March 19, 2014

Michigan Senate Votes to Give Corporate Handout to Oil Drillers

Wednesday, March 19, 2014

Mike Berkowitz

Michigan Senate Votes to Give Corporate Handout to Oil Drillers
Sierra Club Calls on Michigan House and Governor Snyder to Reject the Legislation 

LANSING—The Michigan Senate today passed a controversial bill package that gives oil and gas companies new powers to construct pipelines on private property over the objections of Michigan landowners, while giving new tax breaks to industry.  HB 4885 (Nesbitt), HB 5254 (Outman), HB 5255 (Stallworth), and HB 5274 (Pettalia) are designed to encourage so-called enhanced oil recovery operations, which entail pumping carbon dioxide (CO2) into closed oil wells to extract previously unattainable oil.  Under the proposed legislation, oil and gas companies would get a 40% break on the oil severance tax while taxes on drilling for gas would be reduced by 20%.

“These bills hurt taxpayers, landowners, and threaten water supplies while giving taxpayer handouts to the oil and gas industry,” said Mike Berkowitz, Legislative Director for the Sierra Club Michigan Chapter.  “Fundamentally, we should not be giving tax breaks to an oil industry that is putting our water at risk and making record profits.  The Michigan House of Representatives and Governor Snyder need to reject this corporate giveaway to oil companies.”

Supporters of the industry-backed proposals say there will be environmental benefits from carbon sequestration during the oil recovery process that is promoted as part of the bill package.  Those claims, however, ignore the damage that will likely result from expanded drilling in environmentally sensitive areas.  Moreover, any benefits from carbon sequestration must be weighed against disruptive new pipeline construction, well conversions required to accommodate the process, additional air pollution as well as costs and environmental impacts of increased transport of oil.  These impacts combined with the increased combustion of oil mean the bill package will likely result in the release of more greenhouse gases. 

“These bills pose an alarming new threat for all Michigan residents who are facing aggressive oil, gas and related pipeline construction in their communities.  The Sierra Club strongly opposes giving new eminent domain authority to private oil and gas companies at the expense of the rights of private property owners and the public” said Anne Woiwode, Director of the Sierra Club Michigan Chapter.  “The recent expansion of oil and tar sands pipelines in Michigan has led to many private landowners witnessing pipeline construction within a few yards of their homes or businesses.  Giving oil and gas companies more ability to take lands for the transportation of fossil fuels and pipeline development is the wrong decision for Michigan, for clean water, and for property owners.”

Senator Hoon-Yung Hopgood sponsored an amendment to HB 4885, which was adopted, that would prevent companies who have a criminal record from getting a break on their severance tax for Enhanced Oil Recovery operations. This comes in light of Encana Oil and Gas USA and Chesapeake Energy Corporation recently being charged with collusion for conspiring to hold bid prices down in an October 2010 auction of oil and gas leases.

The bills head back to the Michigan House of Representatives which has already approved a previous version of the package. The bills are expected to be concurred in, passed, and sent to Governor Snyder.
 The Sierra Club is the nation’s largest grassroots environmental organization, with over 150,000 members and supporters in Michigan.