Gas industry pushes back against DiNapoli’s fracking fund proposal

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A natural gas industry trade group is pushing back against a bill proposed today by Comptroller Thomas DiNapoli that would create a company-funded reserve to cover the cost of damages from any future gas-drilling accidents.

The bill, proposed by the comptroller’s office, would tack on a surcharge to permit fees for natural gas wells and other production facilities to create the fund.

The fund would then pay for 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 would later be able to determine who is responsible and sue for damages, with any money recovered going back into the cleanup fund.

But the head of the Independent Oil & Gas Association of New York 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. “The industry’s outstanding record of environmental protection in New York should give the public the assurance that we operate with the best interests of the environment in mind.”

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.”

The comptroller’s proposal comes at a time when the state is readying itself for a sharp increase in natural gas production. In recent years, national scrutiny over the safety of hydrofracking, a technique in which a mix of water, sand and chemicals is injected into gas-rich shale formations to break rock and unlock natural gas, has grown.

The state Department of Environmental Conservation is currently developing permitting guidelines for drilling and high-volume hydrofracking in the Marcellus and Utica shale formations, which sit below the Southern Tier and other parts of the state. Permits for that type of gas extraction are on hold until the DEC’s review is complete, which is expected next year.

In a statement, the DEC didn’t take a stance on the bill. In July, the department launched a hydrofracking advisory panel to make recommendations on issues like permit fees, bonding and severance taxes.

That advisory panel will have its first meeting on Aug. 18, according to DEC spokeswoman Emily DeSantis. The logistics of the meeting, including where it will take place and if it will be open to the public, are still being worked out, she said.

“DEC and the advisory panel are looking at these issues and will make the appropriate recommendations at the appropriate time,” DeSantis said in a statement.

Here’s a copy of the bill memo:

OSCM20 (Natural Gas Fund Memo)[1]

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