Justin H. Werner

In a recent en banc decision by the Pennsylvania Commonwealth Court, the court upheld a local ordinance that authorized the development of unconventional oil and gas wells in areas zoned residential and agricultural against a challenge by residents asserting that the ordinance violated the Pennsylvania Constitution's Environmental Rights Amendment. This case marked one of the first decisions since the Pennsylvania Supreme Court's 2017 decision in Pennsylvania Environmental Defense Foundation v. Commonwealth of Pennsylvania that changed the standard for weighing environmental challenges asserted under the Environmental Rights Amendment. This case is likely the first of many cases that will test the outer bounds of the Pennsylvania Supreme Court's new standard for evaluating and reviewing governmental actions that implicate environmental challenges. The 5-2 decision was subject to two written dissents, which increases the possibility of review by the Pennsylvania Supreme Court.

In the case, captioned Frederick v. Allegheny Township Zoning Hearing Board, No. 2295 CD 2015, a group of Allegheny Township residents challenged a 2010 zoning ordinance that allowed unconventional oil and gas drilling in all zoning districts within the municipality. In 2014, a land use permit was issued under the zoning ordinance to CNX Gas Co. to develop property located with the township's R-2 Agricultural/Residential Zoning District. The residents, all of whom lived near the property to be developed, asserted several challenges against the zoning ordinance, including that it was an impermissible spot zoning that violated substantive due process, that the ordinance violated the Pennsylvania Municipalities Planning Code, and relevant here, that the ordinance did not adequately comport with the Environmental Rights Amendment in Article I, Section 27 of the Pennsylvania Constitution. The residents first challenged the ordinance at the Zoning Hearing Board in early 2015. After hearing expert testimony from all sides, the zoning board rejected all of the residents' challenges to the ordinance on various grounds. The zoning board decision was appealed to the trial court, which rejected the residents' appeal without taking or considering any additional evidence. An appeal to the Commonwealth Court followed.

In the intervening time that the appeal was pending at the Commonwealth Court, the Pennsylvania Supreme Court issued its decision in Pennsylvania Environmental Defense Foundation v. Commonwealth, 161 A.3d 911, 930 (Pa. 2017). In that decision, the Pennsylvania Supreme Court overruled the long-standing three-part test for evaluating whether governmental action complied with Pennsylvania's Environmental Rights Amendment, established in Payne v. Kassab, 312 A.2d 86 (Pa. Commw. 1973), affirmed 361 A.2d 363 (Pa. 1976). While the Payne test had been criticized by the Pennsylvania Supreme Court in an earlier plurality decision, it had remained binding law. In Pennsylvania Environmental Defense Foundation, the Pennsylvania Supreme Court formally rejected the Payne test and found that the commonwealth had a duty as a “trustee” with respect to the management of public natural resources.

Following the issuance of that decision, the Commonwealth Court sought supplemental briefing from the parties as to the potential impact of that decision on the appeal before it. The residents filed a brief that argued that Pennsylvania Environmental Defense Foundation compelled the township to act as a trustee to prevent environmental degradation in the community. CNX filed a brief that argued that the case was more narrowly circumscribed and specifically applied to the commonwealth's obligations relating to the development of state owned parks and forests.

The en banc Commonwealth Court subsequently issued its decision on Oct. 26, upholding the zoning ordinance. Recognizing the specific values with respect to the enactment of zoning ordinances, the court found that the residents had not proven that the zoning ordinance unreasonably impaired their rights under the Environmental Rights Amendment. The court found that the residents failed to prove that the zoning ordinance did not reasonably account for the natural, scenic, historic or esthetic values of the township's environment and noted that in fact, the zoning board had reached the opposite conclusion based on competing evidence of record. The commonwealth further held that the zoning board's authority was limited to the siting of the oil and gas development. Issues relating to the mechanics of the oil and gas development were delegated to the Pennsylvania Department of Environmental Protection and other agencies and those were the proper agencies for many of the operational environmental concerns raised by the residents as the grounds for challenging the zoning ordinance.

The Commonwealth Court's decision plainly recognized the limits of the authority of municipal governments and the values implicated in making zoning decisions with respect to the location of oil and gas development, as well as the burdens placed on persons objecting to those siting decisions. The Commonwealth Court's rejected a more in depth review into the potential environmental impact of a zoning decision under the Environmental Rights Amendment. The majority decision was subject to two forceful dissents that would have, at a minimum, required a more strict review of the zoning decisions under the Environmental Rights Amendment, raising the chance of review at the Pennsylvania Supreme Court. It can be anticipated that scope of the Environmental Right Amendment's application to local government decisions will continue to be litigated in the coming years.

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.