9 th Annual Pennsylvania Land Conservation Conference

1. 9th Annual Pennsylvania Land Conservation Conference May 21, 2011

2. Pipelines, Communities & Safety: Land Use & Model Ordinances Presented by: Vincent M. Pompo, Esquire vpompo@lambmcerlane.com

3. Legal Framework • Federal • State • Preemption

4. Federal • Natural Gas Act • Federal Energy Regulatory Commission (FERC) • Title 18, Chapter 1, Code of Federal Regulations (CFR) • Preemption

5. Federal Preemption • Supremacy of Federal law involving Natural Gas Transmission and Storage Facilities • Interstate Commerce • Total Preemption vs. Conflict Preemption

6. Role of FERC • NGA confers upon FERC “exclusive jurisdiction” over the transportation and sale of natural gas in interstate commerce for resale • Nevertheless, as a matter of policy, FERC has imposed upon applicants a requirement to cooperate with State and local agencies through conditions placed on certificates of public convenience and necessity

7. Typical FERC Ordering Paragraph • Any state or local permits issued with respect to the jurisdictional facilities authorized herein must be consistent with the conditions of AES’s section 3 authorization and Mid-Atlantic’s section 7 certificate. We encourage cooperation between interstate pipelines and local authorities. However, this does not mean that state and local agencies, through application of state or local laws, may prohibit or unreasonably delay the construction or operation of facilities approved by this Commission.

8. What Does This Mean? • Certificate Holders Must Apply for Permits • If a Conflict arises between the requirements of a state or local agency, and the Certificate’s conditions, Preemption will apply • However, FERC subscribes to a “Rule of Reason” • To the extent a state or local agency “unreasonably delays” issuance of an approval, the applicant could proceed without such approval

9. Municipal Role • Clear and defensible ordinances pertaining to local issues specific to pipelines and related surface facilities • Legal authority under statewide municipal codes, such as the Second Class Township Code • Legal authority under the Pennsylvania Municipality Planning Code (MPC)

10. Case StudyRange Resources vs. Blaine Township • General township ordinance regulating corporate disclosure and other matters • Prohibited corporation from operating in the township if it had a history of violations of law • Preemption under Oil and Gas Act • Invalid exercise of township’s municipal powers

11. Regulation under the MPC • Zoning and Oil and Gas Act Preemption

12. Pennsylvania Oil and Gas Act • From the Oil and Gas Act, Sec. 602 – • 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. The Commonwealth, by this enactment, hereby preempts and supersedes the regulation of oil and gas wells as herein defined.

13. Municipalities Planning Code (MPC) • Sec. 603(b) - Zoning ordinances, except to the extent that those regulations of mineral extraction by local ordinances and enactments have heretofore been superseded and preempted by . . . the act of December 19, 1984 (P.L. 1140, No. 223), known as the "Oil and Gas Act,” . . . or that regulation of other activities are preempted by other Federal or State laws may permit, prohibit, regulate, restrict and determine: • Preemption of zoning ordinances by the Oil and Gas Act is express in the MPC • Sec. 603(i) – Zoning ordinances shall provide for the reasonable development of minerals in each municipality

14. Conflicting and Confusing Issues: Preemption • What can be regulated and what cannot – drilling activities vs. transmission pipelines vs. surface pipeline facilities; • Preemption by State of all or a portion of land use regulations

15. Huntley & Huntley, Inc. vs. Borough of Oakmount • PA Supreme Court • Natural gas wells on residentially zoned land • Zoning ordinances may preclude the surface use of land for natural gas production • Such a basic zoning function is not preempted by the Oil and Gas Act • Local authority is retained for the “core municipal function” of designating districts in which land uses may occur

16. Range Resources-Appalachia LLC vs. Salem Township • PA Supreme Court • Subdivision and Land Development Ordinance covered permitting procedures for oil and gas wells, bonding, regulation of well heads, and other operational requirements • Ordinance did not guarantee issuance of a permit • Comprehensive scheme of municipal regulation oil and gas drilled found preempted by Oil and Gas Act • How vs. Where

17. Penneco Oil Company, Inc. vs. County of Fayette • PA Commonwealth Court • County zoning ordinance permits oil and gas wells by special exception in five zoning districts • Ordinance did not pertain to technical or operational aspects • Ordinance directed to “preserving the character of residential neighborhoods, and encouraging beneficial and compatible land uses

18. Standards & Criteria Upheld in Penneco Oil • An oil or gas well shall not be located within the flight path of a runway facility of an airport. • An oil or gas well shall not be located closer than 200 feet from residential dwelling or 50 feet from any property line or right-of-way. • An oil or gas well shall provide fencing and shrubbery around perimeter of the pump head and support frame. • The Zoning Hearing Board may attached additional conditions pursuant to this section, in order to protect the public’s health, safety, and welfare. These conditions may include but are not limited to increased setbacks.

19. Regulation under Municipal Codes • Road Opening Permits • Section 2322 of the Second Class Township Code – “No . . . gas pipe [shall] be laid upon or in, . . . , any portion of a township road except under conditions, restrictions and regulations specified in permits granted by the township for that purpose.”

20. PREEMPTION? • Roads are peculiarly and historically a local function • Under PA law, even public utilities need to comply: “Before entering upon any street, highway or other public way, the public utility corporation shall obtain such permits as may be required by law and shall comply with the lawful and reasonable regulations of the governmental authority having responsibility for the maintenance thereof.” 15 Pa.C.S. Sec. 1511(e)

21. Summary • Cannot Avoid Preemption Issues Involving Pipelines • Adopt Defensible Local Ordinances • Rely on Core Municipal Powers and Authorities

22. Questions/Comments? • CONTACT INFORMATION: • Vincent M. Pompo • Lamb McErlane, P.C. • Box 565, West Chester, PA 19381-0565 • 610-438-8000 • vpompo@lambmcerlane.com

23. Pipelines, Communities & Safety: Land Use & Model Ordinances Presented by: Vincent M. Pompo, Esquire