Marcellus Shale Coal. v. Dep't of Envtl. Prot. of Pa.

• Decision Date: 01 June 2018
• Docket Number: No. 115 MAP 2016,115 MAP 2016
• Citation: 185 A.3d 985 (Mem)
• Parties: The MARCELLUS SHALE COALITION, Appellee v. DEPARTMENT OF ENVIRONMENTAL PROTECTION OF the COMMONWEALTH of Pennsylvania and Environmental Quality Board of the Commonwealth of Pennsylvania, Appellants
• Court: Pennsylvania Supreme Court

185 A.3d 985 (Mem)

The MARCELLUS SHALE COALITION, Appellee

v.DEPARTMENT OF ENVIRONMENTAL PROTECTION OF the COMMONWEALTH of Pennsylvania and Environmental Quality Board of the Commonwealth of Pennsylvania, Appellants

No. 115 MAP 2016

Supreme Court of Pennsylvania.

Argued: October 18, 2017

Decided: June 1, 2018

Michael Adam Braymer, Esq., Alexandra C. Chiaruttini, Esq., Kimberly Hummel Childe, Esq., Elizabeth A. Davis, Esq., Joseph Michael Iole, Esq., Robert Anthony Reiley, Esq., Keith Jason Salador, Esq., Nels Jahn Taber, Esq., Richard Thurston Watling, Esq., PA Department of Environmental Protection, for Appellant.

Kevin J. Garber, Esq., Jean M. Mosites, Esq., Babst, Calland, Clements & Zomnir, P.C., for Appellee.

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

CHIEF JUSTICE SAYLOR

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 Title 25, Chapter 78a of the Pennsylvania Administrative Code. They were promulgated as part of a rulemaking package which included regulations for conventional wells under Chapter 78 and for unconventional wells under Chapter 78a.³ The package went into effect upon its publication in the Pennsylvania Bulletin on October 8, 2016.

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 25 Pa. Code §§ 78a.1, 78a.15(f), (g) ; area of review, see id. §§ 78a.52a, 78a.73(c), (d); onsite processing, see id. § 78a.58(f); impoundments, see id. §§ 78a.59b, 78a.59c; site restoration, see id. § 78a.65; remediation of spills, see id. § 78a.66(c); and waste reporting, see id. § 78a.121(b). MSC alleged that these provisions were void and unenforceable for multiple reasons, including that they were vague, lacked statutory authorization, and conflicted with other regulations and statutes applicable to the industry. See Petition ¶ 34. As well, MSC averred that the rulemaking process did not comply with the Regulatory Review Act, and that the EQB failed to develop criteria for DEP to use in conditioning a drilling permit on relevant factors. See id.

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 into the record, including the transcript of an EQB meeting, a copy of Chapter 78a regulations, a regulatory analysis form submitted to the Independent Regulatory Review Commission ("IRRC") for consideration with those regulations, and correspondence from the House and Senate Environmental Resources and Energy Committees to the IRRC and EQB suggesting legislative disapproval of the proposed Chapter 78a regulations. For their part, the Agencies presented the testimony of DEP Deputy Secretary Scott Perry, who heads the agency's Office of Oil and Gas Management. Secretary Perry supplied information concerning unconventional gas drilling and how it differs from conventional drilling. He also addressed the substance of the disputed regulations, the process by which they were finalized, and the need for such rules.

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. , 89 Pa.Cmwlth. 377, 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 25 Pa. Code § 78a.15(f)(1). Under the Chapter 78a regulations, it also includes "common areas on a school's property or a playground" and "other critical communities." Id. "Other critical communities" is defined in Section 78a.1 to include plant and animal "species of special concern identified on a [Pennsylvania Natural Diversity Inventory] receipt[.]" Id. § 78a.1. Further, a "common area on a school's property" comprises "an area on a school's property accessible to the general public for recreational purposes." Id. Thus, the court observed, in relation to each public resource that may potentially be impacted by a proposed drilling operation, the applicant must provide to each "public resource agency"—that is, an entity which manages a public resource, including playground owners, see id. —information concerning its proposal, such as a plat and any measures which might mitigate prospective harm to the public resource in question.

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 Section 3215(c) of Act 13—with the consequence that DEP lacked authority to protect "public resources" under Act 13. In the alternative, MSC claimed, inter alia , that: Act 13 does not authorize the type of pre-permitting notification scheme required by the above-mentioned regulations; such regulations exceed the scope of DEP's authority by extending public-resource status to species of special concern, common areas of schools, and playgrounds; the regulations improperly confer "public resource agency" status upon local government agencies and private parties; and the scheme does not comply with Section 3325(e) of Act 13. As to this latter contention, the court explained that Section 3215(e) directs the EQB to develop, by regulation, criteria for DEP to use in "conditioning a well permit based on its impact to the public resources identified under subsection (c) and for ensuring optimal development of oil and gas resources and respecting property rights of oil and gas owners." 58 Pa.C.S. § 3215(e)(1) (emphasis added). In turn, subsection (c) indicates that DEP "shall consider the impact of the proposed well on public resources " such as parks, forests, wildlife areas, scenic rivers, natural landmarks, habitats of "rare and endangered flora and fauna and other critical communities," historical and archaeological sites, and sources of "drinking supplies[.]" Id. § 3215(c) (emphasis added).

The Commonwealth Court...