DRBC Ban 3rd Circuit Opinion An Injustice, But Not the End!
Jim Willis on NGL Pipelines
Editor & Publisher, Marcellus Drilling News (MDN)
[Editor’s Note: An urban biased panel of 3rd Circuit Court of Appeals judges has delivered nothing but injustice for Wayne County landowners but it’s not the end of the story.]
In a brilliant move aimed at boxing in the Delaware River Basin Commission (DRBC), two northeastern Pennsylvania State Senators–Gene Yaw and Lisa Baker–along with members of the PA Senate Republican Caucus (27 Senators in all), filed a lawsuit in January 2021 against the DRBC accusing the quasi-governmental agency of “taking” the property rights of PA residents without just compensation under the law over the DRBC’s ban on fracking (see PA Senators Sue DRBC for “Taking” Property re Frack Ban).
In June 2021, a federal district court judge in Philadelphia dismissed the case claiming the Senators, who represent people shafted by the DRBC, don’t have “standing” to bring the lawsuit (see Fed Court Dismisses PA Senate Lawsuit Against DRBC Frack Ban). Senators Yaw and Baker appealed the dismissal to a higher court–to the U.S. Court of Appeals for the Third Circuit. Unfortunately, last Friday, the 3rd Circuit ruled against the brave and righteous Senators citing the same reason.
Somehow the judges in the case said the great economic damage being done to landowners in Wayne and Pike counties, where the DRBC prohibits fracking (and where there is plenty of frackable shale), is only “hypothetical,” ergo, the Senators don’t have (you guessed it)…standing. Can you believe that?
Hey judges, have you visited neighboring Susquehanna County, where drillers in the same shale deposit have invested upward of $10 billion in private (not public) money?! That’s not “hypothetical” money–it’s very real money that has benefited every citizen of the county, whether they get royalty checks or not.
From Big Green mouthpiece Susan Phillips at PBS:
Republican state lawmakers lost their bid to overturn a fracking ban in Northeast Pennsylvania enacted by the regulatory agency that oversees drinking water quality for about 15 million residents in four states.
The 3rd U.S. Circuit Court of Appeals issued a ruling Friday that the lawmakers, led by state Sens. Gene Yaw and Lisa Baker, and the municipalities that joined don’t have standing to bring the case against the Delaware River Basin Commission.
“In our view, the state senators and the Senate Republican Caucus lack standing because the legislative injuries they allege affect the state legislature as a whole, and under well-established Supreme Court caselaw, ‘individual members lack standing to assert the institutional interests of a legislature,’ ” the decision reads.
The court said the municipalities lacked standing because the injuries claimed — lack of revenue from fracking operations — were “hypothetical.”
The Republican lawmakers argued that the DRBC, which is governed by a federal compact and includes the governors of the four states that draw from the Delaware River, overstepped its legal authority in banning fracking in the basin, which includes the eastern part of Pennsylvania.
Democrats and environmental groups applauded the ruling from judges L. Felipe Restrepo, Jane R. Roth, and Julio M. Fuentes.
“In short, this case was nothing short of political posturing,” said the Delaware Riverkeeper Network’s Maya van Rossum.
The decision on standing is precedential, meaning it binds all courts in the 3rd Circuit from allowing cases where individual lawmakers challenge policy.
“It makes clear that these types of challenges by state legislators cannot go forward, the courthouse door is not open to them,” said Robert Wiygul, an attorney representing suburban Philadelphia Democratic senators who joined the case on the side of the DRBC. “They were trying to speak for the General Assembly as a whole.”
The plaintiffs also tried to use the Environmental Rights Amendment of the Pennsylvania Constitution to argue in favor of their standing as “trustees” of the state’s natural resources.
“The court cited how upside down and backwards that was,” Wiygul said.
All four basin states — Pennsylvania, New Jersey, Delaware and New York — voted to ban fracking in February 2021.
After 10 years of debating and studying the issue, the DRBC cited scientific evidence that fracking has polluted drinking water, surface water, and groundwater. The vote prohibits gas drilling in northeastern Pennsylvania and southern New York state, where Marcellus Shale gas deposits are limited to about one-third of the basin.
The court did not preclude others from challenging the ban who could prove injury.
Yaw’s office did not return a request for comment. (1)
From Reuters:
Pennsylvania Republicans aiming to overturn a ban on hydraulic fracturing in the Delaware River Basin fundamentally misconstrued state law guaranteeing the right to clean air and water, a federal appeals court said Friday, dismissing the state GOP’s challenge.
Noting the ruling was “narrow,” the 3rd U.S. Circuit Court of Appeals found the economic injuries alleged by the state’s Senate Republican caucus and several town governments were “hypothetical” and the challengers were attempting to bend the state’s 1971 Environmental Rights Amendment (ERA), which establishes the state as a trustee of the commonwealth’s natural resources.
“The problem with this argument is that it ignores the explicit purpose of the ERA and mistakes the unique public trust it created for a run-of-the-mill financial trust in which the trustees have a duty to maximize profits,” wrote Judge Julio Fuentes for a three-judge panel.Steven Miano, an attorney at Hangley Aronchick Segal Pudlin & Schiller, who represented Democratic state senators and Philadelphia-area counties that intervened in the case, said the court’s decision affirms that the challenge was “based on political disagreement” that has no place in federal court.
The ERA’s “purpose is to conserve Pennsylvania’s environmental resources, not exploit them,” Miano said.
Spokespeople for the Republican senators and the commission didn’t immediately respond to requests for comment Friday.The fracking ban was approved last year by the Delaware River Basin Commission, a collaborative effort between several states to oversee the watershed stretching from southern New York along the Appalachian Mountain range into southern New Jersey and northern Delaware. The Commission’s ban codified a moratorium that began in 2010 amid conservationists’ concerns that fracking – a process that involves injecting water, sand and chemicals into bedrock to extract fuel – posed serious threats to the drinking water supply for millions of people.
In their complaint and subsequent appeal, Republican state senators Gene Yaw and Lisa Baker, alongside the state’s Senate Republican caucus, two townships and two counties, said the ban overstepped the commission’s authority and amounts to an attack on the ERA because it limits payments from fracking going into the trust’s stewardship fund. Their earlier challenge to the fracking moratorium was also denied.
The case is Gene Yaw et al. v. Delaware River Basin Commission et al., United States Court of Appeals for the 3rd Circuit, case No. 21-2315. (2)
Here is the tragically wrong decision.
Is there any hope, now that this case has been rejected by the 3rd Circuit? We turned to someone smarter than us to address that issue: Our buddy Tom Shepstone, who writes the Natural Gas Now website. Tom told us:
This is not the end of the road on the ban. Precisely because the case was thrown out on standing, it can be brought back by a party with standing, which would include, for instance, an owner of mineral rights separated from the property or anyone else with a lease. There are numerous such parties.
Also, because the liberal judges went out of their way to defend the Environmental Rights Amendment in their decision and the SRBC [Susquehanna River Basin Commission] is governed by the same majority as the DRBC, the industry is getting a major wake-up call with this decision. Fracking is at risk in the SRBC if the industry doesn’t get involved and challenge this DRBC decision using a party with standing. And, the industry has a great case to make.
Finally, I am hopeful (perhaps naively) that Doug Mastriano [Pennsylvania gubernatorial candidate] and Lee Zeldin [New York gubernatorial candidate] will both win in November. Mastriano is the kind of guy who would tell his DEP to issue permits for drilling on the basis of sovereignty and let the DRBC sue Pennsylvania, which is the proper way to proceed. The DRBC would, of course, face a bit of a crisis at that point, and if Trump is reelected in 2024, the governing majority would be inclined to be done with this nonsense. I don’t think that’s too far-fetched an agenda during an energy crisis.
Tom’s lips to God’s ears.
Editor’s Note: Jim is too kind, of course, but I do think this is where we are right now. I also have some further thoughts on the decision itself, which is a profoundly political document issued by three questionable judges with respect to this case. Readers will recall the initial dismissal of the case was by Judge Paul Diamond, a former political for Arlen Specter. The appeal then went to three judge panel of the Third Circuit Court of Appeals, which issued the opinion Jim posted and wrote about. One of these individuals, Jane Roth, is an 87-year old senior judge from the Philadelphia region. Another was J. Felipe Restrepo, an Obama appointee born in Medillin, Columbia, who basically did criminal law all his life in the Newark, New Jersey. The third judge, and the author of the opinion, was Julio Fuentes, a Clinton appointee from Puerto Rico. None of these judges have the slightest understanding of the foundational issue; the theft, by the DRBC, of landowner mineral rights and economic futures.
The politics of the decision were to be expected, given the background of all four involved judges. Indeed, what we see with the decision is the same thing we’re repeatedly observing with the injustice of our Federal court system. It, in fact, ensures injustice in many cases by outrageously prolonged proceedings of easily a decade or more that no ordinary person can afford or endure.
We have also witnessed in recent years the blatant abuse of the “standing” principle. It’s obviously important to ensure only the truly aggrieved take up the time of courts, but we also know the Delaware Riverkeeper, for example, gets standing whenever it asks for it – no debate or proof required. And, since the 2020 election, Federal courts have, time and time again, simultaneously adopted the wholly incompatible positions that one has no standing to challenge election procedures before the vote (speculative) or after the vote (too late).
This is precisely the sort of nonsense we see with the circuit court panel’s decision in this case, especially with regard to the two municipal appellants (Damascus and Dyberry Townships, Wayne County. Here, in fact, is what the panel said with respect to these two Township’s rights (emphasis added):
Plaintiffs-Appellants also argue that the Municipal Plaintiffs have standing based on economic injuries that they suffered, and are continuing to suffer, as a result of the ban. This is Plaintiffs-Appellants’ most straightforward theory of standing, because “financial harm is a classic and paradigmatic form of injury in fact.” We nevertheless agree with the District Court that this theory of standing also fails because the economic injuries the Municipal Plaintiffs allege are either too old or too speculative to support the relief that they are seeking.
“Injury-in-fact is not Mount Everest,” and an “identifiable trifle of injury” will suffice. That said, to have an injury- in-fact for standing purposes, a plaintiff must have an injury that is “actual or imminent, not conjectural or hypothetical.” For this reason, we have explained that “[p]laintiffs do not allege an injury-in-fact when they rely on a chain of contingencies or mere speculation.”
In Finkelman v. National Football League, 810 F.3d 187 (3d Cir. 2016), for example, we considered whether a plaintiff had standing to sue the National Foot- ball League (“NFL”) based on the theory that he paid a higher price for Super Bowl tickets because the NFL restricted the number of tickets it released to the public, driving up prices on the resale market. Although this theory of standing appeared promising “[a]t first blush,” it failed under closer examination because the complicated economics of the resale market meant that “while it might [have been] the case that the NFL’s withholding increased ticket prices on the resale market, it might also [have been] the case that it had no effect.” We ultimately found that the plaintiff lacked standing because we could “only speculate” about the price effects of the NFL’s actions and “speculation is not enough to sustain Article III standing.”
Moreover, “a plaintiff must demonstrate standing separately for each form of relief sought.” When a plaintiff seeks retrospective (backward-looking) relief in the form of money damages, they can establish standing through evidence of a past injury. But when a plaintiff seeks prospective (forward- looking) relief in the form of an injunction or a declaratory judgment, they must show that they are “likely to suffer future injury.” The future injury must also be “imminent,” meaning that it is “certainly impending” rather than just merely “possible.”
In their Amended Complaint, Plaintiffs-Appellants allege that, “[a]lthough [the] Municipal Plaintiffs’ low population density and terrain renders them particularly well-suited for natural gas exploration and extraction,” the ban on fracking has excluded them “from participating in the economic development made available to neighboring areas.” Between 2006 and 2017, for example, a single natural gas producer paid over $1 billion in royalties to landowners in Susquehanna County, which adjoins Plaintiff-Appellant Wayne County but is located outside of the Basin.
Plaintiffs-Appellants also allege that before the Commission’s moratorium on natural gas extraction in 2010, “countless landowners within the Basin had negotiated and/or executed leases with natural gas producers” that were later rendered valueless. For example, “a group of landowners in Wayne County expended approximately $750,000 in legal fees to negotiate a lease that was estimated to yield over $187 million during its term, but as a result of the Commission’s moratorium, the contract became ineffectual and . . . was terminated.”
Finally, Plaintiffs-Appellants allege that, under Act 13, municipalities in which unconventional natural gas wells are located have received sizable distributions from the Well Fund, a statewide fund comprised of fees from the development of unconventional wells. In 2019, for example, municipalities throughout Pennsylvania received over $109 million in distributions, including $5.7 million to Susquehanna County.
The District Court found these allegations insufficient to give the Municipal Plaintiffs standing. The Court found that the Municipal Plaintiffs have failed to allege that fracking would likely occur within their borders but for the Commission’s ban and that the “theoretical possibility” of missed fracking opportunities does not give them standing. The Court also found that the “single missed fracking opportunity” cited in the Amended Complaint does not give the Municipal Plaintiffs standing because that potential project occurred over 12 years ago and “obviously [does] not show that some twelve years later, any of the Municipalities is suffering a current in- jury.”
On appeal, Plaintiffs-Appellants argue that the “single missed fracking opportunity” in Wayne County is enough to give them standing because they need only allege a “trifle of injury.” But this argument overlooks the fact that Plaintiffs- Appellants are seeking prospective rather than retrospective relief. As a consequence, they cannot base their standing on past injuries. The District Court was therefore correct to conclude that while the missed fracking opportunity in Wayne County might have given the Municipal Plaintiffs standing twelve years ago, it does not do so today.
The only remaining question is whether the Municipal Plaintiffs have sufficiently alleged the kind of ongoing or imminent economic harm needed to sustain their request for prospective relief. Like the District Court, we think not. Although the Municipal Plaintiffs have identified fracking projects that are currently underway in neighboring counties, they have failed to identify any recent projects within their borders that would have moved forward if not for the ban.
The Municipal Plaintiffs have also failed to identify any projects that would be ready and able to proceed in the near future if the ban is lifted. Instead, they have made only general allegations about the suitability of their terrain and the presence of natural gas reserves without mentioning “the viability of or actual interest in extraction.” As one group of Defendants-Appellees puts it, the Municipal Plaintiffs have failed to allege “that the reserves within their borders could feasibly be extracted via fracking, or that but for the [ban], a permit would have been issued and withstood likely legal challenges, [or] that fracking would in fact occur, or that the fracking would result in actual extraction of natural gas and [the] payment of fees into the Well Fund.”
This lack of detail is fatal to the Municipal Plaintiffs’ standing, because it renders their economic injuries “hypothetical” and “conjectural” rather than “actual or imminent.”
At most, the Municipal Plaintiffs have shown a possibility of future economic injury through the loss of hypothetical future fracking projects within their borders. But that is not enough to give them standing, because “[a]llegations of possible future injury are not sufficient.” The Municipal Plaintiffs accordingly lack standing based on economic injuries, as the District Court found.
Read it again to see how incredibly biased, naive, political and self-contradictory the decision is regarding the Townships. These three urban judges just told two townships with dozens and dozens of landowners holding leases for which they never got paid their final payments that they had no standing. The reason? Well, because the DRBC killed that possibility and any future possibilities. And, then the courts themselves killed the opportunity for justice by dragging things out so long they could now say it was all too speculative or too late. Where we have heard that before?
There was nothing speculative, of course. The landowners had leases and were awaiting final payments when the DRBC ended it all for the moment. That’s not speculation. That’s what happened. And, if leases for which gas companies paid hundreds of millions of dollars and drilled several test wells aren’t evidence of imminent drilling, what would be? The truth is that the court took the word of Delaware Riverkeeper, a self-appointed, non-official entity with no stake in those townships, over the facts and the townships and their landowners and citizenry are the victim of these judicial politics.
This is not the end of the road, though, as I told Jim. Persistence is always the key to success and we are nothing if not that.
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