Responsible Drilling Alliance

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22
Apr

Statement by John Quigley, December 7, 2011

HB 1950 hijacks the money earned from leasing the public’s forest to subsidize the gas industry in 6 ways, bleeds DCNR dry, and is an existential threat to the public lands. But to understand its impact, you first have to know a little about the Oil and Gas Lease Fund and DCNR’s budget. 

 


 

The OGLF was created by the Oil and Gas Lease Fund Act, passed in 1955. It required all income from oil and gas leases from state forest land be used “exclusively” for conservation, recreation, dams, or flood control. In its first 54 years, over $160 million in rents and royalties were deposited in the Fund and used for conservation. Eight state parks — and portions of over 30 others — were purchased and developed with these funds. The operation of the Fund has been one of the most successful conservation programs in our nation’s history. That changed beginning in 2009, when the OGLF was used to offset some of the deep General Fund budget cuts that resulted from the worst economy since the Great Depression. In FY 2009-10 and 10-11, a total of $383 million was transferred from OGLF to the General Fund. And since then, most of what was left in the OGLF has been used to run DCNR: 

 In FY 09-10, about $19 million was taken from OGLF to offset some budget cuts, to keep the Bureau of Forestry operating and keep state parks open. 

 In FY 10-11, the picture got worse. DCNR’s budget was cut further – reducing its General Fund appropriation to the same dollar amount as when the agency was created in 1995 – and $39 million from OGLF was used to offset some cuts. 

 The current state budget cut DCNR’s General Fund appropriation by another 30%, and the transfer from the OGLF to run the agency rose 75% to $68 million. The General Fund now provides less than one fifth of DCNR’s budget, and OGLF is the largest since source of DCNR’s operating funds. 

 Left unaddressed is the need to rehabilitate and invest in DCNR’s vast infrastructure system that supports state parks, forests and local economies. DCNR estimates those needs at a billion dollars. 

 

Difficult budgets have rendered DCNR dependent on OGLF to fund its operations, and caused disinvestment in conservation, and in the resources that do so much to enhance our environment, our quality of life, that support our timber and tourism industries, and in so many ways define the Pennsylvania that we love. 

HB 1950 will make it vastly worse. It hijacks the money earned from leasing the public’s forest to subsidize the gas industry in 6 ways: 

 First, starting in 2013, 25% of OGLF income would be transferred annually to the Environmental Stewardship Fund to plug abandoned oil and gas wells. There may be 180,000 of those wells, according DEP. Shouldn’t the cost of plugging them be borne by the gas industry? 

 

HB 1950 also contemplates funding “other authorized uses” of the Environmental Stewardship Fund if there’s any money left after plugging all those wells. Presumably, that would be to renew Growing Greener – by itself, a good thing – IF there was some Statement by John Quigley, December 7, 2011 

 

assurance that most of the rest of annual OGLF income would go to DCNR and conservation. But that is hardly the plan in HB 1950. 

 Second, starting in 2014, $40 million of OGLF is annually transferred to the Hazardous Sites Cleanup Fund. The transfer will rise with inflation each year. Should the cost of cleaning up polluted industrial sites be borne by the state’s parks and forests? At the cost of conservation? Shouldn’t industry pay these costs? 

 

 Third, starting in 2013, 5% of annual OGLF income up to $5 million is transferred to counties, townships, and school districts as payments in lieu of taxes. A better way to compensate them – and at higher amounts – is to have a real drilling tax that would generate respectable payments to localities. 

 

 Fourth, starting in 2013, $15 million is annually transferred to the Conservation District Fund to pay for oversight of gas drilling activities. Shouldn’t the gas industry pay these costs? 

 

These three measures alone amount to a $60 million (and growing) annual public subsidy to the gas industry. Here are two additional blatant subsidies. 

 Fifth, HB 1950 transfers $5 million from OGLF to DEP to fund grants to small transit authorities to buy natural gas-fueled buses. I agree with the use, but not the source of funding. Should parks, forests, and conservation pay to create customers for natural gas? Great for drillers’ bottom lines, not so much for parks and forests. 

 

 Sixth and finally, another $7.5 million goes from OGLF to DEP to fund loans to large transit authorities for more natural gas buses. At least this money is to be repaid to OGLF by 2021. But it’s another gift to the gas industry to expand their customer base at the expense of conservation. Drillers should fund these worthwhile programs. 

 

So let’s do a little math. When all these annual subsidies kick in, ESF gets 25% of all OGLF revenues, and another $60 million-plus is used every year to cleanup industrial sites, pay localities, and subsidize gas oversight. That’s on top of the $12.5 million that goes to DEP for gas vehicle subsidies. If the OGLF generates $100 million in 2014, what will be left for DCNR? $3 million? DCNR is using $68 million from OGLF this year to keep the lights on. What if more General Fund cuts are in the offing? And how does the agency deal with its billion dollar backlog? The answers to these questions cannot be “lease more state forest land” – something that would be ecologically and economically disastrous, and which, according to the September Franklin and Marshall poll, 72% of Pennsylvania voters oppose

HB 1950 represents the proposition that the OGLF is the answer to all problems, and a piggybank for the gas industry. It – and the mindset it represents – are existential threats to the public lands, and flaunt Pennsylvania’s constitutional mandate to conserve and maintain Pennsylvania’s public natural resources for the benefit of all the people. What we should be discussing is not defunding conservation, not disinvesting in the public lands, not bleeding DCNR, not subsidizing a well-heeled industry, but rather how Pennsylvania can wisely invest income from state forest leases to permanently strengthen Pennsylvania’s public lands, environment, economy, and quality of life. 

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