Peacock Tales • Spring 2012

 

Who May Regulate Natural Gas Operations?

Our actions are constantly influenced by the laws of the local, state and federal governments.  Sometimes it is difficult to understand the authority of each level of government. For instance, people have expressed their confusion as to whether the local or the state government should regulate oil and gas operations.  Some believe local municipalities have the power to regulate such activities while others believe the state has such authority.  Recently, Governor Corbett signed House Bill 1950 which amended the Oil and Gas Act regulations to define the roles of both local and state government in this area.

Before reviewing the impact of the Bill, it is important to understand how municipalities receive their authority and the principle of preemption.  Municipalities do not have inherent power to regulate.  This power must be obtained through a constitutional or statutory provision.  For example, municipalities in Pennsylvania obtain the right to regulate zoning through the Municipalities Planning Code (“MPC”).  Under the MPC, municipalities may control land use through a planning agency, adopt a comprehensive plan and enact zoning regulations.  You may have experienced this regulatory scheme when you applied for a permit or variance.  These control mechanisms help municipalities protest local safety and health.  However, this power is not absolute.  It is limited by a principle known as preemption.

Preemption is a judicially-created principle based on the idea that a municipality, as an agent of the state, cannot act contrary to the state.  A municipality will be preempted from regulating an activity if the state legislature intended to preclude a municipality from exercising its police power through regulating a specific activity.  This may occur in one of three ways:  (1) express preemption, where the state expressly claims authority over the area in question;  (2) conflict preemption, where the state and municipal legislation are in conflict with one another; or (3) field preemption, where the state’s action to legislate in a particular field infers preemption.  Although the state provides municipalities with broad powers to regulate zoning, these powers are preempted if they conflict with the power of the state.  An example of express preemption can be found in House Bill 1950.

House Bill 1950 grants the state the authority to regulate oil and gas operations, which includes permitting, well and well pad placement, restoration, well plugging and bonds. The bill expressly preempts municipalities from regulating oil and gas operators in any way that might conflict with the bill.  Municipalities may still regulate zoning through the enforcement of setbacks and conditions on heights of structures, lighting, or nose, but they may not impose more stringent conditions than those provided in the bill.  Municipalities may continue to create zoning districts, but may not completely ban oil and gas operations.  The bill is so comprehensive in providing the state the power to regulate such operations that it even authorizes the State Public Utility Commission to review local ordinances, at the request of a municipality, prior to their enactment.

The new law clearly limits the powers of municipalities.  Essentially, the state has expressly preempted them from regulating oil and gas operations.


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