Babst Calland: Pennsylvania Commonwealth Court Invalidates Act 13 Local Ordinance Limitations

Babst Calland: Pennsylvania Commonwealth Court Invalidates Act 13 Local Ordinance Limitations

In a 4-3 decision, the Pennsylvania Commonwealth Court struck down portions of Act 13 of 2012, which had placed limits on the authority of local governments to regulate oil and gas industry activities. In its July 26, 2012 ruling on a legal challenge brought by seven municipalities and others, the Court majority declared Section 3304 of Act 13 unconstitutional, null and void. That section mandated that local ordinances provide for the "reasonable development of oil and gas resources." The Court's majority found that Section 3304 violated substantive due process because it allows incompatible uses in zoning districts, does not protect the interests of neighboring property owners from harm, alters the character of the neighborhood and makes irrational classifications. The dissent disagreed, finding that Section 3304 is a valid exercise of the police power, and noting that such due process considerations typically only apply to challenges that ordinances are too restrictive.

Some of the more significant provisions of Section 3304 that were invalidated by the Court included the requirements that a local ordinance: (1) authorize most oil and gas operations as permitted uses in all zoning districts, with the exception that wells located in residential districts may be prohibited or required to go through the conditional use process if the well bore is located within 500 feet of an existing building; (2) authorize compressor stations as permitted uses in agricultural districts and industrial districts, and as conditional uses in all other zoning districts, subject to certain distance and noise limitations; (3) authorize processing plants as permitted uses in industrial districts, and as conditional uses in agricultural districts, subject to certain distance and noise limitations; (4) allow impoundments as permitted uses in all zoning districts subject to a distance requirement; (5) allow pipeline/well assessment and subterranean operations throughout the municipality; (6) place maximum time limits on zoning decisions; (7) prohibit certain restrictions on hours of operation; and (8) in numerous other respects, treat industry construction activities and permanent facilities in a manner consistent with industrial uses.

Although the Court's invalidation of Section 3304 significantly alters the local regulatory landscape for the industry, several other key limitations on local ordinances remain in effect. With minor modifications, Section 3302 carried forward the preemption section from the former Oil and Gas Act (and the case law applying it) with regard to local ordinances that address the same features

or purposes of Act 13. Section 3303 also preempts local controls of oil and gas operations regulated by state and Federal environmental acts. An operator still can challenge a local ordinance inconsistent with these two sections before either the Public Utility Commission or the Commonwealth Court, and if such a finding is made, the local government is ineligible to receive well fees.

The Court also invalidated Section 3215(b)(4), which authorizes the Department of Environmental Protection to waive certain well bore and well site distance limitations from streams, springs, other bodies of water and wetlands. The Court found that because this section fails to set forth any standards for the Department to employ in considering such waivers, it violates the Pennsylvania Constitution's prohibition on the delegation of legislative authority. The Court rejected several other challenges to Act 13.

To access the full text of the Court's, majority and dissenting opinions please go to http://www.pacourts.us/OpPosting/Cwealth/out/284MD12_7-26-12.pdf.

The Commonwealth has appealed the Commonwealth Court's decision to the Pennsylvania Supreme Court. Navigating the myriad of local ordinances while the appeal is pending will be a challenge for the oil and gas industry, and will require operators to develop and implement strategies on how to deal with municipalities in the interim.

For more information, please contact Blaine Lucas at 412-394-5657 or blucas@babstcalland.com.

Copyright 2012 • Babst, Calland, Clements and Zomnir, P.C. • Two Gateway Center, Pittsburgh, PA 15222 • 412-394-5400 • Administrative Watch is privately distributed by Babst, Calland, Clements and Zomnir, P.C., for the general information of its clients, friends and readers. It is not designed to be, nor should it be considered or used as, the sole source of analyzing and resolving legal problems. If you have, or think you may have, a legal problem or issue relating to any of the matters discussed in the Administrative Watch, consult legal counsel.

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