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 near streams and wetlands, id.; see also § 3215(b)(1)-(3)), but gave DEP the authority to waive these distance restrictions if the operator identifies additional measures, facilities or practices to protect the waters of the Commonwealth, id. § 3215(b)(4).

These measures, while applauded by oil and gas operators, proved controversial, and seven municipalities and certain of their officials (together with the Delaware Riverkeeper Network, its appointed "riverkeeper," and an individual physician) sued the Commonwealth and a number of its officials, raising a series of constitutional challenges to various aspects of Act 13, including its preemption of, and limits on, municipal zoning.

The Commonwealth Court's Ruling

The dispute came before a seven-judge en banc panel of the Commonwealth Court, a specialized court with original jurisdiction over disputes involving agencies of the Commonwealth. The matter proceeded to an expedited judgment - the plaintiffs moved for summary relief, in a process akin to a motion for summary judgment, and the Commonwealth filed preliminary objections and a cross-motion for summary relief. The court resolved these cross-motions in a 54-page opinion, written by President Judge Dan Pellegrini and joined by Judges McGinley, Leadbetter and McCullough.

The court first addressed questions of standing and justiciability, holding that the municipal plaintiffs had standing and that the dispute was not barred by the political question doctrine. See Slip op. at 8-24. These preliminaries aside, the court invalidated Section 3204's restrictions on municipal zoning, and held that Section 3215(b)(4)'s variance provisions unconstitutionally delegated to DEP the authority to make legislative policy judgments.

In determining the validity of the statewide preemption of local zoning, the court undertook a "substantive due process" analysis, asking whether the legislation was (among other things) "justified by a balancing of community costs and benefits," considerations that "have been summarized as requiring that zoning be in conformance with a comprehensive plan..." Slip op. at 30 (emphasis in original; internal quotation omitted). Applying this standard, the court reasoned:

58 Pa. C.S. § 3304 requires zoning amendments that must be normally justified on the basis that they are in accord with the comprehensive plan, not to promote oil and gas operations that are incompatible with uses by people who have made investment decisions regarding businesses and homes on the assurance that the zoning district would be developed in accordance with the comprehensive plan and would only allow comparable uses. If the Commonwealth-proffered reasons are sufficient, then the Legislature could make similar findings requiring coal portals, tipples, washing plants, limestone and coal strip mines, industrial chicken farms, rendering plants and fireworks plants in residential zones for a variety of police power reasons advancing those interests in their development. It would allow the proverbial "pig in the parlor instead of the barnyard."

Slip op. at 33 (quoting Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 388 (1926), the case in which the United States Supreme Court first upheld the constitutionality of zoning).

In sum, the court held that Section 3304 "violates substantive due process because it allows incompatible uses in zoning districts and does not protect the interests of neighboring property owners from harm, alters the character of the neighborhood, and makes irrational classifications.§ Slip op. at 35. Accordingly, the court held that Section 3304 was "unconstitutional and null and void." Id.

The court also invalidated Section 3215(b)(4), which allowed DEP to issue waivers to allow oil and gas operations within 100 feet of a stream or wetland, as an impermissible delegation of legislative authority. Section 3215(b)(4) provided for DEP waivers "upon submission of a plan identifying additional measures, facilities or practices to be employed during well site construction, drilling and operations necessary to protect the waters of this Commonwealth." This provision, found the court, is "insufficient to give guidance to permit DEP to waive specific setbacks." Slip op. at 52. Accordingly, the court held that "Section 3215(b)(4) is unconstitutional because it gives DEP the power to make legislative policy judgments otherwise reserved for the General Assembly." Id.

The court rejected the remaining challenges to other aspects of Act 13:

  • The court rejected the contention that Act 13 was an invalid "special law" simply because it applied to the oil and gas industry and not to other industries, because "the distinction is based on real differences that justify varied classifications..." Slip op. at 38.
  • The court declined to address the contention that Act 13, by authorizing the use of eminent domain to condemn private property for gas storage reservoirs and protective zones, was an unconstitutional taking of private property for private, and not public, purposes. Such a challenge, the court held, could only be made in the context of a declaration of taking. Slip op. at 39-40.
  • The court held that Act 13 did not violate Article I, Section 27 of the Pennsylvania constitution (which guarantees the "right to clean air, pure water, and... the preservation of the natural, scenic, historic and esthetic values of the environment," and which obligates the Commonwealth to "conserve and maintain them for the benefit of all the people"). Slip op. at 40-43.
  • The court rejected the contention that Act 13 violated the separation of powers doctrine, and impermissibly invaded the province of the judiciary, by empowering the Public Utility Commission to issue advisory opinions about whether local zoning ordinances were in compliance with Act 13's limits. Slip op. at 44.
  • The court held that Section 3304 was not unconstitutionally vague. Slip op. at 53.

The Dissent

Judge Kevin Brobson, joined by Judges Simpson and Covey, dissented from the court's ruling invalidating Section 3304's statewide zoning limitations. Section 3304, the dissent opined, "does not, as the majority suggests, eviscerate local land use planning." Rather, it "allowed, but restricted, oil and gas operations based on, and not in lieu of, each local municipality's existing comprehensive plan." Slip op. at PKB-3 to -4 (emphasis in original).

The dissent also believed that the majority opinion wrongly "reaches a legal conclusion that any zoning ordinance that allows a particular use in a district that is incompatible with the other uses in that same district is unconstitutional." Slip op. at PKB-5. This was incorrect, in the dissent's view: "The desire to organize a municipality into zones made up of compatible uses is a goal, or objective, of comprehensive planning" but "it is not an inflexible constitutional edict." Slip op. at PKB-5 to -6.

Based on these observations, the dissenting judges believed that the municipal petitioners had not carried their burden of proof: "There is no doubt that Petitioners have legitimate concerns and questions about Act 13. But it is not our role to pass upon the wisdom of a particular legislative enactment." Slip op. at PKB-9.

McGuireWoods' Analysis

As an initial observation, this decision rests on an odd procedural footing. Under the Commonwealth Court's internal operating procedures, opinions are circulated for approval by all of the commissioned judges. That ordinarily would have included not only the seven judges on the panel, but also Judges Leavitt and Cohn Jubelirer. However, Judge Leavitt recused herself, leaving only eight judges to review the opinion. Judge Cohn Jubelirer evidently objected to the panel opinion, creating a 4-4 tie. Nonetheless, under that circumstance, the internal operating procedures provide that the opinion is published. While this may be supportable under the court's procedures, its wisdom is questionable. It is odd - to say the least - that a major constitutional decision on a matter of great public controversy, subject to a tie vote, would nonetheless be rushed into publication by the court, without any effort to narrow its holding to reach a broader consensus.

More substantively, at first blush, it is difficult to support the Commonwealth Court's ruling based on existing law. The case law on which the court relied involves challenges to local ordinances, rather than state law. Further, these cases address ad hoc "spot zoning." None of these cases, as the dissent correctly observed, turn consistency with a comprehensive plan into a mandatory constitutional command.

Moreover, the majority decision fundamentally rewrites bedrock principles of municipal law. As the court pointed out, a municipality's "power derives solely from its creator-state." Put otherwise, municipalities "have no inherent powers of their own," but rather "possess only such powers of government as are expressly granted to them and as are necessary to carry the same into effect." Slip op. at 26 (quoting Huntley & Huntley, 964 A.2d at 862). If that is indeed the state of the law, however, then it should follow as a matter of logic that the Commonwealth, having invested municipalities in the first instance with the power to enact zoning ordinances, should be able to condition or narrowly restrict that power as it sees fit. Instead, it appears that the court, after recognizing this general principle, has implicitly, but fundamentally, redrawn the constitutional relationship between the Commonwealth and its offspring.

The court also appears to have recognized, for the first time, a constitutional right to retain a particular zoning classification, enforceable by municipalities and landowners. Under the court's rationale, it is difficult to see how zoning classifications could ever be loosened, to allow more intense land uses, so long as a judge concludes that the new land use is "incompatible" with what came before. Put otherwise, while zoning may be intended to keep the "pig out of the parlor," until now legislatures have been empowered to decide what is a "pig" and what is a "parlor." Now, however, the court appears to have reserved that power to the judiciary, as a matter of constitutional command. After this ruling, could the General Assembly mandate fair housing, medical care facilities or houses of worship in all districts? For that matter, could the General Assembly deny municipalities the right to enact zoning ordinances altogether? Until now, the answers to these questions seemed clear; now, the answers are much less certain.

In short, the court, relying on an internal operating rules peculiarity, has rendered a decision supported by less than a majority of the court's active judges that, if it stands, could profoundly alter not only the production of oil and gas in the Commonwealth, but also principles of municipal law that had appeared to be well-established.

What Next?

This is almost certainly not the last word on the issue. Governor Corbett already has lodged an appeal. Given the fractured Commonwealth Court, and the intense public interest in oil and gas development in Pennsylvania (both pro and con), the Pennsylvania Supreme Court will weigh in on the matter.

Whether that review will generate a definitive precedent, however, is another matter entirely. Because Justice Jane Orie Melvin has taken a leave of absence, while under indictment, the supreme court has only six justices, a bench equally divided between Democrats and Republicans. Accordingly, there is a very real possibility that the court could affirm the Commonwealth Court by an evenly divided supreme court.

If Section 3215(b)(4) - authorizing DEP variances from watercourse and wetland setback requirements - remains invalid, the ultimate consequences may not be substantial. After all, it should be possible to amend the statute to include the legislative guidance that the Commonwealth Court believed to be lacking.

The Commonwealth Court's invalidation of Section 3304's statewide standards, however, could have a more far-reaching impact. If the court's reasoning holds, it is difficult to envision a statewide land use regime that would pass constitutional muster. In that event, the industry will continue to confront an inconsistent patchwork of local land use regulations, overseen by a wide variety of local bodies (with varying sympathy or antipathy to local oil and gas development). As industry sources have already noted in connection with the Commonwealth Court's decision, this eliminates the predictability that is needed to support secure investment, and hinders the rational and orderly development of the Commonwealth's mineral resources.