University of Michigan Journal of Law Reform Volume 54 2021 The Role of Trust Law Principles in Defining Public rustT Duties for Natural Resources John C. Dernbach Widener University, Commonwealth Law School Follow this and additional works at: https://repository.law.umich.edu/mjlr Part of the Estates and Trusts Commons, Natural Resources Law Commons, and the State and Local Government Law Commons Recommended Citation John C. Dernbach, The Role of Trust Law Principles in Defining Public rustT Duties for Natural Resources, 54 U. MICH. J. L. REFORM 77 (2020). Available at: https://repository.law.umich.edu/mjlr/vol54/iss1/3 https://doi.org/10.36646/mjlr.54.1.role This Article is brought to you for free and open access by the University of Michigan Journal of Law Reform at University of Michigan Law School Scholarship Repository. It has been accepted for inclusion in University of Michigan Journal of Law Reform by an authorized editor of University of Michigan Law School Scholarship Repository. For more information, please contact [email protected]. THE ROLE OF TRUST LAW PRINCIPLES IN DEFINING PUBLIC TRUST DUTIES FOR NATURAL RESOURCES John C. Dernbach* ABSTRACT Public trusts for natural resources incorporate both limits and duties on governments in their stewardship of those natural resources. They exist in every state in the United States—in constitutional provisions, statutes, and in common law. Yet the law recognizing public trusts for natural resources may contain only the most basic provisions—often just a sentence or two. The purpose and terms of these public trusts certainly answer some questions about the limits and duties of trustees, but they do not answer all questions. When questions arise that the body of law creating or recognizing a public trust for natural resources does not fully answer, trustees, lawyers, and courts often look to trust law for help. In fact, they have been doing so for more than a century, including in the U.S. Supreme Court’s landmark 1892 public trust decision, Illinois Central Railroad Co. v Illinois. In this sense, trust law provides a set of background or underlying principles for interpreting and applying public trusts. Using cases from around the country, this Article sets out a four-step methodology for determining when and how to use trust law principles to help interpret public trusts. This methodology can be applied in any case involving the use of specific trust principles to help interpret any particular public trust. This Article also explains that the relevant trust law should not be limited to private trust law, but rather it should include general trust principles, charitable trust law principles, and private (or noncharitable) trust law principles. This Article uses a 2019 Commonwealth Court of Pennsylvania decision, Pennsylvania Environmental Defense Foundation v. Commonwealth, as a case study. The case applies article I, section 27 of the Pennsylvania Constitution, which requires that public natural resources be conserved and maintained for the benefit of present and future generations. In that case, the court used an interpretation of private trust law to decide that the state could spend some bonus and rental payment money from oil and gas leasing on state forest and park land, which is constitutional public trust property, for non-trust purposes. This Article applies the four-part methodology to the case, explains * John Dernbach is Commonwealth Professor of Environmental Law and Sustainability at Widener University, Commonwealth Law School, and Director of its Environmental Law and Sustainability Center. He can be reached at [email protected]. For help with research and footnotes, thanks to Richard Marcil, Widener University Commonwealth Law School Class of 2021; Jesse Miles, Lewis & Clark Law School Class of 2020; Frank Pryzbilkowski, Widener University Commonwealth Law School Class of 2020; and Ed Sonnenberg, Research Librarian, Widener University Commonwealth Law School. Thanks to Michael Blumm, Robin Kundis Craig, Karen A. Fahrner, Alexandra Klass, Ken Kristl, Michael Hussey, Jim May, Zygmunt Plater, J.B. Ruhl, Kurt Weist, Mary Wood, and Bridget Whitley for comments on earlier drafts. Thanks also to Kathleen Stephenson and John A. Terrill, II for answering questions on trust law. Any remaining errors, of course, are the author’s responsibility. 77 78 University of Michigan Journal of Law Reform [Vol. 54:1 general trust law and charitable trust law principles that the Commonwealth Court of Pennsylvania did not address, and argues that the use of these principles better fits the constitutional public trust. It concludes that the money from bonus and rental payments should be spent entirely for the purposes of the trust. This Article draws attention to both the potential value of trust law principles and also to their potential danger in the interpretation and application of public trust laws for natural resources. Trust law has the potential to enhance the protectiveness of public trusts by imposing various fiduciary duties on trustees. It also has the potential to undermine public trusts, particularly through rules requiring or encouraging that trust assets be financially productive. To vindicate public trusts for natural resources, environmental and natural resources lawyers need to become better trust lawyers. TABLE OF CONTENTS INTRODUCTION.................................................................................. 79 I. THE USE OF TRUST LAW PRINCIPLES TO INTERPRET NATURAL RESOURCES PUBLIC TRUSTS.................................. 88 A. Illinois Central and the Implicit Judicial Use of Traditional Trust Law .................................................. 88 B. Explicit Consideration of Trust Law Principles.................. 93 1. Use of Trust Law Principles to Further Public Trusts........................................................................ 93 2. Refusal to Use Trust Law Principles When They Would Undermine Public Trusts.......................... 103 C. Charitable Trusts Versus Private Trusts.......................... 107 II. PENNSYLVANIA ENVIRONMENTAL DEFENSE FOUNDATION V. COMMONWEALTH ......................................... 110 A. Pennsylvania Supreme Court: Royalties from Oil and Gas Leasing............................................................... 113 B. Pennsylvania Commonwealth Court: Bonus and Rental Payments from Oil and Gas Leasing.................... 119 III. A FOUR-STEP METHODOLOGY FOR DETERMINING APPLICATION OF TRUST LAW PRINCIPLES TO NATURAL RESOURCES PUBLIC TRUSTS ................................................ 124 A. Step 1: What Are the Terms and Purpose of the Public Trust? ............................................................. 124 B. Step 2: Do the Terms and Purpose of the Public Trust Answer the Question? .................................................. 126 C. 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? ..................... 128 1. Meaning of “Underlying Principles”..................... 128 2. Principles to Consider ........................................... 132 D. Step 4: Which Principles Would Most Fully Effectuate the FALL 2020] Defining Public Trust Duties 79 Terms and Purpose of the Public Trust? ......................... 136 1. General Duties of Trustees.................................... 136 2. Perpetual Charitable Trust Principle.................... 139 3. Private Trust Principle........................................... 140 CONCLUSION ................................................................................... 144 INTRODUCTION Public trusts for natural resources incorporate both limits and duties on governments in their stewardship of those resources.1 They exist in every state in the United States—in constitutional provisions, statutes, and common law.2 These public trusts reflect fundamental public legacy values for the use and protection of particular natural resources and for their continuing availability to the public, both present and future generations.3 They are designed and implemented to protect natural, ecological, recreational, navigational, fishing, and similar public values of these resources, primarily on publicly-owned property, and to ensure that they are accessible to the public. They involve different kinds of natural resources, impose different duties on states, and 1. The first and most influential statement of these limits and duties is Joseph L. Sax, The Public Trust Doctrine in Natural Resource Law: Effective Judicial Intervention, 68 MICH. L. REV. 471 (1970). 2. Robin Kundis Craig, A Comparative Guide to the Eastern Public Trust Doctrines: Classifications of States, Property Rights, and State Summaries, 16 PA. ST. ENV’T L. REV. 1, 26–113 (2007); Robin Kundis Craig, A Comparative Guide to the Western States’ Public Trust Doctrines: Public Values, Private Rights, and the Evolution Toward an Ecological Public Trust,37ECOLOGY L.Q. 53, 93–197 (2010); see also Alexandra B. Klass, The Public Trust Doctrine in the Shadow of State Environmental Rights Laws: A Case Study, 45 ENV’T L. 431 (2015) (detailing the relationship between the Minnesota Environmental Rights Act and Minnesota’s public trust doctrine). 3. Sax, supra note 1, at 477 (explaining three limits and duties on government for public trust property: 1) the property must “not only be used for a public purpose, but it must be held available for use by the general public;”2) limits on sale of property;