On July 22, 2010, the Commonwealth Court of Pennsylvania decided Penneco Oil Company, Inc. v. The County of Fayette, 4 A.3d 722 (Pa. Cmwlth. 2010). Penneco is the first reported appellate decision on the topic of the preemption of local zoning regulations by the Oil and Gas Act (the “Act”) since the Pennsylvania Supreme Court’s companion opinions of Huntley & Huntley, Inc. v. Borough Council of the Borough of Oakmont, 964 A.2d 855 (Pa. 2009) and Range Resources v. Salem Township, 964 A.2d 869 (Pa. 2009).
Based upon preemption by the Act, Penneco challenged the validity of the Fayette County Zoning Ordinance. After the County was granted summary judgment by the trial court, Penneco appealed to the Commonwealth Court. Penneco argued to the Commonwealth Court that the zoning ordinance’s provisions permitting oil and gas drilling in certain zoning districts by special exception only were preempted. Additionally, Penneco asserted that the zoning ordinance’s stated criteria for granting a special exception for oil and gas drilling, which authorized the zoning hearing board to attach conditions to protect the public’s health, safety and welfare, were preempted.
Following a comprehensive analysis of the Supreme Court’s holdings in Huntley and Range Resources, the Commonwealth Court rejected Penneco’s claims of preemption. The Commonwealth Court stated the central issue to be decided was whether provisions of the challenged zoning ordinance “reflect an attempt by Fayette County to enact a comprehensive regulatory scheme relative to the oil and gas development within the County as in [Range Resources] or the provisions thereof are merely traditional zoning regulations that identify which uses are permitted in different areas of the locality, even if such regulations preclude oil and gas drilling in certain zones as in Huntley.” The Commonwealth Court then ruled that the special exception criteria regulating oil and gas operations did not pertain to the technical aspects of well functioning and matters ancillary thereto, but rather were traditional zoning regulations, and therefore not preempted by the Act. Further, the Commonwealth Court found that while the zoning ordinance granted the zoning hearing board the discretion to attach additional conditions, such discretion was not unfettered or unbridled.
Although the facts of the Penneco case are very similar to those presented in Huntley, the Penneco court’s acceptance of special exceptions and the Huntley court’s similar acceptance of conditional uses sets up future challenges by oil and gas companies to the actual conditions attached to special exception and conditional use approvals and whether those conditions pertain to the technical aspects of well functioning, thus being preempted.
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