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. McCULLOUGH, 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’ cross-Applications for Summary 

Relief. 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 unrelated to the Marcellus Shale region in northcentral 

1 42 Pa. C.S. §§7531-7541.
2

Pennsylvania violates the Commonwealth’s trustee obligations under 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 was 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 Acts of 

20172 and 2018,

3 and the 2017 legislative amendments to The Fiscal Code,

4 because 

these provisions divert funds away from the intended conservation and maintenance 

objectives. The Foundation also seeks a declaration that affirmative legislation and 

a detailed accounting of the Lease Fund are necessary. Conversely, the 

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 

Pennsylvania’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-Applications for Summary Relief. 

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

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 forests and parks for oil and gas 

exploration and extraction. 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 beneficiaries.” 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, 161 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 are trust principal and remain part of the corpus of the trust.” PEDF 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 protections 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 nonconservation 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 funds 
5

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 Environmental 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 compensation 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 nontrust purposes under Section 27. We determined that rents and bonuses were 

received 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.

Consequently, 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-third 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 resources. Id. 

While PEDF III was pending in this Court, the Foundation instituted 

this action against the Commonwealth by filing a Petition for Review in the Nature 

of Declaratory Relief (Petition). The Petition contains 327 paragraphs, 7 counts and
6

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. Petition for Review, ¶¶12, 15, 21-23, 34-36, 37-38. Following 

discovery, the parties filed cross-Applications for Summary Relief, which are now 

before this Court.

5

 

II. Cross-Applications for Summary Relief

The Foundation seeks the following declarations

6

: (1) the 

appropriations from the Lease Fund contained in Sections 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 these appropriations for 

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)7is facially 

unconstitutional; (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 Petition and the parties filed their cross-Applications 

for Summary Relief 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, formerly 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 Section 1601.2-E of The Fiscal Code, which the Foundation also challenges. 
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

 

The Commonwealth seeks counter-declarations 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 State 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. Discussion

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 Brief, 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 Pennsylvania 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. Declaratory Relief

Section 7533 of the DJA states: “Any person . . . whose rights, status, 

or other 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.” 

42 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, granting or denying an action for a 

declaratory judgment is committed to the sound discretion of a court of original 

jurisdiction. Gulnac by Gulnac v. South Butler County School District, 587 A.2d 

699, 701 (Pa. 1991).
9

3. Constitutional Review

“When reviewing challenges to the constitutionality of Commonwealth 

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 facially 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 sweep.’” 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 the 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-Applications for Summary Relief. 

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 Acts of 2017 and 2018 are facially unconstitutional because they 
10

authorize the appropriation of Lease Fund money for general government 

operations. According to the Foundation, 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 rentals, 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 government 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 has failed 

to exercise its fiduciary duties of loyalty, impartiality and 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 the appropriation of trust monies for the DCNR’s general operating

expenses does not violate Sections 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 responsibilities as a Section 27 trustee. Thus, the 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 Executive 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 State parks operations and $3,552,000 for State 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 State parks operations and $4,198,000 for State 

forests operations, for a total appropriation 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 general 
12

operations as contained in Sections 1602-E

10 and 1603-E11 of The 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 limitations 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 Supreme Court determined that these appropriations fell short of 

the Commonwealth’s Section 27 trustee obligations. The Court noted that the 

10 Added by the Act 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 

transferred 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 

appropriations 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 oil 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: “They 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 royalties from the Lease Fund to the 

DCNR that were mirrored by decreased appropriations from the 

General Fund to the DCNR.

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

corpus by, inter 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 authorized 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 Robinson 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 

royalties, 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 Petitioner’s Brief, 

Exhibit A, Commonwealth’s Answer and Objections to the Foundation’s First Set 
15

of Interrogatories, ¶¶6a, 7a (identifying rents, bonuses and interest from the oil and 

gas leases as well as vehicle sales and other statutory deposits in the Lease Fund).

In this regard, the provisions here are more similar to the other 

provisions at issue in PEDF II, namely Sections 1604-E

13 and 1605-E14 of The Fiscal 

Code and Section 1912 of the Supplemental General Appropriations Act of 2009.

15

 

These provisions authorized the transfer of money in the Lease Fund to the General 

Fund. However, these transfers were not royalty-specific. Recognizing that the 

Lease Fund also contained rents and bonuses generated from the oil and gas leases, 

the Supreme Court remanded the matter to this Court to determine if these proceeds

constituted trust principal or income. 

On remand, we determined that some of the proceeds represented

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 year 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 from 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 appropriation 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 Section 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 the Lease Fund to the DCNR for 

governmental operations are not facially unconstitutional under Section 27. 

The Foundation also claims 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 inviolate.

Pa. Const. art. I, §25. This 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 Article I, including Section 27, by establishing 

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 protections 
17

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 is needed 

for a vindication of those rights in the civil courts. Id.; accord PEDF II, 161 A.3d 

at 937. This means that the 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, the constitutional issue at hand is not whether the Commonwealth substituted

General Fund revenue with Lease Fund money to finance the DCNR’s general 

operations. Rather, the issue is whether 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, having determined that 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 appropriations contained in Sections 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 crossApplications in this regard. 

2. General Appropriation Acts - Other Environmental Initiatives

In addition, the Foundation challenges Sections 104(P) and 1601 of the 

General Appropriation Acts of 2017 and 2018 as facially unconstitutional on the 

basis that they authorize the appropriation of money from the Lease Fund to the 

DCNR to fund State park and forest operations without restricting such use to 

Pennsylvania’s Marcellus Shale region. The Foundation contends that Lease Fund 

money cannot be used to fund 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, depletes 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 any proceeds derived from this development must be 

dedicated exclusively 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 

Shale 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. In PEDF II, the 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. By the same logic, the use of Lease Fund money for 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 nontrust purpose. 

In PEDF II, the Supreme Court held that the Commonwealth has a

constitutional obligation “to prevent and remedy the degradation, diminution, or 

depletion of the public natural resources,” particularly State forests and parks 

impacted by oil and gas wells. 161 A.3d at 932 (quoting Robinson Township, 83 

A.3d at 957). While we appreciate that the money derives from oil and gas wells, 

the 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 Robinson

Township, 83 A.3d at 955 (“the concept of public natural resources includes not only 

State-owned lands, waterways, and mineral reserves, but also resources that 

implicate the public interest, such as ambient air, surface and ground water, wild 

flora, and fauna (including fish)”). 

Even assuming that we are dealing with corpus assets, the 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 trustee 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 public 
20

natural resources. See id. Pennsylvania is facing many environmental threats from 

climate change to polluted waters to invasive species. To narrowly restrict the use 

of the money garnered from the oil and gas leases to the 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 fund environmental initiatives that are 

unrelated to the Marcellus Shale region. We 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 Sections 

104(P) and 1601 of the General Appropriation Acts of 2017 and 2018 to the DCNR 

for the operation of State parks and forests are not facially unconstitutional. 

3. Repeal of the 1955 Lease Fund Act

Next, the parties dispute whether the Commonwealth violated Section 

27 and its fiduciary duties thereunder 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 wells - the very 

public resources harmed in order to generate these funds - may constitute a failure to preserve the 

trust and a dereliction of its fiduciary duties under Section 27. See PEDF II, 161 A.3d at 933 

(“Although 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 the trustee’s 

fiduciary duties . . . ”; “[t]he trustee may 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 

guaranteeing that the Commonwealth, in its administration of the Lease Fund, will 

comply with its trustee duties and responsibilities under Section 27. In addition, the 

Foundation contends that the Commonwealth has failed to take the basic step of 

evaluating the impact of the repeal of the 1955 Lease Fund Act 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 the 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 Lease Fund and provided: 

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 Commonwealth by purchase, 

condemnation or otherwise such lands as may be needed.

Section 3. All the moneys from time to time paid into the 

“[] Lease 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 powers 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 section 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 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 

2020-2021 fiscal year.

(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. 

The absence of safeguards within Section 1601.2-E does not render this

provision facially unconstitutional. 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 safeguards. 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 Township, 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 prior 
24

to amending the Lease Fund or other legislative enactments. See Frederick v. 

Allegheny Township Zoning Hearing Board, 196 A.3d 677, 700 (Pa. Cmwlth. 2018) 

(holding a municipal trustee was under no obligation to undertake any “preenactment environmental, health, and safety” evaluation for Section 27 purposes). 

Even a liberal reading of PEDF II and Robinson Township does not imply 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. Section 1601.2-E(a)

Next, the 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 that 

funds derived from the extraction and sale of oil and gas must comply with the 

Section 27 mandate. 

The Commonwealth responds that subsection (a) does not establish 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 as a special fund in the State Treasury.” 72 P.S. §1601.2-

E(a). Contrary to the Foundation’s claims, subsection (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, the Lease Fund continues to bear the same fund number (No. 016) 
25

since it was first established. See Petitioner’s Brief, 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 prevails. 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 fund. 

Hospital & Healthsystem, 77 A.3d at 604-605. Moreover, “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. 

As for the removal of the DCNR’s exclusive control over this special 

fund, “the 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 concomitantly 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 statewide and local, 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 at 
26

939. For these reasons, we conclude that Section 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 by commingling the 

protected trust principal with other revenue. According to the Foundation, the

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 Commonwealth 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 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 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 Lease 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 

omissions 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 within Section 1601.2-E(b) itself does not render this provision facially 

unconstitutional. 

c. Section 1601.2-E(c)

Next, the Foundation argues that Section 1601.2-E(c) violates 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 that there are 

no limitations on the use of money in the Lease Fund 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 fiduciary obligations 

as trustee by mandating that the legislature “consider the Commonwealth’s trustee 

duties under [S]ection 27” when appropriating funds. The appropriation of trust 
28

monies for an agency’s general operating expenses does not violate Sections 27 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).

Subsection (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 these funds to municipalities impacted by 

a Marcellus well.”). However, as 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, rents, 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 the Foundation’s Section 25 claim is premised on a Section 

27 violation, it likewise fails. Thus, we conclude that subsection (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 Sites Cleanup Fund violates Section 27. The 

Lease Fund transfers are used to replace insufficient landfill fees and tax revenues. 

These 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 Sites Cleanup Fund, do not violate Section 27 because the appropriations 

are devoted to a multitude of conservation and maintenance efforts. Again, the 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 

2020-2021 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 above, it 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 declaration 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 afoul 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 

declare 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 facially unconstitutional.

5. Section 1726-G of The Fiscal Code

Next, the 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 (Keystone 
31

Fund)19 to the General Fund. The Keystone Fund 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 gaps in the General Fund caused by insufficient tax 

revenue. The Commonwealth made the determination without 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 ability to carry out 

conservation and maintenance projects on our State forests and parks.

The Commonwealth responds that Section 1726-G of The Fiscal Code 

does not violate the Pennsylvania Constitution. These funds are not corpus funds. 

Just as the diversion 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 the 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 receipt 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 amended, 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]ection 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 

libraries 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 the 

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 Section 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 dealing 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 requirement 
33

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 decreased the 

amount of funds available for the DCNR’s conservation activities, the transfer of 

unrestricted money from one fund to another is a matter of legislative prerogative. 

Thereafter, the administration of the appropriations is a function of the 

Commonwealth. 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.” School District of Newport Township in Luzerne 

County v. State Tax Equalization Board, 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, the 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 Foundation also seeks a declaration that the 

Commonwealth must maintain a detailed accounting 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 effectuate its Section 27 duties and 

responsibilities. Respondents’ Joint Brief at 26. The 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, our Supreme Court determined 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 are 

“both negative (i.e., prohibitory) and affirmative (i.e., implicating enactment of 

legislation and regulations”)). The Court recognized numerous legislative 

enactments aimed at protecting our public natural resources, such as the Clean 

Streams Law20 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 actions were necessary, allowing 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 for 

enforcement purposes, as 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. Therefore, we deny both requests for declaratory judgment with regard to 

affirmative legislation. 

As for the accounting, under 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 Uniform 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 accounts, but is instead “commingled.” Petitioner’s Brief, 
36

Exhibit A, Commonwealth’s Answer and Objections to First Set of 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 compounding 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 Lease Fund 

without classification and by not maintaining adequate records, the Commonwealth 

is neglecting its fiduciary duties. See 20 Pa. C.S. §7780. It 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 in accordance with Section 27. See PEDF II, 161 A.3d at 939; PEDF 

III, 214 A.3d at 774. Therefore, we 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 part the parties’ crossApplications for Summary Relief as follows. We grant the Foundation’s Application 

insofar 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 Application in all other respects. We grant the 

Commonwealth’s Application for Summary Relief 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 Marcellus Shale region. However, we deny the 

Commonwealth’s Application 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 all 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 22nd day of October, 2020, upon consideration of the 

parties’ cross-Applications for Summary Relief to Petitioner’s Petition for Review 

in the Nature of Declaratory Relief, the Applications are granted in part and denied 

in part in accordance with the foregoing opinion. 

__________________________________

MICHAEL H. WOJCIK, Judge