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A Pennsylvania court has further limited the reach of a major 2012 law that modernized drilling regulations, ruling Thursday that state public utility regulators cannot review how local zoning restrictions affect the natural gas industry.

The Commonwealth Court decision threw out the Public Utility Commission's newly authorized power to withhold drilling fee revenue from municipalities whose zoning it deems to illegally restrict drilling activity.

The decision is another blow to an effort by Gov. Tom Corbett and the Republican-controlled Legislature to respond to the drilling industry's complaints about municipal zoning. It follows a state Supreme Court ruling in December that said the law could not strip local zoning authority over drilling activity, such as the placement of rigs, pipelines, waste pits and compressor stations.

John M. Smith, a Pittsburgh-area lawyer who helped represent the seven municipalities that sued, said they were pleased that the court "once again protected the rights of local governments and Pennsylvania citizens."

The Commonwealth Court ruling rejected three other challenges in the lawsuit to elements of the sprawling law.

Those three victories led Corbett's office to say the opinion "speaks volumes to the constitutionality of state regulation of oil and gas activities." A spokesman would only say that the office is evaluating the impact of the ruling on the intended role of the utility commission.

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