Commonwealth Court Strikes Down Sections of Act 13 – Commonwealth Appeals Decision To Pennsylvania Supreme Court
Pennsylvania's Act 13 of 2012 ("Act 13") amended Pennsylvania's Oil and Gas laws to create a comprehensive state-wide scheme to facilitate the siting and regulation of natural gas wells within the Commonwealth and to impose a natural gas impact fee. Among other things, Act 13 largely preempts local regulation of oil and gas operations in the Commonwealth; gives the power of eminent domain to a corporation that is empowered to transport, sell or store natural gas; requires uniformity of local ordinances; and affords the Pennsylvania Department of Environmental Protection ("DEP") discretion in granting variances for distance restrictions for water bodies and wetlands. These provisions of Act 13 were among those subject to a constitutional challenge in a petition filed by Robinson Township and numerous other municipalities, an environmental advocacy group and individuals (collectively, "Petitioners") in the Commonwealth Court of Pennsylvania. On July 26, 2012, the Commonwealth Court issued its opinion in the case of Robinson Twp. v. Commonwealth of Pennsylvania, No. 284 M.D. Pa., which struck down portions of Act 13 that would facilitate development of the Marcellus Shale Play.
Sections of Act 13 ruled unconstitutional
The Commonwealth Court ruled that two sections of Act 13 are unconstitutional. The more significant section found to be unconstitutional is Section 3304 ("Uniformity of local ordinances"), which requires municipalities to allow "reasonable development" of oil and gas resources and preempts local municipalities' power to enact oil and gas zoning ordinances that conflict with Chapter 32 of Act 13. Section 3304 authorized oil and gas pipelines, gas wells and impoundments as permitted uses in all zoning districts; compressor stations as permitted uses in agricultural and industrial zoning districts and as a conditional use in all other zoning districts; and processing plants as permitted uses in industrial zoning districts and as a conditional use in agricultural zoning districts. Section 3304 further provided that the municipal review period for permitted uses could not exceed 30 days and the review period for conditional uses could not exceed 120 days. By a 4-3 vote, the court ruled that Section 3304 is an unconstitutional exercise of the Commonwealth's zoning police power. The court also held that Section 3304 violates substantive due process because "by requiring municipalities to violate their comprehensive plans for growth and development, 58 Pa. C.S. §3304 . . . does not protect the interests of neighboring property owners from harm, alters the character of neighborhoods and makes irrational classifications[.]" The court further enjoined all provisions of Chapter 33 that enforce Section 3304.
The second section ruled unconstitutional was Section 3215(b)(4) ("Well location restrictions – Limitation"), which gives the DEP discretion to waive the distance requirements from water body and wetland setbacks and to evaluate an operator's "plan identifying additional measures, facilities or practices to be employed . . . necessary to protect the waters of this Commonwealth." The court ruled that Section 3215(b)(4) is unconstitutional because it does not contain adequate standards that will guide and constrain the DEP's exercise of its discretion. It appears that the Pennsylvania legislature could easily rectify the defects in this Section.
The three dissenting judges agreed with the majority regarding the insufficient guidance provided to DEP under Section 3215(b)(4) but disagreed with the majority's decision to strike down Section 3304. The dissent expressed concern that the majority had undertaken passing upon the wisdom of Act 13 rather than analyzing its constitutionality.
Sections of Act 13 that remain in force
The majority of Act 13 under review survived Petitioners' challenges. These include Sections 3301 ("Definitions"), 3302 ("Oil and gas operations regulated pursuant to Chapter 32") and 3303 ("Oil and gas operations regulated by environmental acts"), which remain in full force and effect. In addition, Section 3305, which allows the Pennsylvania Public Utility Commission to issue non-binding advisory opinions on the constitutionality of municipal zoning ordinances regarding their compliance with Act 13, survived Petitioners' challenge on Separation of Powers grounds.
Other parts of Act 13 survived Petitioners' challenges on technical grounds, without the court reaching the merits of Petitioners' arguments. Thus, the court dismissed Petitioners' challenges to Section 3241(a), which allows a corporation to appropriate an interest in real property for storage reservoirs and protective areas around those reservoirs, as an unlawful taking because this challenge must await the actual filing of a declaration of taking under Section 3241(a). Also, Section 3222.1(b)(10) and (11), which, according to one of the petitioners, restricts a health professional's ability to diagnose and treat patients due to the confidential nature of proprietary compounds involved in hydraulic fracturing, survived constitutional challenges because of that petitioner's lack of standing.
Impact of the court's ruling on Marcellus Shale development
As a result of the court's ruling, the law regarding state preemption of oil and gas operation zoning laws is similar – but not the same – as to what it was pre-Act 13. Two major differences are that, even after this ruling: (1) there remains a stronger express preemption provision with regard to Federal and State environmental acts that regulate oil and gas operations, and (2) unlike the prior law, there is no question that midstream facilities are covered under Act 13. The natural gas impact fee provisions of Act 13 – the result of extensive negotiation during the drafting of the law – were not addressed by this ruling and survive intact.
Appeal to the Pennsylvania Supreme Court Seeks Expedited Review
On July 27, 2012 the Commonwealth filed its notice of appeal to the Pennsylvania Supreme Court and has also filed a motion for expedited review, asking the Court to hear the case during its October session in Pittsburgh. Anyone interested in supporting Act 13 will have an opportunity to file an amicus curiae brief with the Pennsylvania Supreme Court.