Pennsylvania Commonwealth Court Strikes Down Uniform Statewide Rules On Shale Gas Facility Siting

Zoning Provisions Held to be Unconstitutional; The Commonwealth Appeals to Pennsylvania Supreme Court

In a split decision that raises as many questions as it answers, on July 26, 2012, the Pennsylvania Commonwealth Court invalidated key portions of Act 13, the oil and gas reform legislation enacted in February. See Robinson Twp. v. Commonwealth, No. 284 M.D. 2012. By a 4–4 "majority," the court held that Act 13's statewide land use regime, which preempted local zoning rules in favor of a uniform set of rules governing the siting of oil and gas wells and other operations, violated principles of substantive due process and thus ran afoul of the Pennsylvania and United States Constitutions. The court also unanimously held that a narrower provision of the act empowered the Pennsylvania Department of Environmental Protection (DEP) to grant variances from stream and wetland buffer zone requirements, on the grounds that the statute failed to provide sufficient direction to guide DEP's decision-making.

Background

While the development of unconventional oil and gas resources in Pennsylvania in the past several years has been vigorous, producers have often labored under considerable uncertainty in the face of inconsistent local land use restrictions. As a result, rational development of the Commonwealth's oil and gas resources often has been hindered. While the Pennsylvania Supreme Court in 2009 held that municipalities could not regulate those aspects of oil and gas drilling that were within the scope of the Oil and Gas Act (for example, by requiring a local drilling permit or bond or regulating site restoration and the plugging of inactive wells), see Range Resources – Appalachia v. Salem Twp., 964 A.2d 569 (Pa. 2009), the court also held that the Oil and Gas Act did not preempt local zoning ordinances and that local zoning ordinances could limit the location of wells to specified zones, see Huntley & Huntley v. Borough of Oakmont, 964 A.2d 855 (Pa. 2009). As a result, while municipalities could not regulate the details of drilling and production activities, they could effectively declare — on a piecemeal basis — large tracts of the Commonwealth's land area "off limits" to oil and gas production.

In an effort to ensure uniform treatment of oil and gas operations throughout Pennsylvania, Act 13 — a comprehensive statute involving many aspects of oil and gas production — amended the Oil and Gas Act to broaden its preemptive effect, and to constrain, systematize and streamline municipal zoning regulation of certain oil and gas operations. Among other things, the operative provision, Section 3304:

required municipal zoning ordinances to allow oil and gas wells, pipelines and impoundments in every zoning district, subject to setback requirements, 58 Pa. C.S. § 3304(b)(5)-(6); required ordinances to allow pipeline compressor stations and natural gas processing plants in industrial and agricultural zones, subject to setback and noise, id. § 3304(b)(7)-(8); prohibited municipalities from treating oil and gas operations differently from other land uses, see id. § 3304(b)(2)-(3); and imposed limits on the amount of time local officials could take in ruling on applications (30 days for completed applications for permitted uses, and 120 days for conditional uses), id. § 3304(b)(4). As also relevant here, Act 13 further defined minimum setback requirements, limiting oil and gas operations...