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August 2017

Environmental Rights of Pennsylvanians - Fundamental

The environmental rights of Pennsylvanians are further reinforced by a recent Pennsylvania Supreme Court decision issued on June 20, 2017.  In Pennsylvania Environmental Defense Foundation v. Commonwealth, No. 10 MAP 2015 (Pa. June 20, 2017) [PEDF], the Court was tasked with deciding the constitutionality of legislative acts that direct oil and gas royalties derived from the leasing of Commonwealth land from the Oil and Gas Lease Fund to the General Assembly and General Fund. In applying a broad reading of Article I, Section 27 of the Pennsylvania Constitution, which is the Environmental Rights Amendment, the Supreme Court held that, as Trustee of environmental rights of Pennsylvanians, the Commonwealth must utilize trust assets, in this case oil and gas royalties, for conservation and maintenance of public natural resources. 

In 1955, the Pennsylvania Legislature enacted the Oil and Gas Lease Fund Act, requiring that royalties from leases on Commonwealth land be deposited into the Oil and Gas Lease Fund.  Said fund was to be used for conservation, recreation, dams, flood control and other purposes related to maintaining the Commonwealth’s natural resources. In 2009, the Legislature added an amendment to the Fiscal Code which addressed Marcellus Shale leasing.  The amendment resulted in funds designated to the Oil and Gas Lease Fund being transferred to the General Fund to be used for purposes unrelated to conservation. Further acts and legislation between 2008 and 2015 allowed for funds to be reallocated from the Department of Conservation of Natural Resources and into other projects. The plaintiff in PEDF challenged the constitutionality of said legislative acts. 

In a ruling issued by Justice Donohue, the majority found that under Article I, Section 27, which provides: 

“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 people.”          

The Commonwealth is under a duty to maintain conservation efforts as a trustee, and revenue generated from oil and gas royalties produced from the leasing of Commonwealth land belongs to the corpus of the trust. Accordingly, royalty revenue must return to the trust that was built between the Commonwealth and the people. Legislative amendments that work against the self-executing language of Section 27 are unconstitutional because the context of the language of the trust provides for the specific purpose of conservation, preservation and maintenance of the Commonwealth’s natural resources. 

While PEDF dictates how future revenues generated from oil and gas development on Commonwealth lands will be allocated, it does not address the prior use of funds which is now unconstitutional. Further, PEDF only applies to oil and gas royalties. The issue of allocation of funds generated from bonus payments, rentals, etc., from oil and gas leases on Commonwealth lands is to be decided by the Commonwealth Court. PEDF will influence future oil and gas leasing and development activities on Commonwealth lands to an unknown extent.  However, it is clear that the reinforced, fundamental environmental rights of Pennsylvanians require extensive consideration by those seeking to extract the Commonwealth’s natural resources. 

For more information about this case and its potential impact on future Oil & Gas operations, contact Chris Haselhoff or Brant Miller in our Pittsburgh office.

Environmental/Toxic Tort

Christopher J. Haselhoff
Brant T. Miller

Environmental/Toxic Tort