Compliance: Battles over hydraulic fracturing moving to the hinterland

Lessons from Pennsylvania and Illinois cases and why they're significant

The Pennsylvania Supreme Court decided an eagerly anticipated case (PDF) in mid-December 2013 involving hydraulic fracturing and local regulations of the process. The Pennsylvania legislature had enacted a statute allowing and providing for the regulation of hydraulic fracturing within the Commonwealth and specifically preempted local governmental units from enacting zoning laws that could restrict or prohibit hydraulic fracturing operations within the local government’s jurisdiction. Robinson Township challenged the pre-emption restriction of local government’s authority under an Environmental Rights Amendment to the Pennsylvania Constitution.

The Pennsylvania Supreme Court decided that case on a 4-2 vote with three of the justices finding the statute did violate the Environmental Rights Amendment to the Pennsylvania Constitution. The fourth justice found the statute unconstitutional on more traditional, substantive due process grounds. The dissenting justices also each analyzed substantive due process and found the statute constitutional.

This case is significant for a variety of reasons. First, the Pennsylvania statute is similar to others laws in New York and Ohio, and similar cases are pending in those states’ highest courts. This case also highlights the battles associated with hydraulic fracturing will continue at local levels of government Pennsylvania’s Environmental Rights Amendment (PA. Const. article 1, Section 7) provides only that the “people have a right to clean air, pure water, and to preservation of the natural, scenic, historic and esthetic values of the environment.” Like many states, Pennsylvania’s Constitution provides that holds Pennsylvania’s “natural resources” in trust for the use of all of the citizens of the Commonwealth. Pennsylvania’s Constitution does not provide individuals or separate units of local government with specific environmental rights, and the Pennsylvania Supreme Court stretched Pennsylvania’s Environmental Rights Amendment to create local rights, where none were explicitly provided in the Commonwealth’s Charter. From a constitutional perspective, it is compelling that three justices analyzed the case on substantive due process grounds, while three justices created substantive rights based on an expansive interpretation of the public trust.

Contrast that constitutional provision with a similar constitutional provision in Illinois. (See Art. XI, Ill. Const.) There the legislature is saddled with the “responsibility” of providing healthful environment “for the benefit of this and future generations,” but the Illinois Constitution provides that “individuals” have the right to enforce “this right against any party, governmental or private, through appropriate legal proceedings, subject to reasonable limitation and regulation as the General Assembly may provide by law.” The Illinois Constitution provides for protection of the common environmental trust, but individuals — and by extension — local units of government have the right to challenge the Illinois Hydraulic Fracturing Regulatory Act through legal proceedings, albeit “subject to reasonable limitation and regulation as the General Assembly” provided in the law.

Because Illinois’ Constitution is clearer both as to rights and standards of review, the question in Illinois will only be one of substantive due process. When the Illinois Hydraulic Regulatory Act is tested for constitutional soundness, the Illinois Supreme Court will likely construe the statute as constitutional because the Illinois General Assembly provided the statute with constitutionally protected public participation features, and enforceable regulatory and substantive principles designed to protect individuals’ and due process.

Even if the statute in Illinois is held constitutional, operators in Illinois have another hurdle to negotiate, and one that is highlighted in an unpublished opinion issued by the Illinois Appellate Court in January 2012. While unpublished opinions have no precedential value in Illinois, the case of Tri-Power Resources, Inc. v. City of Carlyle has received so much attention that its value must be recognized. It is a decision of the Fifth District Appellate Court in Illinois, which sits in southern Illinois, in the heart of oil and gas country and in close proximity to the New Albany Shale formations reported to contain oil and natural gas in rock formations suitable for hydraulic fracturing.

The Illinois General Assembly did not pre-empt local government’s authority to regulate aspects of hydraulic fracturing within local each jurisdiction. Drafters and commentators were of the view that Home Rule jurisdictions would likely enact ordinances that would prohibit, confine or otherwise condition hydraulic fracturing operations within their respective jurisdictions. It was widely held that there would be few hydraulic fracturing operations in many downstate towns of cities of any reasonable size.

However, in Tri-Power, the Appellate Court held that a non-home rule unit of local government had the authority to prohibit the drilling or operation of an oil or gas well within its jurisdiction. According to the court, Section 13 of the Illinois Oil and Gas Act, non-home rule jurisdictions have “limited authority” to regulate drilling or operation of an oil or gas well within its jurisdiction, even if the local jurisdiction was not authorized to permit such activity. While the statute provides that non-home rule jurisdiction can only impose reasonable restrictions on oil and gas drilling within its jurisdiction, the court noted that the statue also provided local governments with authority to provide “official consent.” According to this court, the authority to provide consent is tantamount to the authority to deny permission, and accordingly held that a non-home rule unit of local government had the authority to prohibit the drilling of an oil or gas well within its non-home rule jurisdiction.

The Pennsylvania Supreme Court had to rely on a strained interpretation of Pennsylvania’s Constitution to reach its result. Indeed, it is not clear that Pennsylvania’s law pre-empting local regulation would have been held unconstitutional based strictly on traditional due process analysis. And while Illinois’s statute should be held constitutional by the Illinois Supreme Court, operators should be prepared to respond to the analysis articulated by the Fifth District Appellate Court in the unpublished Tri-Power case and with the argument that each permitted operator in Illinois must “comply with all provisions of this Act, and all other applicable local, State and federal laws, rules and regulations in effect at the time the permit is issued.”

Local interests have every reasonable right to expect safe operations associated with hydraulic fracturing operations — a process that has been in existence in this country for well over for 60 years without any remarkable injury. Those local rights should not be needlessly augmented out of unjustified fear apparently given voice by some courts. And operators, let’s be cognizant of local interests fears and be prepared to arguable sensibly, based on a good record of compliance, safety and transparency.  

Contributing Author

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William J. Anaya

Bill Anaya is an environmental Lawyer licensed in Illinois and Indiana and heads Arnstein &...

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