Commonwealth Court again rejects a challenge to an ordinance authorizing oil and gas development in non-industrial zoning districts

The PIOGA Press

(by Robert Max Junker)

The argument that the Pennsylvania Constitution compels municipalities to classify natural gas extraction from shale formations as a “heavy industrial use” and therefore mineral development cannot occur in agricultural and rural residential zoning districts was roundly rejected by both the Commonwealth Court and the Supreme Court in the case of Frederick v. Allegheny Township Zoning Hearing Board, 196 A.3d 677 (Pa. Cmwlth. 2018) (en banc), appeal denied, ___ A.3d ___ (Pa., No. 449 WAL 2018, filed May 14, 2019). Nevertheless, opponents of natural gas development continue to be undeterred and refuse to give up this mantra. Attacks on municipalities’ legislative decisions on where natural gas development is appropriate within their own borders are still playing out in several Western Pennsylvania communities, with opponents seeking just one judicial decision that will breathe life into this moribund concept. With the June 26 decision from the Commonwealth Court in Delaware Riverkeeper Network v. Middlesex Township Zoning Hearing Board, No. 2609 C.D. 2015 (Pa. Cmwlth. June 26, 2019) (unreported decision), this tenuous theory was put on life support and yet its few remaining proponents stubbornly refuse to acknowledge the inevitable demise.

Middlesex Township is a rural community in Butler County. In 2014, the Board of Supervisors enacted a zoning ordinance amendment to expressly provide for the use and regulation of oil and gas operations within the township. The board decided that oil and gas well site development should be a permitted use by right in the rural residential, agricultural, residential agricultural and the restricted industrial districts; should be allowed as a conditional use following a public hearing in the commercial districts; and should not be permitted in certain other districts.

R.E. Gas Development, LLC applied for and received a zoning permit authorizing construction and operation of a well site on the farm owned and operated by Robert G. Geyer in the residential agricultural district. Opponents to the well site, led by the out-of-town Delaware Riverkeeper Network and Clean Air Council, challenged the validity of Middlesex’s zoning ordinance and appealed the permit claiming that the zoning ordinance was invalid under the Pennsylvania Constitution for three reasons. First, the objectors claimed the ordinance was not a valid exercise of the township’s police power because it was not designed to protect the health, safety, morals and public welfare in violation of Article 1, Section 1 of the Pennsylvania Constitution. Second, they argued that injecting incompatible industrial uses into a non-industrial zoning district was irrational and again in violation of Article 1, Section 1. Third, the objectors asserted that permitting the Geyer well site in the residential agricultural district unreasonably infringes on the objectors’ rights under Article 1, Section 27 of the Pennsylvania Constitution to clean air, pure water and a healthy local environment. After nine nights of hearings, the Middlesex Township Zoning Hearing Board denied the objectors’ challenge and appeal. The Court of Common Pleas of Butler County likewise denied the appeal.

This case presents an interesting and unusual background at a time when other judicial decisions were trying to make sense of the post-Robinson Township II legal landscape. The Commonwealth Court first addressed this case in an unpublished opinion filed June 7, 2017 (“Middlesex I”). The court found that the objectors did not meet their heavy burden to prove that the zoning ordinance was unconstitutional. In a brief mention, the court analyzed the Article 1, Section 27 claims under the three-part Payne v. Kassab test for reviewing government action that impacts the environment, and concluded that zoning ordinance was valid. The objectors appealed to the Supreme Court. At the time, the Supreme Court was considering but had not yet decided the Gorsline v. Fairfield Township case. That case had been accepted by the Supreme Court to address the question of whether natural gas development was fundamentally incompatible with residential zoning. Around the same time, the Supreme Court decided the PEDF case regarding the Commonwealth’s use of funds generated from the leasing of state forest and park lands for oil and gas exploration and extraction and expressly overruled the Payne v. Kassab test for claims under Article 1, Section 27. In an unusual move, the Supreme Court entered an order stating that it would not consider the Delaware Riverkeeper Network’s appeal until Gorsline was decided.

As it turned out, the Supreme Court did not address the constitutional questions accepted for review in Gorsline and instead only reversed the well pad approval there on narrow evidentiary grounds. But the court did conclude Gorsline by observing that “this decision should not be misconstrued as an indication that oil and gas development is never permitted in residential/agricultural districts, or that it is fundamentally incompatible with residential or agricultural uses.” The Supreme Court recited this quotation when it directed the Commonwealth Court to reconsider the Middlesex I decision in light of PEDF and Gorsline.

Returning to case on remand, the Commonwealth Court quoted heavily from its first opinion. It also now had the benefit of its opinion in Frederick, and found that case controlled the disposition of the Delaware Riverkeeper Network’s substantive due process claims. As in Frederick, the evidence considered by the Zoning Hearing Board could not be disturbed. The testimony and evidence showed that Middlesex had a long history of oil and gas development, which was viewed as an integral part of agricultural preservation and agriculture in general. The ordinance struck a careful balance between limiting suburban sprawl and benefitting agricultural preservation.

On the Article 1, Section 27 claim, the court again referred to Frederick and the interpretation of PEDF as expressed therein. The court found that the Zoning Hearing Board made proper conclusions with respect to environmental concerns. The board acted in its role as trustee for future generations by helping to preserve agricultural resources by permitting oil and gas development in agricultural areas. Oil and gas activities were excluded from exclusively residential districts, but the Zoning Hearing Board noted that “oil and gas drilling provides a financial mechanism by which the free market can preserve agriculture.” The Commonwealth Court held that based on Frederick and the Supreme Court’s decision in PEDF, that the Middlesex zoning ordinance did not violation Article 1, Section 27.

On July 26, the objectors continued the fight, filing a Petition for Allowance of Appeal with the Supreme Court.

The Delaware Riverkeeper decision is just the latest in a series of similar attacks that have been severely blunted by Frederick. The Commonwealth Court has scheduled oral argument in October to address these same claims in an appeal of a challenge to the Penn Township, Westmoreland County zoning ordinance that was rejected by the Westmoreland County Common Pleas Court. This month, the Murrysville Zoning Hearing Board is expected to render its decision in a validity challenge to Murrysville’s use of a zoning overlay district for mineral extraction. Finally, Washington County Common Pleas Court has scheduled a hearing for December of this year on a challenge to the Robinson Township, Washington County zoning ordinance. The irony is that Robinson Township was the named petitioner in the challenge to the provisions of Act 13 limiting the authority of local governments to regulate oil and gas development. After succeeding in having the Supreme Court invalidate those provisions, Robinson’s ordinance is now being challenged based on that decision for having an ordinance which objectors claim is too permissive with regard to the regulation of oil and gas development.

All of these substantive validity challenges do reveal one truth. Active engagement with the community and local officials must continue if the industry hopes to capture the momentum from the string of successes in the Supreme Court and Commonwealth Court. Confronting this narrative that natural gas development must be relegated to industrial areas cannot occur only in appellate courtrooms. By conducting safe operations, minimizing temporary inconveniences and by shouldering the burden of a defense when opponents attack local decisions, the energy sector can partner with local officials to optimize the rights of property owners to develop their mineral interests.

In all of the cases discussed in this article, an attorney for a production company stood with the municipal solicitor to defend the ordinance. This type of cooperation should be celebrated as a counterpoint to media portrayals trying to paint the industry and local government as constant adversaries.

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