On July 29, a seven-judge panel of the Pennsylvania Commonwealth Court, on remand from the Pennsylvania Supreme Court, decided that two thirds of the rental payments and up-front bonus payments received by the commonwealth of Pennsylvania for oil and gas leases on state forest and park lands must be reserved for oil and gas conservation purposes pursuant to Article I, Section 27 of the Pennsylvania Constitution, see Pennsylvania Environmental Defense Foundation v. Commonwealth of Pennsylvania, No. 228 M.D. 2012 (June 29, 2019). The panel reasoned that the other one third of rental payments and up-front lease bonuses constituted “income” that was outside the scope of Article I, Section 27, also known as the Environmental Rights Amendment (the ERA). Absent an appeal to the Pennsylvania Supreme Court, this decision temporarily concludes the years-long dispute regarding how proceeds earned by the commonwealth of Pennsylvania from oil and gas leasing must be spent.

This opinion resolved outstanding issues remaining after the Pennsylvania Supreme Court’s earlier decision in Pennsylvania Environmental Defense Foundation v. Commonwealth of Pennsylvania, 161 A.3d 911 (Pa. 2017). In that case, a challenge had been asserted to the Pennsylvania legislature’s statutory enactments that directed proceeds and other funds received from oil and gas leasing to a general fund, rather than a fund used exclusively for conservation purposes in the commonwealth of Pennsylvania. The Pennsylvania Supreme Court, on appeal, applied the language in the ERA with the context of private trust principles that existed at the time of its passage in 1971, and concluded that the legislative enactments were unconstitutional, and that the proceeds from oil and gas royalties had to be directed to a fund used only for conservation purposes under the ERA. The Pennsylvania Supreme Court’s decision regarding royalties was based on the fact that royalties by definition are proceeds received from the sale of oil and gas resources, and such proceeds were constitutionally required to be used for conservation purposes.