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Pennsylvania Supreme Court Rules Again on Municipal Zoning Ordinance for Oil and Gas Development

On August 3, 2018, the Pennsylvania Supreme Court granted the petition for allowance of appeal filed by certain environmental groups challenging the Commonwealth Court’s decision to uphold a municipal ordinance allowing natural gas drilling in a mixed residential and agricultural (“R-AG”) zone.  See Delaware Riverkeeper Network, et al., v. Middlesex Township Zoning Hearing Board, No. 270 WAL 2017.  In doing so, the Supreme Court vacated and remanded the lower court’s June 2, 2017 decision, finding that it had relied on a now-overruled environmental balancing test to decide that the municipal ordinance passed muster under Section I, Article 27 of the Pennsylvania Constitution, also known as the Environmental Rights Amendment (“ERA”).  Specifically, the Supreme Court directed the lower court to reconsider its decision in light of the Court’s more recent decisions in Pa. Envtl. Def. Fund. v. Commonwealth, 161 A.3d 911 (Pa. 2017), and Gorsline v. Bd. of Sup. of Fairfield Twp., --- A.3d---, 2018 WL 2448803 (Pa. 2018). The Supreme Court also directed the lower court consider the amendments contained in Middlesex Township’s Ordinance 127, which now expressly included gas well development in the R-AG zones.

As a result of these recent opinions, the Commonwealth Court must now decide the case based upon different criteria.  By way of background, and as we previously reported, the petitioners challenged the zoning ordinance, in part, on the basis that the zoning ordinance infringed on their rights under the ERA to clean air, pure water, and a healthy local environment.  The Commonwealth Court held against them, finding that the ordinance did not violate their rights when analyzed under the three-part balancing test first enunciated in Payne v. Kassab 361 A.2d 263, 246 (Pa. 1976).  These factors included: (1) whether there was compliance with all applicable statutes and regulations relevant to the protection of the Commonwealth’s public natural resources; (2) whether the record demonstrated a reasonable effort to reduce the environmental incursion to a minimum; and (3) whether the environmental harm which would result from the challenged decision or action so clearly outweighed the benefits to be derived therefrom that to proceed further would be an abuse of discretion.  Id. at 94.

Just a few weeks after the lower court’s decision in this case (on June 7, 2017), the Supreme Court issued its opinion in Pa. Envtl. Def. Fund. v. Commonwealth on June 20, 2017, 161 A.3d 911 (Pa. 2017), which we also reported on.  There, the Pennsylvania Supreme Court held that local and state government agencies have an obligation under the ERA to act as trustees for the environment and the natural resources of the state, and as such must prohibit their degradation and affirmatively act to protect them.  In so holding, the Court effectively struck the decades-old Payne v. Kassab three-part test finding that it “strip[ped] the constitutional provision of its meaning.” 

The Commonwealth Court, in upholding the ordinance in dispute, also relied on its reasoning in Gorsline, a case where it upheld a zoning approval for gas drilling in the same type of R-AG zones.  However, in June of this year, and as we reported, the Supreme Court reversed the decision in Gorsline, finding that the drilling company failed to show that the well was similar to other types of public utility structures specifically allowed in the municipalities’ residential-agricultural districts.  See Gorsline v. Bd. of Sup. of Fairfield Twp. Et al., No. 67 MAP 2016, 2018 WL 2448803 (June 1, 2018).  As we previously predicted, the outcome of the Delaware Riverkeeper case was likely closely related to the Court’s decision in Gorsline, given the similar facts and questions presented.

Notwithstanding its decision to vacate and remand the case back to the lower court for reconsideration under more recently decided law, the Supreme Court specifically cited to its decision in the Gorsline opinion stating that, it “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.”  However, it is clear that any future development will now need to satisfy the standard applied in Pa. Envtl. Def. Fund and Gorsline, to pass judicial scrutiny.