THE MARCELLUS SHALE COALITION v. DEPARTMENT OF ENVIRONMENTAL PROTECTION OF THE COMMONWEALTH OF PENNSYLVANIA AND ENVIRONMENTAL QUALITY BOARD OF THE COMMONWEALTH OF PENNSYLVANIA
No. 115 MAP 2016
IN THE SUPREME COURT OF PENNSYLVANIA MIDDLE DISTRICT
June 1, 2018
SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ. [J-73-2017] Appeal from the Order of the Commonwealth Court at No. 573 MD 2016 dated 11/8/16 ARGUED: October 18, 2017
OPINION
CHIEF JUSTICE SAYLOR
DECIDED: June 1, 2018
This is a direct appeal in the context of pre-enforcement judicial review of regulations governing the operation of unconventional gas wells in Pennsylvania. The Commonwealth Court, sitting as a trial court, issued a single-judge opinion and order preliminarily enjoining the enforcement of some of the challenged regulations. The administrative-agency parties appeal from that decision.
I. Background
On October 13, 2016, Appellee, the Marcellus Shale Coalition (“MSC“), filed in the Commonwealth Court‘s original jurisdiction a petition for review in the nature of a complaint seeking declaratory and injunctive relief (the “Petition“), on behalf of itself and its members. MSC describes itself as a non-profit membership organization whose members explore, produce, transmit, and distribute natural gas from the Marcellus and Utica Shale formations. See Petition ¶¶3-4. MSC named as respondents the Pennsylvania Department of Environmental Protection (“DEP“) and the Pennsylvania Environmental Quality Board (the “EQB“) (collectively, the “Agencies“).1
In the Petition, MSC challenged the validity of several regulations relating to unconventional gas well operations as governed by Pennsylvania‘s Oil and Gas Act of 2012, known as Act 13.2 See Robinson Twp. v. Commonwealth, 623 Pa. 564, 584 & n.1, 83 A.3d 901, 913 & n.1 (2013). Those provisions are contained in
MSC asserted seven counts, focusing on regulations pertaining to discrete areas within Chapter 78a which were part of the new package. These included: public resources, see
A. Request for preliminary injunctive relief
Contemporaneous with the Petition, MSC filed an Application for Expedited Special Relief (the “Application“), requesting a preliminary injunction with respect to the Chapter 78a regulations challenged in the Petition pending a ruling as to their validity. The Agencies submitted a joint answer opposing the Application and arguing MSC failed to meet the requirements for a preliminary injunction. An evidentiary hearing was held with MSC bearing the burden to demonstrate the need for interim relief.4
At the hearing, MSC did not present any witnesses, but it did enter documents
B. Trial court decision granting relief in part
The Commonwealth Court, per Judge Brobson, issued a single-judge, unpublished opinion and order, granting in part and denying in part preliminary injunctive relief. As MSC has not cross-appealed, we are only concerned with the portion of the decision granting such relief. In particular, the court granted the Application for interim relief (at least in part) with respect to Counts I, II, IV, and V of Petition, and denied the Application in all other respects.
General precepts
Initially, the court made several general comments concerning the prerequisites for preliminary injunctive relief. The court explained, for example, that where a party incurs losses from having to comply with an invalid regulation and the relevant government agency is immune from liability, the party‘s losses constitute irreparable harm. See MSC, No. 573 M.D. 2016, slip op. at 8 (citing Boykins v. City of Reading, 128 Pa. Cmwlth. 154, 158, 562 A.2d 1027, 1028-29 (1989)). With respect to the clear-right-to-relief/likelihood-of-success element, the court added that it need not finally decide the merits of the challenger‘s substantive claims; rather, the court explained, the inquiry is whether the challenger has presented a substantial legal question that must be resolved to determine the parties’ rights and obligations. See id. (citing T.W. Phillips Gas & Oil Co. v. Peoples Natural Gas Co., 492 A.2d 776, 780-81 (Pa. Cmwlth. 1985)). Finally, the court indicated that the status quo to be preserved by a preliminary injunction is the last “peaceable, lawful, noncontested status which preceded the pending controversy.” Id. (citing The Woods at Wayne Homeowners Ass‘n v. Gambone Bros. Constr. Co., 893 A.2d 196, 204 n.10 (Pa. Cmwlth. 2006)).
Public resources (Count I)
In Count I, MSC alleged that regulations pertaining to public resources, as reflected in Sections 78a.15(f) and (g), together with related definitions in Section 78a.1, were void and unenforceable for a variety of reasons.
The court noted that Section 78a.15(f) imposes on drilling applicants a pre-application-notice obligation relative to “public resources” – a term that is not defined but, in context, appears to signify various types of features such as forests, game lands, wildlife areas, national natural landmarks, state or national scenic rivers, historical and archaeological sites, threatened or endangered species, and critical habitats. See
MSC forwarded eleven distinct legal challenges to this scheme, see Petition ¶44, based largely on the premise that, in Robinson Township v. Commonwealth, 637 Pa. 239, 147 A.3d 536 (2016) (“Robinson Twp. IV“), this Court enjoined enforcement of
The Commonwealth Court ultimately rejected MSC‘s general argument that DEP lacks authority to protect public resources under Act 13. The court explained that, in Pennsylvania Independent Oil & Gas Ass‘n v. DEP, 146 A.3d 820 (Pa. Cmwlth. 2016), aff‘d per curiam, 161 A.3d 949 (2017), it had concluded that, in the wake of Robinson Township v. Commonwealth, 623 Pa. 564, 83 A.3d 901 (2013) (“Robinson Twp. I“), DEP‘s authority under Section 3215(c) of Act 13 “to consider the impact that a proposed well will have on public resources, those listed and unlisted, is extant, limited only by” the portion of Robinson Twp. I that enjoins Act 13‘s enforcement with respect to certain statutory water source setback and waiver provisions. MSC, No. 573 M.D. 2016, slip op. at 14 (quoting Pa. Indep. Oil & Gas Ass‘n, 146 A.3d at 829). The court also found most of the other legal theories forwarded by MSC to be insufficient to warrant preliminary injunctive relief.
The court did, however, conclude that MSC had raised a colorable argument that the regulations improperly expanded the list of protected resources beyond those enumerated in Section 3215(c). Although acknowledging that Section 3215(c)‘s list is not exhaustive, the court observed that a substantial question remained whether the General Assembly intended to protect only publicly-owned natural resources, or all publicly-owned property, as well as privately-owned
Similarly, the Commonwealth Court found that MSC presented a substantial question regarding the permissibility of subsuming “species of special concern” within the public-resource protection rules by including them within the definition of “other critical communities.”
Overall, then, the court determined that MSC had satisfied the clear-right-to-relief prong in relation to the Chapter 78a regulations in question insofar as they include as public resources “common areas on a school‘s property or a playground” and “species of special concern,” and include playground owners as public resource agencies. The court reasoned that these aspects of the regulations gave rise to irreparable harm per se and, additionally, irreparable harm via the “cost [of] compliance with these provisions – costs that well applicants will be unable to recover . . . if this Court should rule in favor of MSC on the merits.” Id.
Finally, the court held that the harm to MSC from refusing a narrowly-tailored preliminary injunction relative to the above discrete items outweighed the harm from granting it, particularly as granting it would leave in place the overall notice, comment, and mitigation scheme reflected in Section 78a.15(f), and the Agencies had not offered evidence at the hearing that preliminarily enjoining these provisions would harm any person, entity, or the public. As well, the court noted that a narrowly-tailored injunction would restore the parties to the status quo as it existed prior to the alleged wrongful conduct and would not adversely affect the public interest. See id. at 19 & n.13.
Area of review (Count II)
In Count II of the Petition, MSC challenged the validity of regulations appearing in Sections 78a.52a and 78a.73(c) and (d), which relate to the obligations of well operators relative to nearby wells and the operators of such wells. These rules are designed to address DEP‘s concern with the unintentional migration of fluids and other materials associated with unconventional drilling from the target well to nearby orphan, abandoned, or plugged wells.
Under the regulations, prospective operators must, in the pre-drilling timeframe, conduct an area-of-review survey identifying all active, inactive, orphan, abandoned, and plugged-and-abandoned wells that lie within 1,000 feet of the operator‘s intended vertical well bore or of any point on the surface above the length of an intended horizontal bore.5 They must also provide notice of their planned drilling activities to the operators of all such nearby wells. They are additionally required to engage in ongoing visual monitoring of all such
MSC alleged that: these provisions impose an unreasonable and unwarranted monitoring obligation; there is no legal authority for such area-of-review requirements; requiring someone other than the well owner to plug an orphan or abandoned well conflicts with Section 3220 of Act 13, which imposes plugging requirements only on the well owner or operator, see
As with Count I, the Commonwealth Court granted preliminary injunctive relief in part. Initially, the court rejected the contention that the challenged regulations were unreasonable or unfounded, as MSC failed to demonstrate that the migration of drilling fluids poses no risk to Commonwealth waters as broadly defined by the Clean Streams Law.6 See
Nevertheless, the Commonwealth Court found that MSC raised a substantial legal issue regarding the reasonableness of the monitoring and remediation provisions.
It referenced significant implementation issues apparent from the face of the regulation, i.e.,
The Commonwealth Court also determined that MSC established irreparable harm that outweighed any harm in refusing to grant the injunction, because the cost of compliance as estimated by the EQB was $11 million, which may be unrecoverable if MSC is successful on the merits. Further, the court concluded that an injunction would restore the parties to the status quo, that is, the absence of monitoring and remediation requirements with respect to wells owned or operated by others. Ultimately, the court expressed that it would grant a narrow preliminary injunction whereby operators must still monitor
Impoundments (Count IV)
In Count IV, MSC alleged that the Chapter 78a rulemaking package contained regulations with extensive and burdensome new requirements for impoundments. MSC pointed to rules setting forth new construction standards for well-development impoundments, including requirements that they be constructed with a synthetic impervious liner and either have a completely-surrounding fence or be continuously monitored by an individual to prevent damage from third parties or wildlife. See
MSC challenged these regulations on a number of grounds. Among these was a contention that operators, including its members with impoundments that were built in compliance with DEP regulations, must now close their impoundments or upgrade them to meet the new standards. In this respect, MSC observed there is no grandfathering for synthetic liners already in place. See Petition ¶64.
The Commonwealth Court found that a substantial legal question existed in this regard, noting in particular that Secretary Perry credibly testified that: the new rules arose, not from a change in the law, but from a change in DEP‘s interpretation of longstanding law; and existing impoundments permitted and built to DEP standards would have to be retrofitted or closed under DEP‘s new interpretation. See MSC, No. 573 M.D. 2016, slip op. at 32 (quoting Young J. Lee, Inc. v. Dep‘t of Revenue, 504 Pa. 367, 375, 474 A.2d 266, 270 (1983) (“The government cannot, on the one hand, create a business which is dependent on a permit and then, with the other, destroy it by revoking the authorizing permits without first affording sufficient due process.” (internal quotation marks and citation omitted))). The court additionally recognized that, according to the hearing evidence, the cost of impoundment retrofitting was substantial and potentially unrecoverable, thereby establishing irreparable harm.
Finally, while acknowledging that the proposed regulations would likely offer greater health and safety protections, the court noted DEP offered no evidence demonstrating that existing impoundments pose an immediate threat to the public health and safety or to the environment – a circumstance which led the court to conclude that the harm from refusing an injunction would outweigh any harm from granting it.
The Commonwealth Court expressed that its preliminary injunction as to the impoundment regulations would be closely fitted to address only the effect that such regulations would have on existing impoundments. Thus, the court denied injunctive relief insofar as the regulations apply to new impoundments. The court indicated that, as thus narrowed, the injunctive
Site restoration (Count V)
In Count V of its Petition, MSC challenged the regulations pertaining to site restoration. As the term suggests, site restoration refers to restoration, after the construction of a well is complete, of land surface areas disturbed during the creation of the well. See
Site restoration is addressed by Section 3216 of Act 13. See
As with previous counts, MSC articulated several grounds on which it believed that Section 78a.65 was void and unenforceable. Ultimately, the Commonwealth Court found that only one of MSC‘s claims raised a substantial legal question.
By way of further background, under the Clean Streams Law and associated regulations in
(n) Regulated activities that require site restoration or reclamation, and small earth disturbance activities. The portion of a site reclamation or restoration plan that identifies PCSM BMPs to manage stormwater from oil and gas activities or mining activities permitted in accordance with Chapters 78 and 86--90; timber harvesting activities; pipelines; other similar utility infrastructure; Department permitted activities involving less than 1 acre of earth disturbance; or abandoned mine land reclamation activities, that require compliance with this chapter, may be used to satisfy the requirements of this section if the PCSM, reclamation or restoration plan meets the requirements of subsections (b), (c), (e), (f), (h), (i) and (l) and, when applicable, subsection (m).
Returning to the Chapter 78a regulations in issue, MSC questioned whether
(d) Areas not restored. Disturbed areas associated with well sites that are not included in a restoration plan, and other remaining impervious surfaces, must comply with all requirements in Chapter 102 (relating to erosion and sediment control). The PCSM plan provisions in §102.8(n) apply only to the portions of the restoration plan that provide for restoration of disturbed areas to meadow in good condition or better or otherwise incorporate ABACT [antidegeneration best available combination of technologies] or nondischarge PCSM BMPs.
The Commonwealth Court found that MSC had raised a substantial legal issue as to whether the above subsection “imposes erosion and sediment control measure requirements on well owners and operators in excess of what is required under the Clean Streams Law.” MSC, No. 573 M.D. 2016, slip op. at 38. The court continued that Section 3216(b) and (c) of Act 13 specify that erosion and sediment control measures are to be implemented pursuant to the Clean Streams Law. It observed that in the regulatory analysis form (the “RAF“) submitted to the IRRC for consideration with the Chapter 78a regulations, DEP had described these provisions as mere clarifications of existing law. The court noted that that position was undermined to the extent Section 78a.65(d) purports to abrogate any exemptions contained in the Clean Streams Law. That being the case, the court determined that MSC had raised a substantial legal question and thus had satisfied the clear-right-to-relief prong. See id.
Further, the Commonwealth Court held that any conflict between Section 78a.65(d) and the Clean Streams Law and/or Chapter 102 constitutes irreparable harm per se insofar as the challenged provision conflicts with legislative intent as expressly stated in Section 3216(b) and (e) of Act 13. The court added that the harm to MSC from denying interim relief would outweigh any purported harm to the Agencies from granting it. On this latter point, the court expressed that preliminarily enjoining DEP from implementing the regulation should have no effect on the agency as DEP stated in the RAF that the regulation merely restates what the DEP believes are current restoration requirements. See id. at 37 (quoting RAF at 101). Additionally, the court indicated that enjoining the provision will restore the parties to the status quo before the allegedly wrongful conduct, namely, the absence of Section 78a.65(b). See id. at 39. Lastly, the Commonwealth Court clarified that its injunction would be narrowly tailored to encompass only Section 78a.65(d), thus “leaving intact the bulk of Section 78a.65 pending the outcome of this litigation.” Id.
The Commonwealth Court‘s order
Based on the foregoing, the Commonwealth Court issued an order granting in part and denying in part MSC‘s Application for Expedited Special Relief. The order preliminarily enjoined DEP from implementing and enforcing: (1) Sections 78a.1 and 78a.15(f) and (g) to the extent they include “common areas on a school‘s property or a playground” and “species of special concern” as “public resources” and include “playground owners” as a “public resource agency“; (2) Section 78a.52a(c)(3) and Section 78a.73(c) and (d) to the degree they impose monitoring and remediation obligations on owners and operators with respect to wells in the area-of-review survey owned and/or operated by others; (3)
C. Appeal to this Court
Litigation of the Petition‘s merits continues in the Commonwealth Court. In parallel with those proceedings, the Agencies appealed from the partial grant of preliminary injunctive relief, and this Court noted probable jurisdiction.
II. Arguments and Analysis
A. Trial court standard for interim relief
The Agencies generally contend that the Commonwealth Court did not utilize the correct standard for granting a preliminary injunction. They note that, when finally adjudicating the validity of a regulation adopted per an agency‘s rule-making power, courts use a three-part test whereby the regulation must be: (a) adopted within the agency‘s statutory power; (b) issued pursuant to proper procedure; and (c) reasonable. See Brief for Appellants at 27 (quoting Tire Jockey Serv., Inc. v. DEP, 591 Pa. 73, 108, 915 A.2d 1165, 1188 (2007)). Although the Commonwealth Court‘s reasoning centered on the first element, the Agencies initially focus on the third prong, arguing that a regulation can only be deemed unreasonable if it was fashioned in bad faith, is arbitrary, or represents a gross abuse of discretion. See id. at 28. The Agencies continue by asserting, without reference to supporting authority, that courts should apply the same level of deference to an agency‘s interpretation of its enabling statutes in reviewing a pre-enforcement preliminary injunction as would be warranted in the context of a post-enforcement challenge. See id. at 29.
Based on these dual premises, the Agencies conclude (again without citation to authority) that, in assessing the clear-right-to-relief prerequisite for a preliminary injunction, the Commonwealth Court should have “required MSC to show (1) manifest error in the EQB‘s interpretation of its statutory authority to promulgate the challenged Chapter 78a [r]egulations, (2) a manifest violation of a statutory procedure in promulgating the regulations, or (3) that the [a]gencies’ assertions that the regulations are reasonable were made in bad faith, purely arbitrary, or a manifest abuse of discretion.” Id.
The Agencies additionally fault MSC for failing to call witnesses at the preliminary injunction hearing. They also emphasize that the regulations were formulated during a six-year time period in which voluminous public comments – including comments from other state agencies, DEP‘s Oil and Gas Technical Advisory Board, experts, stakeholders, and local governments – as well as data from the oil and gas industry were received and taken into account, and that the regulations were published in the Pennsylvania Bulletin as an order of the EQB. See id. at 30-31.
MSC argues that the Agencies, throughout their brief, employ an incorrect statement of the deference owed to DEP‘s interpretation of the law. MSC proffers that the Commonwealth Court utilized the proper standard when evaluating the elements for a preliminary injunction, and the Agencies overlay a framework more suited to a final merits assessment of the challenged regulations’ validity. See Brief for Appellee at 16-17 (quoting Fischer v. DPW, 497 Pa. 267, 271, 439 A.2d 1172, 1174 (1982) (noting that, as a preliminary
In this regard, MSC indicates that the three-prong test articulated by the Agencies will be applied later in the litigation when the Commonwealth Court decides the Petition‘s merits, see id. at 17 (citing Rand v. State Bd. of Optometry, 762 A.2d 392, 394 (Pa. Cmwlth. 2000)), but that for now, it was sufficient for the court to determine that there are substantial, unresolved legal questions. See id. MSC adds that, in all events, when applying the first (lawfulness) prong in the context of a challenge to legislative rulemaking, little deference is due to an agency with regard to its reading of the authorizing statute, since administrative agencies have no special expertise in the area of statutory interpretation.
The regulations presently at issue are legislative rules – meaning they establish a controlling standard of conduct. See Borough of Pottstown v. Pa. Mun. Ret. Bd., 551 Pa. 605, 609, 712 A.2d 741, 743 (1998). Such regulations “enjoy a general presumption of reasonableness.” Id. (citations omitted). See generally Nw. Youth Svcs., Inc. v. DPW, 620 Pa. 140, 155-61, 66 A.3d 301, 310-13 (2013) (surveying the different types of agency rules and the deference judicially accorded to each). As MSC notes, however, and because legislative rulemaking “is ‘an exercise of legislative power by an administrative agency, pursuant to a grant of legislative power by the legislative body,‘” Popowsky v. PUC, 589 Pa. 605, 630, 910 A.2d 38, 53 (2006) (quoting Rohrbaugh v. PUC, 556 Pa. 199, 208, 727 A.2d 1080, 1085 (1999)), a legislative rule is only valid if it falls within the scope of the rulemaking power granted by the General Assembly. See, e.g., Rand, 762 A.2d at 395 (invalidating an agency regulation that exceeded the scope of its legislatively-granted rulemaking powers).
In the context of a motion for a preliminary injunction, only a substantial legal issue need be apparent for the moving party to prevail on the clear-right-to-relief prong. See SEIU, 628 Pa. at 590-91, 104 A.3d at 506; Fischer, 497 Pa. at 271, 439 A.2d at 1174.9 This implicates a less deferential standard relative to the agency‘s interpretation of the governing statute than would be applicable to a trial court‘s final merits determination.
B. Standard of appellate review
Appellate courts review a trial court order granting or denying a preliminary injunction for an abuse of discretion. See Brayman Constr. Crop. v. PennDOT, 608 Pa. 584, 601, 13 A.3d 925, 935 (2011) (citing Summit Towne Ctr., Inc. v. Shoe Show of Rocky Mount, Inc., 573 Pa. 637, 645, 828 A.2d 995, 1000 (2003)). Insofar as issues of statutory interpretation are concerned, however, our review is de novo. See SEIU, 628 Pa. at 591, 104 A.3d at 506. Additionally,
we do not inquire into the merits of the controversy, but only examine the record to determine if there were any
apparently reasonable grounds for the action of the court below. Only if it is plain that no grounds exist to support the decree or that the rule of law relied upon was palpably erroneous or misapplied will we interfere with the [decree].
Brayman, 608 Pa. at 602, 13 A.3d at 935-36 (emphasis added) (quoting Roberts v. Bd. of Dirs. of Sch. Dist. of Scranton, 462 Pa. 464, 469, 341 A.2d 475, 478 (1975)).
C. Individual counts
Public resources (Count I)
(i) Playgrounds and common areas on a school’s property
The Agencies argue that the list of public resources appearing in Section
Common areas of a school’s property -- An area on a school’s property accessible to the general public for recreational purposes. For the purposes of this definition, a school is a facility providing elementary, secondary or postsecondary educational services.
Playground – (i) An outdoor area provided to the general public for recreational purposes. (ii) The term includes community-operated recreational facilities.
The Commonwealth Court did not disagree. It observed that the Agencies’ interpretation of the statute could be overly broad as it might justify the inclusion of such items as shopping centers, movie theaters, sports stadiums, and amusement parks, all of which, per the doctrine of ejusdem generis, do not appear to be contemplated by Section
As noted, the court deemed the irreparable-harm prong to be satisfied due to, among other things, the cost of compliance. According to the RAF, the total cost of compliance will be $888,000 per applicant. See RAF at 87, reprinted in R.R. 842a. Although some of this cost would be incurred relative to public resources other than playgrounds and school common areas, it is undisputed that the addition of those two items accounts for at least part of the cost. Further, since the Agencies enjoy sovereign immunity, if the challenged regulations are ultimately held invalid, that portion of the cost would not be recoverable by MSC members. Thus, the court reasonably found that MSC carried its burden to demonstrate irreparable harm. See generally Boykins, 128 Pa. Cmwlth. at 158, 562 A.2d at 1029 (“The inability to be adequately compensated by an award of damages constitutes irreparable harm.” (citation omitted)).
As well, given the Agencies’ failure to produce evidence of the harm they would suffer if the challenged provisions were enjoined preliminarily,12 the court reasonably concluded that, for purposes of the motion, greater injury would result from refusing the injunction than from granting it.13 We also see no basis to disagree with the court’s explanation that issuing the preliminary injunction, narrowly tailored as appropriate, would not adversely affect the public interest. Finally, the court reasonably concluded that a preliminary injunction would restore the parties to the
(...continued) party has compellingly argued why “impacts on [school common areas and playgrounds] should not be considered in equal measure before the DEP issues a permit[.]” Id. at 8.
Our task is not to formulate environmental policy, but to evaluate whether the Commonwealth Court reasonably discerned the existence of a substantial question concerning whether the term “public resources,” as it appears in Section
(ii) Species of special concern
As for “species of special concern,” the Agencies observe, first, that Section
MSC suggests that the Agencies’ argument is misleading. It maintains that, while use of the PNDI database to identify threatened or endangered species may be a longstanding practice, imposition of mandatory protections for “species of special concern” based on a PNDI receipt is new. See Brief for Appellee at 23.15 It observes that, per Secretary Perry’s testimony, the designation of a species as threatened or endangered proceeds from a “rigorous process” which includes notice-and-comment rulemaking, N.T., Oct. 25, 2016, at 153, whereas the same is not true of species of special concern. MSC notes Secretary Perry observed that species of special concern are placed in the PNDI database and designated as such by the jurisdictional agencies, that is, the Agencies with “statutory authority to protect those species,” including the Department of Conservation and Natural Resources, the Game Commission, the Fish and Boat Commission, and the Pennsylvania office of the United States Fish and Wildlife Service. Id. at 153-54. MSC also emphasizes that Secretary Perry confirmed the rule requiring consideration of species which are neither endangered nor threatened was adopted in 2013 pursuant to a departmental policy, which cannot create law, but is now mandatory under the challenged regulation. See id. at 152-54, 159-60.
We need not address whether or how a regulation may make obligations imposed on an applicant depend on the contents of a database which is updated over time by other agencies. In finding a substantial legal question, the Commonwealth Court did not focus on that aspect of the challenged provision. Rather, after indicating that species of special concern, as a resource classification, falls below threatened or endangered, see MSC, No. 573 M.D. 2016, slip op. at 18—a proposition that is not in dispute—the court centrally highlighted that such classification is not the result of public rulemaking and “does not have any special protection afforded under the laws of this Commonwealth that
(...continued) (ii) The term does not include threatened and endangered species.
Without deciding finally whether the absence of statutory authority requiring DEP to protect species of special concern is a valid basis to conclude that the “other critical communities” necessarily excludes that category from the scope of Section
Further, under the regulations challenged in Count I, the inclusion of species of special concern in the “public resource” category triggers the same notice, comment, and mitigation obligations for the well applicant as were applicable to playgrounds and school common areas. See
Area of review (Count II)
In relation to Count II, as discussed, the Commonwealth Court rejected many of MSC’s challenges to the area-of-review regulations, see
The Agencies posit that the Commonwealth Court erred by failing to recognize their broad statutory authority under Act 13 and the Clean Streams Law to protect the waters of the Commonwealth and the public from the impacts of drilling – powers which they exercised by promulgating the area-of-review regulations. They refer to Section 3274 of Act 13 in particular as giving the EQB authority to promulgate regulations necessary to accomplish such objectives. See Brief for Appellants at 44 (citing
In terms of liability for environmental harms, the Agencies observe that the Clean Streams Law provides an independent basis for liability and that such liability can be triggered by causation alone, as opposed to land ownership, thereby undercutting the Commonwealth Court’s concern that the regulations are inconsistent with Sections 3220 and 3271 of Act 13. See id. at 46 (citing Commonwealth v. Harmar Coal Co., 452 Pa. 77, 306 A.2d 308 (1973)). The Agencies also advert to the large number of abandoned oil and gas wells in this state, the many documented stray-gas-migration investigations that have taken place since 1984, and “geyser-like events” and polluted groundwater that can result from communication between an active unconventional well and an existing oil or gas well. Id.17 Overall, in this regard, the Agencies fault the Commonwealth Court for what they view as an overly narrow interpretation of their authority under Act 13 and the Clean Streams Law. See id. at 47.
Notwithstanding the Agencies’ arguments, there are reasonable grounds for the Commonwealth Court’s determination that a substantial legal question was raised in terms of the monitoring and remediation obligations imposed by the regulations on well operators relative to wells located on other persons’ property. The provision of the Clean Streams Law giving DEP power to require entry onto others’ land is not only discretionary, it is only triggered by actual pollution or a danger of pollution. The new regulatory mandate to enter onto others’ land, visually monitor their wells, and cap their wells if necessary, is far broader. Indeed, the regulations dictate that all identified wells be visually monitored during stimulation activities, although it is not evident how this may be achieved without traversing the lands of others. The Agencies have not brought to our attention a legal basis on which DEP would be authorized to require access onto private land in the case of an inaccessible well which posed no apparent danger of pollution. Further, counsel for the Agencies conceded at the hearing that DEP might not have the authority to require anyone to allow access to their property for well-monitoring purposes. See N.T., Oct. 26, 2016, at 358.18
Nor is Harmar Coal on point. In that matter this Court consolidated two appeals dealing with the obligation of a coal mine operator to treat acid mine drainage (a
Given the above, we conclude there are apparently reasonable grounds to support the court’s determination that MSC raised a significant legal question in regard to the implementation of the area-of-review requirements.
In terms of the balancing-of-harms inquiry, the Commonwealth Court’s analysis is somewhat conclusory. See MSC, No. 573 M.D. 2016, slip op. at 26. Unfortunately, however, the parties’ arguments are not entirely helpful as they are not directly apposite to the grant of preliminary relief. MSC notes that the RAF reflects an overall cost to industry of $11 million to comply with the area-of-review regulations, and adds that these costs will be unrecoverable if the regulations are ultimately deemed invalid. Still, that figure appears to be the total cost going forward indefinitely, not the probable cost to be incurred pending a final ruling on the merits. Likewise, the Agencies do not give an expected cost which takes into account the limited timeframe involved. Rather, they maintain there is a non-zero probability of communication between an unconventional well and an existing well, which, if it were to occur, would result in water pollution and substantial cleanup costs.
If such incidents were frequent, the Agencies’ argument would carry more weight. According to Secretary Perry, however, they are “not a common occurrence.” N.T., Oct. 25, 2016, at 120. Even accepting that the cleanup effort ensuing from a single occurrence would be financially burdensome, see id., absent some indication that there is more than a de minimus probability the risk will materialize before MSC’s claims are decided (discussed below), we cannot say that the Commonwealth Court lacked any reasonable basis for its conclusion regarding the balancing of harms.
As for adverse effects to the public interest, the Agencies, again, portray that well-communication incidents tend to cause significant environmental harms, particularly if the communication is between an unconventional well and a conventional one. See Brief for Appellants at 48. It is self-evident that significant environmental harms have an adverse effect on the public interest. Again, however, such effects only arise from an actual incident. MSC suggests that the record only supports a low probability of this occurring. It argues that, with over 9,000 unconventional wells having been drilled in Pennsylvania, see 46 Pa. Bull. No. 41, at 6463 (Oct. 8, 2016), reprinted in R.R. 694a (reflecting a figure of 9,486), the record references only five well-communication incidents and of those, only one was between an unconventional well and a conventional one. See RAF at 89, reprinted in R.R. 844a.19
Finally, we see no basis to disagree with the court’s suggestion that the preliminary injunction, narrowed so that it applies only to wells located on the lands of others, restores the parties to their status quo ante. See MSC, No. 573 M.D. 2016, slip op. at 26-27.
(...continued) the environment, no matter how remote or speculative. See Concurring and Dissenting Opinion, slip op. at 13 (suggesting a “no effect” test which would not countenance even minimal or speculative risks). Other courts have eschewed that stance and instead have considered the probable consequences of an injunction. See, e.g., Stormans, Inc. v. Selecky, 586 F.3d 1109, 1139 (9th Cir. 2009) (explaining that, in analyzing the public-interest prong for purposes of a preliminary injunction, courts should not consider effects that are remote or speculative, but should “weigh the public interest in light of the likely consequences of the injunction” (emphasis in original)). Although the dissent quotes general language from SEIU reciting the standard formulation for the sixth prong of the governing preliminary-injunction standard, the SEIU Court had no occasion to consider whether remote or speculative harms operate to defeat entitlement to preliminary injunctive relief.
Impoundments (Count IV)
Relative to Count IV, the Commonwealth Court preliminarily enjoined, as applied to existing impoundments, Sections
For its part, Section
The primary substantive basis on which interim relief was granted pertains to the circumstance that existing impoundments were built to DEP standards extant at the time, and there has been no change in the governing statutory law which would authorize DEP to retroactively change such standards for impoundments built years ago in reliance on DEP’s prior authorization.
Presently, the Agencies do not argue that the authorizing statutes have changed. Instead, they proffer that they retain the authority to change impoundment requirements via the rulemaking process and apply the new requirements retroactively to existing impoundments without violating due process. In this regard, the Agencies distinguish Young J. Lee, which the Commonwealth Court quoted, noting that that dispute involved agency action which was adjudicative, rather than legislative, in nature. MSC responds that the Commonwealth Court was appropriately skeptical that the Agencies had newly-discovered powers under statutes that had been on the books for many years and, as such, correctly held that a substantial legal question was raised as to the legality of the regulations. Their argument is consistent with the Commonwealth Court’s expression that “Secretary Perry credibly testified that these regulations stem not from a change in the law, but from a change in DEP’s interpretation of long-standing law.” MSC, No. 573 M.D. 2016, slip op. at 32.
(i) Well-development impoundments
There is little in the record to suggest any reinterpretation of a statute occurred with regard to well-development impoundments, which previously were minimally regulated and were only subject to permitting if at least five acres of earth would be disturbed. See Brief for Appellants at 14-15 (providing background). Rather, Secretary Perry explained that, given the sheer size of the new well-development impoundments used for unconventional wells – ranging up to 30 million gallons – they are essentially in the nature of a dam and, as such, are appropriately regulated under the Dam Safety and Encroachments Act (“DSEA“).21 See N.T., Oct. 25, 2016, at 128. According to the record, although these impoundments generally store freshwater, the water may at times include other fluids used in well development which are not indigenous to the local watershed, the escape of which can pose a threat of pollution to the waters of the Commonwealth. See RAF at 31, reprinted in R.R. 786a.22
The Commonwealth Court did not identify a substantial legal issue with regard DSEA’s authorization to regulate these impoundments. As noted, the court proceeded from the supposition that the Agencies’ interpretation of governing law had changed – a premise that does not apply with regard to well-development impoundments. Absent any particularized contention tending to cast doubt upon the Agencies’ position that DSEA allows for such regulations, see, e.g.,
Moreover, by enjoining Section
Accordingly, we conclude that, at this stage, MSC has not carried its burden to demonstrate a clear right to relief as to Section
(ii) Centralized impoundments
The regulation governing centralized impoundments presents a different situation. Secretary Perry testified that the Agencies had not previously regulated them under SWMA on the view that they fell under SWMA’s exemption for drill cuttings from well sites. See
We do not doubt that leaks from centralized impoundments are potentially harmful to the environment. For present purposes, however, it is not apparent how such occurrences can support the concept that the impoundments are not part of the associated well site for SWMA purposes, whereas they were part of the well site before it was known that they could leak. This, in turn, gives rise to a substantial legal issue concerning the validity of the Agencies’ new interpretation of the scope of SWMA’s exclusion of “drill cuttings” from the definition of solid waste. Thus, the Commonwealth Court had an apparently reasonable basis to conclude that MSC had raised a substantial legal question concerning whether SWMA authorizes the promulgation of Section
As the interim relief was limited to existing centralized impoundments that would otherwise have to be closed or retrofitted, the court left Section
Site restoration (Count V)
As discussed, the Commonwealth Court rejected most of MSC’s claims regarding the new site-restoration regulations, see
The Agencies fault the court for finding a potential conflict between Section
Unlike with some of the prior counts, the Commonwealth Court’s grant of partial interim relief as to Count V was not based on any identified deficiency in the Agencies’ statutory authorization to promulgate the rule in question. Rather, the court discerned that a potential conflict existed between Section
As we read the two regulatory provisions, it does not appear that a conflict exists. Section
Even if we assume, for decisional purposes, that an irreconcilable conflict exists between the two regulations, it is clear that Section
Accordingly, we conclude that MSC has not demonstrated a clear right to relief in relation to Section
D. Alleged drafting errors and overbreadth of the order
Appellants raise two additional issues. They indicate that the Commonwealth Court’s order refers to the wrong section numbers of some of the regulations being preliminarily enjoined due to typographical errors. Second, they assert that the relief ordered in Count IV, relating to impoundments, was overbroad in that it failed to leave in place the mandate that well operators register well-development impoundments with DEP – an aspect of Section
Both issues are moot. The Commonwealth Court amended its order to address the drafting errors Appellants have identified.
III. Conclusion
For the reasons given above, we affirm in part and reverse in part the order of the Commonwealth Court. We affirm the grant of preliminary injunctive relief as to Counts I and II. As for Count IV, we affirm the grant of relief as to Section
Justices Baer, Todd, Dougherty, Wecht and Mundy join the opinion.
Justice Donohue files a concurring and dissenting opinion.
Notes
The provision states:
(c) Impact.--On making a determination on a well permit, the department shall consider the impact of the proposed well on public resources, including, but not limited to: (1) Publicly owned parks, forests, game lands and wildlife areas. (2) National or State scenic rivers. (3) National natural landmarks. (4) Habitats of rare and endangered flora and fauna and other critical communities. (5) Historical and archaeological sites listed on the Federal or State list of historic places. (6) Sources used for public drinking supplies[.]
In dissent, Justice Donohue expresses that privately-owned recreational lands are “of the same kind or class as publicly-owned parks.” Concurring and Dissenting Opinion, slip op. at 6 (internal quotation marks and citation omitted). She also indicates that no (continued...)
In this respect the court observed that, while the specific regulations in issue are designed to provide new and greater environmental protections, the Agencies did not supply evidence that preliminarily enjoining their enforcement would “harm any person, entity, or the public in general.” MSC, No. 573 M.D. 2016, slip op. at 19 n.13.
MSC asserts the Agencies have waived, by omitting from their brief, any challenge to the preliminary injunction factors dealing with the weighing of harms as between the parties, and the relief being reasonably suited to abate the offending activity. See Brief for Appellee at 30-31. The Agencies reply that they have not waived any argument regarding harm to the public, as MSC bore the burden of proof on all elements at the preliminary injunction stage. See Reply Brief for Appellants at 6-7, 22. This argument is non-responsive as it relates to a different factor. As well, the Agencies overlook that, as appellants, they carry the burden to demonstrate error by the Commonwealth Court.
(i) Species of special concern identified on a PNDI [Pennsylvania Natural Diversity Inventory] receipt, including plant or animal species: (A) In a proposed status categorized as proposed endangered, proposed threatened, proposed rare or candidate. (B) That are classified as rare or tentatively undetermined.
(continued...)
In its Petition, MSC alleged that, because the PNDI database contents change from day to day, the information on a receipt – including the list of species of special concern – can vary on a daily basis. See Petition ¶44(h).
The dissent characterizes MSC’s argument as stating that the PNDI’s “use to identify species of special concern is new,” and refers to testimony concerning a “long-standing practice” of using the PNDI to identify such species. Concurring and Dissenting Opinion, slip op. at 8. The dissent concludes that it was unreasonable for the Commonwealth Court to find a substantial legal issue. See id. at 9. Respectfully, the dissent mischaracterizes both the issue and MSC’s argument. As discussed, what is “new” is the imposition of mandatory protections for species of special concern based on a PNDI receipt, and the issue arises because their regulatory designation as “other critical communities” did not proceed from notice-and-comment rulemaking.
Secretary Perry testified that “the act of fracking a well” can only cause groundwater contamination when a well-communication incident occurs. N.T., Oct. 25, 2016, at 116.
The dissent seeks to circumvent this problem by pointing to evidence that pollution could result from a well-communication incident. See Concurring and Dissenting Opinion, slip op. at 12. It bears noting that the Commonwealth Court acknowledged such potentiality and declined to find a substantial legal issue with regard to it. See MSC, No. 573 M.D. 2016, slip op. at 24. Instead, the court focused on issues arising from the face of the regulation when considered in light of governing statutory provisions. As discussed, these concerns include such items as: whether a well operator may access and monitor every well owned by others and located on another’s property within the area-of-review survey; and whether Section
More generally, Secretary Perry testified that communication into abandoned wells is of substantially greater concern for conventional, than unconventional, drillers. See N.T., Oct. 25, 2016, at 116-17.
The dissent appears to take the position that the public interest is adversely affected so as to defeat preliminary injunctive relief whenever there is any possibility of harm to (continued...)
Act of Nov. 26, 1978, P.L. 1375, No. 325 (as amended
The Agencies now also allow operators to store and use mine-influenced water in well development impoundments, see
The Agencies object that there is no evidence that the monetary cost of denying the injunction would be incurred by MSC members because MSC did not prove that any of its members operate existing centralized impoundments. This argument is waived as the Agencies did not advance it before the Commonwealth Court, see MSC v. DEP & EQB, No. 573 M.D. 2016, Brief in Opposition to Application for Expedited Special Relief, at 36-40, and effectively assumed that MSC members would be affected. See, e.g., id. at 38 (referring to a three-year sunset provision for decommissioning centralized impoundments and proffering that during that period “MSC members can use these impoundments and may even apply for permission to keep using them“).
The RAF‘s explanation in this regard elaborates that Section