DCNR Has Not Been Asked To Identify New State Forest Lands For Gas Leasing

Cindy Dunn, Acting Secretary of the Department of Conservation and Natural Resources, told the House Appropriations Committee today DCNR has not been asked to identify new State Forest lands to lease for Marcellus Shale natural gas drilling.

Dunn said, overall, DCNR was lucky its budget received generally level funding, even in these difficult economic times.

Dunn provided the comments to the Committee because Gov. Corbett has not yet named a DCNR Secretary.

Here's a quick summary of issues raised during the hearing this morning:

Additional Leasing For Drilling: Dunn said DCNR has not been asked to identify additional areas for Marcellus Shale natural gas leasing, but if they would, the agency would first look at areas drilling companies have expressed interest in. Royalties from all natural gas State Forest land leases are expected to bring in about $65 million in FY 2011-12.

In a follow-up, Dunn said they would look carefully at all proposals for leasing more State Lands giving priority as well to leasing areas adjacent to existing leased areas. She noted the moratorium on leasing additional DCNR lands for drilling is still in effect and has not been lifted.

In response to a question about drilling under State Parks, Norbeck noted mineral rights in 80 percent of the land area in State Parks are not owned by the Commonwealth and therefore not under the same degree of control as State Forest lands where 80 percent of the mineral rights under those lands are owned by the Commonwealth.

Rep. Greg Vitali (D-Delaware) said he understands the Governor's Budget Office revised the DCNR budget proposal to include leasing of from 7,000 to 9,000 acres of State Forest land to generate about $43 million in revenue.

Daniel Devlin, Director of the Bureau of Forestry, said the change was needed because there was a simple transcription error in the Governor's budget document that repeated the FY 2010-11 lease income for FY 2011-12 for the Oil and Gas Fund when royalties from existing leases will increase as a result of well development.

Daniel Devlin said there are now 576 Marcellus Shale well sites in State Forests being developed and anticipated 300 to 400 more wells this year. He said Bureau of Forestry staff was being stretched thin in certain areas, but Dunn noted the proposed budget includes 27 new positions in the Bureau to oversee State Forest land drilling.

In response to a question on the recent revocation of a DEP-DCNR well permit review process, Dunn said there is a process in place to review the impacts of well development under Section 205(c) Oil and Gas Act. In the field, through the robust leases used by DCNR to control drilling on State Forest land, drilling companies do work with DEP and DCNR on impacts as wells are being developed on existing leases.

Devlin, as an example, said they are looking at using existing infrastructure, like existing forest roads, in the well development process. He does anticipate about 50 miles of new roads in State Forests this year as a result of development, which is controlled by the Bureau of Forestry under drilling leases as it occurs on public land.

He also noted there have been a number of proposals for new rights-of-way for gathering and other pipelines to service the Marcellus wells, but there have little development yet on State Forest land, although more is coming.

State Park Privatization: In response to a question about the privatization or sale of some State Parks to be operated by private companies, pointing to Denton Hill Ski Area which has had operational problems.

Dunn said Pennsylvania's Gold Medal winning State Park system is a good example of public-private partnerships, noting a recent economic impact study which shows State Parks generate more than 10,000 direct and indirect jobs around the state.

John Norbeck, Director of the Bureau of State Parks, said there are over 125 concessionaire's contracts for food, recreation and facility operations across the state. On Denton Hill, he said the concessionaire's contract runs out in three years and noted there are some facility maintenance issues at the Park. In other areas, the state has made an investment in upgrading the capital facilities at the parks to provide a better facility.

He noted there are no plans now to sell any State Parks and there are limited funds available for capital facilities improvements at this time.

In response to another member's question on why Pennsylvania does not offered golf courses, better lodging and conference centers in State Parks, Dunn and Norbeck said the facilities in West Virginia and other states frequently cited as examples were actually money losers for those states.

Dunn said The Nature Inn at Bald Eagle Inn in Centre County is a public-private partnership model DCNR would like to promote.

Parks/Forests Infrastructure Improvements: Give the need for $100 million annual needs for State Parks and State Forest infrastructure improvements, Dunn said there is a continuous stream of projects in the pipeline funded by the Capital Budget and the Keystone Fund to make infrastructure improvements.
DCNR staff noted the agency is in the middle of a $45 million capital improvement program this fiscal year and next between the Capital Budget and the Keystone Fund.

State Park Entrance Fees: In response to a question about a general State Park entrance fee, Dunn said this issue has been looked at over the years, but the logistics of imposing a fee would be difficult giving as the example of Pymatuning State Park which has 37 different points of entry.

State Park Naming Rights: Dunn said, in response to a question about the possibility of selling State Park naming rights, many people are very attached to the name of their local State Park. Norbeck said, based on the experience in other states, the revenue from selling those rights has been minor. Rep. Doug Reichley (R-Berks) suggested the state adopt a tax credit for a contribution like that to the State Park system.

Heritage Parks: Asked about the zeroing out of the Heritage Parks line item, Dunn said local Heritage Parks organizations are eligible for Keystone, Community Partnership and Growing Greener grants and they compete well because their projects have multiple benefits-- recreation, environmental and economic development.

Timber Sales: House members noted there has been an increase in timber sales to $30 million in the FY 2011-12 from $15 million in FY 2009-10 indicating a partial recovery of the timber market which has been depressed in recent years. Daniel Devlin, Bureau of Forestry, said timber prices have not fully recovered from their 35 percent or more drop in value over the last few years.

Hunting On DCNR Lands: In response to a question about potential conflicts between hunting and drilling operations, Dunn said DCNR offers more lands for hunting than any other state agency, noting 71 percent of park lands is open to hunting.

Daniel Devlin, Bureau of Forestry, said drilling companies do restrict access to drilling sites during the development process out of necessity for safety and it does result in local, minor restrictions in hunting, but there will not be a major impact. He noted the Bureau is developing a monitoring program for issues like this.

PNDI Natural Diversity Index: Rep. Scott Hutchinson (R-Venango), Majority Chair of the House Environmental Resources and Energy Committee, asked how the PA Natural Diversity Index fits in with the mission of DCNR. He said he views PNDI as a regulatory program and might better suited to DEP's mission.

Dunn said DCNR is charged with managing and protecting the natural resources of the Commonwealth, in concert with the Fish and Boat and Game Commissions, and PNDI is part of managing those plant and animal resources.

She noted PNDI is part of the Natural Heritage Program and is operated under contract with the Western PA Conservancy in cooperation with the Commissions. She said PNDI has tried to improved its operations, including their web-based access in doing checks for rare and endangered species to avoid adverse impacts.

Dunn said the agency is always looking to improve the process, especially in required permit review checks at DEP and for other agencies.

Rep. Hutchinson said he is concerned about the delays PNDI imposes on permits and projects.

DCED Permit Acceleration: In response to a question about a line in Governor's budget announcement about the Department of Community and Economic Development Secretary being given authority to speed up permit reviews in any state agency, Dunn said she did not think it would usurp the authority of the environmental agencies, including DCNR, to make decisions on permits, but meant that agencies, in these difficult economic times, should give priority for projects which generate jobs.

Growing Greener Fund: When asked about whether the Corbett Administration has a plan to renew funding for the Growing Greener Program, Dunn said it's a little early in the Administration. She noted the Renew Growing Greener Coalition is pressing to renew funding for the program.

With respect to DCNR funding, Dunn said her agency is looking to royalties monies in the Oil and Gas Fund to finance State Park and State Forest land development and enhancement.