NORWICH – Town of Norwich Supervisor David C. Law has called for a 10-cent surcharge on every 1,000 cubic feet of natural gas on producing wells in his town.
The revenue would be used to reduce property taxes, he told members of the Chenango County Planning Board yesterday, and is an effort to “be fair to our town’s citizens.” Law proposed the tax to town councilmen at a meeting in June. More than 30 residents were in attendance.
“If we don’t take a stand, there’s going to be a few big winners and a lot of losers in this,” he said.
It’s been a land rush over the past two years in Chenango County and other parts of the Appalachian Basin where natural gas landmen have heavily targeted landowners for drilling rights. Wells have been drilled and more are planned as national and international companies are hurrying to tap into the Marcellus Shale and other subsurface layers where large quantities of the energy source lies.
Law’s proposal was not approved. According to Councilman Adam Evans, the Norwich Town Board would be reviewing the legality of such a surcharge and the dollar amount it might represent.
“We are way too early in the game to propose new taxes on any industry that is interested in coming here, but I am not opposed to looking into it,” Evans said.
Law said he decided to recommend the tax after learning that it is collected in Texas where regulators are more experienced with the oil and natural gas industry and its impact on the economy and the environment.
“They are so much ahead of us. Why not go that way?” he asked.
The Town of Norwich is already in the forefront when it comes to addressing natural gas activity. In May, the board passed a regulation that prohibits companies from receiving permits to test without first acquiring adjacent landowners’ signatures. It also obtained a $30 million insurance bond to cover potential damage to roads.
Members of the Planning Board asked Law Tuesday whether he had discussed his plans with fellow supervisors, and whether others were in agreement with such a surcharge.
Law said, “Why should I? They will hear soon enough. This is my proposal.”
In fact, the Chenango County Board of Supervisors agreed last year to support a similar tax in the towns of Smyrna and Otselic.
Supervisor James B. Bays, D-Smyrna, has suggested a 10 percent “enhancement tax” on production. Local governments would use it to afford the costs associated with drilling and exploration, wear and tear on highways, community safety needs, municipal employee training and equipment needs.
According to state law, municipalities already receive compensation from sales of natural gas. The amount is based on real property taxes as calculated by local assessors in concert with the Department of Environmental Conservation. Superintendent Bays has called the current compensation “woefully inadequate.”
Representatives from Nornew, Inc., a natural gas company with offices in Norwich, were unavailable for comment by press time.
Meanwhile, members of the Central New York Landowner’s Coalition made a presentation before a Town of Norwich Planning Board Meeting recently to express their concerns about possible water contamination from the drilling process. According to board Chairman Ted Guinn, the representatives asked about regulating wastewater liners that companies use to store backwater.
In other planning board news, Planning and Development Director Donna Jones said her department met its map revenue budget for the year, all in the month of June. She said up to five people per day are purchasing geographic maps of Chenango County.