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West Virginia’s regulatory environment markedly different than neighboring Pennsylvania


The State Journal

PITTSBURGH, Pa. — Industry leaders were told this week West Virginia, Pennsylvania and Ohio couldn’t be more different when it comes to the regulatory environment governing oil and gas operations.

Babst Calland’s Blaine Lucas told attendees at Shale Insight 2017 in Pittsburgh this week that West Virginia case law governing local pre-emption — the line between local government authority and state controls — is relatively straightforward: First, a Monongalia County circuit judge nixed a ban on fracking within a mile of Morgantown’s city limits in 2011. Then, just a few months ago the Fourth U.S. Circuit Court of Appeals upheld a federal judge’s finding that Fayette County commissioners had overstepped their authority when they attempted to ban handling, storage and disposal of wastewaters associated with oil and gas operations within their county — essentially making any oil and gas operations a punishable offense. In the Fayette County decision, Appeals Judge Pamela Harris pointed out West Virginia law “simply does not permit a county to ban an activity — here, the permanent disposal of wastewater … underground injection control wells — that is licensed and regulated by the state pursuant to a comprehensive and complex permit program.”

“In West Virginia it’s now fairly clear local regulation is preempted, and as a practical matter, very few counties in West Virginia have a zoning ordinance anyway,” Lucas said. “(Those decisions) made it fairly clear that the courts in West Virginia view local government’s role as being very, very limited.

Babst Calland’s Kip Power, who represented EQT in the Fayette County case, said there’s “far less zoning in general, and the authority of county and municipal governments in the area is more specifically defined and limited.” He said Harris’s “is a published opinion, so it has precedential value.”

In Ohio, Lucas said recent decisions suggest local government control over the oil and gas has largely been preempted, “but that’s not certain.”

The community of Munroe Falls, Ohio, tried at least twice to keep Beck Energy from drilling within city limits: In 2015 the Buckeye State’s highest court dissolved an injunction the city had won in Summit County even though Beck Energy’s drilling operation had been permitted. The city sued and lost again, though this time the Ohio Supreme Court rdered Munroe Falls to pay $45,000 in legal fees Beck Energy had racked up defending itself against what the court called a frivolous lawsuit.

Likewise, in Mahoning County, Ohio, industry critics have tried at least seven times to get an environmental bill of rights on the ballot “and every one of those ballot issues and referenda have failed to date, usually by wide margins,” Lucas said.

“In one case the Ohio Supreme Court bounced (it) off the ballot because it didn’t deal with constitutional issues,” Lucas said, noting the court has made it clear local government has very little jurisdiction.

The regulatory environment in Pennsylvania is much different: A 2013 Supreme Court decision struck down sections of the state’s Oil and Gas Act that stripped local zoning regulations of their teeth. And earlier this year the same court decided any royalty payments the state received from the shale industry can only be used for environmental preservation.

Another case, still pending, will decide if industrial activities, including oil and gas operations, must be compatible with agriculture pursuits under an Environmental Rights Amendment passed in the 1970s.

If the court decides affirmatively, “it would effectively ban oil and gas development throughout the Commonwealth,” Lucas said.

Shale Insight, now in its seventh year, brings industry leaders and other stakeholders together to look at issues impacting shale development. Also addressing the regulatory environment were Eric Vendel, senior legal counsel for Ohio Department of Natural Resources Division of Oil and Gas Resources Management; Kurt Klapkowski, director of the Bureau of Oil and Gas Planning & Management program with the Pennsylvania Department of Environmental Protection; and Doug Mehan, PennEnergy Resource’s Director of Health & Environmental Safety. Babst Calland’s Kevin Garber served as moderator.

Staff writer Linda Harris can be reached at 304-374-0403 or email [email protected]

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