The fate of Pennsylvania's controversial zoning provisions of Act 13, the 2012 amendment to the Oil and Gas Act, will soon be decided by the Supreme Court in Robinson Township v. Commonwealth. At stake are provisions that would require municipalities to eliminate most restrictions on unconventional gas well development from local zoning ordinances. As one might expect from a state that has become a leader in modern oil and gas development, the provisions at issue expressly seek to provide a one-size-fits-all approach to local control of oil and gas development. This effort at uniformity has been met with stiff opposition from municipalities that believe Act 13 goes too far, usurping a local government's traditional role of regulating land use within its borders for the health and safety of its residents. So far, the plaintiff municipalities have had the better of the argument, challenging Act 13 on constitutional grounds, in contrast to a nationwide trend that has seen state courts relying on state/local conflict pre-emption doctrine to limit local efforts to regulate oil and gas development.
The Pennsylvania Commonwealth Court declared the Pennsylvania provisions unconstitutional and void in July 2012, and based on earlier Supreme Court decisions on the topic, there is reason to expect that the state's highest court may uphold that decision. This outcome would restore municipalities' authority to enact zoning ordinances limiting, at a minimum, the location of oil and gas drilling activities within the municipality — authority recognized by the Pennsylvania Supreme Court itself in 2009 in Huntley & Huntley v. Borough Council of Borough of Oakmont, 964 A.2d 855 (Pa. 2009).
To understand what Robinson Township is about, it is helpful to understand what the case is not about. Three recent opinions from West Virginia, Ohio and New York provide an excellent overview of the trend in other jurisdictions finding pre-emption of local ordinances by state oil and gas law. In West Virginia, the city of Morgantown passed an ordinance banning unconventional gas drilling within the city. The Monongalia County Circuit Court adopted the reasoning traditionally applied in state/local conflict pre-emption cases in Northeast Natural Energy v. City of Morgantown, No. 11-C-411, slip op. (Cir. Ct. Monongalia Cty. Aug. 12, 2011). The court found that West Virginia law manifests the state's intent to control the entire field of oil and gas development. Moreover, there is no exception carved out in state law reserving any aspect of local authority in the field. Because the city's ban conflicted with the state's objective, the ban was pre-empted.
In Ohio, an appellate court held that a local ordinance imposing permitting, zoning and right-of-way construction restrictions on unconventional gas development was pre-empted in part by Ohio oil and gas law in State ex. rel. Morrison v. Beck Energy, 2013-Ohio-356, slip op. (9th App. Dist. Feb. 6, 2013). The court noted that Ohio law gives the state exclusive authority to regulate "permitting, location and spacing of oil and gas wells and production operations." Thus, the law provides a comprehensive regulatory scheme indicating the state's intention to broadly control the field of oil and gas development in the state. However, the statute expressly reserves local authority to control roads. The court found that there were irreconcilable conflicts between the state oil and gas regulations and the local permitting and zoning requirements. Therefore, state oil and gas law pre-empted all local control or oversight of oil and gas drilling except for the right-of-way construction ordinance, which fell within the state's carve-out for roads.
New York courts that have addressed the issue generally have come down on the side of local regulation, despite using the same analysis as the West Virginia and Ohio courts. In Norse Energy Corp. USA v. Town of Dryden, 964 N.Y.S.2d 714 (N.Y. App. Div. 2013), a New York appellate court held that a local zoning ordinance that, in effect, banned all unconventional gas development in the municipality was not pre-empted by New York state oil and gas law because the state law contained no clear expression of legislative intent to control the land-use aspects of oil and gas development in such a way that it would pre-empt local zoning authority. Thus, in contrast to the West Virginia and Ohio decisions, Norse Energy's home-rule analysis favored preservation of local authority in the absence of any conflict between the state oil and gas law and local ordinance. Although this was a victory for the municipality, the Norse Energy court implicitly left open the possibility that the New York Legislature could pre-empt local zoning authority if it chose to clearly express such an intention.
At first glance, it appears as if this tension between state regulation of all aspects of oil and gas development on one hand and local governments' duty to ensure the health, safety and welfare of the community through local ordinance on the other hand is at the center of Robinson Township. However, Robinson Township instead is about Pennsylvania's ability to constitutionally mandate the development of local comprehensive growth and development plans (via the Municipalities Planning Code), while simultaneously imposing uniform restrictions on all municipalities' zoning powers, when such restrictions may incidentally conflict with municipalities' comprehensive plans. In other words, the constitutional limits of the state's ability to encroach on local zoning authority, rather than the limits of local authority to encroach on a field occupied by state law, is the central issue in Robinson Township.
In Robinson Township, the state argues that municipalities are "creatures of the state," whose powers are limited to those granted by the state, and, as such, the state can pre-empt the exercise of those powers through statutory enactment, unless such enactment is unconstitutional. The state further notes that Act 13's zoning provisions do not pre-empt local governments from enacting zoning ordinances, as long as they do not place any restrictions on the location of oil and gas drilling operations in conflict with Act 13. The plaintiffs, including seven municipalities, assert that Act 13 would force municipalities to shoehorn oil and gas drilling operations into zoning districts where such activities would conflict with the local government's mandate to protect the health, safety and welfare of its citizens and provide for orderly development of the community. Imposing such requirements on local governments would be an improper use of the state's police power under the due process provisions of Article 1, Section 1, of the Pennsylvania Constitution. Thus, the municipalities have avoided confronting Act 13 on conflict pre-emption doctrine grounds — a confrontation they almost certainly would have lost — and put the state in the constitutional hot seat.
At the heart of the Commonwealth Court's decision was the notion that zoning in furtherance of Act 13's oil and gas development objectives is not the same as zoning "in conformance with a comprehensive plan for growth and development of the community," the latter being the only constitutional application of zoning. The upshot of the court's decision is that the state now appears powerless to pre-empt local zoning ordinances restricting oil and gas development, even if such ordinances rise to an outright ban, as in New York. Consequently, while the rationale of Norse Energy left room for the state to pre-empt municipalitywide local zoning bans on hydraulic fracturing if it should choose to, the Robinson Township decision would leave Pennsylvania powerless to do so.
Such an outcome could be groundbreaking from a national perspective but not inconsistent with prior Pennsylvania case law on point. In Huntley, the Supreme Court broadly acknowledged the state's ability to limit local power, stating that even where the state previously granted municipalities power to act in a particular field, such powers are abrogated when the state pre-empts the field. However, the "field" at issue in Huntley was oil and gas development, not zoning. Ultimately finding that the then-applicable oil and gas law did not conflict with, and therefore did not pre-empt, local zoning restrictions on oil and gas development, Huntley left the door open, as New York has, for the state's express pre-emption of local zoning authority.
Nevertheless, Huntley observed that the purposes of zoning ordinances and oil and gas law are distinctly different — an observation relied upon heavily in the Robinson Township ruling. Because those doors were left open, the Supreme Court now has the opportunity to uphold the lower court's Constitution-based decision while preserving the well-established principles of state/local conflict pre-emption doctrine articulated by the Huntley court. Notably, the municipalities also have an advantage in the Robinson Township proceedings because the currently shorthanded court's three liberal and three conservative justices would uphold the Commonwealth Court's ruling by default in the event of a tie — though it's possible interim Justice Correale Stevens will be involved with the ruling depending on its timing.
Victory for the plaintiff municipalities is not set in stone, but it appears that the Pennsylvania Supreme Court will have to fracture the existing legal bedrock to extract an outcome favorable to the state and industry.
Michael C. Duffy is an associate in Ballard Spahr's litigation department. He focuses on federal and Pennsylvania environmental regulatory compliance and environmental litigation.
Harry Weiss is a partner in the firm's environment and natural resources practice.