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Huntley & Huntley, Inc. v. Borough Council of the Borough of Oakmont

February 19, 2009

HUNTLEY & HUNTLEY, INC.
v.
BOROUGH COUNCIL OF THE BOROUGH OF OAKMONT AND THE BOROUGH OF OAKMONT, J. BRYANT MULLEN, MICHELLE MULLEN, MITCHELL J. PATTI, CHRISTINE M. PATTI, DIANE M. HAMILTON, LEO P. BIDULA AND MAUREEN M. BIDULA
APPEAL OF: BOROUGH COUNCIL OF THE BOROUGH OF OAKMONT AND THE BOROUGH OF OAKMONT
HUNTLEY & HUNTLEY, INC.
v.
BOROUGH COUNCIL OF THE BOROUGH OF OAKMONT AND THE BOROUGH OF OAKMONT, J. BRYANT MULLEN, MICHELLE MULLEN, MITCHELL J. PATTI, CHRISTINE M. PATTI, DIANE M. HAMILTON, LEO P. BIDULA AND MAUREEN BIDULA
APPEAL OF: J. BRYANT MULLEN, MICHELLE MULLEN, MITCHELL J. PATTI, CHRISTINE M. PATTI, DIANE M. HAMILTON, LEO P. BIDULA AND MAUREEN M. BIDULA



Appeal from the Order of the Commonwealth Court entered July 27, 2007 at No. 2406 CD 2006, reversing the Order of the Court of Common Pleas of Allegheny County entered December 11, 2006 at No. SA06-484 and remanding.

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

This appeal by allowance requires an examination of the preemptive scope of Pennsylvania's Oil and Gas Act. It also raises the separate question of whether the municipality should have granted a conditional use permit to drill a natural gas well on the residential property in question. This case and its companion, Range Resources-Appalachia v. Salem Township, ___ Pa. ___, ___ A.2d ___ (2009) (J-121-2008), present our first occasions to interpret the preemptive language contained in the act.

I. Background

Appellee Huntley & Huntley, Inc. ("Huntley"), an engineering company involved in the oil and gas industry in Pennsylvania, sought to extract natural gas from two parcels of land located in the Borough of Oakmont, Allegheny County (the "Borough"). In particular, the company sought to drill and operate a natural gas well on residential property owned by Mr. and Mrs. Capretto. Huntley contemplated that the well would supply natural gas from that property, as well as an adjacent residential parcel owned by Mr. and Mrs. Massaro. Both parcels are located in an R-1 (single-family) residential zoning district within the Borough, and comprise a total of approximately ten acres (hereinafter, the "Property").

On August 31, 2005, Huntley entered into commercial oil and gas lease agreements with both the Caprettos and the Massaros to allow it to conduct drilling and extraction of natural gas from the Property. The Pennsylvania Department of Environmental Protection (the "Department") issued a permit one week later, approving the drilling of the well at that location. Thereafter, the Borough solicitor sent a letter to Huntley on November 9, 2005, setting forth its position on the matter. The letter stated that the Borough solicitor, the Borough Council ("Council"), and the municipality's zoning officer were all in agreement that, under the proper interpretation of the Borough's zoning ordinance (the "Ordinance"), drilling for natural gas constituted the extraction of minerals, which is only permitted in an R-1 district as a conditional use. Thus, the solicitor directed Huntley to cease operations on the well and submit a conditional use application, which would ultimately be acted upon by Council after a hearing at which interested parties could be heard. Any approval, moreover, would be subject to such conditions as Council deemed appropriate.

In accordance with the above, Huntley perfected a conditional-use application and, on February 6, 2006, Council held a public hearing. At the hearing, Huntley's employees testified that the construction of the well would take about six weeks, would require approximately 30 trips of heavy equipment or trucks, and would be noisy. If completed according to plan, the operation would entail: a wellhead consisting of red and green pipes protruding approximately four feet above ground; a chain link fence around the wellhead with privacy screening and landscaping to conceal unsightliness; a 15,000 square foot "pad;" a 50-barrel fluid tank locatable anywhere on the property; a vent shaft protruding from the tank to vent some of the gas; pressure relief valves; a gravel access road from a nearby street to the well site; and a utility gas meter along another road bordered by a chain link fence. Following construction, the well would require regular servicing for six months, including the evacuation of water from the fluid tank, which would involve a truck travelling through the neighborhood to the site.

Huntley estimated that 75 percent of the gas extracted from the well would be sold to a public utility, with the remainder to be consumed by the Caprettos and Massaros.

Although the operation would be predominantly commercial -- which ordinarily would not be permitted in the R-1 district -- Huntley asserted that, consistent with the Borough solicitor's correspondence, the proposed use would constitute the extraction of minerals, and thus, it was allowed as a conditional use under the Borough's zoning code.*fn1 Alternatively, Huntley contended that the Borough was preempted from restricting the location of the operation by the Oil and Gas Act (the "Act").*fn2 Section 602 of the Act provides:

Except with respect to ordinances adopted pursuant to the . . . Municipalities Planning Code, and the . . . Flood Plain Management Act, all local ordinances and enactments purporting to regulate oil and gas well operations regulated by this act are hereby superseded. No ordinances or enactments adopted pursuant to the aforementioned acts shall contain provisions which impose conditions, requirements or limitations on the same features of oil and gas well operations regulated by this act or that accomplish the same purposes as set forth in this act. The Commonwealth, by this enactment, hereby preempts and supersedes the regulation of oil and gas wells as herein defined.

58 P.S. §601.602 (emphasis added to highlight language supplied by a 1992 legislative amendment). A separate provision of the Act places restrictions on the location of wells. See 58 P.S. §601.205.

Two groups of individuals, most of whom lived near the Property, objected to Huntley's application. One group, represented by counsel, made several specific objections to the application, including that: Council lacked jurisdiction; only solid crystalline substances qualify as minerals and, hence, natural gas does not constitute a mineral; and the proposed use is a prohibited commercial use in an R-1 residential zone. The second group of objectors, not represented by counsel, protested that the use would have adverse safety, noise, and traffic effects on the community.

Council eventually concluded -- contrary to the view reflected in the Borough's prior correspondence -- that the proposed use did not fall within the zoning ordinance's definition of "extraction of minerals" so as to constitute a conditional use within an R-1 district. In reaching this determination, Council reasoned that extraction of natural gas does not constitute a mining process and that natural gas is not a mineral. Acknowledging that the zoning ordinance lacked any specific definition of "mineral," Council relied on its view that Pennsylvania common law has applied a rebuttable presumption in the context of private deed conveyances that the term "mineral" does not include oil or gas. See Council's Findings of Fact and Conclusions of Law at 8 (citing Dunham & Short v. Kirkpatrick, 101 Pa. 36 (1882), and Highland v. Commonwealth, 400 Pa. 261, 161 A.2d 390 (1960)). Additionally, Council stated that, because the extraction of natural gas is not a ...


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