On March 9, Sen. Gene Yaw (R-Lycoming) suggested again the Department of Conservation and Natural Resources lease more state forest land for natural gas drilling, this time not to balance the state budget or pay for DCNR’s operating budget, but to pay for needed infrastructure improvements in state parks and forests.
Sen. Yaw has been a frequent critic of the moratorium on further natural gas drilling on state forest land put in place by Gov. Wolf soon after he took office in 2015. [Read more here]
Sen. Yaw had this exact same conversation with DCNR Secretary Cindy Adams Dunn at the 2020 DCNR budget hearing and before that. [Read more here]
Sen. Yaw has served as Majority Chair of the Senate Environmental Resources and Energy Committee since 2013.
“My understanding from some independent sources [is] that DCNR is sitting on 500,000 acres that could be drilled without surface disturbance. 500,000 acres,” said Sen. Yaw. “Now, one of the other things I know, and you said this about a year ago, [is] that some companies are actually surrendering their [DCNR state forest] leases and not drilling them. That correct?”
Secretary Dunn confirmed leases for about 68,000 acres of land leased in 2008 and 2010 were returned undeveloped by natural gas drillers.
“Well, when you leased the land in 2008, the minimum lease price that you got was $1,151 per acre,” said Sen. Yaw. “Even if you had [leased] that 68,000 [acres], if you got $1,000 an acre or $500 an acre, that would be $34 million. I mean, I've been around Harrisburg quite a while now, but even $34 million, that's a reasonable sum of money.”
“Are you familiar with non-surface disturbance leases?” asked Sen. Yaw. “Have you looked at that, the possibility of doing that?”
Secretary Dunn explained, “Of the leases we have, the ones we let in 2008 and 2010, only 35 percent of the available leased land has actually been developed. They could come in and develop the remaining 65 percent.”
Secretary Dunn explained, “Market factors are what’s driving their lack of development of 65 percent of the existing leases. So that suggests to me, should there not be a moratorium, that opportunity really isn’t what it was in 2008 and 2010. The market’s just so different.”
John Norbeck, DCNR Deputy for Parks and Forestry, further explained the 2008 and 2010 leases gave the original companies the opportunity to reassign the lease to another company, but they have not.
“My guess is they didn’t get any takers because of the economics of that lease,” said Norbeck. “The [natural gas] market has also been very depressed for the last several years and our assumption is they made the assessment that it is not economically viable to reassign those leases.”
DCNR told Sen. Yaw last year the state of the natural gas market made developing existing leases on state forest land-- “non-surface disturbance” or otherwise-- uneconomical or the drilling companies would be doing it. [Read more here]
And again, before that.
The bottom line is this is not 2008/2010 when everyone agreed Gov. Rendell hit the “landrush” market for natural gas drilling leases just right to lease over 251,000 acres of state forest land for natural gas drilling.
The proceeds from the upfront payments made to DCNR for those leases-- $594.4 million or so-- was transferred to the General Fund to fill holes in the state budget from 2008 to 2014. [Read more here]
In the 2014-15 state budget, the General Assembly directed DCNR to do yet more “non-impact” leasing of as much additional state forest land for natural gas drilling as required to generate $95 million to fill a hole in that year’s state budget-- Section 1601.1-E of the Fiscal Code. [Read more here]
The non-impact or non-surface disturbance leasing concept came from an executive order issued by Gov. Corbett in May of 2014 ending a moratorium on further leasing of state forest land imposed by Gov. Rendell in 2010, just before the gubernatorial election.
Gov. Rendell was the one who directed the original 2008 and 2010 leasing of state forest land for drilling to help balance the state budget. [Read more here]
Ultimately, the additional leasing was not done because DCNR entered into a negotiated settlement with the PA Environmental Defense Foundation in July 2014 delaying any final action on leasing until Commonwealth Court ruled on a PA Environmental Defense Foundation challenge to using leasing revenues from DCNR’s Oil and Gas Lease Fund to balance the state budget. [Read more here]
In 2017, the PA Supreme Court declared the initial transfer of drilling revenue to the General Fund unconstitutional because the General Assembly and the governor failed in their responsibilities as public trustees for those resources under the state’s Environmental Rights Amendment to the constitution. [Read more here]
Unfortunately, those unconstitutional transfers continue to this day and so do the court battles to stop them.
The PA Environmental Defense Foundation recently appealed to the PA Supreme Court to enforce their 2017 decision declaring the transfers unconstitutional. [Read more here]
In 2019, Senate Republicans proposed legislation eliminating Gov. Wolf’s moratorium on drilling state forest land as an alternative to Wolf’s Restore Pennsylvania proposal which at that time was funded by a severance tax on natural gas.
They again used the ‘non-surface disturbance” terminology in describing their proposal. [Read more here]
Today, natural gas drillers aren’t developing their existing leases on private land, witness the significant drop off in the number of new drilling permits submitted to DEP for review over the last few years [Read more here], let alone looking for new land to lease for drilling [Read more here].
DEP is projecting a 70 percent drop in per drilling application fee revenue. [Read more here]
Revenue from the Act 13 drilling impact fee has dropped 42 percent in the last two years. It’s based on a per well fee. [Read more here]
The suggestion for more drilling to support $1 billion of needed infrastructure safety and maintenance projects in state parks and forests is an empty proposal.
Click Here to watch Senate hearings live. Click Here for testimony and videos of completed hearings.
The Senate hearing on the Department of Environmental Protection is on March 11 at 10:00 a.m. and the Department of Agriculture on April 8 at 2:00 p.m.
NewsClips:
Robert Swift: Focus On State Parks At Senate Budget Hearing
AP: Federal COVID Aid To States Draws Warning To Use It For One-Time Costs
AP: Another $13 Billion In Federal COVID Relief Headed To PA Governments
Resource Link:
DCNR Budget Testimony: Outdoor Recreation Helped Millions Of Pennsylvanians Cope With COVID Pandemic
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