Gov's Office & DCNR say Proctor Trust ruling would cost state $1.3B - That's not true.

The Governor’s office and DCNR claim they needed Act 27 because the Pennsylvania Supreme Court's decision in the Proctor Trust case would have cost the state $1.3 billion.  That is not true. 

Here are the facts.

• The Court Did Not Create Liability for the Department of Conservation & Natural Resources or the PA Game Commission. The Supreme Court’s decision clarified ownership of oil, gas and mineral rights on certain lands. It was a ruling about property ownership.  

• The Amount of Land Involved Is Limited. The dispute with DCNR involves only 741.6 acres (of a 964-acre tract). The Supreme Court case involved a unique fact pattern and only a very limited amount of properties have that same fact pattern. The reach of the decision is small.

• The DCNR’s $1.3 Billion Number Is Its Total Revenue from All of Its Leased Land. DCNR has leased approximately 250,000 acres for oil and gas production since 2008. The Supreme Court decision does not involve this leased acreage. The number is a scare tactic. DCNR’s revenue on those lands is safe.

• DCNR Has Not Identified Any of Its Leased Lands that Will Be Impacted by the Supreme Court Decision. Aside from the 964-acre tract, DCNR has not and cannot point to a title chain that would invoke the fact pattern in the Supreme Court decision

• The Drilling Companies Would Owe any Money — Not PGC or DCNR. Where drilling has occurred, the oil and gas companies that drilled the wells and produced the gas will owe any money, not DCNR. Most companies have delayed drilling for this reason. For the only property involving DCNR lands, funds from the 964-acre tract have been escrowed by the production company—so no money would come from the DCNR’s separate $1.3 Billion revenue. 

• The Gas Produced from the 964-acre Tract Is Not Worth Anywhere Near $1.3 Billion. The estimated royalty funds are approximately $20 million.

• The New Law Is the Problem, Not the Solution. Here is the irony: Act 27 claims to protect the state from liability. But the truth is the opposite: the Supreme Court’s decision did not put the state on the hook for any money. The new law, however, could open the door to “takings” claims — not just from the Proctor Trust, but from every property owner in Pennsylvania who is in a similar situation. This would include properties that would benefit private entities under Act 27 – so the Commonwealth could end up paying for subsurface rights that do not even go to state agencies. That is where the real financial risk lies.