To Ban or Not to Ban? The Fight over Fracking Intensifies

Additionally, existing and proposed regulatory frameworks for fracking are the subject of intense debate at the state and municipal level in nearly half of the United States. Not every state is embroiled in the debate because the process of fracking, which involves the injection of water and chemicals into the ground at high pressure to split apart rock and release natural gas, is necessarily limited to those states that are situated above underground shale deposits. These deposits contain pockets of natural gas and often span multiple states. The Marcellus Shale deposit, for instance, runs underneath New York, Pennsylvania, New Jersey, Ohio, Maryland, Virginia, West Virginia, Kentucky, and Tennessee. Recently, however, even states that are not situated above known or readily accessible shale deposits are nevertheless contemplating regulatory frameworks for fracking, in light of technological improvements that are facilitating the discovery and exploitation of previously unknown or inaccessible shale deposits and the increasingly common interstate transfer of fracking waste.

Central to the development of these regulatory frameworks for fracking has been the fiercely contested debate over the economic and environmental consequences of fracking. On the one hand, proponents of fracking point to the economic benefits, including increased jobs and government revenue, as well as energy independence. Opponents, meanwhile, cite the severe environmental consequences of fracking, including groundwater depletion and contamination, the release of carcinogenic chemicals contained in fracking additives, earthquakes, and climate change resulting from the loss of incentives for the development of renewable energy and the release of methane. Fracking companies generally deny such consequences but are certain to take note of the groundbreaking verdict issued by a Texas jury in April 2014 in Parr v. Aruba Petroleum, Inc., No. 11-1650 (Dallas Cnty. Ct., Mar. 2011), which awarded $2.9 million to a family for suffering a private nuisance created by one company’s fracking activities, which had a negative impact on the family’s drinking water and health.

This article examines recent developments in the regulatory frameworks for fracking in Pennsylvania, New York, California, and Massachusetts. Recent case law and state and local action on fracking in shale-rich Pennsylvania, New York, and California represent significant and rapidly evolving developments in the fight over whether to ban fracking. Meanwhile, the proposed legislative ban on fracking in Massachusetts is representative of preemptive initiatives in states that are not rich in shale. These four states are thus bellwether states in which the fight over fracking is being closely scrutinized.

Pennsylvania

The Pennsylvania Supreme Court’s decision in Robinson Township confirms that fracking raises significant environmental concerns. In that case, the court ruled on Act 13, a state law enacted in February 2012 amending Pennsylvania’s Oil and Gas Act and prohibiting local regulation of oil and gas operations like fracking. The legislation was aimed, in large part, at preventing municipal bans on fracking, like the first-in-the-nation municipal ban adopted in Pittsburgh in 2010. The legislature achieved its objective with three provisions in particular:

1. Section 3215(b)(4) authorized the Pennsylvania Department of Environmental Protection to grant waivers of setbacks to oil and gas permit applicants in certain cases.

2. Section 3303 declared that environmental obligations related to oil and gas were of statewide concern and that all local legislation of the field was thus preempted by state authority.

3. Section 3304 established a statewide regulatory regime for oil and gas that limited municipal authority and required local governments to authorize oil and gas operations as a permitted use in all zoning districts.

In March 2012, a month after Act 13 was enacted, several municipalities and individuals brought a petition for review challenging the constitutionality of the legislation. The lower court found Act 13 to be unconstitutional in part and enjoined the application of certain provisions, including sections 3215(b)(4), 3303, and 3304. In a lengthy decision, the Pennsylvania Supreme Court affirmed that decision in part and reversed in part. In particular, that court affirmed that sections 3215(b)(4), 3303, and 3304 violated section 27 of the Pennsylvania Constitution, otherwise known as the Environmental Rights Amendment. The Environmental Rights Amendment provides as follows:

The people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment. Pennsylvania’s public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people.

Before assessing the challenged provisions of Act 13, the court undertook a detailed analysis of the Environmental Rights Amendment. The court found that while the right enunciated in the first clause may properly be regulated by the state, any such regulation is subordinate to the enjoyment of that right. The court further found that the “public natural resources” mentioned in the second clause include not only state-owned lands, waterways, and mineral reserves, but also ambient air, surface and ground water as well as wild flora and fauna. The court also found that the state, as trustee of these resources, has an obligation to refrain from performing its duties unreasonably and has an obligation to act affirmatively to protect the environment.          

Applying these principles to the challenged provisions of Act 13, the court affirmed that sections 3215(b)(4), 3303, and 3304 were unconstitutional. Section 3215(b)(4), which authorized the state to grant waivers of setbacks to oil and gas permit applicants on the condition that the applicant submit a plan to protect commonwealth waters, was held to be unconstitutional on the ground that the scheme lacked identifiable and readily enforceable environmental standards for granting setback waivers. The Commonwealth cited another portion of Act 13 as incorporating standards of environmental statutes into section 3215(b) decisions, but the court held that the cited portion made no reference to whether or how “substantive standards of existing environmental acts” enter into a section 3215(b) decisions, strongly suggesting that reference to such substantive standards in section 3215(b) would have passed constitutional muster. The court further held that the scheme failed “to ensure conservation of the quality and quantity of the Commonwealth’s waters and to treat all beneficiaries equitably in light of the purposes of the trust.”

Similarly, section 3303, by which the state purported to preempt all local legislation regarding oil and gas permitting, was held to be unconstitutional because it commanded municipalities to ignore their obligations under section 27 and directed them to take affirmative actions to undo existing protections of the environment in their localities. Therefore, the court held that the legislature transgressed its delegated police powers, which, while broad and flexible, are nevertheless limited by constitutional commands, including the Environmental Rights Amendment.          

Section 3304, which required local governments to authorize oil and gas operations as a permitted use in all zoning districts, was also held to be unconstitutional because it permitted such operations as of right in every zoning district throughout the state, thereby exposing otherwise protected areas to the environmental and habitability costs associated with fracking, including (1) air, water, and soil pollution; (2) persistent noise, lighting, and heavy vehicle traffic; and (3) the building of facilities incongruous with the surrounding landscape. The court held that “the degradation of the corpus of the trust and the disparate impact on some citizens sanctioned by Section 3304 of Act 13 are incompatible with the express command of the Environmental Rights Amendment.”          

The petitioners in Robinson Township also claimed that Act 13 violated the Pennsylvania Constitution’s prescription against the enactment of special laws, authorized unconstitutional takings of property, and violated the separation of powers doctrine. The Pennsylvania high court reversed the lower court’s decision to sustain the Commonwealth’s preliminary objections to these first two claims and remanded for further proceedings, affirming the lower court’s determination that the act did not violate the separation of powers doctrine.

New York

Equally notable developments are taking shape in neighboring New York, where the debate over whether to ban fracking is intensifying. Currently, the state has a de facto moratorium on fracking, which has been in effect since 2008, when the Department of Environmental Conservation (DEC) began a review of fracking. In 2012, DEC referred the matter to the Department of Health (DOH) for additional review. Both reviews are still in process. In February 2014, a group of pro-fracking landowners, unwilling to wait for the outcome of these reviews, filed Joint Landowners Coalition of New York v. Andrew M. Cuomo, New York Supreme Court Index No. 000843/ 2014, against Governor Cuomo and the DEC and DOH Commissioners, seeking, among other things, an order compelling DEC to complete its review and a finding that the referral to DOH was arbitrary and capricious, on the grounds that the landowners have lost out on the economic benefits associated with their mineral estates.          

In the absence of action at the state level, municipalities in New York decided to take matters into their own hands. In 2011, the towns of Dryden and Middlefield both amended their zoning laws to ban all fracking in their towns. Dryden and Middlefield are just 2 of more than 100 New York municipalities that have enacted such bans. These two bans were challenged in Matter of Wallach v. Town of Dryden and Cooperstown Holstein Corp. v. Town of Middlefield, 2014 N.Y. Slip. Op. 04875, on the ground that they were expressly preempted by the supersession clause in New York’s Oil, Gas and Solution Mining Law (OGSML), which provides, in part, that the statute supersedes “all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries.” In June 2014, the Court of Appeals issued a landmark decision affirming the lower court decisions in the case, which held that the zoning amendments were not preempted by the statute and that the towns had reasonably exercised their home rule authority to regulate land use.

To assess whether the zoning amendments at issue in Matter of Wallach were preempted by state law, the court conducted a three-pronged inquiry into the plain language, statutory framework, and legislative history of the OGSML and determined that each factor supported the conclusion that the amendments were not preempted. First, the court held that the supersession clause is most naturally read as preempting only local laws purporting to regulate the actual operations of oil and gas activities, not zoning ordinances that restrict or prohibit certain uses within town boundaries. Second, an assessment of the statutory scheme as a whole revealed that the OGSML is concerned with the state’s regulation and authority regarding the safety, technical, and operational aspects of oil and gas activities across the state, and that the supersession clause fits comfortably within this framework because it invalidates only local laws that would intrude on this authority. Finally, the court determined that the legislative history of the OGSML supported the view that the supersession clause does not interfere with local zoning laws regulating permitted and prohibited uses of municipal land.

Significantly, the court in Matter of Wallach noted that

[t]hese appeals are not about whether hydrofracking is beneficial or detrimental to the economy, environment or energy needs of New York, and we pass no judgments on its merits. These are major policy questions for the coordinate branches of government to resolve.

That being said, this decision is likely to have a far-reaching impact on the effectiveness of municipal bans on fracking in other shale-rich states.

California

The battle over whether to forbid fracking is also heating up in California, home of the Monterrey Shale formation. In September 2013, California Governor Jerry Brown signed into law 2013 California Senate Bill No. 4, which is aimed at regulating, but not banning, fracking. The new legislation allows for fracking, but requires drillers to disclose the chemicals used in the fracking process, alert neighboring landowners at least 30 days before starting work, perform groundwater monitoring, and test their water wells upon request. While this legislation attempts to strike a balance between the economic and environmental consequences of fracking, the Los Angeles City Council in February 2014 voted unanimously in favor of a motion seeking a complete moratorium on fracking. The motion instructs the city’s law department to draft zoning regulations instituting a prohibition on fracking within city limits, which is to remain in effect until the city council is assured that drillers can, among other things, protect environmental quality and natural resources and mitigate the effects of fracking on climate change. More recently, in May 2014, Beverly Hills, a city geographically surrounded by Los Angeles, became the first municipality in California to ban fracking. That same month, Santa Cruz became the first county in California to ban fracking, two years after Mora County, New Mexico, became the first county in the country to do so.

Of special concern in the debate over fracking in California is the risk of earthquakes arising from the disposal of fracking wastewater into injection wells. This risk is heightened in California in light of the frequency of seismic activity in the state and the large number of injection wells located within close proximity to active faults. Indeed, one study reports that more than half of California’s 1,553 active injection wells are within 10 miles of a recently active fault. Notably, the Los Angeles City Council motion to ban fracking includes a section entitled “Increased Earthquake Risks,” which states, in part, that the U.S. Geological Survey “has determined that fracking wastewater disposal is responsible for triggering earthquakes in Oklahoma, Arkansas and Ohio, among other states.” On March 17, 2014, just a few weeks after the city council motion, a 4.4‑magnitude earthquake hit Los Angeles. Many suspect that earthquakes like this one are induced by injection well activities that increase pressure on faults through the injection of large volumes of fluids into the ground.

Massachusetts

Even in states with no known or readily accessible shale reserves, the debate over whether to ban fracking is intensifying. For instance, Massachusetts House Bill 3796, introduced in November 2013 and entitled “An Act to protect our drinking water from hydraulic fracking,” proposes a 10-year ban on fracking and the collection, storage, treatment, or disposal of wastewater hydraulic fracturing fluid, wastewater solids, drill cuttings, or other byproducts from hydraulic fracturing. Supporters of the bill believe that the state should be proactive and close the door on fracking before it arrives in Massachusetts, which some fear may happen if fracking spreads and companies become interested in tapping into the shale deposits of the Hartford Basin, which runs from Connecticut through Massachusetts and which contains shale deposits that are small, scattered, and of questionable quality. If House Bill 3796 passes, Massachusetts will follow in the footsteps of neighboring Vermont, which in May 2012 became the first state to ban fracking.

Conclusion

These recent developments in the ongoing fight over whether to forbid fracking in Pennsylvania, New York, California, and Massachusetts are representative of similar developments unfolding in city halls, legislatures, and courtrooms across the country. The fight will only continue to intensify as the debate over the economic and environmental consequences of fracking continues to deepen.

Keywords: real estate litigation, hydraulic fracturing, fracking, state legislation, municipal zoning, environmental protection, Robinson Township

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