South Fayette battles over ordinance despite low demand for gas rights

No one wants to drill for oil and gas in South Fayette anymore.

That’s not part of a new settlement that aims to put to bed a years-long conflict between the township and a group of landowners who felt South Fayette was trying to exclude drilling from its borders.

But it’s a loud unsaid.

The low price of natural gas has likely dampened the appetite of Range Resources, the Texas-based shale operator that once leased land from the Kosky family and their business interests, and of the landowners who continue to spend hundreds of thousands of dollars fighting the township.

Since 2013, the Koskys have filed half a dozen challenges to South Fayette. Most have been procedural, meaning they claimed the commissioners didn’t follow proper procedure when they passed drilling ordinances and a comprehensive plan for the township.

The settlements, which addressed procedural matters and have not been finalized, may signal a cooling off period, according to Blaine Lucas, an attorney for Babst Calland who represents the Koskys on some of the lawsuits.

“Certainly, the current market out there probably comes into play,” he said. “So, it’s like, why fight this battle now? Maybe we will or won’t have to fight it later.”

Further drilling restrictions

Neither South Fayette nor any of the Allegheny County townships that border it have any shale drilling permits. Range had one issued in South Fayette some years ago, but the township challenged the state Department of Environmental Protection on it, and the company withdrew its application. The company did not return calls and e-mails seeking comment.

It’s unclear how many acres are currently under lease in South Fayette. Jonathan Kamin, South Fayette’s solicitor, said that even Mr. Kosky has stated he no longer has any active leases.

But that doesn’t mean South Fayette won’t be pushing for further drilling restrictions. Mr. Kamin said the township is advertising a stricter ordinance than the one it passed in 2010 for a vote at the commission’s next meeting in July.

This would be South Fayette’s third swing at tightening its oil and gas rules.

The first came in 2010, when the township adopted its first oil and gas zoning restrictions regulating the industry’s development as a “conditional use.” That meant that drillers had to apply for township approval for each location they sought. They could operate in commercial and industrial districts only, and had to meet an extensive list of requirements, including noise, traffic, environmental and other impact studies.

In 2012, Pennsylvania passed Act 13, sweeping oil and gas legislation which, among other things, limited municipalities’ ability to regulate where drilling happens. South Fayette and a group of other municipalities challenged the legislation and the matter went all the way to the Pennsylvania Supreme Court, which delivered its bombshell decision in December 2014.

When the court invalidated portions of the oil and gas legislation that aimed to override municipal control over drilling, South Fayette and like-minded municipalities across the state seized on the occasion to exert more control over the industry.

The state Supreme Court agreed with plaintiffs that oil and gas development is an industrial activity and needn’t be permitted everywhere.

South Fayette, in turn, decided to amend its ordinance to specifically limit drilling to industrial areas only. “In my opinion, this is what the courts ordered us to do,” Commissioner Joe Horowitz said at a township meeting last July.

Commissioner Jessica Cardillo-Wagenhoffer begged to differ.

“The whole point of striking down Act 13 was to put control back in the hands of your municipality, and I don’t understand why we keep coming back to the Supreme Court decision,” she said at that hearing. “Your board should be able to make the decisions for you. That decision should not be a de facto ban on drilling, and that is what this is. I believe this is taking the rights away from property owners.”

Keeping the lawyers busy

The fallout from the Act 13 decision has kept industry and township lawyers busy. About 100 oil and gas ordinances were adopted last year, up slightly from the year before, according to yearly legal roundup of matters concerning oil and gas development released by Babst Calland on Thursday.

The vast majority of those were zoning ordinances. The report noted that while some municipalities were regulating oil and gas for the first time, many of the 100 were revisions to existing drilling ordinances that their townships felt could be more restrictive thanks to the Act 13 decision.

That was the case with South Fayette.

“The dust has not settled completely on Robinson,” Mr. Lucas said, referring to Robinson Township, the lead plaintiff in the Act 13 case. “Much to the pain of our clients, this created such a gray area. And gray areas are what lawyers fight over.”

Mr. Lucas, whose firm tracks enacted and proposed oil and gas ordinances in the region, said he’s seeing more ordinances getting into environmental matters, such as water testing. Grant Township in Indiana County even legalized civil disobedience to prevent an oil and gas wastewater injection well from operating within its borders.

‘So annoying’

The discussions last year around South Fayette’s amended oil and gas ordinance were lively. Industry representatives and supporters said restricting drilling to industrial areas only and requiring generous setbacks from structures and streams virtually drew a red X through the entire township.

Mr. Kamin said that wasn’t true but he wouldn’t make public any maps showing where oil and gas activity would be permitted because he said it was part of ongoing litigation.

Mr. Lucas, who appeared before the board to argue against the new limits, said the township was furthering the argument that it won’t allow drilling anywhere within its borders, which makes it more vulnerable to yet more lawsuits.

Just before the vote, the board decided to give an inch. It loosened the setback requirements.

Mr. Kamin assured the commissioners in July that “this solves any questions to the exclusionary issue.”

But the change was made after the public hearing and Mr. Lucas pounced on it to file another procedural challenge.

In May, a court agreed with him and invalidated the 2015 ordinance.

“It’s so annoying I can’t even tell you,” said Mr. Kamin a few days after the decision.

“We went ahead and adjusted things to address their enumerated concerns. And they went and sued us for it,” he said. “Our willingness to accommodate them ended up being our downfall.”

Mr. Lucas said he hoped the township would use this experience to pause and reflect on all of the roadblocks it has put up for shale gas drillers who, admittedly, aren’t interested in drilling there anyway.

But Mr. Kamin said the judge has done the township a favor by charting a clear course for its more restrictive ordinance to stand: simply re-advertise it, hold another public hearing, and repeat the vote.

“Maybe it was time that we bury our hatchets here,” Mr. Lucas said on Thursday. “Although someone joked, does that mean bury them in each other’s backs?”

Anya Litvak: or 412-263-1455.

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