Marcellus Shale Watch

By George Asimos, Esq., Saul Ewing, LLP, Harriburg

Penneco Oil Company, Inc. v. County of Fayette, 2010 WL 2853639 (Pa. Cmwlth. 2010)

Background

On November 1, 2006, Fayette County adopted a Zoning Ordinance. On or about August 7, 2007, Penneco filed a complaint against Fayette County and on or about May 5, 2008, Penneco filed, by consent, an amended complaint primarily alleging that the Zoning Ordinance is preempted by the Oil & Gas Act and requesting that the trial court declare the Zoning Ordinance invalid. 

Fayette’s Zoning Ordinance allowed oil and gas wells by “special exception” in five zoning districts.  The extent of Zoning Ordinance provisions that dealt specifically with the granting of a special exception for oil and gas wells were the following:

A.         An oil or gas well shall not be located within the flight path of a runway facility of an airport.

B.        An oil or gas well shall not be located closer than two-hundred (200) feet from residential dwelling or fifty-(50) feet from any property line or right-of-way.

C.        An oil or gas well shall provide fencing and shrubbery around perimeter of the pump head and support frame.

D.        The Zoning Hearing Board may attach additional conditions pursuant to this section, in order to protect the public’s health, safety, and welfare. These conditions may include but are not limited to increased setbacks.

Penneco and its co-plaintiffs, Range Resources – Appalachia, LLC and the Independent Oil and Gas Association of Pennsylvania, argued that the Zoning Ordinance was pre-empted because:

1.        The Zoning Ordinance provided that deep mining and surface mining in Fayette County were permitted as of right in certain zoning districts while oil and gas operations in those same zoning districts were permitted only by way of special exception.

2.        The Zoning Ordinance purported to give the zoning hearing board discretion to attach additional conditions to oil and gas operations “in order to protect the public’s health, safety and welfare” and that this is clearly covered by the OGA and the provisions of the Zoning Ordinance covering oil and gas operations are preempted by the OGA.

3.         That Section 1000-1004 of the Zoning Ordinance required that an oil and gas well operator obtain costly well permits in contravention of the explicit and extensive permitting requirements of the Act.

4.         Since the grant of a special exception is by the Zoning Hearing Board, the Zoning Ordinance does not guarantee issuance of a permit even if the application complies with all requirements, that issuance is discretionary resulting in the possibility that the Zoning Hearing Board would impose conditions governed by the Act such as road bonding, requirements before drilling begins, regulation of well heads and for site restoration after drilling operations cease.

5.         That the purposes of the Act preempted the purposes of the Zoning Ordinance; that the Supreme Court has held that MPC-enabled local ordinances are preempted to the extent that they either contain provisions which impose conditions, requirements or limitations on the same features of oil and gas well operations regulated by the Act or accomplish the same purposes as set forth in the Act; and that there is an obvious overlap of the purposes of the Act and the purposes of the Zoning Ordinance; therefore, the Zoning Ordinance is preempted by the Act.

Rulings

1.  That the Fayette Zoning Ordinance did not pertain to the technical aspects of well functioning and ancillary matters, but rather to “preserving the character of residential neighborhoods, and encouraging beneficial and compatible land uses.”

2.  That “the fact that the zoning hearing board may attach additional conditions to a grant of a special exception in order to protect the public’s health, safety, and welfare or the Zoning Ordinance does not specifically guarantee issuance of a permit, does not result in the conclusion that the Zoning Ordinance provides arbitrary authority to deny permission to drill.” 

3. That the privilege of a Zoning Board to impose reasonable conditions on the grant of a special exception, “unlike the ordinance at issue in Range Resources/Salem Township, . . . does not provide Fayette County or its zoning hearing board with virtually unbridled discretion to deny permission to drill an oil and gas well even after compliance with the applicable zoning regulations.”

4.  That a zoning permit is not per se a pre-empted “well permit” simply because it is required before a well can be drilled.  Rather it is part of the orderly zoning process upheld by the Supreme Court in Huntley.

5.  That “while there may be some overlap between the goals of Fayette County’s Zoning Ordinance and the purposes set forth in the Act, the most salient objectives underlying restrictions on oil and gas drilling in certain zoning districts appears in Fayette County to be those pertaining to preserving the character of residential neighborhoods, as well as each zoning district, and encouraging beneficial and compatible land uses. As such, the limited provisions of the Zoning Ordinance governing oil and gas wells in Fayette County do not accomplish the same purposes as set forth in Section 102 of the Act. . . .”

6.  “[T]hat the provisions of the Zoning Ordinance do not reflect an attempt by Fayette County to enact a comprehensive regulatory scheme relative to the oil and gas development within the county but instead reflect traditional zoning regulations that identify which uses are permitted in different areas of the locality. The Zoning Ordinance, on its face, is clearly a zoning ordinance of general applicability like the ordinance in Huntley. Therefore, the Zoning Ordinance is not preempted by the Act.”

Commentary

A predictable outcome after Huntley, Range and Arbor and the tenor of other decisions by the Commonwealth Court; but fails to address the practical reality that municipal regulation, particularly in the realm of conditional uses and special exceptions, can be, and often is, a cause of extensive delay and cost in the exercise of property rights and that,  regardless of stated purposes and requirements, such procedures can be used to achieve ends not stated in the ordinances, and may impede the exploitation of valuable mineral rights.  This is perhaps a question for the legislature rather than the courts.

Trackback URI | Comments RSS