COMMONWEALTH COURT OF PENNSYLVANIA PENNSYLVANIA ENVIRONMENTAL DEFENSE FOUNDATION, Petitioner v. COMMONWEALTH OF PENNSYLVANIA, and GOVERNOR OF PENNSYLVANIA, TOM WOLF, in his official capacity as GOVERNOR, Respondents

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No. 228 MD 2012

PENNSYLVANIA ENVIRONMENTAL DEFENSE FOUNDATION’S SECOND ADDENDUM TO SECOND AMENDED PETITION FOR REVIEW IN THE NATURE OF AN ACTION FOR DECLARATORY RELIEF

John E. Childe Attorney for PEDF I.D. No. 19221 1847 Center Street Camp Hill, Pa. 17011 717-743-9811 [email protected]

TABLE OF CONTENTS Page I.

SUMMARY OF THIS SECOND PETITION ADDENDUM ....

1

II.

PETITION PROCEDURAL HISTORY ......................................

4

III.

JURISDICTION ..........................................................................

6

IV.

STATUTORY AUTHORITY .....................................................

6

V.

PARTIES .....................................................................................

7

VI.

STATEMENT OF RELEVANTADDITIONAL FACTS AND LAW ...................................................................................

7

A. RELEVANT FINDINGS OF SUPREME COURT IN THIS CASE ............................................................................

7

B. CONTESTED ACTS AND ACTIONS .................................

11

1. General Appropriations Act of 2017 .................................

11

2. 2017 Fiscal Code Amendments .........................................

12

a. Repeal of the 1955 Oil and Gas Lease Fund Act .........

12

b. New Oil and Gas Lease Fund – Sections 1601-E and 1601.2-E of the Fiscal Code ..................................

13

c. State Park Spending Mandate – Section 1720-F of the Fiscal Code .........................................................

15

d. Special Fund Transfers – Section 1726-G of the Fiscal Code ...................................................................

15

ADDITIONAL DECLARATORY RELIEF REQUESTED ......

16

R. SECTION 1601 OF THE GENERAL APPROPRIATIONS ACT OF 2017 IS UNCONSTITUTIONAL ..........................

16

VI.

1. Using the Public Trust for Agency Operating Costs Violates Section 27 and the Trustee’s Duties Thereunder ..............

16

2. Respondents Have Violated Their Fiduciary Duties ........

25

i

TABLE OF CONTENTS Page S. USING THE SECTION 27 PUBLIC TRUST FOR AGENCY OPERATING COSTS CREATES A DIRECT CONFLICT OF INTEREST ......................................................................

28

T. SECTION 27 PUBLIC TRUST REQUIRES A THOUROUGH EVALUATION OF THE PUBLIC NATURAL RESOURCES NEEDS PRIOR TO USING TRUST ASSETS ......................

29

V. SECTION 20(2) OF THE 2017 FISCAL CODE AMENDMENTS VIOLATES SECTION 27 AND THE TRUSTEES’ DUTIES THEREUNDER ..................................................................... 32 1. Oil and Gas Lease Fund Act Provided Important Safeguards ........................................................................

32

2. The Degradation of the State Forest from the Exploration and Extraction of Oil and Gas ......................

35

3. DCNR Has the Mission to Sustain Our Natural Resources ..........................................................................

40

4. Repeal No Different Than Prior Unconstitutional Fiscal Code Provisions .....................................................

45

5. Need to Evaluate Before Enactment That Might or Will Impact the Oil and Gas Lease Fund .................................

46

6. Trustee Fiduciary Duty of Prudence, Loyalty and Impartiality .......................................................................

47

7. Respondents Breached Their Fiduciary Duty to Evaluate

48

8. DCNR Needs the Oil and Gas Lease Fund to Remedy Harm ...................................................................

49

X. SECTION 1601.2-E OF THE FISCAL CODE VIOLATES SECTION 27 AND THE TRUSTEES’ DUTIES THEREUNDER .....................................................................

55

ii

TABLE OF CONTENTS Page 1. Section 1601.2-E(a) of the Fiscal Code Establishes a New Oil and Gas Lease Fund with None of the Protections Provided by the Repealed Oil and Gas Lease Fund Act ................................................................

55

2. Section 1601.2-E(b) Fails to Require Detailed & Accurate Accounts ...........................................................

57

3. Section 1601.2-E(c) Does Not Provide Any Provisions to Insure Compliance with Constitutional Mandates ......

59

a. Administering the New Fund Through Annual Appropriations Precludes Compliance with Constitutional Mandates .............................................

60

b. No Evaluation of Section 1601-E(c) under Section 27 Prior to Enactment ......................................................

61

c. No Evaluation of Taking Control of the Oil and Gas Lease Fund from DCNR ............................................

62

d. Respondents Did Not Fulfill Their Fiduciary Duties as Trustees .......................................................

64

e. The Qualification to “Consider” Section 27 Insufficient ..................................................................

64

4. Annual Transfers Under Section 1601.2-E(e) Violate Section 27 ........................................................................

67

a. Environmental Stewardship Fund ..............................

68

b. Hazardous Sites Cleanup Fund ..................................

72

c. Failure to Evaluate Impact of Annual Transfers ........

74

d. Trustee Duties to Exercise Prudence, Loyalty and Impartiality .................................................................

74

iii

TABLE OF CONTENTS Page Y. RESPONDENTS’ FAILURE TO REPLACE THE OIL AND GAS LEASE FUND ACT LIMITATIONS WITH A STATUTORY SCHEME THAT COMPLIES WITH SECTION 27 ............ 77 1. Need for Constitutional Mandate to Pass Legislation to Pass Legislation to Protect Our Environment .........................

77

2. Legislation Must Address Constitutional Mandates .......

81

3. Legislation Must Require Keeping Accounts .................

83

Z. SECTION 1720-F OF THE FISCAL CODE VIOLATES SECTION 27 ........................................................................

85

AA. SECTION 1726 OF THE FISCAL CODE VIOLATES SECTION 27 .......................................................................

87

VII. ADDITIONAL SUPPORT OF PERTITIONER’S STANDING

87

VIII. CONCLUSION ............................................................................

93

iv

LIST OF EXHIBITS SECOND AMENDED PETITION EXHIBITS:1 EXHIBIT A –

Affidavit of PEDF Member Cynthia Bower

EXHIBIT B –

Affidavit of PEDF Member Joseph Lauver

EXHIBIT C –

Affidavit of PEDF Member Robert (Butch) Davies

EXHIBIT D –

Affidavit of PEDF President Ron Evans

EXHIBIT E –

Affidavit of PEDF Member Pine Creek Preservation Association

EXHIBIT F –

Affidavit of PEDF Member Keystone Trails Association

EXHIBIT G –

Affidavit of PEDF Member Lycoming Creek Watershed Association

EXHIBIT H –

Affidavit of PEDF Member Muncy Creek Watershed Watershed Association

EXHIBIT I –

Affidavit of PEDF Member Tiadaghton Audubon Society

EXHIBIT J –

Affidavit of PEDF Member Lycoming Audubon Society

EXHIBIT K –

Affidavit of PEDF Member Responsible Drilling Alliance

EXHIBIT L –

Affidavit of PEDF Member Slate Run Sportsmen

EXHIBIT M –

Affidavit of PEDF Member Pine Creek Headwaters Protective Association

EXHIBIT N –

Affidavit of PEDF Member Pennsylvania Forest Coalition

EXHIBIT O –

Affidavit of PEDF Member Loyalsock Creek Watershed Association

EXHIBIT P –

DCNR 1995 “Penn's Woods, Sustaining Our Forests” Strategic Plan

These exhibits were filed with Petitioner’s Second Amended Petition on December 5, 2013. They are listed here for the Court’s convenience as some of these exhibits are refenced in this Third Amended Petition. Additional copies of these exhibits are not attached to avoid unnecessary duplication because the exhibits were previously filed with the Court. 1

v

LIST OF EXHIBITS (Cont.) EXHIBIT Q –

2004 Auditor General Special Audit on Oil and Gas Lease Fund

EXHIBIT R –

1991 Attorney General “Informal” Opinion on Oil and Gas Lease Fund Act

EXHIBIT S –

1990 General Counsel Letter to State Treasurer Regarding Regarding Oil and Gas Lease Fund

EXHIBIT T –

2012 DCNR Chief Counsel Opinion on Oil and Gas Lease Fund

EXHIBIT U –

2007 DCNR State Forest Resources Management Plan Update, Executive Summary

EXHIBIT V –

DCNR Bureau of State Parks Mission Statement

EXHIBIT W –

DCNR Secretary DiBerardinis Memos of January 10 February 26, 2008

EXHIBIT X –

DCNR Quigley Memorandum of September 4, 2008

EXHIBIT Y –

State Park History, The Goddard Era

EXHIBIT Z –

2011 State of the Parks/State of the Forests Report, Report, Pennsylvania Parks and Forest Foundation, Excerpts

EXHIBIT AA –

DCNR Natural Gas Exploration on State Lands

EXHIBIT BB –

2009-2010 Governor’s Executive Budget, Excerpts

EXHIBIT CC –

DCNR Secretary DiBerardinis Memorandum of March 27, 2009

EXHIBIT DD –

DCNR Quigley Memorandum of May 6, 2009

EXHIBIT EE –

FY 2009-2010 State Forest Oil and Gas Lease Sale Environmental Review (November 2009)

EXHIBIT FF –

FY 2010-11 Governor’s Executive Budget Excerpts

EXHIBIT GG –

FY 2010-11 State Forest Oil and Gas Lease Sale Environmental Review (May 2010)

EXHIBIT HH –

Governor’s Executive Order 2010-05, October 26, 2010

EXHIBIT II –

Governor’s Marcellus Shale Advisory Commission Report, July 22, 2011, Excerpts vi

LIST OF EXHIBITS (Cont.) EXHIBIT JJ –

Excepts from “Pennsylvania Energy Impacts Assessment Report 1: Marcellus Shale Natural Gas and Wind,” The Nature Conservancy/Audubon (November 2010)

EXHIBIT KK –

DCNR Natural Gas Exploration, Management Challenges

EXHIBIT LL –

DCNR Natural Gas Development, Public Access and Recreation, Balancing Uses of State Forest Lands

EXHIBIT MM – Governor’s Executive Budget, FY2013-2014, Oil and Gas Lease Fund, page H53 EXHIBIT NN –

Governor's Executive Budgets, FY2007-08 through FY 2012-13, Oil and Gas Lease Fund

EXHIBIT 002 –

Affidavit of Former DCNR Secretary John Quigley

EXHIBIT PP2 –

Affidavit of Former DCNR State Parks Bureau Director John Norbeck (now DCNR Deputy Secretary)

EXHIBIT QQ2 – Legislative History of Article I § 27 EXHIBIT RR2 –

DCNR Oil and Gas Lease Sale Final Results

EXHIBIT SS2 –

Governor's Executive Budgets, DCNR Summaries by Fund and Appropriation for FY 2010-11 through 2014-15

EXHIBIT TT2 –

Governor's Executive Budget for FY 2014-15, Oil and Gas Lease Fund, Environmental Stewardship Fund

2

These exhibits were filed with the Commonwealth Court on April 21, 2014 as part of Petitioner’s Motion for Summary Judgment. Petitioner is incorporating these exhibits by reference into this Second Petition Addendum. Additional copies of the exhibits are not attached to avoid unnecessary duplication because these exhibits were previously filed with the Commonwealth Court. vii

LIST OF EXHIBITS (Cont.) SECOND PETITION ADDENDUM EXHIBITS: EXHIBIT UU3 – Summary of Testimony of Dr. James R. Grace, Former DCNR Deputy Secretary (¶¶ 1-45, Addendum to Petitioner’s Motion for Summary Judgment) EXHIBIT VV3 – Summary of Testimony of Michael DiBerardinis, Former DCNR Secretary (¶¶ 46-63, Addendum to Petitioner’s Motion for Summary Judgment) EXHIBIT WW3 – Summary of Testimony of John Quigley, Former DCNR Secretary (¶¶ 64-84, Addendum to Petitioner’s Motion for Summary Judgment) EXHIBIT XX3 – Summary of Testimony of Danial Devlin, Former DCNR Deputy Secretary (current Director, DCNR Bureau of Forestry), for PEDF (¶¶ 85-96, Addendum to Petitioner’s Motion for Summary Judgment) EXHIBIT YY3 – Summary of Testimony of John Norbeck, former Director, DCNR Bureau of Parks (current DCNR Deputy Secretary) (¶¶ 97-105, Addendum to Petitioner’s Motion for Summary Judgment) EXHIBIT ZZ3 –

Summary of Testimony of Cindy Bower, Regional PEDF Vice President (¶¶ 106-119, Addendum to Petitioner’s Motion for Summary Judgment)

EXHIBIT AAA3 – Summary of Testimony of Daniel Devlin For Respondents (¶¶ 125-143, Addendum to Petitioner’s Motion for Summary Judgment)

Petitioner’s Addendum to Motion for Summary Judgment filed with the Commonwealth Court on June 30, 2014 provides summaries of the testimony presented to the Commonwealth Court in a three-day hearing held on May 28, 2014 and June 2-3, 2014. The summaries provided in Petitioner’s Addendum are incorporated by reference into this Second Petition Addendum. Additional copies of these summaries are not attached to avoid unnecessary duplication because these summaries were previously filed with the Commonwealth Court. 3

viii

LIST OF EXHIBITS (Cont.) EXHIBIT BBB3 – Summary of Testimony of Cindy Adams Dunn, Former Deputy Secretary, DCNR (current DCNR Secretary) (¶¶ 144-157, Addendum to Petitioner’s Motion for Summary Judgment) EXHIBIT CCC4 – Summary of Impacts to State Forests Natural Gas Extraction (Section F (¶¶ 46-58) of Petitioner’s Motion for Summary Judgment) EXHIBIT DDD4 – Summary of Impacts to State Park Natural Gas Extraction (Section G (¶¶ 59-63) of Petitioner’s Motion for Summary Judgment) EXHIBIT EEE4 – Summary of Impacts to Public Natural Resources from the Loss of Oil and Gas Lease Funds (Sections H & I (¶¶ 64-86) of Petitioner’s Motion for Summary Judgment) EXHIBIT FFF4 – Summary of the Impacts to the Section 27 Rights of the People by Respondents’ Actions (Section J (¶¶ 87-117) of Petitioner’s Motion for Summary Judgment) EXHIBIT GGG – DCNR 2014 Shale Gas Monitoring Report5 EXHIBIT HHH – 2017 Affidavits of John Quigley

4

These exhibits include factual summaries developed by PEDF and filed with the Commonwealth Court on April 21, 2014 in Petitioner’s Motion for Summary Judgment. The summaries provided in Petitioner’s Motion for Summary Judgment are incorporated by reference into this Second Petition Addendum. Additional copies of these summaries are not attached to avoid unnecessary duplication because these summaries were previously filed with the Commonwealth Court. 5

This report was admitted as an exhibit during the three-day hearing held in this case in 2014 and is incorporated by reference as an exhibit to this Second Petition Addendum. An additional copy of this report is not attached to avoid unnecessary duplication. The report is also available on DCNR’s website at http://www.docs.dcnr.pa.gov/cs/groups/public/documents/document/dcnr_2002914 7.pdf. ix

LIST OF EXHIBITS (Cont.) EXHIBIT III –

DCNR 2017 “Penn’s Parks for All, Planning For Pennsylvania’s State Parks For Tomorrow” 6

EXHIBIT JJJ –

Natural Gas Development and State Forests, Shale Gas Leasing Statistical Summary, May 20177

EXHIBIT KKK – Governor’s Executive Budgets, FY 2014-15 through FY 2017-18, Oil and Gas Lease Fund EXHIBIT LLL – Governor’s Executive Budgets, FY 2007-08 through 2009-10, FY 2015-16 and FY 2017-18, DCNR Summaries by Fund and Appropriation EXHIBIT MMM – 2017 Affidavit of Cynthia Bower, PEDF Regional Vice President EXHIBIT NNN – 2017 Affidavit of PEDF Member Carol Kafer and Loyalsock Creek Watershed EXHIBIT OOO – 2017 Affidavit of PEDF Member Gary L. Metzger and Lycoming Audubon Society EXHIBIT PPP –

2017 Affidavit of PEDF Member Jim Weaver And Tioga Watershed Council

EXHIBIT QQQ – 2017 Affidavit of PEDF Member Mark Simonis And Pine Creek Protective Association EXHIBIT RRR – 2017 Affidavit of PEDF Member Robert Ross And Tiadaghton Audubon Society EXHIBIT SSS –

2017 Affidavit of PEDF Member Roy Siefert

6

A copy of this document is attached to this Second Petition Addendum and is also available at http://www.dcnr.pa.gov/StateParks/Pages/default.aspx under “Take Our Survey.” 7

A copy of this document is attached to this Second Petition Addendum and is also available at http://www.docs.dcnr.pa.gov/cs/groups/public/documents/document/dcnr_2002936 3.pdf. x

LIST OF EXHIBITS (Cont.) EXHIBIT UUU – DCNR Pennsylvania Wilds Conservation Landscape Fact Sheet

ii

I.

SUMMARY OF THIS SECOND PETITION ADDENDUM (1).

On June 20, 2017, the Pennsylvania Supreme Court issued an opinion

in this case finding Section 1602-E and 1603-E of the Fiscal Code (72 P.S. §§ 1602E and 1603-E) facially unconstitutional because they “plainly ignore the Commonwealth’s constitutionally imposed fiduciary duty [under Article I, Section 27 of the Pennsylvania Constitution (“Section 27”)] to manage the corpus of the environmental trust for the benefit of the people to accomplish its purpose – conserving and maintaining the corpus by, inter alia, preventing and remedying the degradation, diminution and depletion of our public natural resources.” Pennsylvania Environmental Defense Foundation v. Commonwealth (PEDF II), 161 A.3d, 911, 938. These Fiscal Code provisions transferred control of the money generated by the sale of oil and gas on State Park and State Forest land from the Department of Conservation and Natural Resources (“DCNR”) to the General Assembly rendering these funds no longer available to DCNR to ‘manage the corpus of trust for the benefit of the people”, to prevent and remedy the harm to State Parks and State Forests from oil and gas extraction. The Supreme Court found that “[w]ithout any question, these legislative amendments permit the trustee to use trust assets for non-trust purposes, a clear violation of the most basis of a trustee’s fiduciary obligations.” Id. As a result of the Supreme Court decision, DCNR again had control over the Oil and Gas Lease Fund through the Oil and Gas Lease Fund Act8 and the Conservation and Natural Resources Act (71 P.S. §§ 1340.1011340.1103).

8

The act of December 15, 1955, P.L. 865, No. 256 (71 P.S. §§ 1331-1333), commonly referred to as the Oil and Gas Lease Fund Act. 1

(2).

On July 11, 2017, the Respondents enacted the General Appropriations

Act of 2017,9 which appropriates more than $61,000,000 from the Oil and Gas Lease Fund to pay DCNR operating expenses for the 2017-18 fiscal year, and fails to appropriate any funds for projects to conserve and maintain the public natural resources of our State Parks and State Forests impacted by oil and gas extraction. In doing so, the Respondents ignored their fiduciary duties under Section 27 and the purpose of the environmental trust, just as they had done in 2009 when enacting the unconstitutional provisions in Sections 1602-E and 1603-E of the Fiscal Code. (3).

On October 30, 2017, the Respondents enacted amendments to the

Fiscal Code10 (“2017 Fiscal Code Amendments”) that repeal the Oil and Gas Lease Fund Act and create a new Oil and Gas Lease Fund with no protection for the use of the funds in compliance with the purpose of the Section 27 public trust, no requirements to ensure Respondents’ fulfill their fiduciary duties under the Section 27 public trust, and no regard for the beneficiaries of the Section 27 public trust. (4).

Additionally, the Respondents have authorized annual transfers of

$35,000,000 from the Oil and Gas Lease Fund to the Marcellus Legacy Fund through the 2017 Fiscal Code Amendments. As a result, money from the sale of oil and gas on our State Forests is distributed to the Environmental Stewardship Fund and the Hazardous Site Cleanup Fund to pay for activities that, while beneficial, do not prevent and remedy the harm to the State Forest from oil and gas extraction. The Respondents have authorized these transfers with no protection for the use of the

9

The act of July 11, 2017, P.L. __, No. 1A, known as the General Appropriations Act of 2017. 10

The act of October 30, 2017, P.L. ___, No. 44, which enacts omnibus amendments to the Fiscal Code. 2

funds in compliance with the purpose of the Section 27 public trust, no requirements to ensure Respondents’ fulfill their fiduciary duties under the Section 27 public trust, and no regard for the beneficiaries of the Section 27 public trust. (5).

As a result of the above appropriations and transfers from Oil and Gas

Lease Fund, the corpus of the public trust harmed to generate these funds located in the northcentral Pennsylvania region known as the Pennsylvania Wilds (“PA WILDS”) continues to be degraded, diminished and depleted. The State Forests and Parks in this region are and will be degraded by the continuing extraction of oil and gas without the funds to remedy and mitigate the harm; the oil and gas that has been sold has been taken from the corpus, and will not be available to the public trust in the future; and money that is converted from the corpus of trust (more than $97,000,000 in the 2017-18 fiscal year alone), will be used up for purposes outside of the conservation and maintenance of the public trust in the PA WILDS. (6).

In total, over $1.1 billion generated from the lease and sale of public

natural resources on our State Forests has been removed from the Section 27 public trust since 2009 for uses other than preventing and remedying the degradation, diminution and depletion of our State Forest and Park public natural resources by oil and gas extraction. (7).

As a result of the above Oil and Gas Lease Fund appropriations and

transfers, the people who live and work and recreate in the PA WILDS, including the PEDF members, as beneficiaries of the public trust under Section 27, are deprived of their rights by the continued degradation of our State Forests and Parks, continued diminishment of public natural resources that will be needed to sustain the forest for future generations, and the continued loss of the money that is a public natural resource asset. 3

(8).

The General Appropriations Act of 2017 and the 2017 Fiscal Code

Amendments are unconstitutional as they violate Section 27 and allow for continuing the degradation of the public natural resources of our State Forest and Parks. The Respondents have violated their fiduciary duties under Section 27 as trustees in enacting provisions that that diminish the corpus of the trust. (9).

The General Appropriations Act of 2017 and the 2017 Fiscal Code

Amendments also violate Article I, Section 25 of Pennsylvania’s Constitution, II.

PETITION PROCEDURAL HISTORY (10). The Pennsylvania Environmental Defense Foundation (“Petitioner” or

“PEDF”) filed its Second Amended Petition for Review in the Nature of an Action for Declaratory Relief on December 5, 2013 (“Second Amended Petition”). PEDF requested declarations (Declarations A – O) in the Second Amended Petition regarding the Respondents’ duties under Section 27 when leasing State Forest land for the extraction and sale of oil and gas, and when spending the funds generated from such leasing and sale. PEDF also requested declarations that the Respondents violated their constitutional duties under Section 27 through various transfers and expenditures from the Oil and Gas Lease Fund authorized by General Appropriation Acts, Fiscal Code amendments and other legislation enacted since 2009. Petitioners assert that Respondents actions have usurped the ability of the DCNR to fulfill its Section 27 trustee duties to restore public natural resources degraded, diminished and depleted in our State Parks and State Forest from the extraction and sale of oil and gas. (11). PEDF filed an Addendum to its Second Amended Petition on March 18, 2014 (“First Petition Addendum”) to request additional declarations (Declarations P – Q) relating to then Governor Corbett’s proposals to lease 4

additional State Forest land to generate $75,000,000 for the General Fund to support educational programs, and to use $117,000,000 from the Oil and Gas Lease Fund to pay DCNR employee salaries and general operation expenses. (12). PEDF filed a Motion for Summary Judgment on April 21, 2014 and an addendum to its Motion for Summary Judgment on June 30, 2014 seeking the declaratory relief requested in its Second Amended Petition and the First Petition Addendum to the Second Amended Petition. (13). In response to Petitioner’s Motion for Summary Judgment, the Commonwealth Court issued an order and opinion on January 7, 2015 denying all relief sought by PEDF. The Commonwealth Court’s order specifically held that Sections 1602-E and 1603-E of the Fiscal Code (provisions added to divest DCNR of control over the proceeds from the leasing and sale of oil and gas on State Forests) did not violate Section 27. PEDF v. Commonwealth, 108 A.3d 140 (Pa. Cmwlth. 2015) (PEDF I). (14). PEDF appealed, and on June 20, 2017, the Pennsylvania Supreme Court reversed the Commonwealth Court order with respect to the constitutionality of Sections 1602-E and 1603-E of the Fiscal Code and vacated the order in all other respects. PEDF II, supra. The Supreme Court remanded the case to the Commonwealth Court for further proceedings consistent with its opinion. (15). PEDF files this Second Addendum to its Second Amended Petition (“Second Petition Addendum”) requesting additional declarations (Declarations R – AA) that Respondents new acts and actions violate Section 27 based on the Supreme Court opinion issued on June 20, 2017. III.

STATEMENT OF JURISDICTION 5

(16). The Commonwealth Court has jurisdiction to review the additional requests for declaratory relief in this Second Petition Addendum pursuant to 42 P.S. § 761(a); and the Declaratory Judgment Act, 42 Pa.C.S. §§ 7531-7541. IV.

STATUTORY AUTHORITY (17). This Second Petition Addendum is brought pursuant to Article I Section

27 of the Pennsylvania Constitution; the Conservation and Natural Resources Act (71 P.S. §§ 1340.101-1340.1103); the act of December 15, 1955, P.L. 865, No. 256 (71 P.S. §§ 1331-1333), commonly referred to as the Oil and Gas Lease Fund Act11; and the

Declaratory Judgements Act (42 Pa.C.S. §§ 7531-7541), specifically

Section 7532, entitled “General scope of declaratory remedy,” which states that “[c]ourts of record, within their respective jurisdictions, shall have the power to declare rights, status, and other legal relations whether or not further relief is or could be claimed ...”, and Section 7535, entitled “Rights of fiduciaries and other persons,” which states that “[a]ny person interested, as or through … [a] trustee, … in the administration of a trust, … may have a declaration of rights or legal relations in respect thereto: … [t]o direct the … administrators, or trustees to do or to abstain from doing any particular act in their fiduciary capacity [or] [t]o determine any question arising in the administration of the … trust, including questions of construction of … writings.” V.

PARTIES

11

The Oil and Gas Lease Fund Act was repealed by Section 20 of the act of October 30, 2017, P.L. __, No. 44. However, PEDF asserts that this repeal is unconstitutional and, therefore, continues to cite the Oil and Gas Lease Fund Act as authority for its petition. 6

(18). Petitioner, PEDF, is an entity incorporated as a non-profit organization in 1986 under the laws of Pennsylvania for the purpose of protecting and preserving the environmental interests of its members in Pennsylvania. Ron Evans is PEDF’s President and resides at 818 Spring Creek Road, Bellefonte, Pennsylvania, 16823, Phone: 717-579-2263. (19). The Respondent Commonwealth of Pennsylvania is the trustee of the constitutional public trust established over Pennsylvania’s public natural resources under Section 27. (20). The Respondent Governor of the Commonwealth of Pennsylvania, Tom Wolf, acting in his official capacity as Governor, is the Chief Executive Officer of the Commonwealth. Under Article IV, Section 2 of Pennsylvania’s Constitution, the governor of the Commonwealth “has the supreme executive power of the executive branch of the Commonwealth, who shall take care that the laws [of the Commonwealth] be faithfully executed.” VI.

STATEMENT OF RELEVANT ADDITIONAL FACTS AND LAW A. RELEVANT FINDINGS OF SUPREME COURT IN THIS CASE (21). In 1971, Section 27 was ratified by the citizens of Pennsylvania,

“formally and forcibly recognizing their environmental rights as commensurate with their most sacred political and individual rights.” PEDF II, 181 A.3d at 916. (22). Section 27 grants two separate rights. The first right is contained in the first sentence, which is a prohibitory clause declaring the right of citizens to clean air, pure water, and the preservation of natural, scenic, historic and esthetic value of the environment. This clause places a limitation on the state’s power to act contrary to this right, and while the subject of this right may be amenable to regulation, any 7

laws that unreasonably impair the right are unconstitutional. PEDF II, 181 A.3d at 931. (23). The second right reserved by Section 27, set forth in the second sentence, is the common ownership by the people, including future generations, of Pennsylvania’s public natural resources. Id. (24). The Commonwealth, including the Governor, may not approach our public natural resources as a proprietor, and instead must at all times fulfill its role as trustee. Id. at 932. (25). The third sentence of Section 27 establishes a public trust. The natural resources are the corpus of the trust, the Commonwealth is the trustee, and the people are the beneficiaries. Pennsylvania’s State Forests and Parks and the oil and gas minerals therein are part of the corpus of the public trust created by Section 27. Id. at 931-932. (26). The terms “trust” and “trustee” carry their legal implications under Pennsylvania law at the time Section 27 was passed. Id. at 932 (27). As a trustee, the Commonwealth must deal “with its citizens as a fiduciary, measuring its successes by the benefits it bestows upon all its citizens in their utilization of natural resources under law.” Under Section 27, the Commonwealth may not act as a mere proprietor...” Id. (quoting analysis of Professor Broughton in the Section 27 legislative history (Pa. L. Journal, 154 th General Assembly, No. 118, Reg. Sess., 2269, 2273 (1970)). (28). Pennsylvania’s environmental trust imposes two basic duties on the Commonwealth’s duties as the trustee of the environmental trust were created by the people of Pennsylvania under Section 27. As trustee, the Commonwealth is a 8

fiduciary obligated to comply with the terms of the trust and with the standards governing a fiduciary’s conduct. The explicit terms of the trust require the government to “conserve and maintain” the corpus of the trust. The 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. As a fiduciary the Commonwealth has a duty to act toward the corpus of the trust – the public natural resources – with prudence, loyalty, and impartiality. Id. (citing Robinson Twp. v. Commonwealth, 83 A. 3d 901, 956-57); see also 20 Pa.C.S. §§ 7772 – 7774 (relating trustee’s duty of loyalty, impartiality and prudence). (29). The Commonwealth, as the Section 27 trustee, has a duty to prohibit the degradation, diminution, or deletion of our public natural resources and must act affirmatively via legislative action to protect our public natural resources and our environment. Id. at 933 (citing Robinson Twp., 83 A.3d at 957). (30). The Commonwealth, as the Section 27 trustee, may use the assets of the trust only for purposes authorized by the trust or necessary for the preservation of the trust. Id. (citing Robinson Twp., 83 A. 3d at 978). (31). “Section 27 expressly creates a trust, and pursuant to Pennsylvania law in effect at the time of enactment, proceeds from the sale of trust assets are part of the corpus of the trust.” Id. (32). The phrase “for the benefit of the people” in Section 27 “may not be read in isolation and does not confer upon the Commonwealth the right to spend proceeds on general budgetary items.” Id. at 934. (33). Section 27 “mandates that the Commonwealth, as trustee, ‘conserve and maintain’ our public natural resources in furtherance of the people’s specifically enumerated rights. Thus understood in the context of the entire provision, the phrase 9

‘for the benefit of all the people’ in Section 27 is unambiguous, and clearly indicates that assets of the trust are to be used for conservation and maintenance purposes.” Id. at 934-935, (34). Royalties, which are monthly payments based on the gross production of oil and gas at each well, “are unequivocally proceeds from the of oil and gas resources … They are part of the corpus of the trust [established under Section 27] and the Commonwealth must manage them pursuant to its duties as trustee.” Id. at 935. (35). Any payments made in consideration of the oil and gas that is extracted from our State Forests “are proceeds from the sale of trust principal and remain in the corpus [of the Section 27 trust]. These proceeds remain in the trust and must be devoted to the conservation and maintenance of our public natural resources, consistent with the plain language of Section 27.” Id. at 936. (36). The Supreme Court established that “all proceeds from the sale of our public natural resources are part of the corpus of our environmental public trust and that the Commonwealth must manage the entire corpus according to its fiduciary obligations as trustee.” Id. at 939. (37). The constitutionality of acts and decisions challenged by PEDF “depends upon whether they result from the Commonwealth’s faithful exercise of its fiduciary duties vis a vis our public natural resources and any proceeds derived from the sale thereof. For example, the Governor’s ability to override decisions by the DCNR regarding leasing is contingent upon the extent to which he does so in a manner that is faithful to his trustee obligations, not his various other obligations.” Id. (emphasis in original).

10

(38). Section 27 trust funds must be appropriated to an “initiative or agency dedicated to effectuating Section 27 … [and] if proceeds are moved to the General Fund, an accounting is likely necessary to ensure that the funds are ultimately used in accordance with the trustee’s obligation to conserve and maintain our natural resources. The Commonwealth (including the Governor and the General Assembly) may not approach our public natural resources as a proprietor, and instead must at all times fulfill its role as a trustee.” Id. (39). “Because state parks and forests, including the oil and gas minerals therein, are part of the corpus of Pennsylvania’s environmental public trust, [the Supreme Court holds] that the Commonwealth, as trustee, must manage them according to the plain language of Section 27, which imposes fiduciary duties consistent with Pennsylvania trust law. We further find that the constitutional language controls how the Commonwealth may dispose of any proceeds generated from the sale of its public natural resources.” Id. at 916. B. CONTESTED ACTS AND ACTIONS 1. General Appropriations Act of 2017 (38). The General Appropriations Act of 2017 includes provisions related to the Oil and Gas Lease Fund. (39). Part XVI, Section 1601 of the General Appropriations Act of 2017 appropriates $61,291,000 from the Oil and Gas Lease Fund to DCNR for employee salaries and other general operating expenses. This section states: Part XVI Oil and Gas Lease Fund Appropriation Section 1601. Department of Conservation and Natural Resources. 11

The following amounts are appropriated to the Department of Conservation and Natural Resources: For General Operations. State Appropriation …… $50,000,000 For State Parks Operations. State Appropriation … $7,739,000 For State Forests Operations. State Appropriation …$3,552,000 (emphasis added). (40). The General Appropriations Act of 2017 was presented to the Governor on June 30, 2017 and the Governor allowed the act to become law on July 11, 2017 without vetoing the provisions related to the Oil and Gas Lease Fund. 2. 2017 Fiscal Code Amendments (41). The 2017 Fiscal Code Amendments and include provisions related to the Oil and Gas Lease Fund. a. Repeal of the 1955 Oil and Gas Lease Fund Act (42). Section 20 of the 2017 Fiscal Code Amendments repeals various statutory provisions to effectuate new provisions established in the 2017 Fiscal Code Amendments. (43). Subsections (1) and (2) of Sections 20 repeal the Oil and Gas Lease Fund Act to effectuate the addition of Sections 1601-E and 1601.2-E of the Fiscal Code. The Oil and Gas Lease Fund Act established the Oil and Gas Lease Fund in 1955 and gave the Secretary responsible for managing our State Forests and Parks control over these funds exclusively for projects to conserve the natural resources of our State Forests and Parks. The 2017 Fiscal Code Amendments establish a new Oil and Gas Lease Fund and give the General Assembly control over the new fund. (44). Sections 20(1) and (2) of the 2017 Fiscal Code Amendments state: Section 20. Repeals are as follows: 12

(1) The General Assembly declares that the repeals under paragraph (2) are necessary to effectuate the amendment or addition of sections 1601-E and 1601.2-E of the act. (2) The following provisions are repealed: (I)

The act of December 15, 1955 (P.L. 865, No. 256), entitled “An act requiring the rents and royalties from oil and gas leases of Commonwealth land to be placed in a special fund to be used for conservation, recreation, dams, and flood control; authorizing the Secretary of Forest and Waters to determine the need for and location of such projects and to acquire the necessary land.” This act is commonly referred to as the Oil and Gas Lease Fund Act.

(II)

58 Pa.C.S. §§ 2504 and 2505. Chapter 25 of Act 13 of 2012, transferring money from the Oil and Gas Lease Fund to Marcellus Legacy Fund then to the Environmental Stewardship Fund.

b. New Oil and Gas Lease Fund – Sections 1601-E and 1601.2-E of the Fiscal Code (45). Section 3.2 of the 2017 Fiscal Code Amendments amends the definition of “fund” in Section 1601-E of the Fiscal Code to remove the reference to the Oil and Gas Lease Fund established in 1955 by the Oil and Gas Lease Fund Act, which gave control of these public trust funds to DCNR. Section 1601-E establishes a new fund by the exact same name called the “The Oil and Gas Lease Fund”, which will give the outward appearance when information is presented on this fund during the budget process that nothing has changed. (46). Section 3.3 of the 2017 Fiscal Code Amendments adds a new Section 1601.2-E to the Fiscal Code establishing requirements for the new Oil and Gas Lease Fund. This new section of the Fiscal Code states: Section 3.3. The act is amended by adding a section to read: 13

Section 1601.2-E. Oil and Gas Lease Fund. (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 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 appropriations act or other appropriation act shall be distributed prior to allocations under subsection (e).

(e)

Annual transfers.—The following apply: (1) For the 2017-2018 fiscal years 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. (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.

c. State Park Spending Mandate – Section 1720-F of the Fiscal Code (47). Section 19 of the 2017 Fiscal Code Amendments adds Article XVII-F relating to implementation of the 2017-2018 budget. Subsection B includes budget implementation provisions for executive departments. 14

(48). Section 1720-F of the Fiscal Code provides specific direction to DCNR on how to spend certain funds appropriated to DCNR by the General Appropriations Act of 2017 for State Park operations. Section 1720-F of the Fiscal Code states: Section 1720-F. Department of Conservation and Natural Resources. The following shall apply to appropriations for the Department of Conservation and Natural Resources: (1) From money appropriated for State Park operations, no less than $2,250,000 shall be used for the operation and maintenance of the Washington Crossing Historical Park. (2) (Reserved). d. Special Fund Transfers – Section 1726-G of the Fiscal Code (49). Section 19 of the 2017 Fiscal Code Amendments adds Article XVII-G to the Fiscal Code relating to restrictions on 2017-2018 appropriations for fund and accounts. A new Section 1726-G of the Fiscal Code is added to this article, stating: Section 1726-G. Fund 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. VI.

ADDITIONAL DECLARATORY RELIEF REQUESTED

15

(50). PEDF requests the declaratory relief set forth below in addition to Declarations A-O set forth in its Second Amended Petition and Declarations P-Q set forth in its First Petition Addendum. The relevant facts and law cited above are incorporated by reference. R.

SECTION 1601 OF THE GENERAL APPROPRIATIONS ACT OF 2017 IS UNCONSTITUTIONAL 1. Using the Public Trust for Agency Operating Costs Violates Section 27 and the Trustees’ Duties Thereunder

(50). The General Appropriations Act of 2017 transfers over $61,000,000 from the Oil and Gas Lease Fund to pay DCNR operating expenses for the 2017-18 fiscal year. (51). Section 104 of the General Appropriations Act of 2017 describes how the state appropriations being made can be used by the named agencies of the executive, legislative and judicial departments of the Commonwealth. Subsection (p) directs that money appropriated from the Oil and Gas Lease Fund be used to pay salaries and other general operating expenses, stating as follows: Oil and Gas Lease Fund.—The following sums set forth in this act, or as much 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 and for payment of any other expenses, as provided by law or by this act, necessary for the proper conduct of the duties, functions and activities 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. 16

(52). The Oil and Gas Lease Fund was never intended as a general revenue source to replace taxes levied under general laws, as required by Article VIII, Section 1 of the Pennsylvania Constitution, to pay for general government services, including DCNR’s general operations. The Oil and Gas Lease Fund established in 1955 was intended to be used exclusively for conservation, recreation and flood control projects, and to conserve and maintain the public natural resources of our State Parks and Forests for the benefit of all the people, both now and for future generations, when the Pennsylvania Constitution was amended to add Section 27 in 1971. (53). On August 10, 2004, the Auditor General conducted an audit of the Oil and Gas Lease Fund (“2004 Audit”), and submitted the results of the audit to the Governor (then Governor Rendell). The Auditor General found that revenue from the Oil and Gas Lease Fund must by law be used exclusively for conservation, recreation, dams and flood control projects on Commonwealth lands. The 2004 Audit concluded that DCNR failed to exercise reasonable oversight of royalty payment to the Fund; and that DCNR had failed to ensure that the purchases made from the funds were for the specific purposes set forth in the Oil and Gas Lease Fund Act. 2004 Audit, page 3 (Exhibit Q). (54). The 2004 Audit found that expenditures for items such as salaries, clothing and other costs did not appear to be within the purposes set out in the Oil and Gas Lease Fund Act and were of questionable direct benefit to the physical enhancement and conservation of State Parks and State Forests, which were the intended beneficiaries of the revenues in the Oil and Gas Lease Fund, and therefore were inappropriate or unjustified. Id., page 2.

17

(55). In the 2004 Audit, the Auditor General cited an “informal guidance” letter from the Attorney General dated February 7, 1991 (“1991 Attorney General Letter”) in which the Attorney General advised the State Treasurer that the proper lawful use of the Oil and Gas Lease Fund is to carry out physical projects to enhance and conserve the Commonwealth’s natural resources. Id., pages 19-22; 1991 Attorney General Letter (Exhibit R). (56). The Attorney General specifically states in the 1991 Attorney General Letter that the Oil and Gas Lease Fund Act “expressly authorizes expenditures to acquire land needed for conservation, recreation, dam or flood control projects” and also for “the construction of facilities and other improvements to land necessary for such projects, and for the subsequent purchase of equipment, supplies and services necessary to maintain or enhance such projects.” 1991 Attorney General Letter, page 2, Exhibit R (emphasis added). The 1991 Letter continues: I believe it beyond the authority of the [Oil and Gas Lease Fund] Act to expend Fund receipts for a purpose not attributable to a specific project undertaken pursuant to the Act. It is not enough that expenditures for the Fund should relate to conservation, recreation, dam or flood control. If it were, then the Oil and Gas lease Fund would be little more than a general funding source for the broad range of statutory functions performed by DER[12]; and the Act, while imprecise in its expression of intent, certainly suggests otherwise. In my judgment, the General Assembly’s establishment of this special fund, and its focus on geographically-identifiable projects reflects an intent that revenues derived from the depletion of the 12

DER refers to the Department of Environmental Resources, which prior to the enactment of the Conservation and Natural Resources Act in 1995 carried out the regulatory functions now performed by the Department of Environmental Protection and the recreation and conservation functions now performed by DCNR. 18

Commonwealth’s natural resources should be dedicated directly to the physical enhancement or conservation of the Commonwealth’s natural resources. Viewed in this light, [the Oil and Gas Lease Fund Act] would not authorize the use of Fund receipts to support DER’s regulatory or enforcement activities, its general administrative or legal operations, or any other function not related directly to a project undertaken pursuant to the Act. (Emphasis added.) Id.; see also 2017 Affidavit of John Quigley (Exhibit HHH). (57). The right to have our public natural resources conserved and maintained for the people both living now and for future generations is established under Article I of the Pennsylvania Constitution as part of the inalienable rights of the people. (58). The ability of the Commonwealth government to infringe on the declared rights of the people in Article I Section 27 is explicitly limited by Article I, Section 25 of the Pennsylvania Constitution (“Section 25”), which states: “To guard against the transgressions of 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.” PEDF II, 161 A.3d at 930-931; Robinson Twp., 83 A.3d at 947. (59). Section 27 expressly creates a trust, and pursuant to Pennsylvania law in effect at the time of enactment, proceeds from the sale of trust assets are part of the corpus of the trust. PEDF II, 161 A.3d at 933 (citing McKeown’s Estate, 106 A, 189,190 (Pa. 1919)). (60). The General Assembly derives its power from Article III of the Pennsylvania Constitution. Its powers are expressly limited by the fundamental rights reserved to the people in Article I of our Constitution. Id. at 930-931.

19

(61). The clear purpose of requiring the transfer of over $61,000,000 from the Oil and Gas Lease Fund to pay for the operations of DCNR and DCNR’s Bureaus of Forestry and Parks is to avoid having to pay for those operations from the General Fund, and thus to be able to use those general funds for other government purposes. (62). Beginning in the 2009-10 fiscal year, the Respondents began reducing appropriations from the General Fund for DCNR’s annual operating costs and forcing DCNR to rely on the Oil and Gas Lease Fund for annual operations, as shown in the table below.13 With the appropriation of over $61,000,000 from the Oil and Gas Lease Fund to pay DCNR operating expenses for the 2017-18 fiscal year, the Respondents have now authorized disbursement of $609,913,000 for DCNR operating expenses since 2009. These disbursements are in addition to the $383,000,000 that has been transferred directly from the Oil and Gas Lease Fund to the General Fund for statewide general government operations and the $135,000,000 that have been or will be transferred to the Marcellus Legacy Fund. In total, over $1.1 billion generated from the lease and sale of public natural resources on our State Forests has been removed from the Section 27 public trust since 2009 for uses other than conserving and maintaining, and preventing and remedying the degradation, diminution and depletion of our State Forest and Park public natural resources by oil and gas extraction. Source

DCNR OPERATING FUNDS (Thousands) FY 07-08 FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13

13

See also PEDF I, 108 A.3d at 143-153 (Commonwealth Court factual summary of the use of the Oil and Gas Lease Fund to replace General Fund revenue); PEDF II, 161 A.3d at 919-925 (Supreme Court factual summary of the use of the Oil and Gas Lease Fund to replace General Fund revenue). 20

14

General Fund O&G Lease Fund15 Total Source General Fund14 O&G Lease Fund15 Total

DCNR OPERATING FUNDS (Thousands) 98,963 101,617 87,374 77,285 50,459 NA16 NA13 18,549 24,002 59,805 98,963 101,617 105,923 101,287 110,264 FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 24,614 23,878 56,805 100,929 94,402 100,813 132,299 85,770 59,561 61,29117 125,427 156,177 142,575 160,490 155,693

47,844 67,823 115,667

(63). The annual funding of general government operations is an Article III responsibility of the government and cannot infringe upon the fundamental rights of the people in Section 27. PEDF II, 161 A.3d at 930-931. (64). The Respondents do not have the right under Section 27 to direct the proceeds from oil and gas development on our State Forests toward any uses that benefit the people of the Commonwealth. “The phrase ‘for the benefit of all the people’ may not be read in isolation and does not confer upon the Commonwealth a right to spend proceeds on general budgetary items.” Id. at 934 (emphasis added). (65). “The Commonwealth’s fiduciary duty to ‘conserve and maintain’ our public natural resources is a duty owed to the beneficiaries of the public trust, namely

14

General Funds Appropriations for DCNR General Government Operations, State Park Operations, and State Forest Operations (Exhibit LLL). Governor’s Executive Budgets – Oil and Gas Lease Fund Actual Disbursements (available disbursements for FY 2016-17) (Exhibits MM, NN and KKK). 15

16

Disbursements from the Oil and Gas Lease Fund for FY 07-08 and FY 08-09 were $4,250,000 and $12,156,000, respectively. However, these funds were used for purposes authorized by the Oil and Gas Lease Fund Act and were not used for DCNR operating costs. 17

Section 1601 of the General Appropriations Act of 2017. 21

‘the people, including generations yet to come,’ as set forth in the second sentence of Section 27.” Id. (66). “The ‘people,” in turn, are those endowed with “a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment,’ as set forth in the first sentence of Section 27.” Id. (67). “Accordingly, [Section 27] mandates that the Commonwealth, as trustee, ‘conserve and maintain’ our public natural resources in furtherance of the people’s specific enumerated rights. Thus understood in context of the entire amendment, the phrase ‘for the benefit of all the people’ is unambiguous and clearly indicates that assets of the trust are to be used for the conservation and maintenance purposes. … Only within those parameters, clearly set forth in the text of Section 27, does the General Assembly, or any other Commonwealth entity, have the discretion to determine the public benefit to which the trust proceeds – generated from the sale of trust assets – are directed.” Id. at 934-35 (Emphasis added.) Conservation and maintenance purposes means that the proceeds have to be used directly for those purposes, “dedicated to the physical enhancement or conservation of the Commonwealth’s natural resources.” 1991 Attorney General Letter, page 2, Exhibit R. (68). Proceeds from the sale of oil and gas from Section 27’s public trust remain in the corpus of the trust. Id. at 935. (69). One of the principle duties of the trustee is to maintain the corpus of the trust. A trustee may use the trust assets only for the purposes authorized by the trust, or necessary for the preservation of the trust. Other uses are beyond the scope of the trustee’s discretion even when the trustee claims to be acting solely to advance other discrete interests of the beneficiaries. Id. at 934. 22

(70). Using the corpus of the public trust to pay for the operating costs of government agencies, including DCNR, rather than generating the revenue needed for such costs through appropriate taxes, such as a tax on the oil and gas industry in the form of a severance tax, violates the duty to maintain the corpus of the trust. It takes the trust assets from north central Pennsylvania away from the people who rely on those assets and puts the burden of the budget on them, violating the trustee’s fiduciary responsibilities. (71). Using the funds from the Section 27 public trust to pay for operating expenses clearly violates the purposes of the trust, to conserve and maintain the public natural resources. Extracting the oil and gas and taking the funds for purposes that do not conserve and maintain the natural resources degrades, diminishes, and depletes these public natural resources. These funds must be used to restore these resources for the benefit of the people who have been harmed, and to insure that these resources are available for the use of future generations. (72). When these funds are transferred from the public trust to operate a government agency, they are lost to the Section 27 public trust. The direct effect of that loss is that the funds are no longer available to conserve and maintain the public natural resources of the people who live and work and recreate in the northcentral Pennsylvania, the PA WILDS, and the rights of these people and the resources are directly diminished so that the government can avoid its duty to determine what services are necessary and what taxes need to be levied to raise sufficient revenue in the General Fund to pay for those services. The sale of our public natural resources to pay for general government services violates the Section 27 public trust. (73). The people, including future generations, are the common owners of the public natural resources held in the public trust under Section 27 and the 23

Commonwealth, as the trustee, must deal with the people “as a fiduciary, measuring its successes by the benefits it bestows upon all its citizens in their utilization of natural resources under law.” Id. (74). The Commonwealth, including the Governor, may not approach our public natural resources as a proprietor, and instead must at all times fulfill its role as a trustee. Id. at 939. Taking public natural resources of the Constitutional public trust, and using those resources for governmental purposes is done under the assumption that the Commonwealth has proprietary interest in the resources. (75). If the Commonwealth can use our public natural resources for general operating expenses, including salaries and routine daily expenses, even assuming it is argued that the employees’ salaries and expenses are related to “conserving and maintaining” public natural resources, then no constitutional protection of the actual public natural resources will exist. The Commonwealth can and will use the public natural resources to pay the operating costs of DCNR, as well as other agencies such as the Department of Environmental Protection (DEP), that might have obligations that could be viewed, under this interpretation, to be conserving and protecting our public natural resources, including both statewide and municipal entities. The very public natural resources that these agencies are charged with protecting would be depleted to pay for employee salaries and other operating costs. 2. Respondents Have Violated Their Fiduciary Duties (76). The Commonwealth’s duties as the trustee of the environmental trust were created by the people of Pennsylvania under Section 27. As trustee, the Commonwealth is a fiduciary obligated to comply with the terms of the trust and with the standards governing a fiduciary’s conduct. The explicit terms of the trust require the government to “conserve and maintain” the corpus of the trust. The plain 24

meaning of the terms conserve and maintain implicates a duty to prevent and remedy the degradation, diminution, or depletion of our public natural resources. As a fiduciary the Commonwealth has a duty to act toward the corpus of the trust – the public natural resources – with prudence, loyalty, and impartiality. Id. at 934 (citing Robinson Twp., 83 A. 3d at 956-57); see also 20 Pa.C.S. Chapter 77 (Trusts), Subchapter H (Duties and Powers of Trustee). (77). The Respondents, as trustee of the Section 27 public trust, must “administer the trust in good faith, in accordance with its provisions and purposes and the interests of the beneficiaries and in accordance with applicable law.” 20 Pa.C.S. § 7771. (78). PRUDENCE generally requires trustee to exercise ordinary skill, and caution in managing corpus of trust. Id. at 932-933. Under Pennsylvania law, a trustee must “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. Using the corpus of the trust to pay for the operation of the government agency depletes the corpus of the trust. A prudent trustee must use the corpus of the trust to remedy and restore the parts of the corpus of the trust that have been degraded and diminished from extracting and selling oil and gas on State Forests and Parks to ensure the trust assets are conserved and maintained. A prudent trustee would not use the trust assets for annual operating costs that diminish the corpus of the trust. (79). LOYALTY imposes an obligation to manage the corpus of the trust so as to accomplish the trust’s purposes for the benefits of the trust’s beneficiaries. It requires the trustee to administer trust solely in beneficiary's interest and not his own. Id.; 20 Pa.C.S. § 7772 (“A trustee shall administer the trust solely in the 25

interests of the beneficiaries.”). Using our public natural resources to pay for the operating costs of a state agency, rather than generating revenue through appropriate taxes (e.g., a severance tax on the oil and gas industry), is not loyalty to the trust or to the beneficiaries of the trust. Using public natural resources to pay for general government operation expenses benefits the trustee, the Respondents, by allowing them to avoid decisions as to necessary government services and the assessment of taxes to pay for them. (80). IMPARTIALITY requires that the trustee consider the rights of both the people living today and those in future generations. Id.; 20 Pa.C.S. § 7773 (“trustee shall act impartially … giving due regard to the beneficiaries’ respective interests in light of the purposes of the trust”). Using trust assets to operate the agency depletes the corpus of the trust and diminishes the use and enjoyment of our State Forests and Parks by both the current and future generations. Not using the corpus to remedy the degradation, and not retaining the money that is part of the corpus for future generations violates the duty of impartiality. (81). While a trustee is entitled to compensation that is reasonable under the circumstances for administering a trust, a trustee is not entitled to compensation payable from trust principal unless the trust instrument explicitly so provides. 20 Pa.C.S. § 7768. The people of Pennsylvania did not authorize the Commonwealth to receive compensation from the sale of their public natural resource trust assets when they amended their Constitution to add Section 27. To the contrary, the people directed the Commonwealth, as trust of the people’s public natural resources, to conserve and maintain those resources. The people of Pennsylvania had already authorized their government in Article III of their Constitution to raise revenue to pay for necessary government operating expenses, including managing their public 26

natural resources, by enacting legislation to levy taxes and authorizing other appropriate fees. (82). Respondents violated their duty to conserve and maintain the public natural resources by transferring Oil and Gas Lease Fund money from the corpus of the public trust to be used for purposes outside of the purposes of the trust. (83). WHEREFORE, the Petitioner respectfully requests the Commonwealth Court to: a.

FIND and DECLARE that appropriations from the Oil and Gas

Lease Fund in Section 1601 of the General Appropriations Act of 2017 to pay DCNR’s annual operating expenses for the 2017-18 fiscal year violates Article I Sections 25 of the Pennsylvania Constitution by violating Article I Section 27 and the peoples’ rights thereunder, failing to protect the corpus of the public trust, failing to protect the peoples’ rights to clean air, pure water and the preservation of natural scenic, historic and esthetic values of our State Forest. b.

FIND and DECLARE that the enactment of Section 1601 of the

General Appropriations Act of 2017 violates Sections 25 and 27 of the Pennsylvania Constitution by taking the common property of the people under the Environmental Trust and treating it as proprietary rather than fiduciary by using those resources for Article III purposes. c.

FIND and DECLARE that Section 1601 of the General

Appropriations Act of 2017 violates Section 27 by taking public trust assets to pay annual employee salaries and expenses and is not within the purposes of the public trust.

27

d.

FIND and DECLARE that Section 1601 of the General

Appropriations Act of 2017 violates Section 27 by, inter alia, causing the degradation, diminishment and depletion of our State Forest and Parks public natural resources. e.

FIND and DECLARE that Respondents violated Section 27,

and their duties as trustees thereunder, by enacting Section 1601 of the General Appropriations Act of 2017 to use the Oil and Gas Lease Fund to pay DCNR annual operating expenses rather than using this fund to conserve and maintain the public natural resources of our State Forests and Parks by funding projects to prevent and remedy the degradation of these resources from oil and gas extraction. f.

FIND and DECLARE that Respondents have violated Section

27, and their duties as trustees thereunder, by not taking the prudent, loyal and impartial actions necessary to protect the corpus of the public trust when deciding to use public trust assets to pay for agency annual operating expenditures. S.

USING THE SECTION 27 PUBLIC TRUST FOR AGENCY OPERATING COST CREATES A DIRECT CONFLICT OF INTEREST

(84). All prior paragraphs are hereby incorporated by reference. (85). Using the conversion and sale of our public natural resources for the salaries and expenses of the people who are the trustees of those resources creates a direct conflict of interest. Trustees faced with a choice between conserving the public resources of the people and paying themselves cannot fulfill their fiduciary duties of prudence, loyalty and impartiality. The proceeds of the sale of public natural resources that are trust assets must be used directly to conserve and maintain the public natural resources to avoid this conflict of interest. 28

(86). WHEREFORE, the Petitioner respectfully requests the Commonwealth Court to FIND AND DECLARE that using public trust assets for agency operating expenses violations Section 27 by creating a direct conflict of interest. T.

SECTION 27 PUBLIC TRUST REQUIRES A THOROUGH EVALUATION OF THE PUBLIC NATURAL RESOURCES NEEDS PRIOR TO USING TRUST ASSETS

(87). All prior paragraphs are hereby incorporated by reference. (88). Nothing in the General Appropriations Act of 2017 or the 2017 Fiscal Code Amendments indicates that the Commonwealth evaluated its duties as trustee of the Section 27 public trust prior to appropriating public trust assets to pay annual agency operating expenses. (89). The instructions on use of the new Oil and Gas Lease Fund in Section 1601.2-E(c) of the Fiscal Code directs that the funds be used as directed through annual appropriations or through the annual transfers to the Marcellus Legacy Fund authorized by subsection (e). Subsection (c) further provides that the “[i]n making an appropriation from the fund, the General Assembly shall consider the Commonwealth’s trustee duties under Section 27.” (90). The General Appropriations Act of 2017, which appropriates over $61,000,000 from the Oil and Gas Lease Fund to pay DCNR annual operating expenses for the 2017-18 fiscal year, was enacted more than three months before Section 1601.2-E(c) of the Fiscal Code was enacted. Nothing in the General Appropriations Act of 2017 indicates that the Commonwealth appropriately evaluated, let alone “considered”, its trustee duties under Section 27 prior to making the appropriation to DCNR.

29

(91). The only instructions for use of the money appropriated to DCNR from the Oil and Gas Lease Fund are contained in Section 104(p) of the General Appropriations Act of 2017, which directs that the appropriated funds be used “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 and for payment of any other expenses, as provided by law or by this act, necessary for the proper conduct of the duties, functions and activities … for the fiscal year beginning on July 1, 2017, and for the payment of bills incurred and remaining unpaid as the close of the fiscal year ending June 30, 2017.” Nothing in this language suggests that the Commonwealth evaluated the effect of this appropriation on the public natural resources of our State Forests and Parks. To the contrary, these instructions direct the paying of salaries and operating expenses from the Oil and Gas Lease Fund without any suggestion that doing so may have implications for the Commonwealth’s trustee duties under Section 27. (92). As trustees of our public natural resources, both the General Assembly and the Governor have the duty to understand and evaluate the current and future needs of our State Forest and Park public natural resources and both current and future uses of those resources by the beneficiaries prior to making any decisions that might or will affect those resources. This is particularly relevant in determining how to use the funds from the extraction and sale of our oil and gas resources from our State Forest and Parks. (93). Before making a decision or taking an action that might or will negatively impact the State Forests or Parks, the trustee making the decision has the duty under the trust to understand what those impacts are or might be, both to the public natural resources and to the peoples’ uses and benefits to those resources, and to the peoples’ rights established in the amendment. 30

(94). The Supreme Court, in its plurality opinion in Robinson Twp., clearly articulating the need for an evaluation, stating: “Although the first clause of Section 27 does not impose express 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, the right articulated is neither meaningless nor merely aspirational. The corollary of the people’s Section 27 reservation of right to an environment of quality is an obligation on the government’s behalf to refrain from unduly infringing upon or violating the right, including by legislative enactment or executive action. Clause one of Section 27 requires each branch of government to consider in advance of proceeding the environmental effect of any proposed action on the constitutionally protected features. The failure to obtain information regarding environmental effects does not excuse the constitutional obligation because the obligation exists a priori to any statute purporting to create a cause of action.” (95). Neither the General Appropriations Act of 2017 nor the 2017 Fiscal Code Amendments provide evidence that any evaluation was made to determine if and how much impact taking $61,000,000 out of the Oil and Gas Lease Fund would have on the degradation of our State Forests and Parks and on the impacts to the PA WILDS, and the peoples’ rights under Article I Section 27. (96). Neither the General Appropriations Act of 2017 nor the 2017 Fiscal Code Amendments provide evidence that any evaluation was made of the impacts that the annual transfers from the Oil and Gas Lease Fund to the Marcellus Legacy Fund will have on the rights of the beneficiaries to the Section 27 public trust and their use and enjoyment of our State Forests and Parks. (97). WHEREFORE, the Petitioner respectfully requests the Commonwealth Court to FIND AND DECLARE that Respondents violated Section 27 and their fiduciary duties thereunder by failing to thoroughly evaluate the impact or potential impact on the public natural resources or the rights of the beneficiaries prior enacting 31

Section 1601of the General Appropriations Act of 2017 or Section 1601 of the Fiscal Code, which authorize using Section 27 public trust assets to pay agency annual operating costs. V.

SECTION 20(2) OF THE 2017 FISCAL CODE AMENDMENTS VIOLATES SECTION 27 AND THE TRUSTEES’ DUTIES THEREUNDER 1. Oil and Gas Lease Fund Act Provided Important Safeguards

(98). All prior paragraphs are hereby incorporated by reference. (99). Since 1947, DCNR and its predecessors have had the authority to lease State Forest and Park lands for the extraction and sale of the oil and natural gas. PEDF II, 161 A.3d at 919. (100). In 1955, the Oil and Gas Lease Fund Act established specific controls over the use of the funds from leasing State Forest and Park lands for the sale of oil and natural gas. Specifically, the Oil and Gas Lease Fund Act required that all the money from the lease and sale of our oil and natural gas be deposited into a special fund known as the Oil and Gas Lease Fund. 71 P.S. § 1331. It also required that the funds “be exclusively used for conservation, recreation, dams, or flood control…”, id.; authorized only the Secretary of Department of Forests and Waters and its predecessor (now DCNR) to “determine the need for and location of such projects and to acquire the necessary land”, 71 P.S. § 1332; and provided that all the monies paid into the Fund “are specifically appropriated to [DCNR] to carry out the purposes of this act.” 71 P.S. § 1333.

32

(101). When PEDF first brought this action in Commonwealth, 660,000 acres of State Forest were open to leasing for oil and gas in the Marcellus Shale region of Northcentral Pennsylvania.18 PEDF II, 161 A.3d at 921. (102). When DCNR signs a lease for sale of oil and gas, the lease authorizes the conversion of the State Forest to industrial development for the purpose of extracting the natural gas or oil. The lease allows haul roads, well pads, pipelines, compression stations, storage ponds, and many other structures to be built on the leased land to allow the lease holder to extract, process and transport the gas and oil from the ground to distribute the product to its destination. Affidavit of John Quigley (Exhibit HHH). (103). This development directly impacts the corpus of the trust, and the beneficiary’s uses thereto. Former Secretary Quigley has accurately described those impacts in his affidavit stating that oil and gas development “significantly affect habitats, recreation, aesthetics, historical and cultural resources, and watersheds in affected areas and at landscape and ecosystem levels. These cumulative impacts pose the greatest challenge to the conservation of Pennsylvania’s public lands.” Id. (104). The General Assembly recognized its limitations in meeting its fiduciary duties under Section 27 in 1995 when it passed the Conservation and Natural Resources Act, which authorized DCNR to conserve and maintain our State

18

DCNR currently estimates that approximately 617,000 acres of State Forest land are exposed to natural gas development. DCNR Natural Gas Development and State Forests, Shale Gas Leasing Statistical Summary, May 2017 (Exhibit JJJ). Note that these lands are also surrounded by private land and State Game lands subject to gas development, and that most of our State Parks that lie above shale gas formations are subject to gas development because the subsurface rights are privately owned. 33

Forests and Parks, and reauthorized both the leasing of State Forest land for gas extraction and reauthorized the Oil and Gas Lease Fund Act under DCNR’s control. (105). The statutory protections established in the Conservation and Natural Resources Act allowed DCNR to continue to lease State Forest land for extraction of oil and gas and provided DCNR with the revenue from the leasing to mitigate and improve our public natural resources as mandated by Section 27. (106). Section 20(2) of the 2017 Fiscal Code Amendments repeals the Oil and Gas Lease Fund Act. (107). Petitioner believes and avers that Section 20(2) violates Section 27 because repealing the Oil and Gas Lease Fund Act causes immediate and long term impacts to our public natural resources, and to the beneficiaries’ rights to those resources. (108). Section 20(2) depletes the corpus of the public trust, and the beneficiaries uses of the public natural resources of our State Forest in three ways: a.

The development of oil and gas in the State Forest has been and will

continue to cause degradation and diminution to the State Forest, depriving the beneficiaries of the benefits of the natural forest, including the right to clean air, pure water, and the preservation of the natural, scenic, historic and aesthetic values of the State Forest. (See summary of PEDF members affidavits below, as well as the affidavits and summaries thereof in Petitioner’s Second Amended Petition. b.

The loss of the oil and gas natural resources, which are non-renewable,

from the leases and sale of the oil and gas deprives the present and future beneficiaries of those resources.

34

c.

The loss of the funds from the conversion of the forest and the oil and

gas, which are all public natural resources, to restore the degradation of the forest and to provide money for the continuing benefit of natural forest. 2. The Degradation of the State Forest from the Exploration and Extraction of Oil and Gas (109). The money in the Oil and Gas Lease Fund is generated primarily from shale gas extraction on State Forest tracts in the PA WILDS, a 12-county area of northcentral Pennsylvania that is home to the greatest concentration of State Forest and Park land in the Commonwealth (2 million acres of public lands, which is comparable to Yellowstone National Park). DCNR 2014 Shale Gas Monitoring Report, Table 16.1, page 208 (Exhibit GGG); DCNR Pennsylvania Wilds Conservation Landscape Fact Sheet (Exhibit TTT).19 (110). The State Forest and Park lands in the Pennsylvania Wilds impacted by shale gas extraction are some of the most valuable public natural resources protected by Section 27 in Pennsylvania, and include the cleanest water, purest air, and some of the highest natural, scenic, historic and esthetic values of Pennsylvania’s environment. (111). The findings and declarations of the General Assembly in Section 101(a) of the Conservation and Natural Resources Act recognize the value of the public natural resources in our State Parks and State Forests and their critical importance “to the continued success of our tourism and recreation industry, the second largest industry in the State.” 71 P.S. § 1340.101(a).

19

See DNCR Pennsylvania Wilds webpage at http://www.dcnr.pa.gov/Communities/ConservationLandscapes/PennsylvaniaWild s/Pages/default.aspx. 35

(112). The State Forest is being degraded and will continue to be degraded by the development of natural gas. (113). “Construction and operation of approximately 1100 wells located in the concentrated area of State forest lands in the north central Pennsylvania known as the Pennsylvania Wilds, along with the construction and expansion of access roads, pipelines, compression stations, water impoundments, wastewater storage tanks and other gas production facilities, will significantly increase the openings in large blocks of currently contiguous forest canopies resulting in fragmentation and stress from invasive species and disease – the cumulative effect of which could fundamentally alter these forest ecosystems.” Governor’s Marcellus Shale Advisory Commission Report, page 76 (Exhibit II). (114). Based on DCNR’s latest statistics, the Marcellus and Utica shale formations underlie approximately 1.5 million acres of the 2.2 million acres of State Forest in Pennsylvania. Currently, 617,092 acres of the 1.5 million of State Forest underlain by these shale formations is subject to development. DCNR Natural Gas Development and State Forests, Shale Gas Leasing Statistical Summary, May 2017 (Exhibit JJJ).20 (115). Approximately 50% of our State Parks are located in areas underlain by the Marcellus shale formation; and an estimated 80% of State Park land is subject

20

The 2014 DCNR Shale Gas Monitoring Report (Exhibit GGG) indicates that 673,000 acres of State Forest are subject to development. This total comprises 333,722 acres subject to development and gas storage leases issued by DCNR for which rents and royalties are deposited into the Oil and Gas Lease Fund, and an additional 283,370 acres of State Forest subject to development because the subsurface oil and gas rights have been severed from the surface rights and are owned by private parties. 36

to oil and gas development because the subsurface oil and gas rights have been severed from the surface rights and are owned by private parties. Exhibit YY, ¶¶ 99, 103; N.T. at 308, 311.21 (116). In April 2014, DCNR published its initial Shale Gas Monitoring Report (Exhibit GGG). In the Executive Summary, DCNR makes the findings set forth in ¶¶ 117 – 131 below. (117). Given the host of potential impacts of shale gas development to our State Forest system and its associated values, the bureau has established a shale gas monitoring program. The program was initiated in late 2010, and was implemented in 2011. Id. (118). To help guide the monitoring program the DCNR Bureau of Forestry devised a suite of “monitoring values” to help focus of the values that relate to the sustainability of the State Forest system. Id. (119). Natural gas exploration and development can cause short-term or longterm conversion of existing natural habitats to gas infrastructure. Id. (120). As of 2012, approximately 1,486 acres of State Forest have been converted to facilitate gas development; 161 miles of forest road have been improved [expanded]; 191 infrastructure pads have been constructed; and 104 miles of pipelines constructed or widened. Id.

“N.T.” refers to the Notes of Testimony from the hearing conducted by the Commonwealth Court in this matter on May 28, June 2and June 3, 2014. The hearing transcripts have been filed with the Court. 21

37

(121). Forest Health: Impacts to the forest surrounding disturbance can only be discovered through long term forest health monitoring. Id. (122). Invasive Species: Eleven non-native invasive species were present at 14 of 18 representative pads across the core gas forest districts. However, impacts [from invasive species] can be discovered only through long-term monitoring. Id. (123). Water: The majority of streams in the Shale gas region, 87%, are classified as high quality or exceptional value streams, many identified as having wild trout. At this early stage [of water monitoring] the data collected are primarily for establishing base line conditions. Id. (124). Soil: Shale-gas development often involves earth disturbance activities that require careful planning and oversight to minimize negative effects on soil quality. Future research and monitoring will focus on well pad construction on soil physical and chemical properties, as well as best management practices, on hydrology and sediment loads. Id. (125). Air: Shale gas development involves many stages that provide different avenues for the release of air pollutants. The bureau is not conducting any air quality monitoring, but is relying on Department of Environmental Protection to monitor air quality. Id. (126). Incidents: From 2008 to 2012, the bureau recorded 324 incidents, resulting in 302 notices of violations. Id. (127). Fauna: The bureau is in the early stages of developing wildlife monitoring protocols. The bureau will focus on monitoring changes in habitat conditions in relation to shale-gas development. Id.

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(128). Recreation: New infrastructure can affect wild character and view sheds. Noise-generating activities may effect visitor experience. Roads, well pads, pipelines and other shale-gas infrastructure also can effect snowmobile and hiking trails. Id. (129). In the Pennsylvania Wilds, almost 50% of the users in the area surveyed stated that their recreational experiences were impacted by the gas extraction. Id. (130). A total of 568 shale gas wells had been drilled on this acreage as of the end of 2013. DCNR estimates that 3,000 additional shale gas wells may be drilled on State Forest lands to fully develop the 386,630 acres currently subject to DCNR leases. Id. (131). As of May 2017, DCNR has approved 239 well pads and 1,026 shale gas wells for construction on State Forest land. Each well pad can host 6 to 24 wells. Approximately 646 wells have been drilled, with approximately 623 wells completed and producing natural gas. DCNR has issued development and gas storage leases on 333,722 acres of State Forest land. In addition, 283,370 acres of State Forest land are subject to natural gas development because the subsurface rights are privately owned. In total, approximately 617,092 acres of State Forest are subject to natural gas development in the Marcellus shale region. DCNR Natural Gas Development and State Forests, Shale Gas Leasing Statistical Summary, May 2017 (Exhibit SSS). (132). The impacts noted in the 2014 DCNR Shale Gas Monitoring Report will continue to occur throughout the development of the gas extraction. At the time

39

of the Report, only 20% of the development on State Forest leased land had been developed. 22 3. DCNR Has the Mission to Sustain Our Natural Resources (133). DCNR was created “to serve as a cabinet-level advocate for our State parks, forests, rivers, trails, greenways and community recreation and heritage conservation

programs

Commonwealth’s

to

recreation,

provide more focused management natural

and

river

environments.”

of the 71

P.S.

§ 1340.101(b)(1) (emphasis added). (134). The Conservation and Natural Resources Act sets forth the DCNR’s primary mission as follows: “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.” Id. (135). DCNR is mandated to sustain Pennsylvania’s State Forest for future generations. To do so, DCNR has developed the scientific expertise to both manage and sustain our forests through ecosystem management and developed a strategic plan in 1995 documenting that approach, entitled Penn’s Woods-Sustaining Pennsylvania’s Forest (Exhibit P).

22

The DCNR Shale Gas Monitoring Report does not monitor the economic impacts to Pennsylvania Wilds and the Pine Creek Rails Trails areas. 40

(136). A trustee who has special skills or expertise relevant to a trust or who is named trustee in reliance upon the trustee’s representation that the trustee has special skills and expertise relevant to a trust must use those special skills or expertise in the administration of the trust. 20 Pa.C.S. § 7776. DCNR has the special skills and expertise necessary to administer the State Forest and Park public natural resource assets in the Section 27 public trust and has been designated as the trustee of these assets by the Commonwealth. (137). Without DCNR’s control over the use of the funds generated from the leasing and sale of oil and gas on our State Forest, DCNR will be unable to provide more focused management of our natural resources, or to sustain and improve our parks and forests, or to prevent and remedy the degradation, diminution or depletion of public natural resources on the more than 600,000 acres of State Forest Land subject to industrial development to extract natural gas and oil over the next 50+ years. As a result, DCNR will not be able to fulfill its fiduciary duties to administer the Section 27 trust in accordance with its special skills and expertise as required by law. (138). DCNR relied on the funds in the Oil and Gas Fund to deal with the impacts from the development of oil and gas extraction when it leased State Forest land for oil and gas extraction. (139). Secretary Michael DiBerardinis, in a memorandum to then Governor Rendell dated March 27, 2009 (Exhibit CC), stated it clearly: “diverting the Oil and Gas Lease Fund’s lease sale and royalty proceeds toward general use and away from their legislated purpose set a dangerous purpose. This reliable funding stream – intended to offset the impacts of resource extraction – has endured through 50 years and multiple administrations, providing stable investments to conservation and 41

environmental protection. The fund has supported the acquisition, infrastructure investments, and maintenance of our state parks and forest that make them what we enjoy today” (emphasis added). (140). Secretary DiBerardinis sent this memorandum to the Governor because he felt that DCNR’s management prerogative, the ability to manage the broad interests of the State Forests, the ability to sustainably manage the resources, was slipping away. DCNR’s historic mission to balance broad interests, including economic, environmental, and social interests, while insuring the uses and health of the forest for all Pennsylvanians over time, was in jeopardy. Exhibit VV; N.T. at 230-232.23 (141). Former Deputy Secretary for Parks and Forests, Dr. James Grace, testified that “to lose the funds from the leases and royalties means DCNR cannot effectively mitigate whatever happens. It does not allow DCNR to have the control to manage the forest effectively.” Exhibit UU; N.T. at 61. (142). Former DCNR Secretary John Quigley testified that: “Under the Conservation and Natural Resources Act, DCNR has the ability to lease State Forest land if it determines that it is in the best interests of the Commonwealth. We had determined that it was not in the best interests… But we were ordered to do so for the two additional leases. That took away our management control. Secondly, it took away the resources that we needed to mitigate the impacts of that leasing activity…

The reference in Secretary Diberardinis’ letter to Governor Rendell regarding DCNR’s historic mission to sustainably manage the health of the forest is a direct reference to DCNR’s mission to use ecosystem management to insure the biodiversity of the forest to achieve sustainability. His statement regarding DCNR’s ability to balance the various broad interests, including economic, environmental, social interests, is a direct reference to the PA WILDS initiative he began. 23

42

These decisions created a very slippery slope. It created a situation where the State Forest was being used as a cash cow. And that is, in my judgment, an existential threat to the resource.” Exhibit WW; N.T. at 155. (143). Our State Forests and the oil and gas therein are public natural resources. They are specifically protected as part of a public trust by Section 27. (144). The trust provisions of Section 27 require the Commonwealth to conserve and maintain our public natural resources for the benefit of the people both living now and for future generations. (145). The Respondents, from 2008 through 2010 required DCNR to lease over 165,000 acres of our State Forest for money for the General Fund. (146). The money from the conversion of our State Forest and sale of our oil and gas mineral rights are part of the corpus of the public trust created. PEDF II, 161 A.3d at 933. (147). The leasing of our State Forest and sale of our oil and gas mineral rights have depleted the corpus of the trust by diminishing and depleting the State Forest lands subject to the oil and gas extraction, and by the sale of the minerals, which are non-renewable resources. (148). The public natural resources that have been depleted are primarily in the northcentral part of Pennsylvania, known as the PA WILDS, which is an area with the highest concentration of our most pristine State Forest and Park lands. The purpose and vision of the Wilds is to revitalize the rural communities of the 12 counties that are a part of northcentral Pennsylvania. DCNR Web. Site, Conservation Landscapes.

43

(149). The revenue from the conversion of the public lands and the sale of the public natural gas and oil belongs to the people as beneficiaries of the Public Trust. The Commonwealth is not the proprietor of those lands and resources, it is the trustee. Id. at 932. (150). As trustee, the Commonwealth is a fiduciary obligated to comply with the terms of the trust and with standards governing a fiduciary’s conduct. The explicit terms of the trust require the government to “conserve and maintain” the corpus of the trust. Id. (151). “The Commonwealth, as trustee, must manage them according to the plain language of Section 27, which imposes trustee duties consistent with Pennsylvania’s trust law.” Id. at 916. Taking the money from DCNR takes away DCNR’s management control. (152). The Commonwealth’s duties as the trustee of the environmental trust created by the people of Pennsylvania are as follows: As trustee the Commonwealth is a fiduciary obligated to comply with the terms of the trust and with the standards governing a fiduciary’s conduct. The explicit terms of the trust require the government to “conserve and maintain” the corpus of the trust. The 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. As a fiduciary the Commonwealth has a duty to act toward the corpus of the trust-the public natural resources-with prudence, loyalty, and impartiality. Id. at 932 (citing Robinson Twp., 83 A. 3d at 956-57.) (153). “The trustee may use the assets of the trust only for purposes authorized by the trust or necessary for the preservation of the trust…”. Id. at 933. Respondents do not justify the reason for taking the money from the public trust from DCNR 44

(154). “Section 27 expressly creates a trust, and pursuant to Pennsylvania law in effect at the time of enactment, proceeds from the sale of trust assets are part of the corpus of the trust. … The unavoidable result is that proceeds from the sale of oil and gas from Section 27’s public trust remain in the corpus of trust.” Id. Taking the money from the trust takes the money away from the agency responsible to conserve and maintain the public natural resources. (155). The money from the conversion of the public natural resources must be used to conserve and maintain, prevent and remedy the degradation from the conversion of those natural resources. (156). The trustee‘s duty is also to conserve and maintain the peoples’ benefits to our public natural resources. Those benefits must be related to the nature of the public resource that are depleted or diminished, our State Parks and Forests, and the PA WILDS. 4. Repeal No Different Than Prior Unconstitutional Fiscal Code Provisions (157). The repeal of the Oil and Gas Lease Fund Act and replacement with new provisions that give the General Assembly control over this fund are no different than the prior attempt to shift control of the Oil and Gas Lease Fund from DCNR under Section 1602-E and 1603-E of Fiscal Code (72 P.S. §§ 1602-E and 1603-E, enacted as part of omnibus amendments to the Fiscal Code on October 9, 2009), which the Supreme Court declared facially unconstitutional under Section 27. Id. at 938. (158). The Supreme Court determined that Sections 1602-E and 1603-E of the Fiscal Code violate the public trust by using the royalties paid for the sale of natural gas for purposes outside of the trust without any consideration of the purposes of the 45

public trust or the exercise of reasonable care in managing these public trust funds. Id. (159). In finding Sections 1602-E and 1603-E unconstitutional, the Supreme Court states that “[Sections 1602-E and 1603-E] 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 corpus by, inter alia, preventing and remedying the degradation, diminution and depletion of our public natural resources.” Id. (160). Having found the prior Fiscal Code provisions giving the General Assembly control over the Oil and Gas Lease Fund unconstitutional, the Supreme Court declared that the appropriations scheme established by the Oil and Gas Lease Fund Act and the Conservation and Natural Resources Act “again controls, with all the monies in the [Oil and Gas] Lease Fund specifically appropriated to DCNR.” Id. at 939. (161). By repealing the Oil and Gas Lease Fund Act the Commonwealth has again diverted public trust funds from the control of DCNR, leaving DCNR without the ability to fulfill its Section 27 trustee duties; and without establishing any alternative method for the Commonwealth to faithfully exercise its constitutional and fiduciary duties to preserve and maintain the public natural resources of our state forests and parks. 5. Need to Evaluate Before Enactment That Might or Will Impact the Oil and Gas Lease Fund (162). Before making a decision or taking an action that might or will negatively impact the State Forests or Parks, the trustee making the decision has the duty under the trust to understand what those impacts are or might be, both to the 46

public natural resources and to the peoples’ uses and benefits to those resources, and to the peoples’ rights established in the amendment. (163). The Supreme Court, in its plurality opinion in Robinson Twp., clearly articulates the need for an evaluation, stating that Section 27 “requires each branch of government to consider in advance of proceeding the environmental effect of any proposed action on the constitutionally protected features.” 83 A.3d at 951952 (emphasis added). (164). Under Pennsylvania law, a trustee must “take reasonable steps to take control of and protect the trust property.” 20 Pa.C.S. § 7779. The basic step of evaluating the impact of an action prior to taking it is an essential reasonable step that a trustee must take to protect trust property. (165). Section 20(2) of the 2017 Fiscal Code Amendments requires no evaluation or analysis of the immediate or long term impacts of the decision to repeal the Oil and Gas Lease Fund Act on the public natural resources of our State Forest; on the rights of the people, both as the proprietary owners of the natural resources and as the beneficiaries of the public trust; on the duties of the trustees to conserve and maintain both the corpus of the public trust and the rights of the people; on the trustees’ fiduciary duties to the trust and to the beneficiaries; or on the need for projects on our State Parks and State Forests to prevent and remedy the degradation, diminution and depletion of public natural resources. (166). The failure to evaluate any of the above impacts is a violation of Section 27, which requires the Commonwealth from unduly infringing on the rights of the people, and is a violation of the duties of the trustees. 6. Trustee Fiduciary Duty of Prudence, Loyalty and Impartiality 47

(167). The Commonwealth, as a trustee, has a fiduciary duty to act toward the corpus of the trust -- the public natural resources -- with prudence, loyalty, and impartiality. PEDF, 161 A.3d at 952 (citing Robinson Twp., 83 A.3d at 956-957); 20 Pa.C.S. §§ 7772-7774. The Commonwealth, as trustee, also must “administer the trust in good faith, in accordance with its provisions and purposes and the interests of the beneficiaries and in accordance with applicable law.” 20 Pa.C.S. § 7771. (168). The Respondents’ fiduciary duties as trustee of the public trust under Section 27 include the obligation to be prudent, which requires the trustee to consider the purposes, provisions and circumstances of the trust and exercise such care, skill and caution as a person of ordinary prudence would exercise in dealing with his or her own property. Id. at 932; 20 Pa.C.S. § 7774. A prudent person, in dealing with the protection of his own property, would not take away the protections of the Oil and Gas Lease Fund Act without insuring that the protections that Act provided were replaced. (169). The Respondents, as trustees, also have the duty of loyalty, which means they must administer the trust “so as to accomplish the trust’s purposes for the benefit of the trust’s beneficiaries.” Id. They must administer the trust solely in the interests of the beneficiaries. 20 Pa.C.S. § 7772(a). The Respondent’s duties as fiduciary also mandate impartiality, which requires the trustee “to manage the trust so as to give all the beneficiaries due regard for the respective interests.” Id. at 933; 20 Pa.C.S. § 7773. (170). The Respondents breached their fiduciary duty of impartiality by failing to evaluate that impact of the repeal of the Oil and Gas Lease Fund Act on the interest of both present and future beneficiaries of the State Forests, and acting

48

solely in their own interest to find sources of funds to fill the revenue gap for the pending fiscal year. 7. Respondents Breached Their Fiduciary Duty Of Prudence (171). A prudent person would consider and assess potential impacts of repealing the Oil and Gas Lease Fund on the beneficiaries’ rights prior to making the decision. (172). The Respondents breached their fiduciary duty of prudence by failing to evaluate these impacts prior to repealing the Oil and Gas Lease Fund Act. (173). Respondents breached their duty of loyalty by not evaluating the interests of the beneficiaries of the State Forest prior to repealing the Oil and Gas Lease Fund Act. (174). The Respondents breached their fiduciary duty of impartiality by failing to evaluate that impact of the repeal of the Oil and Gas Lease Fund Act on the interest of both present and future beneficiaries of the State Forests, and acting solely in their own interest to find sources of funds to fill the revenue gap for the pending fiscal year. 8. DCNR Needs the Oil and Gas Lease Fund to Remedy Harm (175). Justice Baer, in his concurring and dissenting opinion in PEDF II, expresses concern that “[d]espite a lack of support in the language of Section 27, hundreds of millions of dollars generated by the recent Marcellus Shale exploration on state land…will be cordoned off from critical areas of the Commonwealth’s budget, including education, infrastructure, and other public works, without consideration of whether such funding is necessary to protect Pennsylvania’s public resources, 161 A.3d at 941, 49

(176). In a memorandum from John Quigley, former Secretary of DCNR, to then Governor Rendell, Secretary Quigley specifically laid out the need for the funds from the oil and gas extraction. They were and are still needed to purchase mineral rights that are privately owned underneath our State Parks and Forests, to buy up further lands to buffer and to mitigate the impacts to our public lands from gas extraction, to deal with the impacts of the gas extraction for the next 50 years or more until the production of oil and gas is no longer viable and the leases are terminated, to deal with legacy issues from previous oil and gas and coal extraction on our lands (plugging abandoned wells, restoring lands harmed by coal extraction, restoring the diversity of our State Forests, repairing and replacing dams (many of which are classified as high hazard) and other infrastructure. Affidavits of John Quigley (Exhibit HHH). (177). Petitioner’s Second Amended Petition has provided details from documents identifying the needs for the funding that has been generated to protect our State Parks and State Forests. (178). DCNR needs funds to prevent and remedy the degradation, diminution and depletion of public natural resources on our State Parks and State Forests from oil and gas extraction, as well as other mining. (179). DCNR needs to acquire lands not impacted by gas extraction to replace the public natural resources converted to industrial use, including the loss of hiking trails; the loss of nesting, breeding, spawning and migratory wildlife habitat; the loss of hunting areas; and the lose off wild and scenic areas that are or will be impacted by the gas extraction operations. Such purchases are the only way to mitigate the loss of these Public Trust lands and the people’s constitutional rights to them, to

50

buffer the impact of the gas extraction process, and to provide sufficient replacement of wildlife habitat affected by the gas extraction process. (180). Without the control of the Oil and Gas Lease Fund, DCNR cannot protect the integrity of State Parks and Forests that have been impacted or are threatened by gas development because the oil and gas subsurface rights are privately owned. The purchase of these subsurface rights would allow DCNR to control development and ensure the public natural resources of these State Parks and Forest lands, which are assets of the Section 27 public trust, are properly conserved and maintained. (181). Without control of the Oil and Gas Lease Fund, DCNR cannot have sufficient funds to comprehensively monitor and document the cumulative impacts, both positive and negative, of natural gas development on the diverse trees and plants of the forests, on wildlife and the habitat necessary to support diverse and rare species, on water availability and quality, on soil fertility, and on recreational resources. Known impacts include fragmentation of our core forest areas, increased invasive species, loss of wildlife food and cover, and erosion and sedimentation that reduces the quality of our streams, many of which are of exceptional value Governor’s Marcellus Shale Advisory Commission Report at 109-112 (Exhibit E). (182). In April 2014, DCNR published its initial Shale Gas Monitoring Report (Exhibit GGG). DCNR has just begun to assess the cumulative impacts of shale gas development on our State Forests (see ¶¶ 117 – 131 above) and needs funds to continue this work. (183). Without the control of the Oil and Gas Lease Fund, DCNR cannot sufficiently study, evaluate and implement sufficient methods to reduce the economic and environmental impacts as much as possible during the lifetime of the 51

gas extraction process, and understand and implement the restoration needs from the cumulative impacts when the gas development is completed and private industry is gone. DCNR, Natural Gas Exploration, Management Challenges (Exhibit J); and DCNR Natural Gas Development, Public Access and Recreation, Balancing Uses of State Forest Lands (Exhibit K). (184). Without control of the Oil and Gas Lease Fund, DCNR cannot complete a long list of natural resource projects on State Parks and Forest lands that are currently in need of funding. (185). DCNR sent the Governor's Office a memorandum dated September 4, 2008 (Exhibit X), with a list of projects that DCNR proposed to fund, including purchasing mineral rights under state lands to protect the lands, clean up acid mine drainage and abandoned well problems on state lands, repair and replace dams, roads and other infrastructure, all of which would cost “billions of dollars”. (186). In a recent document published by DCNR, Planning For Pennsylvania State Parks of Tomorrow, in the section entitled, Paying for State Parks, the total for all major maintenance projects in state parks is more than $500,000,000 (Exhibit III). (187). The Supreme Court, in Belden & Blake Corp. v. DCNR, 969 A.2d 528 (Pa. 2009), held that DCNR has no authority to impose restrictions on or limit access by a private owner of subsurface oil and gas rights beneath a State Park without paying just compensation. The Court stated that “[i]f DCNR wishes to further conditions pursuant to its statutory duties, the Commonwealth must compensate the subsurface owner for the diminution of its rights; indeed it may condemn the subsurface interests altogether pursuant to the Eminent Domain Code.” Id. at 568.

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(188). John Norbeck, now DCNR Deputy Secretary for Parks and Forests, estimates that it would cost hundreds of millions of dollars to compensate the mineral rights owner in order to save the integrity of any one State Park. Exhibit YY; N.T. at 308. (189). Mr. Norbeck also testified that funds are needed to repair or replace dams on State Park lands; to buy up additional land to protect existing State Parks, and to clean up acid mine drainage problems from legacy mining activities. These projects will cost hundreds of millions of dollars to complete. Id.: N.T. at 305-306. (190). The cost of meeting the basic statutory and constitutional mission of our State Forests to be sustainable, that is, to insure ecosystem management in sustaining the plant and animal diversity our State Forest, has never been quantified. (191). The costs of dealing with the impacts to the economic development of the PA WILDS is unknown. (192). WHEREFORE, the Petitioner respectfully requests the Commonwealth Court to: a.

FIND AND DECLARE that Section 20(2) of the 2017 Fiscal Code is

unconstitutional, and violates Section 27 by failing to insure that the Respondent’s enactment does not unduly infringe on the rights of the people to have their State Forest and Park public natural resources conserved and maintained; b.

FIND AND DECLARE that Section 20(2) of the 2017 Fiscal Code

Amendments violates Section 27 because the Respondents failed to evaluate the impacts to our public natural resources prior to its enactment, both of which are required under their fiduciary duties to use prudence and loyalty;

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c.

FIND AND DECLARE that Section 20(2) of the 2017 Fiscal Code

Amendments violates Section 27 on its face by failing to enact any safeguards to conserve and maintain the impacted State Forest public natural resources; d.

FIND AND DECLARE that Section 20(2) of the 2017 Fiscal Code

Amendments violates Section 27 by taking away DCNR’s ability to meet its statutory and constitutional duty to sustain Pennsylvania’s State Forest and Parks; e.

FIND AND DECLARE that the Respondents, in enacting Section

20(2) of the 2017 Fiscal Code Amendments, failed to evaluate the impacts of enacting Section 20(2), which violated their fiduciary duty to act toward the corpus of the trust -- the public natural resources -- with prudence, loyalty, and impartiality; f.

FIND AND DECLARE that the Respondents violated their duty as

trustee by failing to evaluate whether DCNR needs the funds to meet their statutory and constitutional duties prior to enacting the repeal of the Oil and Gas Lease Fund Act; and g.

FIND AND DECLARE that DCNR needs the funds from the

conversion of our State Forest and the sale of oil and gas to meet its statutory and constitutional duties and that the repeal of the Oil and Gas Lease Fund Act without providing DCNR with funds for this purpose violates Section 27. X.

SECTION 1601.2-E OF THE FISCAL CODE VIOLATE SECTION 27 AND THE TRUSTEES’ DUTIES THEREUNDER

(193). All prior paragraphs are hereby incorporated by reference. (194). Section 3.2 of the 2017 Fiscal Code Amendments amends the definition of “fund” in Section 1601-E of the Fiscal Code to remove the reference to the Oil and Gas Lease Fund Act, which gave control of these public trust funds to DCNR. 54

(195). Courts have recognized that legislative bodies retain authority to control the fate of special funds in order to serve the changing needs of government, so long as doing so would not contravene a specific constitutional provision or breach a contractual obligation. Hospital and Healthsystem Assoc. of Pa. v. Commonwealth, 77 A.3d 587, 604-605 (Pa. 2013) (quoting Washington, D.C. Ass’n of Realtors, Inc. v. District of Columbia, 44 A.3d 299, 305 & n.28 (D.C. 2012) (emphasis added)). (196). The Supreme Court acknowledges that the ability to redirect special funds may be limited in connection to monies held in trust or otherwise protected by vested entitlements as to the manner of their use. Id. While the Oil and Gas Lease Fund was established as a special fund in 1955 and continues to be characterized as a special fund by statute, its proceeds are held in trust under Section 27, which limits the ability of the Commonwealth, as trustee, to redirect the use of these funds to meet the changing needs of the government. (197). Although the 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, and does not equate to mere subjective judgment. PEDF II, 161 A.3d at 933. 1. Section 1601.2-E(a) of the Fiscal Code Establishes a New Oil and Gas Lease Fund with None of the Protections Provided by the Repealed Oil and Gas Lease Fund Act Or Required Under Article I Section 27 (198). Section 1601.2-E(a) of the Fiscal Code establishes a new fund by the exact same name, the Oil and Gas Lease Fund, as the fund established in 1955 under the Oil and Gas Lease Fund Act. The new “Oil and Gas Lease Fund” will give the

55

outward appearance that nothing has changed, even though the Oil and Gas Lease Fund Act has been repealed. (199). The new Oil and Gas Lease Fund has none of the protective limits provided under the Oil and Gas Lease Fund Act to ensure that these funds, which are part of the corpus of the public trust, will be used in compliance with the public trust created under Section 27, and the trustees’ duties thereunder. (200). Section 1601.2-E(a) violates Section 27 by establishing the Oil and Gas Lease Fund as a special fund but failing to recognize that the funds deposited into the Oil and Gas Lease Fund from the leasing and sale of oil and gas from State Forests are public trust assets, as declared by the Supreme Court, and failing to incorporate limits on the use of the funds to protect the public natural resources. (201). The Supreme Court in this case found that Sections 1602-E and 1603E of the Fiscal Code enacted in 2009 “do not reflect that the Commonwealth complied with its constitutional duties” and reversed the Commonwealth Court’s order to the contrary in PEDF I. Id. at 939. (202). As legislation that impacts public natural resources, Section 1601.2E(a) of the Fiscal Code fails to insure the public trust funds in the Oil and Gas Fund will be used to prevent and remedy the degradation, diminution or depletion of the corpus of the trust, or to secure the beneficial use for the people, both now and in the future. (203). The Commonwealth, by reauthorizing the Oil and Gas Lease Fund Act under DCNR’s control in 1995 through the Conservation and Natural Resources Act, insured that the oil and gas lease funds generated from the State Forest were used effectively by DCNR to conserve and maintain the public natural resources of our 56

State Forests and Parks consistent with Section 27, as its predecessors had done for over 40 years. (204). DCNR, as the statutorily designated trustee for State Parks and Forests, was entrusted by the General Assembly to use the funds for the purposes within the mandate of both the Conservation and Natural Resources Act and the Section 27 public trust, to sustain Pennsylvania’s parks and forests for future generations. (205). The Oil and Gas Lease Fund Act provided that the funds were “specifically appropriated” to the department responsible for managing our State Parks and Forests (now DCNR) “to carry out the purposes of the act.” No further legislation was needed for that department to use the funds for the purposes of the act. (206). Under Section 1601.2-E(a) of the Fiscal Code, the protective limits for the use of the Oil and Gas Lease Fund established in 1955 no longer exist. Section 1601.2E(a) does not provide any specific limitations on the uses of the funds that will insure compliance with terms of the Section 27 public trust and the trustee’s duties thereunder. (207). WHEREFORE, the Petitioner respectfully requests the Commonwealth Court to: a.

FIND AND DECLARE that Section 1601.2-E(a) of the Fiscal Code

violates Section 27 by establishing the Oil and Gas Lease Fund as a special fund but failing to recognize that the funds deposited into the Oil and Gas Lease Fund from the leasing and sale of oil and gas from State Forests are public trust assets, as declared by the Supreme Court, and failing to incorporate limits on the use of the funds to insure that the uses of the funds, as part of the corpus of public natural 57

resources trust, are in compliance with the requirements of Section 27, and the trustees’ duties thereunder; b.

FIND AND DECLARE that Section 1601.2-E(a) of the Fiscal Code

violates Section 27 because it does not act to insure the public trust funds in the Oil and Gas Fund will be used to prevent and remedy the degradation, diminution or depletion of the corpus of the trust, or to secure the beneficial use for the people, both now and in the future. 2. Section 1601.2-E(b) Fails to Require Detailed & Accurate Accounts (208). Section 1601.2(b) of the Fiscal Code identifies the sources of funds that may be deposited into the Oil and Gas Lease Fund as: (1) Rents and royalties from oil and gas leases of land owned by the Commonwealth, except rents and royalties 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;24 and (3) Any other money appropriated or transferred to the fund. (209). A trustee must keep adequate records of the administration of the trust. 20 Pa.C.S. § 7780(a). At a minimum, adequate records must provide detailed and accurate accounts of the type and amount of trust property, and the trustee’s actions related to administration of that property. Restatement (Second) of Trusts § 172, comment a.

24

This statute authorizes the leasing of land owned by the State System of Higher Education and State-owned lands (other than land owned and administered by DCNR, the Pennsylvania Fish and Boat Commission or the Pennsylvania Game Commission) for oil, gas, coal, coal bed methane and limestone extraction. 71 P.S. §§ 1357.1 – 1357.6. 58

(210). The obligation to inventory the trust corpus is basic to trust law, and includes a continuing obligation to record changes in the property. Restatement (Second) of Trusts § 172, comment c, note 318. (211). A trustee must promptly respond to a reasonable request by the settlor of a trust or a trust beneficiary for information related to the trust’s administration. 20 Pa.C.S. § 7780.3. To provide a prompt response, a trustee must maintain complete and accurate information concerning trust property. Restatement (Second) of Trusts § 172, comment c, note 318, and § 173. (212). The obligation to report to beneficiaries is considered so central to the trustee’s basic obligations under the trust that Pennsylvania courts have implied this duty even when not expressly required. Fidelity Bank v. Commonwealth Marine and General Insurance Co., 592 F. Supp. 513, 528-29 (E.D.Pa. 1984). (213). A trustee must keep trust property separate from the trustee’s own property. 20 Pa.C.S. § 7780. Mixing of the public trust funds with other funds precludes the ability to maintain detailed and accurate accounts of the uses of money from the rents and royalties from oil and gas leases of land owned by the Commonwealth that are deposited in the new Oil and Gas Lease Fund. (214). These funds are part of the corpus of the Environmental Public Trust, and as such are protected by the mandates of the trust and the trustees’ duties thereto. The failure to assure that these funds are used in compliance with the public trust violates Section 27. (215). WHEREFORE, the Petitioner respectfully requests the Commonwealth Court to FIND AND DECLARE that Section 1601.2-E(b) of the Fiscal Code violates Section 27 and the trustees’ fiduciary duties thereunder because mixing public trust funds with non-trust funds precludes any detailed and accurate account 59

that will assure that the public trust funds are being used in compliance with the public trust and the fiduciary duties thereunder. 3. Section 1601.2-E(c) Does Not Provide Any Provisions to Insure Compliance with Constitutional Mandates (216). Section 1601.2-E(c) of the 2017 Fiscal Code states that: 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. (Emphasis added). (217). The Supreme Court found Sections 1602-E and 1603-E of the Fiscal Code unconstitutional because those amendments lacked any indication that the Commonwealth was required to reasonably exercise its duties as trustee of the environmental trust created by Section 27. PEDF II, 161 A.3d at 938. (218). The Court found that Sections 1602-E and 1603-E of the Fiscal Code did not reflect that the Commonwealth complied with its constitutional duties and reversed Commonwealth Court order to the contrary in PEDF I. Id. at 939. (219). The new Section 1601.2-E(c) of the Fiscal Code just enacted does not provides any direct limitation on the use of the fund to comply with mandates of the public trust under Section 27. It does not require that the funds be used to prevent and remedy the degradation of the State Forests, contains no statement that the funds must be used only for Section 27 conservation and maintenance purposes, and does not require that the rights of the people to the public trust be met, both now and in future generations. (220). The Supreme Court did not view the requirement in Section 1602-E(c) that “merely requires the General Assembly to ‘consider’ allocating these funds” in 60

a certain way to be sufficient to indicate that the General Assembly actually 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 937-938 a. Administering the New Fund Through Annual Appropriations Precludes Compliance with Constitutional Mandates (221). Section 1601.2-E(c) requires that “[m]oney in the fund may only be used as provided under subsection (e) or as annually appropriated by the General Assembly.” (222). This provision puts the management of the new fund under the control of the political process of determining the budget, which does not provide for any analysis of what is needed for compliance with the constitutional requirements of the Section 27 Environmental Public Trust. (223). The duty to meet Article I constitutional requirements cannot be limited by the political budget process. (224). By placing the management of the new Oil and Gas Lease Fund under the political budget process, the Respondents are acting as proprietors with complete control over the funds, rather than trustees with a fiduciary duty to use these public trust funds for the trust purposes established in Section 27. (225). The Supreme Court has concluded that “[t]he Commonwealth (including the Governor and General Assembly) may not approach our public natural resources as a proprietor, and instead must at all times fulfill its role as a trustee.” Id. at 939. (226). Using our public natural resources as part of the budget process violates Article I Section 25 of Pennsylvania’s Constitution, which excepts everything in 61

Article 1 “out of the general powers of government and shall forever remain inviolate.” b. No Evaluation of Section 1601.2-E(c) under Section 27 Prior to Enactment (227). Before making a decision or taking an action that might or will negatively impact the State Forests or Parks, the trustee making the decision has the fiduciary duty under the trust to understand what those impacts are or might be, both to the public natural resources and to the peoples’ uses of and benefits from those resources, and to the peoples’ rights established in the amendment. (228). The Supreme Court, in its plurality opinion in Robinson Twp., clearly articulating the need for an evaluation, stating that Section 27 “requires each branch of government to consider in advance of proceeding the environmental effect of any proposed action on the constitutionally protected features.” 83 A.3d at 951-952. (229). Section 1601.2-E provides no evidence that any evaluation was made to determine if and how much impact it would have on the constitutional obligation under Section 27 to prevent and remedy harm to the public natural resources; nor does it provide evidence of any evaluation of the impact it would have on the rights of the people who use those public natural resources. The designation of a new Oil and Gas Lease Fund that has no limitations to ensure compliance with Section 27, that treats the use of the Oil and Gas Lease Fund as part of the budget process, and that fails to consider any of the duties and abilities of the DCNR to prevent and remedy the degradation of the public natural resources of our State Forests and Parks, will have significant impacts that must be evaluated before enacting a change of this magnitude.

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c. No Evaluation of Taking Control of the Oil and Gas Lease Fund From DCNR (230). Under the now repealed Oil and Gas Lease Fund Act, DCNR had direct control over the fund with specific controls over how the fund was to be used. The fund was exclusively used for projects for “conservation, recreation, dams and flood control”. 71 P.S. § 1331. (231). DCNR’s statutory mission is to conserve and maintain the pubic natural resources of our State Parks and Forests and, as discussed above in ¶¶ 134-143, former and current Secretaries and Deputy Secretaries serving under multiple administrations have expressed serious concerns with the actions the Respondents have taken since 2009 to usurp DCNR’s control of the funds necessary to fulfill the agency’s Section 27 duties. These important averments have been incorporated by reference here are not repeated to avoid duplication; however, their significance in support of this requested declaration cannot be overstated. (232). Our State forests and the oil and gas therein are public natural resources. They are specifically protected as part of a public trust by Section 27 of Pennsylvania’s Constitution. (233). Although the General Assembly is a trustee of the public trust, it has limited scientific expertise and limited abilities to evaluate on impact of changes to the use of the Oil and Gas Lease Fund on DCNR. It does not have the staffing and experience to be able to provide focused management of our State’s public resources as a basis for prioritizing projects for appropriating oil and gas funds. (234). The money that was taken from the conversion of resources from our State Forests must be used to prevent and remedy of our State Forest degradation resulting from that conversion. 63

(235). As discussed above, these public natural resources that have been depleted are in the northcentral part of Pennsylvania known as the PA WILDS, which is the home of some of Pennsylvania’s most valuable public natural resources critical to the continued success of tourism and recreation industry important to this area. (236). The beneficiaries’ rights that are impacted by the degradation of the PA WILDS include the right to clean air, pure water and the preservation of the natural, scenic, historic and aesthetic values of the PA WILDS. (237). The beneficiaries of the trust who are impacted by the degradation of our State Forest are those people who live and work and recreate in the PA WILDS, including members of the Petitioner, PEDF. d. Respondents Did Not Fulfill Their Fiduciary Duties as Trustees (238). The Respondents were not prudent, loyal or impartial in enacting Section 1601.2-E(c) of the Fiscal Code. (239). The Respondents’ fiduciary duties as trustee of the public trust under Section 27 include the obligation to be prudent, which requires the trustee to exercise such care and skill as a person of ordinary prudence would exercise in dealing with his or her own property. PEDF, 161 A.3d at 932. A prudent person would not take the protections of the Oil and Gas Lease Fund Act away from the corpus of the trust without insuring that there were even more appropriate protections provided. (240). Nor were the Respondents loyal as trustees to the beneficiaries of the public trust. By taking control of the Oil and Gas Lease Fund money from DCNR, the agency with the duty and the skill to sustain our state forests, and giving control to themselves the Respondents are benefiting themselves. 64

(241). Nor were the Respondents impartial. They did not consider the impacts to both current and future beneficiaries by taking control of the Oil and Gas Lease Fund. e. The Qualification to “Consider” Section 27 Insufficient (242). The only qualification on uses of the new Oil and Gas Lease Fund in Section 1601.2-E(c) is the statement that “the General Assembly shall consider the Commonwealth’s trustee duties under Section 27 of Article I of the Constitution of Pennsylvania” (emphasis added). (243). The phrase “shall consider” provides no protective limitation. The provision does not require compliance with either the specific terms of Section 27 nor with the specific fiduciary duties of the trustee. It only requires an undefined consideration, and in some undefined time in the future. (244). The common definition of “consider” is “to think clearly about” or “to take into account.” That is not mandatory language that Section 27 and protection of an Article I constitutional right demands. (245). Section 1601.2-E(c) does not require consideration of Section 27 trustee duties prior to the decision to appropriate money from the new Oil and Gas Lease Fund. (246). The Respondents, in authorizing appropriations from the Oil and Gas Lease fund through the 2017 Appropriations Act, clearly did not “consider” Section 27 when appropriating $61,000,000 of public trust funds in the Oil and Gas Lease Fund to DCNR for operating expenses. (247). The Respondents did not “consider” the requirements of the public trust or their duties as trustee thereunder when enacting the repeal of the Oil and Gas 65

Lease Fund Act, or in giving control of the money from the oil and gas leases and sale of oil and gas of our State Forest to the General Assembly. (248). WHEREFORE, the Petitioner respectfully requests the Commonwealth Court to: a.

FIND AND DECLARE that Section 1601.2-E(c) of the Fiscal Code

violates Section 27 by failing to directly insure that the funds from the new Oil and Gas Lease Fund will be used to prevent and remedy the degradation, diminution or depletion of our State Forests and Parks from oil and gas extraction, and to conserve and maintain all the public natural resources of the PA WILDS; b.

FIND AND DECLARE that Section 1601.2-E(c) violates Section 27

by failing to directly insure that that the beneficiaries’ rights that are impacted by the degradation of the PA WILDS, including their right to clean air, pure water and the preservation of the natural, scenic, historic and aesthetic values of the PA WILDS, will be maintained; c.

FIND AND DECLARE that Section 1601.2-E(c) violates Article I,

Section 25 of the Pennsylvania Constitution by using Article I trust fund excepted out of the general powers of government to meet the Commonwealth’s obligations under Article VIII, Section 13 of the Pennsylvania Constitution to make operating budget appropriations that do not exceed the actual and estimated revenues and surplus available in the same fiscal year. d.

FIND AND DECLARE that Section 1601.2-E(c) violates Section 27

by placing the management of the new fund under the political budgetary process and thus putting the Respondents in the position of being the proprietor of these trust funds, rather than the trustee responsible for these funds; 66

e.

FIND AND DECLARE that The Respondents breached their fiduciary

duties as trustees under Section 27 because they were not prudent, loyal or impartial in enacting Sections 1601.2-E(a) through (e); and f.

FIND AND DECLARE that the Respondents have violated their

fiduciary duties as trustees under Section 27 because they did not protect the core of the public trust.

4. Annual Transfers Under Section 1601.2-E(e) Violate Section 27 (249). Section 1601.2-E(e) of the Fiscal Code directs the following annual transfers from the Oil and Gas Lease Fund: “(1) For the 2017-2018 fiscal years 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. (2) For the 2017-2018 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.” (250). On February 14, 2012, the Governor approved legislation (Act 13 of 2012) that authorized further annual transfers of money from the Oil and Gas Lease Fund to the newly created Marcellus Legacy Fund and then to the Environmental Stewardship Fund and the Hazardous Sites Cleanup Fund. (58 Pa.C.S. Chapter 25 (Oil and Gas Lease Fund)). (251). PEDF challenged the Act 13 provisions authorizing annual transfers from the Oil and Gas Lease Fund to the Marcellus Legacy Fund in the Second Amended Petition (Declaration M, ¶¶ 172-182).

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(252). Through the annual transfers to the Marcellus Legacy Fund authorized by 58 Pa.C.S. § 2504-2505 and now Section 1601.2-E(e) of the Fiscal Code, the General Assembly has appropriated large sums of money ($135,000,000 to date) from the Oil and Gas Lease Fund for projects untethered to protection of public natural resources on our State Parks and State Forests. The General Assembly also protected its ability to control these annual transfers from the Oil and Gas Lease Fund by giving priority in Section 1601.2-E(d) to other appropriations from the Oil and Gas Lease Fund made through the Fiscal Code or other appropriation acts. (253). Section 20(2) of the 2017 Fiscal Code Amendments repeals 58 Pa.C.S. §§ 2504-2505, but similar annual transfers from the Oil and Gas Lease Fund to the Marcellus Legacy Fund for distribution to the Environmental Stewardship Fund and the Hazardous Sites Cleanup Fund are authorized through the new Section 1601.2E(e) of the Fiscal Code. a. Environmental Stewardship Fund (254). When the Environmental Stewardship Fund was originally established by the Environmental Stewardship and Watershed Protection Act (27 Pa.C.S. §§ 6101 – 6119), it received most of its money from a fee imposed on each ton of waste deposited in Commonwealth landfills. 27 Pa.C.S. § 6112. (255). In 2005, the act was amended to authorize the issuance $625,000,000 in bonds over a five-year period to fund the Growing Greener initiative. These bonds would be repaid with up to $60,000,000 of the moneys deposited into the Environmental Stewardship Fund on an annual basis. 27 Pa.C.S. § 6115(d)(4). Revenue from the landfill fees authorized by this act generate approximately $65,000,000 annually and the debt service on the Growing Greener bonds was

68

$37,539,000 in fiscal year 2015-16 and was estimated to be $20,871,000 in the Governor’s Executive Budget for 2017-18 (page H24).25 (256). Funds in the Environmental Stewardship Fund not used to pay for the Growing Greener bonds are allocated annually to four Commonwealth agencies, including DCNR, as follows under 27 Pa.C.S. §§ 6104-6105: a.

The Department of Environmental Protection receives 37.4% to fund

projects to abate pollution resulting from past mining and oil and gas extraction, as well as pollution from agricultural operations and urban development; b.

The Department of Agriculture receives 14.8% to protect agricultural

land from development; c.

The Pennsylvania Infrastructure Investment Authority receives 23.7%

for grants for sewer and water infrastructure projects; and d.

DCNR receives 24.1% for grants to local communities to develop trails

and parks, and to upgrade infrastructure on our State Parks and Forests. (257). The $20,000,000 being committed to the Environmental Stewardship Fund from the Oil and Gas Lease Fund is generated through the degradation, diminution and depletion of the public natural resources of our State Forests from natural gas extraction and from the sale of our oil and gas natural resources. (258). The diversion of $20,000,000 annually from Oil and Gas Lease Fund to the Environmental Stewardship Fund deprives DCNR from direct use of this

25

Available on the Pennsylvania Office of Budget webpage at http://www.budget.pa.gov/PublicationsAndReports/CommonwealthBudget/Docum ents/2017-18%20Proposed%20Budget/2017-18%20Budget%20Document%20%20Web.pdf. 69

money to prevent and remedy the degradation and remediation of our State Park and Forest land. (259). While the projects funded by the Environmental Stewardship Fund are laudable, they should not be funded by money that is part of the corpus of the Section 27 environmental public trust. (260). As a public natural resource, our State Forest should have never been required to be degraded for the purpose of obtaining money that is not needed to conserve and maintain the resources of our State Forests and Parks. When converted, however, the money is still part of the corpus of the public trust. (261). The duty of the trustee is to conserve and maintain our Section 27 public natural resources for the benefit of the people living today and for future generations. That duty requires that the trustee prevent and remedy the degradation of the corpus. In the case of the degradation of our State Forest, it is the duty of the trustee to insure the use of the money that resulted from the degradation of State Forests be used to prevent and remedy the degradation of the State Forests. (262). Taking money from that conversion of the corpus of the public trust and using it for purposes other than preventing and remedying and those public natural resources that have been converted violates Section 27 and the trustee’s fiduciary duties thereunder. (263). The Respondents, as trustees, cannot degrade the public natural resources of our State Forest and use the money derived from that degradation to benefit public natural resources other than the public natural resource degraded to raise the money, which are our State Forest and Parks in the PA WILDS. That is allowing degradation contrary to the purposes of Section 27. 70

(264). The allocation of 37.4% of the Environmental Stewardship Fund to the Pennsylvania Department of Environmental Protection (“DEP”) for environmental projects from a fee imposed on solid waste received at landfills is laudable. (265). But, the use of money that is part of the corpus of the public trust to fund DEP projects violates Section 27 and the trustee’s duties thereunder because the Oil and Gas Lease Fund money is necessary to prevent and remedy the degradation of our State Forest caused by the conversion of the public natural resources of the State Forest to generate the money in the fund. (266). The allocation of 23.7% of the Environmental Stewardship Fund to the Pennsylvania Infrastructure Investment Authority (“PennVest”) for grants for sewer and water infrastructure projects from a fee imposed on solid waste received at landfills is laudable. (267). But, the use of money that is part of the corpus of the public trust to fund PennVest projects violates Section 27 and the trustee’s duties thereunder because the Oil and Gas Lease Fund money is necessary to prevent and remedy the degradation of our State Forest caused by the conversion of the public natural resources of the State Forest to generate the money in the fund. (268). DCNR receives 24.1% of the money transferred from Oil and Gas Lease Fund to the Marcellus Legacy Fund and then to the Environmental Stewardship Fund for grants to local communities to develop trails and parks, and to upgrade infrastructure on our State Parks and Forests. As a result, even with its limited share of funds derived from the leasing and sale of oil and gas on our State Forests, DCNR must choose between supporting local conservation and recreation needs and remedying the harm to State Forest and State Park lands from oil and gas extraction. 71

(269). The amount of money DCNR receives under the Environmental Stewardship Fund is determined by the General Assembly as part of the political budget process and is not based on an evaluation of DCNR’s needs to prevent and remedy harm to our State Forests and Parks from oil and gas extraction, as required by Section 27. (270). Under the Oil and Gas Lease Fund Act, DCNR would have the direct use of all the money in the Oil and Gas Lease for projects to conserve and maintain the public natural resources of our State Parks and State Forests to fulfill its Section 27 trustee duties. Now it is limited to what the General Assembly appropriates annually. b. Hazardous Sites Cleanup Fund (271). Section 1601.2-E(e)(2) of the Fiscal Code transfers $15,000,000 annually from the Oil and Gas Lease Fund to the Marcellus Legacy Fund for distribution to the Hazardous Sites Cleanup Fund. (272). When the Hazardous Sites Cleanup Fund was created in 1988, it was funded from an annual transfer of revenue generated by the Capital Stock and Franchise Tax imposed by Article VI of the Tax Code of 1971, as well as fees assessed on the transportation and management of hazardous waste within the Commonwealth, recovery of costs incurred by the Commonwealth from parties responsible for hazardous sites, interest and penalties, and other State and Federal funds appropriated.26 The Hazardous Sites Cleanup Fund Funding Act27 was enacted in 2007 and directed the annual transfers of $40,000,000 in revenue received from 26

Act of October 18, 1988, P.L. 756, No. 108.

27

Act of December 18, 2007, P.L. 486, No. 77. 72

the Capital Stock and Franchise Tax to the Hazardous Sites Cleanup Fund. This tax expired on December 31, 2015 and is no longer available as a source of funding for the Hazardous Sites Cleanup Fund.28 (273). The Hazardous Sites Cleanup Fund is administered by DEP to investigate, cleanup and monitor contaminated sites to respond to releases or threatened releases of hazardous substances or contaminants, which primarily result from industrial activity on private property; to participate in the federal Superfund and hazardous waste programs, and to implement the Commonwealth’s land recycling program. 35 P.S. § 6020.902. (274). While the original sources of revenue for the Hazardous Sites Cleanup Fund were appropriate, the annual transfer of $15,000,000 from the Oil and Gas Lease Fund violates Section 27 and the Commonwealth’s trustee duties thereunder by using of money from the degradation of public natural resources on our State Forest. (275). Money that is from the conversion of our public natural resources must be used to remedy, replace and restore those public natural resources, not to fund a DEP mandate. (276). The need to fund responses to hazardous industrial releases through the Hazardous Sites Cleanup Fund is important, but cannot be funded at the expense of our public natural resources on our State Forests.

28

See DEP Hazardous Sites Cleanup Fund Annual Report, August 2016, available at http://www.elibrary.dep.state.pa.us/dsweb/Get/Document-116315/2620-REDEP4351%20%202016.pdf. 73

(277). Most if not all of DEP’s programs are committed to helping to protect and preserve our natural environment. If Respondents can use money from the conversion of our public natural resources for one DEP program, then all DEP programs could be funded from the sale of our public natural resources and from our Section 27 Public Trust. The result would be the ultimate degradation, diminution and depletion of our public natural resources in direct violation of the Section 27 mandate to conserve and maintain these resources. (278). As with the transfers to the Environmental Stewardship Fund, the diversion of $15,000,000 annually from Oil and Gas Lease Fund to the Hazardous Sites Cleanup Fund deprives DCNR of the funds necessary to fulfill its trustee duties under Section 27 and Conservation and Natural Resources Act. c. Failure to Evaluate Impact of the Annual Transfers (279). Before any decision is made or action is taken that may or will impact the rights of the people under Section 27, the Commonwealth, as trustee, has the obligation to evaluate the impacts of that decision on those rights. (280). Nothing in Section 1601.2-E(e) of the Fiscal Code indicates that the Respondents evaluated the impact of the annual transfers on DCNR’s ability to prevent and/or remedy the degradation, diminution or depletion of our State Forest. (281). Nothing in Section 1601.2-E(e) requires the Respondents or any other Commonwealth agency to evaluated the impacts of the annual transfers on the public natural resources of our State Forests degraded to raise these funds. (282). Nothing in Section 1601.2-E(e) indicates that the Respondents evaluated the impacts of these annual transfers to sustaining our State Forest through the ecosystem management. 74

(283). Nothing in Section 1601.2-E(e) proves any evidence that the Respondents evaluated the impacts to the PA WILDS from the diversion of funds needed to prevent and remedy the harm to the public natural resources in this region of Pennsylvania from shale gas extraction. d. Trustee Duties to Exercise Prudence, Loyalty and Impartiality (284). The Respondents, as trustees, have a fiduciary duty to act toward the corpus of the trust -- the public natural resources -- with prudence, loyalty, and impartiality. PEDF, 161 A.3d at 952 (citing Robinson Twp., 83 A.3d at 956-957; 20 Pa.C.S. §§ 7771—7774. (285). The Respondents violated their fiduciary duty toward the public trust by authorizing annual transfers from the Oil and Gas Lease Fund to the Marcellus Legacy Fund under Section 1601.2(e) of the Fiscal Code without evaluating DCNR’s ability to prevent and remedy the harm to public natural resources of the State Forest, and the beneficiaries’ rights thereto. (286). The Respondents violated their fiduciary duty by enacting Section 1601.2-E(e) and transferring public natural resources funds to other funds without insuring the accountability of the use of the funds to ensure their Section 27 trustee duties are met. (287). The Respondents violated their fiduciary duty by and appropriating $35,000,000 annually under section 1601.2-E(e) without insuring that the purpose of the public trust, to prevent and remedy the public natural resources of the State Forest and the beneficiaries’ rights thereto were being met. (288). The Respondents’ fiduciary duties as trustee of the public trust under Section 27 include the obligation to be prudent, which requires the trustee to exercise 75

such care and skill as a person of ordinary prudence would exercise in dealing with his or her own property. PEDF II, 161 A.3d at 932; 20 Pa.C.S. § 7774. (289). A prudent person would insure that the purposes of the trust and the beneficiaries rights to the trust were met in deciding how to use assets of the trust, that the corpus of the trust would not be degraded or diminished or depleted; a prudent person would insure that the use of the public trust funds are clearly accounted for; a prudent person would not commit $35,000,000 of the fund annually without insuring that such commitment would not impact other public natural resources and the beneficiaries uses. (290). The Respondents, as trustees, also have the duty of loyalty, which means they must administer the trust “so as to accomplish the trust’s purposes for the benefit of the trust’s beneficiaries.” Id.; 20 Pa.C.S. § 7772. Respondents breached their duty of loyalty by making annual transfers form the Oil and Gas Lease Fund without insuring that the rights of the beneficiaries were maintained; and by benefiting themselves rather than the beneficiaries. (291). The Respondent’s duties as fiduciary also mandate impartiality, which requires the trustee “to manage the trust so as to give all the beneficiaries due regard for the respective interests.” Id. At 933; 20 Pa.C.S. § 7773. The Respondents breached their fiduciary duty of impartiality by failing to insure that the Oil and Gas Lease Fund would be used for both present and future beneficiaries’ interests. (292). WHEREFORE, the Petitioner respectfully requests the Commonwealth Court to: a.

FIND AND DECLARE that authorizing annual transfers from the Oil

and Gas Lease Fund to the Marcellus Legacy Fund for disbursement to the Environmental Stewardship Fund and the Hazardous Sites Cleanup Fund violate the 76

public trust and the duties of the trustee by using oil and gas lease funds for purposes other than to prevent and remedy the public natural resources that have been depleted, diminished or degraded to generate the funds; b.

FIND AND DECLARE that Sections 1601.2-E(e) violates Section 27

and the trustees’ duties thereunder, as well as the beneficiaries’ rights thereto because the enactment was not prudent, loyal or impartial; c.

FIND AND DECLARE Sections 1601.2-E(e) violates Section 27 and

the trustees’ duties thereunder, as well as the beneficiaries’ rights thereto because it was enacted without evaluating the impact on the existing and future conservation of public natural resources of our State Forests and Parks, and the protection of the rights of the beneficiaries, both now and generations to come; d.

FIND AND DECLARE that Sections 1601.2-E(e) is unconstitutional

because its lacks any indication that the Commonwealth is required to reasonably exercise its duties as trustee of the environmental trust created by Section 27. Y.

RESPONDENTS FAILED TO REPLACE THE OIL AND GAS LEASE FUND ACT LIMITATIONS WITH A STATUTORY SCHEME THAT COMPLIES WITH SECTION 27 1. Need for Constitutional Mandate to Pass Legislation to Protect Our Environment

(293). All prior paragraphs are hereby incorporated by reference. (294). As the trustee, the Commonwealth has a duty to “act affirmatively via legislative action to protect the environment.” PEDF II, 161 A.3d at 933 (emphasis added). (295). Respondents have repealed the Oil and Gas Lease Fund Act, and along with it the limitations of that act that ensured that the funds were used exclusively 77

for conservation, recreation, dams and flood control within the State Forest and Parks. (296). Following on the repeal of the Oil and Gas Lease Fund Act, Respondents have also eliminated the Oil and Gas Lease Fund established under the Oil and Gas Lease Fund Act, and has created a new fund under Section 1601.2-E(a), also called the Oil and Gas Lease Fund, for depositing the money from oil and gas leasing on state forestry land, Commonwealth sources. (297). Section 1601.2-E provides no limitations on the use of the new fund except under subsection(c), which states that “[m]oney in the fund may only be used 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.” (Emphasis added.) (298). The Supreme Court found Sections 1602-E and 1603-E of the Fiscal Code enacted in 2009 to be unconstitutional because these amendments lacked any indication that the Commonwealth was required to reasonably exercise its duties as trustee of the environmental trust created by Section 27. Id. at 938. (299). The Supreme Court stated: “Because the legislative enactments at issue here do not reflect that the Commonwealth complied with its constitutional duties, the order of the Commonwealth Court with respect to the constitutionality of 1602E and 1603-E is hereby reversed.” Id. at 939. (300). 1601.2-E(c) does not provide any direct limitation on the use of the fund to comply with mandates of the public trust under Section 27.

78

(301). Because Section 1601.2-E(c) provides no requirement of the General Assembly to meet its constitutional responsibilities, and lacks any indication that the Commonwealth is required to reasonably exercise its duties as trustee of the environmental trust created by Section 27, the newly designated Oil and Gas Lease Fund needs to be amended to reflect these requirements.29 (302). Section 1601.2-E(c) has no provisions to ensure the use of the funds are for conservation and maintenance purposes to comply with the constitutional duty to conserve and maintain the public natural resources for the benefit of the people both now and future generations. (303). The newly created Oil and Gas Lease Fund provisions of the Fiscal Code must be amended to include these constitutional mandates. (304). The Commonwealth’s constitutional obligation to conserve and maintain the public natural resources for future generations means that the Commonwealth must insure that these resources are of at least the same quality and diversity for future generations as they are for the present generation. In this way, the Commonwealth must maximize the options available to future generations. See Edith Brown Weiss, In Fairness of Future Generations: Law, Common Patrimony, and Intergenerational Equity 38-43 (1989). This is a basic fiduciary requirement of impartiality of the use of the trust.30

In PEDF II, the Supreme Court states that “Section 1602-E merely requires the General Assembly to ‘consider’ allocating these funds to municipalities…” 161 A.3d at 937. It is clear that merely requiring to “consider” is not sufficient to indicate that the Commonwealth is required to meet its constitutional responsibilities. 29

30

Because the condition of public natural resources is constantly changing, it is impossible to simply maintain then at some fixed condition. Rather, the state needs 79

(305). The obligation to conserve and maintain the resources for future generations means that the newly created Oil and Gas Lease Fund requirements must be amended to require that the money in the fund that is part of the public natural resources must be for future generations as they are for the present generation. (306). The Commonwealth’s constitutional obligation to conserve and maintain the public natural resources for future generations means that the Commonwealth must insure that resources are of at least the same quality and diversity for future generations as they are for the present generation. (307). The requirements of the new fund must be amended to include to require that the public natural resources are of at least the same quality and diversity for future generations as they are for the present generation. (308). The Commonwealth’s constitutional obligation to conserve and maintain the public natural resources for future generations means that the Commonwealth must insure that the peoples’ rights to the resources are of at least the same quality and diversity for future generations as they are for the present generation. (309). The requirements of the new fund must be amended to include to require that the peoples’ rights to public natural resources are of at least the same quality and diversity for future generations as they are for the present generation.

to aim at enhancing their quality and integrity to ensure that they are conserved and maintained for future generations. John C., Taking the Pennsylvania Constitution Seriously When it Protects the Environment: Part II – Environmental Rights and Public Trust. Penn State Law Review, Vol. 104, 1999, page 134. 80

(310). The obligation to conserve and maintain the rights of the beneficiaries for future generations means that the newly created Oil and Gas Lease Fund requirements must be amended to require that the money in the fund that is part of the public natural resources must be retained to maximize the options available for future generations. (311). The money from the oil and gas extraction and sale that is part of the new Oil and Gas Lease Fund has caused and will continue to cause degradation and diminution of our State Forest and Parks. (312). Our State Forests and Parks that are being degraded are a critical part of the PA WILDS. (313). The PA WILDS includes the State Forests and Parks, the county and municipal public natural resources, including parks, trails, greenways, rivers and estuaries, and other natural, scenic, historic and esthetic parts of the twelve-county area designated as the PA WILDS. (314). Degradation of our State Forests and Parks has caused and will continue to cause degradation to the PA WILDS. (315). The money from the extraction and sale of oil and gas came from our north central region, the PA WILDS. The extraction and sale degraded and diminished the PA WILDS. (316). In order to be in compliance with the constitutional requirement to prevent and remedy the public natural resources the money taken from the resources of the State Forest must be used to prevent and remedy degradation and diminution of the public natural resources of the PA WILDS. 2. Legislation Must Address Constitutional Mandates 81

(317). The only existing agency of the Commonwealth that is capable of and currently responsible for the conserving and maintaining our State Forest and Parks and the PA WILDS is DCNR. (318). Where protection of public natural resources has been considered by a government agency with statutory authority for protection of public natural resources, and where resolution of factual questions requires technical expertise, courts should defer to agency expertise on those factual issues. Deference to expertise would fill gaps that need to be filled if public natural resources are to be accorded necessary protection under the constitution. Dernbach, supra, page 135. (319). Since 1995, when DCNR was created, it has been the legislatively appointed agency responsible for the sustainability of our State Forests and Parks and our mineral resources. (320). DCNR is the statutorily created executive agency with the expertise to evaluate the impacts to State Parks and State Forest of oil and gas extraction and determine the types of projects needed to prevent and remedy such impacts. (321). DCNR is mandated to sustain Pennsylvania’s State Forest for future generations. To do so, DCNR has developed the scientific expertise to both manage and sustain our forests through ecosystem management. The strategic Plan was published in 1995, entitled Penn’s Woods-Sustaining Pennsylvania’s Forest (Exhibit P). (322). DCNR adopted the scientific system known as “Ecosystem Management” for the purpose of sustaining our State Forests. The basic principle of this system is to insure that all the uses of the forest must be balanced so that the integrity of the entire ecosystem is protected. Exhibit UU; N.T. 48. See Bureau of Forestry mission, "Managing state forests under sound ecosystem management, to 82

retain their wild character and maintain biological diversity while providing pure water, opportunities for low-density recreation, habitats for forest plants and animals, sustained yields of quality timber, and environmentally sound utilization of mineral resources." Penn's Woods, Exhibit P. (323). All of these functions of DCNR are necessary for the compliance of the new Fund with the constitutional mandates of the Section 27 Environmental Public Trust. (324). The General Assembly has none of the capabilities of DCNR to administer the new fund in compliance with the constitutional mandates. Either the General Assembly must create its own capabilities to conserve and maintain our public natural resources, prevent and remedy the degradation and diminution, or reinstate DCNR with control of the new fund. (325). The legislative requirements of the new fund must be amended to insure that there are administrative and scientific capabilities to meet the constitutional mandates on how the fund must be used. 3. Legislation Must Require Keeping Accounts (326). Section 1601.2-E(c) has not requirement to meet the trustee’s basic obligation to keep detailed and accurate accounts of the type and amount of trust property, and on the trustee’s administration of that property. Restatement (Second) of Trusts § 172 & cmt. A (1959). (327). In fact, Section 1601.2-E(b) provides for the funds of the trust to be mixed with other non-trust funds before appropriation, which would make accounting of the use of the trust funds impossible.

83

(328). The newly created Oil and Gas Lease Fund requirements must be amended to require the Respondents to keep a detailed account of the use of the funds. (329). WHEREFORE, the Petitioner respectfully requests the Commonwealth Court to: a.

FIND AND DECLARE that that the newly created Oil and Gas Lease

Fund provisions of the Fiscal Code must be legislatively amended to ensure the use of the funds to be in compliance with the constitutional duty to prevent and remedy the degradation, diminution or depletion of our public natural resources. b.

FIND AND DECLARE that the newly created Oil and Gas Lease Fund

provisions of the Fiscal Code must be legislatively amended to include the constitutional mandate to ensure the use of the funds are for conservation and maintenance purposes to comply with the constitutional duty to conserve and maintain the public natural resources for the benefit of the people both now and future generations. c.

FIND AND DECLARE that that the newly created Oil and Gas Lease

Fund provisions of the Fiscal Code must be amended to include the constitutional mandate to ensure the use of the funds are to insure that the public natural resources are of at least the same quality and diversity for future generations as they are for the present generation. d.

FIND AND DECLARE that that that the newly created Oil and Gas

Lease Fund provisions of the Fiscal Code must be amended to include the constitutional mandate that the fund must be used to insure that the peoples’ rights to public natural resources are of at least the same quality and diversity for future generations as they are for the present generation. 84

e.

FIND AND DECLARE that that that the newly created Oil and Gas

Lease Fund provisions of the Fiscal Code must be amended to include the constitutional mandate that the fund must be used to prevent and remedy the degradation and diminution of the public natural resources of the PA WILDS. f.

FIND AND DECLARE that that that the newly created Oil and Gas

Lease Fund provisions of the Fiscal Code must be amended to include the constitutional mandate that the fund must be used to protect and enhance the peoples’ rights to the public natural resources of the PA WILDS. g.

FIND AND DECLARE that that that the newly created Oil and Gas

Lease Fund provisions of the Fiscal Code must be amended to include the constitutional mandate that the fund must be used to insure that there are administrative and scientific capabilities to meet the constitutional mandates of the Section 27 Public Trust. i.

FIND AND DECLARE that

the newly created Oil and Gas Lease

Fund requirements must be amended to require the Respondents to keep a detailed account of the use of the funds. Z.

SECTION 1720-F OF THE FISCAL CODE VIOLATES SECTION 27

(330). All prior paragraphs are hereby incorporated by reference. (331). Section 1720-F of the Fiscal Code provides specific direction to DCNR on how to spend certain funds appropriated to DCNR by the General Appropriations Act of 2017 for State Park operations. Section 1720-F of the Fiscal Code directs DCNR to use no less than $2,250,000 from money appropriated for State Park operations for the operation and maintenance of the Washington Crossing Historical Park. 85

(332). DCNR was appropriated $7,739,000 from the Oil and Gas Lease Fund for State Park Operations under the General Appropriations Act of 2017. These funds are used to pay a myriad of expenses associated with operating Pennsylvania’s 121 State Parks, including employee salaries, benefits and other expenses, equipment and supplies, utilities, and routine maintenance. (333). The 2017 Fiscal Code Amendment directs DCNR to spend $2,250,000 to operate and maintain one park, Washington Crossing Historical Park, without any limitation as to which fund is to be used. (334). Washington Crossing Historical Park is located along the Delaware River in Bucks County. While an important historic landmark, this park has not proximity to the public natural resources being degraded, diminished and depleted by oil and gas extraction on our State Forests and State Parks, or the PA WILDS. (335). By requiring that money appropriated for State Parks be directed to this park, without assurance that the money is not from the Oil and Gas Lease Fund the Respondents have failed to fulfill their fiduciary duties under Section 27. (336). The Respondents have not provided any documentary evidence indicating that any consideration was given to whether Section 1720-F of the 2107 Fiscal Code Amendments complies with Section 27 and the duties of the trustee thereunder. (337). Respondents have not provided any evaluation on the impacts to DCNR’s other state park operations. (338). WHEREFORE, the Petitioner respectfully requests the Commonwealth Court FIND AND DECLARE that Section 1720-F of the 2017 Fiscal Code Amendments violates Section 27 because the Respondents failed to fulfill their 86

fiduciary duties thereunder by not evaluating the impact Section 1720-F on the public natural resources.

AA. SECTION 1726 OF THE FISCAL CODE VIOLATES SECTION 27 (339). All prior paragraphs are hereby incorporated by reference. (340). Section 19 of the 2017 Fiscal Code Amendments adds Article XVII-G to the Fiscal Code relating to restrictions on 2017-2018 appropriations for fund and accounts. A new Section 1726-G of the Fiscal Code is added to this article requiring the governor or the budget secretary to transfer of $300,000,000 during the 2017-18 fiscal year from amounts available in unidentified special funds and restricted accounts to the General Fund. These transfers will occur without any notice, without any transparency for the public. They could involve funds that impact with the Environmental Trust. (341). Section 1726-G does not identify any funds that may or will be impacted. (342). Section 1726-G does not require Respondents to provide any notice to the beneficiaries of the public trust funds in the Oil and Gas Lease Fund prior to transferring these trust funds to the General Fund to be used for non-trust purposes. (343). WHEREFORE, for the reasons set forth in the petition, the Petitions respectfully request the Commonwealth Court to FIND AND DELCARE that the Fund Transfers in Section 1726-G of the Fiscal Code Violates Section 27 by failing 87

funds may or will be impacted, and by excluding any of the special funds subject to such transfers that impact the Environmental Public Trust. VII. ADDITIONAL SUPPORT FOR PETITIONER’S STANDING (344). PEDF has previously submitted affidavits from 16 members representing both individual members and member organizations to demonstrate its interest in conserving and maintaining the public natural resources of our State Parks and State Forests and the harm it has suffered from Respondents decision to divert public trust assets to non-trust purposes (see Exhibits A – O). PEDF provides further averments in support of its members substantial, direct and immediate interest in the claims set forth in the Petition through additional seven affidavits (Exhibits MMM – SSS). (345). As set forth in the Affidavits of the Petitioner’s members, their rights and interests under Section 27 are, have been and continue to be substantially and immediately harmed by the decisions and actions of the Respondents set forth in the Second Amended Petition and the First and Second Petition Addenda. Below are some highlights for each of the new affidavits. Exhibit MMM. Affidavit of Cindy Bower (346). Cindy Bower is the Vice Chairman for PEDF for the central region. She has been a resident of Northcentral Pennsylvania for the past 47 years. She has a personal business ownership in the tourism industry in the Pennsylvania Wilds. (347). Since her previous affidavit, the harm she wrote about and testified to in Commonwealth Court to still remains, and new damage to the forest and to her use of the forest has occurred. New State Forest roads have been expanded, new gates deny public access, and new pipelines fragment the forest. Formerly accessible 88

scenic views are cut off from public access. She finds formerly traditionally narrow roads expanded into wide gravel highways, and additional new gravel highways built where none existed before. Parts of the natural topography have been enormously terraced with industry infrastructure, acres upon acres in formerly undisturbed forestry land. And the development is only 16% of the lands currently under lease. (348). Ms. Bower does not believe that she will see in her lifetime the restoration of trees in the parts of the Tiadaghton and Loyalsock Forests. The unbroken forests that have been fragmented by expanded roads and pipelines, well pads, impoundments and other infrastructure will not be restored. These impacts are deeply and personally wrenching. (349). There is tremendous need for mitigation of these continuing losses, mitigation through purchase of new lands within or adjacent to those impacted. There is need to protect state lands from overdevelopment because of severed rights by purchasing some of those rights. There needs to be huge purchases of oil and gas [severed] rights on lands to stop further development of critical State forests and parks. (350). These lands are our heritage. Our future generations need to be assured that what we leave them will still be there, fully restored. Exhibit NNN. Affidavit of Carol Kafer and the Loyalsock Watershed Association (351). Carol Kafer is and has been president of the Loyalsock Creek Watershed Association (LCWA) for the past 13 years. The Association has been in existence since 1970, and has over 300 members. The purpose of the Association is to promote the protection and enhancement of the Pristine beauty and rich diversity

89

of the Loyalsock Creek Watershed. The watershed is about 320,000 acres. The State forest (Loyalsock) is about 30% of that. (352). In order for the members of the LCWA to have access to nonindustrialized State forests the DCNR needs to be adequately funded. The State does not own the mineral rights to about 10,000 acres of the Loyalsock State Forest. This is largely in the headwaters of the creek and includes two of our most valuable assets: Worlds End State Park and about 22 miles of the Loyalsock trail. Without the funding to negotiate with the owners of the gas resources these irreplaceable recreational resources could be ruined. DCNR needs adequate funding to prevent industrialization of our state forests. (353). About 85% of the Loyalsock Creek and its tributaries are designated Exceptional Value (EV) streams. The main reason that the Loyalsock Creek, and its tributaries are exceptional is that they are surrounded by intact, undeveloped forest. The forested land absorbs rain water, filters it, and drains it into the aquifers to supply good cold clean water to our streams. (354). Carol has a PHD on biological sciences. The current technologies for gas extraction cause increased impermeable surfaces which accelerate runoff; changes in micro-environments; forest fragmentation; miles of additional roads which are vectors of invasive species. DCNR will have to make many hard decisions on how to accommodate development of gas extraction on State forest lands. DCNR needs to be able to control all the money from the existing leases so that they, as the experts in forest management, can manage and maintain our forests in the future. Exhibit OOO. Affidavit of Gary Metzger and the Lycoming Audubon Society

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(355). The purpose of the Lycoming Audubon Society is to conserve and restore the natural ecosystem focusing on birds, wildlife and their habitats in the Lycoming County area. The State forests in their area include the Tiadaghton, the Sproul, the Bald Eagle, and the Loyalsock. The industrialization of these forests from shale gas development has detrimentally altered their natural character. Our constitutional right to be able to enjoy the wildlife in these areas has already been compromised, and will continue. We believe it is critical for DCNR to have control of all the oil and gas funds. The National Audubon Society, of which we are a part, recognizes a portion of the Loyalsock State forest as an Important Bird Area because of its unique habitat. We believe that even with the current development of gas extraction we have already lost too much. Exhibit PPP. Affidavit of Jim Weaver and Tioga Watershed Council (356). Jim Weaver is the retired Tioga County Planner. He is a member of the Tioga County Watershed Council. Jim and the members of the Council have experienced harm from the continued fragmentation of the core forests of northcentral Pennsylvania, the expansion of State forest roads has dramatic impacts to water quality and habitat in our State forests. There has been an increase of invasive species carried on expanded roads and pipelines, the impacts to our Commonwealth biodiversity have been immeasurable. Jim is very concerned from the openings of the canopy of the forest causing increased sun light and warming of the temperature of the water above the threshold for our native trout. Increased sedimentation that effects the macroinvertebrate community. All of these impacts require resources for the Bureau of Forestry and Parks to manage and mitigate. They have seen enough of the impacts from the gas industry already, and only 16% of the leased lands have been developed. It is paramount to keep the oil and gas lease fund 91

for the tasks ahead. We deserve to have access to our public lands in pristine condition. Exhibit QQQ. Affidavit of Mark Simonis and the Pine Creek Protective Association (357). Mark Simonis is retired from the U.S. Corps of Engineers. When a large section of the Northcentral area of Pennsylvania was designated as Pennsylvania Wilds he immediately felt a kinship. He has lived and played in the wilds of the State fores for almost 50 years. The negative impacts to the State forest from gas development are considerable. Areas where he used to hike, camp and fish are now dominated by gas well pads, haul roads, and pipelines. He usually does not go there anymore. In his retirement he has taken up the hobby of botany in the State forest, where he has discovered many habitats and species that had not been identified before. There needs to be an inventory of all habitat and species in our State forest. Then there needs to be protection for the habits and species. DCNR needs th money to conduct those inventories. Exhibit RRR. Affidavit of Robert Ross and the Tiadaghton Audubon Society (358). Robert Ross has been a member of the Tiadaghton Audubon Society for the past 29 years. They have done extensive restoration work on the upper Pine Creek. He is an ecologist, retired from the U.S,. Department of Interior. He is frustrated and in disbelief with the extent of the damage in the Tioga Forest on Oak Ridge. The industry had made recreation and use on Oak Ridge as almost completely non-existent for him. His favorite birding and picnic areas are gone. Many of the forest roads and trails are all impacted by the industry. DCNR needs the oil and gas lease money to protect and mitigate these areas. Exhibit SSS. Affidavit of Roy Seifert 92

(359). Roy Seifert is a retired from DCNR as District Forester of the Tioga State Forest. He has a degree in forestry science from Penn State. He currently lives in the PA Wilds of Northcentral Pennsylvania. He has dedicated his career and his life to trying to ensure that every Pennsylvanian can experience and benefit from Penn’s Woods. [DCNR’s 1995 strategic plan to sustain Pennsylvania’s woods through ecosystem management.] While with DCNR he tried to develop a plan to inventory the resources of our State forest. But the plan has never materialized. (360). Without the monetary resources of the Oil and Gas lease Fund ae needed to sustain the State Forest. There are thousands of miles of streams that are impaired, degraded mine sites, abandoned oil and gas wells, and hundreds of maintenance and improvement needs on DCNR’s list. VIII. CONCLUSION WHEREFORE, the Petitioner Pennsylvania Environmental Defense Foundation respectfully requests that this Honorable Court grant summary judgment in its favor on the requested declaratory relief under Article I § 27.

Respectfully,

John E. Childe Attorney for Petitioner I.D. No. 19221 1847 Center Street Camp Hill, Pa. 17011 717-743-9811 [email protected]

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