The Commonwealth Court has allowed a suit to proceed against the state and Governor Tom Corbett that alleges amendments to several statutes, including the Oil and Gas Act, unlawfully seek to divert money away from the Oil and Gas Lease Fund, which was created to preserve state parks and forests in connection with fracking.

In Pennsylvania Environmental Defense Foundation v. Commonwealth, a three-judge panel unanimously ruled in an unreported opinion to overrule Corbett’s and the state’s preliminary objections to the suit brought by the Pennsylvania Environmental Defense Foundation, a nonprofit organization that aims to assist citizens in environmental litigation.

Judge Robert Simpson, writing for the court, said the allegations in the PEDF’s complaint satisfy the three-prong test for applying Article I, Section 27 of the state constitution — which requires the state to “conserve and maintain” public natural resources “for the benefit of all the people” — to claims that allege the amendment itself was violated, as set forth by the Commonwealth Court in the 1973 case Payne v. Kassab.

“Based on our review of the challenged counts, we cannot state with certainty that petitioner cannot state a legally sufficient claim under Article I, Section 27 of the Pennsylvania Constitution,” Simpson said. “To that end, petitioner’s amended complaint contains averments that fall within the three-part test set forth in Payne.”

Simpson was joined by Judge Bernard L. McGinley and Senior Judge Rochelle S. Friedman.

According to Simpson, PEDF alleges in its complaint that the amendments to the state’s Oil and Gas Act by Act 13 of 2012 provides for the annual diversion of $50 million from the Oil and Gas Lease Fund to the Marcellus Legacy Fund.

The PEDF claims that doing so violates the Oil and Gas Lease Fund Act by failing to preserve, under Article I, Section 27, the state parks and forests that are harmed during the generation of those funds.

The PEDF also alleges in its complaint that Article XVI-E of the Fiscal Code and the Appropriations Acts that implement those amendments have mandated the leasing of more than 65,000 acres of state forest land that is part of the public trust designated for natural gas drilling and have diverted the proceeds from those leases away from the Oil and Gas Lease Fund, according to Simpson.

In addition, the PEDF claims the Fiscal Code Amendments have stripped the Department of Conservation and Natural Resources — the designated trustee of the state’s parks and forests — of its duties under Article I, Section 27 and the Conservation and Natural Resources Act, Simpson said.

Corbett and the state, meanwhile, argued that the amendments at issue did not directly harm the environment, according to Simpson.

The defendants further contended that the amendments did not violate Article I, Section 27 simply because they diverted funds away from state parks and forests, particularly since they also contributed funds to farmland preservation, open space protection and hazardous site cleanup, Simpson said.

Corbett and the state also argued that the General Assembly has the power to change funding statutes and that the governor has the power to act through the DCNR to lease state forest land for natural gas extraction, according to Simpson.

But Simpson said the PEDF’s complaint makes allegations that meet the three prongs of the Payne test.

Simpson said the PEDF met the first prong of the test, which asks whether there was compliance with all applicable laws relevant to the protection of the state’s public natural resources, by alleging that the amendments at issue violated sections of the Oil and Gas Lease Act and the CNRA.

According to Simpson, the PEDF met the second prong of the Payne test, which asks whether the record shows a reasonable effort was made to keep environmental harm to a minimum, by alleging that leasing state park and forest land for drilling while diverting money away from the Oil and Gas Fund will cause substantial environmental damage.

The PEDF met the third prong of the test, which asks whether environmental harm caused by the amendments clearly outweighs the benefits, by alleging that Corbett and the state failed to analyze the potential harm of diverting funds, according to Simpson.

Simpson said he could not with certainty find that the PEDF had failed to state a claim and noted that, because of the fact-intensive examination required to apply the three-part Payne test, tossing out the suit at this stage would be premature.

Simpson also disagreed with the defendants’ argument that the court lacked jurisdiction to review legislative decisions about funding.

Corbett and the state cited the state Supreme Court’s 2002 decision in Pennsylvania School Boards Association v. Commonwealth Association of School Administrators, which held that the General Assembly has the power to appropriate state funds and any challenges to that power are nonjusticiable political questions.

But Simpson said that case involved a statute’s alleged violation of Article III, Section 14 of the state constitution, which mandates that the legislature provide for “the maintenance and support of a thorough and efficient system of public education.”

The Supreme Court, Simpson said, found that there was no way for a court to determine whether the enactment of the statute at issue constituted a failure to meet that constitutional mandate.

The PEDF’s suit, however, alleges that certain statutory amendments are in violation of Article I, Section 27, for which Simpson said the court has established an “analytical framework.”

“Thus, there are judicially manageable standards for analyzing this claim,” Simpson said. “Further, consideration of the constitutionality of the challenged enactments does not implicate a review of legislative policy, but rather a determination of whether the enactments are, in fact, consistent with the Pennsylvania Constitution.”

Counsel for the PEDF, John E. Childe Jr. of Camp Hill, Pa., said he and his client were “very pleased with the opinion and look forward to proceeding with the complaint.”

A spokesperson for Corbett could not be reached at press time Thursday.

Zack Needles can be contacted at 215-557-2493 or zneedles@alm.com. Follow him on Twitter @ZNeedlesTLI.

(Copies of the 31-page opinion in Pennsylvania Environmental Defense Foundation v. Commonwealth, PICS No. 13-0208, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •