“A statute is facially unconstitutional only where there are no circumstances under which the statute would be valid.”
How later courts described this case
- “A statute is facially unconstitutional only where there are no circumstances under which the statute would be valid.”
- “[A]n appellate court may uphold an order of a lower court for any valid reason appearing from the record”
Written by the judges who cited it.
The opinion
[J-82-2021]
IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
BAER, C.J., SAYLOR, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.
PENNSYLVANIA ENVIRONMENTAL : No. 65 MAP 2020
DEFENSE FOUNDATION, :
: Appeal from the Order of the
Appellant : Commonwealth Court at No. 358
: MD 2018 dated October 22, 2020.
:
v. : ARGUED: December 8, 2021
:
:
COMMONWEALTH OF PENNSYLVANIA, :
AND TOM WOLF, IN HIS OFFICIAL :
CAPACITY AS GOVERNOR OF :
PENNSYLVANIA, :
:
Appellees :
OPINION
CHIEF JUSTICE BAER DECIDED: August 5, 2022
The Pennsylvania Environmental Defense Foundation (“PEDF”) comes before this
Court for the third time challenging the use of proceeds from oil and gas leasing on the
Commonwealth’s forest and park lands as violative of Article I, Section 27 of the
Pennsylvania Constitution, also known as the Environmental Rights Amendment.
(“Section 27” or “ERA”), which created a trust to conserve and maintain Pennsylvania’s
public natural resources.1 In the first two cases, PEDF challenged several 2009-2015
1Article I Section § 27, entitled “Natural resources and the public estate.” provides in full
as follows:
The people have a right to clean air, pure water, and to the
preservation of the natural, scenic, historic and esthetic
budgetary provisions enacted in the wake of the dramatic increase in oil and gas revenue
resulting from Marcellus Shale exploration in Pennsylvania. Applying trust principles, this
Court held that the budgetary provisions violated Section 27 by utilizing the oil and gas
revenue for non-trust purposes via transfers to the General Fund. PEDF v.
Commonwealth, 161 A.3d 911 (Pa. 2017) (“PEDF II”); PEDF v. Commonwealth, 255 A.3d
289 (Pa. 2021) (“PEDF V”).
PEDF’s current declaratory judgment action filed against the Commonwealth of
Pennsylvania and Governor Tom Wolf (collectively, “the Commonwealth”), raises
numerous constitutional challenges to provisions of the General Appropriations Act of
2017 and 2018, as well as the 2017 Fiscal Code amendments, all of which were enacted
after our decision in PEDF II.2 As discussed in detail below, these challenges can be
grouped into several categories. First, PEDF contests the constitutionality of the use of
trust resources to fund the Department of Conservation and Natural Resources’
(“DCNR’s”) general operations. Second, PEDF seeks a declaration that the revenue from
oil and gas leasing on State forest and park lands should be reserved for environmental
programs tied to the Marcellus Shale region from which the oil and gas revenue derived.
Third, PEDF challenges the repeal of the Oil and Gas Lease Fund Act and the transfer of
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. 1, § 27.
2General Appropriations Act of 2017, Act of July 11, 2017, P.L. 1279, No. 1A, §§ 104(P),
1601; General Appropriations Act of 2018, Act of June 22, 2018, P.L. 1203, No. 1A,
§§ 104(P), 1601; 72 P.S. §§ 1601.2-E; 1726-G.
[J-82-2021] - 2
the Oil and Gas Lease Fund (“Lease Fund”) to the control of the General Assembly. 3
Finally, PEDF questions the constitutionality of specific aspects of the Lease Fund. For
the reasons set forth below, we conclude that PEDF has failed to demonstrate that the
challenged provisions violate the Pennsylvania Constitution. Accordingly, we affirm the
order of the Commonwealth Court, although based on different reasoning.
I. PEDF II and IV 4
Our decisions addressing PEDF’s prior challenges elucidate several principles of
Pennsylvania’s nascent Section 27 jurisprudence directly applicable to the case at bar.
3 71 P.S. §§ 1331-1333 (repealed).
4 PEDF’s declaratory judgment actions have generated numerous opinions from this
Court and the Commonwealth Court. As the parties to these actions are identical, so too
are the captions. Accordingly, we will use the following numerical indicators to
differentiate the opinions, which we describe in more detail in the body of this opinion.
The Commonwealth Court first addressed PEDF’s challenges to the 2009-2015
budgetary provisions in PEDF v. Commonwealth, 108 A.3d 140 (Pa. Cmwlth. 2015)
(“PEDF I”), which this Court reversed in PEDF v. Commonwealth, 161 A.3d 911 (Pa.
2017) (“PEDF II”), concluding that royalties from the oil and gas leasing must be returned
to the trust corpus and remanding for the Commonwealth Court to apply private trust
principles to address the bonus payments, rents, and interest payments. On remand, the
Commonwealth Court applied what it deemed to be relevant private trust law principles
in PEDF v. Commonwealth, 214 A.3d 748 (Pa. Cmwlth. 2019) (“PEDF III”).
While the remand following PEDF II was pending in the Commonwealth Court,
PEDF filed the instant declaratory judgment action in that court challenging the 2017 and
2018 budgetary provisions, enacted after our 2017 decision in PEDF II. The
Commonwealth Court’s unpublished decision adjudicating the challenges to the 2017 and
2018 provisions can be found at PEDF v. Commonwealth, 2020 WL 6193643, at *1 (Pa.
Cmwlth. 2020), and will be referenced herein as PEDF IV.
PEDF’s current appeal of PEDF IV was pending in this Court when we reversed
the Commonwealth Court’s decision in PEDF III in PEDF v. Commonwealth, 255 A.3d
289, 294 (Pa. 2021) (PEDF V). While we will utilize the designations of PEDF I-V in this
opinion, we will strive to clarify the relevant decisions with descriptive phrases where
possible.
[J-82-2021] - 3
As noted, PEDF challenged several 2009-2015 amendments to the Fiscal Code, as well
as a provision of the Supplemental General Appropriations Act of 2009.5 Broadly
considered, these provisions diverted revenues from the oil and gas leases on State
forest and park lands into the General Fund under the control of the General Assembly.
Prior to the challenged enactments and pursuant to the Oil and Gas Lease Fund
Act, all rents and royalties from oil and gas leasing on state land were deposited into the
Lease Fund and appropriated entirely to the DCNR (or its predecessor) to be “exclusively
used for conservation, recreation, dams, or flood control.”6 71 P.S. §§ 1331, 1333
(repealed). In contrast, the 2009-2015 budgetary enactments, inter alia, provided that
royalties from the Lease Fund could only be expended if “appropriated or transferred to
the General Fund by the General Assembly[,]” apart from an annual appropriation of up
to $50 million to the DCNR, with the direction that the DCNR “shall give preference to the
operation and maintenance of State parks and forests.” 72 P.S. §§ 1602-E, 1603-E.
While additional appropriations were made to the DCNR from the Lease Fund
through legislative direction, other enactments directed funds to the General Fund without
any restriction that they be used for conservation purposes. 72 P.S. §§ 1604-E, 1605-E.
Concomitantly, the DCNR received decreased funding from the General Fund. Thus, “a
larger portion of monies from the Lease Fund [were] 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.” PEDF
II, 161 A.3d at 923. PEDF argued that these provisions violated the Commonwealth’s
fiduciary duties under the ERA.
5Specifically, PEDF challenged 72 P.S. §§ 1602-E -1605-E as well as Act of Oct. 9, 2009,
P.L. 779, No. 10A, § 1912.
6The Oil and Gas Lease Fund Act is set forth in full infra. PEDF II provides a more
extensive historical perspective relating to the creation of the DCNR and the Oil and Gas
Lease Fund Act. PEDF II, 161 A.3d at 919-920.
[J-82-2021] - 4
In addressing these claims, this Court in PEDF II adopted the reasoning of the
landmark decision in Robinson Township v. Commonwealth, 83 A.3d 901 (Pa. 2013)
(plurality), which revitalized the long dormant Environmental Rights Amendment.
Notably, the ERA is included in Article I and, thus, is among the rights reserved to the
people that are “excepted out of the general powers of government and shall forever
remain inviolate.” PA. CONST. art. 1, § 25.7 We explained that the ERA established “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.
This constitutional public trust imposed fiduciary duties on Commonwealth entities
to “conserve and maintain [our public natural resources] for the benefit of all the people.”
PA. CONST. art. 1, § 27. Drawing from Robinson Township, we explained that “[t]he plain
meaning of the terms conserve and maintain implicates a duty to prevent and remedy the
degradation, diminution, or depletion of our public natural resources” and a duty to act
toward the corpus of the trust “with prudence, loyalty, and impartiality.” PEDF II, 161 A.3d
at 932 (quoting Robinson Twp., 83 A.3d at 957). The Court concluded that the public
trust was subject to basic trust principles in effect at the time of enactment of the ERA,
including the restriction that proceeds from the sale of trust assets should remain part of
the corpus of the trust and that trust assets could be used “only for purposes authorized
by the trust or necessary for the preservation of the trust.” PEDF II, 161 A.3d at 933.
7 Section 25, entitled “Reservation of powers in people” provides:
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. 1, § 25.
[J-82-2021] - 5
In PEDF II, this Court held that the royalties generated by the oil and gas leases
clearly derived from the sale of trust assets and, thus, had to be returned to the trust
corpus. Accordingly, we deemed facially unconstitutional those statutory provisions that
directed royalties to be paid over to the General Fund without any restrictions that the
funds be used for conservation and maintenance of trust assets. Id. at 937-38. In so
doing, however, we clarified “that the legislature's diversion of funds from the Lease Fund
(and from the DCNR’s exclusive control) does not, in and of itself, constitute a violation
of Section 27.” Id. at 939. Indeed, “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.
While the Court had sufficient information to determine the constitutionality of the
statutes addressing royalties, which indisputably arose from the sale of trust assets, we
remanded to the Commonwealth Court to address the other revenue streams generated
by the leases, including bonus payments, rental fees, and interest penalties. We directed
that court to apply the Pennsylvania trust principles in effect when Section 27 was adopted
to determine whether these revenue streams should be deemed trust assets and
restricted to trust purposes. Id. at 935-36.
Following remand, this Court, in PEDF V, rejected the Commonwealth Court’s
analysis which derived from that court’s classification of current Pennsylvanians as life
tenants and future generations as remaindermen.8 Diverging from the Commonwealth
8 In its analysis, the Commonwealth Court utilized Section 9 of the Principal and Income
Act of 1947 (“1947 Act”), which was applicable at the time of the ERA’s enactment and
“govern[ed] trusts where the trustee is authorized to sell, lease or otherwise develop such
natural resources and no provision is made for the disposition of the net proceeds.” PEDF
III, 214 A.3d at 768 (citing Act of July 5, 1947, P.L. 1283, as amended, formerly 20 P.S.
§§ 3470.1-3740.15). This statute apportioned proceeds of the trust between life tenants
and remaindermen. Id. at 765.
[J-82-2021] - 6
Court, we concluded that the constitutional text did not create successive beneficiaries of
current and future Pennsylvanians but rather established a cross-generational unity of
interest in the conservation and maintenance of the public natural resources through
Section 27’s use of the phrase “all the people.” PEDF V, 255 A.3d at 309-10 (relying
upon Robinson Twp., 83 A.3d at 959). Accordingly, we concluded that the ERA created
“simultaneous beneficiaries with equal interest in the trust’s management,” which negated
any allocation of income between life tenants and remaindermen, a distinction created in
the Commonwealth Court’s analysis. Id. at 310. We nevertheless agreed with the
Commonwealth Court’s determination that the bonus payments, rental fees, and interest
fees were income rather than funds resulting from the sale of trust assets. Id. at 308.
The question remaining was whether this income should be reserved solely for trust
purposes.
In considering this question, the Court observed that Pennsylvania trust law clearly
provided that a trustee has a duty to deal impartially with all beneficiaries. Id. at 311
(citing RESTATEMENT (SECOND) OF TRUSTS § 183 and 20 Pa.C.S. § 7773). Under the ERA,
the benefit accorded to the people of Pennsylvania as beneficiaries is not an entitlement
to income but rather the conservation and maintenance of public natural resources.
Given “the absence of income entitlements, there is no authority for [the Commonwealth]
Under this statute, life tenants were entitled to one-third of the net proceeds, while
two-thirds had to be reserved to the trust corpus. Accordingly, the Commonwealth Court
declined to find the remaining 2009-2015 budgetary provisions facially unconstitutional
as PEDF had not demonstrated that the non-trust uses exceeded one-third of the
proceeds from rent and bonus payments.
Relevantly, the Commonwealth Court applied the same analysis to PEDF’s current
challenges to the 2017 and 2018 budgetary provisions, as discussed infra. For the
reasons stated in PEDF V, we again are restrained to reject the Commonwealth Court’s
analysis to the extent it relied upon the 1947 Act’s division of revenue between life tenants
and remaindermen.
[J-82-2021] - 7
to generate income from oil and gas assets and then use that income to benefit itself for
non-trust purposes and not the beneficiaries.” Id. at 313.
Thus, the Court held that “the income generated from bonus payments, rentals,
and late fees must be returned to the corpus to benefit the conservation and maintenance
of the public resources for all the people” and could not be diverted to non-trust purposes
of the General Fund. Id. at 314. Accordingly, the challenged 2009-2015 budgetary
provisions were facially unconstitutional as they directed income to the General Fund
without restriction. We nevertheless reiterated our observation in PEDF II that “the
legislature's diversion of funds from the Lease Fund (and from the DCNR's exclusive
control) does not, in and of itself, constitute a violation of Section 27,” so long as the
assets are directed to entities “dedicated to effectuating” Section 27’s purpose of
conserving and maintaining Pennsylvania’s natural resources. Id. at 314 n.21 (quoting
PEDF II, 161 A.3d at 939).
II. Procedural History and Standard of Review
The current challenge involves PEDF’s 2018 petition for review filed pursuant to
the Declaratory Judgement Act, 42 Pa.C.S. §§ 7531-7541, seeking numerous
declarations that certain provisions in the General Appropriations Acts of 2017 and 2018,
as well as in the 2017 amendments to the Fiscal Code, violate the ERA.9 In its answer
9 The Commonwealth Court summarized the declarations sought by PEDF as follows:
(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;
[J-82-2021] - 8
and new matter, the Commonwealth responded in opposition to each of PEDF’s proposed
declarations. Ultimately, the parties filed cross-applications for summary relief, which the
Commonwealth Court granted in part and denied in part.10 PEDF appealed to this Court,
(3) the repeal of the act commonly referred to as the 1955 Oil
and Gas Lease Fund Act (1955 Lease Fund Act) 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; 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.
PEDF IV, 2020 WL 6193643, at *3 (reformatted).
10As will be explained in detail infra, the Commonwealth Court made the following
determinations:
We grant [PEDF’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.
[J-82-2021] - 9
asking us to reverse the Commonwealth Court in relevant part and to grant the denied
declarations.
In reviewing “the Commonwealth Court's decision on cross-motions for summary
relief pursuant to Pa.R.A.P. 1532(b), we may grant relief only if no material questions of
fact exist and the right to relief is clear.” PEDF II, 161 A.3d at 929 (citations omitted). The
parties agree that this case does not involve any issues of fact but rather solely presents
pure questions of law. PEDF IV, 2020 WL 6193643, at *4. Thus, “our standard of review
is de novo, and our scope of review is plenary.” PEDF II, 161 A.3d at 929.
In challenging the constitutionality of duly enacted statutory provisions that are
presumed to be constitutional, PEDF bears the burden of demonstrating that the
provisions “clearly, plainly, and palpably” violate the Constitution. Id. As PEDF presents
facial challenges to the statutes, we reiterate that “[a] statute is facially unconstitutional
only where there are no circumstances under which the statute would be valid.”
Germantown Cab Company v. Philadelphia Parking Authority, 206 A.3d 1030, 1041 (Pa.
2019).
As this Court opined in PEDF II, our review of the Commonwealth’s actions
challenged under the ERA requires careful consideration of “the text of Article I, Section
27 as well as the underlying principles of Pennsylvania private trust law in effect at the
time of its enactment.” Id. at 930.
Applying basic principles of trust law, the Commonwealth must “administer the
[Section 27 trust] in good faith, in accordance with its provisions and purposes and the
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.
Id. at *17 (reformatted).
[J-82-2021] - 10
interests of the beneficiaries and in accordance with applicable law.” 20 Pa.C.S. § 7771.
Moreover, the Commonwealth has a duty to treat the corpus of the trust with loyalty,
impartiality, and prudence. PEDF II, 161 A.3d at 932. The duty of loyalty includes
“administer[ing] the trust solely in the interest of the beneficiaries[,]” which include “all the
people” of Pennsylvania, “including generations yet to come.” 20 Pa.C.S. § 7772; PA.
CONST. art. 1, § 27. Moreover, in acting impartially, a trustee is required to give “due
regard to the beneficiaries’ respective interests in light of the purposes of the trust,” which
requires equitable rather than equal treatment.11 20 Pa.C.S. § 7773. Finally, “prudent
administration” by a trustee entails administering the trust “as a prudent person would, by
considering the purposes, provisions, distributional requirements and other
circumstances of the trust and by exercising reasonable care, skill and caution.” 20
Pa.C.S. § 7774.
In light of these broad trust principles, we reiterate that Section 27 imposes
fiduciary duties on Commonwealth entities to “conserve and maintain [Pennsylvania’s
public natural resources] for the benefit of all the people,” which includes a “duty to
prevent and remedy the degradation, diminution, or depletion of our public natural
resources.” PA. CONST. art. 1, § 27; PEDF II, 161 A.3d at 932 (quoting Robinson Twp.,
83 A.3d at 956-57).
III. Analysis
11 The duty of impartiality is defined as follows:
If a trust has two or more beneficiaries, the trustee shall act
impartially in investing, managing and distributing the trust
property, giving due regard to the beneficiaries' respective
interests in light of the purposes of the trust. The duty to act
impartially does not mean that the trustee must treat the
beneficiaries equally. Rather, the trustee must treat the
beneficiaries equitably in light of the purposes of the trust
20 Pa.C.S. § 7773.
[J-82-2021] - 11
As stated, PEDF sought numerous declarations, which the Commonwealth Court
granted in part and denied in part. PEDF filed a direct appeal from that determination to
this Court, again raising numerous challenges, which can be grouped in four categories.
First, PEDF challenges the use of Lease Fund monies to fund the general operations of
the DCNR. Second, PEDF faults the allocation of Lease Fund monies for environmental
projects outside of the Marcellus Shale region from which the monies derived. Third,
PEDF contends that the repeal of the Oil and Gas Lease Fund Act and the transfer of the
Lease Fund to the control of the General Assembly violates the ERA. Finally, PEDF
challenges specific statutory provisions governing the funding of the Lease Fund and
appropriations to other funds. We address these issues seriatim.12
A. Funding the General Operations of the DCNR
PEDF seeks a declaration that Sections 104(P) and 1601 of the General
Appropriation Acts of 2017 and 2018 violate the Commonwealth’s trustee duties by using
trust resources to pay for the general operations of the DCNR.13 PEDF specifically
12 Following the decision in PEDF V, this Court permitted the parties to file supplemental
briefing. For ease of discussion, we provide a single recitation of the parties’ arguments
gleaned from their presentations to the Commonwealth Court as well as to this Court. We
do not address the parties’ arguments responding to the Commonwealth Court’s analysis
in PEDF III, which this Court subsequently rejected in PEDF V.
13Section 104(P) of the General Appropriations Act of 2017, Act of July 11, 2017, P.L.
1279, provided as follows:
(p) Oil and Gas Lease Fund. -- The following sums set forth in
this act, or as much thereof as may be necessary, are hereby
specifically appropriated from the Oil and Gas 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 and for payment of
[J-82-2021] - 12
contends that revenue from oil and gas leases of State forest and park lands deposited
in the Lease Fund should not be appropriated to pay DCNR’s general operations,
including inter alia, the “salaries, wages or other compensation and travel expenses” of
DCNR officers and employees of the Commonwealth, or for the “purchase or rental of
goods and services” or “any other expenses . . . necessary for the proper conduct of the
duties, functions and activities.” Section 104(P). PEDF maintains that Section 27 does
not authorize the Commonwealth “to sell State Forest assets to generate revenue for the
general operating expenses of DCNR,” as such sales would deplete the resource,
contrary to the goal of conserving and maintaining Pennsylvania’s natural resources.
PEDF Supp. Brief at 7.
PEDF additionally argues that these General Appropriations Act provisions violate
Section 25 by using Lease Fund monies to replace appropriations from the General Fund.
As an explanation for its position, PEDF alleges that the “passage of an annual
appropriation act to fund general government operations for the current fiscal year is an
Article III responsibility of the Commonwealth and cannot infringe” on the people’s rights
under Article I, Section 27, which are “excepted out of the general powers of government
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 beginning July 1, 2017, and for the payment of bills
incurred and remaining unpaid at the close of the fiscal year
ending June 30, 2017.
The General Appropriations Act of 2018 contained a functionally identical Section 104(P).
Act of June 22, 2018, P.L. 1203. We reference these provisions collectively as “Section
104(P).”
Section 1601 of the 2017 General Appropriations Act appropriated to the DCNR
$50 million for general operations, nearly $8 million for state park operations, and
approximately $3.5 million for state forest operations. The following year, Section 1601
allocated to the DCNR approximately $37 million for general operations, $7.5 million for
state park operations, and $4.2 million for state forest operations.
[J-82-2021] - 13
and shall forever remain inviolate” under Section 25. PEDF Brief at 28 (quoting PA.
CONST. art. 1, § 25). It contends that Commonwealth entities cannot violate their
obligations as Section 27 trustees in order “to fulfill their constitutional duties under
Articles III, IV, or V of the Pennsylvania Constitution to raise revenue to fund general
budgetary matters.” PEDF Supp. Brief at 3.
The Commonwealth refutes PEDF’s argument by observing that “[c]onservation
and maintenance activities are not accomplished in a vacuum: they require people and
equipment.” PEDF IV, 2020 WL 6193643, at *5. It contends that the funding of DCNR’s
general operations is a proper use of trust fund assets as the funding allows DCNR to
perform its trustee duties to conserve and maintain Pennsylvania’s public natural
resources; the Commonwealth emphasizes that “DCNR’s main purpose is to effectuate
Section 27.” Cmwlth. Supp. Brief at 7. It highlights that trust law provides for trustees “to
incur expenses which are necessary or appropriate to carry out the purposes of the trust
and are not forbidden by the terms of the trust.” Id. at 11 (quoting RESTATEMENT (SECOND)
OF TRUSTS § 188 (1959)).
The Commonwealth contrasts the provisions challenged herein with the statutes
deemed unconstitutional in PEDF II, which “removed DCNR's ability to act as trustee
because the funds were placed in the General Fund, potentially for non-conservation
purposes.” Cmwlth. Brief at 14 (quoting PEDF II, 161 A.3d at 927). In contrast, the
current provisions “appropriate the funds directly to the DCNR so that it can continue its
conservation and maintenance efforts.” Id. Thus, the Commonwealth asserts that the
allocation of lease fund monies for DCNR’s general operation does not violate the
Commonwealth’s trustee duties under the ERA.
Rather than resolving the constitutionality of using trust resources to fund DCNR’s
operations, the Commonwealth Court instead relied upon its then-recent analysis in
PEDF III, which this Court subsequently respectfully rejected in PEDF V. As discussed
[J-82-2021] - 14
supra, the Commonwealth Court in PEDF III reasoned that one-third of the revenue
derived from rents and bonus payments could be used for non-trust purposes under the
Act of 1947, applicable at the time of the ERA’s adoption.
Applying the PEDF III analysis to the instant case, the Commonwealth Court
distinguished the royalty transfers that this Court deemed unconstitutional in PEDF II from
the current provisions, which involved transfers from the Lease Fund generally, thus
including not only royalties but also rents and bonus payments. Given this distinction, the
court held that one-third of the proceeds derived from rents and bonus payments in the
Lease Fund could be allocated to non-trust purposes under PEDF III. Having reasoned
that it did not violate fiduciary duties for the Commonwealth to utilize one-third of these
funds for non-trust purposes, the Commonwealth Court concluded that PEDF failed to
demonstrate that the statute was “facially unconstitutional” under Section 27, as it was
possible that the challenged transfers could have been encompassed within the one-third
deemed non-trust assets. PEDF IV, 2020 WL 6193643, at *7.14
While it is understandable that the Commonwealth Court utilized its PEDF III
analysis in the instant case given that it pre-dated PEDF V, this portion of the court’s
analysis cannot stand as it is directly contrary to PEDF V. PEDF V, 255 A.3d at 293. We
nevertheless affirm the Commonwealth Court’s ultimate holding, denying PEDF’s motion
seeking a declaration that Sections 104(P) and 1601 of the General Appropriations Acts
of 2017 and 2018 violated the ERA. See Ario v. Ingram Micro, Inc., 965 A.2d 1194, 1200
(Pa. 2009) (“[A]n appellate court may uphold an order of a lower court for any valid reason
appearing from the record”).
14The Commonwealth Court likewise found that PEDF’s Section 25 challenge failed as it
hinged on a violation of Section 27. The court additionally denied the Commonwealth’s
request to declare constitutional its use of Lease Fund monies for DCNR’s general
operations.
[J-82-2021] - 15
In addressing PEDF’s claim, we apply fundamental principles of Pennsylvania trust
law. As explained in PEDF II, a “trustee may use the assets of the trust only for purposes
authorized by the trust or necessary for the preservation of the trust.” PEDF II, 161 A.3d
at 933 (internal quotation marks omitted). One of the basic duties of a trustee is to
administer the trust, and Pennsylvania’s trust law provides that a trustee may incur costs
in administering the trust, so long as the costs “are reasonable.” 20 Pa.C.S. § 7775.15
The Uniform Trust Law as adopted in Pennsylvania further empowers a trustee to pay
“the compensation of the trustee and employees and agents of the trustee and other
expenses incurred in the administration of the trust.” 20 Pa.C.S. § 7780.6(a)(8) (listing
“illustrative powers of trustee”); see also 20 Pa.C.S. § 7769 (“A trustee is entitled to be
reimbursed out of the trust property . . . [for] expenses that were properly incurred in the
administration of the trust.”).
As applied to the trust created by Section 27, this basic trust law clearly empowers
the Commonwealth, as trustee, to incur reasonable costs in administering the trust to
conserve and maintain Pennsylvania’s public natural resources. As noted by the
Commonwealth, conservation and maintenance does not occur in a vacuum but instead
require people and materials, and in particular the people and materials of the DCNR,
which is the cabinet-level advocate for our State forest and park lands, as well as other
natural resources. 71 P.S. § 1340.101(b). DCNR’s primary mission is, inter alia, “to
maintain, improve and preserve State parks [and] to manage State forest lands,” which
15“In administering a trust, the trustee may incur only costs that are reasonable in relation
to the trust property, the purposes of the trust and the skills of the trustee.” 20 Pa.C.S.
§ 7775; see also RESTATEMENT (SECOND) OF TRUSTS § 188 (1959) (“The trustee can
properly incur expenses which are necessary or appropriate to carry out the purposes of
the trust and are not forbidden by the terms of the trust, and such other expenses as are
authorized by the terms of the trust.”). Similarly, “[a] trustee shall administer the trust as
a prudent person would, by considering the purposes, provisions, distributional
requirements and other circumstances of the trust and by exercising reasonable care,
skill and caution.” 20 Pa.C.S. § 7774.
[J-82-2021] - 16
are indisputably in furtherance of the purposes of the Section 27 trust.16 Id. Given these
statutory responsibilities, we conclude that the use of trust assets to fund DCNR’s
operations is within the authority of the Commonwealth as trustee to incur costs in
administering the Section 27 trust, absent demonstration that these administrative costs
16
In full, the Conservation and Natural Resources Act explains the primary mission of the
DCNR as follows:
The primary mission of the Department of Conservation and
Natural Resources will be to maintain, improve and preserve
State parks, to manage State forest lands to assure their long-
term health, sustainability and economic use, to provide
information on Pennsylvania's ecological and geologic
resources and to administer grant and technical assistance
programs that will benefit rivers conservation, trails and
greenways, local recreation, regional heritage conservation
and environmental education programs across Pennsylvania.
71 P.S. § 1340.101; see also 71 P.S. §§ 1340.302-312 (setting forth DCNR’s statutory
authority). Our colleagues in dissent on this issue question whether all of DCNR’s
statutory responsibilities are consistent with its Section 27 trustee duties to conserve and
maintain Pennsylvania’s public natural resources. See Concurring and Dissenting
Opinion at 6 (Dougherty, J.) (viewing aspects of DCNR’s mission as “not explicitly related
to the trustees’ Article I, Section 27 duties”).
Respectfully, we decline to determine whether all of DCNR’s statutory
responsibilities qualify as trust purposes because PEDF, in the current litigation, presents
a facial challenge to the use of trust assets for DCNR’s general operations, rather than
challenging DCNR’s use of trust funds for specific administrative costs. We further
observe that our nascent Section 27 jurisprudence has not explored what activities qualify
as trust purposes. Accordingly, while it appears that many, if not all, of DCNR’s
responsibilities are consistent with Section 27, we do not speak to those issues herein.
Rather, for purposes of this case, we conclude that the existence of these other duties
does not undermine our rejection of PEDF’s facial challenge to the appropriation of trust
assets for DCNR’s general operations, as the challenged provisions are not inconsistent
with DCNR’s use of the trust assets solely for trust purposes. See Germantown Cab
Company v. Philadelphia Parking Authority, 206 A.3d 1030, 1041 (Pa. 2019) (“A statute
is facially unconstitutional only where there are no circumstances under which the statute
would be valid.”).
[J-82-2021] - 17
are unreasonable or that the DCNR has failed to act with prudence, loyalty, or impartiality
in carrying out its fiduciary duties.17
As we conclude that PEDF failed to demonstrate that the provisions violate Section
27, we likewise find no violation of Section 25. Accordingly, we affirm the Commonwealth
Court’s denial of PEDF’s requested declaration.
B. Funding Environmental Projects Outside of the Marcellus Shale Region
PEDF seeks a declaration that Sections 104(P) and 1601 violate the ERA by
allocating funds derived from oil and gas leasing in Pennsylvania’s Marcellus Shale region
for environmental projects in other parts of the state. It avers that Commonwealth trustees
should not be permitted “to deplete, degrade, or diminish our State Forest and Park public
natural resources to benefit another resource.” PEDF Brief at 45. Utilizing the term “State
Forest and Park trust corpus,” PEDF contends that the corpus of this trust should be
reserved solely for the region from which the revenue derived to remedy any detrimental
effects of the Marcellus Shale leasing. Id.
The Commonwealth responds that the plain language of Section 27 does not
provide geographic restrictions on the use of trust resources. The Commonwealth
instead emphasizes this Court’s recognition that trustees have “discretion with respect to
the proper treatment of the corpus of the trust,” so long as that discretion is exercised in
support of the purpose of the trust. Cmwlth. Brief at 17 (quoting PEDF II, 161 A.3d at
933). It stresses that the Section 27 trust extends to the conservation and maintenance
17 We additionally address a portion of PEDF’s argument relying upon our decision in
PEDF II, which deemed unconstitutional a statutory provision that gave preference to
funding “the operation and maintenance of State parks and forests” rather than
conservation purposes. PEDF II, 161 A.3d at 937-938 (quoting 72 P.S. § 1603–E). PEDF
reads our decision as deeming the funding of DCNR’s general operations to be a non-
trust use. Respectfully, we reject PEDF’s reading because this Court in PEDF II did not
address whether the trust funds could be used to pay DCNR’s general operations, which
is the issue resolved herein.
[J-82-2021] - 18
of public natural resources across Pennsylvania, such that it is appropriate for DCNR to
expend trust resources to “address the broad environmental threats faced by
Pennsylvania,” including those outside the Marcellus Shale region. Id. at 18. Indeed, it
contends that restricting the use of these funds to the Marcellus Shale region would
arguably violate the Commonwealth’s fiduciary duty of impartiality to the beneficiaries
across Pennsylvania. Cmwlth. Supp. Brief at 19, 26. Moreover, the Commonwealth
observes that at the time of the ERA’s enactment, use of the Lease Fund was not
restricted to the area that produced the funds but instead was intended to be used “for
conservation, recreation, dams, or flood control.” Id. at 19 (quoting 71 P.S. § 1331
(repealed)).
In reviewing these claims, the Commonwealth Court found PEDF’s proposed
geographic restriction of the use of funds to be “myopic,” when the Commonwealth was
confronting a multitude of “environmental threats from climate change to polluted waters
to invasive species.” PEDF IV, 2020 WL 6193643, at *8. The court instead opined that
DCNR had discretion as trustee to determine how trust funds should be used to conserve
and maintain all of Pennsylvania’s natural resources. Accordingly, the court denied
PEDF’s requested declaration and granted the Commonwealth’s related declaration,
holding 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.” Id. at *9.
While rejecting PEDF’s declaration that the fund must be limited to the Marcellus
Shale region, the Commonwealth Court nevertheless “caution[ed] 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.” Id. at *9 n.16.
[J-82-2021] - 19
As noted by the Commonwealth Court, the broad language of Section 27 instructs
that “Pennsylvania's public natural resources are the common property of all the people,
including generations yet to come” and that the Commonwealth, as “trustee of these
resources,” “shall conserve and maintain them for the benefit of all the people.” PA.
CONST. art. 1, § 27. Absent from this language is any regional segmentation of trust
assets or beneficiaries nor a prioritization of regions deserving of conservation and
maintenance efforts. Contrary to PEDF’s terminology, our charter does not create a
“State Forest and Park trust corpus.” Instead, Section 27 speaks in the unifying terms of
“Pennsylvania’s natural resources” and twice encompasses “all the people.” Id.
Accordingly, we affirm the Commonwealth Court’s denial of PEDF’s proposed declaration
seeking to regionalize Pennsylvania natural resources and to limit expenditure of oil and
gas revenue to the Marcellus Shale Region from which it derived.18
C. Oil and Gas Lease Fund Challenges
PEDF next asks this Court to deem unconstitutional the 2017 repeal of the 1955
Oil and Gas Lease Fund Act,19 and the enactment of Section 1601.2-E of the Fiscal Code,
18PEDF raises a related issue in its challenge to Section 1601.2-E(e) of the Fiscal Code,
set forth infra at 22 n.20. Section 1601.2-E(e) directs specific annual transfers from the
Lease Fund to the Marcellus Legacy Fund for distribution to the Environmental
Stewardship Fund and the Hazardous Sites Cleanup Fund.
PEDF alleges that these transfers violate Section 27 because these funds support
statewide projects that are not limited to the Marcellus Shale region and not controlled by
the DCNR, and also because these funds were previously supported through non-trust
sources, including a waste disposal fee and the Capital Stock and Franchise Tax. As
these allegations fail for the same reasons PEDF’s challenges to the General
Appropriations Act provisions fall, we will not address them separately below.
19The Oil and Gas Lease Fund Act was repealed in Section 20(2)(i) of the 2017 Fiscal
Code Amendments, Act of October 30, 2017, P.L. 725 (“2017 Fiscal Code Amendments”).
Prior to its repeal, the Act provided in full as follows:
[J-82-2021] - 20
which “continued” the Lease Fund “as a special fund in the State Treasury.” 2017 Fiscal
Code Amendments § 20(2)(i); 72 P.S. § 1601.2-E(a).20 The effect of Section 1601.2-E is
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.
Section 2. It shall be within the discretion of the [DCNR] to
determine the need for and the location of any project
authorized by this act. The Secretary of [DCNR] 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 “Oil
and Gas Lease Fund” are specifically appropriated to the
[DCNR] to carry out the purposes of this act.
71 P.S. §§ 1331-1333 (repealed). When originally enacted in 1955, the Oil and Gas
Lease Fund Act granted discretion over the funds to the Department of Forests and
Waters. The General Assembly subsequently substituted the DCNR for the Department
of Forests and Waters pursuant to the Conservation and Natural Resources Act (CNRA)
in 1995. 71 P.S. § 1340.304(c). A more extensive recounting of the history of the Oil and
Gas Lease Fund Act, the CNRA, and leasing on State forest and park lands can be found
in this Court’s decision in PEDF V, 255 A.3d at 293-294.
20 Section § 1601.2-E, entitled “Oil and Gas Lease Fund” provides in full as
follows:
(a) Continuation. -- The fund is continued as a special fund in
the State Treasury.
(b) Sources. -- The following shall be deposited into the fund:
[J-82-2021] - 21
(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.
(c) Use. -- Money in the fund 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.
(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,
2020-2021 and 2021-2022 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.
[J-82-2021] - 22
to remove the Lease Fund from the sole control of the DCNR, where its use was restricted
to “conservation, recreation, dams, or flood control,” and instead to transfer the control to
the General Assembly. 71 P.S. § 1331 (repealed). Subsection (c), however, directs that
“[m]oney in the [Lease Fund] may only be used as provided under subsection (e)
[directing specific annual transfers] or as annually appropriated by the General
Assembly.” 72 P.S. § 1601.2-E(c). Subsection (c) additionally mandates that “the
General Assembly shall consider the Commonwealth’s trustee duties under section 27 of
Article I of the Constitution of Pennsylvania,” when making appropriations from the Lease
Fund. 72 P.S. § 1601.2-E(c).
PEDF asserts that the repeal of the Oil and Gas Lease Fund Act and transfer of
the Lease Fund in Section 1601.2-E violated the Environmental Rights Amendment
because the General Assembly eliminated the restrictions on the use of the funds that
had been explicitly imposed by the Oil and Gas Lease Fund Act. It also claims that the
removal of the Lease Fund from DCNR’s control eliminated the prior arrangement
whereby DCNR had the statutory authority both to lease State forest and park lands for
oil and gas exploration and extraction and to dispense funds to remedy any harm resulting
from those leases. PEDF deems the restrictions imposed by subsection (c) on the
General Assembly to be insufficient, asserting that subsection (c) fails to restrict Lease
Fund monies solely for conservation and maintenance of Pennsylvania’s natural
resources.
In response, the Commonwealth emphasizes that the repeal and transfer did not
result in the elimination of the Lease Fund but rather the explicit continuation of the Lease
Fund as a “special fund in the State Treasury,” 72 P.S. § 1601.2-E(a). Moreover, the
Commonwealth highlights this Court’s observation in PEDF II, that “the legislature's
diversion of funds from the Lease Fund (and from the DCNR's exclusive control) does
not, in and of itself, constitute a violation of Section 27,” as the ERA imposes trustee
[J-82-2021] - 23
duties not merely on the DCNR but on all Commonwealth entities. Cmwlth. Brief at 19
(quoting PEDF II, 161 A.3d at 939).
The Commonwealth additionally highlights that the plain language of subsection
(c) explicitly directs the General Assembly to consider its trustee duties under the ERA
when making appropriations, in contrast to the provisions deemed unconstitutional in
PEDF II, which allowed for unrestricted transfers to the General Fund for non-trust uses.
Indeed, it argues that any appropriation by the General Assembly of Lease Fund monies
for non-trust purposes would violate Section 1601.2-E(c), in addition to Section 27.
The Commonwealth Court addressed PEDF’s challenges to subsections (a) and
(c) separately. In addressing the “continuation” of the Lease Fund in subsection (a), the
Commonwealth Court rejected PEDF’s facial challenge, concluding that the absence of
explicit restrictions on the use of the Lease Fund in the text of Section 1601.2-E(a) did
not violate Section 27, given that all Commonwealth entities were bound by “Section 27's
constitutional requirement that trust principal must be used for trust purposes.” PEDF IV,
2020 WL 6193643, at *11.
The court, however, found support in PEDF II for PEDF’s challenge to subsection
(c). Specifically, it equated subsection (c)’s language, dictating that the “General
Assembly shall consider the Commonwealth’s trustee duties under [S]ection 27,” to
language that this Court deemed inadequate to remedy the constitutional violation in
PEDF II, where Section 1602-E instructed that the “General Assembly shall consider the
adoption of an allocation to municipalities impacted by a Marcellus well.” PEDF IV, 2020
WL 6193643, at *13.
The Commonwealth Court, nevertheless, concluded that Section 1601.2-E(c) did
not facially violate Section 27 relying again upon its analysis in PEDF III, which deemed
it permissible to use one-third of the non-royalty revenues for non-trust purposes. In so
doing, the court distinguished the section deemed unconstitutional by this Court in PEDF
[J-82-2021] - 24
II, which solely involved a transfer of royalties, from the section at issue in the current
case, which directed a transfer from the Lease Fund generally. Given that it was possible
that the transfers could be encompassed within the one-third that it viewed as permissible
to use for non-trust purposes, the court concluded that PEDF failed to demonstrate that
Section 1601.2-E(c) facially violated the ERA. Accordingly, the Commonwealth Court
granted the Commonwealth’s application for declaratory relief and denied PEDF’s
contrary application.
As with the Commonwealth Court’s analysis of PEDF’s challenge to the use of
Lease Fund assets for DCNR’s general operations, we affirm the court’s denial of PEDF’s
proposed declaration but diverge from its reasoning to the extent it relies upon the now-
rejected analysis in PEDF III permitting one-third of non-royalty revenues to be used for
non-trust purposes. In contrast, we conclude that the decision in PEDF II answers
PEDF’s challenge to both Subsections 1601.2-E(a) and (c).
In PEDF II, we observed that “that the legislature's diversion of funds from the
Lease Fund (and from the DCNR’s exclusive control) does not, in and of itself, constitute
a violation of Section 27,” because DCNR is not the only Commonwealth entity with a
fiduciary duty under Section 27. PEDF II, 161 A.3d at 939. Instead, all Commonwealth
entities, including the General Assembly, are bound to conserve and maintain
Pennsylvania’s public natural resources. PEDF II, 161 A.3d at 931 n.23. Thus, as we
explained in both PEDF II and PEDF V, “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.” PEDF II, 161 A.3d at 939; PEDF V, 255 A.3d at 314 n.21.
Section 1601.2-E(c) expressly reminds the General Assembly of its duties in
administering the Lease Fund mandating that “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). In contrast to the Commonwealth Court and the
[J-82-2021] - 25
Concurring and Dissenting Opinion, we find subsection (c)’s reiteration of the General
Assembly’s Section 27 duties to be entirely distinguishable from the constitutionally
insufficient provision in Section 1602-E, under review in PEDF II, which merely directed
the Commonwealth to “consider . . . an allocation to municipalities impacted by a
Marcellus well.” 72 P.S. § 1602-E. The fact that both statutes use the verb “consider”
does not render them equivalent. Rather, the operative portion of the provision is what
follows the verb: specifically, what must be considered. While one requires consideration
of mandatory trustee duties imposed by Section 27, the other suggests a specific
allocation of resources to one of many potentially constitutional purposes.
We further observe that the language of subsection (c) seems intended to remedy
the fault identified in PEDF II. In that case, we criticized the statute reviewed therein for
the absence of 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.” PEDF II, 161 A.3d at 938. The current language
addresses these failings by expressly requiring that “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). Thus, we reject PEDF’s facial challenge to the
repeal of the Oil and Gas Lease Fund Act and its continuation in Section 1601.2-E. 21
21 In rejecting PEDF’s challenge, we agree with Justice Dougherty’s statement that
Section 27 and our decisions in PEDF II and V require the General Assembly to “‘exercise
reasonable care’ in administering the trust.” Concurring and Dissenting Opinion at 4
(quoting PEDF II, 161 A.3d at 938) (Dougherty, J.). Respectfully, we diverge from the
responsive opinion because we read the current language of Section 1601.2-E(c) to
incorporate the duty to exercise reasonable care. See 1 Pa.C.S. § 1922(3) (providing
that in interpreting legislative intent, courts may presume “[t]hat the General Assembly
does not intend to violate the Constitution”).
As stated above, Section 1601.2-E(c) instructs that the General Assembly “shall
consider the Commonwealth’s trustee duties under section 27 of Article I of the
[J-82-2021] - 26
While Section 1601.2-E(c) is facially constitutional as it requires the General
Assembly to consider its mandatory trustee duties and does not authorize the
Commonwealth to use trust assets for non-trust purposes, our holding herein does not
negate the potential of an as applied challenge to the General Assembly’s ultimate
appropriation of the Lease Fund. We reiterate that in expending funds from the newly
transferred Lease Fund, the General Assembly has a duty to conserve and maintain the
Section 27 trust assets which “implicates a duty to prevent and remedy the degradation,
diminution, or depletion of our public natural resources” and a duty to act toward the
corpus of the trust “with prudence, loyalty, and impartiality.” PEDF II, 161 A.3d at 932
(quoting Robinson Twp., 83 A.3d at 956–57). 22
D. Section 1601.2-E(b) – Commingling of Funds
PEDF next challenges the constitutionality of Section 1601.2-E(b), which sets forth
the “sources” of the Lease Fund. Specifically, it provides for the inclusion in the Lease
Constitution of Pennsylvania.” While the responsive opinion reads this phrase as
providing for the General Assembly’s “mere consideration” of its trustee duties, we view
this language as an express reminder to the General Assembly of its mandatory duties
imposed by the Constitution. Concurring and Dissenting Opinion at 8. The statute’s
arguably inarticulate use of the verb “consider” does not negate the mandatory nature of
the General Assembly’s Section 27 duties.
These duties, as interpreted by this Court in PEDF II and V, include, inter alia, the
duty to act with prudence toward the corpus of the trust, which is defined as incorporating
the duty of “exercising reasonable care, skill and caution” in administering the trust. 20
Pa.C.S. § 7774. While the General Assembly could have listed each of the Section 27
trustee duties or quoted this Court’s summary of those duties, including the exercise of
reasonable care, the absence of such explication does not undermine the constitutionality
of Section 1601.2-E(c).
22 In conjunction with this and the other arguments raised, PEDF seeks a declaration that
the Commonwealth must “petition the court for a declaration of compliance with Section
27 prior” to engaging in the challenged activities. PEDF Brief at 58. We reject this
argument outright as our constitution’s tripartite system of government does not provide
for judicial pre-approval of legislative or executive action.
[J-82-2021] - 27
Fund of trust assets of “rents and royalties from oil and gas leases of land owned by the
Commonwealth” along with funds derived from the Indigenous Mineral Resources
Development Act and “[a]ny other money appropriated or transferred to the fund.”23
PEDF contends that this comingling of trust and non-trust assets violates the basic trust
principle requiring a trustee to maintain separate accounts for trust assets. The
Commonwealth responds that Section 27 does not mandate separate accounts.
The Commonwealth Court rejected PEDF’s assertions, determining that the
addition of other funds to the Oil and Gas Lease Fund did not render the statute facially
unconstitutional given that the statute could be applied constitutionally if the
Commonwealth appropriated the entirety of the funds solely for trust purposes. The court
cautioned, however, that a constitutional issue could arise if the Lease Fund was used
for non-trust purposes. Thus, it opined that the Commonwealth trustees should maintain
“a clear accounting and identification of corpus funds . . . to ensure that these funds are
properly used in strict compliance with Section 27.” 24 Id. at *12. It concluded, however,
that while the Commonwealth should engage in an accounting, the absence of language
requiring an accounting did not render Section 1601.2-E(b) unconstitutional.
We affirm the Commonwealth Court’s holding. We reiterate that a party
challenging a duly-enacted statute has the burden of demonstrating that the statute
“clearly, plainly, and palpably violates the Constitution.” PEDF II, 161 A.3d at 929 (internal
quotation marks omitted). In this case, PEDF failed to demonstrate that Section 1601.2-
23Section 1601.2-E(b) is set forth in full supra at 22, n.20.
24The court granted PEDF’s separate request for a declaration that the “Commonwealth,
as trustee of Pennsylvania's public natural resources, is required to keep detailed
accounts of the trust monies derived from the oil and gas leases and track how they are
spent as part of its administration of the trust.” PEDF IV, 2020 WL 6193643, at *17. The
Commonwealth has not appealed that holding to this Court.
[J-82-2021] - 28
E(b) is facially unconstitutional given that the Commonwealth may fulfill the dictates of
Section 1601.2-E(b) without violating its trustee duties under Section 27, by segregating
the monies from the different funds and keeping an accurate accounting.25 Moreover, as
noted by the Commonwealth Court, it may avoid improper expenditure of the funds by
restricting the Lease Fund’s use solely to trust purposes. Accordingly, we conclude that
PEDF failed to demonstrate that Section 1601.2-E(b) is facially unconstitutional.
E. Section 1726-G of the Fiscal Code
Finally, PEDF challenges Section 1726-G’s transfer of funds from the Keystone
Recreation, Park and Conservation Fund (“Keystone Fund”) to the General Fund. 26 It
emphasizes that the Keystone Fund had previously been used by the DCNR to improve
25A trustee has a duty to maintain “adequate records of the administration of the trust”
and to “keep trust property separate from the trustee's own property.” 20 Pa.C.S.
§ 7780(a), (b).
26 Section 1726-G of the Fiscal Code, entitled “Fund transfers,” provides as follows:
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.
72 P.S. § 1726-G. Included in the $300,000,000 was a transfer of $10,000,000 from the
Keystone Fund to the General Fund. See Petitioner's Brief in Supp. of Application for
Summ. Relief, Exhibit J, Commonwealth’s Supplemental Answer and Objections to First
Set of Interrogatories, ¶16.
[J-82-2021] - 29
State forest and parks. 27 PEDF claims that reducing this line of funding constitutes a
violation of the Commonwealth’s trustee obligations under Section 27, which should have
entailed public notice and an evaluation of the effect of the transfer of these funds on
DCNR and the projects affected by the reduced funding.
The Commonwealth Court denied relief to PEDF. The court observed that the
Keystone Fund derives not from the proceeds of oil and gas leasing but instead from the
sales of bonds and notes and the State Realty Transfer Tax. PEDF IV, 2020 WL
6193643, at *15 (citing 32 P.S. § 2014). Thus, it opined that “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.” Id.
The Commonwealth Court additionally rejected PEDF's claim that the
Commonwealth entities breached their fiduciary duties by failing to provide public
evaluation of the environmental impact of the transfer from the Keystone Fund. The court
concluded that Commonwealth entities are not obligated by their fiduciary responsibilities
under Section 27 to provide public evaluation of every transfer of non-trust funds that
might implicate Pennsylvania’s natural resources.
We affirm the Commonwealth Court’s denial of PEDF’s proposed declaration in
regard to Section 1726-G based upon its conclusion that the transfer from the Keystone
Fund does not implicate Section 27. As the Commonwealth Court observed, the
Keystone Fund does not involve trust assets but rather allocates funds derived from non-
trust sources of Commonwealth revenue. We likewise do not find support in Section 27
or basic trust law for PEDF’s claim that the Commonwealth must provide a public
evaluation for every decision that could potentially impact Pennsylvania’s natural
resource trust.
27The General Assembly provided that one of the purposes of the Keystone Act, which
created the Keystone Fund is to provide “[a] predictable and stable source of funding”
funding for state parks. 32 P.S. § 2012(6).
[J-82-2021] - 30
IV. Conclusion
For the reasons set forth above, we affirm the order of the Commonwealth Court,
while rejecting that portion of the court’s analysis derived from its decision in PEDF III,
214 A.3d 748.
Justices Todd, Donohue and Mundy join the opinion.
Justice Donohue files a concurring opinion in which Justice Todd joins.
Justice Mundy files a concurring opinion.
Justice Dougherty files a concurring and dissenting opinion.
Justice Wecht files a concurring and dissenting opinion.
Former Justice Saylor did not participate in the consideration or decision of this
matter.
[J-82-2021] - 31