October 21, 2013
Governor Scott Walker
115 East State Capitol
Madison, Wisconsin
53702
Sent by email: govgeneral@wisconsin.gov
Dear Gov. Walker:
At a recent appearance at the Wisconsin Freight Rail Day in
Madison, you thanked “God and the glaciers” for the rapidly expanding frac sand
mining industry.
It is indeed a booming industry. An industrial sand executive estimates there
are about 2,000 jobs associated with frac sand mining in Wisconsin.
As you no doubt know, the development of the industry has
not been without controversy. Dust,
noise, truck traffic and other community and environmental concerns have
surfaced all across western Wisconsin. We note that you have added two positions at
the Wisconsin Dept. of Natural Resources devoted to frac sand mining. But it appears those positions are designed
to expedite permit processing rather than to improve the scrutiny of permits
for sand mines. We do understand that
the positions were not developed to monitor air and water quality and quantity
impacts of the mines once they are operating.
Long-term environmental damage from frac sand mining – in
particular, air quality and groundwater depletion – may not be well understood
yet. What is well understood – and you
acknowledged this in your Freight Rail Day comments – that Wisconsin sand is a
very valuable and highly sought after product that is essential to the
expansion of oil and natural gas production, both domestically and globally.
Given the high value of Wisconsin sand to the extremely
lucrative oil and gas industry; and given that Wisconsin (and to a far lesser
extent, Minnesota) are the premier locations for such sand; and given the
quantifiable impacts (road damage, reclamation, local and state government
environmental and zoning review) of developing sand mines, processing
facilities and loading terminals, we believe it makes eminent sense for
Wisconsin to develop a severance tax for frac sand.
Wisconsin already has a severance tax for oil and gas (WI
Chapter 70.397), but it clearly doesn’t include sand for fracking. (The state is very unlikely to generate much
revenue from an oil and gas severance tax, with no known reserves here.) We would not be alone in having a severance
tax: According to MineralWise.com, a
total of 23 states have oil/gas severance taxes, among them conservative and
business-friendly states such as Wyoming and Texas.
More appropriate examples for Wisconsin include Alabama’s
forest products and local solid minerals severance taxes, and there is
Colorado’s severance tax, very applicable to Wisconsin, that applies to
“non-renewable natural resources that are removed from the earth.”
Minds more creative than our own could develop ideas for how
a severance tax could be used. At a
minimum, the revenues could be directed to the local communities most affected
by sand mining. But clearly more revenue
could be generated, for the benefit of the entire state, than what would be
required to provide for affected local communities.
According to a Wisconsin DNR fact sheet, a “conservative
estimate” of the amount of sand mined in Wisconsin (in 2012) was 12 million
tons. Using that figure, a small
25-cent-per-ton severance tax would generate $3 million in revenues. This would be an insignificant “hit” on the
industry and would allow Wisconsin to capture a small part of the considerable
wealth of this highly valuable product that the state is essentially giving
away to the industry.
We hope that as you continue to promote industrial sand
mining in Wisconsin that you also consider how the state should seriously “get
in the game” of the hydrocarbon extraction business. We possess a product the oil and gas industry
are very anxious to have, and it seems only right and sensible that Wisconsin
capture a small part of the obvious value of this product. We also urge you to take seriously the
ongoing human health and resource depletion concerns arising from frac sand
mining. Our tax idea might be one way to
support the expenses of necessary studies and monitoring of this billion-dollar
industry.
We appreciate your consideration.
Sincerely,
Denny Caneff
Executive Director
