NJ Subsidizing Oil and Gas Pipelines That Cross State Lands

Texas Eastern and Algonquin Gas pipeline crosses State Park lands in West Amwell, NJ

Today’s Assembly Environment Committee hearing on a A2232, a bill to dedicate $150,000 in Island Beach State Park revenues to certain purposes, provided an opportunity to talk about increasing revenues to State Parks simply by collecting money that is owned to the State.

Amazingly, existing oil and gas pipeline and electric power-line easements across state lands – including State Park Lands – that distribute BILLIONS of dollars in products, are based on below market rates in agreements almost 100 years old – some for as little as $1 per day! DEP has failed to renegotiate these easements and leases to reflect current market value. It’s as if you could rent Jay Gatsby’s mansion for $100 per month, the market rate in 1929.

Worse, as far as I know, even that paltry revenue is not being collected!

Texas Eastern & Algonquin Gas pipeline

For several years now, I have been trying to get attention focused on the failure of the DEP Office of Leases and Consessions to collect revenues owed to the State of NJ. See: NEW JERSEY PARKS LOSE MILLIONS IN UNCOLLECTED LEASE PAYMENTS – Park Closures Could Be Averted by Reaping Concessionaire and Easement Revenue

That press release relied on a prior 2003 OLS Audit that found that DEP had not addressed prior Audit reports of lost lease revenue.

We also disclosed internal DEP documents – please read this absurd situation documented by D&R Canal Park Supervisor. The memo describes how flawed the lease arrangements are at just one state park, D&R Canal State Park

Despite 2 prior Audits with adverse findings and OLS questions of DEP during recent budget reviews, I am unaware of any documentation or evidence that State Audit deficiency findings were ever fully corrected. I am unaware of evidence that DEP ever responded to prior OLS requests and quantified the status of revenues of the Office of leases and concessions, particularly with respect to easement revenues and the status of renegotiating prior easements to reflect current market values. (see page 9 of DEP

In this time of fiscal crisis and budget cutting, it is vital that NJ collect all revenues owed, particularly from the deep pockets out of state oil and gas corporations.

So why was my testimony today on this issue before the Assembly Environment Committee ignored? Why did the Committee Chairman take the highly unusual step to try to rule my testimony out of order as “off the bill” (see A2232) (you can listen to my complete testimony at the conclusion of this link)

In 2003, the State Audit found:

Office of Leases and Concessions

The Bureau of Parks, Office of Leases and Concessions mission includes developing and providing facilities for visitors to state parks. As part of that mission, they are responsible for the leases and concessions located within the parks. There are a wide variety of agreements including leasing of fields and orchards for agricultural uses and leasing of historic structures, cottages and dock rights for residential use. In addition, there are other agreements for easement and pipeline crossings. …. During fiscal year 2003, concession payments and lease rentals deposited into the General Fund totaled [only] $750,000 with over half attributable to the Senator Frank S. Farley marina lease. It does not appear that the monitoring of leases or collection of rent is a priority of the Office of Leases and Concessions. Our reviews of both the leases and concession components of the office noted the following issues.

Timeliness of Lease Agreements

• The Office of Leases and Concessions has not sought to replace expired lease agreements.
• Three expired leases noted in our previous audit issued in 1999 have not been renegotiated and reissued. The tenants continue to operate under a special use permit in holdover status. The terms for two of the previous leases, including rental amounts due, have remained unchanged.
• Leases formerly administered by the Division of Water Resources were turned over to the office in fiscal year 1992. We noted that 15 of 20 leases are expired and need to be renegotiated.

These sweetheart deal easements must be renegotiated to reflect current market rates. And the landlord needs to start collecting the rent.