Pennsylvania legislature wins in court on fracking royalties

Court says DCNR, not governor, has authority to OK gas leases on state lands

HARRISBURG — Pennsylvania’s Commonwealth Court on Wednesday upheld the state Legislature’s right to use the royalties from oil and gas production on state forest lands for general state budget purposes, but it found that the state’s conservation department — not the governor — has the ultimate authority for making the decision to lease.

In a nearly unanimous decision, the court held that the General Assembly acted within its constitutional authority when it gave itself the power to transfer money out of a special account, funded by oil and gas revenue from state lands, that had been set aside for conservation projects. Beginning in 2009, the legislature transferred money from the fund to help balance the state budget.

But the court rejected the Corbett administration’s argument that the governor can override decisions made by the Department of Conservation and Natural Resources about whether to lease state lands for oil and gas development.

In an opinion written by Judge P. Kevin Brobson and joined by five of the court’s judges, the court found that although DCNR officials “serve at the pleasure of the governor,” their primary duty is to serve “the people of this Commonwealth,” who expect those officials to defend the environmental rights defined in the state constitution “even when faced with overwhelming political pressure, perhaps from the governor, to act against their better judgment.”

“This is not to say that the Governor, as the chief executive, and the General Assembly are precluded from attempting to influence DCNR’s leasing decisions,” Judge Brobson wrote. But based on the 1995 Conservation and Natural Resources Act, “the ultimate decision lies exclusively with DCNR, and DCNR, therefore, is accountable for making the decision to lease and, if challenged, justifying it.”

Judge Renee Cohn Jubelirer joined the majority opinion in part and dissented in part.

The case was brought by the Pennsylvania Environmental Defense Foundation, which first challenged the natural gas leasing and fund transfers in 2012. The environmental advocacy group asked the court to declare that both Republican Gov. Tom Corbett and former Democratic Gov. Ed Rendell violated the state constitution by leasing state lands for shale gas extraction without adequately considering or protecting against harms to public resources, and by diverting the windfall away from the special conservation fund.

The court chose not to address the legality of lease sales DCNR held in 2008 and 2010, since the companies that bought the leases were not a part of the case.

Patrick Henderson, Mr. Corbett’s top energy adviser, said the administration’s lawyers are still reviewing the opinion, but he called the decision “a very resounding victory for the authority of both the executive and the legislative branch.”

“We’re appreciative, pleased, but not surprised with the ruling simply because we’ve always believed that this was a matter of policy choices, and it was clearly permissible under both the statute and the constitution,” he said.

An attorney for the Pennsylvania Environmental Defense Foundation said he will appeal the ruling.

“I’m disappointed the court refused to deal with the basic constitutional questions that I raised,” attorney John Childe said.

Mr. Corbett and the legislature had planned to raise $95 million by signing new leases for gas extraction under public lands this fiscal year, but the state agreed not to sign any leases while the Commonwealth Court considered the environmental group’s legal challenge.

Gov.-elect Tom Wolf, a Democrat, campaigned on a pledge to reinstate the ban on new oil and gas leases in state parks and forests that was in place from October 2010 through May 2014. His inauguration is Jan. 20.

In hearings related to the case last year, both past and present DCNR officials testified that they did not recommend leasing additional public lands for drilling. Rendell-era officials said they had warned against policies that took leasing decisions out of the conservation agency’s hands, and a current DCNR official said he was comfortable with Mr. Corbett’s leasing plan only as long as the agency is allowed to set strict operational conditions.

The most recent leases for state forest drilling were signed in 2010 under Mr. Rendell.

Mr. Henderson said that although the court ruled against the Commonwealth’s argument that the governor can override DCNR officials’ decisions on whether to sign leases, “from a practical perspective — to my knowledge at least, and certainly under the Corbett administration — it’s never happened.”

“The governor has always respected, looked to and relied upon the judgement of the DCNR secretary and her personnel,” he said.

Mr. Childe said that aspect of the ruling is no consolation.

“Does that opinion give DCNR the right to say to the next governor, ‘No, you can’t lease. We determine that it’s not viable’? No it doesn’t,” he said. “Because the court says that any determination in regard to these impacts is subject to a balance. It just gives the governor and the legislature the hammer to do what it wants in the future.”

Laura Legere:

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