In December of 2013, in Robinson Township v. Commonwealth of Pennsylvania, 83 A.3d 901 (Pa. 2013) (“Robinson II”), the Pennsylvania Supreme Court, among other things, struck down as unconstitutional provisions of the 2012 amendments to Pennsylvania’s Oil and Gas Act, also referred to as Act 13 regarding statewide zoning laws and municipalities’ abilities to enact ordinances affecting the oil and gas industry. On Wednesday September 28th, in Robinson's second round before the Pennsylvania Supreme Court (Robinson IV), the Court invalidated additional provisions of Act.
The remand of Robinson II to the Commonwealth Court required the lower court to determine whether or not certain provisions of the Act regarding the review of municipal ordinances affecting oil and gas operations were severable from the Act 13 provisions that were found unconstitutional. The remand also required the Commonwealth Court to determine; (a) whether two other Act 13 sections, one related to the disclosure of hydraulic fracturing chemical trade secrets to health professionals and the other related to the scope of PADEP notification requirements after spills, violated Article III, Section 32 (no “special laws”) or Article III, Section 3 (the “single subject rule”) of the Pennsylvania Constitution; and (b) whether another Act 13 section regarding the use of eminent domain for gas storage violated the 5th amendment of the U.S. Constitution and Article 1, Section 10 of the Pennsylvania Constitution. The case before the Supreme Court was an appeal to the Commonwealth Court’s ruling on these issues.
In its ruling, the Supreme Court upheld the Commonwealth Court’s finding that Sections 3305 through 3309 of Act 13, which would have granted either the Public Utilities Commission (“PUC”) or the Commonwealth Court the authority to review challenges to local ordinances directed at the oil and gas industry, were not severable from the other unconstitutional Act 13 provisions concerning state-wide standards for such local ordinances. The Supreme Court found Sections 3305 through 3306 were no longer capable of being executed in accordance with the original intent of the statue, and were thus not severable from Sections 3303 and 3304 which the Court previously struck down. Sections 3307 to 3309 likewise cannot be severed as they governed provisions for penalties on municipalities, which were based on the review process set forth in 3305 through 3306.
In reaching these conclusions, the Supreme Court engaged in a de novo review of whether these remaining provisions may be severed from the now unconstitutional ones. Recognizing that Act 13 did not provide a severability clause, the Supreme Court looked to the Pennsylvania Statutory Construction Act. Pursuant to the Act, the Supreme Court considered whether Act 13 continued to effectuate the original legislative purpose behind its enactment following the voiding of the prior provisions. The Supreme Court found that, missing the voided provisions, Sections 3305 and 3306 were no longer capable of being executed in accordance with the original intent of the General Assembly, which is to speed and simplify the local ordinance review process, thus the sections could not be severed. Absent the invalidated portions of Act 13, the Supreme Court stated, the legislature could not have passed these sections into law to merely have the PUC and the Commonwealth Court engage in the same type of measured and deliberative review process for local ordinances which the MPC already provides. As to Sections 3307 to 3309, the Court found they were inextricably linked to the review provisions of the sections and likewise could not be severed. As a result of the Supreme Court’s findings, any claim that a local ordinance affecting the oil and gas industry violates the Municipal Planning Code must use the process in place before Act 13 was enacted, i.e., challenges brought before local governing bodies or the courts of Common Pleas.
The Supreme Court next turned to Sections 3222.1(b)(10) and 3222.1(b)(11) of Act 13, which required operators, vendors and service providers to supply trade secret information to health professionals about hydraulic fracturing fluids in a medical emergency or when such information was needed for the purpose of diagnosis or treatment of a patient. The health professional, in turn, was required to agree (either verbally or in writing) to keep the information confidential.
With respect to the single subject rule, the Supreme Court reasoned that the law governing Article III, Section 3, claims is “well settled,” and a statute will “not violate the mandates of Section 3 even though it pertains to multiple topics, provided the topics are germane to a single subject.” The Supreme Court, while recognizing that Sections 3222.1(b)(10) and (b)(11) impacted health professionals in carrying out their duties as there were no restrictions upon disclosure limitations in the plain language of the statute, found that their primary purpose was the maintenance of trade secret protections for the chemicals used in hydraulic fracturing. Therefore, given that the sections were germane to Act 13’s purpose of regulating oil and gas industry, the Supreme Court found these sections were not violative of the “single subject” mandate in Article I, Section III of the Pennsylvania Constitution.
However, under Article III, Section 32 (the “special laws” provision) the Supreme Court found otherwise. The Supreme Court, citing Pennsylvania Turnpike Commission v. Commonwealth, 899 A.2d 1085, 1094 (Pa. 2006), looked at this challenge as a question of law, where the statute would enjoy presumption of validity unless it “clearly, palpably and plainly violates the constitution.” The Supreme Court, referring to its holdings in Robinson II, stated that when reviewing a legislative enactment to determine if it violates Article III, Section 32, the query is to ensure that the challenged legislation promotes a legitimate state interest, and that a classification is reasonable rather than arbitrary. It further stated that a classification will not violate Section 32 if it is based on “necessity … springing from manifest peculiarities clearly distinguishing” one class from the other and “imperatively demanding legislation for each class separately” that would be useless to others Allegheny County v. Monzo, 500 A2.Sd 1096, 1105 (Pa 1985)(quoting Commonwealth v. Gumbert, 256 Pa. 531, 534 (Pa. 1917)).
In deciding this issue, the Supreme Court considered whether these sections “confer on the oil and gas industry, as a class, special treatment not afforded to any other class of industry, and whether the special treatment ‘rests upon some ground of difference, which justifies the classification and has a fair and substantial relationship to the object of the legislation.’” Robinson II, 83 A.3d 987. Ignoring the fact that the statute required disclosure where none was previously required, the Court asserted that no other industry in the Commonwealth enjoyed similar trade secret “protections” and struck down the provision as a special law.
Along similar lines, the Supreme Court held that Section 3218.1 of Act 13, which required PADEP to notify public water facilities—but not private well owners—of spills from oil and gas operations that threaten water supplies, also amounted to a “special law” because it unjustifiably distinguished between public and private wells.
The Supreme Court analyzed this Article III, Section 32 claim by looking first at whether the challenged legislation “promotes a legitimate state interest,” and that a “classification is reasonable rather than arbitrary,” as they did with sections 3222.1(b)(10) and (b)(11). The Court looked at one of the express purposes of Act 13 – to protect the health, safety, environment and property of Pennsylvania citizens – and concluded that Section 3218.1’s exclusion of those residents who receive drinking water from private wells did not have a fair and substantial relationship to that objective. While the Supreme Court strongly signaled that the solution was for DEP to be required to notify both public and private well owners and operators, it declined to rewrite the section. Instead, the Supreme Court stayed the mandate on Section 3218.1 for 180 days to give the General Assembly an opportunity to enact “remedial legislation.”
Lastly, the Supreme Court struck down Section 3241 of Act 13, which granted eminent domain powers to private corporations empowered to transport, sell or store gas or manufactured gas in Pennsylvania for the purpose of underground gas storage, finding that it violated the 5th amendment of the U.S. Constitution and Article I, Section 10 of the Pennsylvania Constitution.
The Supreme Court looked at the plain meaning of the terms in Section 3241, where any corporation empowered to “transport, sell or store natural gas or manufactured gas in the Commonwealth” is able to use the subsurface real property of another landowner in order to store natural or manufactured gas. While appellees and the lower court strived to make an argument that such language restricted the taking power to those corporations which would qualify as public utilities, the Supreme Court disagreed. The Supreme Court emphasized that the ability to sell, transport, or store gas does not itself qualify a corporation as a public utility. In particular, the Supreme Court noted that the Public Utility Code states that natural gas producers that do not sell gas directly to the public for compensation are excluded from public utility classification. Furthermore, the Supreme Court stated that for a corporation to be able to exercise the power of eminent domain a public purpose must be served- and the public must be the primary and paramount beneficiary of the taking. The Supreme Court found that the Commonwealth’s proffered benefit to the public, i.e. that the power of eminent domain advances the development of infrastructure, was speculative and would merely be incidental.
Notably, in its opinion the Supreme Court declined an invitation to revisit and “disavow” its reasoning in a previous plurality opinion that a number of Act 13 provisions violated the Environmental Rights Amendment at Article I, Section 27 of the Pennsylvania Constitution. The Court in a footnote stated that the Citizens, upon review of the record, failed to preserve the claim in the instant proceedings. The Supreme Court’s choice to not reach the issue is nonetheless interesting given that the case’s prior ruling before the Supreme Court Section 27 was central in striking down the first round of Act 13 provisions. Clarification of the weight Section 27 and whether it will gain additional traction in the Pennsylvania courts going forward is an issue that will need to wait for another day.