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Monday, October 21, 2013

A Modest Proposal for Frac Sand Mining

We're serious.  We hope he will take this proposal seriously.

October 21, 2013

Governor Scott Walker
115 East State Capitol
Madison, Wisconsin  53702
Sent by email:

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, 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.

Denny Caneff
Executive Director 

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