NY Comptroller Wants New Tax to Cover Gas Drilling Accidents

pickpocketEven though New York still has not adopted new drilling regulations, and likely won’t until late this year, and even though drilling will not begin until 2012 at the earliest, New York politicians are lining up to dip their hands into driller’s and landowners’ pockets. The latest example is New York State Comptroller Thomas DiNapoli who has proposed a bill to the state legislature to create a driller-funded pool of money (i.e. a new tax on drillers) to cover the cost of any future accidents that may (or may not) happen because of drilling.

The problem, of course, is that any pool of money in Albany—home of politicians with sticky fingers—has a half-life of about 30 minutes before it will be borrowed, moved from one side of the ledger to the other, or otherwise disappear.

The bill, proposed by Comptroller Thomas DiNapoli, would allow the state to create the fund by tacking on a surcharge to permit fees for natural gas companies and other production facilities.

The fund would then cover the cost of any cleanup work from accidents during gas drilling or hydraulic fracturing if the cause of the contamination couldn’t be immediately identified, or if the responsible party refused to pay. The state Attorney General’s Office would later determine who is responsible and sue for damages, with any money recovered going back into the cleanup fund.

DiNapoli said the proposal is modeled after the state’s oil spill fund. The bill would allow for leaseholders or other landowners to seek claims if drilling accidents were to occur, he said.

"Unlike protections for those who suffer from an oil spill, we don’t have a similar recovery and compensation fund for incidents involving natural gas extraction," DiNapoli said. "So we’re trying to provide a level playing field."

But the head of the state Independent Oil & Gas Association called the bill "premature" and said there is "simply no basis for such a fund at this time."

"The proposal does not take into account existing permit requirements, which address bonding for site reclamation, and it does not acknowledge existing environmental, criminal and civil law, which holds businesses accountable on many levels," IOGA Executive Director Brad Gill said in a statement.*

*Elmira Star-Gazette (Aug 9, 2011) – N.Y. plan promotes fund to cover gas-drilling accidents