Pennsylvania Independent Petroleum Producers v. Com., Dept. of Environmental Resources

• Decision Date: 11 May 1987
• Citation: 106 Pa.Cmwlth. 72,525 A.2d 829
• Parties: PENNSYLVANIA INDEPENDENT PETROLEUM PRODUCERS, A Non-Profit Corporation, Petitioner, v. COMMONWEALTH of Pennsylvania, DEPARTMENT OF ENVIRONMENTAL RESOURCES and Nicholas De Benedictis, Secretary of Environmental Resources of the Commonwealth of Pennsylvania, Respondents. 1195 C.D. 1985
• Court: Pennsylvania Commonwealth Court

Page 829

525 A.2d 829

106 Pa.Cmwlth. 72

PENNSYLVANIA INDEPENDENT PETROLEUM PRODUCERS, A Non-Profit Corporation, Petitioner, v. COMMONWEALTH of Pennsylvania, DEPARTMENT OF ENVIRONMENTAL RESOURCES and Nicholas De Benedictis, Secretary of Environmental Resources of the Commonwealth of Pennsylvania Respondents.

1195 C.D. 1985

Commonwealth Court of Pennsylvania.

Argued Nov. 19, 1986.

Decided May 11, 1987.

Thomas L. Cooper, Al Pelaez, Gilardi, Cooper & Gismondi, P.A., Pittsburgh, for petitioner.

Jerome T. Foerster, Deputy Atty. Gen., Allen C. Warshaw, Chief, Deputy Atty. Gen., Harrisburg, Chief, Litigation Section, Office of Atty. Gen., Justina M. Wasicek, Harrisburg, for respondents.

Before CRUMLISH, Jr., President Judge, and CRAIG, MACPHAIL, DOYLE, BARRY, COLINS and PALLADINO, JJ.

OPINION

CRUMLISH, Jr., President Judge.

The Pennsylvania Independent Petroleum Producers ¹ (PIPP) filed a petition for review in the nature of an equitable action for declaratory judgment challenging the constitutionality of the 1984 Oil and Gas Act. ² The Commonwealth filed preliminary objections, which were denied per curiam. Pennsylvania Independent Petroleum Producers v. Department of Environmental Resources, 95 Pa.Commonwealth Ct 51, 504 A.2d 420 (1986). PIPP has now filed a motion for summary judgment. We deny said motion.

The issuance of a declaratory judgment is a matter of judicial discretion which should only be exercised to illuminate an existing right, status or legal relation. Doe v. Johns-Manville Corp., 324 Pa.Superior Ct. 469, 471 A.2d 1252 (1984). An actual controversy must exist for declaratory relief to be appropriate. South Whitehall Township v. Department of Transportation, 82 Pa.Commonwealth Ct. 217, 475 A.2d 166 (1984).

Summary judgment may be entered only where the following standards are met:

1) the case must be clear and free from doubt; 2) the moving party must prove that there is no genuine issue of material fact to be tried and that it is entitled to judgment as a matter of law; and 3) the record must be viewed in the light most favorable to the non-moving party and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party.

Pennsylvania Public Utility Commission Bar Association v. Thornburgh, 62 Pa.Commonwealth Ct. 88, 93, 434 A.2d 1327, 1329 (1981), aff'd, 498 Pa. 589, 450 A.2d 613 (1982). A motion for summary judgment is appropriate in declaratory judgment proceedings. Id.

The Oil and Gas Act became effective on April 18, 1985. It replaced the Gas Operations Well-Drilling Petroleum and Coal Mining Act. ³ The purpose of the Oil and Gas Act is to permit the optimal development of such resources in this Commonwealth consistent with the protection of the health, safety, environment and property of the citizenry. ⁴ At the time this case was argued before this Court, no enforcement actions had been initiated.

PIPP's petition to this Court contains thirteen counts challenging seven specific provisions of the Oil and Gas Act and, in the alternative, the entire Act itself. We will review the contested provisions seriatim.

Section 208

Water Pollution Presumption

Section 208(c) ⁵ creates a rebuttable presumption that a well operator is responsible for pollution of any water supply within 1,000 feet of a gas or oil well. Section 505(a) ⁶ states that a person who violates any provision of the Act is guilty of a summary offense, punishable by a fine not to exceed $300 and/or imprisonment up to ninety days. Willful violators of the Act are guilty of a misdemeanor with possible imprisonment of not more than one year. Section 505(b). ⁷

PIPP contends that if the pollution presumption is applied in a criminal enforcement proceeding, it would impermissibly shift to a well operator the Commonwealth's burden to prove beyond a reasonable doubt all elements of a criminal violation. See Commonwealth v. McFarland, 252 Pa.Superior Ct. 523, 382 A.2d 465 (1977).

The Commonwealth counters that declaratory relief is inappropriate at this time because no criminal actions involving Section 208 have been initiated. Hence, no actual controversy or threatened action exists. See Chester Upland School District v. Commonwealth, 90 Pa.Commonwealth Ct. 464, 495 A.2d 981 (1985). The Commonwealth also argues that Section 208 creates only a rebuttable presumption to a civil offense because the penalty imposed for pollution in subsection (a), i.e., restoration or replacement of the affected water supply, is the exclusive remedy for violations.

The criminal sanctions found in Section 505 are expressly applicable to violations of any provision of the Oil and Gas Act. However, the record fails to disclose any actual or threatened criminal prosecution for a Section 208 violation. The Commonwealth has conceded that the presumption would not be appropriate in criminal prosecutions and that it would have the burden to establish all elements of a criminal violation. Therefore, since we find any injury resulting from Section 506 sanctions to be speculative and remote, we decline to declare Section 208 unconstitutional.

Section 215

Bond Requirements

Section 215(a) ⁸ requires that as of the effective date of the Oil and Gas Act, a bond be filed with the Department of Environmental Resources (DER) upon the filing of an application for a well permit or before continued operation of any oil or gas well. The bonding amount per well is $2,500. ⁹ However, in lieu of individual bonds, an owner may post a blanket bond of $25,000. The bond is required to ensure compliance with all requirements of the Oil and Gas Act. The amount reflects the costs which the Commonwealth would incur to plug an abandoned or illegally operated well.

PIPP contends that this section creates two separate classes--large well operators, i.e., owners of ten or more wells posting a blanket bond, and small well operators--and that it discriminates against the small operators, hence violating the Equal Protection Clause of the Fourteenth Amendment and Article I, § 1 of the Pennsylvania Constitution.

Since there exists no allegations of a violation of "suspect" classifications or "fundamental" rights, in order for the legislative classification found in Section 215 to be upheld, it must be found to be reasonable, not arbitrary, and rest upon a difference having a fair and substantial relation to the object of the legislation. Snider v. Thornburgh, 496 Pa. 159, 436 A.2d 593 (1981).

We hold that Section 215 does not violate the equal protection clause. PIPP advances its argument by creating a hypothetical conglomerate entity which posts a blanket bond covering 1,000 wells, hence posting $25 bond per well. PIPP argues that this classification enhances the survival of larger oil corporations because smaller well operators are financially disadvantaged. ¹⁰

The legislature, in creating the blanket amount, acted reasonably and in a non-discriminatory manner. As a safeguard to small operators, it enacted Section 215(d), which permits economically distressed operators to submit nonrefundable fees in the amount of $50 in place of $2,500 bonds. Moreover, Section 215(c) ¹¹ states that the entire blanket bond may be forfeited for a violation at a single well site and that the entire bond would have to be replaced within ten days. Such a sanction would injure large operators to the benefit of small operators. We conclude that the blanket bond provision treats all operators fairly and is consistent with the Act's avowed purposes.

Sections 210(e)

and 215(c), (e)

Prehearing Seizure of Property and Bonds

Section 210(e) ¹² authorizes DER to enter upon an unplugged and abandoned well, proceed to plug the well and sell any remaining equipment, casing and pipe to recover plugging costs. Section 215(c) permits DER to declare a bond forfeited upon noncompliance by a well operator with any provision of the Oil and Gas Act.

PIPP contends that by permitting both actions without any prior notice or hearing, these sections deprive well operators of due process of law, in violation of the Commonwealth and United States Constitutions. Specifically, PIPP argues, relying on Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), that no emergency or exigency exists which would permit a preforfeiture or pre-seizure hearing.

The Commonwealth counters that (1) this challenge is premature since PIPP has made no assertion that the provisions have been unconstitutionally applied and (2) Section 1921-A of The Administrative Code of 1929 (Code), ¹³ which permits an aggrieved party to timely appeal such action to the Environmental Hearing Board (EHB), adequately protects PIPP's due process rights.

Again, this Court is troubled because we are compelled to operate in a vacuum and to speculate as to how these statutory guidelines will be implemented and enforced. See American Family Life Assurance Co. v. Insurance Department, 51 Pa.Commonwealth Ct. 247, 414 A.2d 166 (1980). We note that in its statement of policy as to how bond forfeiture would be implemented prior to the issuance of regulations by the Environmental Quality Board (EQB), ¹⁴ DER stated that such action would be utilized only after all other remedies were exhausted and that the surety and owner would receive prior notice and opportunity to comply with any violations of the Act. ¹⁵ Moreover, consistent with the definition of "abandonment" in Section 103 ¹⁶ of the Act and the notice requirements of abandonment found in Section 210 of the Act, DER will attempt to plug a well only after a well owner fails to apprise DER of on-site activity (i.e., a driller only need request "in-active" status, pursuant to Sections 210(a) and 103, thereby giving notice of nonabandonment).

While this Court is concerned about potential due process violations by DER's actions, a statute's constitutionality is presumed unless there appears a clear and palpable constitutional...