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Volume XII, Number 176

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Pennsylvania Court Rejects Challenges to State Gas Leases

On January 7, 2015, the Pennsylvania Commonwealth Court unanimously rejected challenges to oil and gas leases of Commonwealth lands brought by the Pennsylvania Environmental Defense Fund (PEDF).  The court threw out challenges to existing leases on the grounds that the plaintiff failed to join the lessees, whom the court held were indispensable parties to the action.  Challenges to statutes providing that part of the royalty money from the Lease Fund be put into the Commonwealth General Fund rather than spent by the Department of Conservation and Natural Resources (DCNR) were also rejected.  PEDF argued the diversion of money violated the Environmental Rights Amendment to the Pennsylvania Constitution.  The court denied this claim, holding the PEDF failed to show that the funding of DCNR was “so inadequate that it impairs the proper functioning” of the DCNR.  They further held “the Environmental Rights Amendment does not …expressly command that all revenues derived from the sale or leasing of the commonwealth’s natural resources must be funneled to those purposes and those purposes only.”

The court rejected a request from the Commonwealth for a declaration that the Governor has the power to reject or approve future leases, noting that the Conservation and Natural Resources Act vests that power in the DCNR.  However, they acknowledged that the Governor had the power to dismiss DCNR officials and to influence them to approve or reject future leases.

Judge Jubelirer wrote a concurring and dissenting opinion (beginning on page 62), agreeing with the rejection of the lease challenges, but arguing that the court should not have reached a decision on the future leasing issue due to the lack of any actual dispute between the DCNR and the Governor.

This opinion vindicates the right of the Commonwealth to lease its oil and gas and the right of the General Assembly and Governor to determine how the proceeds are spent.

Click here to read the opinion. 

© Steptoe & Johnson PLLC. All Rights Reserved.National Law Review, Volume V, Number 16
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About this Author

Nate Holland, Oil, Gas, Attorney, Steptoe Johnson Law Firm
Member

Nate Holland assists clients with business transactions and litigation involving the oil and gas industry. In particular, Mr. Holland helps clients develop solutions for novel challenges or new applications of oil and gas law.

(814) 333-4906
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