Natural Gas Summit - Local Government and Legal Tracks

I did not attend all the other tracks. Hopefully, Penn State will post the slides on the Natural Gas Summit conference website. Meanwhile, here are some notes from the Local Government and Legal tracks.

Impact on Local Roads :

A Local Government session was devoted to Road Impacts and conducted by Mr.Tim Ziegler of the Center for Dirt and Gravel Roads. The emphasis was very strongly on the need for having a Post and Bond Ordinance, the monitoring needed to determine damage, and the engineering required upfront to establish a legally solid base for the ordinance. It takes a 6 or more months to schedule the engineering, so advance planning is key. The handouts list publications and organizations that are useful, e.g. PennDOT Pub 221.

He recommended being proactive, getting an ordinance in place, and going to the gas companies early to negotiate on how they can help prevent or fix problems. It may be necessary to rebuild a road and the companies could help by putting in a stronger base before bringing in trucks. Get a properly signed Excessive Maintenance Agreement early and make it fit your needs. Then monitor the status of the roads and traffic.

During the discussion, we heard that Sullivan County was paying, or reimbursing their towns, for the P&B engineering studies. No other county seems to be doing that. Susquehanna County Commissioner Warren expressed interest in this and in determining what could be done to protect bridges which are a county responsibility.

Legal :

Lester Greevy, Esq., presented another version of a talk he has given at several Penn State sponsored meetings to educate people about gas leasing pitfalls and benefits. He gave several slides which may be available at other Penn State sites. He did make two significant new announcements. First, the gas companies are lobbying heavily to get Eminent Domain privileges for laying gas pipelines and are trying to trade that for going along with some of the other bills pending in the legislature. Second, there is a new Appalachia Chapter of the National Association of Royalty Owners ( NARO) which can provide a useful forum for local landowners who have leases or are considering them.

Ross Pifer, Penn State Dickenson School of Law, discussed ten currently pending law cases. Several have to do with the constitutuonality of leases which reduce the state minimum 12.5% royalty by deducting expenses. The first such case was filed against Cabot by Susquehanna County residents and remains undecided. A key point is what is a suitable remedy - termination or reformation of the contract. The comments seem to indicate reformation is more likely but the terms are hard to determine - e.g. set new $ figures now when the prices are lower than last summer or at those higher numbers when the cases were filed.
Two key cases involve whether a town's zoning law could regulate gas drilling operations. The two County Courts ruled differently, but the Commonwealth Courts ruled in favor of the gas company in both cases saying that the State Oil and Gas Law preempted the zoning ordinance. However, other ordinance provisions which do not conflict with the O&G law may apply. A third case was initially resolved on that basis. The Supreme Court has heard arguments on appeal and a ruling is expected by next summer which may settle the issue of extent of preemption. Some other cases are pending on environmental aspects. A case is pending trail on the right of a gas company to establish a gas storage field under land in Bradford County using eminent domain pursuant to the Natural Gas Act, 15U.S.C. s 717f(h).

Legislative :

Rep. Garth Everett discussed the bills in the legislature. While none of these passed, all or most will be introduced again next session. Several bills address various forms of assessments, and severance or royalty taxes which the state could apply. Others seek to protect rights of surface owners and to clarify the rights of landowners by applying the Oil and Gas Conservation law to the Marcellus shale layer and preventing underground trespass by horizontal drilling ( Bill proponed by Reps. Major and Pickett). There is a bill proposed that would put PennDOT in charge of ensuring gas developers restore all roads used in gas development. This would would relieve small townships of the burden of dealing with gas developers and provide a single point of contact for the developers. There is another proposal to establish an independent commission to study all the Marcellus gas development issues and recommend legislation. This session gave the impression that it might take a long time to get the issues resolved.