Management Act, all local ordinances and enactments purporting to regulate oil and gas well operations regulated by this act are hereby superseded. No ordinances or enactments adopted pursuant to the aforementioned acts shall contain provisions which impose conditions, requirements or limitations on the same features of oil and gas well operations regulated by this act or that accomplish the same purposes as set forth in this act.”
Agricultural Law Resource and Reference Center
Oil and Gas Act § 602
![Page 32: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/32.jpg)
• Huntley & Huntley v. Borough of Oakmont – Permissible municipal regulation
• Range Resources v. Salem Township– Impermissible municipal regulation
Agricultural Law Resource and Reference Center
Supreme Court Case Law
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• Features– Pertains to technical aspects of well functioning
and ancillary matters rather than location
• Purposes– Zoning considers “the community’s development
objectives, its character, and the ‘suitabilities and special nature of particular parts of the community.’”
Agricultural Law Resource and Reference Center
Huntley & Huntley v. Borough of Oakmont
![Page 34: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/34.jpg)
• “Overall restriction on oil and gas wells in R-1 districts [was] not preempted” by Oil and Gas Act.
Agricultural Law Resource and Reference Center
Huntley & Huntley v. Borough of Oakmont
![Page 35: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/35.jpg)
• Bottom line:– Municipalities have some ability to limit /
govern natural gas operations through zoning.
Agricultural Law Resource and Reference Center
Huntley & Huntley v. Borough of Oakmont
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• Features– Various requirements overlapped with Oil
and Gas Act
• Purposes– “enabling continuing oil and gas drilling
operations . . . while ensuring the orderly development of property . . .”
Agricultural Law Resource and Reference Center
Range Resources v. Salem Township
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• “Not only does the Ordinance purport to police many of the same aspects of oil and gas extraction activities that are addressed by the Act, but the comprehensive and restrictive nature of its regulatory scheme represents an obstacle to the legislative purposes underlying the Act.”
Agricultural Law Resource and Reference Center
Range Resources v. Salem Township
![Page 38: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/38.jpg)
• Huntley & Huntley v. Borough of Oakmont – Zoning restrictions permitted in R-1
district.
• Range Resources v. Salem Township– Comprehensive regulatory scheme not
permitted.
Agricultural Law Resource and Reference Center
Supreme Court Case Law
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• Unresolved questions:– Are restrictions limited to R-1 districts?– How does geology affect permissible
limitation?
Agricultural Law Resource and Reference Center
Huntley & Huntley v. Borough of Oakmont
![Page 40: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/40.jpg)
• Commonwealth Court opinion – Issued on July 22, 2010
• Facts: County zoning ordinance allowed wells only by special exception in residential, industrial, and airport zones.
Agricultural Law Resource and Reference Center
Penneco Oil Co. v. County of Fayette
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• Ordinance was reflection of traditional zoning principles rather than a comprehensive regulatory scheme.
• Although there was some overlap of purposes of Oil and Gas Act, primary purpose of ordinance was to encourage compatible land use.
Agricultural Law Resource and Reference Center
Penneco Oil Co. v. County of Fayette
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• Arbor Resources v. Nockamixon Twp., 973 A.2d 1036 (Pa. Commw. May 12, 2009)– Zoning ordinance provisions
• Where a facility can be located
– Operational ordinance provisions• How a facility may be technically designed and operated
Agricultural Law Resource and Reference Center
Preemption – Procedural Issue
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• Identify prohibited zoning districts
• Set-backs, Lot size, proximity to habitat
• Number of well sites per pad
• Submission of environmental reports
• Performance bonds
Agricultural Law Resource and Reference Center
Arbor Resources v. Nockamixon Twp.
![Page 44: Municipal Regulation of Oil and Gas Operations Agricultural Law Resource and Reference Center Ross H. Pifer, J.D., LL.M., Director.](https://reader035.fdocuments.in/reader035/viewer/2022062801/56649e355503460f94b24d3e/html5/thumbnails/44.jpg)
• Prior precedent:– Where zoning regulations and operational
regulations are inextricably connected, CCP has jurisdiction.
• Holding:– Township ordinances do not contain
operational provisions.
Agricultural Law Resource and Reference Center
Arbor Resources v. Nockamixon Twp.
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• Rationale:– “Court is not persuaded that the challenged
provisions . . . clearly regulated the operation of oil and gas drilling . . . in addition to location and physical configuration.”
– “Challenged provisions are part of the land use process and not unique operational regulations that become pertinent only after land use approval is granted.”
Agricultural Law Resource and Reference Center
Arbor Resources v. Nockamixon Twp.
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• Corporate Rights Ordinance
• Corporate Disclosure and Environmental Protection Ordinance
• Temporary Structure Fee Resolution
Agricultural Law Resource and Reference Center
Range Resources v. Blaine Twp.
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• Motion to Dismiss filed by Township denied June 23, 2009.– Range has standing to challenge
ordinance as Township cannot annul corporation’s constitutional rights.
• Motion for Judgment on Pleadings filed by Range granted Oct. 29, 2009.
Agricultural Law Resource and Reference Center
Range Resources v. Blaine Twp.
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• Oil and Gas Act preemption– Disclosure Ordinance forbids what the
OGA permits.– OGA was intended to be exclusive
regulator of oil and gas well development.– Disclosure Ordinance stands as obstacle
to accomplishment of OGA purposes.
Agricultural Law Resource and Reference Center
Range Resources v. Blaine Twp.
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• Authority– 75 P.S. Chapter 49– 67 Pa. Code Chapters 189, 191, and 193
• Reference– Timber Harvesting in Pennsylvania, Penn
State School of Forest Resources
Agricultural Law Resource and Reference Center
Road Bonding
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• Posting restrictions on roads / bridges– Requires engineering and traffic study
• Local traffic– May exceed posted limit unless notice
provided
Agricultural Law Resource and Reference Center
Road Bonding
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• Permit required for overweight vehicle traffic– Different type of permit issued based upon extent of use– Issuance of permit conditioned on excess maintenance
agreement
• Level of security required– $6,000 per lineal mile for maintenance of unpaved road– $12,500 per lineal mile for maintenance of paved road– $50,000 per lineal mile for degradation of road
Agricultural Law Resource and Reference Center
Road Bonding
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• Pennsylvania Statutes
• Regulatory Agencies
• Municipal Regulation of Oil and Gas Operations
• Legislative Issues
Agricultural Law Resource and Reference Center
Overview of Presentation
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• Reporting requirements • Severance tax• Forced / Fair Pooling• Extent of municipal zoning regulation• County Assessment Law• Surface owners rights• FRAC Act (Federal legislation)
Agricultural Law Resource and Reference Center
Legislative Issues
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Governments’ Roles in Natural Gas Development
Agricultural Law Resource and Reference Center
• Agricultural Law Resource & Reference Center
207C Lewis Katz Building
University Park, PA 16802
Phone: (814) 865-3723
Email: [email protected]
Web: www.law.psu.edu/aglaw