Gas Pipeline Deal Just One Example of Far Larger Problems at DEP

DEP Commissioner Bob Martin - business skills, yet can't set current market value based leases and collect revenues owed by corporate energy giants.

[Update 2 – 7/20/10: killer Star Ledger editorial:  New Jersey taxpayers get shorted on gas pipeline]

Update 1: 7/7/10 Brian Murray of the Star Ledger wrote a good story:

Audit shows public land leases to private firms continue to trouble N.J.]

Last week, I wrote about a corporate givaway – a proposed state land lease betweeen DEP and Tennessee Gas Pipeline Co. to alllow a 23 mile pipeline across the Highlands (See: Christie DEP Cuts Sweetheart Deal With Gas Industry)

Well, that proposed lease is just one of many similarly flawed leases that have been criticized by a series of  negative audits by the State Auditor – see below press release issued today. Be sure to hit the links to read my letter to the State House Commission and the most recent Audit findings.

NEW JERSEY FORFEITS MILLIONS ON PARK LEASES AND CONCESSIONS
Lapsed Leases, Below Market Rates and Sweetheart Deals Give Corporations Breaks

Trenton – Despite a declared fiscal emergency, New Jersey taxpayers are losing millions of dollars every year on lapsed leases and other concessions on state forest and recreational lands, according to a state audit report posted today by Public Employees for Environmental Responsibility (PEER).  Failure to keep leases current or charge full market rates gives an underhanded subsidy to some of the state’s biggest corporations at taxpayer expense.

The Office of State Auditor report covers “Natural Resource Management” by the New Jersey Department of Environmental Protection (DEP) for the period from July 1, 2007 through September 30, 2009.  The audit found that long-standing deficiencies in DEP property management had still not been remedied:

• Nearly half of the leases (112 of 236) on a state inventory list are expired;

• More than half of leases sampled (17 of 28) could not show that market rates are charged.  This chronic problem is compounded by the fact DEP “does not have a system that can easily determine the rent receivables.”  As a result, state marinas and other concessions operate at a loss; and

• Lack of required insurance can also increase state liability.  For example, at the Aero-flex-Andover Airport in Kittatinny State Park only 3 of 45 hangar and business rentals had proof of insurance on file. Only two of those 45 tenants had current rental agreements; 16 of the tenants had no agreements at all on file.

“This is the fourth audit in a row highlighting these same problems,” stated New Jersey PEER Director Bill Wolfe, a former DEP analyst.  “The state is in dire fiscal straits; is it too much to ask DEP to simply collect the rent?”

A related and perhaps larger deficiency is that DEP does not charge utilities, oil companies and other big corporate interests the full market rate for use of state lands, facilities and right-of-ways.  This problem was illustrated last week when DEP proposed that Tennessee Gas Pipeline Co. pay only $45,000 on a 24-year lease for a $2 billion pipeline that will cross through several state parks and preserves.  While the deal was temporarily shelved by the State House Commission, during the hearing DEP was unable to find a copy of the appraisal on which the lease schedule was based.  PEER today sent a letter to the State House Commission asking it to remedy severe deficiencies in its property management and appraisals before reconsidering the Tennessee pipeline deal.

“It is scandalous that the State of New Jersey does not know what it owns or what it is worth,” added Wolfe, noting that the DEP does not even have a complete list of all its leases.  “One simple but seemingly revolutionary economy measure that we should enact right now is to ensure that all holders of state easements, leases and other concessions pay their fair share.

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Read the State Auditor report

View the PEER letter to the State House Commission

Look at past warnings ignored

New Jersey PEER is a state chapter of a national alliance of state and federal agency resource professionals working to ensure environmental ethics and government accountability