THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY D. WHITE, BROWNE, TOMLINSON, WAUGH, M. WHITE, WOZNIAK, EARLL, GREENLEAF AND SCARNATI, FEBRUARY 1, 2011

AS AMENDED ON THIRD CONSIDERATION, OCTOBER 25, 2011   

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.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

This act shall be known and may be cited as the Indigenous

Mineral Resources Development Act.

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Department."  The Department of General Services of the

Commonwealth.

"Mineral resources."  Coal, oil, natural gas, coal bed

<--

methane, limestone and other valuable minerals.

"Right-of-way."  Includes:

(1)  a right of passage and haulage for a lawful purpose;

(2)  a right of flowage or transmission for a lawful

purpose; or

(3)  the construction, operation and maintenance of

infrastructure necessary to facilitate a lawful purpose.

"State-owned land."  Land owned by the Commonwealth. The term

does not include land owned and administered by the Department

of Conservation and Natural Resources, the Pennsylvania Fish and

Boat Commission or the Pennsylvania Game Commission.

"State system land."  Land owned by the State System of

Higher Education or controlled by the State System of Higher

Education pursuant to a memorandum of understanding approved by

the Department of General Services.

"System."  The State System of Higher Education of the

Commonwealth.

Section 3.  Development of mineral resources on State-owned

<--

land.

(a)  Authority.--The department has the following powers:

(1)  To make and execute contracts or leases in the name

of the Commonwealth for the mining or removal of valuable 

coal, oil, natural gas, coal bed methane, limestone and 

<--

mineral resources which may be found in or beneath State-

owned land and to convey Commonwealth rights to coal, oil,

<--

natural gas, coal bed methane, limestone and mineral

resources.

(2)  To grant a right-of-way through State-owned land to

any individual or corporation that applies if the department

determines that:

(i)  the grant will not so adversely affect the land

as to interfere with its usual and orderly

administration; and

(ii)  the interests of the Commonwealth or its

citizens will be promoted by the grant.

(3)  To cooperate with, consult with or delegate to the

Department of Conservation and Natural Resources in carrying

out the provisions of this act.

(b)  Advertising.--

(1)  A proposed contract, lease or conveyance of coal,

<--

oil, natural gas, coal bed methane, limestone and mineral 

resources exceeding $1,000 in value must be advertised once a

week for three weeks, in at least two newspapers of general

circulation published nearest the locality indicated, in

advance of awarding the contract or lease.

(2)  If the proposed conveyance of the mineral resources 

<--

is included in the proposed conveyance of the real property

to which it is attached, the department shall comply with the

advertising requirements for the conveyance of the real

property.

(c)  Bidding.--

(1)  Except as set forth in paragraphs (2) and (3),

contracts, leases and conveyances shall be awarded to the

highest and best bidder. If title to the property has already

been conveyed, but the Commonwealth has reserved the right to 

coal, oil, natural gas, coal bed methane, limestone or  

<--

mineral resources, the Commonwealth may convey the mineral 

<--

resources to the owner of the fee without bidding.

(2)  The requirement for competitive bidding may be

waived if the Commonwealth owns a fractional interest in the 

coal, oil, natural gas, coal bed methane, limestone or

<--

mineral resources in or beneath State-owned land; and the

department may enter into a contract to lease that fractional

interest, with the approval of the Governor and upon terms

and conditions the department deems to be in the best

interest of the Commonwealth.

(3)  If a proposed conveyance of the mineral resources 

<--

under this section is included in the proposed conveyance of

<--

the real property to which it is attached, the award shall be

made to the selected buyer of the real property.

(d)  Bond.--A party that enters into a contract or lease

under this section must provide a bond satisfactory to the

department for the proper performance of the contract or lease.

Section 4.  Development of mineral resources on State system

<--

land.

(a)  Authority.--The department has the following powers:

(1)  To make and execute contracts or leases in the name

of the Commonwealth for the mining or removal of valuable 

coal, oil, natural gas, coal bed methane, limestone and  

<--

mineral resources which may be found in or beneath State

system land.

(2)  To grant a right-of-way through State system land to

any individual or corporation that applies if the system

determines that:

(i)  the grant will not so adversely affect the land

as to interfere with its usual and orderly

administration; and

(ii)  the interests of the Commonwealth or its

citizens will be promoted by the grant.

(3)  To cooperate with, consult with or delegate to the

Department of Conservation and Natural Resources in carrying

out the provisions of this act.

(b)  Advertising.--A proposed contract or lease of mineral

<--

resources exceeding under this act that exceeds $1,000 in value

<--

must be advertised for three weeks on the system's publicly

accessible Internet website and at least once a week for three

weeks, in at least two newspapers of general circulation

published nearest the locality indicated, in advance of awarding

the contract or lease.

(c)  Bidding.--

(1)  Except as set forth in paragraph (2), contracts and

leases shall be awarded to the highest and best bidder.

(2)  The requirement for competitive bidding may be

waived if the Commonwealth owns a fractional interest in the

mineral resources in or beneath State system land and the  

department may enter into a contract to lease that fractional

interest, with the approval of the Governor and upon terms

and conditions the department deems to be in the best

interest of the Commonwealth.

(d)  Bond.--A party that enters into a contract or lease

under this section must provide a bond satisfactory to the

department for the proper performance of the contract or lease.

Section 5.  Deposit of revenue.

(a)  Payments.--

(1)  All payments or royalties received by the department

pursuant to a contract or lease under this act, except for a

contract or lease under section 4, in fiscal year 2011-2012

through fiscal year 2013-2014 shall be deposited in the Oil

and Gas Lease Fund.

(2)  All payments or royalties received by the department

pursuant to a contract or lease under this act, except for a

contract or lease under section 4, in fiscal year 2014-2015

and each fiscal year thereafter shall be deposited as

follows:

(i)  the first $50,000,000 Twenty-five percent of

<--

payments or royalties received by the department shall be

deposited in the Hazardous Sites Cleanup Fund. Fund; and

<--

(ii)  all remaining payments or royalties shall be

deposited in the Oil and Gas Lease Fund.

(ii)  Twenty-five percent of the payments or

royalties shall be allocated to the Pennsylvania

Infrastructure Investment Authority established under the

act of March 1, 1988 (P.L.82, No.16), known as the

Pennsylvania Infrastructure Investment Authority Act.

(iii)  Twenty-five percent of the payments or

royalties shall be allocated to the H2O program

established under the act of July 9, 2008 (P.L.908,

No.63), known as the H2O PA Act.

(iv)  Twenty-five percent of the payments or

royalties shall be deposited into the Oil and Gas Lease

Fund.

(3)  The costs incurred by the department or the

Department of Conservation and Natural Resources in

advertising and contracting, leasing or conveying the mineral 

<--

resources, including the fees of any survey, appraisal or

report, shall be deducted from payments or royalties, and

that amount shall be an executively authorized augmentation

to the appropriation to the department or the Department of

Conservation and Natural Resources.

(b)  Payments derived by system.--All payments or royalties

derived from any lease entered into under section 4 shall be

allocated as follows:

(1)  Forty percent shall be retained by the university

where the coal, oil, natural gas, coal bed methane, limestone

<--

or mineral resource is leased or extracted and shall be used

by the university for deferred maintenance projects or energy

efficiency or energy cost saving improvements.

(2)  Sixty percent shall be allocated to the State System

of Higher Education for distribution among those universities

where no coal, oil, natural gas, coal bed methane, limestone

<--

or mineral resources have been leased or extracted. The

distribution formula shall be determined by the Board of

Governors of the State System of Higher Education. Funds

distributed under this paragraph shall only be used for

deferred maintenance or energy efficiency or energy cost

saving improvements.

Section 6.  Condition relating to surplus property.

Notwithstanding the provisions of section 2405-A(6) of the

act of April 9, 1929 (P.L.177, No.175), known as The

Administrative Code of 1929, the department may convey all oil,

gas and mineral rights to the purchaser of surplus Commonwealth

real property along with the conveyance of the surplus real

property when done so in accordance with this act.

Section 7 30.  Effective date.

<--

This act shall take effect immediately.