• Pennsylvania Colleges May Soon Benefit Economically from Marcellus Shale under SB 367
  • October 4, 2012 | Authors: Scott H. DeBroff; Alicia R. Duke
  • Law Firm: Rhoads & Sinon LLP - Harrisburg Office
  • On September 25, 2012, the Pennsylvania State House passed Senate Bill 367, an Act providing for indigenous mineral resource development; and imposing powers and duties on the Department of General Services and the State System of Higher Education. This bill will allow the state to lease mineral rights on some state-owned lands allowing for natural-gas exploration, coal mining, and quarrying limestone around universities, prisons and other state institutions. The State Senate approved the bill this past June and Governor Corbett who endorsed the bill last year is expected to sign it.

    Previously, several state agencies including the Department of Conservation and Natural Resources (DCNR) and the Fish and Boat Commission were allowed to enter into leases to develop these resources. The new bill does not affect these relationships.

    Senate Bill 367 presents a formula for how the fees and royalties generated under this bill can be used by the state universities. Fifty percent (50%) of the fees and royalties generated by the State System of Higher Education lands would be retained by the university where the resources are located.  This portion can be used by the university for its deferred maintenance projects, energy efficiency projects, or energy cost savings improvements. Thirty-five (35%) percent of the money that is generated under the lease will be allocated to other state universities where no coal, oil, natural gas or limestone has been leased or extracted.  The distribution of this thirty-five percent will be determined by the Board of Governors of the Pennsylvania System of Higher Education. The funds that are distributed can also only be used for deferred maintenance projects, energy efficiency projects or energy cost saving improvements. Lastly, the remaining fifteen percent (15%) generated under a lease will be allocated to the System of Higher Education for the distribution to all fourteen universities to help with tuition fees. 

    The bill states that for non-university leases, sixty percent (60%) of the revenue generated would be allocated to the Oil and Gas Lease Fund, twenty-five percent (25%) would go to the Pennsylvania Infrastructure Investment Authority and fifteen percent (15%) will be retained by the state agency where the coal, oil, natural gas or limestone is leased or extracted.

    There is also a provision in the bill which states that the president of the university affected by the contract or lease has to provide written authorization before the Department of General Services can proceed with negotiating a contract or lease.