Pa. legal bills exceed $550,000 in dispute over shale drilling law

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HARRISBURG -- With a state Supreme Court ruling still pending regarding the legality of the Marcellus Shale gas drilling law passed last year, billing documents show that the case already has cost the commonwealth more than $550,000.

Those costs stem from hiring an outside legal firm, Philadelphia-based Conrad O'Brien, to represent the state Department of Environmental Protection and the Public Utility Commission in the lawsuit brought by a group of mostly Western Pennsylvania towns.

The two agencies have split the cost of those attorney fees, which already have surpassed the $150,000 that the PUC had allocated for legal services out of its $1 million share of last year's shale impact fees.

The state's costs dwarf those reported by the municipalities involved, which have not been charged by the attorneys representing them in the appellate courtrooms.

Local officials from seven municipalities, along with a Monroeville doctor and members of the Delaware Riverkeepers Network, sued the state in March over the shale drilling law, which they argued hinders their abilities to protect residents through the law's restrictions on how they craft local zoning rules.

The law approved last February, known as Act 13, made the first significant changes to the state's rules for oil and gas drilling in decades. It created a per-well annual fee, changed scores of regulations and outlined which parts of the drilling industry can and cannot be regulated by municipalities.

Commonwealth Court temporarily halted a portion of the law's zoning provisions days before the statute went into effect in April. An en banc panel of that court heard arguments on the full case in June.

While Matt Haverstick, an attorney with Conrad O'Brien, was representing the DEP and the PUC during the initial Commonwealth Court hearings, a contract with his firm was not in place until July.

A DEP spokesman said it's "fairly typical" for a law firm to begin defense work before a contract is finalized, citing what can be expeditious court schedules.

"When litigation has been filed against the commonwealth, we ordinarily need the firm to work on the defense immediately, and often can't wait for the procurement process to be concluded for the firm to begin work," DEP spokesman Kevin Sunday said.

A settlement document dated Sept. 24 shows that the firm -- which has held contracts with state legislative caucuses -- was later paid $232,664.72 for the work it did on the Act 13 lawsuit between April and July.

Several weeks after the contract was in place, Commonwealth Court ruled that part of the zoning provisions in the statute, along with a section pertaining to waivers from a setback requirement, were unconstitutional.

An appeal of the July 26 decision quickly followed from the state agencies, setting up a final decision by the state Supreme Court. Work on the appeal pushed the contract costs close to the initial $300,000 limit, and a change order was signed in October -- days after the Supreme Court heard arguments -- to boost that cap to $600,000.

A memo within that change-order document states that as the case progressed through the appeals courts, "the costs of presenting a legal defense have mounted more rapidly than expected."

"We have been carefully monitoring costs under this contract, but the unpredictable nature of this case makes it important that we sufficiently anticipate future needs," the memo states.

As the two sides continue to await a final verdict, DEP documents show bills to date totalling $550,292.66. The PUC has paid $153,046.15 so far, though its agreement with DEP states it will reimburse the agency for half of the legal expenses.

On the municipalities' side, lead attorney John Smith of the Canonsburg firm Smith Butz did not charge any of the towns for his work on the case. His firm also covered the various court, travel and copying charges, Mr. Smith said.

"While I have not added it up, the cost was several thousand dollars," he said. "We have not sought nor will we seek reimbursement for anything we have done."

In Peters, township manager Michael Silvestri said his municipality also incurred some costs as a result of its solicitor reviewing legal filings, but described those costs as "fairly minimal."

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Harrisburg Bureau Chief Laura Olson: lolson@post-gazette.com.


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