Fine Print: Trying to Set a Fair Price for Use of New Jersey’s Public Lands

Tom Johnson | December 8, 2014 | Energy & Environment
Senate committee takes up bill that could change the rules governing how the state is compensated for use of protected land

natural gas pipeline
The issue: How much should private companies compensate New Jersey for leasing private rights-of-way on state-owned lands that was purchased with taxpayers’ dollars. It has become a source of controversy as transmission lines and gas pipelines increasingly crisscross environmentally sensitive lands.

Why it is important: For several years, environmentalists and some lawmakers have been unhappy with leases granted to pipeline companies and others to build new projects on state-owned lands. They argue the leases fail to fairly compensate the state for the land the projects acquire at a much cheaper cost than if they had to purchase private property.

What is being done: The Senate Environment and Energy Committee is expected to consider a bill (S-570) today, sponsored by its chairman Sen. Bob Smith (D-Middlesex), that could force corporations to pay more if they divert public land from recreational use. The bill, similar to one in the last legislative session that never became law, would require the state to consider how much revenue a project would generate when completed, a process proponents argued would deliver more value to taxpayers who paid for preservation of the land.

How the state Department of Environmental Protection is addressing the problem: Nearly two years ago, the agency issued a report arguing it is making big strides in dealing with the situation. It conceded, in some cases, that agency fee schedules are outdated; in other cases, current rules and statutes prevent the state from realizing fair compensation for the private use of state land. It proposed raising the lease costs for private projects on public lands.

What has happened in the past: A $45,000 lease was approved with Tennessee Gas Pipeline four years ago to build a project through two state parks and a wildlife management area in the New Jersey Highlands. After much criticism, the lease was revised to return $180,000 to the state over 24 years, as well as to require the pipeline company to pay $2 million in mitigation costs.

Why it is still an issue: With cheap natural gas supplies available in nearby Pennsylvania, new gas-pipeline projects continue to be proposed, including one that could run through portions of preserved farmland and open space in central New Jersey and another through protected areas in the New Jersey Pinelands. Also, a proposed high-voltage transmission line could run through a number of wildlife management areas and other protected spaces, if approved.

What happens next: The bill is likely to be approved by the Senate committee today, but it never made it out of the Senate in the last session. The Christie administration’s Energy Master Plan, however, strongly backs development of new gas pipelines and transmission lines as a way of lowering high energy bills for consumers and businesses.