On June 1, 2018, the Pennsylvania Supreme Court issued its opinion in one of the most highly anticipated oil and gas related decisions since it struck down portions of Act 13 in Robinson Twp. v. Commonwealth, 83 A.2d 901 (Pa. 2013). In Gorsline v. Bd. Of Sup’rs of Fairfield Twp., No. 67 MAP 2016, 2018 Pa. LEXIS 2781 (Pa. 2018), many in the legal community and shale gas industry expected the Court to clarify the extent to which oil and gas development is compatible with residential and agricultural uses under the Environmental Rights Amendment to the Pennsylvania Constitution (Article I, Section 27). The Court, however, chose to decide the case on much narrower grounds and instead reiterated the importance of building a strong evidentiary record before municipal boards in order to avoid reversal of an approval upon appeal.

In Gorsline, the Court faced the question of whether the Board of Supervisors (Board) of Fairfield Township (Township), Lycoming County, Pennsylvania had properly approved a conditional use application filed by Inflection Energy, LLC (Inflection) to locate a natural gas well pad and a 2 million gallon water impoundment in the Township’s Residential Agriculture (R-A) District. Inflection filed the conditional use application (Application) under the “savings clause” of the Fairfield Township Zoning Ordinance (Zoning Ordinance), which authorizes the Board to grant a conditional use application where the proposed use is not specifically authorized anywhere in the Township. In such cases, under the Zoning Ordinance, the applicant must demonstrate to the Board that the proposed use is “similar to and compatible with” other uses that are permitted in the zoning district where the undefined use is proposed.

The Board held two hearings where Inflection presented evidence in support of its Application and at which several neighboring landowners (Objectors) entered their appearance in opposition to the Application. The Objectors expressed concern that the project would negatively affect their water supplies, cause truck traffic, noise and light pollution, as well as adversely affect their property values. Inflection presented its case through its senior field operations manager and director of regulatory compliance, both of which the Board accepted as experts.

In a 2-1 vote, the Board approved the Application, finding that Inflection’s proposed operation was not a use permitted in any of the Township’s three zoning districts and was therefore governed by the savings clause. The Board broadly found “that the criteria for review set forth in [the savings clause] [has] been sufficiently satisfied.” However, as the Supreme Court noted in its Majority Opinion, “[t]he Board made no specific findings in support of this conclusion of law, and it neither referenced the subsection nor identified any permissible use in the R-A district that it found to be similar to the use proposed by Inflection.”

Objectors appealed the Board’s decision to the Lycoming County Court of Common Pleas, where Inflection argued that its drilling operations were similar to a “public service facility”1 use, which is a use permitted in the R-A District. The trial court disagreed and reversed the Board’s decision, observing that the Board had offered no explanation as to how Inflection’s operations were similar to a “public service facility.”

Inflection appealed the decision to the Commonwealth Court, which found that the lower court had erred in concluding that Inflection had not met its burden of proof on the question of whether the proposed use was similar to permitted uses in an R-A district. The Commonwealth Court further specifically found, based on its decision in MarkWest Liberty Midstream & Resources, LLC v. Cecil Twp. Zoning Hrg. Bd., 102 A.3d 549 (Pa. Commw. Ct. 2014), that Inflection’s operations were similar to and compatible with a “public service facility” use or an “essential service” use, both of which are permitted in the Township’s R-A District.

Objectors filed a petition for allowance of appeal to the Pennsylvania Supreme Court, which granted the petition to determine whether, inter alia: (1) the Commonwealth Court’s decision, that shale gas development is similar to and compatible with uses expressly permitted an R-A District, conflicts with the Court’s decision in Robinson; and (2) whether the Commonwealth Court committed an error of law in finding that there was substantial evidence to conclude that Inflection’s proposed shale gas development is similar to and compatible with a “public service facility.”

In rendering its decision, the Court declined to decide the first issue because it determined that it could decide the case on nonconsitutional grounds. The first issue would require the case to be decided on constitutional grounds because resolution of the issue would ultimately require analysis of substantive due process rights and the Environmental Rights Amendment.

Moving to the second issue, the Court found that Inflection “while representing that it ‘serves the general public,’ offered no evidence, and the Board made no findings of fact, that its extraction of natural gas is in any respect for the benefit of the residents of the R-A district…Seen in this light, Inflection’s proposed use is plainly not of the ‘same general character as’, or ‘similar to,’ ‘public service facility’ or ‘essential services’ uses.” Therefore, the Court reversed Board’s decision approving the Application. In doing so, however, the Court stressed:

[T]his decision should not be misconstrued as an indication that oil and gas development is never permitted in residential/agricultural districts, or that it is fundamentally incompatible with residential or agricultural uses…[W]e do not take the position that oil and gas drilling/development may never occur in a district unless a township amends its zoning ordinance to expressly allow the use, or that applicants may never seek a conditional use permit for this use pursuant to a local ordinance’s savings clause. Where an applicant develops a sufficient evidentiary record to establish similarity of use, nothing prevents a local governing body from granting permission for a use not expressly allowed or disallowed in a particular district. Instead, we hold only that in the present case, given the stark differences between the proposed use and those uses expressly allowed in the R-A district (including “public service facilities” and “essential services”) as well as Inflection’s failure to even attempt to breach this divide through the development of a factual record, the Board erred in granting a conditional use permit under the Ordinance's savings clause.

Consequently, the holding in Gorsline is quite narrow. The court declined to address whether oil and gas development is fundamentally incompatible with residential or agricultural uses. Rather, the Court merely emphasized the importance of building a strong evidentiary record to show compliance with specific ordinance provisions.

The main practical takeaways from the decision are threefold. First, applicants seeking approvals from municipal boards should carefully review the applicable zoning ordinance to identify specific requirements contained therein. Applicants should then present evidence at hearing demonstrating compliance with the ordinance’s specific requirements in order to build a strong evidentiary record that will withstand an appeal of the approval. Second, applicants should give consideration to asserting all available alternative theories of relief when seeking approval under a local ordinance that does not make any provision for oil and gas development. In this case, had a validity challenge or curative amendment been asserted in the alternative, the zoning ordinance may have been found to be substantively invalid. Third, municipalities should review their existing ordinances and, if necessary, amend them to specifically provide for oil and gas development and designate where in the municipality such uses are permitted.