In this direct appeal from a decision of the Commonwealth Court, the Pennsylvania Supreme Court ruled that the text of the Environmental Rights Amendment to the Pennsylvania Constitution (Art. 1, § 27) was the appropriate standard of judicial review for determining the constitutionality of Commonwealth agency actions. In so ruling, the Court expressly rejected the balancing test established by the Commonwealth Court in Payne v. Kassab, 312 A.2d 86 (Pa. Commw. 1973), which had been used for decades to determine whether state action was in violation of the Environmental Rights Amendment.

Pursuant to the Oil and Gas Lease Fund Act of 1955, all rents and royalties from the leasing of state lands for oil and gas drilling must be deposited in the “Oil and Gas Lease Fund” (the “Lease Fund”) and used exclusively for “conservation, recreation, dams, or flood control or to match any Federal grants which may be made for any of the aforementioned purposes.” From 2009 through 2014 the General Assembly diverted money from the Lease Fund to the Commonwealth’s General Fund, restricted the ability of the Department of Conservation and Natural Resources (“DCNR”) to spend funds without legislative authority, and began using the Lease Fund to support the overall budget of DCNR. In total, $335 million was diverted from the Lease Fund to the General Fund for a variety of state government purposes. The Pennsylvania Environmental Defense Foundation (PEDF) filed a declaratory judgment action in Commonwealth Court challenging the Commonwealth’s diversion of monies from the Lease Fund, and asserting these actions violated the rights of all Commonwealth citizens conferred by the Environmental Rights Amendment.

The Commonwealth Court upheld the diversion of monies from the Lease Fund, applying the 3-part test it had established in Payne to determine whether the use of Commonwealth land violated the Environmental Rights Amendment.  PEDF filed a direct appeal by right to the Pennsylvania Supreme Court, which reversed in part and vacated in part the Commonwealth Court’s decision.  As an initial matter, the Court found that laws that unreasonably impair citizens’ rights to clean air, pure water, and environmental preservation were unconstitutional; squarely rejecting the Commonwealth’s 3-part Payne test. It next held that because state parks and forests, including the oil and gas minerals therein, were part of the corpus of Pennsylvania’s environmental public trust, the Commonwealth, as trustee, must manage those resources according to the plain language of the Environmental Rights Amendment, which imposes fiduciary duties consistent with Pennsylvania trust law. Applying Pennsylvania trust law, the Court held that proceeds from the sale of oil and gas resources from public lands must remain in the corpus of the trust, and thus may only be used for conservation and maintenance purposes. The Court next concluded that the public trust provisions of the Environmental Rights Amendment were self-executing. Lastly the Court held that the statutory provisions transferring proceeds from the Lease Fund to the General Fund were facially unconstitutional because they permitted the trustee to use trust assets for non-trust purposes; a clear violation of a trustee’s most basic fiduciary obligations. An opinion concurring in part and dissenting in part was filed by Justice Baer, and a dissenting opinion was filed by Chief Justice Saylor.

Click here to read: PA Env. Defense Fdn. v. Wolf, 10 MAP 2015 (Pa. Jun. 20, 2017).

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