On Thursday, July 17, 2014, in the matter of Robinson Township, et. al. v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania issued the latest decision in the state judicial system’s ongoing review of amendments to Pennsylvania’s Oil and Gas Act (“Act 13”).

Under a prior decision issued on July 26, 2012, the Commonwealth Court held as unconstitutional those portions of Act 13 requiring the implementation of uniform zoning ordinances applicable to oil and gas development by municipalities throughout Pennsylvania. Following an appeal by the Governor, the Supreme Court, by decision dated December 19, 2013, ultimately agreed with the Commonwealth Court, although for different reasons, remanded the matter back to the Commonwealth to determine whether certain previously undisturbed provisions of Act 13 were severable from the stricken section.

In advance of the Commonwealth Court’s review on remand, the parties agreed to limit the Court’s review to the constitutionality of the following sections of Act 13:

  1. Section 3218.1 mandating that, in the event of a spill, notice shall be provided only to public drinking water systems, without requiring the same notice be provided to private drinking water systems;
  2. Section 3222.1 prohibiting health professionals from disclosing to others the amount of hydraulic fracturing additives received from drilling companies;
  3. Section 3241(a) granting the power of eminent domain to certain corporations engaged in the transport, sale and/or storage of natural gas; and
  4. Section 3305 conferring upon the Pennsylvania Public Utility Commission (the “PUC”) the power to review local zoning ordinances applicable to oil and gas development, and to withhold impact fees from any municipality where the PUC determined that the relevant zoning ordinances violated the Oil & Gas Act, as amended by Act 13.

On remand, the Commonwealth Court held that the spill notice requirements, physician non disclosure requirements and eminent domain provisions are constitutional. However, the Commonwealth Court found the grant of first review to the PUC to be unconstitutional. Specifically, as a consequence of the Supreme Court having previously struck down portions of Act 13, the Commonwealth Court determined that as municipal drilling ordinances are enacted under the Pennsylvania Municipalities Planning Code, the relevant Court of Common Pleas has exclusive jurisdiction to hear any appeal of those ordinances. President Judge Pellegrini, in delivering the Commonwealth Court Opinion, which was not unanimous, stated that, “Because challenges to those ordinances must be brought in common pleas court, it would further frustrate the purpose of the act in having a uniform procedure … [a]ccordingly, [the provisions regarding PUC review and penalties] are not severable.” This means that the Act 13 procedure for PUC review of local drilling ordinances, and the withholding of impact fees, is invalid.

Although this decision further defines the scope and impact of Act 13 on future oil and gas development in Pennsylvania, it signals a regression for developers with respect to the uncertainty inherent in Pennsylvania’s municipal zoning structure. Companies actively involved in the oil and gas industry will again be required to navigate myriad zoning and land use regulations which vary amongst the Commonwealth’s 67 counties and 2,563 municipalities. Although it is anticipated that the oil and gas industry will continue to lobby for favorable legislative changes, in the interim it will be forced to address local zoning regulations on a case-by-case basis, which is particularly difficult for projects situated in multiple municipalities.

For the most recent decision, visit pacourts.us.