Appalachian Basin

Wayne National Forest Fracking Alleviates Loss of Funding to Ohio Counties and Schools

EID has highlighted that the first two Bureau of Land Management (BLM) federal mineral lease auctions of acreage in the Wayne National Forest yielded nearly $7 million. But folks may not realize that of that $7 million, the state of Ohio will receive 25 percent of the sales, which will make a huge positive impact at the local level.

For example, Wayne National Forest Supervisor Tony Scardina and staff announced this week that leasing of federal minerals has more than made up for a recent considerable loss of federal funding for the 12 counties that share Wayne National Forest acreage. Those counties have already received hundreds of thousands from just one Wayne minerals auction, accounting for 47 percent of the total revenue received from the federal government. The U.S. Forest Service is projecting these payments to swell to approximately three times that amount in conjunction with the second Wayne National Forest mineral lease sale.  With regard to federal funding for Washington County specifically, Scardina recently told the Marieta Times,

“[T]he county would lose $30,000 a year (due to an 80 percent reduction in funding due to the expected expiration of the federal Secure Rural Schools and Community Self-Determination Act at the end of fiscal year 2016), but due to mineral lease payments the county will receive a lot more.” (Emphasis added)

Appalachian Counties All Benefiting from Wayne Fracking

As a result of the BLM’s formula for distribution of federal land payments to state land local governments, each of the dozen Ohio counties that share the Wayne National Forest’s 244,240 acres will receive financial compensation from mineral sales. This is certainly welcome news to all 12 counties, despite the fact that only two — Washington and Monroe — actually leased minerals in the December and March federal lease sales.

Unlike private lands, which are subject to various taxes that support local infrastructure and schools, the 244,240 acres of the Wayne are only subject to Payment in Lieu of Taxes and revenue made possible by the Payments to States Act of 1908, which mandates 25 percent of all receipts received from commercial activities in the national forests and mineral payments be paid to counties with Wayne acreage, is another source of revenue. Over the years, revenue to local communities located in the forest has been a real challenge, as Ohio Congressman Bill Johnson has explained,

“…it degenerates the tax base, makes it very, very difficult for those counties to pay for education and infrastructure programs.”

In the past, these 12 counties also relied on Secure Rural Schools Funding. But that funding was recently cut by 80 percent, taking revenues from $236,382 in 2015, down to $62,971. The program also has not been renewed by the federal government.  And while there have been producing wells in the Wayne for years, cumulative mineral payments to these communities was yielding only about $40,000 a year prior to the development of the Utica Shale.

Areas such as Monroe County have dealt with these funding shortfalls for a very long time, which is why there was broad bipartisan support for leasing of federal minerals throughout the extensive review to lease in the Wayne. Washington County also strongly supported leasing the Wayne as well — and it’s now obvious why.

Here is a look at how significant fracking has been for ALL of Appalachia Ohio and how fracking is quite literally saving the budgets of these local communities, accounting for 47 percent of the total federal payments received!

Prior to Secure Rural Schools funding cuts, the total payments distributed to these 12 counties was $640,264 in 2015. After the schools lost the lion’s share of this funding in 2016, total payments dipped down to $435,289. This is precisely why many supported leasing of the Wayne, including Frontier Local Schools treasurer Lee Howard, who recently noted,

“The Wayne does not pay regular property taxes like private landowners. So we only get a stipend from them from what they choose to provide as payment in lieu of taxes. But if they were to develop horizontal drilling or hydraulic fracturing connecting private and federal lands in our district, we could benefit not only from royalties but also the value of utility construction.”

Thanks to fracking, the loss of those funds were not only replenished but surpassed by several hundred thousand dollars more. What’s even more exciting is that the March lease sale, which has not yet been distributed, should bring in an additional $1.2 million! If we use the same breakdown from the December payment information, which was provided by the U.S. Forest Service in meetings with Ohio county commissioners, we can assume that these Appalachian counties will receive approximately the following payments from the March lease sale as well.

Starting next month Ohio counties will be required to split this money 50/50 between the schools and road and bridges, according to Ohio Revised Code. Washington County Commissioners are extremely excited about this news, as Commissioner Ron Feathers recently said,

“Fifty percent would be a boon to our engineering department.” (Emphasis added)

Of course, this is only the beginning. The BLM has only leased about five percent of the 40,000 acres in the Wayne, which leaves another 38,160 acres for federal mineral lease sales. The proceeds from the sale of minerals, as well as the royalty payments once wells start producing could be a game-changer and significant revenue source for these 12 counties.

Of course, in Ohio, developing shale while preserving and protecting our forests, state and federal lands is not new. Fracking has proven to be a win-win for the environment and the economy, with a prime example being the Muskingum Watershed Conservancy District (MWCD), where fracking has brought more than $200 million in mineral lease and royalty revenue to the district since 2011. A direct result of leases signed with Utica Shale developers in the eastern portion of the district, the revenue has been used to improve the watershed of this political subdivision of the State of Ohio, proving that conservation and shale development can work hand-in-hand. The Wayne National Forest is certainly another example of this story, as the initial stages of shale development has come just in time to help offset significant federal funding cuts to schools and infrastructure throughout the Appalachian region of Ohio.

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