On February 14, 2012, the Unconventional Gas Well Impact Fee Act (Act 13 of 2012) which amends Title 58 (Oil and Gas) of the Pennsylvania Consolidated Statutes was signed into law by Governor Corbett. This Act among other matters required municipalities to amend their land use ordinances to allow unconventional gas wells, such as those associated with extraction of natural gas from the Marcellus Shale formation, as a permitted use in every zoning district and their related facilities in nearly every zoning district (58 Pa. C.S. §3304). The definition of oil and gas operations also was expanded to include construction, installation, use, maintenance and repair of oil and gas pipelines, natural gas processing plants or facilities performing equivalent functions and all equipment directly associated with the foregoing activities.
Under the Act, there are certain permissible limitations on the location of oil and gas operations within residential zoning districts. For example, a local zoning restriction may prohibit wells or well sites within a residential district if the well site cannot be placed so that the wellhead is at least 500 feet from any existing building. The well site may not be located so that the outer edge of the well pad is closer than 300 feet from an existing building in a residential district and oil and gas operations may not take place within 300 feet of an existing building. Impoundment areas for oil and gas operations also are permitted in all zoning districts provided that the edge of an impoundment cannot be located closer than 300 feet from an existing building.
The Act further provides that natural gas compressor stations must be authorized as a permitted use in agricultural and industrial zones and as a conditional use provided the compressor building is located at least 750 feet from the nearest existing building or 200 feet from the nearest lot line, whichever is greater and the noise level cannot exceed a noise standard of 600 dbA at the nearest property line or the applicable standard imposed by Federal law, whichever is less.
Other than the principal exceptions outlined above, among other lesser limitations, municipalities are preempted from regulating oil and gas operations as defined in Act 13 of 2012 (58 Pa. C.S. §3302).
In response to the above limitations on the ability of local government to regulate the location of oil and gas operations within their jurisdictions, a number of municipalities filed a Petition for Review with the Pennsylvania Commonwealth Court on March 29, 2012 challenging the constitutionality of state preemption of local regulation and, in particular, zoning regulations under Act 13.
The Commonwealth Court in an order dated July 26, 2012 held that Section 3304 of the Act which, in effect, requires a municipality to violate its comprehensive plan for growth and development violates substantive due process because it does not protect the interests of neighboring property owners from harm, it alters the character of the neighborhood and it makes zoning classifications a nullity as it requires a municipality to allow in all zones, drilling operations, impoundments, gas compressor stations and related facilities.
The Commonwealth was permanently enjoined from enforcing this Section 3304 and most of the remainder of Chapter 33 of the Act. The Commonwealth among others filed a Notice of Appeal of the Commonwealth Court’s decision with the Pennsylvania Supreme Court on July 27, 2012. Stay tuned for further developments in this very significant case.