Last week the Pennsylvania Public Utility Commission (PUC) issued the first of what could be numerous rulings denying a township its share of impact fees from shale drilling because its local land use ordinances overly regulated drilling.  Specifically, the PUC found in its October 18 order that the township of South Fayette’s ordinances were preempted by existing state environmental laws and imposed duplicative permitting requirements.

The PUC is reviewing local ordinances pursuant to mandates in Act 13, which the state legislature enacted earlier this year.  Act 13 comprehensively revised the state’s oil and gas laws, and imposed impact fees on deep-shale wells to compensate for infrastructure, environmental, and other local impacts from shale resource development.  But Act 13 also removed local land use authority to regulate where drilling can occur.  Although the Pennsylvania Commonwealth Court struck down the land use and setback portions of Act 13 (see our previous coverage of that decision here and here), a landowner holding oil and gas leases for his land challenged South Fayette’s ordinances before the PUC based on parts of Act 13 that were not invalidated. 

The PUC agreed that although Act 13′s constitutionality is currently being reviewed by the state supreme court, state law nonetheless required it to issue its decision.  Per the PUC’s opinion:  “The General Assembly has established affirmative mandates that the commission cannot choose to ignore.”  The PUC further agreed with the landowner’s claims that South Fayette’s ordinances duplicate several environmental requirements reserved only for state oversight.  As a result, South Fayette must revise its local ordinances by November 28 or face losing approximately $2,700 in revenue from Act 13′s drilling impact fees. 

In a parallel proceeding before the Pennsylvania Commonwealth Court, the plaintiffs in the Robinson Township case (South Fayette is one of the plaintiffs) are challenging the PUC’s authority to review local oil and gas drilling ordinances.  Yesterday the Commonwealth Court held a hearing in which the municipal plaintiffs requested an order barring the PUC from conducting its review and withholding impact fees.

Media coverage of the PUC’s decision as to South Fayette can be found here, here, and here.