SUSAN PARADISE BAXTER,
Plaintiff Pennsylvania General Energy Company, LLC, ("PGE") filed this action challenging the constitutionality, validity and enforceability of an ordinance adopted by Grant Township that established a so-called Community Bill of Rights. Plaintiff seeks injunctive and declaratory relief, as well as damages, against Defendant Grant Township on the grounds that the Ordinance purports to strip Plaintiff of its constitutional rights. Additionally, Plaintiff contends the Ordinance is in direct conflict with a number of Pennsylvania statutes and is therefore preempted. Defendant Grant Township has filed a counterclaim alleging that by challenging the Ordinance, PGE is violating the inalienable rights of the people of its Township to "local community self government." Presently before this Court are the cross motions for judgment on the pleadings, which have been fully briefed.
Plaintiff PGE is a Pennsylvania limited liability company with offices in Warren, Pennsylvania. ECF No. 5, Amended Complaint, ¶ 1. PGE is in the business of exploration and development of oil and gas. Id. PGE's exploration and development activities include drilling and operating oil and natural gas wells and managing brine and produced fluids generated from operating wells. Id. at 18. The operation of oil and gas wells unavoidably requires engaging in the activity of "disposing of waste from oil and gas extraction" since any producing hydrocarbon well produces oil and gas materials, such as production brine, which must be stored at the well site temporarily until they are removed by the well operator. Id. at ¶ 28.
In 1997, Pennsylvania General Energy Corp., PGE's predecessor in interest, put into production a deep gas well in Grant Township on property known as the Yanity Farm pursuant to Well Permit No. 37-063-31807-00-00 (hereinafter referred to as the "Yanity Well") issued by the Pennsylvania Department of Environmental Protection. Id. at ¶ 19. PGE currently has tanks located on the Yanity Well site used for the storage of oil and gas materials. Id. at ¶ 20. PGE intends to use the Yanity Well to inject produced fluids from its other oil and gas development operations. Id. at ¶ 26. PGE operates seven other currently producing conventional hydrocarbon wells in Grant Township, all of
Defendant Grant Township, a Second Class Township located in Indiana County, Pennsylvania (Id. at ¶ 2), adopted an Ordinance on June 3, 2014, that bears a title reading an ordinance "establishing a Community Bill of Rights for the people of Grant Township, Indiana County, Pennsylvania, which prohibits activities and projects that would violate the Bill of Rights and which provides for enforcement of the Bill of Rights" (hereinafter, the "Community Bill of Rights Ordinance" or "Ordinance"). Id. at 7. The Ordinance lays out the framers' beliefs that corporations should not have more rights than the people of its community and that the people have the right to regulate all activities pursuant to a right of local self government. ECF No. 5-1, page 1.
Federal Rule of Civil Procedure 12(c) provides that "after the pleadings are closed — but early enough not to delay trial — a party may move for judgment on the pleadings." Judgment on the pleadings is appropriate only when the movant "`clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law.'" Minnesota Lawyers Mut. Ins. Co. v. Ahrens, 432 Fed.Appx. 143, 147 (3d Cir.2011) quoting Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir.2008).
"The standard for deciding a motion for judgment on the pleadings filed pursuant to Federal Rule of Civil Procedure 12(c) is not materially different from the standard for deciding a motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6)." Zion v. Nassan, 283 F.R.D. 247, 254 (W.D.Pa.2012). Either motion may be used to seek the dismissal of a complaint based on a plaintiffs "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6), (h)(2)(B). The only difference between the two motions is that a Rule 12(b) motion must be made before a "responsive pleading" is filed, whereas a Rule 12(c) motion can be made "[a]fter the pleadings are closed." A court presented with a motion for judgment on
A motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) must be viewed in the light most favorable to the plaintiff and all the well-pleaded allegations of the complaint must be accepted as true. Erickson v. Pardus, 551 U.S. 89, 93-94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). A complaint must be dismissed pursuant to Rule 12(b)(6) if it does not allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (rejecting the traditional 12(b)(6) standard set forth in Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). See also Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (specifically applying Twombly analysis beyond the context of the Sherman Act).
A Court need not accept inferences drawn by a plaintiff if they are unsupported by the facts as set forth in the complaint. See California Pub. Employees' Ret. Sys. v. The Chubb Corp., 394 F.3d 126, 143 (3d Cir.2004) citing Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.1997). Nor must the Court accept legal conclusions set forth as factual allegations. Twombly, 550 U.S. at 555, 127 S.Ct. 1955, citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). See also McTernan v. City of York, Pennsylvania, 577 F.3d 521, 531 (3d Cir.2009) ("The tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions."). A plaintiff's factual allegations "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 556, 127 S.Ct. 1955, citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed.2004). Although the United States Supreme Court does "not require heightened fact pleading of specifics, [the Court does require] enough facts to state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955.
In other words, at the motion to dismiss stage, a plaintiff is "required to make a `showing' rather than a blanket assertion of an entitlement to relief." Smith v. Sullivan, 2008 WL 482469, at *1 (D.Del. Feb. 19, 2008) quoting Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir.2008). "This `does not impose a probability requirement at the pleading stage,' but instead `simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element.'" Phillips, 515 F.3d at 234, quoting Twombly, 550 U.S. at 556 n. 3, 127 S.Ct. 1955.
The Third Circuit has expounded on the Twombly/Iqbal line of cases:
Defendant moves for judgment on the pleadings on its single counterclaim, which alleges that by bringing this lawsuit challenging the constitutionality, validity and enforceability of the Ordinance, PGE is violating the rights of the
In its motion for judgment on the pleadings as to this counterclaim, Defendant summarizes its position:
ECF No. 53, page 4 (italics in original).
According to Defendant, the alleged right of local community self-government includes the right of the people to change their system of government if it has been rendered incapable of protecting their civil and political rights. Defendant explains that after "... recognizing the existence of [certain] constraints on their own municipal government, the people of Grant Township decided to change their system of government" and the people "did so through the adoption of the Ordinance, which envisions a new system of local governance free of those constraints." ECF No. 59, pages 1-2. Defendant further describes:
Id.
Defendant claims the right to local community self government is deeply rooted in our nation's history and tradition. ECF No. 53, page 9. In support of its alleged right to local community self government, Defendant undertakes a lengthy examination of historical documents such as the Mayflower Compact, the Exeter Compact of 1639, the Articles of Confederation for the United Colonies of 1643, and the Declaration of Independence, and analyzes historical events leading up to the American Revolution, such as the Second Continental Congress, the British Parliament's enactment of the Currency Acts in 1764, the Stamp Act Riots in 1765, and the Boston Tea Party.
Defendant seeks judgment upholding its Ordinance based solely upon these historical events. Defendant provides no precedential statute or constitutional provision authorizing its action other than its assertion that Plaintiff has no rights — from contracting to do business in Grant Township to bringing a lawsuit to complain about an ordinance — because it is not a person. This view is contrary to over one hundred years of Supreme Court precedent that establishes that corporations are considered "persons" under the United States Constitution. In a remarkably similar case in this district, District Judge Donetta Ambrose held:
Pennsylvania Ridge Coal LLC v. Blaine Township, C.A. No. 08-1452P, ECF No. 30 (April 8, 2009). More recently, a federal district court in New Mexico examined a local ordinance in the face of several constitutional challenges and held:
Swepi, LP v. Mora County, New Mexico, 81 F.Supp.3d 1075, 1171-72 (D.N.M.2015) (some internal citations omitted).
Defendant has provided no legal precedent to the contrary. Without a legal basis for its actions, as opposed to historical documents and events, this Court cannot provide the relief Grant Township seeks. Defendant's motion for judgment on the pleadings will be denied.
As laid out in the Amended Complaint, Plaintiff raises thirteen separate causes of action. Plaintiff claims the Ordinance, as a whole, violates the Supremacy Clause, the Equal Protection Clause, the Petition Clause of the First Amendment, the Contract Clause, and both the substantive and procedural components of the Due Process Clause of the United States Constitution. Plaintiff also claims the entire Ordinance is preempted by Pennsylvania's Second Class Township Code, the Oil and Gas Act, the Limited Liability Companies law, and the Sunshine Act and violates state law as an impermissible exercise of police power and because it is exclusionary. As relief, Plaintiff seeks declaratory judgments that the entire Community Bill of Rights Ordinance is unconstitutional, violates state law and is preempted. It also seeks injunctive relief against Grant Township, enjoining its enforcement of the full Ordinance. Finally, Plaintiff seeks compensatory and consequential damages, fees and costs.
In its motion for judgment, Plaintiff asks the Court to invalidate the entire Ordinance as a matter of law. See ECF No. 50-1, Proposed Order. Yet, when an analysis was made of Plaintiff's motion and arguments side-by-side with a copy of the Ordinance, the whole of the Ordinance was never attacked. Instead, the language of certain sections of the Ordinance was challenged repeatedly as invalid and unenforceable; however, much of the Ordinance was never mentioned or analyzed at all. A movant for judgment on the pleadings cannot skip analyzing all of the provisions of an ordinance it seeks to invalidate as a whole.
Moreover, the Court is not an advocate. It will not review those portions of an ordinance not challenged by Plaintiff in its own motion and arguments. The Court did not undertake to analyze the sections of the Ordinance that were not part of Plaintiff's motion. Likewise, the Court did not transfer the ruling on the validity or invalidity of the analyzed provisions to cover the whole of the Ordinance. The rulings made are explained below the same way they were analyzed: first, the precise provision of the Community Bill of Rights Ordinance at issue is listed, with its full text; second, each of Plaintiff's legal theories challenging that exact provision is laid out; and third, the legal analysis as to the legality, enforceability and constitutionality (if necessary) of that provision is made.
Before proceeding through the challenged provisions of the Ordinance and each of Plaintiff's attacks upon them, one additional issue must be addressed. Where a party raises both statutory and constitutional arguments in support of a judgment, a federal court should first consider whether the plaintiff is entitled to full relief under a statute, and if so, should refrain from reaching the constitutional issue.
Plaintiff challenges Section 3 as:
The preemption doctrine establishes a priority between potentially conflicting laws enacted by various levels of government. Huntley & Huntley v. Borough Council of Borough of Oakmont, 600 Pa. 207, 964 A.2d 855, 862-63 (2009).
In the Amended Complaint, Plaintiff claims that the Ordinance is preempted by
Next, Plaintiff alleges that Grant Township exceeded the scope of its authority in violation of state law when it enacted the Ordinance prohibiting the depositing of waste materials from oil and gas extraction (at Section 3(a)) and declaring that no permits or licenses awarded by state or federal authorities will be deemed valid (at Section 3(b)). ECF No. 5, Count VII, ¶¶ 68-76. Plaintiff alleges that as a Second Class Township, Grant Township possesses only those powers granted to it by the Pennsylvania General Assembly. Plaintiff alleges that because Grant Township does not have a zoning ordinance, any authority to regulate UIC wells or injection of oil and gas materials must originate from the Second Class Township Code and the Code does not authorize Grant Township to take such action. Id. In its motion for judgment on the pleadings, Plaintiff argues that Sections 3(a) and (b) are beyond the scope of the powers granted to townships under the Code and, as such, the Ordinance is an impermissible exercise of Grant Township's legislative authority and is therefore invalid and unenforceable.
There is no state authority expressly granting a municipal government or its people the authority to regulate the depositing of waste from oil and gas wells or to invalidate permits granted by the state or federal government. Any provision enacted without underlying legislative authority is invalid and unenforceable. Grant Township exceeded its legislative authority under Pennsylvania's Second Class Township Code by enacting Sections 3(a) and (b) of the Community Bill of Rights Ordinance, and accordingly, these Sections are invalid and unenforceable.
Plaintiff also alleges that the Ordinance is exclusionary in violation of Pennsylvania law that requires that a municipality authorize all legitimate uses somewhere within its boundaries. Plaintiff argues that the Ordinance's outright ban on the injection and storage of oil and gas materials within Grant Township (at Section 3(a) of the Ordinance) excludes legally permitted uses within Grant Township. ECF No. 5, Count X, ¶¶ 93-97. Defendant has not contested Plaintiff's argument that the Ordinance is exclusionary in violation of state law.
Pennsylvania law requires that a municipality authorize all legitimate uses somewhere within its boundaries. Beaver Gasoline Co. v. Osborne Borough, 445 Pa. 571, 285 A.2d 501, 503-04 (1971) ("The constitutionality of a zoning ordinance which totally prohibits legitimate uses or fails to provide for such uses anywhere within the municipality should be regarded with particular circumspection."). Although an ordinance is presumed valid, the presumption disappears when an ordinance is de jure exclusionary. Id. at 504-05; Tri-County Landfill v. Pine Twp. Zoning Hearing Bd., 83 A.3d 488, 518 (Pa.Cmmw.Ct.2014). A de jure exclusion exists where an ordinance, on its face, completely or effectively bans a legitimate use. Tri-County Landfill, 83 A.3d at 518. Upon a showing that an ordinance is de jure exclusionary, the burden shifts to the municipality to show that the "exclusionary regulation bears a substantial relationship to the public health, safety, morality, or welfare." Twp. of Exeter v. Zoning Hearing Bd., 599 Pa. 568, 962 A.2d 653, 661 (2009).
Here, Section 3(a) of the Ordinance proclaims that "it shall be unlawful within Grant Township ... to engage in the depositing of waste from oil and gas extraction." ECF No. 5-1, page 2. Although Defendant wishes it were not so, the development of oil and gas (which necessarily includes the management of waste materials generated at a well site) is a legitimate business activity and land use within Pennsylvania. See generally Oil & Gas Act, 58 Pa.C.S. § 3301.
Because Section 3(a) of the Ordinance, on its face, completely bans a legitimate use, the Ordinance is de jure exclusionary. As Defendant has not opposed Plaintiff's motion in this regard, judgment will be granted in favor of Plaintiff on Count X.
Plaintiff challenges Section 4(b) and (c) as unenforceable because Grant Township exceeded the scope of its legislative authority under the Pennsylvania Second Class Township Code by enacting the Ordinance.
Plaintiff alleges that Grant Township exceeded the scope of its legislative authority in violation of state law when it enacted Section 4 of the Ordinance. Plaintiff alleges that Section 4(b) and (c) purport to vest in Grant Township and all of its residents the power to enforce and defend the rights and prohibitions of the Community Bill of Rights Ordinance, including the rights to recover all costs of litigation, experts, and attorney's fees, regardless of whether Grant Township and/or its residents succeed in such enforcement. Plaintiff alleges that Sections 4(b) and (c) of the Ordinance are not within the scope of the powers granted to Grant Township by the Code because the Ordinance attempts to create a legal cause of action in Grant Township and its residents. Plaintiff alleges that as a Second Class Township, Grant Township possesses only those powers granted to it by the Pennsylvania General Assembly and the statute does not authorize Grant Township to create any cause of action in itself or its residents. ECF No. 5, Count VII, ¶¶ 68-76. In its motion for judgment on the pleadings, Plaintiff argues that Sections 4(b) and (c) of the Ordinance are an impermissible exercise of legislative authority and are therefore invalid and unenforceable.
Because local governments only possess the power "expressly granted" to them by state government (Appeal of Gagliardi, 163 A.2d at 419) and because there is no authority for Grant Township to create a cause of action for its residents to enforce an ordinance written on their behalf, Section 4(b) and (c) were enacted beyond the scope of Grant Township's legislative authority.
Plaintiff challenges Section 5 as:
Plaintiff alleges that the Ordinance, which purports to divest corporations of their rights as "persons" is preempted by the Pennsylvania Limited Liability Companies Law. Plaintiff alleges that by enacting the statute, the Commonwealth of Pennsylvania intended to preempt municipal regulation of a company's status as a natural person. Plaintiff alleges that Section 5(a) purports to strip companies of their status as natural persons. ECF No. 5, Count XI, ¶¶ 98-102.
Pennsylvania's 15 Pa.C.S. § 8921(a) provides that LLCs "shall have the legal capacity of natural persons to act," while Section 5(a) of the Ordinance purports to divest corporations of their rights as "persons." The language of the two sections is precisely opposite of the other. There is a direct conflict between these two provisions. Because it irreconcilably conflicts with the Limited Liability Companies Law, Section 5(a) of the Community Bill of Rights Ordinance cannot stand. See Western Pa. Restaurant Ass'n v. City of Pittsburgh, 366 Pa. 374, 77 A.2d 616, 620 (1951) ("It is of course self-evident that a municipal ordinance cannot be sustained to the extent that it is contradictory to, or inconsistent with, a state statute."). Accordingly, Section 5(a) is unenforceable as preempted by state law.
Next, Plaintiff alleges that Sections 5(a) and (b) of the Ordinance are
Pennsylvania's 53 P.S. § 66601(f) provides that those aggrieved by the adoption of any local ordinance may challenge the legality of the ordinance to the court of common pleas. Here the language of the Second Class Township Code is clear in its intent to provide legal recourse in the courts of common pleas to those aggrieved by a local ordinance. Meanwhile, Section 5(a) of the Community Bill of Rights Ordinance provides that violators of the Ordinance will not "possess any other legal rights" including "the power to assert state or federal preemptive laws in an attempt to overturn this Ordinance." By attempting to eliminate legal recourse to the court of common pleas, Section 5(a) of the Ordinance is in direct conflict with the Second Class Township Code and is therefore preempted.
Section 5(b) of the Community Bill of Rights Ordinance provides that the rights and prohibitions within the Ordinance shall trump "laws adopted by the legislature of the state of Pennsylvania, and rules adopted by any State agency" in situations where there is a conflict between state and local law. The can be no doubt that here the state statute at § 66506 and the local provision are diametrically opposed to each other. In such a situation, the state law preempts the local Ordinance. Therefore, Section 5(b) of the Ordinance cannot stand as it is preempted by the state law.
Plaintiff moves for judgment on the pleadings on its Supremacy Clause, Equal Protection Clause, and Petition Clause challenges to the constitutionality of Section 5(a) of the Community Bill of Rights Ordinance. However, because Section 5(a) of the Ordinance is preempted by both Pennsylvania's Limited Liability Companies Act and the Second Class Township Code, this Court need not undertake an analysis as to whether Section 5(a) also violates the Supremacy Clause, the Equal Protection Clause or the First Amendment. See Spector Motor, 323 U.S. at 105, 65 S.Ct. 152.
For the reasons stated in this Memorandum Opinion, Defendant's motion for judgment on the pleadings will be denied.
Plaintiff's motion for judgment on the pleadings will be granted in part and denied in part. Plaintiff's motion will be denied on the basis of preemption under the Oil & Gas Act. Judgment will be granted in favor of Plaintiff in the following regards:
Based on the foregoing, Grant Township will be enjoined from enforcing Sections 3(a) and (b), Sections 4(b) and (c), and Sections 5(a) and (b) of the Community Bill of Rights Ordinance.
An approriate order will be entered.
ECF No. 59, page 12 (internal citations omitted). As there is no legal basis for this argument, it is rejected here.