State Supreme Court declines case rejecting challenge to zoning ordinance allowing drilling in all districts

The PIOGA Press

(by Blaine Lucas, Robert Max Junker and Jennifer Malik)

On May 14, the Pennsylvania Supreme Court entered an order denying the petition for allowance of appeal in Frederick v. Allegheny Township Zoning Hearing Board, et al., No. 449 WAL 2018 (Pa. 2019). The order concludes a battle of more than four years over the validity of the Allegheny Township, Westmoreland County, zoning ordinance. Previously in Frederick, the Commonwealth Court in a 5-2 en banc decision, rejected the contention that an unconventional natural gas well pad can be permitted only in an industrial zoning district, concluding that Pennsylvania law empowers municipalities to determine the location of oil and gas development and whether the same is compatible with other land uses within their boundaries. Frederick v. Allegheny Twp. Zoning Hr’g Bd., 196 A.3d 677 (Pa. Cmwlth. 2018).

Frederick is one of at least eight cases involving challenges to the validity of local zoning ordinances in Pennsylvania which authorize oil and gas development. Generally speaking, the challengers in these cases claim, based on the Pennsylvania Supreme Court’s decisions in Robinson Township v. Commonwealth, 83 A.3d 901 (Pa.2013) and Pennsylvania Environmental Defense Foundation v. Commonwealth, 161 A.3d 911 (Pa. 2017) that the zoning ordinances violate substantive due process and Article I, Section 27 of the Pennsylvania Constitution, commonly known as the Environmental Rights Amendment (ERA), because they permit an allegedly industrial use in non-industrial zoning districts.

In Frederick, the Allegheny Township zoning ordinance authorized oil and gas operations as a permitted use by right in all zoning districts.1 After the township issued a zoning permit to an operator for an unconventional well pad, three residents filed an appeal with the zoning hearing board challenging both the permit and the validity of the zoning ordinance. Following multiple nights of hearings, the board dismissed these challenges. The board’s decision contained numerous findings of fact related to the qualities and characteristics of the township and its long history of oil and natural gas development. The board specifically accepted the testimony of an expert proffered by the operator on the interplay between the oil and gas industry and agricultural and rural communities in Pennsylvania. The board rejected the objectors’ claims that the well pad would have an adverse effect on public health, safety, welfare or the environment. The board likewise declined to accept the objectors’ reading of Robinson, concluding that the zoning ordinance was valid.

Both the Westmoreland County Court of Common Pleas and the Commonwealth Court affirmed the board’s decision. Addressing the objectors’ repeated use of the term “industrial” to describe natural gas wells, the Commonwealth Court observed that the objectors did not present any evidence to the zoning hearing board “on what they meant by ‘industrial’ or the significance of that term.” The court observed that oil and gas drilling, like farming, is not a heavy industrial use, but instead is a use traditionally exercised in agricultural areas, containing temporary components of an industrial use. As a result, the court agreed with the zoning hearing board that the zoning ordinance does not violate substantive due process.

Next, the Commonwealth Court addressed the objectors’ contention that the zoning ordinance violates the ERA. The objectors repeated their previous argument under the due process clause―hat oil and gas is an incompatible “industrial use” that degrades the local environment. The objectors also asserted that the Supreme Court’s interpretation of the ERA in Robinson required the township to engage in an undefined preaction environmental impact analysis before enacting the zoning ordinance.

In analyzing the ERA claims, the Commonwealth Court addressed the Pennsylvania Supreme Court’s 2017 decision in PEDF rejecting the three-part test for measuring compliance with the ERA first enunciated in the Commonwealth Court’s 1973 decision in Payne v. Kassab, 312 A. 2d 86 (Pa. Commw Ct. 1973) and instead ruled that challenges raised under the ERA should be decided in accordance with its text. Acknowledging that the “precise duties imposed upon local governments by the first sentence of [the ERA] are by no means clear,” the Commonwealth Court ascertained the relevant standard, based on Robinson and PEDF, to be whether the governmental action “unreasonably impairs” the environmental values implicated by the ERA. However, the court found that Robinson “did not give municipalities the power to act beyond the bounds of their enabling legislation” and that “[m]unicipalities lack the power to replicate the environmental oversight that the General Assembly has conferred upon [the Department of Environmental Protection] and other state agencies.”

The Commonwealth Court also observed that Section 3302 of the Oil and Gas Act preempts municipalities from regulating “how” drilling takes place, and that a municipality only may use its zoning powers to regulate “where” mineral extraction occurs. The court concluded that the objectors failed to prove that the township’s legislative decision expressed in the zoning ordinance allowing gas wells in all zoning districts unreasonably impairs their rights under the ERA, particularly when the record (and the zoning hearing board’s findings) showed how long natural gas development has safely coexisted within rural communities, how the land can be returned to its original state once the wells are completed and how energy extraction can support the agricultural use of land.

In its conclusion, the Frederick majority opinion recognized that municipalities, if they do elect to utilize their discretion to enact land use regulations in the first place, must balance the interests of landowners in the use and enjoyment of their property with the public health, safety and welfare. The objectors’ contention that the ordinance would result in oil and gas development anywhere and everywhere in the township is tempered by the significant setback requirements in Act 13 that remain in effect. In fact, the zoning hearing board found that these requirements eliminated shale gas development from more than 50 percent of the land mass of the township. The Commonwealth Court returned to the “where” versus “how” distinction declared by the Supreme Court and noted that a zoning ordinance expressing legislative decisions regarding where a land use can occur must be affirmed unless clearly arbitrary and unreasonable.

Other validity challenges pending in Commonwealth Court

With the Supreme Court’s denial of the petition for allowance of appeal in Frederick, there is now precedent supporting the validity of zoning ordinances authorizing oil and gas development in all zoning districts. Presumably the Frederick decision will have a significant impact on two other similar ordinance validity challenges currently pending before the Commonwealth Court.

Of particular note is Delaware Riverkeeper Network v. Middlesex Township Zoning Hearing Board, No. 2609 CD 2015 (Pa. Cmwlth. 2015). There, the township zoning hearing board denied a zoning ordinance validity challenge and well permit appeal brought by several residents and nongovernmental organizations. The challenged ordinance permits oil and gas wells as either a use by right or a conditional use in designated rural, residential and commercial districts, but not in all districts. In its decision, the board noted the history of oil and gas production in the township, found the balancing of residential and oil and gas interests in the challenged ordinance to be credible, and found challengers’ arguments would render the zoning ordinance exclusionary. On appeal, the Butler County Common Pleas Court affirmed. The Commonwealth Court, in an unpublished opinion, affirmed the zoning hearing board and the common pleas court. However, in doing so the Commonwealth Court applied the Payne v. Kassab test for measuring compliance with the ERA. Thirteen days later, the Pennsylvania Supreme Court rejected Payne v. Kassab in its PEDF decision. The objectors had filed a timely petition for allowance of appeal in Delaware Riverkeeper, and the Supreme Court subsequently entered an order vacating the Commonwealth Court decision and remanded the case back to the Commonwealth Court for reconsideration. The Commonwealth Court held oral argument on the remanded case on June 6 and a decision is pending.

Finally, in Protect PT v. Penn Township Zoning Hearing Board, 1632 CD 2018 (Pa. Cmwlth. 2018), a nongovernmental organization filed a substantive validity challenge to the Penn Township, Westmoreland County, zoning ordinance on the grounds that allowing oil and gas drilling as a special exception in the Mineral Extraction Overlay (MEO) district, which encompasses portions of the rural resource and industrial districts, violated substantive due process and the ERA. The township zoning hearing board elected not to schedule a hearing on the challenge, resulting in a deemed denial under applicable law.

On appeal, the Westmoreland County Court of Common Pleas heard the case de novo and upheld the validity of the zoning ordinance. The court observed that the township had an established history of oil and gas drilling. Further, the court found that while the MEO district encompasses 54 percent of the township’s land mass, natural gas development is only permitted in less than 10 percent of the township after applying setbacks. Relying on the testimony of an oil and gas operator’s expert witnesses, the court reasoned that natural gas development: (1) did not interfere with the expectations of township residents because historical ordinances were much less stringent concerning oil and gas; and (2) was consistent with and beneficial to the agricultural and residential uses in the rural resource district. Applying the standards set forth in Frederick, the court held that the objector failed to meet its burden that the zoning ordinance violated substantive due process or the ERA. The objector appealed to Commonwealth Court, and the parties have submitted their briefs. Oral argument is scheduled for the October session in Pittsburgh.

For more regarding issues relating to land use and municipal implications of the Frederick case, contact Blaine A. Lucas at 412-394-5657 or blucas@babstcalland.com, Robert Max Junker at 412-773-8722 or rjunker@babstcalland.com, or Jennifer L. Malik at 412-394-5490 or jmalik@babstcalland.com.

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