Response to State Senator Greg Ball's "responsible drilling" proposal

State Senator Ball has proposed “responsible drilling” regulations below. DSEC, in keeping with its mission of a “middle way” toward energy development, suggests stripping the proposal of its numerous “poison pills” designed to turn “responsible drilling” into a feast for lawsuits and trial lawyers and effectively a prohibition and replacing it with the following (DSEC modifications and comments shown in italics).

Immediate 180 day comment period on hydrofracking.

DSEC rejects lengthy comment periods.  Most of what needs to be said has already been said.  Lengthy periods are just delaying tactics.  DSEC supports sixty days which will be adequate.  Those who have strong positions should be able to say what they want to say in that time.

Mandatory full disclosure of all chemicals used and compounds produced during the hydrofracking process. Requires oil and gas companies to inform New York State Division of Oil, Gas, and Geothermal Resources what chemicals are injected, the source of water used, how much water was used, and whether any radiological components were injected, and their fate.

We accept and promote the concept of mandatory disclosure as a reasonable regulation for safe energy  development.  Disclosure requirements should be set by the DEC and should be similar to those in use in other states which have mandatory disclosure laws.  The disclosure requirements should not be written with a punitive intent but rather to provide the public with necessary information.

Mandatory water and soil testing by an official governmental third-party for presence of chemicals used by the fracturing process prior to drilling

Prior testing is to establish a base line.  Reputable private labs should be able to do this testing, there is no need for an expensive and bureaucratic government agency.  Base line testing should be voluntary for the landowner and the industry, whoever wants it done should pay for it.  People should have choices.  Mandates take away individual freedom and responsibility.

All fracking companies must agree to sign a Presumption of Causation Agreement with the State of New York.

This provision DSEC rejects as a “poison pill.”  Would you sign a blank check to be fiscally and legally responsible for anything that may happen in an area, whether or not you caused it?  No sensible business organization would sign such a pledge.  Senator Ball must know this and that this provision is a deal killer.  The industry should be held responsible for the damages it actually causes, not for damages for things it does not cause.  DSEC proposes that energy companies be required to establish a damages escrow fund, which will be returned to them, with interest, if they do no damage.  If damages are established, as provided in law, those damaged would be assured by the escrow that adequate funds have been deposited and are available to pay damages.  The companies interests in recovering their deposits would be an incentive to safety.

Mandatory full reimbursement to property owners by negligent fracking companies for 150% of the real estate's market value of property, based on estimates prior to drilling, and 100% of the cost for full remediation of soil and water. The company will also be accountable for full reimbursement of the land owner's legal fees.

Damages should be limited to damages caused, not punitive.  DSEC believes reasonable regulation does include the full cost of remediation for damages actually caused.  The “American Rule” is that each party is responsible for its own legal fees.  Those granting leases need to be aware they are entering contracts and that in return for the monies received, they do take on some risks.  Free people are allowed to enter into contracts and to understand that economic gain sometimes means risk.  No one is being required to sign a lease or to permit surface activity.

Mandatory full remediation of soil and water, and free medical monitoring for life. All settlements are not to be taxed.

When the energy company causes damage, it should fully remediate or compensate.  Free medical monitoring for life is too broad, could constitute a hundred year liability, and needs to be redefined as germane medical monitoring as medically necessary, not every medical condition that may arise.  An arbitration procedure should be put in place to handle disputes about coverage.  Senator Ball and New York State cannot determine whether settlements are taxed by anyone other than New York.  Federal taxes are the larger component and the state has no power over federal taxes.  DSEC believes compensatory damages should not be taxed and that no punitive damages should be allowed.

Allow local governments to enact or enforce certain laws and ordinances relating to oil, gas and solution mining.

DSEC does not accept this provision.  Local government control over energy development means “local pocket majorities” can establish different rules in each and every town and village.  Such a “patchwork quilt” of regulation would show that despite talk of New York being “open for business” it is in fact closed in many places.  Local governments lack the expertise of the DEC, which should set the regulations for New York.  Limits have been placed on local government control over high tension power lines.  Why?  Because without limitations on local government, the “Not in My Back Yard Syndrome” means high tension power lines could never be built anywhere.  Energy development is not an appropriate subject for local home rule by local pocket majorities which could switch places by election every few years.  Current law should not be changed.  Those who object to energy development are represented as we all are at state level.

Mandatory adherence to an environmental impact assessment process, similar to New York's SEQR Process, to assess the impact to the environment from fracking.

DSEC considers the need to do a full environmental impact statement on each well a “poison pill.”  This is expensive and bureaucratic.  Moreover, any impact assessment should consider both economic and environmental concerns and should balance both of these.

Mandatory disclaimers and warning statements on lease documents about the risk of contamination of soil and water, as well as the potential health affects, related to fracking spills.

Another “poison pill” from State Senator Ball.  Why present only one side?  It is designed to scare and deter leasing, not really to inform, and presumes adults signing leases are too uniformed to know what they are doing.  There are advantages as well as disadvantages in energy development.  Senator Ball’s proposal is similar to running a national election but mandating everyone listen to one party’s material.

Finally, Senator Ball’s position ignores the need for a national energy policy.  Natural gas was declared in the Kyoto Protocols to be a cleaner energy source.  The U.S. is dependent on foreign energy sources which causes involvement and sometimes conflict overseas, with loss of American lives.  National energy development policy should allow the states a role in regulation, but DSEC believes that states should not be permitted to delegate that authority to local pocket majorities or allow the NIMBY (not in my back yard) syndrome to block energy development.