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Range Resources - Appalachia, LLC v. Salem Township

February 19, 2009

RANGE RESOURCES - APPALACHIA, LLC (FORMERLY GREAT LAKES ENERGY PARTNERS), PENNECO OIL COMPANY, CB ENERGY, INC., AND INDEPENDENT OIL AND GAS ASSOCIATION OF PENNSYLVANIA, APPELLEES
v.
SALEM TOWNSHIP, COMMONWEALTH OF PENNSYLVANIA, APPELLANT



Appeal from the Order of the Commonwealth Court entered August 9, 2007 at No. 1866 CD 2006 affirming the Order of the Court of Common Pleas of Westmoreland County entered September 8, 2006 at No. 8126 of 2005.

The opinion of the court was delivered by: Mr. Justice Saylor

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, GREENSPAN, JJ.

ARGUED: September 9, 2008

OPINION

The primary question raised in this appeal by allowance pertains to the preemptive scope of Pennsylvania's Oil and Gas Act. As such, this decision is issued in conjunction with our disposition in Huntley & Huntley, Inc. v. Borough Council of the Borough of Oakmont, ___ Pa. ___, ___ A.2d ___ (2009), which also addresses the same issue within the context of a somewhat different set of facts.

In 2005, Appellant Salem Township, Westmoreland County (the "Township") enacted a general ordinance directed at regulating surface and land development associated with oil and gas drilling operations. Shortly thereafter, Appellees, oil and gas producers, commenced an action in the common pleas court, seeking declarations that: the ordinance was invalid due to non-compliance with the Municipalities Planning Code ("MPC") (Count I); the ordinance's regulations were preempted by Pennsylvania's Oil and Gas Act (the "Act") (Count II);*fn1 the regulations were also preempted by other state and federal enactments (Counts III and IV); the regulations violated due process (Count V); and they effected a regulatory taking (Count VI). Only Count II, relating to Oil and Gas Act preemption, is relevant to this appeal.

After pleadings closed, the parties filed cross-motions for summary judgment. In July 2006, while these motions were pending, the Township enacted, for the first time, comprehensive subdivision and land development legislation, thereby supplanting the earlier ordinance. This new legislation was adopted pursuant to the MPC, and included two appendices. Appendix B (hereinafter, the "Ordinance") comprised a wholesale re-enactment of the oil and gas regulations found in the prior legislation. In addition to its substantive restrictions on oil and gas drilling activities, the Ordinance established a fee for permit applications and provided for criminal penalties upon failure to comply with its terms. The parties stipulated that any decision on the pending motions for summary judgment would affect the validity of the replacement oil and gas regulations contained in the Ordinance, and Appellees withdrew Count I of the complaint.

Acting on the pending motions, the trial court granted partial summary judgment in favor of Appellees on the basis that the Act preempted the Township's oil and gas regulations. The court additionally granted the Township's application for a determination of finality under Rule of Appellate Procedure 341(c). See Pa.R.A.P. 341(c). The Township then appealed to the Commonwealth Court.

The trial court issued an opinion setting forth the rationale for its conclusion that each of the oil and gas regulations challenged in the complaint was preempted by state law. In particular, the court found that the Ordinance requires a permit for all drilling-related activities; regulates the location, design, and construction of access roads, gas transmission lines, water treatment facilities, and well heads; establishes a procedure for residents to file complaints regarding surface and ground water; allows the Township to declare drilling a public nuisance and to revoke or suspend a permit; establishes requirements for site access and restoration; and provides that any violation of the Ordinance is a summary offense that can trigger fines and/or imprisonment. The court then summarized some relevant aspects of the Act's "comprehensive regulatory scheme with regard to the development of oil and gas and coal," including those pertaining to such things as casing requirements, protection of water supplies, safety devices, and the plugging of wells. Great Lakes Energy Partners v. Salem Township, No. 8126 of 2005, slip op. at 6 (C.P. Westmoreland Sept. 8, 2006) (citing 58 P.S. §§601.207-601.210, and Commonwealth v. Whiteford, 884 A.2d 364, 368 (Pa. Cmwlth. 2005)).

The trial court also enumerated the purposes of the Act as stated by the General Assembly, including: to allow the optimal development of oil and gas resources consistent with the protection of citizens' health, safety, environment, and property; to protect the safety of personnel and facilities employed in gas and oil exploration, development, and storage; to protect the safety and property rights of persons residing in areas where such activities occur; and to protect natural resources. See id. at 6-7 (quoting 58 P.S. §601.102). In light of all of the above, the court found that the Ordinance "places conditions, requirements, or limitations on some of the same features of oil and gas well operations regulated by the Oil and Gas Act," id. at 7, and indeed, is even more stringent than the Act with regard to the manner in which many activities are regulated.*fn2 The court suggested that the Township was attempting, through the Ordinance, to impose requirements with regard to the location of activities necessarily incident to the development of wells, and that these types of restrictions fall within the purview of the Act and the oversight of the Department of Environmental Protection (the "Department"). See id. at 7-8. The trial court ultimately concluded as follows:

Although the township expresses laudable goals in its concern for the health, safety and property of its citizens, the hazardous nature of oil and gas well drilling operations, and the potential for an adverse impact on environmental resources, those purposes have been addressed by the legislature in its passage of the act. While the township may have traditionally been able to pursue such purposes, once the state has acted pursuant to those purposes, the township is foreclosed from exercising that police power. I would add that the comprehensive nature of the statutory scheme regulating oil and gas well operations reflects a need for uniformity so that the purposes of the legislature can be accomplished.

Id. at 8 (citations omitted).

The Commonwealth Court affirmed. See Great Lakes Energy Partners v. Salem Township, 931 A.2d 101 (Pa. Cmwlth. 2007) (en banc). The court noted that the Township's primary contention on appeal was that the trial court had erred in concluding that, because some of the Ordinance provisions conflicted with the Act, the entire ordinance was invalid. Specifically, the Township maintained that the court should have examined the Ordinance on a provision-by-provision basis to ascertain whether any provisions were severable. The Commonwealth Court did not directly address this claim, but instead, affirmed based on the analysis set forth in the trial court's opinion. See id. at 103-04 & n.8.

In seeking permission to appeal to this Court, the Township questioned whether the Act's preemptive scope is as broad as the trial court indicated -- and particularly, whether the items regulated by the Ordinance, including oil and gas well access roads, gas transmission lines, road maintenance agreements, and the location of water cleaning facilities associated with coal bed methane operations, fall under the rubric of "features of oil and gas well operations" for purposes of Section 602 of the Act. This Court allowed appeal here, as in Huntley, to address the topic of Oil and Gas Act preemption. We additionally invited the Department to file an amicus brief articulating its view of whether the Act and ...


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