Monday, March 16, 2015

Budget: DCNR Infrastructure Project Backlog Reduced By $400 Million In 2 Years

Acting DCNR Secretary Cindy Dunn told the House Appropriations Committee Monday the backlog of infrastructure projects in State Parks and Forests was now about $600 million thanks to a combination of funding sources including the Capital Budget, Enhance Penns Woods and others
In 2013, then DCNR Secretary Richard Allan told the Committee during his budget hearing there was a $1 billion infrastructure backlog.
A number of House members expressed concern about the lack of funding for the Heritage Parks Program, including House Appropriations Majority Chair Bill Adolph (R-Delaware).
In response, Dunn said DCNR has an “austere” budget and she noted those eligible for Heritage Parks grants are also eligible and are encouraged to apply for Growing Greener Grants to preserve their funding.
Dunn and Dan Devlin, Deputy Secretary for Parks and Forests, who accompanied her to the hearing, noted there has been a significant drop in drilling activity on existing State Forest natural gas leases due to the drop in natural gas prices. Only one well pad is active at the moment Devlin said.
There are now 608 Marcellus Shale wells drilled on State Forest land of the approximately 3,000 wells allowed under the leases issued under Gov. Rendell.
In a written statement for the Committee, Acting DCNR Secretary Cindy Dunn said, “I am pleased to say that DCNR’s proposed budget for the next fiscal year shows an overall increase of about $8.3 million, which will allow the department to operate as we currently do.  I think our budget is a reflection of DCNR’s value in the lives of Pennsylvanians, our inspired work, and the fact that we operate a lean and efficient organization.
“The proposed budget takes an important first step in returning stability to our budget by reducing DCNR’s reliance on revenues generated from leases of Commonwealth lands for natural gas extraction, restoring $20 million from General Fund monies to the department’s general government, state park and state forest operations. This positions us in the future to use Oil and Gas Fund revenues to focus on conservation and recreation rather than just operations.
“Earlier this year, Gov. Wolf signed an executive order reinstating the moratorium on new leases for oil and gas development in Pennsylvania’s state forests and parks.
“DCNR agrees that this approach recognizes the immense ecological and recreational value of Pennsylvania’s state parks and forests, while allowing responsible, monitored development to occur on approximately 700,000 acres of existing leases and areas where DCNR does not own mineral rights.
“This approach allows the department to focus staff resources on managing existing and future development; continue to monitor impacts of gas extraction; refine guidelines and management practices; and fully engage stakeholders on impacts to a full suite of state forest values.
“The governor’s budget proposal maintains funding for the geologists and other scientists who lead this work.”
Among the issues raised by questions from House members were--
-- Heritage Parks Money Missing: Rep. Bill Adolph (R-Delaware), Majority Chair of the Appropriations Committee, asked why $2.2 million in Heritage Parks funding was not include in the budget proposal.  Acting Secretary Dunn said DCNR’s budget is an “austere” budget and she noted those eligible for Heritage Parks grants are eligible and are encouraged to apply for Growing Greener Grants to preserve their funding.
-- Drilling On State Forest Land: Rep. John Maher (R-Allegheny), Majority Chair of the House Environmental Resources and Energy Committee, asked if DCNR does an audit of gas well production on State Forest Land to determine if the state is getting all the royalties it is entitled to.  Dunn said there is an audit process now for both well production and royalty payments, including post production costs.  She said DCNR is also looking to retain an independent firm to perform price audits for production and royalties.
Rep. Maher followed up by asking if there are provisions for providing gathering lines that connect wells to midstream pipelines leading to natural gas markets.  Dunn said there are now 600 wells on State Forest Land with the potential build out of 3,000 wells under existing leases.  That includes the infrastructure needed to bring the gas to market.  Dan Devlin, Deputy Secretary for Parks and Forests, added there is a bottleneck between gathering lines and connecting them to the midstream and other pipelines needed to market the gas.
-- Point State Park, Pittsburgh: Rep. Maher asked about what the additional staff proposed in the budget would do at Point State Park in Pittsburgh and suggested the use of seasonal employees.  Dunn said the two additional positions are needed at the park year-round, although she would provide more information on seasonal employees.
-- Closing State Parks In The Event Of A Budget Impasse: Rep. Maher said during the Rendell Administration when there was a budget impasse action was taken to close State Parks and State Forests, even though it cost more money to pay staff overtime to “chase people away.” He asked if there are plans on how to deal with that issue.  Dunn said she hopes it does not happen and had not yet thought about what DCNR would do.
-- Drilling Moratorium/Use Of Oil & Gas Fund: Rep. Greg Vitali (D-Delaware), Minority Chair of the House Environmental Resources and Energy Committee, noted the Executive Order re-instituting the moratorium on further drilling in State Parks and State Forests was an important symbolic act.  He also expressed concerns about the continued use of Oil and Gas Fund monies for administrative costs.  Dunn noted DCNR’s budget is taking the first step in weaning the agency from Oil and Gas Fund revenues to pay administrative costs.
-- Loyalsock State Forest Drilling: Rep. Vitali said Gov. Wolf noted during the campaign he would have the Commonwealth try to block drilling in Loyalsock State Forest.  Dunn said she would be meeting with environmental groups and the drilling companies who own the mineral rights under the State Forest with the goal of trying to protect the uses and values of the State Forest.
-- New Recreation, Conservation Initiatives: Rep. Vitali asked if DCNR is looking at any new recreation and conservation initiatives.  Dunn said DCNR and its partners are looking to increase State Park programming to teach people recreational skills like fishing, snowshoeing and other activities through the GetOutdoorsPA program.
-- Enhanced Penns Woods: Rep. Vitali asked for an update on the Enhanced Penns Woods Initiative started last year.  Dunn said the $40 to $50 million spent in the initiative from several sources has made a dent in the State Parks and Forests infrastructure.
-- Gypsy Moth Spraying: Rep. Vitali asked about the status of funding for gypsy moth spraying.  Dunn said DCNR does have the funding for the program, but there is an increase in gypsy moth activity, particularly in the Northeast.  Dan Devlin, Deputy Secretary for Parks and Forests, said this year’s budget includes funding to spray about 30,000 acres.
-- Severance Tax Proposal Debt Service Funding: Rep. Duane Milne (R-Chester) asked if the proposed severance tax is the source of the $50 to $55 million needed annually to finance the $675 million energy and economic development bond issue proposed in the Governor’s budget.  Dunn said she would have to get back to the Committee on that issue, since it is not under DCNR’s purview.
In a follow-up question, Rep. Milne asked if there was any proposal to use the Oil and Gas Fund to finance the debt service, if the severance tax was not passed with the budget.  Dunn said she had not been party to any discussion of using the Fund for that purpose.
-- Drilling, Mineral Development By Other Agencies: Rep. Milne asked if DCNR has adequate funding under Act 147 authorizing drilling and mineral development on lands owned by other state agencies.  Dunn said there has not been much interest in natural gas development on other state lands and as a result there has been little cost to DCNR.  Dan Devlin added there is no natural gas development on other state agency land because of low gas prices, but there has been interest in a small PennDOT property with coal.
-- Expanding State Park Programs To Urban Areas: Rep. Michael O’Brien (D-Philadelphia) asked what DCNR is doing to expand State Park activities into urban areas like Philadelphia.  Dunn said in her work for Audubon PA and previously with DCNR gave her experience in promoting recreation and conservation in more urban areas, for example, by promoting the use and development of facilities like the Schuylkill River Trail through grants and educational programs.  She added working closely with local partners is critical to expanding urban recreation through programs like GetOutdoorsPA.
-- Update On State Forest Drilling Operations: In response to a question by Rep. Garth Everett (R-Lycoming) asking for an update on State Forest drilling, Dan Devlin, Deputy Secretary for Parks and Forests, said as of March 1 a total of 1,120 locations were approved for drilling by DCNR, 1,004 wells have received permits from DEP and 608 wells have been drilled on 232 well pads.   517 wells are now producing royalties.  He added only one drill pad is being drilled now, which represents a considerable drop in activities.  
 In a follow-up, Rep. Everett asked about the build out of natural gas pipelines and expressed concern about forest fragmentation.  Dunn said DCNR cooperates with companies and there are discussions with companies interested in pipeline rights-of-way.  Rep. Everett complemented DCNR’s local state foresters for their work in making sure drilling on State Forest land is done properly and invited Committee members to tour the area.
-- Recruiting of DCNR Work Force: Rep. Stephen Kinsey (D-Philadelphia) said a significant portion of DCNR’s workforce will be eligible for retirement in the near future and he said he was aware of plans for an out-of-state recruiting drive to replace foresters.  Dunn noted most of DCNR’s forestry staff comes from Penn State and State System Schools like Shippensburg University.  She said they are looking for some diversity in the workforce-- minority candidates in particular.  Rep. Kinsey said he was interested in promoting recruitment within cities and Dunn agreed to work with him on that issue.
-- South Newark Shale Basin Moratorium: Rep. Marguerite Quinn (R-Bucks) asked about the South Newark Basin drilling moratorium and study in Southeast Pennsylvania that was mandated in the Fiscal Code bill two years ago.  Dunn said the Bureau of Topographic and Geologic Survey has been looking at existing information about the potential for drilling in Southeast Pennsylvania, since no funding was provided to conduct its own study.  Although the study is not yet complete, she said there is no interest in drilling in Southeast Pennsylvania.
-- Washington Crossing State Park: Rep. Quinn asked about the $2.2 million in funding for Washington Crossing State Park directed by the Fiscal Code bill last year.  Dunn said if the funding is approved in the final budget, DCNR can take over administration of the Park from PA Historic and Museum Commission.
-- DCNR Infrastructure Backlog:  Rep. Mary Jo Daley (D-Montgomery) asked what the status of DCNR’s $1 billion infrastructure backlog is.  Dunn said the estimated infrastructure backlog of projects is now about $600 million thanks to a combination of funding sources including the Capital Budget, Enhance Penns Woods and others.  She added that investments in State Parks and Forests bring real economic dividends.  Every dollar invested returns $10 in economic activities.  There is about a $1 billion in economic benefit and 13,000 jobs from Pennsylvania’s State Parks and Forest systems.
In a follow-up, Rep. Daley asked if more General Fund monies would free up more resources in the Oil and Gas Fund for infrastructure improvements.   Dunn said freeing up those funds would mean more investments in Parks and Forests.  She said there has been proposal to create a Conservation Trust funded by Oil and Gas Funds to provided a more permanent source of funding for State Park and Forest infrastructure improvements, but that may come sometime in the future.
-- River Trails/Rail Trails:  Rep. Karen Boback (R-Lackawanna) asked if there have been any studies done on the economic benefits of river trails and rail trails. Dunn said some studies have been done in some local areas, including examples like the study by the  Susquehanna Greenway Partnership which found $4 million in annual economic benefits on a mid-state trail and a study of the Great Allegheny Passage rail trail near Pittsburgh that identified a $40 million annual benefit.
-- ATV Trails: Rep. Kurt Masser (R-Columbia) asked about the status of the gap analysis for ATV trails in Pennsylvania.  Dunn said there is a draft RFP for a study.  In a follow-up, Rep. Masser noted there is a significant gap in miles of snowmobile versus ATV trails with ATV trails not as numerous even though there are many more ATVs registered by DCNR.  Dunn said the agency looks at the best opportunities for spending the small number of recreation dollars in the best way they can in developing trails and they do not have any preset spending allocations.
A copy of Acting Secretary Dunn’s statement is available online.
Click Here for a more detailed summary of the proposed DEP, DCNR budgets.
Written testimony and a video of each budget hearing will be posted on the Republican House Appropriations Committee webpage.

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