Insights

The recently enacted Indigenous Mineral Resources Incentives Development Act (“Act”), Senate Bill 367, expands and clarifies the rules involving leases with various Pennsylvania state agencies.

The PA Department of Conversation and Natural Resources (DCNR) has been in on the leasing game for a while, seeking royalties for wells that are drilled under streams, rivers and other public waterways in Pennsylvania. The DCNR considers a waterway to be publicly owned if they are used in any form of commercial trade or travel.

The new Act designates the Department of General Service of the Commonwealth as the department responsible for executing leases or other contracts for mineral resources. The Act covers leases for coal, oil, coal bed methane or limestone. This Act includes leasing the properties held by the State System of Higher Education, which has seen some press in the past year about exploring leases on the various campuses around the state. The Act does require authorization by the president of the impacted university to proceed with negotiating a mineral lease.

Payments received under leases or contracts are required to be allocated on a pre-determined schedule, as follows:

1) Sixty percent of the payments are deposited into the Oil and Gas Lease Fund;
2) Twenty-five percent of payments are remitted to the Pennsylvania Infrastructure Investment Authority; and
3) Fifteen percent of payments received will be retained by the state agency where the lease is located.

If the lease involves one of the state system properties, the allocation is as follows:

1) Fifty percent is retained by the university where the minerals are located;
2) Thirty-five percent is allocated to universities that do not have minerals leased; and
3) The remaining fifteen percent is to be allocated to the state system to help reduce or offset tuition fees or other charges.

Read the full text of the Indigenous Mineral Resources Incentives Development Act.

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