Court Ruling Affects Marcellus Shale Exploration

Oklahoma’s Chesapeake Energy leaders no doubt have paid close attention to a recent ruling by the Pennsylvania Supreme Court regarding the Marcellus Shale activity. The company has been a key player in exploration for several years.

The high court said Pennsylvania lawmakers cannot arbitrarily divert money from natural gas drilling on state forests to other priorities. It’s a decision that many observers feel will affect environmental and fiscal policies in the state.

The decision means royalties and other revenue from state lands have to be used to preserve the “public trust” created by the state’s constitutional environmental protections. The ruling came in a challenge by the Pennsylvania Environmental Defense Foundation which fought the leasing of state forests for natural gas drilling. The foundation specifically questioned a provision of the state fiscal code that diverted some of the revenue to the Pennsylvania general fund.

It was in 2008 when Pennsylvania started leasing its state forests and between then and 2014, the state legislature diverted $335 million from state-land gas revenue to general revenue spending.

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