161 A.3d 911
Pa.2017Background
- In 1971 Pennsylvania added Article I, §27 (Environmental Rights Amendment), declaring a right to clean air and pure water and creating a public trust: the Commonwealth is trustee of public natural resources to "conserve and maintain" them for current and future generations.
- DCNR manages state parks/forests and has statutory authority to lease minerals; the Oil and Gas Lease Fund Act (1955) had directed rents/royalties into a fund "exclusively used" for conservation/recreation and specifically appropriated to the agency responsible for forests/parks.
- Beginning with large Marcellus Shale bonus payments (2008), Legislature amended the Fiscal Code (2009–2014) to route royalties/transfers from the Lease Fund to the General Fund, cap DCNR distributions ("up to $50M"), and authorize multi‑hundred‑million transfers to the General Fund and other funds.
- Pennsylvania Environmental Defense Foundation sued, seeking declaratory relief that the Fiscal Code amendments and transfers violated §27 by diverting proceeds from trust purposes and by failing to exercise trustee duties in leasing and appropriation decisions.
- Commonwealth Court largely upheld the Fiscal Code changes; this appeal asks how §27 should be judicially reviewed and whether specific Fiscal Code provisions (Sections 1602‑E, 1603‑E, transfers) violate §27.
- Supreme Court majority (Donohue, J.) holds §27 creates an enforceable public trust governed by fiduciary (trust) duties; royalties that are proceeds from sale of trust resources are corpus and must be used to conserve and maintain public natural resources; reverses Commonwealth Court as to Sections 1602‑E and 1603‑E and remands.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper review standard for §27 challenges | Reject Payne three‑part test; require review grounded in §27 text and trust law | Maintain Payne test or defer widely to legislature on resource uses | Court rejects Payne test; applies §27 text plus Pennsylvania trust principles (prudence, loyalty, impartiality) |
| Are royalties/proceeds from sale of public natural resources part of the §27 trust corpus? | Royalties/proceeds from sale (including royalties) are trust principal and must be retained/used for trust purposes | §27 silent on proceeds; proceeds may be used for broad "benefit of all the people" and subject to appropriation | Royalties are proceeds from sale and part of trust corpus; must be managed under trustee duties; some other payments require factual development to classify |
| Constitutionality of Fiscal Code Sections 1602‑E and 1603‑E (control and cap of royalties) | These provisions facially violate §27 by diverting royalties and failing to reflect trustee duties | Legislative control of appropriations and fund structure is constitutional; Lease Fund was statutory, not constitutional | Sections 1602‑E and 1603‑E are facially unconstitutional because they allow use of trust assets for non‑trust purposes without trustee exercise of fiduciary duties; reversed |
| Legality of other transfers (1604‑E, 1605‑E, Act 13 transfers, transfers to General Fund) | Transfers of proceeds from sale to General Fund violating §27 unless done consistent with trustee duties | Transfers permissible for public benefit; no textual mandate funds be reinvested in conservation | Transfers may be unconstitutional if they divert proceeds from trust purposes absent faithful exercise of fiduciary duties; remanded for factual/ trust‑law analysis to determine classification and compliance |
Key Cases Cited
- Robinson Township v. Commonwealth, 83 A.3d 901 (Pa. 2013) (plurality) (interpreting §27 as creating affirmative trustee duties and prohibitory environmental rights)
- Payne v. Kassab, 361 A.2d 263 (Pa. 1976) (affirming prior decision but not adopting its three‑part test for §27 challenges)
- McKeown’s Estate, 106 A. 189 (Pa. 1919) (proceeds from sale of trust assets presumptively part of trust principal)
- Illinois Central R.R. Co. v. Illinois, 146 U.S. 387 (1892) (seminal public trust doctrine decision concerning alienation of public trust lands)
- National Audubon Soc’y v. Superior Court, 658 P.2d 709 (Cal. 1983) (applying public trust principles; governmental disposals permissible only when public trust uses are considered)