Joseph Schaeffer, University of Pittsburgh School of Law Class of 2012, is spending the summer working for a firm specializing in energy law. He writes on Marcellus exploration and the regulation of hydraulic fracturing, specifically considering the implications of Pittsburgh's decision to ban the practice at the municipal level...
The practice of hydraulic fracturing, commonly known as fracking in the industry, has been covered everywhere from the nightly news to The Colbert Report. Although some news reports make fracking seem like a recent development, it has actually been in use for over 50 years. Fracking is a process where drillers inject a high-pressure mix of water, sand, and chemicals into the ground to loosen rock formations and release oil or natural gas. In the last five years, fracking has been used to release gas in shale formations across the country, including one of the country's largest shale formationsthe Marcellus in Appalachia. From a single well pad, drillers can extend several wells out horizontally through the Shale formationsome as long as 8,000 feet. Whereas exploiting these formations was previously uneconomical, higher natural gas prices and better drilling technologies have made the Marcellus commercially attractive. While it varies from state to state, landowners with oil and gas rights are receiving anywhere from $2,000 to $5,000 signing bonuses per acre and 12.5 to 18.5 percent royalty rates on any gas produced. Last year alone, it is estimated that Marcellus-related activity added billions of dollars to Pennsylvania's economy.
Job creation and tax payments in a recession sound great. So what is the fuss? Opponents of Marcellus exploration allege that hydraulic fracturing has negative impacts on the environment and public health. The primary concern is that chemicals used in hydraulic fracturing will leak (or worse, be dumped) into watersheds. A secondary concern is that the fracking process itself releases methane gases trapped underground that will seep into the water supply. The movie Gasland, by Pennsylvania film director Josh Fox, purports to show this methane contamination in shocking detail, and plaintiffs in two recent Pennsylvania cases allege groundwater contamination as the result of fracking operations. Other concerns include noise and air pollution from the wells, fracking's high water use, and increased truck traffic.
New York has reacted to these perceived threats by extending its moratorium on hydraulic fracturing for another year, in addition to suing the Delaware River Basin Coalition and the Army Corps of Engineers. Pennsylvania, on the other hand, has issued several thousand Marcellus permits, and former Pennsylvania Department of Environmental Protection Secretary John Hangar has been outspoken about the safety of natural gas exploration. In contrast to New York and Pennsylvania, West Virginia's response has been that of inactivity. Marcellus specific legislation failed to pass during the last regular legislative session, and West Virginia's new interim governor, Earl Ray Tomblin, has yet to call for a special legislative session.
This has led to the perception that hydraulic fracturing specifically, and Marcellus exploration in general, are unregulated at the federal and state level, and municipalities in the Appalachian region have responded accordingly. In November 2010, Pittsburgh became the first major American city to outlaw hydraulic fracturing within city limits. Buffalo, New York, followed Pittsburgh's lead in February of 2011. Most recently, Morgantown, West Virginia, has responded to drilling activity outside its city limits by considering a ban of its own on hydraulic fracturing.
However, the question remains, how do these municipalities justify regulating an activityoil and gas explorationthat is almost exclusively regulated by states and the federal government? Referring to the actual text of these ordinances, it is clear that water contamination is the primary concern of these municipalities. Where the municipalities differ, however, is in how they justify the passage of these ordinances. Pittsburgh and Morgantown are representative of two different approaches. This article will discuss Pittsburgh's ordinance, as Buffalo's ordinance is moot and Morgantown's has yet to take effect.
Pittsburgh's Community Protection from Natural Gas Extraction Ordinance [PDF] is remarkable for both the authorities it cites and those it does not. Pittsburgh bases its authority to regulate natural gas extraction on the inherent right to self-governance established by the Declaration of Independence and on Article 1, Section 2, of the Pennsylvania Constitution, which states "[a]ll power is inherent in the people." Interestingly, the ordinance cites neither Pittsburgh's home rule powers under Pennsylvania law nor the Natural Resources Clause of the Pennsylvania Constitution, which states "[t]he people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment." Instead, the rights established by the Natural Resources Clause are alluded to in the statements of law setting forth a right to water and rights of natural communities.
Pittsburgh's decision to ground the ordinance in constitutional rights, rather than statutory home rule powers is likely the result of the Pennsylvania Supreme Court's holding in Range Resources Appalachia, LLC v. Salem Township. In Salem Township, the Court held that Salem's ordinances regulating surface and land development related to oil and gas drilling were preempted by the Pennsylvania Oil and Gas Act. Pittsburgh anticipates a similar preemption challenge in Section 5 of the ordinance. Section 5.3 attempts to preclude corporations (which in Section 5.2 are told that they will not have the rights of "persons") from enforcing state or federal preemptive law against Pittsburgh or from challenging or overturning any ordinances adopted by the Pittsburgh City Council. Finally, the ordinance attempts to render invalid any permit, license, privilege or charter issued by any state or federal agency if it would conflict with the ordinance's terms.
Pittsburgh's ordinance is breathtaking in its audacity (and its unconstitutionality). Even if one forgets that the ordinance is almost certainly preempted by state law, as held in Salem Township, there are multiple constitutional deficiencies. First, denying corporations the right of "personhood" implicates various issues of due process and equal protection. Second, and perhaps most clearly, the ordinance violates Pennsylvania's Certain Remedy Clause. Article 1, Section 11 of the Pennsylvania Constitution states: "All courts shall be open; and every man for an injury done him in his lands, goods, person or reputation shall have remedy by due course of law, and eight and justice administered without sale, denial or delay. Suits may be brought against the Commonwealth in such manner, in such courts and in such cases as the Legislature may by law direct." By prohibiting corporations from challenging the ordinance, Pittsburgh is blatantly violating Pennsylvania's Certain Remedy Clause.
This, however, reflects an interesting tactical choice. Generally, municipal ordinances in home rule states receive a presumption of validity upon review. Courts further apply a presumption of constitutionality to legislative enactments. Thus, Pittsburgh's ordinance puts potential challengers in a bind. If a corporation brings a preemption claim, Pittsburgh can state that this remedy is excluded because the corporation is not a "person" for purposes of standing, the corporation is specifically excluded from challenging the ordinance or attempting to enforce preemption law. Assuming that the court quickly disposes of these arguments as unconstitutional, the plaintiff must then argue that Pittsburgh lacks the power to enact the ordinance or that it is otherwise preempted. Pittsburgh grounds the ordinance in constitutional rights, however, giving it two arguments. First, Pittsburgh can argue that it is not trying to regulate in the same area as the legislature (oil and gas) since its ordinance is directed toward public health and safety. Second, Pittsburgh can argue that the ordinance is not inconsistent with state law, and thus not preempted, because it advances state constitutional goals of self-governance and natural resource conservation. A corporate plaintiff is thus in the unenviable position of having to argue that Pittsburgh does not have recourse to or has misapplied these constitutional rights or that these rights are nevertheless preempted.
Any challenge will result in a show trial, and even where Pittsburgh loses (and it will lose), the forces behind the ordinance win (and the taxpayers footing the legal bills lose). Pittsburgh will be able to challenge the rights of corporations and the idea of corporate personhood, and testimony about the safety of hydraulic fracturing will allow the city to call doomsday experts. This is just in the courts of law. The court of public opinion will likely have even less relation to fact, with confusion about preemption doctrine devolving into a personification of the evil corporation exploiting state laws and connections to deny the will of local voters.
With all of the potential negatives and the relative lack of Marcellus exploration in Pittsburgh's Allegheny County, it is not surprising that no one has challenged Pittsburgh's ordinance. If and when the challenge does come, however, it could set the stage for a fascinating and protracted legal battle.
Joseph Schaeffer, the former head of JURIST's student commentary service, is the recipient of the Energy and Mineral Law Foundation Scholarship. He graduated from West Virginia University, Phi Beta Kappa, with a BA in International Studies and Foreign Languages, where his research focused on post-war German literature.
Suggested citation: Joseph Schaeffer, Municipal 'Fracking' Bans and Preemption in Appalachia, JURIST - Dateline, July 12, 2011, http://jurist.org/dateline/2011/07/joseph-schaeffer-hydraulic-fracturing.php.
This article was edited for publication by Megan McKee, the head of JURIST's student commentary service. Please direct any questions or comments to her at email@example.com