June 6, 2019

Court Says Operating History Relevant in Zoning Permit Case

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The Pennsylvania Supreme Court upheld a borough’s denial of a conditional use permit for unconventional oil and gas development in an oil and gas overlay zone, ruling that the borough could rely on testimony from residents of an adjacent township about their adverse experiences with development by the same applicant. On May 31, 2019, in EQT Production Co. v. Borough of Jefferson Hills, the Court by 6-1 decision reversed the Commonwealth Court’s 2017 decision which had required the borough to issue the permit for a 30-acre 16-well site.

A conditional use permit is a zoning tool that requires an applicant to make a specific showing that it has satisfied objective standards and criteria set forth in the zoning ordinance. The local “governing body shall hold hearings on and decide requests for such conditional uses in accordance with such standards and criteria.” 53 P.S. § 10913.2. Where the applicant makes the required showings, it is entitled to the use as a matter of right.  

In the Jefferson Hills case, the borough heard evidence from the applicant that met the specific criteria of the ordinance; but it also heard testimony from persons living near the applicant’s previous operations in nearby Union Township that identified impacts from noise, lights, vibrations, fumes, and noxious odors that caused these persons distress and/or led to their vacating their residences at various periods. The company chose not to cross-examine these non-expert witnesses, and did not submit any rebuttal evidence to these witnesses. The borough denied the conditional use permit, relying on a provision of the zoning ordinance that in addition to demonstrating compliance with the conditions for grant of a conditional use in the ordinance, the applicant for a conditional use “shall demonstrate” that “[t]he use shall not endanger the public health, safety or welfare nor deteriorate the environment, as a result of being located on the property where it is proposed.”

EQT appealed the denial and won in both Common Pleas Court and on appeal in Commonwealth Court. These courts found the lay testimony speculative and not properly founded on the criteria of the ordinance; they held that EQT was entitled to the permit.

The Supreme Court took a different view. It found “the testimony of the Union Township objectors as to the foul stenches, intense vibrations, loud and penetrating sounds, and increased levels of traffic and air and light pollution they continuously endured, in and around their homes … both relevant and probative in establishing the potential adverse impacts which Jefferson Borough residents living near the [proposed] site reasonably could expect.” It also found that testimony about EQT’s proffer of waiver agreements to residents living near the Union Township site in response to the deleterious effects they perceived “was suggestive of a practice by EQT to not terminate activities which were adversely affecting residents living near its well sites, but, instead, to pay them so that EQT could continue those activities without alteration.”

Justice Mundy, dissenting, characterized the testimony as “anecdotal” and insufficiently linking the site conditions in Union Township to those of the proposed Jefferson Hills site. She maintained that expert testimony would be needed to demonstrate the likelihood of specific adverse effects on the Jefferson Hills community other than those “normally associated” with the oil and gas activities allowed by the ordinance.

Past operating experience is relevant to municipal evaluation of conditional use applications. Key factors in the Court’s decision are the importance of the clause in the conditional zoning ordinance requiring findings on health, safety, and welfare; and the company’s strategic decision not to challenge the lay witnesses in the borough hearing. In the future, moreover, expert testimony would clearly be helpful, if available, if parties are trying to link impacts at a prior site to predicted effects at a proposed site.

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