Oil & Gas Lease Fund
Letter to Governor
PALTA Op-EDs
(Philadelphia Inquirer / Patriot-News)
Press Release
CRNAC Memo of Concern
$324 Million May Be Diverted From Environmental Funding The Oil and Gas Lease Fund Act of 1955 created the Oil and Gas Lease Fund. Money received from oil and gas leases on state lands (except for Game Lands) are to be placed in the Oil and Gas Lease Fund, to be used a broad range of conservation infrastructure, including land acquisition. The fund has recently received an influx of $190 million from the leasing of state forestland for natural gas drilling in the Marcellus Shale. The Oil and Gas Lease Fund by law must “be exclusively used for conservation, recreation, dams, or flood control,” items that are desperately in need of job-creating capital investments. Instead, Governor Rendell’s proposed budget diverts $174 of the $190 million to the General Fund this year, and $150 million next year. Because the act requires the funds to “be exclusively used for conservation, recreation, dams, or flood control, the diversion could happen two ways. Funds could be given to DCNR for operating costs, and then the same amount of money from the general fund would be removed from their budget. Or, new legislation could be passed allowing a transfer. Senate Bill 490, attempted to do this. The proposed transfer represents the single greatest hijacking of conservation funding in the state's history. The General Assembly created the Oil and Gas Lease Fund in 1955, adopting a farsighted policy of taking the money from the sale of nonrenewable oil and gas resources owned by the state and reinvesting this money into public conservation assets that would last for generations. They showed respect for the generations yet to come who deserved to inherit more than just empty gas and oil wells and degraded public lands. Through seven recessions, and more than five decades, the intent of the law has been honored. This 54-year record of investing in Pennsylvania’s future could come to an end this budget cycle.
The Creation and Use of the Oil ad Gas Lease Fund
In January 1955, Maurice K Goddard became the Secretary of the Department of Forests and Waters. Twelve months later, Governor Leader signed the Oil and Gas Lease Fund Act. This act authorized expenditure of funds received from the leasing of oil and gas on state lands (not including Game Lands) to be used for a broad range of conservation infrastructure including land acquisition. The new fund provided Dr Goddard with the means to put in place what he later regarded as his single greatest achievement…locating a state park within 25 miles of every Pennsylvanian. The concept of the new fund was quite simple—revenues from the sale of publicly owned, non-renewable natural resources would be reinvested into conservation infrastructure that would provide long term public value. This concept was later mirrored in the late 60’s with the passage of the Federal Land and Water Conservation Act. For over 50 years, the Oil and Gas Fund revenues have been dedicated to implementing this concept. From time to time there was some tension in the use of these revenues, but more the most part, the bulk of the funding has supported infrastructure and land acquisition investments for our State Park and State Forests. In 1991, then Treasurer Catherine Baker Knoll questioned the Department’s authority regarding the appropriateness of various expenditures from the fund including operational related costs. This resulted in a more restrictive use to generally exclude operational expenditures. This interpretation was in accordance with the opinions of the then Attorney General, the Governor’s Office of General Counsel, and DER’s Office of Chief Counsel. Since that time, staff costs supported by the fund were generally associated with attorney time related to the actual lease development and some staff time within the Bureau of Forestry, who were managing the lease program. If money from the fund is transferred legislatively to the General Fund, the Governor is not bound by the restrictions on the use of the money within the Fund itself. However, it is likely that any money remaining in the fund will be subject to future creative legal opinions from the Governor’s Office or from within the Department designed to promote the use of the Fund to support future operational needs.
Implications of a Transfer from the Oil and Gas Lease Fund
The transfer of millions from the Oil and Gas Lease Fund was done without recognition or mention as to the importance of the fund and the public values being created by the fund’s investments. The transfer is intended to use the money for addressing other priority needs as the Governor sees them. As a result, every legislator having different priorities will view these transfers as a way to fund their own concerns. The result is that there is now an open season on the monies in the fund. There will be a feeding frenzy to divert fund revenues for any purpose including the operational needs of DCNR. The Governor’s proposal has also opened the door for the legislative earmarking of any monies that might be left in the fund. And there will be a push for more leasing to generate more revenue. Finally, there will be those who use the current fiscal crisis in an attempt to dismantle conservation funding…especially funding that can be used to acquire more public lands. If the Governor is successful with his current transfer proposal, he will have established a precedent that is likely to gut the fund in the long term. During the debate over SB490, Senator White commented that the original law did not contemplate that this much money would be available in the fund. These comments are symptomatic of how many politicians see the revenues from the recent lease sale. The jump in the fund’s income from an average of $4-5 million/year to a projected $190 million this year is now seen as a windfall that shouldn’t or wasn’t intended to be spent of conservation.
Oil and Gas Lease Fund: The End of a Conservation Legacy?
With state environmental funding depleted, investments in conservation, restoration and recreation are plummeting. Without a new revenue source, good community projects simply won’t be funded.
Coverage of budget negotiations from the PA Environment Digest
DEP Secretary, Sen. White Spar Over Senate, Governor's Environmental Funding Cuts, Dave Hess, May 15, 2009
Department of Environmental Protection Secretary John Hanger and Sen. Mary Jo White (R-Venango), Majority Chair of the Senate Environmental Resources and Energy Committee, exchanged words this week over proposed cuts in environmental funding by both the Senate Republicans and the Governor.
Secretary Hanger said the Senate Republican plan to cut $50 million in additional funding to his department’s budget would have long-term, negative consequences for the state’s natural resources, public health, and economic viability.
“The Senate Republican plan removes funds that help keep sewage out of the land and water, that help our river basin commissions monitor potentially dangerous activities throughout the state, and that fight potentially deadly mosquitoes that could carry the West Nile virus and the bothersome black flies that are such a nuisance each summer,” said Secretary Hanger. “They also cut much-needed funds that help communities protect themselves against floods and that will make it easier for consumers to avoid higher energy costs by installing insulation and windows or by purchasing more energy efficient appliances.” Read the full article at the PA Environment Digest
DCNR: 35 State Parks Would Close Under GOP Budget, Sen. White - Use Gas Drilling Funds, Dave Hess, May 15, 2009
Department of Conservation and Natural Resources Acting Secretary John Quigley this week said the budget adopted by Senate Republicans would force the agency to close at least 35 state parks and 1,000 miles of state forest roads, which would sharply reduce access for anglers, hunters and hikers.
Under Senate Bill 850 (Senate Republican budget), an additional $19 million would be cut from DCNR's budget beyond the "difficult but prudent reductions" Gov. Rendell proposed in February which itself cut $6.9 million from the proposed 2009-10 budget.
read the full article at the PA Environment Digest.
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