Pennsylvania Supreme Court Affirms, Expands Commonwealth Court Ruling Striking, Among Other Provisions of Act 13, the Act’s Zoning Limitations

Yesterday, the Pennsylvania Supreme Court handed down a long-awaited decision in Robinson Twp. v. Com., No. 63 MAP 2012, affirming in part and reversing in part the Pennsylvania Commonwealth Court’s decision, 52 A.3d 463 (Pa. Commw. Ct. 2012), regarding the constitutionality of various provisions of Act 13 of 2012, 58 P.S. § 2301 et seq. (the "Act") which amended the Pennsylvania Oil and Gas Act. (The 162 page opinion can be found here.) In an opinion by Chief Justice Ronald Castille, the Supreme Court found "several challenged provisions" of the Act, including the provisions providing for zoning uniformity in Section 3304, to be unconstitutional. The opinion also noted that "the Court majority affirming the finding of unconstitutionality is not of one mind concerning the ground for decision." Additionally, the Court found Sections 3215(b)(4) (relating to distance waivers from streams and other features) and Sections 3303 (environmental preemption) and 3215(d) to be unconstitutional.

Taking a skeptical view of modern oil and gas development and reviewing the legacy associated with Pennsylvania’s past development of its natural resources, the Court stated that, "[b]oth techniques [horizontal drilling and hydraulic fracturing] inevitably do violence to the landscape." The Court found the case to "implicat[e]" Pa. Const. art. I, § 27, which it referred to as the Environmental Rights Amendment ("Environmental Amendment"), which provides, in pertinent part, that "The people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment….[and] as trustee of [Pennsylvania’s natural resource], the Commonwealth shall conserve and maintain them for the benefit all people." In its decision, the Court relied heavily upon the interplay between the Environmental Amendment and the development of the Commonwealth’s natural gas resources.

Operational Implications

We note the following general implications for natural gas operations in the Commonwealth under Part III of the Supreme Court’s decision.

First, the case preserves the status quo regarding zoning uniformity which existed prior to the enactment of the Act. In finding Section 3304 to be unconstitutional, the Court stated that "the provision compels exposure of otherwise protected areas to environmental and habitability costs associated with this particular industrial use: air, water, and soil pollution; persistent noise, lighting, and heavy vehicle traffic; and the building of facilities incongruous with the surrounding landscape." According to the Court, it also resulted in a disparate impact on citizens due to the Commonwealth’s varied geography.

As enacted, Section 3304 of the Act provided that municipalities must allow development within certain parameters, but this provision never became effective given the Commonwealth Court’s decision. As a result, the Court’s determination that Section 3304 is unconstitutional permits municipalities to continue to enact varying zoning ordinances as they did under the prior Oil & Gas Act. However, the Court’s ruling may increase obstacles to development by encouraging municipalities which were otherwise so inclined to adopt or enforce ordinances significantly restricting oil and gas development.

Second, the Court likewise held that Section 3303, which preempted municipal regulation of environmental matters, was unconstitutional. The Court found the provision to "transgress[]" the legislature’s police powers limited by the [Environmental Amendment]. The implications of this holding will need to be examined in time. Although Section 3302 was not challenged in the litigation, the decision may call into question the scope of a municipality’s authority to regulate environmental matters, and the preemption allowing municipalities to determine where oil and gas wells are placed, but not "how" they are drilled or operated.

Third, the decision eliminates the statutory mechanism (Section 3215(b)(4) of the Act)¹  providing for distance waivers with regard to bodies of water. In so deciding, the Court stated: "[c]onsidered in its totality, the Section 3215(b) scheme lacks identifiable and readily-enforceable environmental standards for granting well permits or setback waivers, which yields at best arbitrary terms and conditions and, at worst, wholly ineffective protections for the waters of the Commonwealth." Given this elimination, the DEP may not allow waivers from the setback requirements provided for by Act 13 (
i.e. no unconventional well may be drilled 300 feet from any wetland). However, the Court also held that Section 3215(b)(4) is not severable from the rest of subsection (b), thus appearing to eliminate statutory water body setbacks in their entirety. While this might initially appear to be beneficial to the industry, the DEP will presumably rely upon distance requirements found in the regulations at 25 Pa. Code Ch. 78 (and possibly attempt to revive the prior version of waiver provisions found in the regulations).

Summary of Additional Holdings

The following is a summary of the additional sections of the Court’s decision. It should be noted that Parts III (discussed above) and VI(C) are plurality opinions.²

Part II.A. Justiciability. The Commonwealth Court sustained preliminary objections arguing that the cross-appellants Delaware Riverkeeper Network ("DRN"), its executive director and Dr. Mehernosh Khan lacked standing. The Supreme Court reversed, finding these parties had alleged sufficiently immediate and direct injury so as to establish standing. The Court also affirmed standing as to other Petitioners.

Part II.B. Political Question. The Supreme Court affirmed the Commonwealth Court’s determination that the case did not present a political question. "The nature of the citizens’ claims require nothing more than the exercise of powers within the courts’ core province: the vindication of a constitutional right."

Part IV. A. Pennsylvania Constitution Art. 3, § 32. The Commonwealth Court sustained preliminary objections to Petitioners’ argument that Act 13 was a "special law" prohibited by the Pennsylvania Constitution. The Supreme Court found that the Commonwealth Court sustained the preliminary objection on "a basis insufficient as a matter of law" and remanded for "an appropriate merits disposition." The Court stated that the "required inquiry is into the effect of the provisions challenged by the citizens, with respect to whether the admitted different treatment of oil and gas represented by Act 13 rests upon some ground of difference that is reasonable rather than arbitrary and has a fair and substantial relationship to the object of each challenged provision."

Part IV. B. Pennsylvania Constitution Art. 3, § 1 & 10. The Commonwealth Court rejected petitioners’ argument that Section 3241 ("appropriation interest in real property") was a taking. The Supreme Court vacated this decision and remanded for further proceedings, stating that the Commonwealth Court’s analysis was "conclusory" and "misdirected."

Part IV. C. Pennsylvania Constitution Art. 3, § 32. The Commonwealth Court rejected Petitioners’ claim that Section 3305(a) and (b) violated the separation of powers doctrine by delegating authority to the Public Utilities Commission to review and determine ordinance compliance with Chapters 32 and 33 of Act 13 or the Municipalities Planning Code and to issue a written advisory opinion. The Supreme Court affirmed the rejection, finding that "administrative agencies are not precluded from passing upon constitutional claims in the first instance" and local governments, as opposed to the PUC, retain the power to frame local ordinances such that no improper delegation exists.

Part V. Severability. Petitioners sought a declaration that Act 13 was unconstitutional as a whole. The Supreme Court rejected the idea that Act 13 was unconstitutional in its entirety. However, it directed the Commonwealth Court to re-examine the issue of severability in general. Additionally, the Court found that Sections 3215(c) and (e) could not be severed from 3215(b) and (d). Further the Court found that "to the extent that Sections 3305 through 3009 implement or enforce provisions we hold invalid, these provisions are incapable of execution and are enjoined."