PA. Environ. Defense Fd., Aplt. v. Com & Gov. Wolf ( 2021 )

[J-78-2020] [MO: Donohue, J.]
IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
PENNSYLVANIA ENVIRONMENTAL : No. 64 MAP 2019
DEFENSE FOUNDATION, :
: Appeal from the Order of the
Appellant : Commonwealth Court dated July 29,
: 2019 at No. 228 MD 2012.
:
v. : ARGUED: September 17, 2020
:
:
COMMONWEALTH OF PENNSYLVANIA, :
AND GOVERNOR OF PENNSYLVANIA, :
TOM WOLF, IN HIS OFFICIAL CAPACITY :
AS GOVERNOR, :
:
Appellees :
DISSENTING OPINION
CHIEF JUSTICE BAER DECIDED: July 21, 2021
As in my responsive opinion in the initial appeal of this case, I commend this
Court’s holdings in Pennsylvania Environmental Defense Foundation v. Commonwealth,
161 A.3d 911 (Pa. 2017) (“PEDF II”), which continued the rejuvenation of the
Environmental Rights Amendment of the Pennsylvania Constitution, Article I, Section 27
(“ERA”), begun by Chief Justice Castille in his plurality in Robinson Township,
Washington County v. Commonwealth, 83 A.3d 901 (Pa. 2013). In so doing and as
described in the current majority opinion, the Court properly rejected the view that the
ERA was an “aspirational policy statement” and instead deemed it self-executing.
Majority Opinion at 8 (“Maj. Op.”); PEDF II, 161 A.3d at 937. Moreover, the Court rightly
discarded the test adopted in Payne v. Kassab, 312 A.2d 86 (Pa. Cmwlth. 1973), that had
been applied for more than four decades and instead returned to the language of Section
27, correctly opining that it created what the current majority opinion phrases as a
“constitutional public trust.” Maj. Op. at 2.
Respectfully, however, I remain in dissent regarding my colleagues’ conclusion
that Section 27 should be subject to private trust principles, including those specifically
related to the distribution of income generated by trust assets. In my view, Section 27
does not equate to a standard private trust instrument, which generally consists of a multi-
page document detailing trust assets, beneficiary classes and distributions, and trustee
powers and duties. Instead, the public trust created by the ERA arises from the following
sparse, two-sentence constitutional provision:
Pennsylvania’s public natural resources are the common
property of all the people, including generations yet to come.
As trustee of these resources, the Commonwealth shall
conserve and maintain them for the benefit of all the people.
PA CONST. art. 1, § 27.1 Rather than providing instructions related to the division of
income, the ERA sets forth expansive rights of Pennsylvanians and imposes important,
but general, duties on Commonwealth entities, which encompass, as described by the
majority, a “cross-generational dimension,” requiring the Commonwealth, as trustee, to
resist prioritizing “the needs of the living over those yet to be born.” Maj. Op. at 36.
I maintain that the ERA’s language is more befitting general trust concepts, such
as prudence, loyalty, and impartiality, rather than the intricate aspects of private trust law
and precedent. See PEDF II, 161 A.3d at 942-46 (Baer, J., concurring and dissenting)
(attempting to glean public trust principles available at the time of the adoption of Section
27 and finding private trust principles inapt). As I previously stated in PEDF II, I view the
1 The ERA begins with the following language which is not directly applicable to the
current inquiry regarding the natural resources trust: “The people have a right to clean
air, pure water, and to the preservation of the natural, scenic, historic and esthetic values
of the environment.” Id.
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ERA as creating “a fiduciary-like construct whereby the government has ‘the duty to
manage, use, and/or consume the property of the public solely for the benefit of the
public.’” Id. at 943, 944 (quoting Duquesne University Professor Robert Broughton’s
analysis of the proposed amendment as set forth in 1970 Pa. Legislative Journal–House
at 2269–82, 2273 (April 14, 1970)) (Baer, J., concurring and dissenting).
I recognize, however, that a majority of the Court disagreed and instead deemed
private trust law applicable. In PEDF II, the Court concluded that application of private
trust law principles required all royalties derived from the sale of oil and gas on state forest
and park lands to be deemed sales of trust assets, which required the proceeds to be
returned to the trust corpus to be used exclusively for conservation purposes. It then
remanded the case to the Commonwealth Court to apply trust principles applicable at the
time of the enactment of the ERA to determine whether the other income streams of
bonus payments, rental fees, and interest from late payments generated by the oil and
gas leases should be deemed sales of the trust assets and also whether the income
streams should be designated part of the corpus of the trust to be used solely for
conservation uses.
In my view, the Commonwealth Court on remand engaged in a yeoman’s effort to
comply with this Court’s directive. The court delved into the intricacies of trust law
applicable to mineral rights in 1971, when Pennsylvania voters adopted the ERA.
Recognizing that trusts involving mineral rights generally utilized the concepts of life
tenants and remaindermen, the court attempted to apply those concepts and the related
statutory provisions and precedent to Section 27 and the Commonwealth’s detailed
leases of oil and gas rights. In so doing, it ably weighed the applicability of the open wells
[J-78-2020] [MO: Donohue, J.] - 3
doctrine and the various iterations of the Uniform Principal and Income Act, as adopted
in Pennsylvania, involving life tenants and remaindermen.2
Nevertheless, the current majority holds that the Commonwealth Court erred in
concluding “that the ERA created life estates for the benefit of current Pennsylvania
citizens, followed by successive beneficiaries in the form of future generations of
Pennsylvanians as the remaindermen.” Maj. Op. at 34. Instead, my colleagues reason
that the ERA does not create “income entitlements” for life tenants but instead
“simultaneous beneficiaries with equal interests in the trust’s management.”3 Id. at 37.
Absent a division of beneficiary classes between life tenants and remaindermen and
provisions for income entitlements to life tenants, the majority concludes that all income
generated by the leases “must be returned to the corpus of the trust.” Id. at 37. Relying
on well-established case law relating to trustee self-dealing, it expounds that absent
2 In his recent article reviewing the Commonwealth Court’s decision in this case and the
application of charitable and non-charitable trust law to public trusts, Professor John
Dernbach, the Commonwealth Professor of Environmental Law and Sustainability at
Widener University, Commonwealth Law School, ultimately disagreed with the
Commonwealth Court’s conclusions but, nevertheless, acknowledged the court’s use of
the concepts of life tenants and remaindermen. John Dernbach, The Role of Trust Law
Principles in Defining Public Trust Duties for Natural Resources, 54 U. Mich. J. L. Reform
77 (2020). In so doing, he quoted the following explanation from George T. Bogert’s
treatise on trusts:
Nearly all trustees act for two classes of beneficiaries, namely,
income beneficiaries who are to receive the net income from
the trust property for a period of years or lives, and remainder
beneficiaries who at the termination of the income
administration are given the capital or principal of the trust.
Id. at 133 (quoting George T. Bogert, Trusts § 111 (6th ed. 1987)).
3 In so analyzing, the majority opinion demonstrates the granular detail provided in many
trust documents regarding the distribution of income and the creation of successive
beneficiaries. Maj. Op. at 39 n.18.
[J-78-2020] [MO: Donohue, J.] - 4
language creating income entitlements for life tenants, “there is no authority for the trustee
to generate income from oil and gas assets and then use that income to benefit itself for
non-trust purposes and not the beneficiaries.” Maj. Op. at 40-41. Accordingly, it opines
that any income must be devoted solely to the trust’s purpose, which is to “conserve and
maintain” Pennsylvania’s natural resources.
Without addressing the merits of the majority’s application of this terminology, I
question whether Pennsylvania voters, as “settlors” of the trust, contemplated the
concepts of “successive” or “simultaneous” beneficiaries or “income entitlements,” when
the language adopted does not even mention the more basic trust terminology of
beneficiaries and trust corpus. See PEDF II, 161 A.3d at 942 (Baer, J., concurring and
dissenting). More fundamentally, however, I question whether Pennsylvania voters
intended for the ERA to address the income generated by the natural resources in the
first place.
In its analysis, the majority opines that “[t]he textual absence of an allocation
mechanism [for revenue generated] has a straightforward explanation: the settlors did not
intend to create any income entitlements, hence eliminating the need to allocate receipts.”
Maj. Op. at 43-44. In my view, the absence of such language is evidence that the ERA
was never intended to apply to income generated by the resources, but instead to instruct
the Commonwealth to “conserve and maintain” Pennsylvania’s natural resources for “the
benefit of all the people.” PA CONST. art. 1, § 27. In line with this reasoning, I question
the applicability of the concept of trustee self-dealing where the funds are directed to the
General Fund. In such a situation, the income generated is simply not being siphoned off
by the Commonwealth “for its own use,” Maj. Op. at 42, but instead is being employed to
[J-78-2020] [MO: Donohue, J.] - 5
benefit all Pennsylvanians by providing basic governmental services underwritten through
the General Fund, including, for example, roads, schools, and health services.4
While I acknowledge that a majority of my colleagues rejected my analysis when
this case was last before the Court, I believe that the arguments addressed in this case
following remand demonstrate the unsoundness of forcing the public trust created by the
ERA into the ill-fitting structure of private trust law. In my view, the application of private
trust law to the ERA has resulted in contrived distinctions that are not reflected in the
language of the constitutional provision. Going forward, the practitioners, agencies, and
judges of our Commonwealth will find themselves in the unenviable position of divining
which bits and pieces of the wide-ranging and well-developed body of law governing
charitable or non-charitable private trusts should apply to the scant language of the ERA.
Indeed, the majority opinion alludes to this difficulty, observing that while Section 27
created an “express trust that is presumptively subject to the Uniform Trust Act, the
ultimate power and authority to interpret the constitutional command regarding the
purposes and obligations of the public trust created by Section 27 rests with the Judiciary,
and in particular with this Court.” Maj. Op. at 34-35 n.15 (quoting Robinson Township, 83
A.3d at 959 n.45).
As referenced in note 2, Professor John Dernbach recently wrote a thoughtful
article attempting to remedy this conundrum by setting forth a four-step process for
determining which charitable and non-charitable private trust law principles to apply to a
4 In support of the conclusion that the income streams from oil and gas leases should be
returned to the trust corpus, the majority observes that at the time of enactment of the
ERA the voters may have understood that the Oil and Gas Lease Fund Act provided for
all rents and royalties to be “exclusively used for conservation, recreation, dams or flood
control.” Maj. Op. at 42 (quoting former 71 P.S. § 1331, repealed by Act 2017, Oct. 30
P.L. 725). The voters, however, were presumably also aware that this restriction was not
included in the ERA and were cognizant that statutory law could be relatively easily
altered in the future to address the changing needs of the people and the Commonwealth.
[J-78-2020] [MO: Donohue, J.] - 6
specific public trust application, utilizing the facts of the present dispute as a case study.
John Dernbach, The Role of Trust Law Principles in Defining Public Trust Duties for
Natural Resources, 54 U. Mich. J. L. Reform 77 (2020).5 This process requires the
gathering and assessment of potentially applicable principles of charitable and non-
charitable trusts as well as general trust duties. With all due respect, I question whether
agencies and practitioners working with Pennsylvania’s natural resources should be
forced to become experts in charitable and non-charitable private trust law and then
predict which trust law provisions this Court will eventually deem most applicable to a
specific scenario.
I urge my colleagues at this early stage in the development of ERA to reconsider
the application of private trust principles to the language of Section 27. As explained, I
question the relevance of intricately detailed private trust principles to the broad language
of the public trust created by the ERA. While I agree with the majority that “the settlors
did not intend to create any income entitlements,” Maj. Op. at 44, as previously explained,
I would go further and conclude that the settlors did not intend for the ERA to govern
5 Briefly, Professor Dernbach outlines the following “four-step methodology for
determining application of trust law principles to natural resources public trusts:”
Step 1: What are the terms and purpose of the public trust?
Step 2: Do the terms and purpose of the public trust answer
the question?
Step 3: If the terms and purpose of the public trust do not
answer the question, what underlying principles of trust law
can help provide an answer?
Step 4: Which principles would most fully effectuate the terms
and purpose of the public trust?
Id. at 124-44.
[J-78-2020] [MO: Donohue, J.] - 7
income generated by the natural resources, but rather merely directed the
Commonwealth, as trustee, to conserve and maintain those resources. Having witnessed
the difficulties arising from the attempted application of private trust principles in this case,
we have the opportunity at this juncture to change course and develop public trust
principles in Pennsylvania rather than continuing to force private trust principles onto the
ERA.
[J-78-2020] [MO: Donohue, J.] - 8