On June 20, the Pennsylvania Supreme Court issued its opinion in Pennsylvania Environmental Defense Foundation (PEDF) v. Commonwealth, 2017 Pa. LEXIS 1393 (Pa. June 20), in connection with the so-called Environmental Rights Amendment or ERA (Article 1, Section 27 of the Pennsylvania Constitution). Suffice it to say, the opinion has reopened the debate as to the meaning of the ERA, and more importantly, how the ERA is implemented as a practical and legal matter. In brief, the court ruled that amendments to the state’s fiscal code (which sought to address budgetary shortfalls by redirecting money from a fund containing rents and royalties from oil and gas leases on commonwealth land to the general fund) violated the ERA. While the facts before the court were narrowly drawn, the court used the opportunity to revisit the decades old “test” applied in evaluating ERA claims, an issue it first addressed in its 2013 plurality opinion in Robinson Township v. Commonwealth, 83 A.3d 901 (Pa. 2013). It abruptly rejected the well-established Payne v. Kassab test and roughly 45 years of ERA-related case law, thereby placing the ERA, and industry, back into legal limbo. Despite some legal uncertainty, this opinion should not be interpreted as a major stumbling block to key energy and infrastructure projects.
First, some context. Decades before the 2013 Robinson Township opinion, the Commonwealth Court in Payne v. Kassab, 312 A.2d 86 (Pa. Cmwlth. 1973), aff’d 361 A.2d 263 (Pa. 1976), established a three-part test that allowed the ERA to become “operational.” In applying the Payne test, a court could determine whether a state action violates the ERA by determining whether there was compliance with all applicable statutes and regulations; reviewing the record for evidence of a reasonable effort to reduce environmental incursions; and determining whether the environmental harm of the challenged action clearly outweighs the benefits to be derived. These criteria gave legal meaning and structure to the otherwise amorphous ERA, which incorporates aspirational language: the people’s right to “clean air and pure water” as well as the right to the natural, scenic, historic, and esthetic values of the environment (individual rights); and the “common ownership by the people of the commonwealth’s public natural resources” (the public’s rights).
Second, some history. Although the 2013 Robinson Township plurality opinion—which addressed an ERA challenge to Act 13, Pennsylvania’s Oil and Gas Act—acknowledged that the Payne test “answered the call for guidance on substantive standards in this area of law” and was “easy to apply,” the court nevertheless found it to be an inappropriate benchmark for assessing ERA compliance “in all but the narrowest category of cases, i.e., those cases in which a challenge is premised simply upon an alleged failure to comply with statutory standards … .” The test, the court reasoned, is narrower than what the ERA provides as to rights, and as a result, minimizes the constitutional duties of the executive agencies and judicial branch. In lieu of the Payne test, the court seized upon the public trust aspect of the ERA, and the commonwealth’s duty to prevent degradation and depletion of our natural resources as trustee for the people. A plurality of the court ultimately invalidated certain portions of Act 13, under the ERA, finding that those portions of the act failed to prevent degradation and depletion of our public natural resources in violation of the ERA.
Since the court’s opinion in Robinson Township, the Commonwealth Court has repeatedly refused to apply its holding to subsequent ERA claims, noting that because the decision was a mere plurality, it was only binding on the parties to that case. Instead, courts continued to apply the familiar Paynetest in evaluating ERA claims. See, e.g., Pennsylvania Environmental Defense Foundation v. Commonwealth, 108 A.3d 140 (Pa. Cmwlth. 2015); Feudale v. Aqua Pennsylvania, 122 A.3d 462 (Pa. Cmwlth. 2015); Funk v. Wolf, 144 A.3d 228 (Pa. Cmwlth. 2016); Delaware Riverkeeper Network v. R.E. Gas Development, 2017 Pa. Commw. Unpub. LEXIS 415 (Pa. Cmwlth. 2017). In short, the Robinson Township decision had minimal impact on cases involving ERA challenges.
Third, fast forward to 2017. In fairly sweeping language, the court in a 5-1 opinion “rejected the Payne test developed by the Commonwealth Court as the appropriate standard for deciding ERA challenges.” The court reiterated its 2013 criticism of the Payne test, calling it “ill-fitted” to the language of the ERA, and stated that it “strips the constitutional provision of its meaning.” The court further reviewed and reiterated the lengthy analysis in the 2013 Robinson decision, observing that the ERA was adopted to prevent further destruction of the commonwealth’s natural resources (following deforestation, endangerment of certain species through hunting, etc., and coal production). It must be remembered, though, that this decision emanated from unique facts: a challenge to a fiscal code provision that, in essence, diverted funds from the Oil and Gas Lease Fund to the State General Fund.
Fourth, moving forward. The court announced vague principles to be considered when assessing ERA claims—at least those claims based upon an alleged violation of the public trust. First, courts are to be guided by the text of the ERA itself. Second, courts are to apply the underlying principles of Pennsylvania “trust law” in effect at the time of the ERA was adopted (1971). For companies engaging in energy development—a favorite target of some advocacy groups—the court’s decision and analysis offers little clarity on the scope and application of the ERA.
There have been suggestions by commentators that this opinion will serve as a major hurdle to important projects in the commonwealth; these prognostications are overblown. Indeed, the Robinson Township court itself noted that the ERA should not serve as an impediment to development, acknowledging that “The Environmental Rights Amendment does not call for a stagnant landscape; nor, as we explained below, for the derailment of economic or social development.” Thus, to interpret the court’s decision to mean that the ERA stifles economic development by creating an unreasonable hurdle would be an overreach.
Nevertheless, for any company or individual planning a project, one can expect increased scrutiny of requested governmental approvals at all levels, from the local land use authorizations to Pennsylvania Department of Environmental Protection (PADEP) environmental permits. Why? Not only will the government entities feel the impact of this opinion, but they will be under a microscope from NGOs waiting in the wings to use this decision to delay and stop all types of energy projects by filing legal challenges to permits and approvals. As a result, companies will need to work closely with counsel, as well as government and communications, permitting strategy and technical experts. Consultations should be done early and often in the project development phase to build a record that, if scrutinized, would pass muster under the revised ERA test.
Obtaining and complying with all applicable permits, and establishing a close relationship with environmental regulators and local communities, will be paramount. Companies should emphasize the environmental and economic benefits that will be advanced by a particular project. For example, companies seeking to enhance gas production and improve transportation and distribution infrastructure should highlight the environmental benefits of a project, such as a reduced emissions of carbon, sulfur dioxide, nitrogen oxide, and particulate emissions from natural gas, while likewise emphasizing all efforts to mitigate any disruptions. In this regard, it is important to note that increased natural gas production in the United States and its use has contributed to a 27-year low in national greenhouse gas emissions. The ERA aspires to preserve environmental quality for future generations. These projects are critical to achieving that goal and thus are entirely consistent with the ERA.
Postscript: We may not need to wait much longer to see how Pennsylvania courts will interpret the ERA in the wake of PEDF. In an appeal filed last week before the Environmental Hearing Board, Fair Shake Environmental Legal Services on behalf of its client objected to the DEP’s approval of a brine spreading plan on dirt roads in Warren County, claiming, among other things, violations of the ERA due to potential water and air quality degradation, see Docket No. 2017-051. Additionally, in June 2016, the court granted an appeal from the Commonwealth Court’s decision permitting oil and gas development in residential agriculture (RA) districts, see Gorsline v. Board of Supervisors of Fairfield Township, 123 A.3d 1142 (Pa. Cmwlth. 2015), appeal granted 139 A.3d 178 (Pa. 2016). The Commonwealth Court dismissed claims that a gas well installed in an RA district violated the ERA because the record did not support the underlying presumption that the proposed use was incompatible with uses in an RA district, and that such uses would cause environmental harm. Companies engaging in energy and infrastructure projects should keep a close eye on this case for additional guidance on ERA compliance in this new legal landscape.
This article was originally published in The Legal Intelligencer on July 13, 2017. Click here to read the article online.