Oil & 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.

Marcellus Shale Boom – Since the Marcellus Shale boom began in 2008, more than $227 million in rent and royalty payments have been deposited into the Oil and Gas Lease Fund. In addition, the state has collected a total of $417 million in bonus rental payments. A moratorium on further state forest land leasing has been in place since October 2010.

Funding DCNR with Oil & Gas Lease Fund – In 2009, Governor Rendell began the practice of using Oil & Gas Lease Fund revenues to fund the Department of Conservation & Natural Resources.  Governor Corbett has continued the practice.  Instead of using the royalty revenues to supplement the agency’s budget and mission, as was intended, gas royalties are replacing monies that the agency would receive through the general fund. In the 2013-14 budget, one-third of the agency’s $315 million budget.

Auditor General Report – 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.