The Pennsylvania Public Utilities Commission (PPUC) is asking the state Supreme Court to review a July ruling by the Pennsylvania Commonwealth Court that strips PPUC of its authority to review and approve local drilling ordinances.

Specifically, PPUC is appealing the Commonwealth Court’s rejection of PPUC’s right to withhold “impact fees” imposed under Pennsylvania’s oil and gas law, known as “Act 13,” from municipalities that enacted rules restricting drilling.  Over the past three years, the state has collected more than $600 million in impact fees from well owners.  The results of recent litigation related to Act 13, however, have undermined PPUC’s centralized regulatory authority and have instead vested municipalities with authority to modify and enforce local zoning laws within their respective jurisdictions.

A divided court ruled against the PPUC, relying in part on prior decisions that invalidated other sections of Act 13, including the Pennsylvania Supreme Court’s December 2013 decision striking down a provision that imposed a statewide municipal planning code on natural gas operations and limited local governments’ authority to impose additional restrictions on drilling.

In its appeal, the PPUC claims that the lower court’s reliance on these prior decisions was erroneous. “Because a condition to receipt of the impact fee funds is compliance with PA law, we are questioning the Commonwealth Court’s order that prevents us from doing any sort of review of ordinances,” explained PPUC spokeswoman Denise McCracken.

But Bucks County attorney Jordan Yeager, who helped represent seven communities that sued the state in 2012, insisted that Pennsylvania Supreme Court would again side with local government. “The courts have vindicated the local process of protecting those issues,” said Yeager. “We’re confident they will rule the same again.” Pennsylvania’s impact fee program has been controversial from its inception.  For many, particularly those in the western and central part of the state where drilling is taking place, the “impact fee” program was logical because the fees collected were distributed to the communities where the drilling was occurring (i.e., those most impacted by the drilling).  Many opponents of the impact fee program (typically those from the eastern part of the state) have argued that these fees should be allocated to more pressing State-wide needs.  The Commonwealth Court’s decision, coupled with PPUC’s decision, will ensure that the impact fee program (and its implementation) will remain a political hot-button issue in the coming years.

The case caption is Robinson Township et al. v. Pennsylvania et al., No. 284 MD 2012, in the Commonwealth Court of Pennsylvania.