• Commonwealth Court of Pa. Limits Authority of PUC to Regulate Local Oil and Gas Development
  • September 9, 2014
  • Law Firm: Burns White LLC - Pittsburgh Office
  • In a three-to-two split decision on July 17, 2014, the Commonwealth Court of Pennsylvania in Robinson Tp., Washington County v. Com. upheld the constitutionality of three core provisions contained within Pennsylvania’s Marcellus Shale drilling law, Act 13 of 2012. However, the court held as unconstitutional a portion of Act 13, which allowed the Public Utility Commission (PUC) authority to judge municipal ordinances that regulate oil and gas development.

    Robinson appeared before the Commonwealth Court after the Pennsylvania Supreme Court’s holding on Dec. 19, 2013, which held several provisions of Act 13 violated the Environmental Rights Amendment of the state constitution, removing Act 13’s preemption over local zoning ordinances and restrictions on municipal regulations of oil and gas resources. The Supreme Court’s decision also removed Act 13’s requirement that the PA Department of Environmental Protection (DEP) issue waivers for certain well setback requirements along with the Act’s express limitations on a municipality’s ability to challenge the DEP’s issuance of the waivers. More about that can be found in a prior update here.

    Deciding Robinson on remand, the Commonwealth Court specifically held Act 13 could constitutionally: (1) limit discussions between doctors and patients concerning the propriety information of fracking fluids; (2) authorize gas companies’ use of eminent domain; and (3) implement differing notice requirements as to procedures for gas-well neighbors with public water versus private water. However, the Commonwealth Court rejected the state’s argument that the PUC still has the authority to judge municipal ordinances that regulate oil and gas development after the state Supreme Court ruled in December that Act 13 unconstitutionally limited local governments’ right to say where well sites, compressor stations, and other oil and gas facilities can be located.

    The Commonwealth Court’s decision clarifies several limitations of Act 13. First, while Act 13 is permitted to limit discussions between doctors and patients concerning certain proprietary information, the court emphasized that Act 13 does not prohibit a physician from sharing the disclosed confidential and proprietary information with another physician for purposes of diagnosis or treatment, nor does it preclude a physician from including the information in patient records, medical treatment or evaluations, including evaluations based on trade secrets that physicians are required to keep. Second, while Act 13 permitted to authorize gas companies’ use of eminent domain, the court emphasized the provision was limited to a “public utility” that has received a certificate of public convenience from the PUC. Third, although Act 13 requires notice to be given by drilling companies or the DEP for spills in public water systems, no notice requirement exists for spills that take place in private water systems.

    Furthermore, the Commonwealth Court held that the PUC no longer has the authority to judge municipal ordinances that regulate oil and gas development. The court’s decision was a consequential byproduct of the Pennsylvania Supreme Court’s prior holding that Act 13 could not limit a local government’s right to designate where well-sites, compressor stations, and other oil and gas facilities can be located. While the state argued that the commission still had an essential role in reviewing ordinances, hearing challenges and determining if local governments are eligible to receive their share of impact fees distributed to communities that play host to drilling operations, the court found the provision unsalvageable after the Supreme Court held the uniform zoning provisions of Act 13 were unconstitutional.

    As a result of the Commonwealth Court’s holding, municipalities can regulate locations but not the details of drilling operations that the DEP already regulates. As President Judge Dan Pellegrini wrote for the majority opinion, “Local zoning matters will now be determined by the procedures set forth under the [Municipalities Planning Code] and challenges to local ordinances that carry out a municipality’s constitutional environmental obligations.” Judges P. Kevin Brobson and Patricia A. McCullough wrote separate opinions that partially agreed and dissented from the majority opinion.

    For questions or concerns about how the decision might affect Marcellus Shale businesses in the region, contact the Burns White Energy Group.