State DEP Does 180 on Highlands Pipeline Lease

State House Commission OKs a deal that allows 23-mile natural gas pipeline to cut through two state parks and a wildlife management area

The state Department of Environmental Protection, under intense criticism for the way it appraises public land, concedes it is time to come up with a better method. But it won’t come fast enough to hold up a land deal in the New Jersey Highlands.

Despite protests from conservationists that it was undervaluing the land, the State House Commission yesterday approved a slightly revamped lease allowing Tennessee Gas Pipeline to build a 23-mile natural gas pipeline through two state parks and a wildlife management area in the heart of the Highlands, the source of drinking water for 5 million people.

Unsuccessful Arguments

The approval followed a two-hour long public hearing in the Statehouse Annex, where environmentalists had unsuccessfully argued the state was getting shortchanged. In the end, the commission voted 5-1 to approve the lease, although it increased the lease value from $45,000 to $180,000 over 24 years.

“They sold out the people of New Jersey and opens space for a few extra pennies,’’ said Jeff Tittel, executive director of the New Jersey Sierra Club, after the commission rejected pleas to renegotiate the deal to get better value for the state.

The lease was defended by Amy Cradic, an assistant commissioner for natural resources at the state DEP, which negotiated the deal with the company. Beyond the lease, Cradic noted the state was being fairly compensated since the company is agreeing to pay $2 million in reparations. The money would replace lands destroyed during the pipeline construction by purchasing an additional 116 acres in the Highlands, four times the amount of land affected by the lease deal.

Still, Cradic acknowledged that moving forward, the state is reviewing a new methodology for more fully realizing the value of state-owned land it leases or sells in the future.

The state agency has come under fire from environmentalists and the non-partisan Office of Legislative Services for the way it handles leases on public lands. An audit released by the office earlier this month found that 112 of the 236 leases under its purview are expired. More than half of the lease reviewed could not be validated for fair market value, the audit found.
Critics of the deal say the land being sold was undervalued and objected to a $7,500 per acre cap on land acquisitions made by Tennessee Gas. Both Tittel and the New Jersey Conservation Foundation cited recent acquisitions in the Highlands where land was purchased at anywhere from $13,225 per acre to as much as $83,000 per acre.

One Dissenter

“The problem with the standard which you are using, you may very well end up buying cheap land,’’ said Sen. Robert Smith (D- Middlesex), the only member to vote against the deal. He suggested that the state should have taken in account how much the land would be worth once the pipeline was installed and gas started flowing.

“If they are literally going to make hundreds of millions of dollars off this, it seems to me that $1 million or $2 million is inadequate compensation,’’ Smith said. “New Jersey is not being fairly compensated.’’

Michael Gross, an attorney representing the company, said the lease deal will bring economic benefits to the state, creating jobs and the potential that it will lower or reduce natural gas costs to consumers in New Jersey. “We believe we negotiated a fair deal with the state of New Jersey,’’ he said.

In the end, Sen. Gerald Cardinale proposed to increase the lease amount from $45,000 to $180,000, a step that failed to sway opponents of the deal.

“It’s still too much of a low-ball offer,’’ said David Pringle, campaign director of the New Jersey Environmental Federation. “It’s chump change.’’