Local vs State Control: Big Question for Natural Gas Firms in the Marcellus

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By Jay Vincent, The Saint Consulting Group
Senior Vice President – Energy Sector, Practice Leader

Since the 1984 passage of the Oil & Gas Act, most Pennsylvanians thought that counties and townships, cities and boroughs had little to no say over any aspect of the gas industry; that regulations top to bottom fell squarely within the purview of the Commonwealth’s Department of Environmental Protection.

Yet a recent landmark legal decision has changed all that in a fashion which is having a dramatic effect on the energy industry’s future in the state and the Marcellus Shale.

Frankly, the July 22, 2010 Commonwealth Court decision in the case of Penneco Oil Company, Inc., Range Resources-Appalachia, LLC and the Independent Oil & Gas Association of Pennsylvania vs. The County of Fayette, Pennsylvania changed the game for the energy industry.  Our analysis now shows a permitting landscape which is changing at a nearly daily pace.  This is quite problematic for an industry which has relied on permitting stability for 20 years.

Communities are now examining their zoning, proposing new rules to restrict opportunities and adopting these measures.  This is not merely in reaction to environmental and health concerns — concerns given an increasing voice by the media and films like Joshua Fox’s “Gasland”.  Now it is all seeming to be on the verge of change with residents up in arms about truck traffic, water availability and other issues.

The pendulum is swinging now towards local control with more and more media reports showing creative ways municipalities are blocking the industry from permitting.  Whether it is restricting truck traffic or adding onerous conditions to siting regulations, the industry is no longer able to rely on the state to get its permits.  That reality means more due diligence to plan a win and more work then ever to win.

Jay Vincent is senior vice president and Energy Sector Practice Leader for The Saint Consulting Group, email vincent@tscg.biz, phone 312.970.5770 ext 7501

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