Justin H. Werner

On Aug. 29, the Pennsylvania Supreme Court declined to accept discretionary appeals in two separate cases (No. 952 C.D. 2017 and No. 942 C.D. 2017) relating to the construction of the Mariner East 2 pipeline. The denial of the petitions for appeal concludes this chapter of challenges to the construction of the Mainer East Pipeline based on local zoning ordinances.

By way of background, Sunoco is in the process of constructing the Mariner East 2 pipeline, which is intended to traverse the entirety of Pennsylvania. Sunoco is operating pursuant to a certificate of public convenience issued by the Pennsylvania Public Utility Commission (Pa. PUC), which authorizes it to transport natural gas liquids from Western Pennsylvania, and nearby West Virginia and Ohio, to points in Eastern Pennsylvania, terminating at the Marcus Hook facility in eastern Pennsylvania. In connection with this project, the Pa. PUC found that the proposed pipeline and the service it would provide was a public utility service, and that Sunoco was a public utility corporation subject to Pa. PUC regulation as a public utility. Previously, Pennsylvania courts affirmed Sunoco's status as a public utility and the pipeline as a public utility service, see In re Sunoco Pipeline, 143 A.3d 1000 (Pa. Commw. 2016) (en banc), appeal denied 164 A.3d 485 (Pa. 2016).

The Mariner East pipeline has proven to be controversial and has been the subject of numerous lawsuits on a variety of different procedural, regulatory, environmental, and other substantive and legal grounds. Most recently, challenges to the pipeline's projected construction path were brought on the basis of local zoning ordinances, which were the subject of the latest appeals to the Pennsylvania Supreme Court. Two cases involving similar challenges based on local zoning ordinances were filed and appealed to the Commonwealth Court, which in both instances, ruled against the local zoning ordinances, concluding that they could not be applied to bar the construction of the Mariner East 2 pipeline in accordance with its certificated route.

In Delaware Riverkeeper Network v. Sunoco Pipeline, 2018 Pa. Commw. LEXIS 74, 2018 WL 943041, No. 952 C.D. 2017 (Pa. Commw. Ct. Feb. 20, 2018), Pennsylvania's Commonwealth Court affirmed a trial court's decision rejecting another challenge that sought to halt the construction of the Mariner East 2 pipeline. In Delaware River Keeper, the township enacted a 2014 ordinance regulating the location and setback requirements for liquid natural gas facilities, requiring conditional use permits for liquid natural gas facilities and not permitting any such facilities in residential districts. In 2017, the plaintiffs filed a complaint in the trial court challenging the pipeline as violating the township's ordinance. Sunoco filed preliminary objections, challenging the trial court's subject matter jurisdiction and arguing, among other things, pre-emption of the zoning ordinance under federal and state law. The trial court granted Sunoco's preliminary objections and the Commonwealth Court affirmed the trial court's ruling. The Commonwealth Court reaffirmed. It framed the issue has a conflict between the Pa. PUC's authority to regulate public utilities, and a township's authority to enact zoning ordinances to promote the public health, safety, morals and general welfare. Upon examination of the various pre-emption doctrines and the statutes governing regulation and zoning, the court concluded that the Pa. PUC has the exclusive authority to regulate public utilities when questions arise regarding local zoning, unless there was an express grant of authority to the township on the subject matter. The opinion was subject to a dissent that would have referred the matter to the Pa. PUC.

In Flynn v. Sunoco Pipeline, 942 CD 2017, the Commonwealth Court issued an opinion about a month after Delaware River Keeper, relying on similar reasoning to reject a similarly styled local zoning ordinance challenging. In Flynn, about a half dozen residents of Middletown Township filed a lawsuit in the Delaware County Court of Common Pleas, alleging that the construction of the Mariner East 2 pipeline violated a local subdivision and land development ordinance that was over 50 years old, that required that all gas and oil pipelines be located at least 75 feet from a unit where an individual resides. The trial court dismissed the case, and the Commonwealth Court affirmed, relying on the same pre-emption analysis as explained in Delaware River Keeper. The Commonwealth Court concluded that based on its review of the public utility code, the state legislature “intended the code to occupy the field of public utility regulation, in the absence of an express grant of authority to the contrary.” The court concluded no such grant of authority had been made to the local municipality. See Flynn v. Sunoco Pipeline, 942 2017 (March 26, 2018) (unreported memorandum decision). The decision was subject to the same dissent as in Delaware River Keeper.

The Pennsylvania Supreme Court's refusal to hear the discretionary appeals (no reasoning for declining to hear the appeals is set forth in the Pennsylvania Supreme Court's orders) means that the Commonwealth Court's pre-emption analysis stands as the law with respect to local zoning ordinances. However, while challenges to the Mariner East 2 pipeline may continue, given the court's denial of these appeals, the challenges will likely have to take a different form.

Justin H. Werner is a partner in Reed Smith's energy and natural resources group and focuses his practice on all aspects of oil and gas law, representing energy clients on a range of litigation issues relating to the production of natural gas throughout the Appalachian region.