This action might not be possible to undo. Are you sure you want to continue?
COMMONWEALTH OF PENNSYLVANIA,
COURT OF PENNSYLV ANIA
No. 284 MD 2012
Respondents. MEMORANDUM OF LAW IN SUPPORT OF PETITION FOR LEAVE TO INTERVENE AND FOR EXPEDITED CONSIDERATION THEREOF The Pennsylvania Independent Oil and Gas Association ("PIOGA"), the Marcellus Shale Coalition ("MSC"), MarkWest Liberty Midstream & Resources, LLC ("MarkWest"), Oil Company, Inc. ("Penneco"), and Chesapeake Appalachia, LLC ("Chesapeake"), memorandum Penneco
of law in support of their petition to this Court for leave to intervene as
respondents in this matter, and for expedited consideration thereof. INTRODUCTION PIOGA is a nonprofit trade association representing Pennsylvania's natural gas producers. independent oil and
PIOGA member companies drill and operate the majority of the state's
crude oil and natural gas wells, including the wells extracting gas from shale formations. PIOGA's members, however, are not limited to owners and operators. PIOGA's nearly 1,000
members also include oil and natural gas drilling contractors, service companies, manufacturers,
firms and consultants, royalty owners, and others with interests
Pennsylvania's oil and gas industry. The MSC is a nonprofit trade association that represents companies operating the
exploration and production of natural gas from unconventional formations, such as the Marcellus shale, as well as companies constructing and operating the pipelines for the transmission of that natural gas. Included among its more than 300 members are also national and local supply chain businesses that provide the necessary support services and materials for the development of shale gas in Pennsylvania. The MSC is committed to the responsible development of the Marcellus The MSC's
shale resources and its members seek to be responsible members of the community.
members seek to address issues related to the development of the State's natural gas resources directly with regulators, local, county, state and federal government officials and communities. PIOGA and the MSC are the leading trade associations for oil and gas operations in the Appalachian development Basin. Together, they represent the businesses and organizations leading the
oil and natural gas resources, in both historic conventional
(sandstone, limestone) formations and unconventional (shale) formations. Mark West, a member of the MSC, is a national leading owner and operator of "midstream facilities" that transport, compress, and process oil, gas, and other substances
extracted from oil and gas wells. As a provider of midstream services and facilities, including compressor stations, MarkWest's services are integral to natural gas production companies by In order to serve natural
facilitating the transmission of produced natural gas to the marketplace.
gas producers with well sites in and around Petitioner Cecil Township, MarkWest purchased property within the Township, in an industrial zoning district, for purposes of constructing a compressor station and related appurtenances. Petitioner Cecil Township has, through the
passage of local zoning ordinances, the denial of zoning approvals and other actions, engaged in a systematic and ongoing course of conduct designed for, and aimed at, precluding the development of MarkWest's proposed facilities, and the development of oil and gas resources generally, within the Township. See, e.g., MarkWest v. Cecil Township Zoning Hearing Board, No. 2011-2645 (C.C.P. Washington) (appeal pending). Penneco, a member of PIOGA, is .a privately held oil and natural gas exploration and production company headquartered in Delmont, Pennsylvania. Penneco has been in the exploration business for over 30 years and operates over 1,000 natural gas or oil wells in Pennsylvania. With operations throughout 15 counties and 172 townships in Pennsylvania, Penneco's operations have been directly affected by numerous overlapping and conflicting municipal regulations, and will be directly affected by the local ordinance reforms in Act 13 that are challenged by this lawsuit. Petitioners Cecil Township and Robinson Township through their restrictive local ordinances have effectively frustrated and delayed Penneco's efforts at successful oil and gas development to the detriment of Penneco and Penneco' s underlying lessees, in conflict with applicable laws of the Commonwealth. Chesapeake, a member of the MSC, is actively drilling for and producing natural gas from the Marcellus shale formation in Pennsylvania, and, accordingly, takes great interest in Act 13 and the regulatory regime for construction and operation of horizontal wells in the state. Chesapeake has invested millions of dollars in the development of the Marcellus shale gas play. Chesapeake has extensive leasehold interests throughout the Commonwealth for natural gas exploration and production, including within certain of the municipal Petitioners' borders. Chesapeake's ability to explore for and produce natural gas from its. leasehold interests in the Commonwealth has been negatively impacted by the passage of local zoning ordinances
precluding or impeding the development of oil and gas resources, including those of certain of the municipal Petitioners. This matter involves issues of grave importance to the Comnionwealth, as well as to PIOGA and MSC members, MarkWest, Penneco and Chesapeake. By creating jobs, spurring local spending and generating millions of dollars in tax revenue, gas extraction from conventional (sandstone, limestone) formations and newly defined unconventional (shale) formations, is playing a key role in Pennsylvania's recovery from the economic downturn throughout the extraction "supply chain." The Governor's Marcellus Shale Advisory
Commission Report recently confirmed the significant role of the extraction of shale gas in Pennsylvania's economy: The development of vast natural gas resources trapped beneath more than half of Pennsylvania has created tens of thousands of new jobs, generated billions of dollars in tax and lease revenues for the Commonwealth and its citizens, infused billions of additional dollars in bonus lease and royalty payments to landowners, and significantly expanded access to clean, affordable energy sources for residential, commercial and industrial customers.
'" '" '"
Generally, when the public thinks of jobs that are associated with the Marcellus Shale natural gas play, the perception is drilling work. However, the natural gas industry employs individuals from many other trades and sectors. From site selection and preparation to pre-drilling work, to production stages and finally, delivery of the natural gas, each stage engages many other industries. A study published by Penn State provides the following example: "Exploration crews purchase supplies, stay at hotels, and dine at local restaurants. Site preparation requires engineering studies, heavy equipment and aggregates. Drilling activity generates considerable business for trucking firms and well-support companies now based in Pennsylvania that, in turn, buy supplies, such as fuel, pipe drilling materials and other goods and services. Likewise, construction of pipelines requires steel, aggregates, and the services of engineering construction firms. " The Penn State study goes on to state that for every $1.00 that Marcellus producers spend in the state, $1.90 of total economic output is generated. The ripple effect that the natural gas industry causes enables businesses to hire additional workers, which ultimately leads to higher income taxes. This businessto-business activity has already generated increased sales and sales tax revenues and has the potential to produce even greater returns in the future ....
Governor's Marcellus Shale Advisory Commission Report, pp. 7, 83 (July 22, 2011) (emphasis original).
On February 14, 2012, Pennsylvania Governor Tom Corbett signed into law Act 13 of 2012 ("Act 13"), a broad reform of the key environmental protection regime that governs the development of oil and gas resources in the Commonwealth. 58 Pa.C.S. §§ 2301-3504. Act 13,
which is the product of years of debate and months of intense negotiation, provides a wideranging update to and re-codification of the Commonwealth's Oil and Gas Act. In addition to
extensive revisions to the Oil and Gas Act's environmental regulatory provisions, Act 13 also addresses drilling fees and local regulation of the industry. With respect to local regulation of the industry, Act 13 supplies uniformity with respect to local ordinances relating to oil and gas operations and further clarifies the scope of preemption under the Commonwealth's • Oil and Gas Act. Specifically:
Section 3302 of Act 13, 58 Pa.C.S. § 3302, preserves and expands the former Oil and Gas Act's preemption of local ordinances, by preempting and superseding local ordinances that attempt to regulate oil and gas operations except for ordinances adopted pursuant to the Municipalities Planning Code (the "MPC") or Flood Plain Management Act ("FPMA"). An ordinance adopted pursuant to the MPC or FPMA is preempted if (1) the ordinance "contain[s] provisions ... that accomplish the same purposes as set forth in" the Act; or (2) the ordinance "contain] s] provisions which impose conditions, requirements or limitations on the same features of oil and gas operations regulated by" the Act. Section 3303 of Act 13, 58 Pa.C.S.§ 3303, adds an additional, and broad, preemption provision to the Act with respect to oil and gas operations regulated by environmental acts: "Notwithstanding any other law to the contrary, environmental acts are of Statewide concern and, to the extent that they regulate oil and gas operations, occupy the entire field of regulation, to the exclusion of all local ordinances. The Commonwealth by this section, preempts and supersedes the local regulation of oil and gas operations regulated by the environmental acts, as provided in this chapter" For purposes of Section 3303, "environmental acts" means "[a]ll statutes enacted by the Commonwealth relating to the protection of the environment or the protection of
Available at: http://www.portal.state.pa.us/portal/server.ptlcommunity/marcellus _shale_advisory _commissionl20074.
public health, safety and welfare, that are administered and enforced by [the Pennsylvania Department of Environmental Protection] or by another Commonwealth agency, including an independent agency, and all Federal statutes relating to the protection of the environment, to the extent those statutes regulate oil and gas operations." 58 Pa.C.S. § 3301. • In addition to both preserving and expanding the scope of preemption of local ordinances purporting to regulate "oil and gas operations," Act 13 contains additional provisions mandating uniformity among municipal ordinances regulating such activities. Building upon, and consistent with, Section 603(i) of the MPC, 53 P.S. § 10603(i), Section 3304 of Act 13,58 Pa.C.S. § 3304, requires that all local ordinances regulating oil and gas operations allow for the "reasonable development" of oil .and gas resources, based upon express standards set forth in Section 3304(b)(1) through (b)(11).
PIOGA and MSC members are uniquely impacted by Act 13. Members ofPIOGA and the MSC have invested billions of dollars in developing oil and gas resources and operations across the Commonwealth. Vast property interests have been acquired, corresponding large
investments have been made, thousands of employees have been hired, and materials, equipment and other resources have been deployed across the Commonwealth, as part of the historic
development of natural gas and the recent increase in natural gas development associated with production from the Marcellus shale. Moreover, both organizations, on behalf of their respective members, actively advocated for many of the reforms set forth in Act 13, including the
uniformity provisions set forth in Section 3304 of the Act. MarkWest is uniquely impacted by Act 13. MarkWest has invested millions of dollars in development of midstream facilities within the Commonwealth to transport, compress, and
process oil, gas, and other substances extracted from oil and gas wells. MarkWest's operations within the Commonwealth are impacted by the reforms set forth in Act 13, including the
uniformity provisions set forth in Section 3304 of the Act. Penneco is uniquely impacted by Act 13. Commonwealth are directly affected by numerous Penneco's overlapping extensive operations in the
regulations, including those of Petitioners Cecil Township and Robinson Township.
operations within the Commonwealth are impacted by the reforms set forth in Act 13, including the uniformity provisions set forth in Section 3304 of the Act. Chesapeake is uniquely impacted by Act 13. Chesapeake has invested millions of dollars
of the Marcellus shale gas play and has extensive leasehold interests for natural gas exploration and production. Chesapeake's
throughout the Commonwealth
operations within the Commonwealth are impacted by the reforms set forth in Act 13, including the uniformity provisions set forth in Section 3304 of the Act. There has, since the onset of Marcellus natural gas development in the Commonwealth, been a proliferation of inconsistent and varying "zoning" ordinances adopted by municipalities across the Commonwealth, including certain of the municipal Petitioners, directed specifically at oil and gas development, many of which are overtly hostile to such development. Over 125 Those
municipalities, across the Commonwealth, have adopted or proposed such ordinances. ordinances, in turn, have spawned additional
litigation over the scope and effect of the
preemption provisions of the Oil and Gas Act and, in some cases, have impeded the development of oil and gas resources in certain municipalities in the Commonwealth. Those ordinances have
also impeded those members of PIOGA that are royalty owners from realizing royalties from gas production. PIOGA and MSC members, MarkWest, Penneco, and Chesapeake have leasehold and other property interests related to oil and gas well development and associated activities both within, and outside of, certain of the Petitioners' borders. Certain of the Petitioners, and other
municipalities across the Commonwealth, have adopted local ordinances directed specifically at, and which are overtly hostile to, "oil and gas operations," as defined by Act 13. See, e.g.,
Petition for Leave to Intervene, Exhibits A (Peters Township), B (South Fayette Township), C (Mt. Pleasant Township), and D (Cecil Township). Certain of these ordinances, moreover,
purport to prohibit well operators from obtaining any zoning approval unless they first receive the consent of any surface owner of property to drill a well. See, e.g., Id., Exhibit A (Peters Township) at § 713.A; Exhibit B (South Fayette Township) at
Not only do such
provisions infringe upon a developer's contractual rights, but they also create in surface owners a full veto power over development thai they otherwise lack pursuant to Pennsylvania law
established over a century ago in Chartiers Block Coal Company v. Mellon, 25 A. 597 (Pa. 1893), as recently reaffirmed by Belden &. Blake v. DCNR, 969 A.2d 528 (Pa. 2009). Although municipal Petitioners' local ordinances purport to have been adopted for the
health, safety, morals and general welfare of their citizens, those purposes have already been addressed by the Oil and Gas Act and the Pennsylvania Department of Environmental Those purposes have
Protection's extensive regulatory regime governing oil and gas operations.
been further addressed by the General Assembly, as a matter of State policy, through its passage of Act 13. The petition for review in this matter seeks to have Act 13 declared unlawful and enjoined from operation. If Act 13 is declared unconstitutional and enjoined from operation, the ability of PIOGA and MSC members, MarkWest, Penneco and Chesapeake to realize their substantial investments in the Commonwealth, including those within Petitioners' borders, will be substantially operations, and directly affected because municipal ordinances hostile to oil and gas those of the municipal Petitioners, will continue to apply unless
successfully challenged in piecemeal litigation.
ARGUMENT When the Pennsylvania Rules of Appellate Procedure do not prescribe the practice and procedure to be followed by this Court when acting in its original jurisdiction, the Pennsylvania Rules of Civil Procedure are applicable. Pa.R.A.P, 106. Intervention in an original jurisdiction Accordingly, Pa.R.C.P, 2326 - 2350 govern
matter is not addressed by the Appellate Rules.
intervention is this matter. See Darlington, et al., PENNSYLVANIA pPELLATEPRACTICE A (20112012 ed.) at §§ 106:10, 106:22. A. PIOGA And MSC Members, MarkWest, Penneco, And Chesapeake Have Legally Enforceable Interests That May Be Affected By The Judgment In This Matter.
Pennsylvania Rule of Civil Procedure 2327 provides that a person, "[a]t any time during the pendency of an action ... shall be permitted to intervene" if: (1) the entry of a judgment in such action or the satisfaction of such judgment will . impose any liability upon such person to indemnify in whole or in part the party against whom judgment may be entered; or (2) such person is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof; or (3) such person could have joined as an original party in the action or could have been joined therein; or (4) the determination of such action may affect any legally enforceable interest of such person whether or not such person may be bound by a judgment in the action, Pa,R.C.P. 2327, prOGA, the MSC, MarkWest, Penneco, and Chesapeake qualify under
paragraph (4) of this rule. The Pennsylvania Supreme Court has recognized that the standard for determining a
"legally enforceable interest" for intervening in a pending action under Rule 2327(4) is not as straightforward as it might first appear and, further, has emphasized that the exact boundaries of
the legally enforceable interest limitation of Pa.R.C.P. 2327(4) are not clear. See Pennsylvania Crime Commission Subpoena, 309 A.2d 401, 406 (Pa. 1973). Consequently, "[t]he result is a flexible, although uncertain rule whose application in a given case calls for a careful exercise of discretion and consideration of all the circumstances involved." Id. The Supreme Court has
further recognized that, pursuant to Rule 2327: [t]he right of intervention should be accorded to anyone having title to property which is the subject of litigation, provided that his right will be substantially affected by the direct legal operation and effect of the decisions, and provided also that it is reasonably necessary for him to safeguard an interest of his own which no other party on the record is interested in protecting. BUy v. Ed of Prop. Assessment, Appeals and Review of Allegheny Cnty, Pa., 44 A.2d 250, 251 (Pa. 1945); see also Twp. of Radnor v. Radnor Recreational, LLC, 859 A.2d 1, 5 (Pa. Cmwlth. 2004) (holding that owners of property in the vicinity of property involved in zoning litigation have the "requisite interest to fit under the definition ofPa.R.C.P. No. 2327(4) and such property owners have grounds to intervene in the litigation"). In Pa. Liquor Control Ed v, Raneri, 509 A.2d 939, 940 (Pa. Cmwlth. 1986), this Court concluded that a common pleas court did not err in determining that an association of local restaurateurs had standing to intervene to protect the economic interests of its members in an appeal to common pleas court from the denial of a request for a special liquor license. The Court concluded that the association had demonstrated that it would be aggrieved by the loss of duespaying members and that some members would be aggrieved by the loss of their businesses if the application were granted. In Kater v. Cosgrove, 844 A.2d 29, 32 (Pa. Cmwlth. 2004), this Court concluded that a common pleas court did not err in allowing an association of taxpayers to intervene in a challenge to a ballot referendum where the association had a stake in protecting the reforms it
had sought. In that case, the associations members consisted of taxpayers who had previously been proponents of having the referendum placed on the ballot. Id. Here, Petitioners seek a declaration that Act 13 is unconstitutional against its enforcement. and injunctive relief
Such relief will eviscerate the needed reforms that Act 13 provides and
with the substantial investments made by PIOGA and MSC members, Mark'West, in the Commonwealth. As noted, PIOGA· and MSC members,
Penneco, and Chesapeake
MarkWest, Penneco, and Chesapeake have made substantial investments in developing oil and gas resources and operations across the Commonwealth. Property interests have been acquired,
large investments have been made, thousands of employees have been hired, and materials, equipment and other resources have been deployed across the Commonwealth, as part of the
historic development of natural gas and the recent increase in natural gas development associated with production from the Marcellus shale. Certain of the Petitioners, and numerous other
municipalities, have enacted ordinances that fail to allow for the reasonable development of oil and gas resources, If Petitioners are successful in their challenge, the ability ofPIOGA and MSC members, MarkWest, Penneco, and Chesapeake to realize their substantial investments in the Commonwealth, including those within Petitioners' borders, will be jeopardized. Thus, the
Court should conclude that PIOGA, the MSC, MarkWest, Penneco, and Chesapeake have a right to intervene in this proceeding, and in support of Act 13, pursuant to Rule 2327(4).
The Petition Should Not Be Refused.
Because PIOGA and MSC members, MarkWest, Penneco, and Chesapeake have legally enforceable interests that may be affected by the determination of this matter, intervention must be granted unless one the three grounds set forth in Pa.R.C,P. 2329 are present.
- 11 -
PIOGA, the MSC, MarkWest, Penneco, and Chesapeake are not attempting to intermeddle in the affairs of others.
Rule 2329(1) provides that a court may decline to permit intervention if "the claim or defense of the petitioner is not in subordination to and in recognition of the propriety of the action." Pa.R.C.P.2329(1). That is, "[t]he intervenor takes the litigation as he finds it." Appeal
ofthe Municipality of Penn Hills, 546 A.2d 50, 52 CPa. 1988). "We cannot and do not construe an appeal as a challenge to all possible issues; we confine ourselves to what the parties choose and only that."
Id. at 54. Here, PIOGA, the MSC, MarkWest, Penneco, and Chesapeake are
seeking to intervene as respondents in support of Act 13 and are not raising defenses or claims that go beyond the scope of the petition for review and what is needed for the protection of their respective interests.
The interests ofPIOGA and MSC members, MarkWest, Penneco, and Chesapeake are not adequately represented by the Commonwealth Respondents.
While the interests of PIOGA and MSC, MarkWest, Penneco, and Chesapeake may be aligned with those of the Commonwealth Respondents in defending Act 13, their interests are not adequately represented. The Pennsylvania Supreme Court has held that, in matters involving
zoning disputes, property owners have unique interests that may not be otherwise adequately represented. Esso Standard Oil Co. v. Taylor, 159 A.2d 692, 696 (Pa. 1960) (allowing property Specifically, PIOGA and MSC
owners in the vicinity of the subject property to intervene).
members, MarkWest, Penneco, and Chesapeake have leasehold and other property interests related to oil and gas development and associated activities that are significantly affected by the adoption of Act 13 and by the Petitioners' proposed relief. For example, the Petitioners seek declaratory relief that Act 13 is unconstitutional in the multiple counts of their Petition, as well as preliminary and permanent injunctions against the enforcement of Act 13. Such requested
- 12 -
relief presents a risk of harm to PIOGA and MSC members,
Chesapeake dissimilar to the harm of the Commonwealth Respondents.
local governments have imposed ordinances precluding PIOGA and MSC members, MarkWest, Penneco, and Chesapeake from exercising their fundamental property rights, and without the protections of Act 13, PIOGA and MSC members MarkWest, Penneco, and Chesapeake may be subject to substantive due process violations by local governments, including the Petitioners. Thus, such risk of harm is not adequately represented by the Commonwealth Petitioners. Further, this Court has recognized that townships may not adequately represent the interests of their residents.
See, e.g. Larock v. Sugarloaf Twp. Zoning Hearing Ed, 740 A.2d
308, (Pa. Commw. Ct. 1999) (recognizing that the interests of the Township and a Zoning Board may diverge from the residents, granting the resident property owners intervention). here, the Commonwealth Respondents By analogy,
do not adequately represent the unique interests of
PIOGA and MSC members, MarkWest, Penneco, or Chesapeake as they pertain to Act 13. Therefore, the interests of the owners of oil and gas property interests and related rights, best represented by PIOGA, the MSC, MarkWest, Penneco, and Chesapeake, are not otherwise adequately represented by the Commonwealth should be granted. Respondents, and the petition for intervention
The petition for leave to intervene is not unduly delayed.
PIOGA, the MSC, MarkWest, Penneco, and Chesapeake are filing their petition for leave to intervene only 4 business days after Petitioners initiated this action. not unduly delay, embarrass or prejudice adjudication of this matter. Their intervention will
- 13 -
REQUEST FOR EXPEDITED CONSIDERATION Petitioners have moved this Court for preliminary injunctive relief, seeking to have certain provisions of Act 13 enjoined before their effective date of April 14, 2012. Because this matter involves issues of grave importance to the Commonwealth, PIOGA and MSC members, MarkWest, Penneco, and Chesapeake, petitioning intervenors respectfully ask the Court to give expedited consideration to their petition for leave to intervene. CONCLUSION For the reasons set forth above, the Court should grant the petition of PIOGA, the MSC, MarkWest, Penneco, and Chesapeake for leave to intervene. Respectfully submitted,
April 5,2012 Walter A. Bunt, Jr. Pa. Id. No. 36738 David R. Overstreet Pa. Id. No. 68950 K&L GATES LLP K&L Gates Center 210 Sixth Avenue Pittsburgh, PA 15222 Tel: (412) 355-6500 Fax: (412) 355-6501 firstname.lastname@example.org email@example.com Christopher R. Nestor Pa. Id. No. 82400 K&L GATES LLP 17 North Second Street, 18th Floor Harrisburg, PA 17101-1507 Tel: (717) 231-4500 Fax: (717) 231-4501 firstname.lastname@example.org
Attorneys for Intervenors, The Pennsylvania Independent Oil and Gas Association, the Marcellus Shale Coalition, MarkWest Liberty Midstream & Resources, LLC, Penneco Oil Company, Inc., and Chesapeake Appalachia, LLC
- 15 -
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing Memorandum of Law in Support of Petition for Leave to Intervene was served this 5th day of April, 2012 by first-class U.S. mail addressed as follows: John M. Smith Smith Butz, LLC 125 Technology Drive, Suite 202 Bailey Center I, Southpointe Canonsburg, PA 15317 Jordan B. Yeager Curtin & Heefner LLP Heritage Gateway Center 1980 South Eaton Road, Suite 220 Doylestown, PA 18901 Susan J. Kraham Columbia University School of Law 435 West 116th Street New York, NY 10027 Jonathan M. Kamin Goldberg, Kamin & Garvin LLP 1806 Frick Building Pittsburgh, PA 15219
William A. Johnson 23 East Beau Street Washington, PA 15301
Susan J. Forney Chief Deputy Attorney General Chief, Civil Litigation Section Pennsylvania Office of Attorney General . Litigation Section 15th Floor, Strawberry Square Harrisburg, PA 17120 (for Commonwealth Respondents)
Christopher R. Nestor
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.