Act 13 Declared Unconstitutional: Violates Environmental Rights Amendment

“Act 13 Declared Unconstitutional by the Pennsylvania Supreme Court in Violation of §27, Article 1 of the Pennsylvania Constitution, Known as the “Environmental Rights Amendment”

The Supreme Court of Pennsylvania recently issued a Decision dated December 19, 2013 declaring major portions of Act 13, (the 2012 Amendments to the Pennsylvania Oil and Gas Act enacted by the Pennsylvania Legislature and signed by Governor Tom Corbett) unconstitutional. In doing so, the majority Opinion relied on §27 of Article I of the Pennsylvania Constitution amended to our state Constitution in 1971. This amendment, also known as the Environmental Rights Amendment, states in full as follows:

“The people have a right to clean air, pure water, and to the preservation of the nature, scenic, historic and aesthetic values of the environment. Pennsylvania’s public natural resources are the common property of all of the people, including generations yet to come.As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of the people.”

What Is Act 13?

Act 13 was signed into law by Governor Thomas Corbett in February, 2012. Act 13 is a law largely written, sponsored and driven by the oil and gas industry because of the burgeoning development of the Marcellus shale formation in Pennsylvania. Act 13 was a major overhaul of the existing Pennsylvania Oil and Gas Act (originally enacted in 1951) in that it repealed parts of the existing law, and added significant provisions altering the well permitting process and statewide limitations on oil and gas development, such as set back distances of well sites from certain waters of the Commonwealth, and the DEP’s power to grant waivers of those setbacks to oil and gas operators. Other provisions significantly prohibited local municipalities from regulating oil and gas operations within their local jurisdiction under zoning or other land use regulatory powers. Another change gave energy companies the power of eminent domain to take land from private owners in order to create storage fields for natural gas.

One of the other controversial provisions of Act 13 is the so-called “Physician’s Gag Rule,” which limits a physician’s ability to obtain and share information about the identity, quantity, or mixture of any chemicals or other ingredients contained in slick water fracking fluid, if the drilling operator designates those ingredients as a “trade secret” or “confidential proprietary information.” In that case, the doctor must go through a cumbersome and time-consuming request process to obtain the identity of chemicals or other harmful substances in fracking fluid, and must “execute a confidentiality agreement” which prohibits the doctor from sharing that information with anybody, including his/her patients, Judges or workers’ compensation authorities. It further provides criminal penalties for any physician that does not comply with the confidentiality provisions of the law.

Challenges to the Constitutionality of Act 13

Act 13’s constitutionality was challenged initially in the Commonwealth Court of Pennsylvania by numerous parties, which include: (1) individual citizens; (2) local, county and municipal entities throughout the Commonwealth of Pennsylvania; and, (3) a physician who was challenging the Physician’s Gag Rule. Although these parties challenged the constitutionality of the entire Act 13, they also took aim at specific provisions, most notably: (1) §§3304-3309 regarding abolishment of local zoning regulations and stripping local governments of the power to regulate oil and gas operations within their locality; (2)§3215(b) regarding the permitting process, statewide setbacks of oil and gas wells from certain waters of the Commonwealth, and the DEP’s discretionary power to grant waivers to oil and gas operators from complying with those set backs; (3)§3241, which grants oil and gas operators the power of eminent domain to take private property for the purpose of establishing underground natural gas storage fields; and (4)§3222.1(b), the Physician’s Gag Rule.

Governor Corbett, DEP, the PUC and the oil and gas industry all defended the constitutionality of Act 13 and argued that the claims of the citizens, the municipalities, and the doctor should be dismissed. The Commonwealth Court declared certain portions of Act 13 unconstitutional regarding set backs and waivers thereof, and, essentially, all of the provisions of Chapter 33, which prohibited and affected local zoning regulation of oil and gas operations in their localities. The Commonwealth Court dismissed the doctor’s challenge because it ruled that the doctor did not yet have legal standing to file since he had never requested nor been denied trade secret or proprietary information. The Court dismissed other constitutional challenges of the citizens and municipalities, specifically the challenge to the eminent domain power provision. The Court also rejected their arguments that Act 13 violates the Environmental Rights Amendment and fails to provide equal protection of the law in that it favors the oil and gas industry as a special class.

Provisions of Oil and Gas Act That Violate the Environmental Rights Amendment

All parties appealed to the Pennsylvania Supreme Court, which took the case under expedited review. The Majority Opinion, written by Justice Ronald Castile, affirmed the Commonwealth Court in part and reversed in many other parts. It affirmed in that it held that §3215(b)(4) regarding set backs and waivers and §§3303 and 3304 regarding prohibition of local regulation of oil and gas operations were unconstitutional. However, unlike the Commonwealth Court, the Supreme Court declared that these provisions violated the Environmental Rights Amendment.

In doing so, the Court performed a thorough analysis of the Environmental Rights Amendment, and declared that this amendment gave the “People” an absolute right “to clean air, pure water and to the preservation of the nature, scenic, historic and aesthetic values of the environment.” The Court stated that these rights are as important to citizens as the highest political rights under our Constitution, such as the right to free speech, freedom of religion, the right to be free from unreasonable search and seizure, the right to vote and the right to a trial by jury. The Court also held that the second and third sentences of the amendment created a “trust” in which “Pennsylvania’s public natural resources” was placed for “all of the People, including generations to come.” The Court held that the third sentence of the amendment which states, “As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of the people,” applies to all branches of government of the Commonwealth of Pennsylvania, including county and local governmental agencies.

The Supreme Court’s Analysis of the Physician’s Gag Rule

The Court also addressed the Physician’s Gag Rule. The Court held that the doctor who challenged the constitutionality of §3222.1(b) did have standing to bring his challenge to that part of the law even though he had not yet requested or been denied allegedly confidential, proprietary or trade secret information about the make up of the chemicals and solution of frack water. The Court held that in certain circumstances courts can perform a prospective constitutional review of the law before an actual controversy arises. If an aggrieved party is presented with an unpalatable choice of either complying with the law or not complying with it and suffering the consequences, then the party has a real interest in having the constitutionality of the law reviewed in advance.

In the context of this case, the Court stated, “We agree with the citizens that Dr. Kahan’s interest in the outcome of litigation regarding the constitutionality of §3222.1(b) is neither speculative or remote.Dr. Kahan describes the untenable and objectionable position in which Act 13 places him: choosing between violating a §3222.1(b) confidentiality agreement and violating his legal and ethical obligations to treat a patient by accepted standards, or not taking a case and refusing a patient medical care…Accordingly, we reverse the Decision of the Commonwealth Court regarding Dr. Kahan’s standing, and we remand the matter to the Commonwealth Court for a merits decision of Dr. Kahan’s substantive claims.” Thus, the Court sent the case back to the Commonwealth Court for a full decision on the constitutionality of §3222.1(b). That litigation will continue in the Commonwealth Court, and most likely, be appealed back to the Supreme Court once the Commonwealth Court has issued a decision on the merits.

Eminent Domain Issue Remanded to Commonwealth Court

The Court also addressed the constitutionality of §3241 of Act 13, which permits private energy companies to exercise what traditionally is a governmental power of eminent domain to take private property in order to store its private natural gas. The Commonwealth Court dismissed this claim because it felt that it should have been brought under a different section of the Pennsylvania Eminent Domain Code. The Supreme Court, however, disagreed and remanded the matter to the Commonwealth Court for a decision on the merits of the constitutionality of this section. Specifically, the Supreme Court indicated that the citizens of Pennsylvania brought a facial challenge to the validity of the statute, which is an appropriate vehicle to bring a constitutional challenge, and remanded the matter back to the Commonwealth Court to make its decision on the merits.