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Pa. court upholds challenge to Act 13

Keywords: Tags  Act 13, Pennsylvania, oil and gas, Supreme Court, Marcellus Shale, oil country tubular goods, OCTG, Chief Justice Ronald Castille Dave Spigelmyer

NEW YORK — The Pennsylvania Supreme Court has found sections of Act 13, a law that governs oil and gas exploration in the state, unconstitutional.

"Following careful deliberation, this Court holds that several challenged provisions of Act 13 are unconstitutional, albeit the Court majority affirming the finding of unconstitutionality is not of one mind concerning the ground for decision," Chief Justice Ronald Castille said regarding the courts decision to uphold a challenge by the Commonwealth of Pennsylvania.

The court’s 4-2 decision reaffirms local municipalities’ rights to zoning regarding natural gas drilling. Under Act 13, municipalities had little say in where oil and gas drilling could take place.

Parts of the act prohibit "any local regulation of oil and gas operations, including via environmental legislation, and requires statewide uniformity among local zoning ordinances with respect to the development of oil and gas resources," the ruling said.

Oil and gas interest groups were dismayed with the decision.

"Although we will continue to collaborate with communities across the Commonwealth, today’s decision is a disappointment and represents a missed opportunity to establish a standard set of rules governing the responsible development and operation of shale gas wells in Pennsylvania," Dave Spigelmyer, president of the Marcellus Shale Coalition, a coalition of exploration and production, midstream, and supply chain partners, said in a statement.

"I am disappointed that the Supreme Court has invalidated some key provisions of Act 13. We must not allow today’s ruling to send a negative message to job creators and families who depend on the energy industry," Pennsylvania Gov. Tom Corbett said in a statement.

Act 13, which repealed parts of the Pennsylvania Oil and Gas Act, was signed into law in February 2012 due to the rapid development of the Marcellus Shale, according to the ruling.

The U.S. fracking boom, including in the Marcellus, has spurred a flurry of new oil country tubular goods (OCTG) capacity, as companies are expecting increased consumption of the products.

One Southern energy tubulars distributor said the ruling could further complicate oil and gas exploration in what is already a challenging jurisdiction as compared to the Southern United States.

"Environmental has always been a big hang-up on moving forward (in the Marcellus). If you see these kinds of issues, you’re going to go somewhere else and invest your money there because you’re looking at a more immediate return," he said.

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