American Oil and Gas Reporter - June 2014 - 158

ConventionSection: Pennsylvania Independent Oil & Gas Association
severance tax may be gaining favor among
Republicans, Gmerek assesses. "I think
the severance tax is a huge problem this
year as we do the budget," he acknowledges. "It is going to be a problem for
the rest of the year. The hole in the budget
makes it a necessary problem and that
hole does not include the additional money
the governor wants to spend on education.
The governor does not want to see new
taxes. We think the general assembly is
leaning toward the idea that there is no
way out of this except through new taxes,
which creates an interesting dilemma for
the governor. If (legislators) put a tax on
his desk, will he veto it?"
Act 13 Uncertainty
PIOGA says it is continuing to monitor
the implications of Robinson Township
v. the Commonwealth of Pennsylvania, a
December 2013 plurality opinion of the
Pennsylvania Supreme Court that overturned portions of Act 13. That law was
passed in 2012 to update the state's Oil
and Gas Act of 1984 and reflected the
surge in Marcellus Shale activity, describes
David Overstreet, an attorney with K&L
Gates, who spoke at EOGCTS with his
K&L Gates colleague Christopher Nestor.
Although Act 13's impact fee remains
intact, the high court remanded issues to
the Commonwealth Court, which must
decide whether the provisions the court
deemed unconstitutional can be severed
from the remainder, Overstreet details.
Unfortunately, he says, industry representatives find themselves on the outside
looking in.
Nestor was barred from the judge's
chambers during a March 10 status conference before President Judge Dan Pellegrini of the Commonwealth Court while
the state and Robinson Township presented

Since it is not a majority opinion, the
Pennsylvania Supreme Court's ruling
that overturned aspects of Act 13 is not
precedential, indicates K&L Gates Partner
David Overstreet. Overstreet and his K&L
Gates colleague Christopher Nestor discussed developments with Act 13 in a
presentation on the second day of PIOGA's EOGCTS, held May 12-14 at Heinz
Field in Pittsburgh.

arguments about which provisions of the
law should be reconsidered, Overstreet
recalls. By excluding the industry, the
parties demonstrate their preference not
to deal with difficult questions such as
the impact fee's fate, he assesses.
"We were not going to argue that the
fee should be stricken," Overstreet says.
"But the process was managed in such a
way that the parties were allowed to
agree that they were going to interpret
the Supreme Court mandate to put only
their questions before the court and not
deal with all the others the industry

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158 THE AMERICAN OIL & GAS REPORTER

wanted to raise. By keeping Chris in the
hall, they were able to manage the process
in such a way that what we wanted to put
before the court was not on the table."
However, PIOGA and others will be
allowed to argue thorough amicus briefs
as friends of the court, he allows. Among
the remanded issues Overstreet mentions
are provisions that notify public water
suppliers of spills and language dealing
with the appropriation of property for
gas storage.
In the Robinson Township decision,
Justice Ronald Castille's opinion was
joined by justices Debra McCloskey Todd
and Seamus P. McCaffery, Overstreet reviews. Justice Max Baer found provisions
unconstitutional on different grounds.
The plurality opinion eliminates sections of Act 13 that pre-empt local ordinances from regulating environmental aspects of oil and gas business, provisions
that mandated uniformity on local zoning
across the state, and Pennsylvania Department of Environmental Protection
waivers for well setbacks, Nestor recalls.
The court ruled that Act 13 provisions
that limited local land use regulation
were unconstitutional based on Article 1,
Section 27 of the Pennsylvania Constitution, Overstreet adds. However, he counters, the segment merely recognizes a
right and is not a grant of authority.
Among provisions the court ruled were
not to be severed from those declared
unconstitutional were requirements for
well setbacks from streams and provisions
that granted the state's Environmental
Quality Board authority to implement
the act's public natural resources provisions, Overstreet reports.
Case Law Considerations
The plurality opinion is not precedential, Nestor emphasizes, and litigation is
likely on provisions relating to local ordinance pre-emption. But the ruling may
embolden municipalities' attempts to further regulate the industry, despite the
state's primacy, he acknowledges.
What, Overstreet poses, is the upshot
for operators? It does not mean that municipalities can regulate oil and gas operations, he insists. "That is the bottom
line," he says. "Article 1, Section 27 of
the Pennsylvania Constitution does not
give municipalities the authority to regulate
your business. It doesn't give any authority
at all. It is not a delegation of authority
to municipalities. It never was."
The Supreme Court decision takes the

American Oil and Gas Reporter - June 2014

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