NY Comptroller DiNapoli Editorial Defends Drilling Tax

Thomas DiNapoliLast week, New York State Comptroller Thomas P. DiNapoli made a pitch for taxing the gas drilling industry in New York to create a pool of money that can be used to clean up accidents that may occur. As MDN pointed out (see MDN story here), any pool of money that sits in Albany doesn’t last long and will certainly be reallocated for other unintended uses. In addition, wouldn’t you make the company who caused the accident pay to clean it up? Why extort extract money ahead of time from all drillers, even from those who will never experience an accident, for an accident fund? Why? Because politicians love money, that’s why.

Apparently DiNapoli is feeling push-back against his brilliant proposal, and has found it necessary to write an editorial, sent to multiple news outlets across the state, to defend the indefensible: yet another new tax. Here is DiNapoli’s editorial, in full:

When a Chesapeake Energy Corporation gas well blew out near midnight April 19 in Bradford County, Pa., thousands of gallons of fluids containing dangerous chemicals from the drilling operation discharged into nearby creeks and neighboring properties. While Chesapeake personnel attempted to stop the spill, the company’s accident response specialists didn’t arrive from Texas until 13 hours later. Contaminated fluids and gas gushed from the well for more than a day. It was an environmental disaster.

In New York, we have the chance to do things differently.

Last week, I proposed a program that would ensure the quick and effective remediation of any accidental contaminations from natural gas production accidents and create an industry-supported fund to help private citizens recover damages to their property.

With more than 6,000 natural gas wells in production in New York today and the state evaluating whether to approve high-volume hydraulic fracturing, we must ensure the safety of both ongoing and proposed drilling operations.

Preventing accidents and contamination during the production of natural gas should always be our first priority. However, well contaminations, fluid spills in and around well sites, fires and explosions at gas sites, and dangerous emissions are known hazards of this industrial activity. While regulatory agencies and some in the industry are doing their best to minimize these risks, my new program would ensure that if something does go wrong, it is the industry — not property owners — who bear the financial burden of cleanup, repair and restitution.

This program is modeled on our own successful Oil Spill Fund, which is administered by the comptroller’s office in conjunction with the Department of Environmental Conservation and the attorney general. The program, begun in the 1970s, has proven to be an effective tool to ensure those responsible for contamination are held accountable, petroleum contamination is quickly identified and cleaned up, and economic damage claims are resolved promptly and fairly.

The program I am proposing establishes strict liability for damages associated with natural gas production, including drilling, storing and transporting both natural gas and fracking fluids. It requires that bonds be posted and available to pay for cleanups when contamination occurs. Finally, it establishes an industry-supported recovery fund, paid for through permitting fees, penalties assessed and recoveries received, to ensure quick cleanups in cases where polluters refuse to pick up costs or cannot immediately be identified.

Whether or not high-volume hydraulic fracturing in the Marcellus Shale is approved by the state, drilling for natural gas will be a fact of life in New York for the foreseeable future. To address the risks, we must take steps now to ensure prompt and permanent cleanups of any accidents. Failing to prepare for the potential consequences of natural gas production is not a risk we should be willing to take.*

All of DiNapoli’s bluster over liability for this and regulation of that is nonsense. Does he think he now heads up the Department of Environmental Conservation? Sorry Tom, that’s Joe Martens’ job, not yours. Your job is to manage the state’s pension fund and keep an eye on state finances. It’s not your job to worry about regulating the gas drilling industry. All of his talk about damages and liability and regulation is to obfuscate the real purpose of his proposal: a steep, new tax on an industry not even off the ground yet in New York State. I Red heart NY!

*Elmira Star-Gazette (Aug 15, 2011) – Natural gas damage recovery fund needed