The Pennsylvania General Assembly has passed a bill that authorizes the state Department of General Services (DGS) to lease state-owned land for oil and natural gas drilling, as well as mining for coal, limestone and collecting coalbed methane.

SB 367, also known as the Indigenous Mineral Resources Development Act, passed the state House of Representatives by a 136-62 vote on Tuesday. The state Senate passed the bill last October (47-2), then passed it again on June 30 (46-3) as part of a concurrence on House amendments. The legislation now heads to Gov. Tom Corbett, who is expected to sign it into law.

“I appreciate my colleagues’ support of this bill,” State Sen. Donald White (R-Indiana), the bill’s primary sponsor, said Tuesday. “This legislation does not require the state or SSHE [State System of Higher Education] to lease or sell any property rights. It simply provides a new opportunity to generate revenue, while helping students, supporting Pennsylvania’s environmental protection efforts and boosting our state economy through the creation of new jobs.”

Under the bill, 50% of the payments and royalties for minerals extracted from “state system land” would be retained by the host university, and another 35% would go to the SSHE. The universities and the organization would be able to use the revenue for deferred maintenance costs, or energy efficiency or energy cost saving improvements. The remaining 15% would go to 14 universities that are members of SSHE to help offset tuition fees and other charges.

SB 367 defines “state system land” as property owned or controlled by the SSHE.

“This distribution formula benefits all state universities,” White said. “Perhaps the best component of the formula is the requirement that 15% be set aside for scholarships, which will allow students and their families to directly benefit from this as well.”

For other state-owned land, the bill allocates 60% of payments and royalties to the Oil and Gas Lease Fund, and 25% to the Pennsylvania Infrastructure Investment Authority. The remaining 15% would be retained by the state agency that signed the lease.

The bill excludes land owned and administered by the Department of Conservation and Natural Resources (DCNR), the Pennsylvania Fish and Boat Commission (PFBC) or the Pennsylvania Game Commission (PGC).

One interesting part of SB 367 stipulates that competitive bidding for leases may be waived if the state owns a fractional interest in the coal, oil, natural gas, coalbed methane or limestone either in or beneath state-owned land. Under that scenario, the law says the DGS may sign a contract with the governor’s approval.

“College campuses, in my view, are not the appropriate places for drilling,” Rep. Gregory Vitali (D-Havertown), who cast one of the dissenting votes on SB 367, told NGI’s Shale Daily on Wednesday. He added that while he supports natural gas development, “it’s a highly industrial activity, whereas college campuses are places that are meant to be more serene. They’re supposed to be places of quiet and contemplation. So I don’t think college campuses are conducive to the industrial activity that comes along with gas production.”

On the provision allowing a waiver of competitive bidding, Vitali said he was familiar with it, “[but] that wasn’t brought up in any of the debate or discussion. No red flags were raised.”

John Hanger, former secretary of the Pennsylvania Department of Environmental Protection, also weighed in on the issue. “I personally don’t like broad waivers of competitive bidding requirements,” he told NGI’s Shale Daily on Wednesday.

Last June the DCNR began requiring operators to sign a lease and make royalty payments to the state for natural gas gathered from wells adjacent to navigable streams, lakes and waterways (see Shale Daily, June 5). One month earlier, the PGC put about 18,987 acres of State Game Lands No. 36 up for oil and natural gas leasing, and is considering other areas (see Shale Daily, May 21; April 25, 2011). Meanwhile the PFBC began negotiations with operators for leasing rights to 43,000 acres of waterways in 2011 (see Shale Daily, July 14, 2011; March 15, 2011).