On June 20, 2017, the Pennsylvania Supreme Court, in a majority decision, established a binding, heightened standard of review for challenges brought under Pennsylvania’s Environmental Rights Amendment. See Pa. Environmental Defense Foundation v. Commonwealth, No. 10 MAP 2015 (Pa. June 20, 2017) (PEDF). The Court’s decision in PEDF affirmed and expanded upon the Court’s 2013 plurality decision in Robinson Township v. Commonwealth, 83 A.3d 901 (Pa. 2013), which the Commonwealth Court had refused to follow.
Article I, Section 27 of the Pennsylvania Constitution, commonly referred to as the Environmental Rights Amendment (ERA), states:
The people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment. Pennsylvania’s public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people.
Prior to PEDF and Robinson Township, the Commonwealth Court in Payne v. Kassab, 312 A.2d 86 (Pa. Cmwlth. 1973), set forth a three-part balancing test to determine whether use of the Commonwealth’s public natural resources violated Section 27: (1) whether there was compliance with all applicable statutes and regulations relevant to the protection of the Commonwealth’s public natural resources; (2) whether the record demonstrates a reasonable effort to reduce the environmental incursion to a minimum; and (3) whether the environmental harm which will result from the challenged decision or action so clearly outweighs the benefits to be derived therefrom that to proceed further would be an abuse of discretion. Id. at 94. Pennsylvania courts applied the Payne v. Kassab test for decades.
Then, in 2013, the Pennsylvania Supreme Court issued its decision in Robinson Township which erased decades of jurisprudence and replaced Payne v. Kassab with a significantly heightened standard of review. In Robinson Township, the Pa. Supreme Court set forth a series of foundational principles for decision-makers and other courts to follow. First, the Court held that Section 27 creates “an obligation on the government’s behalf to refrain from unduly infringing upon or violating the right, including by legislative enactment or executive action.” Id. at 952. The Court also held that Section 27 “requires each branch of government to consider in advance of proceeding the environmental effect of any proposed action on the constitutionally protected features. Id. at 952 (emphasis added). The second right conferred by Section 27, the Court held, “is the common ownership of the people, including future generations, of Pennsylvania's public natural resources.” Id. at 954. Third, the Court held, Section 27 “establishes the Commonwealth's duties with respect to Pennsylvania's commonly-owned public natural resources, which are both negative (i.e., prohibitory) and affirmative (i.e., implicating enactment of legislation and regulations).” Id. at 955-56. Robinson Township fundamentally changed the way the Commonwealth was required to regulate the use of its natural resources.
Yet uncertainty remained because Robinson Township was only a plurality decision. The Commonwealth Court in a number of subsequent decisions gutted Robinson Township and found that, because it was a plurality decision, it applied narrowly to the facts presented in Robinson Township and that in all other cases courts should continue to apply the Payne v. Kassab test. See Pa. Environmental Defense Foundation v. Commonwealth, 108 A.3d 140, 156 n.37 (Pa. Cmwlth. 2015); Feudale v. Aqua Pa., 122 A.3d 462, 468 n.8 (Pa. Cmwlth. 2015); Funk v. Wolf, 144 A.3d 228, 234 n.2 (Pa. Cmwlth. 2016); Delaware Riverkeeper Network v. R.E. Gas Development, 2017 Pa. Commw. Unpub. LEXIS 415, at *36 (Pa. Cmwlth. June 7, 2017). After some reshuffling of the justices, the Pa. Supreme Court in PEDF once and for all dismantled Payne v. Kassab, finding that it “strips the constitutional provision of its meaning.”
In PEDF, the Court reviewed a declaratory judgment action brought by the Pennsylvania Environmental Defense Foundation challenging, inter alia, the constitutionality of statutory enactments that collected revenue generated from the leasing of state forest and park lands for oil and gas exploration and extraction and directed that revenue into the general fund instead of a fund to be used exclusively for environmental protection.
Rather than adopt a multi-factor balancing test like in Payne v. Kassab, the Court looked to the history and text of Section 27 and attempted to distill the rights of the citizens and the duties of the Commonwealth. The Court, citing heavily to Robinson Township, noted that the first two sentences of Section 27 grant two separate rights to the people of the Commonwealth. The first is “the right of citizens to clean air and pure water, and to the preservation of natural, scenic, historic and esthetic values of the environment.” PEDF, slip op. at 29. This right may be “amenable to regulation,” but “any laws that unreasonably impair the right are unconstitutional.” Id. The second right is “the common ownership by the people, including future generations, of Pennsylvania's public natural resources.” Id.
The third sentence of Section 27 “establishes a public trust, pursuant to which the natural resources are the corpus of the trust, the Commonwealth is the trustee, and the people are the named beneficiaries.” Id. at 30 (footnote omitted). The Court stated that the Commonwealth has two basic duties as trustee: (1) “prohibit the degradation, diminution, and depletion of our public natural resources, whether these harms might result from direct state action or from the actions of private parties;” and (2) “act affirmatively via legislative action to protect the environment.” Id. at 32-33. The Court held that “pursuant to Pennsylvania law in effect at the time of enactment, proceeds from the sale of trust assets are part of the corpus of the trust.” Id. at 33-34. The Court found that the phrase “for the benefit of all of the people” “does not confer upon the Commonwealth a right to spend proceeds on general budgetary items” but rather “clearly indicates that assets of the trust are to be used for conservation and maintenance purposes.” Id. at 35-36.
The Court found that royalties based on the gross production of oil and gas at each well are proceeds from the sale of oil and gas resources and that they are therefore “part of the corpus of the trust and the Commonwealth must manage them pursuant to its duties as trustee.” As such, the Court held that the legislative enactments that directed oil and gas royalties to the General Fund and thus permitted the Commonwealth to use the royalties for non-trust purposes, were facially unconstitutional. The Court remanded to the Commonwealth Court to determine how to categorize other revenue streams, such as up-front bonus bid payments.
An important announcement was made in footnote 23 of the decision, in which the Court stated that the trust obligations under Section 27 are vested in “all agencies and entities of the Commonwealth government, both statewide and local,” each of which “have a fiduciary duty to act toward the corpus with prudence, loyalty, and impartiality.” Id. at 30 n.23. In addition, the Court re-affirmed that “the public trust provisions of Section 27 are self-executing,” and that no implementing legislation is required. Id. at 40.
PEDF is poised to fundamentally change how the Commonwealth regulates activities affecting public natural resources. We can expect that most future environmental litigation will contain a count under the ERA and will cite to PEDF. Courts are likely to develop tests and rules to implement the Court’s holding in PEDF, such as providing guidelines for the actions that the Commonwealth must take to fulfill its duties as a trustee under Section 27. Courts will also need to address how the ERA applies to the regulation of private actions that impact the environment, particularly where that private action is constitutionally protected. Going forward, state agencies and local governments, as well as regulated entities, will need to carefully account for the Pa. Supreme Court’s recent decision in PEDF in their future environmental and resource planning decisions.