A Pennsylvania appeals court on Thursday dismantled the state’s argument that the Public Utilities Commission could still review and challenge local zoning ordinances that did not facilitate oil and gas development in a ruling that preserved a key decision by the state Supreme Court in December.

The appeals court made its decision on remand from the state Supreme Court, which made a landmark ruling on the constitutionality of Act 13, the state’s omnibus oil and gas legislation passed in 2012 (see Shale Daily, Feb. 15, 2012). The high court struck down parts of that law and dealt a blow to centralized regulation in the state by returning to municipalities their right to change or enforce local zoning laws (see Shale Daily, Dec. 20, 2013).

Other parts of the case were then handed to the lower court and dismissed on Thursday, including chemical disclosure requirements, eminent domain laws and an argument that regulators should be required to notify both private water well owners and public water authorities in the event of a hazardous spill.

But the PUC’s ability to review local ordinances meant it could possibly withhold impact fees from local governments if they violate an unchallenged section of Act 13 and other parts of the state law.

John Smith, a lawyer with Smith Butz LLC, who served as a lead attorney for two of the seven townships that brought the case, said the PUC ruling was key to upholding the state Supreme Court’s decision and preserving municipal regulation of the oil and gas industry.

“We are extremely pleased that the Honorable Judge Pellegrini and a majority of the Pennsylvania Commonwealth Court have once again protected the rights of local governments and Pennsylvania citizens with its decision in favor of the Act 13 municipalities,” Smith said.

He told NGI’s Shale Daily that the PUC’s assertion that it could still review local ordinances had created significant concerns for the townships involved in the case.

“What was at issue here was the PUC could oversee local ordinances to determine whether they violated other aspects of state law. If they did that, there was a fear that the state would deny municipal impact fees and force them to pay the legal fees of oil and gas companies,” he said. “With this ruling that says the PUC can no longer review for compliance, there’s no longer that hammer over the heads of some of these townships.”

The opinion did not explicitly say doctors would be required to disclose the chemical additives used in fracking or that oil and gas companies would be forced to provide them with such information. Instead, the court said that information was already available to doctors in well completion reports and nothing included in Act 13 bars them from speaking about it with patients, other doctors or including it in medical reports.

Smith said that although the court did not rule in the township’s favor, that part of the decision was a win because it alleviates any concerns that doctors might have had about the law and will now encourage more information sharing within the healthcare community.

The office of Gov. Tom Corbett’s general counsel, which challenged the state Supreme Court’s earlier decision (see Shale Daily, Jan. 3), had no comment and said lawyers there were still reviewing the lower court’s ruling.

The appeals court also said in its decision that requiring the DEP to notify private water well owners, as they typically do for public water authorities, was too broad a mandate and dismissed that challenge. But the court added that the agency should make every possible effort to do so.

The township’s argument that a corporation should not be allowed to seize property for injecting, storing and removing natural gas was also dismissed. The appeals court said such a challenge was also too broad because the law “only vests this eminent domain power in a corporation empowered to transport, sell or store natural gas in this Commonwealth,” such as a regulated utility.