Court Upholds Rights of Municipalities in Long Awaited Fracking Decision

On December 19, the Pennsylvania Supreme Court issued its long-awaited decision in Robinson Township v. Commonwealth of Pennsylvania, No. 63 MAP 2012. It affirmed in part and reversed in part the Pennsylvania Commonwealth Court decision¹ and found that certain provisions of Act 13 unconstitutionally restricted the power of municipalities to govern gas drilling in their jurisdictions. The impact of the Robinson Township decision will be felt directly in Pennsylvania, where there has been active exploration of the Marcellus Shale formation, and likely in many other states, including the adjacent states of New York and Ohio, where municipalities, acting pursuant to home rule authority, have used local ordinances to limit the location of hydraulic fracturing ("fracking") operations or to ban the practice entirely.² 

Pennsylvania has a long history of oil and gas operations. It moved comparatively quickly to capitalize on fracking as a technique to unlock previously inaccessible natural gas reserves. In an effort to streamline and optimize the development of these operations, in February, 2012 the Pennsylvania Legislature passed Act 13, which repealed Pennsylvania's Oil and Gas Act and replaced it with a statutory framework regulating oil and gas operations in the Commonwealth, preempting local regulation and superseding local environmental laws and zoning code provisions except in limited instances, such as setbacks in areas involving oil and gas operations. Act 13 also gave the power of eminent domain to companies that transport, sell or store natural gas and required uniformity of local ordinances.

In response, a group of municipalities and individuals challenged the constitutionality of Act 13.³ The petitioners alleged that almost 150 unconventional Marcellus Shale wells had been drilled within the borders of the Township, and that Act 13 prevented them from fulfilling their constitutional and statutory obligations to protect the health, safety and welfare of their citizens and to guard public natural resources from the industrial activity of oil and gas drilling. The municipalities argued that Act 13 was unconstitutional because it compelled them to enact zoning ordinances that would allow mining and gas operations in all zoning districts—an action that would be incompatible with the municipalities' comprehensive plans and would make zoning irrational. The Commonwealth, on the other hand, argued that Act 13 furthered the goal of achieving energy independence and did not preempt local municipalities' powers to enact zoning ordinances that did not conflict with oil and gas well operations. 

In rendering its decision, the Pennsylvania Supreme Court took a broader view of the case than the lower court.

To describe this case simply as a zoning or agency discretion matter would not capture the essence of the parties' fundamental dispute regarding Act 13. Rather, at its core, this dispute centers upon as asserted vindication of citizens' rights to quality of life on their properties and in their hometowns, insofar as Act 13 threatens degradation of air and water, and of natural, scenic, and esthetic values of the environment, with attendant effects on health, safety, and the owners' continued enjoyment of their private property.

In its 162 page opinion, which is already being characterized as a "landmark" and a "bombshell", the Court focused on the constitutionality of three sections of Act 13, in light of the Pennsylvania Constitution's Environmental Rights Amendment (Article I, Section 27 or the "Environmental Amendment"), which recognizes the people's rights and the government's duties to the people to protect the environment for the benefit of current and future generations.

Section 3303

Section 3303 of Act 13 declares that environmental obligations related to the oil and gas industries are of "statewide concern." On that basis, the Commonwealth argued that it was entitled to preempt the regulatory field to the exclusion of all local environmental legislation that might be perceived as affecting oil and gas operations. The Court disagreed, noting that the municipalities affected by Act 13 all existed prior to when Act 13 was adopted and that most had land use measures in place. Act 13, according to the Court, fundamentally disrupted the expectations established under these land use measures and, in effect, ordered local governments to take measures to effect the new uses, irrespective of local concerns. The Court concluded that:

[t]he constitutional command respecting the environment necessarily restrains legislative power with respect to political subdivisions that have acted upon their Article I, Section 27 responsibilities: the General Assembly can neither offer political subdivisions purported relief from obligations under the Environmental Rights Amendment, nor can it remove necessary and reasonable authority from local governments to carry out these constitutional duties. 

The Court found that Act 13 commands municipalities to ignore their obligations under Article I, Section 27 and further directs municipalities to undo existing protections of the environment in their localities. The Court concluded that the police power does not encompass the authority to disrupt the basis of these expectations.

Section 3304

Next the Court addressed the constitutionality of Section 3304 of Act 13 in light of the Environmental Amendment, which imposes a fiduciary duty on the General Assembly to prevent degradation, diminution, and depletion of public natural resources. The Court found that Section 3304 falls short of meeting this obligation for two reasons. First, a new regulatory regime permitting industrial uses as a matter of right in every type of pre-existing zoning district cannot conserve or maintain the constitutionally-protected aspects of the public environment and of a certain quality of life. Conditions and terrain vary throughout a municipality and between municipalities, and so protection of environmental values is a quintessentially local issue that must be tailored to local conditions. 

Additionally, Act 13 displaces the established development guidelines, and Section 3304 compels exposure of otherwise protected areas to environmental and habitability costs associated with industrial use: air, water and soil pollution; noise, lighting and heavy vehicle traffic; and the building of facilities incongruous with the surrounding landscape. The court reasoned that the new legal regime alters existing expectations of communities and property owners and substantially diminishes the natural and esthetic values of the local environment. Because Section 3304 unavoidably compels some communities and properties to carry much heavier environmental and habitability burdens than others, the express Constitutional command that the trustee manage "the corpus of the trust for the benefit of all the people," cannot be met.

Section 3215(b)(4)

Finally, the Court assessed the constitutionality of Section 3215(b)(4), which created mandatory setbacks for fracking installations but also required the Department of Environmental Protection to waive the setbacks if the permit applicant submitted a plan to protect the Commonwealth waters. The Act empowered the Department to consider local concerns, but did not require it to act upon them. Ultimately, the Court found that the statute did not provide any ascertainable standards by which public natural resources were to be protected if an oil and gas operator seeks a waiver of the Section 3215(b) setbacks. Ultimately the Court concluded that, as an exercise of police power, Sections 3215(b)(4) and (d), 3303 and 3304 are incompatible with the Commonwealth's duty as trustee of Pennsylvania's public and natural resources. 

Implications

The Court's decision is both unique to Pennsylvania and potentially national in scope. From a purely practical perspective, the decision does not alter the existing legal landscape, in which municipalities can regulate the "where" of natural gas drilling activities but not the "how." Furthermore, in choosing to focus its lengthy analysis on the Environmental Amendment, the Court picked a constitutional vehicle which has no replica in any other state. Thus, the odds of rapid adoption or proliferation of the Court's holding seem low. On the other hand, however, the Court picked the first and most salient constitutional analysis available to it to reach its conclusions and invalidate provisions if the Oil and Gas Act. It left largely unexplored the more traditional, but further reaching, constitutional challenges, all of which had been developed by the parties in the Robinson litigation, including arguments relating to substantive due process violations.

These issues have potentially more immediate application in other states where challenges are pending based on home rule powers and local expectations concerning quality of life and historical economic choices that have been made to ensure those results. The Robinson Court's decision is not an explicit invitation to other litigants to press those analyses. For all cases in jurisdictions in which there is no equivalent to the Environmental Amendment, however, the willingness of the Pennsylvania Supreme Court to address this issue on constitutional grounds is a likely roadmap for how future disputes will be framed and why the highest appellate courts in multiple states will be called on over the coming years to rule. Until those courts have been heard from, ongoing uncertainty will be the only sure thing.

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¹ 52 A.3d 463 (Pa. Commw. Ct. 2012).

² For a more complete discussion of the legal landscape in New York and Pennsylvania, see "Home Rule: The Grass-Roots Story That Will Shape the Hydraulic Fracturing Map," Bloomberg BNA Daily Environment Report (October 24, 2013).

³ 52 A.3d at 463

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