Fair Market Value Leases for Energy Infrastructure Could Fund Park System

[Update: 8/17/11 – DEP and TGP did a lousy job in permitting and design. See today’s Record story: Heavy rain force mud into pristine lake

These major water quality violations warrant huge enforcement fines. This is a DEP project with DEP permits, so DEP enforcement is required. DEP must not be allowed to transfer responsibility to the local Soil Conservation District, which lacks effective enforcement powers.

And it wasn’t the heavy rains that caused this problem, which was occuring prior to the recent deluge. This is a chronic problem. On August 5, 2011, the Record reported: Residents of West Milford’s Lake Lookover continue to deal with runoff problem = end update]

“If the Christie managers want to run the state more like a business, they should start by collecting the rents truly owed. Doing this basic job would eliminate the need to panhandle in the parks with chintzy privatization schemes.”

We’ve previously written about the scandalous sweetheart deal that DEP provided for the Tennessee gas pipeline easement across NJ’s most environmentally sensitive public lands.

We also written about how that pipeline will carry fracked gas and why fracking is a serious threat to NJ’s water supply.

But today’s post focuses on a long ignored aspect of the story we have repeatedly been trying to put on the table.

DEP has failed to collect fair market value for energy infrastructure easements across state lands as required by 2008 legislation that specifically mandated the DEP submit a plan by July 1, 2009.

That law mandated that DEP:

conduct a re-appraisal of the rents and fees charged for all residences and other buildings and structures, and for utility easements and right-of-ways, located on State park or forest lands to ensure they reflect current fair market values and will continue to do so;

See below for today’s PEER press release for details and links to the relevant documents.

Fair Market Value Leases Could Fund Jersey Park System

Shale Gas Pipeline Highlights State’s Failure to Collect Full Payments from Utilities 

Trenton – Responding to protests from Public Employees for Environmental Responsibility (PEER) and others, the State of New Jersey has dramatically hiked the lease payment it is demanding for a proposed shale gas pipeline crossing state parklands.  Despite this huge increase, the state is still not collecting fair market value on hundreds of leases, easements and concessions, thus forfeiting millions of dollars.

Tomorrow (Wednesday 8/17/11)), the state Department of Environmental Protection (DEP) is holding a public hearing on its plan to lease up to 30.21 acres of state land in High Point, Long Pond Ironworks and Ringwood State Parks to Tennessee Gas Pipeline Company.  This pipeline is just one segment of the “Northeast Pipeline Project” to import natural gas into the New York City metro area.  The gas is produced by controversial fracking of the Marcellus shale play underlying most of Pennsylvania and New York’s southern tier.

DEP originally proposed a lease payment for an earlier pipeline segment of just $45,000 for a 24-year term.  After protests led by PEER, the state raised that rent to $180,000.  DEP is now proposing for the next pipeline segment a rent of approximately $7.84 million over the same period – a more than 170-fold increase over what DEP proposed for the first segment.  Even with this hefty hike it is not clear that DEP is charging the full market value as it is required to do by law.

“PEER is proud to have won New Jersey taxpayers $8 million in additional revenue but they may be owed even more,” state New Jersey PEER Director Bill Wolfe, who testified against the original lease in July 2010 before the State House Commission which must approve all state land leases. “DEP proposed a lease that was less than pennies on the dollar due to a flawed real estate appraisal but we still do not know at what price a proper appraisal would peg this lease.”

Over the last several years, a series of audits by the Office of Legislative Services found major flaws in the DEP Office of Leases and Concessions, most notably its failure to charge fair market value or collect overdue lease and concession payments.  In response to these audits and PEER advocacy, the Legislature mandated that DEP “conduct a re-appraisal of the rents and fees charged for all residences and other buildings and structures, and for utility easements and right-of-ways, located on State park or forest lands to ensure they reflect current fair market values and will continue to do so” (P.L. 2008, c.31). DEP was then supposed to integrate this with its plan to fund state parks and forests, a plan due on July 1, 2009.

More than two years after this statutory deadline, DEP has done neither mandated task.  Instead the Christie administration has explored a number of small revenue measures to commercialize parks, such as selling corporate naming rights for park facilities and privatizing various park operations.

“As this new lease richly demonstrates, charging fair market value for utility easements from the energy industry, as the state is required to do, would be a major funding source for depleted parks and state lands budgets” Wolfe added.  “If the Christie managers want to run the state more like a business, they should start by collecting the rents truly owed. Doing this basic job would eliminate the need to panhandle in the parks with chintzy privatization schemes.”

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Look at past audits faulting state land lease collections

http://www.peer.org/news/news_id.php?row_id=1369

View photos of the pipeline construction

http://www.wolfenotes.com/2010/11/tennessee-gas-pipeline-blasts-through-nj-highlands-watershed-lands-will-import-marcellus-frack-gas/

See lowball lease on first pipeline segment

http://www.peer.org/news/news_id.php?row_id=1375

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

existing Tennessee pipeline ROW- looking west from Terrace Pond trail (West Milford, NJ)

[End note: my site data tracker tells me that they’re reading this in Texas, home of “Tennessee Gas Co.!” What’s up TGC guys?