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A07942 Memo:
Go to topNEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
TITLE OF BILL: An act to amend the environmental conservation law, in relation to establishing the natural gas production contamination response and compensation program; and to amend the state finance law, in relation to creating the New York natural gas production contam- ination damage recovery and remediation fund PURPOSE: The intent of this bill is to ensure a clean environment and healthy economy for the State by providing for the remediation of any contam- ination associated with natural gas production which may result in damage to lands, waters or natural resources of the state by authorizing the Department of Environmental Conservation to respond quickly to such contamination and effect prompt cleanup and decontamination of such contamination, giving first priority to protecting against public health risks and minimizing environmental damage and by providing for strict liability for damage sustained within the State as a result of such contamination. SUMMARY OF PROVISIONS: Section 1 establishes a new "Title 29" within Article 23 of the Environ- mental Conservation Law, adding new Sections 23-2901 through 232936, collectively known as the "Natural Gas Production Contamination Response and Compensation Program": - Section 23-2901 contains legislative intent; - Section 23-2902 contains the purpose of this Title; - Section 23-2903 defines those terms applicable to Title 29. The terms defined are administrator, claim, cleanup and decontamination, contam- ination, environment, fund, natural gas production, gas production, owner, operator and person; - Section 23-2904 establishes that contamination of the environment by natural gas production is prohibited; - Section 23-2905 requires the Commissioner of Environmental Conserva- tion to promulgate regulations governing the cleanup and decontamination of any contamination resulting from natural gas production; - Additionally, Section 23-2905 authorizes the Department of Environ- mental Conservation to draw on money in the New York Natural Gas Production Contamination Damage Recovery and Remediation Fund to pay for cleanup and decontamination costs incurred in any response to contam- ination due to natural gas production after funds from bonds established for this purpose are fully expended; - Section 23-2906 requires any person responsible for causing contam- ination to immediately notify the Department of Environmental Conserva- tion; - Section 23-2907 requires any person causing prohibited contamination to immediately undertake to contain such contamination; - Section 23-2908 requires the Commissioner of Environmental Conserva- tion to establish an emergency natural gas production contamination control network and an emergency natural gas production contamination relocation network; - Section 23-2909 authorizes the Department of Environmental Conserva- tion to enter and inspect any property for the purposes of inspecting sites, facilities for the purpose of inspection and to assist in the cleanup or decontamination of the contamination; - Section 23-2910 requires the Department of Environmental Conservation to maintain a registry of all reports of contamination; - Section 23-2914 requires the State Comptroller to appoint and super- vise an administrator of the fund and establishes the powers and duties of such administrator; - Section 23-2915 establishes that any person who has caused contam- ination and the fund shall be strictly liable for all cleanup and decon- tamination costs and all direct and indirect damages; - Additionally, Paragraph (c) of Subdivision 3 of Section 23-2915 estab- lishes that owners and operators of natural gas production facilities engaging or seeking to engage in natural gas production shall provide a bond or other financial security in an amount sufficient to fully discharge such owner's and operator's cleanup and decontamination responsibilities. Cleanup and decontamination costs will be paid from this bond until it is exhausted; - Section 23-2916 states the fund shall have a lien for the costs incurred by the fund for the cleanup and decontamination of contam- ination and for the payment of claims for direct and indirect damages as a result of contamination upon certain real property located within the State; - Section 23-2917 establishes what a notice of environmental lien must state; - Section 23-2918 requires a notice of environmental lien to be filed within 6 years from the time a disbursement is made by the fund for cleanup and decontamination costs and damage costs incurred; - Section 23-2919 establishes that nothing in this Article or in Article 3 of the Lien Law shall affect the right of the fund to bring certain actions to recover cleanup and decontamination costs and damage costs; - Section 23-2920 requires amounts received by the administrator to satisfy all or part of an environmental lien shall be deposited in the state treasury and credited to the fund; - Section 23-2921 relates to the timing and manner of claims against the fund; - Section 23-2922 requires the administrator to attempt to promote and arrange a settlement between the claimant and the person responsible for the contamination; - Section 23-2923 requires the administrator and the claimant to attempt to arrange a settlement of any claim against the fund when the source of the contamination is unknown or cannot be determined; - Section 23-2924 requires the administrator to grant a hearing when persons alleged to be responsible for the contamination contest the validity or amount of certain claims or settlement proposals; - Section 23-2925 establishes that payment of any cleanup costs or damages by the fund arising from a single incident shall be conditioned upon the administrator acquiring by subrogation all rights of the claim- ant to recovery of such costs or damages from the person responsible for the contamination or other responsible party. The administrator shall then seek satisfaction from the person responsible for the contamination or other responsible party; - Section 23-2926 establishes that in the event that the total awards for a specific occurrence exceed the current balance of the fund, the immediate award shall be paid on a prorated basis; - Section 23-2927 allows any claims for costs of cleanup and decontam- ination, civil penalties or damages by the state and any claim for damages by any injured person, to be brought directly against the bond, the insurer or any other person providing evidence of financial respon- sibility; - Section 23-2928 relates to the applicability of this Title; - Section 23-2931 authorizes the Commissioner of Environmental Conserva- tion and the State Comptroller to adopt, amend, repeal and enforce such rules and regulations as they deem necessary to accomplish the purposes of this Title; - Section 23-2932 establishes penalties for any person who knowingly gives or causes to be given false information as a part of, or in response to, any claim made pursuant to this Title or who otherwise violates any of the provisions of this Title or any rule promulgated thereunder; - Section 23-2933 states that nothing in this Title shall be deemed to preclude the pursuit of any other civil or injunctive remedy by any person; - Section 23-2934 states that this title shall be liberally construed for the general health, safety and welfare of the people of this State; - Section 23-2935 requires the Commissioner of Environmental Conserva- tion and the administrator to make an annual report to the Legislature and the Governor describing the quantity and degree of contamination caused by natural gas production, the costs and damages paid by and recovered by the fund, and the economic and environmental impact on the state as a result of the administration of this Title; - Section 23-2936 relates to the effect of future Federal legislation on this Title. Section 2 of this bill amends Section 23-1903 of the Environmental Conservation Law to add a new Subdivision 3 that authorizes the Commis- sioner of Environmental Conservation to establish a surcharge on the permit fees on gas wells that will be credited to the fund. The surcharge shall be established to provide sufficient funds to meet the obligations of the fund. Section 3 of the bill amends the State Finance Law to create a new § 92-t establishing the New York Natural Gas Production Contamination Damage Recovery and Remediation Fund. Section 4 of the bill contains a severability clause. Section 5 of the bill sets an effective date of the one hundred twenti- eth day after it shall have become a law. PRIOR LEGISLATIVE HISTORY: A.2972 of 2017-2018 A.5895 of 2015-2016 S. 4028 and A. 3634 of 2013-2014 S. 6542 and A. 8572 of 2011- 2012 JUSTIFICATION: New York's lands and waters constitute a unique and delicately balanced resource. The protection and preservation of these lands and waters promotes the health, safety and welfare of the people of this State. The State is the trustee, for the benefit of its citizens, of all natural resources within its jurisdiction. Contamination from incidents or accidents that result from natural gas production pose a threat to the economy and environment of this State. This bill would provide strict liability for damage sustained within this state as a result of contam- ination caused by natural gas production, require prompt cleanup and decontamination of any affected real or personal property and establish a fund for the payment of remediation costs of contamination and timely and adequate compensation to any persons damaged by such contamination. The Natural Gas Production Contamination Response and Compensation Program established in this bill is modeled after the New York State Environmental Protection and Spill Compensation Fund ("Oil Spill Fund"), which draws on the expertise and collaborative efforts of the Office of the State Comptroller ("OSC"), the Department of Environmental Conserva- tion ("DEC"), and the Office of the Attorney General ("OAG"). The new program would ensure the timely clean up of dangerous contamination caused by any element of the natural gas production process, and provide for efficient resolution to related damage claims and recovery of costs from liable parties. It would also create for the first time a registry of all gas drilling related incidents in New York State. This program is modeled closely after the successful structure of the Oil Spill Fund, which uses the expertise of three State agencies (OSC, OAG and DEC). With the Oil Spill Fund, OSC ensures that the accounting is scrupulous and the Fund is used for appropriate expenses, the legal expertise of the OAG ensures that responsible parties pay and money is recouped whenever possible, and DEC's environmental expertise ensures timely and adequate site remediation. The New York Natural Gas Production Contamination Damage Recovery and Remediation Fund ("Natural Gas Damage Recovery Fund") would also be structured similarly to the Oil Spill Fund currently administered by OSC and would establish absolute liability for damages caused by natural gas production. In the event of a report or evidence of contamination or damages, DEC would investigate, identify responsible parties and deter- mine an appropriate course of action. OSC would manage the Natural Gas Damage Recovery Fund, which would pay for any remediation undertaken by DEC of contamination where either a responsible party could not be identified or parties refused or were unable to clean up the contamination. OAG would determine who is legally responsible for the contamination and, if necessary, commence civil damage-recovery litigation against responsible parties. Any recovered funds would be returned to the Natural Gas Damage Recovery Fund to pay for the cleanup of future contamination. By using The Oil Spill Fund as a model, the Natural Gas Production Contamination Response and Compensation Program and the Natural Gas Damage Recovery Fund established in this bill shall make sure that dangerous contamination is remediated quickly and that New York resi- dents do not have to face costly and prolonged delays in resolving damage claims for losses related to accidents. The Comptroller urges approval of this legislation. BUDGET IMPLICATIONS: There are mechanisms to fund this Act included in this bill. Therefore, the budget implications should be minimal. EFFECTIVE DATE: The 120th day after this act shall have become a law.