IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Pennsylvania Environmental Defense : Foundation, : : Petitioner :

: v. : No. 358 M.D. 2018 : Argued: September 11, 2019 Commonwealth of Pennsylvania, and : Tom Wolf, in his official capacity : as Governor of Pennsylvania, : : Respondents :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge

HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE PATRICIA A. McCUL LOUGH, Judge HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE ELLEN CEISLER, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY JUDGE WOJCIK FILED: October 22, 2020

In this case initiated by the Pennsylvania Environmental Defense Foundation (Foundation) against the Commonwealth of Pennsylvania and Tom Wolf in his official capacity as governor of Pennsylvania (collectively, the Commonwealth), we are presented with the parties ’ cro ss

- A pplications for S ummary R elief. The parties seek declarations under the Declaratory Judgments Act (DJA) 1
as to whether , inter alia , the Commonwealth ’ s appropriation and use of money in
the Oil and Gas Lease Fund (Lease Fund) to pay for the general government operations of the Department of Conservation and Natural Resources (DCNR) or
environmental initiatives un related to the Marcellus Shale region in northcentral

1 42 Pa. C.S. §§7531

- 7541.2

Pennsylvania violate s the Commonwealth ’ s trustee obligations u nder Article I , Section 27 of the Pennsylvania Constitution ( Section 27 or the Environmental Rights Amendment).

The Foundation argues that money in the Lease Fund must be used exclusively for conservation and maintenance efforts at the lease sites where natural
gas and oil wa s extracted and not for other conservation initiatives or general government operation purposes. On this basis, the Foundation asks this Court to
declare as unconstitutional certain provisions of the General Appropriation Act s of
2017 2 and 201 8 , 3 and the 2017 legislative amendments t o The Fisc al Code , 4 because these provisions divert funds away from the intended conservation and maintenance objectives

. The Foundation also seeks a declaration that affirmati ve legislation and
a detailed accounting of the Lease Fund are necessary

. Conversely, t he Commonwealth counters that the use of Lease Fund money for these other purposes is wholly consistent with its fiduciary duties and obligations as trustee of Pennsylv ania ’ s public natural resources and does not violate the Environmental Rights Amendment. The Commonwealth maintains that affirmative legislation is not required. For the reasons that follow , we grant in part and deny in part the parties ’ cross

- A pplications for S ummary R elief.

2 Act of July 11, 2017, P.L. 1279, as am ended

.

3 Act of June 22, 2018, P.L. 1203, as amended

. The Foundation is challenging Sections 104( P ) and 1601 of both appropriation acts.

4 Act of April 9, 1929, P.L . 343, as amended , 72 P.S. §§1

- 1805

. The specific amendments at issue are Sections 1601.2

- E and 1726

- G of The Fiscal Code, both of which were added by the Act of October 30, 2017, P.L. 725, as amended , 72 P.S. § § 1601.2

- E, 1726

- G.3 I. Background We begin by examining the Supreme Court ’ s opinion in Pennsylvania Environmental Defense Foundation v. Commonwealth , 161 A.3d 911 (Pa. 2017) ( PEDF II ) , which laid the foundation for this suit. There , the Supreme Court examined the constitutionality of the 2009 legislative enactments to The Fiscal Code relating to funds generated from the leasing of State forest s and park s for oil and gas exploration and extra ction. The Supreme Court began its analysis by closely examining the contours of the Environmental Rights Amendment, which provides:

The people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment. Pennsylvania ’ s public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people. Pa. Const. art. I, §27. The Supreme Court determined that Section 27 “ establishes a public trust, pursuant to which the natural resources are the corpus of the trust, the Commonwealth is the trustee, and the people are the named beneficiar ies. ” PEDF
II , 161 A.3d at 931

- 32.

The Supreme Court continued that the “ public natural resources ”
referenced in Section 27 “ include the [S]tate forest and park lands leased for oil and gas exploration and .

. . the oil and gas themselves. ” PEDF II , 1 61 A.3d at 931.

“ [S]tate parks and forests, including the oil and gas minerals therein, are part of the corpus of Pennsylvania ’ s environmental public trust. ” Id. at 916.

The Commonwealth is the trustee and not the proprietor of public
natural resources. PEDF II , 161 A.3d at 932. As trustee of the public natural resources, the Commonwealth has the duty to act toward the corpus of the trust with

“ loyalty, impartiality and prudence. ” Id. (citing Robinson Township v.4

Commonwealth , 83 A.3d 901, 956

- 57 (Pa. 2013) (plurality)). This includes the

“ duty to prohibit the degradation, diminution, and depletion of our public natural

resources. ” Id. at 933. In addition, the Commonwealth “ must act affirmatively via legislative actions to protect the environment. ” PEDF II , 161 A.3d at 933 (citing Robinson Township , 83 A.3d at 957

- 58).

“ Pennsylvania trust law dictates that proceeds from the sale of trust

assets ar e trust principal and remain part of the corpus of the trust. ” PED F II , 161
A.3d at 935 (citing In re McKeown’s Estate , 106 A. 189, 190 ( Pa. 1919) ) (emphasis added). “ When a trust asset is removed from the trust , all revenue received in exchange for the trust asset is returned to the trust as part of its corpus. ” Id. at 935 (citing Bolton v . Stillwagon , 190 A.2d 105, 109 (Pa. 1963)) (emphasis added).

The Supreme Court examined the types of proceeds generated from the
Commonwealth ’ s oil and gas leases of State forests and parks : royalties, rents and
bonuses. PEDF II , 161 A.3d at 920. The Supreme Court determined that royalties

“ are unequivocally proceeds from the sale of oil and gas resources. ” Id. at 935. As such, funds generated from royalties are part of the trust corpus and must be committed to further the purposes, rights and protec tions afforded under Section 27,
i.e. , to conserve and maintain our natural resources. Id. at 935. Insofar as certain legislative enactments appropriated royalty payments from the Lease Fund for non

conservation purposes, the Supreme Court declared them unconstitutional. Id.

However, the Supreme Court was less clear on how to categorize other revenue streams from State forest oil and gas leases, i. e. , rents and bonuses derived from the oil and gas leases

. PEDF II , 161 A.3d at 935. The Supreme Court remanded the matter to this Court for further proceedings to determine if these funds5

represent corpus or income under Pennsylvania ’ s private trust principles in effect at
the time of Section 27 ’ s ratification in 1971. Id. at 939.

In Pennsylvania E

nvironmental Defense Foundation v.
Commonwealth , 214 A.3d 748 (Pa. Cmwlth. 2019) ( PEDF III ) , appeal filed

, probable jurisdiction noted and oral argument granted , (Pa., No. 64 MAP 2019, filed May 19, 2020), we examined whether rents and bonuses are compensa tion for the sale of natural resources and, thus, part of the trust corpus that must be used to conserve and maintain those natural resources, or income that may be used for non

trust purposes under Section 27. We determined that rents and bonuses were

re ceived as payments on a lease, not as consideration for the permanent severance
of natural resources. PEDF III , 214 A.3d at 774

.

Pursuant to the law in effect at the time Section 27 was ratified , the proper allocation of such payments is one

- third to income and two

- thirds to trust principal. PEDF III , 214 A.3d at 774

. Payments designated as income are not required to remain in the trust corpus and may be used for non

- trust purposes. Id.
Conse quently, we held that the challenged legislative enactments that diverted
money from the Lease Fund to the General Fund were not facially unconstitutional
under Section 27. Id. However, we noted that an accounting is necessary to ensure that only one

- thi rd of the proceeds allocable to income are removed from the Lease
Fund for non

- conservation purposes and that proceeds designated as trust principal are ultimately used in accordance with the trustee ’ s obligation to conserve and
maintain our natural resour ces. Id.

While PEDF III was pending in this Court, the Foundation instituted
this action against the Commonwealth by fil ing a P etition for R eview in the N ature of D eclaratory R elief (Petition). The Petition contains 327 paragraphs , 7 counts and6

18 subparts

. The Foundation challenges the Commonwealth ’ s conduct as trustee and certain legislative enactments allowing transfers and appropriations from the
Lease Fund to other funds for alleged non

- trust purposes as unconstitutional under
Section 27

. Pe tition for Review, ¶¶12, 15, 21

- 23, 34

- 36, 37

- 38. Following discovery, the parties filed cross

- A pplications for S ummary R elief , which are now before this Court

. 5

II. Cross

- Applications for Summary Relief

T he Foundation seeks the following declaration s 6 : (1) the appropriations from the Lease Fund contained in S ec tions 104(P) and 1601 of the General Appropriation Acts of 2017 and 2018 for the DCNR ’ s government operations are facially unconstitutional; (2) the use of the se appr opriations f or environmental initiatives beyond Pennsylvania ’ s Marcellus Shale region are likewise facially unconstitutional; (3) the repeal of the act commonly referred to as
the 1955 Oil and Gas Lease Fund Act (1955 Lease Fund Act) 7 is facially
unconsti tutional; (4) Section 1601.2

- E of The Fiscal Code is facially unconstitutional; (5) Section 1726

- G of The Fiscal Code is facially unconstitutional;

5 We note that the Foundation filed its P etition and the parties filed their cross

- A pplications for Summary R elief and briefs in support before this Court filed PEDF III on July 29, 2019. The parties did not seek to amend their filings.

6 The Foundation presented numerous overlapping issues with multiple subparts, which we have distilled as six overarching declarations

.

7 Act of December 15, 1955, P.L. 865, formerl y 71 P.S. §§1331

- 1333, repealed by Section 20(2)(i) of the Act of October 30, 2017, P.L. 725. The subject matter of the 1955 Lease Fund Act was transferred to S ection 1601.2

- E of The Fiscal Code, which the Foundation also challeng es

.7

and (6) affirmative legislation and a detailed accounting are required to ensure that
the Lease Fund is protected and used in accordance with Section 27

. 8

T he Commonwealth seeks counter

- declaration s that : (1) the use of Lease Fund money for the DCNR ’ s general government operations is constitutional; (2) revenue from the extraction and sale of oil and gas from the S tate forests and parks is being used in a constitutional manner; (3) the repeal of the 1955 Lease Fund Act is constitutional; (4) Section 1601.2

- E of The Fiscal Code is constitutional; (5)
Section 1726

- G of The Fiscal Code is constitutional; and (6) affirmative legislation is not needed for the Commonwealth to properly effectuate its Section 27 duties and responsibilities.

III. Di scussion A. Legal Standards 1. Summary Relief
We start our analysis by reviewing applicable legal standards. Rule 1532(b) of the Pennsylvania Rules of Appellate Procedure provides that “ the court may on application enter judgment if the right of the applicant thereto is clear. ”
Pa. R.A.P. 1532(b); see Scarnati v. Wolf , 173 A.3d 1110, 1118 (Pa. 2017) ( “ The standard for granting summary relief turns upon whether the applicant ’ s right to relief is clear. Summary relief on a petition for review is similar to the relief provided by a grant of summary judgment. Pa. R.A.P. 1532, Official Note. ” ) (footnote omitted). “ Summary judgment is appropriate where, after the close of pleadings, ‘ there is no genuine issue of any material fact as to a necessary element
of the cause of action or defense which could be established by additional discovery or expert report. ’” Scarnati , 173 A.3d at 1118 (quoting Pa. R.C.P. No. 1035.2(a)).

8 In support of its Application, the Foundation relies on exhibits attached to its brief, which include, inter alia , the Commonwealth’s Answer and Objections and Supplemental Answer and Objections to the First Set of Interrogatories. See Petitioner’s Brie f, Exhibits A and J.8

Conversely, “ [w]here there are material issues of fact in dispute or if it is not clear that the applicant is entitled to judgment as a matter of law, the application will be
denied. ” Sherman v. Kaiser , 664 A.2d 221, 225 (Pa. Cmwlth. 1995). “ A fact is
considered material if its resolution could affect the outcome of the case under the governing law. ” Hospital & Healthsystem Association of Pennsyl vania v.
Commonwealth , 77 A.3d 587, 602 (Pa. 2013). The parties agree that there are no
issues of material fact and that the issues are purely legal.

2. D eclaratory Relief
Section 7533 of the DJA states: “ Any person

. . . whose rights, status,

or ot her legal relations are affected by a statute , . . . may have determined any question of construction or validity arising under the

. . . statute

. . . and obtain a declaration of rights, status, or other legal relations thereunder. ” 42 Pa. C.S. §7533 (emphasis added). The DJA was enacted “ to curb the courts ’ tendency to limit the availability of judicial relief to only cases where an actual wrong has been done or
is imminent. ” Bayada Nurses, Inc. v. Department of Labor and Industry , 8 A.3d 866, 874 (Pa. 2010). The purpose of the DJA is “ to settle and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations ” and, therefore , the DJA should “ be liberally construed and administered. ”
4 2 Pa. C.S. §7541(a); accord Office of Governor v. Donahue , 98 A.3d 1223, 1229 (Pa. 2014) (citation omitted); Funk v. Wolf , 144 A.3d 228, 251 (Pa. Cmwlth. 2016), aff ’ d , 158 A.3d 642 (Pa. 2017). Generally, g ranting or denying an action for a declaratory jud gment is committed to the sound discretion of a court of original jurisdiction. Gulnac by Gulnac v. S outh Butler C ounty School District , 587 A.2d 699, 701 ( Pa. 1991).9 3. Constitutional Review
“W hen reviewing challenges to the constitutionality of Common wealth
actions under Section 27, the proper standard of judicial review lies in the text of Article I, Section 27 itself as well as the underlying principles of Pennsylvania trust
law in effect at the time of its enactment. ” PEDF II , 161 A.3d at 930

. With regard to facial challenges , “ [a] statute is facially unconstitutional only where no set of
circumstances exist [ s ] under which the statute would be valid

. ” Id. at 938 n.31 (emphasis added). “ In determining whether a law is faciall y invalid, [a court] must be careful not to go beyond the statute ’ s facial requirements and speculate about

‘ hypothetical ’ or ‘ imaginary ’ cases. ” Id. ( quoting United States v. Raines , 362 U.S. 17, 22 (1960)). “ A facial challenge ‘ must fail where the statute has a ‘ plainly legitimate sw eep. ’” Id. (quoting Clifton v. Allegheny County , 969 A.2d 1197, 1222 (Pa. 2009) )

.

“ As with any constitutional challenge to legislation, the challenger bears the heavy burden of demonstrating that th e statute ‘ clearly, plainly, and palpably violates the Constitution, ’ as we presume that our sister branches act in conformity with the Constitution. ” PEDF II , 161 A.3d at 929 (quoting Stilp v.
Commonwealth , 905 A.2d 918, 939 ( Pa. 2006) )

.

With these legal standards in mind, we review the relief requested in the parties ’ cross

- A pplications for S ummary R elief.

B. Cross

- Applications for Summary Relief 1. General Appropriation Acts

- Government Operations The Foundation argues that Sections 104(P) and 1601 of the General Appropriation Act s of 2017 and 2018 are facially unconstitutional because they10

authorize the appropriation of Lease Fund money for general government operations

. According to the Foundatio n, the Commonwealth cannot use any of the proceeds from oil and gas deposited in the Lease Fund to pay for the DCNR ’ s general government operations , which include salaries and travel expenses, contract fees, vehicle and equipment purchases and maintenance , office rental s , and other similar
expenses

. Such use violates Section 27 by using trust assets for non

- trust purposes.
In PEDF II , the Supreme Court struck down similar appropriations as facially
unconstitutional on this very basis

. In addition, the Foundation argues that such use also violates Article I, Section 25 of the Pennsylvania Constitution (Section 25) , which guards against transgressions of government, by using trust assets to replace General Fund revenue for general governmen t operations as beyond enumerated authority

. By appropriating trust principal to governmental operations , the Commonwealth is acting as a proprietor of the funds , not as a trustee, and h as failed
to exercise its fiduciary duties of loyalty, impartiality a nd prudence

.

The Commonwealth responds that not all of the money in the Lease
Fund constitutes trust corpus that must be spent on trust purposes. Nevertheless, it
defends that t he appropriation of trust monies for the DCNR ’ s general operating expenses does not violate Section s 27 or 25

. Conservation and maintenance activities are not accomplished in a vacuum: they require people and equipment.
The DCNR ’ s main purpose is effectuating Section 27 and ensuring conservation and
maintenance of Pennsylvania ’ s parks and forests. See Section 101(b)(1) of the
Conservation and Natural Resources Act (CNRA)

. 9 By appropriating Lease Fund money to the DCNR for general operations , the DCNR is able to carry out its duties
and responsibil ities as a Section 27 trustee. Thus, t h e Commonwealth seeks a

9 Act of June 28, 1995, P.L. 89, as amended , 71 P.S. §1340.101(b)(1).11

declaration that its current usage of the Lease Fund is wholly consistent with its Section 27 trustee responsibilities.

Section 104(P) of both the General Appropriation Act of 2017 and the General Appropriation Act of 2018 provides , with emphasis added :

The following sums set forth in this act, or as much thereof as may be necessary, are hereby specifically appropriated from the [] Lease Fund to the hereinafter named agencies of the Exe cutive Department of the Commonwealth for the payment of salaries, wages or other compensation and travel expenses of the duly appointed officers and employees of the Commonwealth, for the payment of fees for contractual services rendered, for the purchase or rental of goods and services for payment and any other expenses, as provided by law or by this act, necessary for the proper conduct of the duties, functions and activities and for the purposes hereinafter set forth for the fiscal year

. . . . In turn, Section 1601 of the General Appropriation Act of 2017 appropriated the following amounts to the DCNR: $50,000,000 for general operations , $7,739,000
for S tate parks operations and $3,552,000 for S tate forests operations, for a total appropriation of $61, 291,000 for the 2017

- 2018 fiscal year. Section 1601 of the General Appropriation Act of 2018 appropriated to the DCNR: $37,045,000 for general operations, $7,555,000 for S tate parks operations and $4,198,000 for S tate forests operations, for a total appr opriation of $48,798,000 for the 2018

- 2019 fiscal
year

. In PEDF II , the Supreme Court examined the Commonwealth ’ s appropriation and use of funds belonging to the trust corpus for the DCNR ’ s general12

operations as contained in Sections 1602

- E 10 and 1603

- E 11 of T he Fiscal Code

. These sections authorized the appropriation of up to $50,000,000 of royalties from the Lease Fund to the DCNR and authorized appropriations and transfers from the
Lease Fund to the General Fund. The only limit ations were : (1) the General Assembly was to “ consider ” allocating funds to municipalities impacted by a
Marcellus Shale well and (2) the DCNR was to “ give preference to the operation and maintenance of State parks and forests ” rather than to conservation purposes. PEDF
II , 161 A.3d at 937

- 38.

The Su preme Court determined that these appropriations fell short of
the Commonwealth ’ s Section 27 trustee obligations. The Court noted that the

10 Added by the A ct of October 9, 2009, P.L. 537, as amended , 72 P.S. §1602

- E . This section provides:

Notwithstanding any other provision of law and except as provided in section 1603

- E [providing for an annual appropriation to the DCNR of up to $50 ,000,000 of royalties] , no money in the [Lease Fund] from royalties may be expended unless appropriated or tr ansferred to the General Fund by the General Assembly from the fund. In making appropriations, the General Assembly shall consider the adoption of an allocation to municipalities impacted by a Marcellus well.

72 P.S. §1602

- E (emphasis added).

11 Added by the Act of October 9, 2009, P.L. 537, as amended , 72 P.S. §1603

- E. This section provides:

Subject to the availability of money in the fund following transfers, up to $50,000,000 from the [Lease Fund] from royalties shall be appropriated annually to the [ DCNR] to carry out the purposes set forth in the [ 1955 Lease Fund Act ]. The [DCNR] shall give preference to the operation and maintenance of State parks and forests.

72 P.S. §1603

- E (emphasis added).13

Commonwealth was using Section 27 trust assets to replace General Fund
appropr iations to the DCNR for its annual operations, thereby reducing the amount
of monies available to the DCNR to undertake conservation activities. 12 PEDF II , 161 A.3d at 923

. The “ revenue generated by oil and gas leases [was] spent in a
multitude of ways entirely unrelated to the conservation and maintenance of our public natural resources. ” Id. at 937

.

The Supreme Court opined that o il and gas royalties are assets of the trust and, as such, may not be spent on non

- trust purposes. PEDF II , 161 A.3d at 938

. The legislative enactments lacked any “ indication that the General Assembly considered the purposes of the public trust or exercised reasonable care in managing the royalties in a manner consistent with its Section 27 trustee duties. ” Id. at 937

. The Court opined: “ T hey plainly ignore the Commonwealth ’ s constitutionally imposed fiduciary duty to manage the corpus of the environmental public trust for the benefit of the people to accomplish its purpose

— conserving and maintaining the

12 The Court observed:
The 2013 General Appropriations Act decreased the appropriation to the DCNR from the General Fund and increased the appropriation from the Lease Fund to the DCNR, resulting in a larger portion of monies from the Lease Fund being used to pay for the DCNR ’ s operational expenses, which had previously been funded by the General Fund, and thus reduced the amount of monies available for the DCNR ’ s conservation activities

.
The 2014

- 2015 General Appropriations Act again included increased appropriations of royal ties from the Lease Fund to the DCNR that were mirrored by decreased appropriations f r om the General Fund to the DCNR.

PEDF II , 161 A.3d at 923 (emphasis added).14

corpus by, in ter alia , preventing and remedying the degradation, diminution and depletion of our public natural resources. ” Id. at 938

.

The Supreme Court continued: “ [T] hese legislative enactments permit
the trustee to use trust assets for non

- trust purposes, a clear violation of the most
basic of a trustee ’ s fiduciary obligations. ” PEDF II , 161 A.3d at 938

. “ [T] he trustee may use the assets of the trust only for purposes a uthorized by the trust or necessary for the preservation of the trust; other uses are beyond the scope of the discretion conferred, even where the trustee claims to be acting solely to advance other discrete
interests of the beneficiaries. ” Id. (quoting R obinson Township , 83 A.3d at 978 ) ; see Section 7780 of the Uniform Trust Act, 20 Pa. C.S. §7780 (providing that the duty to administer a trust with prudence involves “ considering the purposes ” of the trust
and “ the exercise of reasonable care, skill, and caution ” ). Thus , the Supreme Court
declared Sections 1602

- E and 1603

- E of The Fiscal Code as facially
unconstitutional. PEDF II , 161 A.3d at 939.

However, the legislative enactments declared unconstitutional in PEDF
II are distinguishable from the appropriations at issue here in one key respect. Sections 1602

- E and 1603

- E of The Fiscal Code dealt exclusively with oil and gas royaltie s , i.e. , trust principal, and authorized the transfer of royalties from the Lease
Fund to the General Fund for non

- trust purposes

. In contrast, the appropriations at issue here are not royalty

- specific. In fact, the General Appropriation Acts of 2017
and 2018 do not identify whether the funds are royalties, rents, bonuses , or interest from the oil and gas leases or from other sources within the Lease Fund

. See Section
1601.2

- E(b) of The Fiscal Code, 72 P.S. §1601.2

- E(b); see also Petitio ner ’ s Brief, Exhibit A, Commonwealth ’ s Answer and Objections to the Foundation ’ s First S et15

of Interrogatories, ¶

¶6a, 7a (identifying rents, bonuses and interest from the oil and gas leases as well as vehicle sales and other statutor y deposits in the Lease Fund).

In this regard, the provisions here are more similar to the other provisions at issue i n PEDF II , namely Section s 1604

- E 13 and 1605

- E 14 of The Fiscal
Code and Section 1912 of the Supplemental General Appropriations Act of 2009

. 15 These provisions authoriz ed the transfer of money in the Lease Fund to the General
Fund. However, the se transfers were not royalty

- specific. Recognizing that the
Lease Fund also contained rents and bonuses generated from the oil and gas leases,

t he Supreme Court remanded the mat ter to this Court to determine if these proceeds
constituted trust principal or income.

On remand, we determined that some of the proceeds represent ed
income. PEDF III , 214 A.3d at 774 . While 100% of royalties constitute trust

13 Added by the Act of October 9, 2009, P.L. 537, 72 P.S. §1604

- E. Section 1604

- E provides: “ Notwithstanding section 1603

- E or any other provision of law, in fiscal year 2009

- 2010 the amount of $60,000,000 shall be transferred from the [Lease Fund] to the General Fund .” 72 P.S. §1604

- E (emphasis added)

.

14 Added by the Act of July 6, 2010, P.L. 279, 72 P.S. §1605

- E. Section 1605

- E provides:
(a) Fiscal ye ar 2010

- 2011.

-- Notwithstanding section 1603

- E or any other provision of law, in fiscal year 2010

- 2011, the amount of $180,000,000 shall be transferred fro m the [Lease Fund] to the General Fund

. (b) Fiscal year 2014

- 2015.

-- Notwithstanding section 1603

- E or any other provision of law, in fiscal year 2014

- 2015, the amount of $95,000,000 shall be transferred from the [Lease Fund] to the General Fund.

72 P.S. §1605

- E (emphasis added)

.

15 Act of October 9, 2009, P.L. 779. Section 1912 of the Supplemental General Appropriations Act of 2009 directed the transfer of $143 ,000,000 from the Lease Fund to the General Fund.16

principal , only two

- thirds of proceeds derived from rents and bonuses on the oil and gas leases represent trust principal ; the other one

- third is income. Id. There are no Section 27 restrictions on the appropri ation and use of income derived from the oil and gas leases

. Id. Because the Lease Fund contains both trust principal and income from the gas leases as well as other sources of revenue , we ruled that Sections 1604

- E and 1605

- E of The Fiscal Code and Sect ion 1912 of the Supplemental General Appropriations Act of 2009 were not facially unconstitutional. PEDF III , 214 A.3d
at 774. For the same reasons espoused in PEDF III , we likewise conclude that the appropriations here of non

- specified monies from th e Lease Fund to the DCNR for governmental operations are not facially unconstitutional under Section 27.

The Foundation also claim s that the use of the Lease Fund to fund general governmental operations to replace General Fund revenue violates Section
25

. Section 25 provides:

Reservation of powers in people To guard against transgressions of the high powers which we have delegated, we declare that everything in this article is excepted out of the general powers of government and shall forever remain inv iolate. Pa. Const. art. I, §25. T his provision has been described as a “ reservation of rights in the people. ” Grimaud v. Commonwealth , 865 A.2d 835, 845

- 46 (Pa. 2005). It safeguards the rights enumerated in Artic le I , including Section 27, by e stablishing those rights to be “ inviolate, ” such that they “ may not be transgressed by government. ” Gondelman v. Commonwealth , 554 A.2d 896 (Pa . 1989) (citing Spayd v. Ringing Rock Lodge No. 665, Brotherhood of Railroad Trainmen , 113 A. 70 ( Pa. 1921) ); see Yanakos v. UPMC , 218 A.3d 1214, 1231 (Pa. 2019), reargument denied , 224 A.3d 1255 (Pa. 2020) (Donohue, J., concurring) (It “ invokes special pr otections17

to safeguard the rights set forth in Article I. ” ). A cause of action arises under the Pennsylvania Constitution for the violation of rights guaranteed under Article I.
Erdman v. Mitchell , 56 A. 327 , 331 ( Pa. 1903). No affirmative legislation i s needed for a vindication of those rights in the civil courts. Id. ; accord PEDF II , 161 A.3d
at 937. This means that t he public trust provisions of the Environmental Rights
Amendment are self

- executing and do not require implementing legislation for
enforcement

. PEDF II , 161 A.3d at 937

.

The Foundation ’ s Section 25 argument misses the mark in two respects

. First, t he constitutional issue at hand is not whether the Commonwealth substituted General Fund revenue with Lease Fund money to f inance the DCNR ’ s general operations. Rather , the issue is w hether the appropriation and use of Lease Fund
money for the DCNR ’ s general operations violates Section 27. Second, the
Foundation has set forth a viable cause of action under the Pennsylvania Constitution to vindicate rights asserted under Section 27 as guaranteed by Section 25. PEDF
III

. However, h aving determined t hat the appropriations at issue are not facially unconstitutional under Section 27, the Foundation ’ s Section 25 claim fails by
extension. In sum, because the Lease Fund contains both trust principal and other deposits , we cannot declare that the appropr iations contained in Sec tions 104(P) and 1601 of the General Appropriation Acts of 2017 and 2018 for the DCNR’s government operations are facially unconstitutional. By the same token, we are also unprepared to grant the Commonwealth ’ s sweeping request that its current usage is wholly consistent with its Section 27 trustee responsibilities. Such a declaration requires an as

- applied analysis, which we are not prepared to address in this matter

.18

Therefore, we deny both the Foundation ’ s and the Commonwealth ’ s cross

A pplications in this regard

.

2. General Appropriation Acts

- Other E nvironmental Initiatives
In addition, t he Foundation challenges Sections 104(P) and 1601 of t he General Appropriation Act s of 2017 and 2018 as facially unconstitutional on the
basis that t hey authorize the appropriation of money from the Lease Fund to the
DCNR to fund S tate park and forest operations without restricting such use to Pennsylvania’s Marcellus Shale region . The Foundation contends t hat Lease Fund money cannot be used to f und environmental initiatives that are unrelated to the region impacted by a Marcellus well. The extraction and sale of oil and gas requires large

- scale industrial development that degrades, dep letes and diminishes the State
lands . This industrial development has and will continue to negatively impact the forest and water ecosystems in the Marcellus Shale region

. Therefore, the
Foundation maintains that a ny proceeds derived from this development m ust be
dedicated e xclusively to mitigate the harm caused and to restore natural resources of this region. Otherwise, these public natural resources will not be conserved or maintained as mandated by Section 27. By utilizing proceeds from the oil and gas
leases for any use other than conservation programs to rehabilitate the Marcellus
S hale region, the Commonwealth violates Section 27 as well as the Supreme Court ’ s directives in PEDF II regarding the use of Section 27 trust funds.

The Commonwealth counters that there is no requirement that money
derived from the State’ s oil and gas leases must be used in specific areas of the Commonwealth or that they be specifically used in Pennsylvania ’ s Marcellus Shale region. I n PEDF II , t he Supreme Court held that the appropriation of trust funds to agencies or initiatives other than the DCNR “ would not run afoul of the constitution ”19

where the funds are still dedicated to effectuating Section 27. PEDF II , 161 A.3d
939

. B y the same logic, the use of Lease Fund money fo r enhancement, remediation, or conservation of public natural resources in areas other than those outlined by the
Foundation is constitutional because such use is not a diversion of proceeds to a non

trust purpose.

In PEDF II , the Supreme Court held tha t t he Commonwealth has a
constitutional obligatio n “ to prevent and remedy the degradation, diminution, or depletion of the public natural resources, ” particularly S tate forests and parks impacted by oil and gas wells. 161 A.3d at 932 (quoting Robinson Tow nship , 83 A.3d at 957). While we appreciate that the money derives from oil and gas wells,

t he environmental public trust embraces more than Pennsylvania ’ s Marcellus Shale region from which the oil and gas was extracted. Indeed, our public natural
resources include “ clean air and pure water, ” as well as “ natural, scenic, historic and
esthetic values of the environment. ” Pa. Const. art. I, §27; accord Robin son Township , 83 A.3d at 955 ( “ the concept of public natural resources includes not only
S tate

- owned lands, waterways, and mineral reserves, but also resources that implicate the public interest, such as ambient air, surface and ground water, wild flora, a nd fauna (including fish) ” ).

Even assuming that we are dealing with corpus assets, t he notion that
all trust principal derived from the extraction and sale of oil and gas must be applied exclusively toward public land impacted by oil and gas is unfounded. As a trustee, the Commonwealth has discretion to use corpus funds provided those funds are used
to further its truste e duties in accomplishing Section 27 objectives. See PEDF II , 161 A.3d at 933

. The vast proceeds derived from the oil and gas leases may be used in a variety of ways to benefit a wide array of Pennsylvania ’ s cherished public20

natural resources. See i d. Pennsylvania is facing many environmental threats from climate change to pollute d waters to invasive species. To narrowly restrict the use of the money garnered from the oil and gas leases to th e situs of extraction is myopic. As the Supreme Court opined, “ the General Assembly would not run afoul of the constitution by appropriating trust funds to some other initiative or agency dedicated to effectuating Section 27

. ” Id. at 939.

For these reasons, we deny the Foundation ’ s request for a declaration
that Lease Fund money cannot be used to fu nd environmental initiatives that a re

unr elated to the Marcellus Sh ale region . W e grant the Commonwealth ’ s declaratory request that Lease Fund money , including trust principal, may be expended on other
environmental conservation initiatives because such use is not a diversion of funds

to a non

- trust purpose. 16 We conclude that the appropriations contained in Sec tions 104(P) and 1601 of the General Appropriation Acts of 2017 and 2018 to the DCNR for the operation of State parks and forests a re not facially unconstitutional.

3

. Repeal of the 1955 Lease Fund Act Next, the parties dispute whether t he Commonwealth violated Section
27 and its fiduciary duties thereund er by repealing the 1955 Lease Fund Act

. The

16 However, we caution the Commonwealth that the failure to remedy the degradation, diminution, or depletion of the State forests and parks impacted by Marcellus w ells

- the very public resources harmed in order to generate these funds

- may constitute a failure to pr eserve the trust and a derelictio n of its fiduciary duties under Section 27. See PEDF II , 161 A.3d at 933 (“ A lthough a trustee is empowered to exercise discretion with respect to the proper treatment of the corpus of the trust, that discretion is limited by the purpose of the trust and t he trustee ’ s fiduciary duties

. . . ”; “[t] he trustee m ay use the assets of the trust ‘ only for purposes authorized by the trust or necessary for the preservation of the trust ’”); Section 7780.4 of the Uniform Trust Act, 20 Pa. C.S. §7780.4 (“ The trustee shall exercise a discretionary power in good faith and in accordance with the provisions and purposes of the trust and the interests of the beneficiaries

. . . .”).21

Foundation argues that Section 1601.2

- E of The Fiscal Code violates Section 27 on its face by repealing the 1955 Lease Fund Act without replacing any safeguards to ensure that the public natural resources are conserved and maintained or otherwise guarante eing that the Commonwealth, in its administration of the Lease Fund, will comply with its trustee duties and responsibilities under Section 27. In addition, t he
Foundation contends that the Commonwealth has failed to take the basic step of evaluating the impact of the repeal of the 1955 Lease Fund Ac t on the environment

. The Foundation argues that the repeal violates Section 27 on its face because it lacks any indication that the Commonwealth considered or even contemplated its duties
as the trustee of th e environmental public trust by eliminating the protections
contained therein.

The Commonwealth counters that the repeal of the Lease Fund and replacement with new provisions does not run afoul of Section 27. The Foundation wrongfully attempts to impose a requirement upon the Commonwealth that it must provide an evaluation on the immediate or long

- term impacts of its decision to repeal the 1955 Lease Fund Act. There is no such requirement.

The 1955 Lease Fund Act established the Leas e Fund and provide d:

Section 1. All rents and royalties from oil and gas leases of any land owned by the Commonwealth, except rents and royalties received from game and fish lands, shall be placed in a special fund to be known as the “ Oil and Gas Lease Fund ” which fund shall be exclusively used for conservation, recreation, dams, or flood control or to match any Federal grants which may be made for any of the aforementioned purposes.22 Section 2. It shall be within the discretion of the Secretary of Forests and Waters [ 17 ] to determine the need for and the location of any project authorized by this act. The Secretary of Forests and Waters shall have the power to acquire in the name of the Commonwea lth by purchase, condemnation or otherwise such lands as may be needed.

Section 3

. All the moneys from time to time paid into the

“ [] Le ase Fund ” are specifically appropriated to the Department of Forests and Waters to carry out the purposes of this act.
Former 71 P.S. § §1331

- 1333 (emphasis added)

.

In 2017, the General Assembly repealed the 1955 Lease Fund Act and transferred the subject matter to Section 1601.2

- E of The Fiscal Code. Section
1601.2

- E provides :

(a) Continuation.

-- The [Oil and Gas Lease Fund] is continued as a special fund in the State Treasury.
(b) Sources.

-- The following shall be deposited into the fund: (1) Rents and royalties from oil and gas leases of land owned by the Commonwealth, except rents and royalties received from game and fish lands. (2) Amounts as provided under [S] ection 5 of the act of October 8, 2012 (P.L. 1194, No. 147), known as the Indigenous Mineral Resources Development Act [, 71 P.S. §1357.5]

. (3) Any other money appropriated or transferred to the fund

. (c) Use.

-- Money in the fund may only be used as provided under subsection (e) or as annually appropriated by the

17 The General Assembly transferred the p owers and duties of the Department of Forests and Waters under this section to the DCNR

. See Section 304(c) of the CNRA, 71 P.S. §1340.304 (c)

.23 General Assembly

. In making an appropriation from the fund, the General Assembly shall consider the Commonwealth ’ s trustee duties under sec tion 27 of Article I of the Constitution of Pennsylvania. (d) Priority.

-- Money appropriated from the fund under a General Appropriation Act or other appropriation act shall be distributed prior to allocations under subsection (e).
(e) Annual transfers.

-- The following apply:
(1) (i) Except as provided under subparagraph (ii), for the 2017

- 2018 fiscal year and each fiscal year thereafter, $20,000,000 shall be transferred from the fund to the Marcellus Legacy Fund for distribution to the Environmental Stew ardship Fund.
(ii) No amount shall be transferred from the fund to the Marcellus Legacy Fund for distribution to the Environmental Stewardship Fund for the 2019

- 2020 and 2020

- 2021 fiscal year.
(2) For the 2017

- 2018 fiscal year and each fiscal year the reafter, $15,000,000 shall be transferred from the fund to the Marcellus Legacy Fund for distribution to the Hazardous Sites Cleanup Fund. 72 P.S. §1601.2

- E.

Th e absence of safeguards within Section 1601.2

- E does not render th is provision facially uncon stitutional. The Commonwealth has a constitutional obligation to ensure that trust proceeds are used to conserve and maintain the corpus of the trust, regardless of any statutory sa feguards. However, Section 27 “ does not impose duties on the political branches to enact specific affirmative measures to promote clean air, pure water, and the preservation of the different values of our environment[.] ” Robinson T ownship , 83 A.3d at 951

- 52.
Further , there is no requirement for the Commonwealth, or the General Assembly, to provide the Foundation or the public with any written evaluation prior24

to amending the Lease Fund or other legislative enactments

. See Frederick v. Allegheny Township Zoning Hearing Board , 196 A.3d 677, 700 (Pa. C mwlth. 2018) (holding a municipal trustee was under no obligation to undertake any “ pre

enactment environmental, health, and safety ” evaluation for Section 27 purposes).
Even a liberal reading of PEDF II and Robinson Township does not i mply such a requirement. Thus, we deny the Foundation’s Application and grant the
Commonwealth’s cross

- Application upon concluding that the repeal of the 1955 Lease Fund Act is not facially unconstitutional.

4

. Section 1601.2

- E of The Fiscal Code
a. Sectio n 1601.2

- E (a) Next, t he Foundation argues that Section 1601.2

- E(a) violates Section 27 by eliminating the Lease Fund, over which the DCNR had exclusive control, and creating a new fund as a special fund, without any recognition or restriction th at funds derived from the extraction and sale of oil and gas must comply with the
Section 27 mandate.

The Commonwealth res p onds that subsection (a) does not est ablish a new Lease Fund. Rather, it merely continued the Lease Fund. Furthermore, the DCNR is not the only agency entrusted with Section 27 trustee duties.

Section 1601.2

- E (a) of The Fiscal Code provides: “ Continuation.

-- The [Lease Fund] is continued a s a special fund in the State Treasury. ” 72 P.S. §1601.2

- E(a). Contrary to the Foundation ’ s claims, subs ection (a) did not establish a “ new ” Lease Fund. Rather, it simply “ continued ” the Lease Fund previously established in
the 1955 Lease Fund Act as a special fund. 72 P.S. §1601.2

- E(a). According to the Commonwealth, t he Lease Fund continues to bear the same fund number ( No. 016)25

since it was first established. See Petitioner ’ s Br ief, Exhibit A, Commonwealth ’ s Answer and Objections to the Foundation ’ s First Set of Interrogatories, ¶5a.

Although subsection (a) no longer contains the statutory requirement
that the fund must “ be exclusively used ” by the DCNR “ for conservation, recreation, dams, or flood control , ” Section 27 ’ s constitutional requirement that trust principal must be used for trust purposes nevertheless p revails. See PEDF II

. The omission
of this statutory language does not render Section 1601.2

- E (a ) facially
unconstitutional. The legislature retains “ authority to control the fate of special funds in order to serve the changing needs of the government ” provided that doing so does not contravene a specific constitutional provision controlling the fun d. Hospital & Healthsystem , 77 A.3d at 604

- 605. Moreove r, “ th e Lease Fund is not a constitutional trust fund and need not be the exclusive repository for proceeds from oil and gas development. ” PEDF II , 161 A.3d at 939

.

As for the removal of the DCNR ’ s exclusive control over this special fund, “ t he DCNR is not the only agency committed to conserving and maintaining our public natural resources

. ” PEDF II , 161 A.3d at 939

. “ [P]ublic trustee duties were delegated concomita ntly to all branches and levels of government in recognition that the quality of the environment is a task with both local and statewide implications. ” Id. at 919. Indeed, “ all agencies and entities of the Commonwealth government, both statewid e and loca l, have a fiduciary duty to act toward the corpus with prudence, loyalty, and impartiality. ” Id. at 931 n.23; accord Robinson Township , 83 A.3d at 957 ( “ duties and powers attendant to the trust are not vested exclusively in any single branch of Pennsylvania ’ s government ” )

. “ [T] he General Assembly would not run afoul of the constitution by appropriating trust funds to
some other

. . . agency dedicated to effectuating Section 27. ” PEDF II , 161 A.3d at26

939. F or these reasons, we conclude that Sec tion 1601.2

- E(a) is not facially
unconstitutional.
b

. Section 1601.2

- E ( b )

Next, the Foundation argues that Section 1601.2

- E(b) is facially
unconstitutional because it violates Section 27 and trust law b y commingling the protected trust principal with other revenue

. According to the Foundation, t he Commonwealth is neglecting its trustee obligations by not maintaining separate accounts and keeping adequate records to ensure that Section 27 trust funds are used
for trust purposes.

The C ommonwealth defends that there is no requirement to maintain separate accounts.

Section 1601.2

- E(b) of The Fiscal Code provides:
(b) Sources.

-- The following shall be deposited into the [Lease F und ] : (1) Rents and royalties from oil and gas leases of land owned by the Commonwealth, except rents and royalties received from game and fish lands. (2) Amounts as provided under section 5 of the act of October 8, 2012 (P.L. 1194, No. 147), known as the Indigenous Mineral Resources Development Act.
(3) Any other money appropriated or transferred to the fund. 72 P.S. §1601.2

- E( b ).

Section 1601.2

- E(b) , on its face, directs deposits into the Lease Fund,
which results in a mixture of trust principal and income. As the Supreme Court held,

“ the Lease Fund is not a constitutional trust fund and need not be the exclusive repository for proceeds from oil and gas development. ” PEDF II , 161 A.3d at 939

.27

By the same token , there is no restriction that the Lea se Fund must be comprised solely of corpus funds derived from oil and gas. Although Section 1601.2

- E(b) does not identify nor account for the funds going into and out of the Lease Fund , such
omission s do not render this section facially unconstitutional. This is because if the General Assembly chose to appropriate all monies in the Lease Fund for trust purposes, there would be no Section 27 violation. The constitutional problem arises only when trust assets are applied to non

- trust purposes. See PEDF II

. Although we agree with the Foundation a clear accounting and identification of corpus funds from the oil and gas leases are necessary to ensure that these funds are properly used in strict compliance with Section 27, which we discuss below, the absence of such a mandate with in Section 1601.2

- E (b) itself does not render this provision facially
unconstitutional.

c. Section 1601.2

- E(c)

Next, t he Foundation argues that Section 1601.2

- E(c) v iolates Section
27 as well as Section 25 by failing to provide that the funds must be used to conserve and maintain the corpus by preventing and remedying the degradation, diminution and depletion of our public natural resources. The Foundation asserts th at t here are
no limitations on the use of money in the Lease F und to comply with Section 27. Subsection (c) requires no evaluation prior to the use of funds generated from the extraction and sale of oil and gas.

The Commonwealth defends that subsection (c) clearly evidences that the General Assembly contemplated and faithfully exercised its fiduciar y obligation s as trustee by mandating that the le gislature “ consider the Commonwealth ’ s trustee duties under [S]ection 27 ” when appropriating funds. The app ropriation of trust28

monies for an agency ’ s general operating expenses does not violate Section s 2 7 or
25 of the Pennsylvania Constitution.

Section 1601.2

- E(c) of The Fiscal Code provides:
(c) Use.

-- Money in the [Lease] [F] und may only be used as provided under subsection (e) or as annually appropriated by the General Assembly

. In making an appropriation from the fund, the General Assembly shall consider the Commonwealth ’ s trustee duties under section 27 of Article I of the Constitution of Pennsylvania

. 72 P.S. §1601.2

- E( c ) (emphasis added)

.

S ubsection (c) merely requires the General Assembly to “ consider ” the
Commonwealth ’ s trustee duties when making appropriations. Id. In PEDF II , the Supreme Court held that it is not enough to simply “ consider ” allocating the corpus funds for trust purposes in declaring Section 1602

- E of The Fiscal Code
unconstitutional

. PEDF II , 161 A.3d at 937 ( “ Section 1602

- E merely requires the General Assembly to ‘ consider ’ allocating t hese funds to municipalities impacted by
a Marcellus well. ” )

. However, a s discussed above, Section 1602

- E dealt with the appropriation and transfer of royalties in the Lease Fund, which belonged to the trust
corpus. Here, Section 1601.2

- E(c) of The Fiscal Code authorizes the appropriation or transfer of monies within the Lease Fund without any indication as
to the specific nature of the funds , i. e. , royalties, rent s , bonuses, interest or other

sources . Because the Lease Fund is comprised of both restricted corpus and
unrestricted deposits , we cannot conclude that Section 1601.2

- E(c) violates Section
27 on its face

. Because t he Foundation ’ s Section 25 claim is premised on a Section 27 violation, it likewise fails. Thus, we conclude that subs ection (c) is not facially unconstitutional under Section 27 or Section 25 of the Pennsylvania Constitution.29 d. Section 1601.2

- E( e ) 18 Next, the Foundation argues that the transfers from the Lease Fund to the Marcellus Legacy Fund for subsequent distribution to the Environmental Stewardship Fund and Hazardous Site s Cleanup Fund violates Section 27

. T he Lease Fund transfers are used to replace insufficient landfill fees and tax revenues.
T hese funds are “ untethered to the protection of the public natural resources in the
State [f] orests and [p] arks of northcentral Pennsylvania impacted to generate this
money. ” Petitioner ’ s Brief at 88. The DCNR does not exercise control over these
funds

. The Commonwealth counters that the transfers to other Commonwealth agencies or initiatives, including the Environmental Stewardship Fund and
Hazardous Site s Cleanup Fund, do not violate Section 27 because the appropriations
are devoted to a multitude of conservation and maintenance efforts. Again, t he issue is not whether the funds replace other revenue streams but whether the funds are devoted to trust purposes. The DCNR is not the only Section 27 trustee.

Section 1601.2

- E(e) of The Fiscal Code provides:
(e) Annual transfers.

-- The following apply:
(1) (i) Except as provided under subparagraph (ii), for the 2017

- 2018 fiscal year and each fiscal year thereafter, $20,000,000 shall be transferred from the fund to the Marcellus Legacy Fund for distribution to the Environmental Stewardship Fund.
(ii) No amount shall be transferred from the fund to the Marcellus Legacy Fund for distribution to the Environmental Stewardship Fund for the 2019

- 2020 and 2020

- 20 21 fiscal year.

18 The Foundation does not challenge subsection (d) of Section 1601.2

- E.30 (2) For the 2017

- 2018 fiscal year and each fiscal year thereafter, $15,000,000 shall be transferred from the fund to the Marcellus Legacy Fund for distribution to the Hazardous Sites Cleanup Fund. 72 P.S. §1601.2

- E( e )

.

As discussed abov e , i t is not clear whether the transfers from the Lease Fund to the Marcellus Legacy Fund, the Environmental Stewardship Fund and Hazardous Sites Cleanup Fund are trust principal or income. Even assuming the transfers represent trust principal belonging to the environmental trust , the
Foundation is not entitled to the declarat ion it seeks . First, the use of trust assets to replace insufficient revenue is not a per se violation of Section 27 . Section 27 is
violated when trust assets are used for non

- trust purposes. PEDF II , 161 A.3d at
938. Second, we reiterate that utilization of the trust assets on conservation and
maintenance initiatives beyond the Marcellus Shale region do not run afou l of
Section 27. Id. at 939

. Third , the DCNR is not the only Section 27 trustee or the sole agency responsible for conserving and maintaining Pennsylvania ’ s public
natural resources. Id. at 931 n.23. Consequently , there is no basis upon which to
declar e subsection (e) facially unconstitutional.

Thus, we deny the Foundation’s Application for Summary Relief and grant the Commonwealth’s cross

- Application upon concluding that the challenged provisions of Section 1601.2

- E of The Fiscal Code are not facial ly unconstitutional.

5

. Section 1726

- G of The Fiscal Code Next, t he Foundation argues that the transfer in Section 1726

- G is
unconstitutional insofar as the Commonwealth authorized the transfer of $10,000,000 from the Keystone Recreation, Park and Conservation Fund (Keystone31

Fund) 19 to the General Fund . The Keystone Fu nd is used primarily by the DCNR to improve the public natural resources of our parks and forests. The Keystone Fund
should not be used to fill budget gap s in the General Fund caused by in sufficient tax
revenue. The Commonwealth made the determination wi thout any public notice or evaluation regarding the impact of this transfer on our public natural resources. Combined with the loss of control over the Lease Fund, the Foundation argues that the transfer from the Keystone Fund further impedes the DCNR ’ s a bility to carry out

conserv ation and maintenance projects on our State f orests and p arks. The Commonwealth responds that Section 1726

- G of The Fiscal Code does not violate the Pennsylvania Constitution. These funds are not corpus fund s. Just as the dive rsion of funds from the Lease Fund does not constitute a facial
violation of the Commonwealth ’ s Section 27 duties and responsibilities, the diversion of money from t he Keystone Fund does not violate the Commonwealth ’ s responsibilities as a Section 27 trustee.

Section 1726

- G of The Fiscal Code directs the following transfers:
During the 2017

- 2018 fiscal year, $300,000,000 shall be transferred from amounts available in special funds and restricted accounts to the General Fund. The transfers under this section shall be in accordance with the following: (1) The Secretary of the Budget shall transmit to the State Treasurer a list of amounts to be transferred from special funds and restricted accounts to the General Fund. (2) Upon r eceipt of the list under paragraph (1), the State Treasurer shall cause the transfers under paragraph (1) to
occur.

19 The Keystone Fund was created by the Keystone Recreation, Park and Conservation Fund Act (Keystone Act), Act of July 2, 1993, P.L. 359, as am ended , 32 P.S. § § 2011

- 2024.32

72 P.S. § 1726

- G. Of the $300,000,000, the Commonwealth authorized the transfer of $10,000,000 from the Keystone Fund to the General Fund. See Petitioner ’ s Brief,
Exhibit J , Commonwealth ’ s Supplemental Answer and Objections to First Set of Interrogatories, ¶ 16

.

In the Keystone Act , the General Assembly recognized that “ the land and water resources of this Commonwealth as described in [S]ec tion 27 ” are fundamental to the health and welfare of the people of Pennsylvania. Section 2(1) of the Keystone Act, 32 P.S. §2012(1). One of the objectives of the Keystone Act is to provide a “ predictable and stable source of funding ” for “ parks, natural areas, recreation, historic preservation facilities, educational facilities, zoos and public
li braries in this Commonwealth. ” Section 2(6) of the Keystone Act,
32 P.S. §2012(6). Section 3 of the Keystone Act, 32 P.S. §2013, identifies t he
DCNR as one of the agency recipients of an allocation from the Keystone Fund

.

Unlike the Lease Fund, the Keystone Fund is not funded by money from the extraction and sale of oil and gas from Pennsylvania ’ s natural resources. Rather, the Keystone Fund is funded by “ proceeds from the sale of bonds or notes ” and “ the monthly transfer of a portion of the State Realty Transfer Tax. ” Section 4(b) of the Keystone Fund, 32 P.S. §2014(b) ; see Sec tion 12 of the Keystone Act, 32 P.S. §2022 (the DCNR is allocated $17,000,000 from bond revenues and 30% of realty transfer tax revenues). In short, we are not dealin g with money belonging to the trust corpus

. Consequently, the transfer of funds from the Keystone Fund to the General Fund
does not run afoul of Section 27 or impugn the Commonwealth ’ s fiduciary duties as

trustee

. See PEDF II

.

As for the Commonwealth ’ s failure to provide notice or evaluate the impact on our public natural resources, as discussed above, there is no requirement33

for public notice or an evaluation as to the potential impacts of such transfers. See
Frederick , 196 A.3d at 700

. Although we understand that this transfer d ecreased the
amount of funds available for the DCNR ’ s conservation activities, t he transfer of unrestricted money from one fund to another is a matter of legislative prerogative. Thereafter, the administrati on of the appropriations is a function of the
Co mmonwealth. Section 4(c) of the Keystone Fund, 32 P.S. §2014 (c) ; see Common Cause of Pennsylvania v. Commonwealth , 668 A.2d 190, 206 n.21 (Pa. Cmwlth. 1995). For this Court to hold otherwise would be an unconstitutional encroachment on the powers of the executive branch

. See Common Cause. “ [ W ] e must respect the legislative prerogative to control the State ’ s finances, a prerogative that is subject only to constitutional limitations

. ” Sch ool District of Newport T ownship in Luzerne
C ounty v. State Tax Equalization B oard , 79 A.2d 641, 643 ( Pa. 1951)

. We , therefore, conclude that Section 1726

- G is not facially unconstitutional , and we deny the Foundation’s Application and grant the Commonwealth’s cross

- Application in this regard

.

6

. Affirmative Legislation & Accounting

Finally , t he Foundation asks this Court for a declaration that affirmative legislation is required to ensure that the Lease Fund has protective limitations. Specifically, the Foundation seeks new legislation to ensure that the money derived
from the oil and gas leases in the Marcellus Shale region will be : used only in that region; available to conserve these resources for future generations; and appropriated to the DCNR for these purposes. The F oundation also seeks a declaration that the
Commonwealth must maintain a detailed account ing of monies in the Lease Fund and how they are used

.34 The Commonwealth responds that “ no affirmative legislation is
needed ” for the Commonwealth to properly effect uate its Section 27 duties and responsibilities. Respondents ’ Joint Brief at 26. T he Commonwealth maintains that the Supreme Court rejected this very argument in PEDF II

. It also defends that the Commonwealth and the General Assembly “ account for all monies derived from the
DCNR ’ s oil and gas leases and do, in fact, track the allocation of oil and gas royalty
monies. ” Respondents ’ Joint Brief at 25.

In PEDF II , o ur Supreme Court deter mined that “ Pennsylvania ’ s environmental trust ” requires the Commonwealth to “ act affirmatively via legislative action to protect the environment. ” PEDF II , 161 A.3d at 933 ; see Robinson Township , 83 A.3d at 955

- 66 (the Commonwealth ’ s Section 27 duties ar e

“ both negative ( i.e. , prohibitory) and affirmative ( i.e. , implicating enactment of legislation and regulations ” ) ) . The Court recognized numerous legislative

enactments aimed at protecti ng our public natural resources, such as t he Clean
Streams Law 20 and the Air Pollution Control Act. 21 See Robinson Township , 83 A.3d
at 958. But, the Court held back from dictating what new legislative enactments or executive action s were necessary , allo wing the legislative and executive branches to
exercise their discretion in furtherance of their Section 27 duties

. Indeed, such a legislative mandate is not the role of the judiciary. See Benson ex rel. Patterson v.
Patterson , 830 A.2d 966, 968 (Pa. 2003) ( “ [I]t is not the role of the judiciary to legislate changes the legislature has declined to adopt. ” ). Therefore, we deny the
Foundation ’ s request for declaratory judgment for specific affirmative legislation.

20 Act of June 22, 1937, P.L. 1987, as amended , 35 P.S. §§691.1

- 691.1001.

21 Act of January 8, 1960, P.L. (1959) 2119, as amended , 35 P.S. § § 4001

- 4015

.35 By the same token, we also deny the Commonwealth ’ s request for a sweeping declaration that “ no affirmative legislation is needed ” for the Commonwealth to properly effectuate its Section 27 duties and responsibilities. Respondents ’ Joint Brief at 26. Although Section 27 is self

- executing fo r enforcement purposes , a s our discussion illustrates, some legislative or executive

measures are necessary to ensure that the trust assets are properly spent on trust
purposes

. See PEDF II ; Robinson

. However, we will not dictate how the
Commonwealth , or the General Assembly for that matter, should exercise their delegated powers in this regard. To do so would encroach upon executive and legislative power in violation of the constitutional provision governing separation of
powers. Theref

ore, we deny both request s for declaratory judgment with regard to affirmative legislation

.

A s for the accounting, u n der Pennsylvania trust law, a trustee must maintain “ adequate records of the administration of the trust. ” Section 7780(a) of the Uniform Trust Act, 20 Pa. C.S. §7780(a). In addition, “ [a] trustee shall keep trust property separate from the trustee ’ s own property. ” 20 Pa. C.S. §7780(b). The trustee has a duty to inform and report. Section 7780.3 of the Un iform Trust Act,
20 Pa. C.S. §7780.3

.

The Lease Fund as it exists today is comprised of both royalties, rents,
bonuses and interest from the oil and gas leases as well as other sources of revenue. See 72 P.S. §1601.2

- E( e ) ; see also Petitioner ’ s Brief, Exhibit A, Commonwealth ’ s Answer and Objections to the Foundation ’ s First Set of Interrogatories, ¶ ¶6a, 7a

. Although the Commonwealth tracks the source of the monies as they are deposited into the Lease Fund, once in the Lease Fund, money is no longer earmarked or maintained in separate account s , but is instead “ commingled

. ” Petitioner ’ s Brief,36

Exhibit A, Commonwealth ’ s Answer and Objections to First Set o f Interrogatories, ¶ ¶ 3a, 3b, 3c

. According to the Commonwealth, “ it is not possible to identify the originating source of the total monies in the Lease Fund on a particular day. ” Id.
Further c ompounding the problem are the transfers of money from the Lease Fund
to the General Fund and beyond

. As the money shuffles from one fund to the next,
money loses any trace of its originating source

.

While money classified as trust principal must be spent on trust
purposes , money classified as income need not comply with the same spending
restrictions. PEDF III , 214 A.3d at 774. By commingling monies in the Le ase Fund
without classification and by not maintaining adequate records, the Commonwealth is neglecting its fiduciary duties. See 2 0 Pa. C.S. §7780

. I t is impossible for this
Court to determine whether the money appropriated and transferred from the Lease
Fund is trust principal , and whether trust principal is being used in a constitutional

manner. 22 Thus, an accounting is necessary to ensure that the assets of the trust are being used only for purposes authorized by the trust or necessary for the preservation
of the trust i n accordance with Section 27. See PEDF II , 161 A.3d at 939 ; PEDF
III , 214 A.3d at 774. Therefore, w e grant the Foundation ’ s Application for Summary Relief in this regard and declare that the Commonwealth, as trustee of Pennsylvania ’ s public natural resources, is required to keep detailed accounts of the

22 Based upon a rough estimate of the monies deposited into and diverted from the Lease Fund, we are extremely concerned that the Commonwealth may not be administering the trust funds with “ loyalty, impartiality, and prudence .” See PEDF II ; see also Sections 7772, 7773, and 7774 of the Uniform Trust Act, 20 Pa. C.S. §§7772, 7773, 7774.37

trust monies derived from the oil and gas leases and track how they are spent as part of its administration of the trust

. 23

IV. Conclusion

For these reasons, we grant in part and deny in p art the parties ’ cross

Applications for Summary Relief as follows. W e grant the Foundation ’ s Application
insofa r as it seeks a declaration that the Commonwealth is required to maintain
accurate records of the Lease Fund and track trust principal as part of its trustee
duties , and we deny the A pplication in all other respects. W e grant the Commonwealth’s A pplication for Summary R elief upon concluding that the following legislative enactments are not facially unconstitutional: Sections 104(P) and 1601 of the General Appropriation Acts of 2017 and 2018; the repeal of the 1955 Lease Fund Act; Section 1601.2

- E of The Fiscal Code; and Section 1726

- G of The
Fiscal Code. We also grant the Commonwealth’s declaratory request that Lease Fund money , including trust principal, may be expended on environmental conservation initiatives beyond the Marcell us Shale region. However, we deny the
Commonwealth ’ s A pplication insofar as it seeks a declaration that its current usage of the trust is wholly consistent with its Section 27 trustee responsibilities and that affirmative legislation is not necessary

.

MICHAEL H. WOJCIK, Judge Judge Crompton did not participate in the decision of this case.

23 Considering that this Court’s opinion in PEDF III is pending on appeal before the Supreme Court and that our assessment of what constitutes trust principal and income is challenged therein, we strongly suggest that the Commonwealth account for and track a ll monies derived from the oil and gas leases, not just royalties and other trust principal.IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Pennsylvania Environmental Defense : Foundation, : : Petitioner :

: v. : No. 358 M.D. 2018
: Commonwealth of Pennsylvania, and : Tom Wolf, in his official capacity : as Governor of Pennsylvania, : : Respondents :

O R D E R

AND NOW, this 22 nd day of October , 20 20 , upon consideration of the parties ’ cross

- A pplications for S ummary R elief to Petitioner ’ s Petition for Review in the Nature of Declaratory Relief , the A pplications are granted in part and denied
in part in accordance with the foregoing opinion.

__________________________________ MICHAEL H. WOJCIK, Judge