Court Opinion

ID: 4579464
Source: CourtListenerOpinion
Date Created: 2020-10-22 14:12:28.706059+00
Date Added: 2024-06-11T13:41:44.528664
License: Public Domain

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.
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.

                                                2
                                   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.

                                          3
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 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 funds

                                           4
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 non-
trust 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

                                          5
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 declarations6:                           (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)7 is 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.
                                                  6
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.
                                                  7
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).

                                           8
                              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

                                          9
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).
                                               10
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

                                          11
operations as contained in Sections 1602-E10 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).
                                               12
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).
                                               13
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

                                           14
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-E13 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.
                                                15
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

                                         16
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.

                                         17
Therefore, we deny both the Foundation’s and the Commonwealth’s cross-
Applications 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”

                                         18
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 non-
trust 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

                                          19
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
. . . .”).
                                                 20
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.

                                         21
              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).
                                            22
             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

                                         23
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 “pre-
enactment 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)

                                          24
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

                                          25
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.

                                        26
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

                                         27
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.

                                          28
                                     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.
                                                  29
                    (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

                                           30
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.
                                            31
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

                                         32
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.

                                           33
                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.
                                               34
             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,

                                         35
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.

                                              36
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’ cross-
Applications 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.
                                               37
          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         :

                                      ORDER

            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