Supreme Court says state can't use oil and gas lease funds for non-environmental purposes

By Nicholas Malfitano | Jun 28, 2017

HARRISBURG – A recent landmark ruling from the Supreme Court of Pennsylvania decreed the state government is not permitted to use money from the Oil and Gas Lease Fund towards purposes not related to environmental conservation.

A majority decision authored by Supreme Court of Pennsylvania Justice Christine Donohue and released on June 20 overturned a January 2015 ruling from the Commonwealth Court of Pennsylvania, which had then thrown out a challenge from the Pennsylvania Environmental Defense Foundation as to the aforementioned funds being used for non-environmental purposes.

Per the recent ruling, the matter has now been remanded to the Commonwealth Court for further proceedings.

On an annual basis, the state earns millions of dollars from opening state forest land for purposes of drilling, money which was later used for environmental conservation programs. But over the past 8 years, hundreds of millions of dollars were transferred from conservation use into the general fund.

That practice was given de facto approval to continue through the Commonwealth Court decision in 2015, leading the Environmental Defense Foundation to challenge it as a violation of the state constitution – specifically, the Environmental Rights Amendment.

Passed by voters in 1971, the Environmental Rights Amendment states that citizens of Pennsylvania “have the right to clean air, pure water and to the preservation of the natural, scenic, historic and aesthetic values of the environment” and calling on the state government to “conserve and maintain resources for the benefit of all the people.”

The Environmental Defense Foundation claimed the state did not fulfill that duty, and instead sought to patch its budgetary holes with the use of the lease funds in question for non-environmental purposes.

“The Lease Fund is not a constitutional trust fund and need not be the exclusive repository for proceeds from oil and gas development. However, if proceeds are moved to the General Fund, an accounting is likely necessary to ensure that the funds are ultimately used in accordance with the trustee’s obligation to conserve and maintain our natural resources,” Donohue stated.

Donohue rejected the logic of state leaders who claimed there were no specific rules as to the proper use of the lease funds, a perception she labeled “plainly inaccurate” and that per the Environmental Rights Amendment, the Commonwealth did not have the right to spend the funds in question on “general budgetary items.”

Donohue and concurring justices Debra McCloskey Todd, Kevin M. Dougherty and David N. Wecht left remaining disputes in the case as a question to be resolved through future proceedings in the Commonwealth Court, where the matter has now been remanded.

Justice Max Baer concurred with the majority's broad interpretation of the Environmental Rights Amendment, but dissented from their view on the diversionary use of the lease funds.

“The legislative and executive branches must consider the funding level required by the Department of Conservation and Natural Resources [DCNR] and other conservation bodies to allow them to fulfill the Commonwealth’s constitutional duty to maintain and conserve the people’s natural resources. However, once the Commonwealth has conscientiously fulfilled these duties, it is not required to take the illogical step of leaving substantial monies unused in a fund for the environment while being unable to meet other pressing needs of the people,” Baer said.

“Accordingly, I would affirm the Commonwealth Court’s dismissal of the Foundation’s claims that the Governors violated their fiduciary duties in regard to the budgetary provisions,” Baer added.

In a brief statement, Chief Justice Thomas G. Saylor wrote he “joined the central analysis of the dissenting opinion authored by Justice Baer, based on the recognition that the Environmental Rights Amendment is an embodiment of the public trust doctrine.”

Supreme Court of Pennsylvania case 10 MAP 2015

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at

Want to get notified whenever we write about Pennsylvania Supreme Court ?

Sign-up Next time we write about Pennsylvania Supreme Court, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

Pennsylvania Supreme Court

More News

The Record Network