On April 21, with little fanfare and zero media coverage, the Butler Township Board of Commissioners approved the construction of a Marcellus Shale well pad in a residential area. Details of the drilling site off Schaffner Road in an area zoned R-1 (Single Family Residential) may be found on the township website in the Planning Committee meeting minutes for Apr. 1.

Prior to the passage of Act 13 in Feb. 2012, Butler Township ordinances allowed drilling in agricultural and manufacturing zones only. After Act 13 was passed, the commissioners drafted a letter of support for those municipalities mounting a legal challenge to the zoning prohibitions of Act 13. In December 2013 that challenge was successful, and the PA Supreme Court restored to municipalities their right to zone drilling.

But now that the zoning powers which they once supported have been restored, the Butler Township commissioners seem no longer interested in zoning safeguards with regard to drilling. The current drilling ordinance, adopted in Dec. 2012 to comply with the original version of Act 13, permits drilling in all zones.

I wonder if any other Butler Township residents find this trend disturbing. Or perhaps they have bought into the industry's claims that shale-gas drilling is safe and tightly regulated and there is nothing to worry about. Myself and others have been sharing factual reports to the contrary for years now; if readers aren't yet convinced that this process needs at the very least to be kept out of residential areas, they probably never will be.

Then again, perhaps many township residents have leased their residential properties and so wish for the township's drilling ordinance to remain as it is. But drilling in a residential zone can have costs beyond environmental, health and safety factors. At least one local bank has stated that it would be "very hesitant" to issue a mortgage to a property if a well pad was within close proximity to that property.  Other local banks may have similar policies.  Thus the ordinance allowing residential drilling could potentially put a number of residential properties at risk of being unsellable due to an inability to procure the requisite financing for purchase.

In addition, many area banks will not grant mortgages to leased properties with the clause “Lease has priority over mortgage” or similar language contained in the lease. A search on the Butler County Deeds and Records website has turned up a number of residential leases with such language in Butler Township. This could ultimately have a great negative impact on the township's future growth for the reasons mentioned above. Leaseholders should check with their banks or lending institutions for details and to verify this information.

Finally, there may be those Butler Township residents who are concerned about residential drilling but don't know what they can do, or feel there is nothing they can do, to stop it. These people may be surprised to know that the power of law is on their side. Besides restoring zoning powers, the state Supreme Court's ruling on Act 13 has placed the rights to clean air and enjoyment of property, among other rights, on equal footing with the right to financial gain from one's mineral rights. One can still do the latter, but not at the expense of the former. Furthermore, a lawyer consulted about Butler Township's drilling ordinance stated that a zoning ordinance that allows drilling everywhere is in violation of the state constitution.  He said that municipal officials must by law enact zoning that protects the interests of all residents, not just leaseholders.

A couple years ago I attended a Butler Township commissioners' meeting and was surprised to see a large number of people there to protest a sports complex that had been proposed for their residential neighborhood. The level of organization was remarkable. The complaints and concerns – noise, bright lights, safety, property values – were the same as those I'd heard expressed in meetings elsewhere when shale-gas wells were being discussed. Could that level of organization and concern be brought to bear in the matter of residential well pads in Butler Township?

For those of us who are concerned about drilling in residential areas, the law is on our side. What is lacking is the organization and mobilization of concerned residents. Could we perhaps remedy that situation? Soon? Before the next residential drilling site is approved by Butler Township commissioners?  

j.p.m.

For years, fracktivists and real estate lawyers have been warning of the potential conflict between gas leases and the ability to secure a mortgage on one's leased property.  Now the reality of that conflict is beginning to hit home locally.

A Butler Township resident, concerned over a gas lease that was taken out on his and his neighbors' condos by their homeowners' association, has been contacting area banks and lending institutions to inquire into their policies regarding the financing of leased properties. His research has yielded some very discouraging results.

Fewer and fewer banks in the area are willing to grant a mortgage to a leased property, and if the lease has the statement “lease has priority over mortgage” in it, even those few banks will not offer a mortgage for that property.

A representative from Dollar Bank said that their main concern is with the lease holder being sued. This would put the value of their mortgage in jeopardy since the lease has first priority on monies spent to settle claims filed against the gas company and lease holders. He also said that the bank would be very hesitant in issuing a mortgage if the well pad was within close proximity to the property, especially if the lease didn't absolve the lease holder from any damages. (That Butler Township has recently approved the construction of a well pad in a residential area potentially puts a number of properties at risk.) ESB Bank likewise is taking a close look at leases and liability issues. Many banks refuse to grant mortgages on leased properties simply because federal financial institutions consider gas drilling a “hazardous activity” and will not lend money for a property leased for such an activity; sometimes they refuse to finance a property that is even adjacent to one that has a gas lease.

(This was information received specific to the individual's property. It is always wise to meet and discuss your own situation with lenders.)

This same Butler Township resident has also researched a number of township leases on the Butler County Deeds and Records website; many of the residential leases in the township have the “lease priority” statement in them and the right to run water lines and access roads across the property.

This is a situation that could seriously impact Butler Township's future growth.

It should be noted that, in Aug. 2011, Butler Township formed a Marcellus Shale advisory board to help guide the township in making decisions regarding shale-gas drilling. In March 2012, an advisory board member handed the township officials an extensive report detailing the hazards and issues attendant to unconventional drilling and hydraulic fracturing. One of those issues was the potential lease/mortgage conflict described above. The advisory board member requested that the information contained in the report be shared with all township residents. This was never done.

If township officials had taken the potential lease/mortgage conflict seriously, they could have sent out a township-wide notification warning residents of this potential conflict and encouraging them to seek legal counsel on this specific issue. They did not.

Whatever may be the fallout of the lease/mortgage issue on Butler Township, one thing is certain: township officials cannot claim that they were not informed of this danger, that they were not “advised...”

M.O.B.