Pittsburgh and Southwestern Pennsylvania have had a long history of natural gas development. In spite of various technical differences, there are striking similarities between issues from our early history and the current debate over drilling in the Marcellus Shale.
One of these concerns relates to the right of municipalities to enact regulations controlling natural gas operations within their boundaries without conflicting with state law. This is a major issue in regard to shale fracking for natural gas development today. But it was also prominent in the 1880s during the early days of traditional natural gas development and distribution.
In February 1882, the state of Pennsylvania, under the Corporation Act of 1874, gave five-year charters to two companies, the Fuel Gas Co. and the Penn Fuel Co., to provide natural gas from their wells to Pittsburgh. That summer, Pittsburgh's City Council voted to give the companies permission to lay pipe in the city's streets. But since the companies had little experience in this regard, their work was substantially flawed, with improper piping for mains, numerous leaks around joints and valves and inadequate allowance for wintertime temperatures.
The limited understanding that Pittsburghers possessed of the risks associated with natural gas compounded these flaws. In late 1884 and 1885, the city experienced a number of natural gas explosions causing loss of life, injury and property damage.
A Pittsburgh Daily Post editorial, "Death In The Streets," warned that "Save in a state of war we don't believe any large city in the world was ever in a more perilous situation than Pittsburgh is today owing to the dangers of natural gas explosions." Protest meetings were held throughout the city and the Court of Common Pleas, on request of the city, appointed a commission to investigate what safeguards were required to end the risk of explosions.
The commission recommended, among other things, safety devices such as stop-valves on high-pressure mains, pressure regulators on low-pressure mains, the installation of blow-off valves, double piping and specified types of fittings.
George's gushers in Point Breeze
In 1884, the entrepreneur and inventor George Westinghouse entered the natural gas scene when he dug a productive gusher on his homestead in the Point Breeze section of Pittsburgh.
Westinghouse organized the Philadelphia Co. (now Equitable Gas and EQT) under an old charter to supply gas to homes and industries in the city and its outlying areas. A brilliant inventor and entrepreneur (he created the Westinghouse air brake, for one), Westinghouse understood the importance of safety in regard to selling natural gas. He proceeded to make a number of patented improvements in gas transmission including the use of double piping to avoid leaks, formed the Safety Appliance Co. to manufacture gas meters and regulators, and emphasized his system's safety in a series of newspaper ads.
On July 31 and Nov. 13, 1884, the Pittsburgh City Council approved ordinances that granted Westinghouse and the Philadelphia Co. what was essentially an exclusive ordinance. It specified that any natural gas distributed in the city had to be done so in a pipe system that Westinghouse had invented and was in the process of patenting. By 1885, the Philadelphia Co. was by far the largest natural gas distributor in the city, piping in gas along 12 separate mains from 45 wells and distributing it over more than 300 miles of pipe to almost 3,000 homes.
In February 1885, however, in the case of Emerson [Penn Fuel Company] vs. the Attorney General, the Supreme Court ruled that existing gas companies had no legal corporate status. In addition, it ruled that municipal ordinances could not confer any legal rights in regard to natural gas. In the absence of a legal context for natural gas, on May 29, 1885 the state Legislature passed The Natural Gas Act of 1885 that provided for the incorporation and regulation of natural gas companies.
This act provided certain stipulations and requirements, such as giving the companies the right of eminent domain to lay pipes. It also noted that such action required the "assent of the Council of such city or borough by ordinance" and was subject to "such regulations as the Councils of any city may by ordinance adopt."
What these regulations might be became a matter of conflict. The act also contained requirements for the plugging of abandoned wells as a conservation measure. It declared the furnishing of natural gas a public service and provided that franchises be nonexclusive in order to maintain competition.
In August and then again in December 1885, under the authority of the Natural Gas Act of the Commonwealth, the City Council passed a general ordinance that contained specific standards for natural gas. These included requirements, among others, for the testing of pipes by the city engineer, for the depth and laying of pipe, for pressure gauges, for a restriction of 15 pounds pressure to the square inch unless there was an inner pipe and for a system of safety valves and escape pipes. Companies wishing to provide gas in the city were required to accept these stipulations before receiving an ordinance.
In 1886, however, Peoples Natural Gas challenged those ordinances in the Court of Common Pleas, claiming that the city, by requirements in the ordinance, had in essence refused the company entry into Pittsburgh streets to distribute gas from its Westmoreland County wells. The city denied, however, that it was exercising unlawful powers and claimed that the provisions of its ordinance were "absolutely essential to the public welfare."
As required by the 1885 Natural Gas Act, the Court of Common Pleas submitted the case to a master, who took extensive testimony concerning technical issues and concluded that the requirements of the Pittsburgh ordinance were largely "unjust and unreasonable." The city appealed this decision to the Supreme Court, but in January 1887, that body affirmed the decision of the master and the Court of Common Pleas and required that the city modify the sections of its ordinance imposing conditions on access by gas companies.
"Can the city in granting its assent," asked Supreme Court Justice James Sterrett, "ignore that statute [the Natural Gas Act of 1885] and require the Company to enter into a special contract, binding it to conditions and burdens not authorized by the statute?"
"I think not," he answered. "This statute is the law of the state on the subject. Each city and borough cannot have its own law on the subject." But, he added, if a city or borough did not want natural gas, it could refuse a company access to the city. If it did grant access, it had to be "on the terms and conditions of the [state] statute."
The court required that Pittsburgh modify its natural gas ordinances, removing what it held to be "unreasonable" regulations and those conflicting with state law. The issue of the "reasonableness" of regulations it declared to be a judicial question.
In response, the city argued that when a city was given the power to adopt regulations it saw as proper, the courts could not strike them down "merely because it differs in opinion as to their being either reasonable or necessary." The court did not agree, and Pittsburgh was required to modify its natural gas ordinances as the Supreme Court specified.
And today, the debate goes on
Today Pennsylvania is again confronting the question of the rights of municipalities to control aspects of natural gas development within their boundaries in the context of state legislation. In Pennsylvania the doctrine of pre-emption dictates that municipalities cannot enact local ordinances that contradict state law. That point was underlined last month: The state Public Utility Commission declared that Pittsburgh City Council's November 2010 ban on gas drilling in the city was likely illegal -- the state has the higher authority to make environmental regulations.
Section 602 of the Oil and Gas Act explicitly pre-empts local government regulations concerning features of the wells regulated by the act. However, the judicial record is unclear concerning what regulations are pre-empted and which are permitted. The current legal initiatives regarding the appropriate scope of state and local regulation will perhaps further clarify the state law governing state versus local control of natural gas development and supply.
The conflict between municipal and state control that occurred over a century ago reminds us of the extent to which we are again facing similar issues with regard to natural gas development. Many of these issues relate to the health of the commonwealth's citizens and the quality of its environment. Moreover, in spite of natural gas regulations dating back to 1885 and various court decisions, we have still been left with a legacy, according to the state Department of Environmental Protection, of more than 200,000 "orphan" gas and oil wells whose location and impacts are unknown and that can present a hazard to the health and safety of people living near them.
It is up to the citizens of Pennsylvania, its courts, its Legislature and its municipalities to avoid once again creating such a legacy.
Joel A. Tarr is the Richard S. Caliguiri University Professor of History & Policy at Carnegie Mellon University (