On August 12, the PA Environmental Defense Foundation appealed a July 29 Commonwealth Court ruling the Foundation said ignore a 2017 opinion of the PA Supreme Court saying revenue from natural gas drilling on State Forest had to be held in trust under the Environmental Rights Amendment to the Constitution and only used for conservation purposes.
Commonwealth Court ruled, however, that $67.6 million of the shale gas drilling revenue generated from bonus and rental payments in 2009 and transferred to the General Fund to balance the state budget were not part of the trust under the application of a 1947 state law, not the constitution.
$135.3 million in drilling revenues were ruled as part of the trust in the transfers made in 2009.
Commonwealth Court was ruling on motions of summary judgment when it issued its July decision.
In its jurisdictional statement supporting its request for appeal to the PA Supreme Court, PEDF said, among other questions the Court should address is-- “In spite of the Supreme Court admonition to the Commonwealth Court in determining the purpose of the bonus and rental payments to be consistent with the Commonwealth’s constitutional duty as trustee “to negotiate and structure leases in a manner consistent with its Article I Section 27 duties.”, and, “Consequently, oil and gas leases may not be drafted in ways that remove assets from the corpus of the trust or otherwise deprive trust beneficiaries of the funds necessary to conserve and maintain the public natural resources.”, the Court found that the Commonwealth is entitled to keep the money from bonuses and rentals, regardless of production, because DCNR did not structure or draft the leases in an attempt to remove rents and bonuses from the corpus of the trust.”
In an earlier statement on the Commonwealth Court ruling, John E. Childe, the attorney for PEDF, said, “One of the basic principles of trust law is that it is the duty of the trustee to protect the corpus of the trust for the benefit of the people, not the trustee. Interpreting the leases of the trustee to provide that the trustee receives the income from leases in the form of bonus and rental payments belies this principle.
“The Supreme Court in PEDF II recognized this fact, stating that the “Commonwealth, as trustee, has the constitutional obligation to negotiate and structure leases in a manner consistent with its Article I Section 27 duties,” said Childe. “Oil and gas leases may not be drafted in ways that remove assets from the corpus of the trust or otherwise deprive the trust beneficiaries (the people, including future generations) of the funds necessary to conserve and maintain the public natural resources.”
In addition to the 2009 and 2010 transfers out of the Oil and Gas Lease Fund to balance the state budget, transfers were made from the Fund to pay for DCNR operating expenses in almost all the budget since then-- $69.774 million in FY 2019-20, $48.7 million in FY 2018-19, $11.2 million in FY 2017-18, $31.9 million in FY 2015-16, $62.5 million in 2014-15, $16.1 million in FY 2012-13 and $15 million in FY 2011-12.
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