New York Comptroller DiNapoli Introduces Frack Fund To Cover Industry Damage

Marcellus Protest

Although New York State comptroller Thomas DiNapoli has yet to take a stance on the issue of hydraulic fracturing within his state, he introduced legislation on Tuesday that will require the gas industry to pay into a frack fund that would cover environmental damages caused by the controversial process. The fund would be on standby during drilling and ready to issue compensation to landowners affected by fracking’s unfortunate side-effects, like air pollution and water contamination.

Taking its shape from an oil spill fund created in the 1970s that DiNapoli administers, the proposed legislation would require drillers to post a liability bond for damages before they begin. The legislation also proposes increased state involvement in emergency cleanup for which drillers will pay a surcharge on drilling permits.

DiNapoli, who launched an investigation into the risks associated with fracking in June, said then that “hydraulic fracturing can potentially poison local water supplies, pollute the air and leave us with a waste management nightmare…We’ve seen what happens when companies sacrifice safety for short-term profits.”

The proposed legislation is making its debut as concerns around fracking in New York are mounting. State Governor Andrew Cuomo’s administration has recommended New York’s doors be opened to unconventional gas extraction, rescinding a moratorium that has been in effect for over a year. 

The State Department of Environmental Conservation (DEC) proposed last month that fracking be allowed in the gas-rich Marcellus Shale but not near New York City, the state’s public lands, aquifers or watersheds. The preliminary DEC 2011 Supplemental Generic Environmental Impact Statement has already been called “a full endorsement in favor of oil and gas development in much of New York.”

The DEC is preparing to release new draft fracking rules by the end of this month. 

The liability fund will give affected landowners more direct access to compensation. “The only current remedy for private citizens who suffer damages to their property from natural gas production is to enter into litigation, which has the potential to be costly, difficult and slow,” said DiNapoli

Preventing accidents and contamination should always be our first priority. But it’s impossible to eliminate all risk. If an accident does occur, the state needs to be ready with a rapid response and a reliable mechanism to hold polluters responsible.”

The fund, while offering some hope to communities near fracking operations, also confirms the very stark reality of the high risks involved. Despite what drilliers are willing to pay, there is no amount of money that can clean a contaminated aquifer.