Allegheny County leased the natural gas rights beneath its airports and Deer Lakes Park to raise hundreds of millions of dollars for promoting economic development, reducing airline fees, upgrading park facilities and funding capital projects.
Now, the environmental organization PennFuture suggests that a recent state Supreme Court ruling directs the county to use the money for one purpose: protecting public natural resources like clean air and water.
In a letter to county officials on July 7, PennFuture’s vice president of legal affairs, George Jugovic Jr., asked how the county plans to comply with the high court ruling last month, which found that gas royalties from leases on state forests must be spent on conservation, not on general state budget items that serve other public benefits.
More broadly, the court declared that “all proceeds from the sale of our public natural resources are part of the corpus of our environmental public trust” and that the environmental trustee obligations described in the state constitution apply to all levels and branches of government.
“There can be no question that Allegheny County must abide by the court’s ruling” and “must use revenue derived from the lease of public trust resources — such as minerals beneath Deer Lakes Park and the Pittsburgh International Airport — exclusively for purposes authorized by the trust,” Mr. Jugovic wrote. Those purposes are limited to conserving and maintaining public natural resources for current and future generations.
The letter is one of several aftershocks following the landmark June 20 ruling that highlight its significant financial implications.
At the state level, the environmental group that won the case — the Pennsylvania Environmental Defense Foundation — is seeking to have a court declare part of the state general fund budget that became law on July 11 unconstitutional because it uses $61 million in gas drilling revenue from state forests to fund the Department of Conservation and Natural Resources’ daily operations, which the group says violates the Supreme Court’s ruling.
The group’s attorney filed an amended application for an injunction on Thursday to block the state from transferring the $61 million out of a special conservation fund.
PennFuture’s letter to Allegheny County is the first of what will likely be many more queries to local governments across the state that have raised money by opening public lands for Marcellus Shale natural gas development.
The organization is doing research now to determine which other jurisdictions have leased public gas rights.
The point of the letter, Mr. Jugovic said, was to alert the county of its obligations and to start a dialogue about how it will meet them. He said the letter is “not necessarily” a precursor to formal legal action.
Allegheny County spokeswoman Amie Downs said the county is still reviewing the court decision and its implications.
Allegheny County leased the natural gas rights beneath Pittsburgh International and Allegheny County airport to Consol Energy in 2013 in a deal that is expected to pay the airport authority an estimated $450 million in royalties over two decades. Wells at Pittsburgh International Airport began producing gas — and paying royalties — last summer.
The county leased the natural gas rights beneath Deer Lakes Park to Range Resources in 2014 with the expectation of receiving more than $50 million in royalties.
Left unclear by the Supreme Court decision — and crucial for the county’s future spending decisions — is what, exactly, counts as public natural resources.
The case dealt with gas rights under land specifically dedicated to conservation. Although the justices in the majority said the public environmental trust is broader than just state parks and forests, they did not define the breadth of the trust or whether it would encompass publicly owned natural gas beneath developed land, like Allegheny County’s airports.
“Looking at the narrowest possible interpretation, I think what’s most plain is the royalties from natural gas beneath Deer Lakes Park must be used for public trust purposes,” Mr. Jugovic said.
“Beyond that, there’s a number of questions that need to be answered and we’re asking the county, how are you going to answer that question?”
Laura Legere: email@example.com.