The PIOGA Press
Recently, the United States Department of Labor (DOL) announced that it has helped more than 5,300 oil and gas workers recover nearly $4.5 million in back wages for unpaid overtime and other wage violations as a result of an “ongoing multiyear enforcement initiative” conducted by the DOL’s Wilkes-Barre and Pittsburgh Wage and Hour Division offices which found significant violations of the Fair Labor Standards Act (FLSA). The DOL found that the majority of the FLSA violations were due to improper payment of overtime. In many cases, employee’s production bonuses were not included in their “regular rate” of pay. In other cases, employers failed to pay overtime to employees that were paid day rates. The DOL attributed the wage violations in part to the structure of the oil and gas industry in Pennsylvania and West Virginia. According to the DOL, job sites “that used to be run by a single company can now have dozens of smaller contractors performing work, which can create downward economic pressure on lower level subcontractors,” which can lead to noncompliance with wage and hour laws and regulations.
Read more.
Charleston Area Alliance
We would like to send out a warm welcome to our newest member of the Alliance, Babst Calland Clements & Zomnir, P.C.
Babst Calland is one of the most respected top-tier law firms in the mid-Atlantic United States. Their attorneys have the knowledge and experience needed to solve complex legal problems for corporations, private companies and organizations of all types. Babst Calland attorneys deliver a broad range of quality legal services, responding quickly and efficiently to answer questions and solve problems and litigate issues in federal state courts and before administrative tribunals. Babst Calland’s Charleston, WV office handles a wide range of legal issues that include a particular focus on natural gas and other energy related issues, as well as environmental, business services, title, litigation, land use, construction, and employment and labor law. Babst Calland just moved to their new office centrally located in the BB&T building in Downtown Charleston.
Read more.
Employment Bulletin
On April 20, 2015, the United States Equal Employment Opportunity Commission (EEOC) issued its long-awaited Proposed Amendment to Regulations under the Americans with Disabilities Act (the “Proposed Rule”), which provides guidance on the EEOC’s application of the Americans with Disabilities Act (ADA) to employer wellness programs. Specifically, the Proposed Rule addresses: (1) whether a wellness program is considered “voluntary”; (2) what notice must be provided to employees concerning a wellness program; and (3) the limits to incentives or disincentives that may be provided by employers. While the Proposed Rule offers some much needed clarity to the EEOC’s position on wellness programs, it also raises several questions and concerns in an already muddied area of law. The publication of the Proposed Rule triggered a 60-day public notice and comment period. Employers sponsoring wellness programs are encouraged to submit comments by June 19, 2015.
Read more.
The PIOGA Press
In a somewhat ironic twist, anti-industry residents and environmental groups have been relying on their victory in Robinson Township v. Commonwealth, 83 A.3d 901 (2013), which invalidated the statewide standardized land use control set forth in Act 13 and restored local land use control over oil and gas operations, to challenge local zoning ordinances that regulate oil and gas development. The challengers in these validity actions generally argue that, per the plurality’s expansion of the Pennsylvania Constitution’s Environmental Rights Amendment (ERA) in Robinson Township, each municipality must engage in substantial environmental and safety analysis prior to enacting oil and gas regulations or issuing permits thereunder. According to the challengers, an ordinance enactment process or permit review process that does not satisfy these requirements is invalid.
Read more.
The Legal Intelligencer
The Pennsylvania Supreme Court recently rendered a decision in Reading Area Water Authority v. Schuylkill River Greenway Association, 100 A.3d 572 (Pa. 2014), further narrowing the definition of what constitutes a “public purpose” for a taking by eminent domain in Pennsylvania. The Reading opinion is significant, as it constitutes yet another Pennsylvania decision favoring the protection of private property rights from seizure by the government. The decision is particularly noteworthy in the context of the U.S. Supreme Court’s controversial expansive view of the eminent domain power in Kelo v. City of New London, 454 U.S. 469, from 2005.
*Reprinted with permission from the 4/28/15 issue of The Legal Intelligencer. © 2015 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
Read more.
The Public Record
On April 8, 2015, the Pennsylvania Supreme Court agreed to hear an appeal from the Pennsylvania Commonwealth Court’s decision in Fish v. Township of Lower Merion. In Fish, the Commonwealth Court determined that the Local Tax Enabling Act (LTEA), the state law that authorizes and regulates local taxes, prohibits a political subdivision from imposing a business privilege tax on lease revenue. The Supreme Court’s decision in Fish will constitute an important development in the law as many municipalities currently collect business privilege tax on lease income.
In Fish, several individuals who own and rent property in Lower Merion Township (Township) challenged the Township’s collection of a 1.5 mill business privilege tax on their lease revenue. The property owners based their challenge on an exclusion set forth under Section 301.1(f)(1) of the LTEA, which expressly prohibits a political subdivision from taxing leases or lease transactions if the tax was not imposed prior to July 1, 2008. According to the property owners, a tax on gross receipts from lease revenue is the same as a tax on individual leases or lease transactions, as prohibited under Section 301.1(f)(1). The Township took the position that Section 301.1(f)(1) prohibits the imposition of a “direct tax,” e.g. a per-lease tax, but not the imposition of a tax on lease revenue. The Township argued that it was taxing the privilege of doing business in the Township, as authorized under the LTEA, not leases or lease transactions.
Rejecting the lessors’ argument, the Montgomery County Court of Common Pleas ruled in favor of the Township. On appeal, however, the Commonwealth Court, strictly construing Section 301.1(f)(1) of the LTEA against the Township, disagreed and reversed. In doing so, the Pennsylvania Commonwealth Court concluded that Section 301.1(f (1) of the LTEA “bars ‘any tax’ – i.e., privilege, transactional, or otherwise – on leases or lease transactions”, noting that it is thus immaterial that the challenged tax was characterized by the Township as a tax on the privilege of engaging in business, and not on a particular lease or lease transaction.
The property owners also argued that the Township could not require them to comply with the annual registration and fee requirements set forth in the Township’s Code, which applied to persons engaging in a business, trade, occupation or profession within the Township. The Commonwealth Court clarified that although the property owners’ rental income was not subject to the Township’s business privilege tax, or any other type of tax authorized pursuant to the LTEA, their rental activities constituted a “business activity” under the Township’s Code and were, therefore, subject to the annual registration requirement and related fees.
Despite the Commonwealth Court’s seemingly straightforward decision in Fish (i.e., that the LTEA prohibits a political subdivision from imposing a business privilege tax on lease revenue), it is critical to note that in reaching this decision the Commonwealth Court did not address, or even acknowledge the existence of, the express exception to the prohibition. More specifically, the Commonwealth Court did not acknowledge or address the fact that Section 301.1(f)(1) of the LTEA “does not apply to municipalities imposing a tax on leases or lease transactions prior to July 1, 2008.” The Commonwealth Court’s silence on the exception is significant because it creates confusion over whether a municipality that imposed a tax implicating a lease or lease transaction prior to July 1, 2008 is permitted to continue collecting the tax.
The Township appealed the Commonwealth Court’s decision in Fish to the Pennsylvania Supreme Court on October 20, 2014. Until the Supreme Court decides the case, all that appears certain at this time is that municipal entities desiring to impose a new tax authorized under the LTEA should proceed with caution to ensure that the tax, regardless of form, does not implicate a lease, a lease transaction or income derived from either. Those municipal entities that have imposed a tax that implicates either, directly or indirectly, a lease or lease transaction prior to July 1, 2008 should be aware that the tax may be subject to challenge under Fish.
Babst Calland’s Public Sector Services Group will continue to keep public agencies apprised of further developments related to this and other issues. If you have any questions or need assistance in addressing the above-mentioned area of concern, please contact Stephen L. Korbel at 412-394-5627 or skorbel@babstcalland.com, or Krista Ann M. Staley at 412-394-5406 or kstaley@babtscalland.com.
Click here for PDF.
The PIOGA Press
Should an operator in a lawsuit challenging the validity of its oil and gas lease have to risk having its lease expire during that suit by not commencing operations? Nearly all states whose courts have addressed this issue say, “No.” Those states’ courts allow operators to extend or “equitably toll” their challenged leases if they prevail in the suit. But not in Pennsylvania, where the Supreme Court has rejected equitable tolling in most situations and forced the operator to bear the risk that its lease will expire during the suit challenging that lease.
Read more.
The PIOGA Press
Pennsylvania’s evolving law regarding regulation of oil and gas development has undergone yet another change, this time in a footnote to the Commonwealth Court’s January 7, 2015 en banc opinion in Pennsylvania Environmental Defense Foundation v. Commonwealth 2015 Pa. Commw. LEXIS 9 (2015). The Pennsylvania Environmental Defense Foundation (PEDF) case, in which PIOGA filed an amicus brief, rejected constitutional challenges to the leasing of state land for natural gas development and to the use of funds generated by those leases. In doing so, the Commonwealth Court took the opportunity to clarify the legal weight to be given to the analysis of the plurality decision in Robinson Township v. Commonwealth, 83 A.2d 901 (2013) interpreting Article I, Section 27 of the Pennsylvania Constitution (the Environmental Rights Amendment).
Read more.
The PIOGA Press
Oil and gas developers and their vendors may claim an exemption from Pennsylvania sales and use tax on qualified purchases of certain property and services. Until the past few years, there was little published guidance available to the oil and gas industry on the availability of the socalled “mining exemption” for purchases of property and services used in conventional and unconventional oil and gas extraction.
Read more.
Employment Bulletin
Last month, the United States Department of Labor (DOL) announced in a press release that it has helped more than 5,300 oil and gas workers recover nearly $4.5 million in back wages for unpaid overtime and other wage violations as a result of an “ongoing multiyear enforcement initiative.” The DOL attributed the wage violations, in part, to the structure of the oil and gas industry in Pennsylvania and West Virginia. According to the DOL, job sites “that used to be run by a single company can now have dozens of smaller contractors performing work, which can create downward economic pressure on lower level subcontractors,” which can lead to noncompliance with wage and hour laws and regulations.
Read more.
The Legal Intelligencer
With the rise of unconventional shale development in many portions of Pennsylvania, there has been a corresponding increase in litigation stemming from local government actions approving and disapproving of a wide variety of oil and gas facilities. In a case with origins predating both Act 13 of 2012 and the ensuing challenge to it in Robinson Township v. Commonwealth, 83 A.3d 901 (Pa 2013), on Sept. 26, the Commonwealth Court rendered a decision in MarkWest Liberty Midstream & Resources v. Cecil Township Zoning Hearing Board, 2014 Pa. Commw. LEXIS 470 (Pa. Commw. Ct. 2014), addressing the scope of a zoning hearing board’s authority when considering an applicant’s request for land use approval related to a natural gas compressor station.
In 2010, MarkWest Liberty Midstream & Resources applied to the Cecil Township Zoning Hearing Board for a special exception to construct and operate a natural gas compressor station in the township’s I-1 light industrial district, pursuant to a provision in its unified development ordinance (UDO), which authorized “comparable uses which are not specifically listed” in that district, provided any such use: would have an equal or lesser impact than, and is of the same general character as, any of the township’s permitted conditional uses or uses by right; meets the township’s area and bulk requirements; complies with the express standards and criteria specified for the most nearly comparable I-1 use; and is consistent with the intent set forth in the UDO for industrial districts. The board denied MarkWest’s application, finding that it failed to satisfy these criteria, a decision the Washington County Court of Common Pleas affirmed. However, the Commonwealth Court reversed and remanded the case with direction that the special exception be granted, subject to the board’s determination as to whether any conditions are needed to ensure compliance with the UDO.
The threshold issue in MarkWest was whether a natural gas compressor station was comparable to other uses authorized in the I-1 district. MarkWest asserted that it was of the same general character as an “essential service,” a permitted use by right in the I-1 district. The UDO defined the term, in part, as “the erection, construction, alteration or maintenance of gas, electrical and communication facilities.” However, the definition excluded “private commercial enterprises such as cellular communication facilities.”
The board determined that MarkWest is a commercial enterprise and is neither a public utility nor does it provide a service essential to the public. The board found that the proposed use is more comparable to a cellular communications facility, which was expressly excluded from the definition of essential service. It also concluded that the compressor station was not an essential service because the gas was not transmitted to the end user.
The Commonwealth Court rejected all of these conclusions, finding that: the ordinance definition does not require that an essential service be a public utility; it was unreasonable to extend the exclusion of telecommunications facilities to compressor stations in light of the fact that “natural gas compressor station” was a defined term under the UDO and was not excluded; the UDO’s definition of essential services does not require that the applicant transmit natural gas directly to an end user; and the proposed use was not required to be of “the same character” as an essential service, but only of the “same general character.”
The board articulated a number of other bases for its denial of MarkWest’s special exception application, all of which were rejected by the Commonwealth Court.
The board stated that the proposed compressor station “would have a greater impact in an adverse way upon the environment than an essential service,” and “would cause certain carcinogenic materials and other hazards to be expelled into the air.” However, the Commonwealth Court pointed out that the board made no factual findings supporting these conclusions, made no comparison of the proposed facility to manufacturing uses permitted in the I-1 district, and specifically noted that MarkWest would obtain minor air permits from the Department of Environmental Protection.
The board also concluded that the special exception application failed “as a matter of law” because MarkWest did not present “documentation or expert reports demonstrating compliance with the requirement that its proposed use is of the same general character as uses permitted by right in the I-1 light industrial district.” The Commonwealth Court reversed, finding that such an obligation was not supported by the UDO, and that while MarkWest had the initial burden of demonstrating compliance with the specific objective requirements of the UDO, there was no authority mandating it to produce expert reports.
The board also rejected the special exception application on the basis that MarkWest did not produce “noise or sound studies” establishing that it met the ordinance requirement that “excessive noise shall be required to be muffled so as not to be objectionable to surrounding property owners due to intermittence, beat frequency, shrillness or volume.” Reversing this determination, the Commonwealth Court again noted that there was no such study requirement under the UDO, and that MarkWest presented testimony that with sound mitigation measures it would meet a decibel limit of 60 dBA at the property line. The Commonwealth Court reversed a board finding with regard to odor thresholds and the “emission of smoke or particulate matter” on similar grounds.
The board’s final conclusion was that MarkWest failed to meet its burden to establish that the proposed use “would impact neighboring properties in a manner that was equal to or less than the impact of permitted uses” in the I-1 district. Specifically, the board found that MarkWest failed to provide rebuttal testimony on neighbors’ testimony regarding real estate values, failed to show similarities in noise, odor and air emissions between the proposed facility and other uses by right in the I-1 district, and failed to produce studies that demonstrate that the facility would have no greater impact on neighboring properties than other I-1 uses.
The Commonwealth Court again reversed, noting the substantial testimony presented by the applicant on these issues. As a result, the court reiterated the established law that the burden shifted to objectors to “show a high degree of probability that [the proposed use] will substantially affect the health and safety of the community.”
Operators, municipalities and property owners are faced with a multitude of challenges in connection with unconventional shale gas development, particularly as to the interpretation and application of zoning ordinances regulating these uses. When applying zoning ordinance provisions, the law gives deference to a local agency’s interpretation. However, as evidenced by the Commonwealth Court’s decision in MarkWest, that discretion is not unfettered. A local agency must be cognizant that it is sitting in its quasijudicial capacity, as opposed to a legislative capacity. As a result, it may not arbitrarily modify or alter a zoning ordinance, impose additional requirements or prescribe a higher burden on applicants than that which is mandated under established Pennsylvania land use law principles.
*Reprinted with permission from the 12/16/14 issue of The Legal Intelligencer. © 2014 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
Click here for PDF.
The Legal Intelligencer
On July 21, the Pennsylvania Supreme Court rendered a decision in Marshall v. City of Philadelphia, 2014 Pa. LEXIS 1785 (Pa. 2014), that clarified the unnecessary hardship standard applicable to the granting of a use variance. Most notably, the court ruled that a use variance applicant is not required to prove that an existing building is “functionally obsolete” for any use permitted on the property in order to establish the requisite unnecessary hardship.
In Marshall, upon receipt of a nearly $10 million grant from the U.S. Department of Housing and Urban Development, the Archdiocese of Philadelphia sought a zoning/use registration permit from the Philadelphia Department of Licenses and Inspections to covert an old, vacant, nonconforming school building located in a residential zoning district into a 63-unit one-bedroom apartment complex for lowincome senior citizens. Concluding that the proposed apartment complex failed to comply with several provisions of the Philadelphia Zoning Code, the department denied the archdiocese’s permit request. Specifically, the department found that, in addition to failing to meet certain parking, landscaping and setback requirements under the Zoning Code, the proposed housing project was not a permitted use in the subject residential zoning district.
The archdiocese appealed to the city of Philadelphia Zoning Board of Adjustment, seeking a number of use and dimensional variances. The requirements for the granting of a variance under the Zoning Code in large part track the variance standards applicable to most Pennsylvania municipalities pursuant to Section 910.2(a) of the Pennsylvania Municipalities Planning Code, 53 P.S. Section 10910.2(a).
The Pennsylvania Supreme Court previously has “boiled down” the variance criteria of the Zoning Code into three key requirements: “(1) unique hardship to the property; (2) no adverse effect on the public health, safety or general welfare; and (3) the minimum variance that will afford relief at the least modification possible.”
Voting unanimously to grant the requested variances, the board found, in pertinent part, that the archdiocese had established: (1) overwhelming support of the surrounding community for the housing project; (2) the unique nature of the property, such as its legally nonconforming character; and (3) the building was currently vacant, in need of repair, and providing no benefit to the community. Furthermore, the board concluded that the conditions forming the basis for the archdiocese’s requested variances “were not the result of the archdiocese’s actions, but rather were unique to the [subject] property and related to its legally nonconforming character.”
Contending that the archdiocese had not met its burden of proving a hardship unique to the subject property/school building, an objector appealed the board’s decision to the trial court, which affirmed the decision granting the variances.
However, the Commonwealth Court reversed, finding that the archdiocese had “completely failed to address how the physical characteristics of the property would prevent it from being utilized as one of the many other permitted uses” in the residential district.
In reaching its conclusion, the Commonwealth Court explained that to successfully meet the burden necessary to obtain a use variance, the archdiocese needed to “demonstrate that the entire [school] building is functionally obsolete for any purposes other than one not permitted under the relevant zoning ordinance.
The Supreme Court granted the archdiocese’s petition for allowance of appeal, and proceeded to reverse the Commonwealth Court’s decision, ruling that the Commonwealth Court applied the wrong standard for determining unnecessary hardship in the context of a use variance and erred by substituting its judgment for that of the board. The Supreme Court found that the board acted well “within its discretion … in concluding that the archdiocese had established an unnecessary hardship” by proving that the subject property could be conformed for a permitted use only at a prohibitive expense.
Clarifying the appropriate standard for determining unnecessary hardship in the context of a use variance, the Supreme Court stated that an applicant seeking a use variance must establish by evidence that: “(1) the physical features of the property are such that it cannot be used for a permitted purpose; or (2) the property can be conformed for a permitted use only at a prohibitive expense; or (3) the property has no value for any purpose permitted by the zoning ordinance.” The Supreme Court further declared that “an applicant for a variance is not required to show that the property at issue is valueless without the variance or that the property cannot be used for any permitted purpose,” noting that a “showing that [a] property … is ‘valueless’ unless the requested variances is granted ‘is but [only] one way to reach a finding of unnecessary hardship.'” Although the Supreme Court reiterated the long-standing principle that “mere economic hardship will not of itself justify the grant of a variance,” it pointed out that the “functionally obsolete” standard for unnecessary hardship applied by the Commonwealth Court is merely a reiteration of the “practically valueless” standard, which it “has repeatedly and explicitly rejected.”
Throughout the state, property owners are faced with a multitude of challenges in connection with attempts to repurpose long vacant structures or properties for viable new uses. This is particularly the case with regard to vacant school and other large institutional buildings, which often are located in residential zoning districts. The number and types of uses permitted in those districts are typically very limited, and the costs associated with either renovating the building or demolishing and rebuilding a new structure can make redevelopment for a permitted use prohibitive. The Marshall decision gives zoning boards more discretion to take these economic challenges into account when considering whether an applicant has met its burden of establishing the requisite unnecessary hardship for a use variance.
*Reprinted with permission from the 10/21/14 issue of The Legal Intelligencer. © 2014 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
Click here for PDF.
The Legal Intelligencer
On March 10, the U.S. Supreme Court rendered a decision in Brandt Revocable Trust v. United States, 134 S. Ct. 1257 (2013), addressing whether the federal government retains any interest in railroad rights-of- way that were created by the General Railroad Right-of-Way Act of 1875, 43 U.S.C. § 934 et seq.
The act was enacted by Congress for the purpose of encouraging the construction of railroads and the settlement and development of the western portion of the United States. The act permitted railroad companies that met certain requirements to obtain a right-of-way through the public lands of the United States and granted railroads the right to take the land adjacent to a right-of-way for station buildings, depots, machine shops, side tracks, turnouts and water stations.
As expansion of the railroads advanced rapidly and development of the West grew, the federal government began to convey the same public lands that were subject to railroad rights-of-way to private individuals wishing to settle in the West.
Over time, however, railroad companies have steadily abandoned the rights-of-way granted pursuant to the act, and in 1976 Congress enacted the Federal Land Policy and Management Act, 43 U.S.C. § 1701 et seq., which, among other things, repealed the Railroad Right-of-Way Act’s provisions governing the issuance of new rights-of-way. As a result of the increasing trend of railroad companies abandoning their rights-of-way granted pursuant to the Railroad Right-of-Way Act, a question arose in Brandt as to who owns the land underlying the rights-of-way after abandonment-the private property owners or the United States.
In Brandt, the United States initiated an action seeking both a judicial declaration of abandonment of a right-of-way granted to the Laramie, Hahn’s Peak and Pacific Railway Co., its successors and assigns under the Railroad Right-of-Way Act and an order quieting title in the United States to the legally abandoned right-of way.
The United States named the railroad’s successors and the owners of 31 parcels of land crossed by the abandoned right-of-way as defendants in the action. The United States settled with or obtained a default judgment against all but one of the landowners.
The remaining landowner contested the United States’ claim to the abandoned right-of-way and filed a counterclaim on behalf of his family’s trust, asserting that the stretch of right-of-way crossing his family’s property was a mere easement that was extinguished upon legal abandonment by the railroad. The landowner further asserted in the counterclaim that as a consequence of the railroad’s abandonment, his family enjoyed full title to the land without the burden of the easement. The United States countered the landowner’s position by arguing that, pursuant to the Railroad Right-of-Way Act, it retained a reversionary interest in all rights-of-way granted thereunder.
Agreeing that the United States retains a reversionary interest in a railroad right-of-way granted pursuant to the Railroad Right-of-Way Act after a legal abandonment, the U.S. District Court for the District of Wyoming granted summary judgment to and quieted title in the United States, and the U.S. Court of Appeals for the Tenth Circuit affirmed that decision.
After granting certiorari, however, the U.S. Supreme Court reserved and remanded the case to the Tenth Circuit for further proceedings, concluding that a right-of-way granted pursuant to the Railroad Right-of-Way Act constituted a simple easement for which the United States retained no reversionary interest. Relying upon basic common-law principles addressing what happens to an easement when it ceases to be used, the Supreme Court found that, upon legal abandonment of the right-of-way, ownership would vest in the underlying property owner, not in the United States.
In reaching this conclusion, the Supreme Court asserted that “the government loses [its] argument today, in large part because it won when it argued the opposite before this court more than 70 years ago” in Great Northern Railway v. United States, 315 U.S. 262 (1942).
In Great Northern, a railroad company sought to drill for oil beneath the surface of its right-of-way obtained pursuant to the Railroad Right-of-Way Act. Upon discovering the oil, the railroad company claimed ownership of it and threatened to use the right-of-way to drill for and remove it.
The United States challenged the railroad company’s rights to the underlying oil, arguing that it remained the property of the United States. In so arguing, the United States contended that the act granted the railroad company an easement and nothing more, and consequently the railroad company acquired neither the right to use any portion of the right-of-way for the purpose of drilling or removing subsurface oil and minerals, nor any right, title or interest in or to the deposits below the right-of-way.
Agreeing with the United States, the Supreme Court ruled in Great Northern that based upon the text, background and subsequent administrative and congressional construction of the act from which the railroad’s interest stemmed, only an easement had been granted to the railroad company, and not a fee interest. Accordingly, the Supreme Court held that the railroad company had no interest in the oil beneath its right-of-way, but rather this property interest belonged to the United States.
In light of the Supreme Court’s decision in Brandt, many are questioning the fate of existing and proposed rails-to-trails projects that span for hundreds if not thousands of miles across the United States. Although the Tenth Circuit has yet to issue a decision on remand, at a minimum it appears that rails-to-trails projects involving rights-of-way obtained pursuant to the Railroad Right-of-Way Act and then subsequently abandoned may be adversely impacted.
Although the Supreme Court’s decision is limited to rights-of-way created by that statute only, it is likely that the Brandt decision will be cited by litigants in cases involving the creation and abandonment rail rights-of-way under other statutes and common law. On the other hand, the decision does not appear to impact rail corridors “rail-banked” under the National Trails Systems Act Amendments of 1983, the constitutionality of which the U.S. Supreme Court affirmed in Preseault v. ICC, 494 U.S. 1 (1990).
*Reprinted with permission from the 8/26/14 issue of The Legal Intelligencer. © 2014 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
Click here for PDF.
The Legal Intelligencer
In 1999, the Pennsylvania General Assembly amended the Municipalities Planning Code (MPC), 53 P.S. §10101 et seq., to establish statewide zoning regulations for methadone treatment facilities. Section 621 of the MPC, 53 P.S. § 10621, essentially prohibited a methadone treatment facility from being located within 500 feet of an existing school, public playground, public park, residential housing area, child care facility, church, meetinghouse, or other place of worship established prior to the proposed methadone treatment facility. Section 621 also authorized a municipality to permit, in its discretion, the establishment and operation of a methadone treatment facility within this established 500-foot spatial restriction so long as the municipality conducted a public hearing on the proposed request and provided prior written notice of the hearing to adjacent property owners.
In 2007, the U.S. Third Circuit Court of Appeals ruled in New Directions Treatment Services v. City of Reading, 490 F.3d 293 (3rd Cir. 2007), that the MPC’s methadone treatment facility restrictions violated Title II of the Americans with Disabilities Act, 42 U.S.C. §12131 et seq., and the federal Rehabilitation Act, 29 U.S.C. §701 et seq. In New Directions, the operator of a methadone clinic sought to open a new treatment center in an area of the city interspersed with private residences. Only three lots within the city complied with the MPC’s methadone treatment facility location-based restrictions; the property leased by the operator did not. After holding a series of public hearings, the city council denied the operator’s application based on Section 621 of the MPC. The operator and individual methadone patients filed suit in the U.S. District Court for the Eastern District of Pennsylvania, raising both constitutional and federal statutory claims.
The district court dismissed the operator’s claims. On appeal, the Third Circuit found that in order for the operator’s discrimination claim to succeed, it only needed to show that “intentional discrimination was the but-for cause of the allegedly discriminatory action.” Concluding that the operator met its burden, the Third Circuit struck down the MPC’s location-based restrictions, holding “that a law that singles out methadone clinics for different zoning procedures is facially discriminatory under the ADA and the Rehabilitation Act.”
As a result of the Third Circuit’s decision in New Directions, a Pennsylvania municipality is prohibited from treating a methadone treatment facility any differently than an “ordinary” medical clinic for zoning purposes. However, the New Directions decision does not prohibit a municipal zoning ordinance from applying “facially neutral” regulations to all medical clinics.
In fact, the Third Circuit in New Directions favorably cited the Ninth Circuit’s decision in Bay Area Addiction Research and Treatment v. City of Antioch, 179 F.3d 725 (9th Cir. 1999), which noted that a discriminatory regulation similar to the MPC’s location-based restriction “could only have been rendered facially neutral by expanding the class of entities that may not operate within 500 feet of a residential neighborhood to include all clinics at which medical services are provided, or by striking the reference to methadone clinics entirely.”
Since New Directions, Pennsylvania appellate courts have addressed zoning regulations related to methadone clinics on three occasions.
First, in 2009, the Commonwealth Court relied upon New Directions in Freedom Healthcare Services v. Zoning Hearing Board of the City of New Castle, 983 A.2d 1286 (Pa. Commw. 2009), to reverse a trial court order affirming a zoning hearing board’s denial of a special exception application to operate a clinic that dispensed methadone. Although medical clinics were a use by right, a special exception was necessary to locate parking spaces off-site. The board denied the special exception on the basis that the total number of parking spaces being provided was inadequate.
The applicant in Freedom proposed a medical clinic that, among other things, would dispense methadone to patients addicted to heroin. The proposed clinic would be open seven days a week and was projected to treat 200 to 250 patients per day during the hours of 6 and 10 a.m. Although the zoning ordinance in question treated methadone clinics the same as medical clinics, as required by New Directions, the ordinance’s parking table was silent as to the number of spaces required for medical clinics. In order to determine the number of parking spaces a medical clinic was required to provide, the Commonwealth Court held that the city must look to the parking requirements of the use most similar to medical clinics.
After examining the zoning ordinance’s parking table, the court concluded that the use most similar to medical clinics was medical offices. The zoning ordinance required medical offices to provide seven parking spaces for each physician on site. The court acknowledged that the proposed methadone clinic did not follow the parking patterns of a medical office as contemplated by the zoning ordinance since one physician at a methadone clinic would generate a significantly greater amount of traffic than that which would be generated by one physician at a medical clinic. However, the court concluded that because the proposed methadone clinic was permitted by right without regard to number of patients served, concerns over health and safety of the community, including unsuitability of volume of cars and patients, as well as traffic and parking issues, while valid, were a legally insufficient basis to deny the special exception for off-site parking.
Two years later, relying upon both the New Directions and the Freedom decisions, in an unpublished opinion, the Commonwealth Court in Habit OPCO v. Borough of Dunmore, 2011 Pa. Commw. Unpub. LEXIS 319, 1 (Pa. Commw. Ct. 2011), struck down provisions of a local zoning ordinance that imposed restrictions on methadone clinics, concluding that the provisions violated the ADA. The invalidated provisions required, among other things, that in addition to meeting the borough’s basic conditional use approval criteria, methadone clinics were required to obtain licensing from the Pennsylvania Department of Health before opening and were prohibited from locating within one half-mile of churches, charitable institutions, schools, public playgrounds, child day-care centers, liquor stores, hotels, restaurants, clubs possessing a retail liquor license, older adult daily living centers and senior centers.
Most recently, the Commonwealth Court rendered a decision in THW Group LLC v. Zoning Board of Adjustment, 86 A.3d 330 (Pa. Commw. Ct. 2014), following the Third Circuit’s holding in New Directions. In so ruling, the court acknowledged that, although the courts might sympathize with the concerns of the surrounding community, municipalities are not free to apply different zoning standards to methadone clinics than to ordinary medical clinics. In THW, the applicant sought a zoning use permit to establish a medical office that would dispense methadone for the treatment of patients in the city’s C-2 Commercial District. The proposed clinic would operate from 6 a.m. to 3 p.m. daily and would serve approximately 200 patients per day. The city department of licenses and inspections issued the permit. Shortly thereafter, neighbors appealed the issuance to the city zoning board of adjustment on the basis that a methadone clinic is not a permitted use in the C-2 District. After conducting a public hearing, the board agreed with the appellants and determined that the department erred in granting the permit, explaining that methadone clinics are not permitted uses in the C-2 District because they are not specifically listed as such under the city zoning code.
On appeal, the trial court reversed, finding that there is no difference between a medical clinic and a medical office or medical center, as both provide treatment to patients, and because the city zoning code specifically permits the use of property in the C-2 District for the “treatment of patients” and permits medical centers and medical offices, a methadone clinic also is a permitted use. The Commonwealth Court affirmed the trial court’s decision, noting that heroin addicts must be classified as people with a disability under the ADA and the federal Rehabilitation Act, and that treating methadone clinics differently than other medical clinics therefore violates the ADA.
The Commonwealth Court further explained that, because THW’s proposed use “clearly qualifies as a use of the property for the ‘treatment of patients’ and a medical office,” both of which are specifically permitted in the C-2 District, no error is apparent in the legal determination that THW’s proposed methadone clinic is permitted in the C-2 District.
In light of New Directions and its progeny, a municipality must be cognizant of the prohibition against distinguishing between medical clinics that dispense methadone, or any other type of narcotic drug available for the treatment of opiate dependence for that matter, and medical clinics that do not dispense such drugs and/or provide such treatment. If a municipality desires to apply more stringent regulations to methadone clinics in order to eliminate and/or lessen associated detrimental impacts to the health and safety of the community, such regulations must be facially neutral and apply to all medical clinics in the same zoning district.
*Reprinted with permission from the 6/10/14 issue of The Legal Intelligencer. © 2014 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
Click here for PDF.
The Legal Intelligencer
Over the past several decades, as they have become increasingly common and conspicuous, billboards also have become a source of land use litigation in both state and federal courts. The legal issues implicated by their regulation are broad, and include First Amendment and exclusionary zoning claims. As a result, local governments seeking to control the location and style of billboards must be sure to navigate carefully when weighing a landowner’s or an advertising company’s interests against those of the general public.
Most recently, on Feb. 11, 2013, the U.S. Court of Appeals for the Third Circuit rendered a decision in Interstate Outdoor Advertising v. Mount Laurel, 706 F.3d 527 (3rd. Cir. 2013), which upheld a New Jersey municipality’s zoning ordinance banning billboards. There, a billboard company challenged the ordinance because it prohibited commercial and non-commercial billboards in the township, asserting that it violated free speech guarantees under the First Amendment to the U.S. Constitution. The court disagreed, and found that the township sufficiently justified the ban with a report from the township engineer reviewing 37 articles on billboard and traffic safety and the township planner’s testimony that the ban preserved the “billboard-free aesthetic charm and character of the area.”
In upholding the ordinance, the Third Circuit cited the U.S. Supreme Court’s 1981 ruling in Metromedia v. San Diego, 453 U.S. 490 (1981), which expressed deference to local lawmakers and reviewing courts regarding billboard impacts and ultimately upheld San Diego’s ban on off-site commercial advertising based on traffic and safety concerns. The Third Circuit demonstrated similar deference by holding that Mount Laurel’s ordinance was a reasonable means of achieving the town’s substantial interests in traffic safety and aesthetics.
Despite the Third Circuit’s decision in Mount Laurel, Pennsylvania municipalities should proceed with caution when considering similar regulations. It is critical to note that the Mount Laurel challenger did not raise an argument that the township’s zoning ordinance was exclusionary. As a result, the decision does not impact the Pennsylvania Supreme Court’s 2009 holding in Township of Exeter v. Zoning Hearing Board, 962 A.2d 653 (Pa. 2009), that billboards are a legitimate land use and cannot be banned outright in a municipality.
In Exeter, the court addressed a constitutional challenge to a zoning ordinance limiting billboards to 25 square feet. Unlike the plaintiff in Mount Laurel, the challenger in Exeter argued that the ordinance excluded billboards from the township, and that the exclusion violated its constitutionally protected right to enjoy its property. The court agreed with both points. The court found that the ordinance excluded billboards based on the applicant’s testimony that a 25-foot billboard cannot function as a billboard because it is “too small to contain and convey an advertising message to the motoring public.”
While the court acknowledged that the exclusion could be justified if it had a substantial relationship to public health, safety or welfare, it found no such relationship in the record. The court was careful to note, though, that contrary to the plaintiff’s argument, the industry standard of 300 square feet was “not necessarily the absolute minimum size necessary to make a billboard effective in serving its communication purpose and economically viable.”
Thus, municipalities still can rely on their police powers to impose reasonable regulations on billboard characteristics, such as location, size and height. Since Exeter, the Commonwealth Court has addressed several ordinances with these types of restrictions, such as the 50-square-foot size and 25-foot height limitations upheld in Interstate Outdoor Advertising L.P. v. Zoning Hearing Board of Warrington Township, 39 A.3d 1019 (Pa. Commw. Ct. 2012).
In reaching the conclusion that those limits did not result in a de facto exclusion, the court in Interstate Outdoor Advertising relied upon evidence presented by the township that indicated billboards of that size and height can effectively convey an advertising message to passing motorists. Similarly, in 2013, the Commonwealth Court upheld an ordinance in Smith v. Hanover Zoning Hearing Board, 78 A.3d 1212 (Pa. Commw. Ct. 2013), that limited billboards to a heavy industrial district, and imposed a 300-squarefoot size limitation and 25-foot height limitation, on the basis that the applicant failed to present any evidence that effectively explained why the limitations created a de facto exclusion.
In both Interstate Outdoor Advertising and Smith, the parties challenging the ordinances could not show and/or did not present sufficient evidence demonstrating that the regulations unconstitutionally excluded billboards, and the municipalities were able to present sufficient evidence supporting the regulations. Therefore, a municipality is in a better position to defend an ordinance that regulates billboards, so long as the regulations are not so stringent that they result in an outright ban and are reasonably related to the objective of fostering public safety, health and welfare.
When crafting zoning rules to address billboards in a non-exclusionary manner, municipalities should note that the Pennsylvania Supreme Court has held that they may not regulate billboards as “land developments” under the Pennsylvania Municipalities Planning Code. In Upper Southampton Township v. Upper Southampton Zoning Hearing Board, 934 A.2d 1162 (Pa. 2007), the township denied a billboard company’s application for building and sign permits to erect six billboards on the basis that the erection of the billboards also required “land development” approval under the township’s subdivision and land development ordinance (SALDO). The Supreme Court, however, disagreed with the township, finding that billboards do not implicate the same concerns addressed by the SALDO review process (e.g., provision of sanitary sewer, water, stormwater management, parking, driveways and the like). As a result, the court held that the construction of a billboard is not a “land development” and, therefore, does not require land development review and approval.
Despite these recent legal developments and clarifications, local regulation of billboards remains a topic of much debate and controversy. Accordingly, municipalities should proceed with caution when imposing limitations on billboards in order to ensure that they comport with the current state of the law, both state and federal.
*Reprinted with permission from the 4/15/14 issue of The Legal Intelligencer. © 2014 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
Click here for PDF.