On February 8, 2012, House Bill 1950 was passed by the Pennsylvania General Assembly, and six days later on Tuesday February 14, 2012, the bill was signed into law by Governor Corbett.

This bill effectively amends the Oil & Gas Act 58 § 601.101 et seq. The changes come after a flurry of judicial activity on cases dating back through 2009, and after multiple municipalities engaged in practices which sought to restrict, impose, or supersede aspects of the Oil & Gas Act.

Under the current bill, municipalities are barred from restricting drilling by zoning district, the primary exceptions being a minimum setback provision of 500 feet from an existing building in a residential district and additional set-backs when operations are near water sources.

As such, municipalities must allow drilling in all zoning districts, and must also allow seismic testing and pipeline location assessment and operations as long as they are conducted consistent with state and federal laws and regulations. Furthermore, municipalities cannot place restrictions on construction related to drilling and gas development that are greater than restrictions placed on other industrial uses within the municipality or place zoning restrictions more stringent than those placed on other industrial activities.

Importantly, with few exceptions, oil and gas operations are now a “permitted use in all zoning districts.” One important exception is that a municipality can require a conditional use permit if the 500-foot minimum setback requirement for placement of a wellhead from an existing building in a residential zone cannot be met. Likewise, there is a 300-foot setback limitation applicable only in residential zones for the edge of the well pad as well as other non-gathering, road/pathways and transport-related activities.

The amendments also mandate the permitted use-status for compressor stations in agricultural and industrial districts, and allow such development as a conditional use in all zoning districts subject to setback requirements. The changes are extensive, and municipalities are afforded 120 days to enact changes to any local ordinance, which conflicts with the amendments.

The new law also increases the presumed liability of operators near water sources. Should the water be found contaminated, the “presumed liability” is expanded from 1,000 to 2,500 feet, with a duration expanded from six to 12 months.

This is a brief overview of sweeping changes in Pennsylvania energy law. The new law also includes impact fees for drilling operations that apportion and pay to both the state and local municipalities as well as additional requirements for environmental compliance.

The law firm of Cipriani & Werner offers its clients the highest level of legal representation in areas of products liability, premises liability, medical malpractice, professional malpractice, construction and commercial transportation, as well as employment issues in the areas of workers’ compensation and discrimination. Our firm footprint gives us “boots on the ground” across the Marcellus Shale play and we are proud to provide outstanding services to our clients in the energy industry.

What It Means to You

Issues involving zoning, land use, and oil and gas development are evolving in Pennsylvania at a fast pace. The recent changes create liability issues and may result in negative outcomes should a company or municipality be unaware or hesitant to comply with the new changes. Additionally, drilling and natural gas companies must be aware of fees and permitting requirements in order to avoid harsh fines and restrictions on operations, while appropriately addressing potential litigation.