April 1, 2014

Snyder Administration Approves Handout to Oil Drilling Corporations Right After BP Spills in Lake Michigan

Tuesday, April 1, 2014

Mike Berkowitz

Snyder Administration Approves Handout to Oil Drilling Corporations Right After BP Spills in Lake Michigan
New Law Flies in the Face of Taxpayers and Landowners

LANSING—Michigan property owners and taxpayers have lost ground today as Governor Snyder’s administration today signed into law a controversial bill package that gives oil and gas companies new powers to site pipelines on private property, while reducing the taxes the industry pays.  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 new law, oil and gas companies will receive a 40% reduction in the oil severance tax as well as a 20% reduction for natural gas, essentially handing money to the industry.

“This law hurts taxpayers, landowners, and threatens water supplies while giving taxpayer handouts to the oil and gas industry,” said Mike Berkowitz, Legislative Director for the Sierra Club Michigan Chapter.  “Giving tax breaks to the oil industry that is putting our water at risk while they make record profits is just plain wrong. Especially considering that BP just spilled 1600 gallons of oil into Lake Michigan last week.  Michiganders deserve better from Governor Snyder and the Michigan Legislature than this harmful law.

Supporters of the industry-backed proposals say there might be environmental benefits from carbon sequestration during the oil recovery process that is included 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 extracted mean the bill package will likely result in the release of more greenhouse gases. 

“This law poses 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 the expansion of 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 rapid expansion of oil and tar sands being pumped through Michigan pipelines is raising legitimate concerns from private landowners about the safety of these pipelines near their homes and businesses.  Giving oil and gas companies more ability to take lands for the transportation of fossil fuels and carbon dioxide pipeline development is the wrong decision for Michigan, for clean water, and for property owners.”

Sierra Club applauds Senator Hoon-Yung Hopgood for sponsoring an amendment to HB 4885, which was adopted, that prevents companies who have been convicted of an anti-trust violation 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.

Michiganders are continuing to face increased risks to their water supplies, and now will have fewer rights over their property, while the oil and gas industry reaps the benefits of a corporate tax handout.

 The Sierra Club is the nation’s largest grassroots environmental organization, with over 150,000 members and supporters in Michigan