Last week, the Kasich administration quietly introduced a five-fold tax increase on the disposal of chemical-laced fracking wastewater from other states. Disposal of Ohio brine will cost ten times less. Such a move clearly violates the US Constitution’s restrictions on Interstate commerce, something Kasich has in the past acknowledged.

Let’s recap: ODNR recently confirmed that injection of chemical-laced wastewater from hydraulic fracturing (“fracking”) was responsible for a series of earthquakes near Youngstown:

“a number of coincidental circumstances appear to make a compelling argument for the recent Youngstown-area seismic events to have been induced.” – Ohio Department of Natural Resources, March 9, 2012

Nearly 93 percent of drilling waste injected into Youngstown well was from out of state. Because of its abundant sandstone, Ohio boasts 176 fluid injection wells and counting; 29 permits were issued in 2011 alone. Neighboring Pennsylvania, home to considerably more drilling than Ohio, has just seven. As a result, Pennsylvania drillers send 98 percent of their fracking waste to Ohio. If New York ends its moratorium on shale drilling, their waste,too, would likely head to Ohio.

In total, 511 million gallons of chemical-laden waste was disposed in 2011 by injection in Ohio—nearly half it from out of state.

Since 2010, the state charges a disposal a fee of five cents per barrel on Ohio brine, and twenty cents for waste originating out of state. Last month, when asked how Ohio would avoid becoming a dumping ground for out of state waste, Governor Kasich told Bloomberg that the U.S. Constitution prohibits interference with interstate shipments.

He seems to have changed his tune.

Last week, the Governor’s energy policy legislation, Senate Bill 315, was introduced by sponsor Shannon Jones. The bill raises brine disposal fees from five to ten cents on in-state waste, and from twenty cents to $1 on out of state waste.

A five-fold increase in the fees might put a small dent in the wallets of deep-pocketed drillers, but could dramtically increase revenue for the state, which collected $1.45 million in 2011. Part of the revenue will pay for seismic monitoring, not funded in the current state budget.

The problem is, this proposal is clearly unconstitutional. The Commerce Clause prohibits states from placing a burden on interstate commerce (some examples). While there has existed a fee differential since 2010, the costs were relatively low. With this move, waste haulers may resort to lawsuits to fight the discriminatory burden placed on them by the new dollar-a-barrel fee. It also hits border county well operators hard, the Vindicator’s reporting finds.

Instead of violating the US Constitution, if Kasich really wants to prevent Ohio from becoming a waste dumping ground, there’s an easy solution. Shut down the injection wells.

If toxic wastewater is of great enough concern that we need to raise fees five-fold to discourage it, perhaps we should reconsider whether we want to allow it in the first place. But, assuming that Ohio intends to stay in the waste disposal business, better regulatory oversight is essential. The Kasich proposals include better seismic monitoring and restrictions on the depth and pressure of injection wells. But it falls far short.

Representative Jay Goyal (D-Mansfield) recently introduced legislation that would, in addition to increasing protections by requiring water testing and community approval before an injection well is approved, reduce the demand for disposal wells by requiring recycling of fracking wastewater. The Ohio Environmental Council applauded the move.

Passing unconstitutional legislation is par for the course for the Ohio legislature, so we hardly expect this revelation will prevent them from passing Kasich’s proposal. The courts will likely decide its ultimate fate. But, in the meantime, lawmakers should the need for disposal by injection by imposing a recycling mandate.

Evangelize!
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  • Leonidas

    A quick — if such a thing is possible — discussion of why under current Supreme Court cases this
    change probably violates the commerce clause and, therefore, is
    unconstitutional.

    A
    state statute may violate what is known as the “dormant” Commerce Clause in
    several ways.  This is a complicated area of the law, but generally, a
    statute that clearly discriminates against interstate commerce in favor of
    in-state commerce is invalid and can survive only if the discrimination is
    justified by a valid factor unrelated to favoritism for in-state
    businesses.  A state statute violates the “clear discrimination” standard
    when it creates “differential treatment of in-state and out-of-state economic
    interests.”   A discriminatory law is presumptively invalid. 
    Such a law may overcome the presumption of invalidity only where ‘the
    discrimination is demonstrably justified by a valid factor unrelated to
    economic protectionism.

    Over
    the past couple of decades, the Supreme Court has considered Commerce Clause
    challenges to state and local waste disposal regulations that differentiated
    between in-state and out-of-state waste. In every instance, the Court found the
    challenged law unconstitutional.  In one case, the Supreme Court
    invalidated a New Jersey statute that prohibited the importation of out-of-state
    waste.  In another case, the Court struck down an Alabama law that imposed
    a disposal fee on out-of-state hazardous waste.  Most on-point is the
    Court’s striking down of an Oregon law that taxed out-of-state waste at a
    higher rate that in-state waste.  In that case, the Court noted that a
    discriminatory law that sought to advance goals of conservation was
    unconstitutional.  Under Supreme Court precedents, a state may seek to
    protect the environment by creating uniform regulations.

     (The
    justification offered by Kasich’s spokesman – that out-of-state companies don’t
    pay other taxes to Ohio – is not valid under the Constitution.  I am not
    aware of any cases permitting a state to “balance” the amount of taxes paid by
    in-state and out-of-state companies.) 
    As I understand it, Kasich wants to impose a tax of 10-cents-per-barrel tax on all injected fracking wastewater that originates from Ohio and a $1-per-barrel tax on injected wastewater from out of state.  Currently, the rates are Current rates are 5-cents-per barrel on wastewater from Ohio and 20 cents-per-barrel on wastewater from out of state. 

    I
    am not sure if anyone challenged the current fee.  Perhaps it could have
    been justified by additional regulatory or administrative burdens imposed by
    the transportation of the waste.  But the 10/1 differential proposed by
    Kasich is almost certainly likely to be found to be unconstitutional. 

     

  • Pingback: Most of Gov. Kasich’s energy plan introduced as S.B. 315; Hearing set for Wednesday | Ohio Citizen Action

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