Opinion ID: 1490138
Heading Depth: 2
Heading Rank: 2

Heading: Oil and Gas Act Preemption

Text: Appellants argue that the very essence of zoning is the designation of areas where different uses are permitted, subject to the appropriate level of municipal review. They state that, with the Oil and Gas Act, the Legislature distinguished the technical features of oil and gas operations, which the Act regulates and which the Department oversees statewide, from local zoning authority under the MPC, which the Act preserves. Thus, Appellants claim that the Commonwealth Court's decision was flawed in that it failed to recognize this how-versus-where distinction. In support of their contention, Appellants point to state-preemption provisions of other statutessuch as the Solid Waste Management Act, the Surface Mining Act, and the Non-Coal Actthat they maintain are similar to the preemption language in Section 602, and aver that a substantial body of decisional law from the Commonwealth Court interpreting such statutes has recognized that these provisions preempt local governance of operations, but leave local authority for site selection unencumbered. See Brief for Appellants at 23-25 (citing cases). Appellants emphasize their point in this regard by asserting that, even in the three areas of the law where the Legislature has preempted all local regulation, namely, alcoholic beverages, banking, and anthracite strip mining, see Hydropress Envtl. Servs. v. Township of Upper Mt. Bethel, 575 Pa. 479, 490, 836 A.2d 912, 918 (2003) (opinion announcing the judgment of the Court) (quoting Council of Middletown Township v. Benham, 514 Pa. 176, 182, 523 A.2d 311, 314 (1987)), municipalities retain the power to designate suitable districts for those uses. See, e.g., Appeal of Sawdey, 369 Pa. 19, 25, 85 A.2d 28, 31 (1951) (indicating, in dicta, that a zoning ordinance may exclude taverns from a residential area, albeit the regulation of liquor sales and distribution is preempted by state law). As for the Commonwealth Court's determination that Nalbone could not be relied upon due to the 1992 amendment to Section 602, Appellants maintain that the court misconstrued the intent of that amendment. According to Appellants, the General Assembly's goal was merely to clarify, in the wake of certain judicial decisions, that the Commonwealth was preempting all local regulation of the operational facets of oil and gas enterprises, whether the ordinances in question were enacted before or after the effective date of the amendment. However, Appellants argue that the Legislature was not attempting to preempt zoning ordinances to the extent they designate appropriate districts in which oil and gas operations may be located. Rather, Appellants suggest that the setback and other requirements of Section 205, see 58 P.S. § 601.205, are only intended as a minimum level of protection for existing buildings, national landmarks, bodies of water, and other environmentally sensitive areas. The Department articulates a position in substantial conformity with the above, developing that the technical aspects of well operations covered by the Act include such things as safety devices, the plugging of wells, well site restoration, and casing requirements aimed at protecting groundwater, see 58 P.S. §§ 601.206-601.210, and that these provisions are supplemented by the Department's regulatory framework found at 25 Pa.Code, Chapter 78, which addresses these topics as well as environmental-protection performance standards, temporary pits and tanks, storage of production fluids, disposal of drill cuttings and other residual waste, and bonding requirements. See, e.g., 25 Pa.Code §§ 78.51-66, 78.71-111, 78.301-313. Thus, according to the Department, when the Legislature amended Section 602 of the Act to clarify that zoning ordinances enacted under the MPC may not 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 the Act, it simply intended to foreclose municipalities from legislating on the technical aspects of well operations or enacting ordinances that purport to establish permitting, bonding, or registration requirements for oil or gas wells. This, in the Department's view, does not equate to an evisceration of a political subdivision's core municipal function of designating different areas of the municipality for different uses. See 53 P.S. § 10105 (reflecting that the legislative purposes behind the MPC include allowing localities to promote the safety, health, and morals of the community, to accomplish coordinated development, and to guide uses of land and structures). See generally Gary D. Reihart, Inc. v. Carroll Township, 487 Pa. 461, 466, 409 A.2d 1167, 1170 (1979) (The [MPC] is the Legislature's mandate for the unified regulation of land use and development.). Huntley, on the other hand, indicates that the Commonwealth Court properly held that the Act preempts local zoning ordinances that attempt to regulate the location and operation of natural gas wells. In reaching this holding, Huntley argues, the court applied the plain language of the Act, which clearly regulates where natural gas wells may or may not be situated, thereby preempting local regulation of this feature. Huntley maintains that the cases cited by Appellants that interpret other state regulatory statutes are distinguishable because the preemption language at issue in those disputes either was not as explicit as that contained in Section 602 of the Act, or expressly allowed for supplemental local regulation. Huntley also emphasizes that the Act limits a municipality's authority to enact zoning regulations that either impose conditions on the same features of oil and gas operations, or accomplish the same purposes as the Act. In this regard, Huntley notes that, even if this Court were to determine that the location of the well is not a feature, we must still consider whether the challenged zoning restriction accomplishes the same purposes as set forth in the Act, 58 P.S. § 601.602, a topic that Huntley claims Appellants and the Department fail to address. Huntley proffers that the Act's purposes, which are carried out through the departmental permitting process, include allowing for the optimal development of the Commonwealth's oil and gas resources consistent with the protection of the health, safety, environment, and property of its citizens, and protecting the property rights and safety of persons residing in areas where oil or gas exploration, development, storage, or production occurs. See 58 P.S. § 601.102; see also id., § 601.205 (pertaining to well location restrictions). Finally, Huntley avers that, even if this Court were to conclude that the Act is ambiguous, its legislative history demonstrates that local regulation of the location of natural gas wells is preempted. Municipalities are creatures of the state and have no inherent powers of their own. Rather, they possess only such powers of government as are expressly granted to them and as are necessary to carry the same into effect. City of Phila. v. Schweiker, 579 Pa. 591, 605, 858 A.2d 75, 84 (2004) (quoting Appeal of Gagliardi, 401 Pa. 141, 143, 163 A.2d 418, 419 (1960)). Even where the state has granted powers to act in a particular field, moreover, such powers do not exist if the Commonwealth preempts the field. See United Tavern Owners of Phila. v. Philadelphia Sch. Dist., 441 Pa. 274, 279, 272 A.2d 868, 870 (1971). The preemption doctrine establishes a priority between potentially conflicting laws enacted by various levels of government. Under this doctrine, local legislation cannot permit what a state statute or regulation forbids or prohibit what state enactments allow. See generally Liverpool Township v. Stephens, 900 A.2d 1030, 1037 (Pa.Cmwlth.2006) (quoting Duff v. Northampton Township, 110 Pa. Cmwlth. 277, 287, 532 A.2d 500, 504 (1987)). Additionally, a local ordinance may not stand as an obstacle to the execution of the full purposes and objectives of the Legislature. [6] Preemption of local laws may be implicit, as where the state regulatory scheme so completely occupies the field that it appears the General Assembly did not intend for supplementation by local regulations. [7] It may also be express, as where the state enactment contains language specifically prohibiting local authority over the subject matter. As applied presently, Section 602 of the Oil and Gas Act contains express preemption language. That language totally preempts local regulation of oil and gas development except with regard to municipal ordinances adopted pursuant to the MPC as well as the Flood Plain Management Act. With regard to such ordinances, the express preemption command is not absolute. Accordingly, our interpretive task is to examine the particular wording of this provision, together with any other relevant aspect of the statute, in order to determine whether the Legislature intended to leave room for localities to designate certain zoning districts (such as residential ones) where oil and gas wells may be prohibited as a general matter. As this is a question of law, we exercise de novo review that is plenary in scope. See Gregg v. V-J Auto Parts, 596 Pa. 274, 284, 943 A.2d 216, 221 (2007). Although, as noted, the preemption directive applicable to MPC-enabled ordinances is more limited than that pertaining to local enactments generally, it is nonetheless quite broad. Such 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. As Huntley emphasizes, this edict reflects two independent proscriptive components, both of which must be given effect. See 1 Pa.C.S. § 1921(a). As to the former, the closely-contested question centers on whether the location of a well in a particular zoning district constitutes a feature of a natural gas well operation that is regulated by the Oil and Gas Act. [8] On this topic, although Huntley develops that the Act places some restrictions on the siting of wells-most notably, setback requirements designed to prevent damage to existing water wells, buildings and bodies of water, see 58 P.S. § 601.205(a, b), as well as measures intended to protect attributes of Pennsylvania's landscape such as parks, forests, gamelands, scenic rivers, natural landmarks, and historical and archeological sites, see id., § 601.205(c)-it does not automatically follow that the placement of a natural gas well at a certain location is a feature of its operation. The Statutory Construction Act of 1972 commands that words and phrases should ordinarily be understood according to their common and approved usage. See 1 Pa.C.S. § 1903(a). [9] Feature means a prominent or conspicuous characteristic, RANDOM HOUSE WEBSTER'S COLLEGE DICTIONARY 481 (2d ed. 2000), and operation refers to a process and manner of functioning, see id. at 929. Although one could reasonably argue that a well's placement at a certain location is one of its features in a general sense, it is not a feature of the well's operation because it is not a characteristic of the manner or process by which the well is created, functions, is maintained, ceases to function, or is ultimately destroyed or capped. Therefore, we find the resolution of this issue as advanced by Appellants and the Department to be persuasive and, accordingly, conclude that, absent further legislative guidance, Section 602's reference to features of oil and gas well operations regulated by this act pertains to technical aspects of well functioning and matters ancillary thereto (such as registration, bonding, and well site restoration), rather than the well's location. Cf. Borough of Pottstown v. Pennsylvania Mun. Ret. Bd., 551 Pa. 605, 610, 712 A.2d 741, 743 (1998) (explaining that, where an administrative agency issues an interpretive rule construing a statute within its area of expertise, such a rule is viable so long as it tracks the meaning of the underlying statute). [10] This leads to the second inquiry: whether the challenged zoning restrictions accomplish the same purposes as set forth in the Act. The as set forth qualifier signifies that this Court should not attempt to glean the Act's objectives from its substantive provisions, but instead should consult the list of purposes enumerated in the Act itself, namely, to: (1) Permit the optimal development of the oil and gas resources of Pennsylvania consistent with the protection of the health, safety, environment and property of the citizens of the Commonwealth. (2) Protect the safety of personnel and facilities employed in the exploration, development, storage and production of natural gas or oil or the mining of coal. (3) Protect the safety and property rights of persons residing in areas where such exploration, development, storage or production occurs. (4) Protect the natural resources, environmental rights and values secured by the Pennsylvania Constitution. 58 P.S. § 601.102. By way of comparison, the purposes of zoning controls are both broader and narrower in scope. They are narrower because they ordinarily do not relate to matters of statewide concern, but pertain only to the specific attributes and developmental objectives of the locality in question. However, they are broader in terms of subject matter, as they deal with all potential land uses and generally incorporate an overall statement of community development objectives that is not limited solely to energy development. See 53 P.S. § 10606; see also id., § 10603(b) (reflecting that, under the MPC zoning ordinances are permitted to restrict or regulate such things as the structures built upon land and watercourses and the density of the population in different areas). See generally Tammy Hinshaw & Jaqualin Peterson, 7 SUMM. PA. JUR.2D PROPERTY § 24:12 (A zoning ordinance reflects a legislative judgment as to how land within a municipality should be utilized and where the lines of demarcation between the several use zones should be drawn.). More to the point, the intent underlying the Borough's ordinance in the present case includes serving police power objectives relating to the safety and welfare of its citizens, encouraging the most appropriate use of land throughout the borough, conserving the value of property, minimizing overcrowding and traffic congestion, and providing adequate open spaces. See Ordinance § 205-2(A). There is some overlap between these goals and the purposes set forth in the Oil and Gas Act, most particularly in the area of protecting public health and safety. As we read the ordinance, however, the most salient objectives underlying restrictions on oil and gas drilling in residential districts appear to be those pertaining to preserving the character of residential neighborhoods, see Ordinance § 205-3(A)(7), and encouraging beneficial and compatible land uses. Id., § 305-3(A)(10). In this regard, the highest appellate court of one of our sister states has observed as follows: While the governmental interests involved in oil and gas development and in land-use control at times may overlap, the core interests in these legitimate governmental functions are quite distinct. The state's interest in oil and gas development is centered primarily on the efficient production and utilization of the natural resources in the state. A county's interest in land-use control, in contrast, is one of orderly development and use of land in a manner consistent with local demographic and environmental concerns. Given the rather distinct nature of these interests, we reasonably may expect that any legislative intent to prohibit a county from exercising its land-use authority over those areas of the county in which oil development or operations are taking place or are contemplated would be clearly and unequivocally stated. We, however, find no such clear and unequivocal statement of legislative intent in the Oil and Gas Conservation Act. Board of County Comm'rs of La Plata County v. Bowen/Edwards Assocs., Inc., 830 P.2d 1045, 1057 (Colo.1992). We find the Colorado court's emphasis on a political subdivision's land-use authority appropriate here because, as discussed, the express preemptive language of Section 602 pertains to features of well operations and the Act's stated purposes. This limitation on preemption regarding MPC-enabled legislation appears to reflect the General Assembly's recognition, as Appellants contend, that, while effective oil and gas regulation in service of the Act's goals may require the knowledge and expertise of the appropriate state agency, the MPC's authorization of local zoning laws is provided in recognition of the unique expertise of municipal governing bodies to designate where different uses should be permitted in a manner that accounts for the community's development objectives, its character, and the suitabilities and special nature of particular parts of the community. 53 P.S. § 10603(a), quoted in Brief for Appellants at 22. Accordingly, and again, absent further legislative guidance, we conclude that the Ordinance serves different purposes from those enumerated in the Oil and Gas Act, and hence, that its overall restriction on oil and gas wells in R-1 districts is not preempted by that enactment. [11]