Articles, Alerts & Perspectives

The PIOGA Press

On September 14, the Commonwealth Court of Pennsylvania issued a much-anticipated ruling in Gorsline v. Board of Supervisors of Fairfield Township, 1735 C.D. 2014. The Commonwealth Court reversed a decision of the Lycoming County Court of Common Pleas which found that the development of an unconventional natural gas well pad in a residential and agricultural zoning district was not similar to and compatible with other uses in that zoning district. The decision in Gorsline addressed the compatibility of natural gas development in a zoning district consisting of mixed residential and agricultural uses. This ruling is significant because a considerable amount of natural gas development in the Commonwealth takes place in similarly situated zoning districts.

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Employment Bulletin

Pittsburgh recently joined the wave of localities across the nation to pass a new sick leave law. The Paid Sick Days Act (the Ordinance) (found at http://apps. pittsburghpa.gov/co/Paid_Sick_Time_Legislation_Text.pdf), approved by the Pittsburgh City Council and signed into law by Mayor Bill Peduto in August 2015, requires all employers within the city to create and implement paid sick time policies for their part-time and full-time employees. Although a pending lawsuit threatens to nullify the law, Pittsburgh employers should begin now to familiarize themselves with the basic requirements of the Ordinance, which is anticipated to take effect in March of 2016.

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The American Oil & Gas Reporter

HARRISBURG, PA.– Pennsylvania’s oil and gas industry is facing one of the most stringent regulatory environments in the country, energy leaders there suggest. And if present trends continue, the situation likely will worsen. Pennsylvania Independent Oil & Gas Association Chairman Gary Slagel comments that the commonwealth’s Department of Environmental Protection seems to respond to every complaint or concern it receives about the industry with new requirements or policies. The DEP appears to want to regulate all aspects of the industry, rather than allowing companies and industry groups to develop their own best practices, he says.

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The PIOGA Press

The United States Environmental Protection Agency (EPA) recently released several proposals seeking to reduce greenhouse gas and other emissions from the oil and natural gas sector. EPA’s proposals are part of the Obama administration’s larger Climate Action Plan, a goal of which is to reduce methane emissions from the oil and gas industry by 40 to 45 percent from 2012 levels by 2025. EPA also stated that the proposals seek to protect public health by seeking to reduce emissions of volatile organic compounds (VOCs), a precursor to ground-level ozone formation. In addition to these emissions related measures, EPA also released a proposed rule intended to clarify single source determinations for entities within the oil and gas industry. Together, these proposals will likely affect a wide array of facilities within the industry, including natural gas well sites, processing plants, compressor stations and storage facilities.

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The PIOGA Press

It is common for oil and gas leases in Pennsylvania to allow for the storage of natural gas. Pennsylvania case law regarding dual-purpose oil and gas leases, which grant both production rights and storage rights, is complex and provides very fact-specific holdings which may not be applicable to every dual-purpose lease. However, in this past year, two favorable decisions have been issued providing a better understanding of the status of such a lease that is held by storage operations alone.

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The Legal Intelligencer

The mandated creation of a State Construction Notices Directory to track work on construction projects costing in excess of $1.5 million was one of the many changes made to the Pennsylvania Mechanic’s Lien Law in 2014. To accompany the new directory, the Pennsylvania Legislature also passed several new notice requirements to apply to these construction projects.

Although the new notice procedure is not anticipated to go into effect earlier than December 2016, members of the Pennsylvania construction industry should begin now to familiarize themselves with the changes to the Lien Law to determine how to change their business practices to meet the requirements. Other states’ laws and precedent can be a useful tool in helping owners, subcontractors and their lawyers jumpstart this process. Specifically, the 2014 amendments make Pennsylvania’s mechanic’s lien procedure similar to Ohio, as both the new notice-of-commencement and notice-of-furnishing filings have been required in Ohio for years.

The Anticipated Directory

In October 2014, Act No. 142 was enacted, amending the Pennsylvania Mechanic’s Lien Law, 49 P.S. Section 1101 et seq., and creating a more structured notice procedure for owners and subcontractors to follow. Specifically, the act permits the following four types of filings within the directory: (1) notice of commencement; (2) notice of furnishing; (3) notice of completion; and (4) notice of nonpayment.

A notice of commencement will be filed by an owner prior to the start of construction and must contain: (1) the full name, address and email address of the contractor; (2) the full name and location of the searchable project; (3) the county in which the searchable project is located; (4) a “legal description” of the property, including the tax identification number of each parcel included in the searchable project; …

PIOGA Press

This article highlights an excerpt of the recently published 2015 Babst Calland Report – Appalachian Basin Oil and Gas Industry: Rising to the Challenge, Legal and Regulatory Perspective for Producers and Midstream Operators.

With a large number of regulatory and legal issues unresolved for the industry, litigation will remain part of the landscape. Industry will continue to be required to litigate interpretations of statutes and rules by federal and state regulators and environmental groups—with, we hope, favorable outcomes such as in Citizens for Pennsylvania’s Future v. Ultra Resources, Inc. Industry will also continue to face issues related to the validity of leases and royalty payments. Finally, property owner claims of both personal injury and property impact from oil and gas development activities will continue, fueled by claims of groundwater contamination and adverse health effects of shale development.

Federal court refuses to aggregate compressor stations, dismisses Clean Air Act Citizens’ suit alleging violation of new source review

In a highly-anticipated decision, the U.S. District Court for the Middle District of Pennsylvania granted a motion for summary judgment in favor of a Pennsylvania natural gas operator in an air aggregation case filed by a citizens group. The decision was issued on February 23 in Citizens for Pennsylvania’s Future, and is the latest development in the debate over single source determinations. The court agreed with the permitting decisions made by Department of Environmental Protection that the compressor stations at issue were not located on adjacent properties and thus should not be treated as a single source of emissions. The court disagreed with the Citizens for Pennsylvania’s Future’s (PennFuture) argument that the compressor stations were functionally interrelated and, therefore, should be aggregated as a single source. …

The Legal Intelligencer

With a growing number of townships, boroughs and cities experiencing fiscal challenges, many municipalities have increased or are considering increasing their fees related to the administration of their zoning, subdivision and land development, and related ordinances as a means of generating additional revenue.

On one hand, it certainly is prudent for municipalities to examine and, where appropriate, to increase their fees to cover their actual administrative costs. However, they need to proceed cautiously when doing so. If the fees are not reasonably commensurate with the cost of services performed, they will be viewed as a “back-door tax” and be subject to legal challenge.

The Municipalities Planning Code, 53 P.S. Section 10101 et seq., which establishes the framework for zoning and land use regulation in Pennsylvania, expressly authorizes municipalities to charge fees in an amount sufficient to offset the costs borne by a municipality in processing and administering applications.

Specifically, the MPC authorizes municipalities to charge fees related to: (1) processing applications and reviewing plans filed under a subdivision and land-development ordinance, including fees to cover the “reasonable and necessary charges by [a] municipality’s professional consultants for review and report thereon”; (2) administering a zoning ordinance; and (3) conducting hearings before the zoning hearing board, including fees to cover the “compensation for the secretary and members of the zoning hearing board, notice and advertising costs and necessary administrative overhead connected with the hearing.”

A municipality’s authority to charge land-use permitting fees, however, is not without limitation. It is a well-settled principle of Pennsylvania law that these fees must be reasonable and commensurate with the cost of the services performed by the municipality. A party wishing to challenge a fee has at least two options. …