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Road Damage and Who Pays for It—Yet Another Cost of Fracking!

Sally Morgan, CWFNC Energy and Environmental Justice Researcher/Organizer

POTHOLE

The North Carolina Department of Transportation (NCDOT) is at odds with the Mining and Energy Commission, but not over fracking. NCDOT says it wants to work with the industry to ensure that NC’s transportation infrastructure can “serve the industry’s needs.” What they disagree about is how to make sure the industry pays for resulting road repair costs. And with 1,600 truck trips estimated for a single fracked well, damage to roads is no trivial matter.

If fracking comes to North Carolina, much of it would occur in rural areas, where roads are not designed to support heavy industrial trucks. In states where fracking is rampant, the cost of road repair often outweighs state income from fracking, in some cases by billions of dollars. According to reviews of state records by the Energy Policy Forum, Pennsylvania collected $204 million in impact fees in 2012 (they don’t have a severance tax), but road damage topped $3.5 billion! Since 2009, Arkansas received $182 million in gas severance taxes, but estimates road damage cost $450 million.

The NCDOT studied Plank Road in western Lee County, with a bridge crossing the Deep River, as a likely route for fracking trucks. This bridge alone needs $1.3 million in upgrades to handle heavy trucks. Who should pay for this? The NCDOT is funded largely from state taxes on gasoline, vehicle registration fees and the like. It’s essential that the road repair costs be paid for by the industry causing the damage, and reaping any profit. One option to recoup the costs is through “severance taxes” (percent of proceeds) on the gas extracted. However, between the small estimates of recoverable gas, and the delay in production (likely several years after initial well pad construction), NCDOT ruled this option out. NC state severance tax rates are among the lowest in the nation, and it’s unlikely they will be raised. Most other states have shown that severance taxes aren’t enough to cover road damage from fracking operations, and have had to implement additional “road use agreements” with industry.

The NCDOT is proposing another option to ensure the industry pays for most road repairs, and returns the roads to original condition after use. A “Road Management Use Agreement” (RUMA), holds the industry responsible for maintaining designated haul routes, and for posting a bond amount that is 60% of the average expected costs for repair. NCDOT studied options for two years, including other states’ approaches, and concluded that the RUMA is by far the best available approach. Unfortunately, despite inclusion of the RUMA in early drafts of the MEC’s fracking rules, this recommendation was left out of the final rules submitted to the legislature. Now the NCDOT has to ask the legislature for authority to request a RUMA.

We know the people of North Carolina should not have to pay for costs resulting from the fracking industry; but with the meager protections proposed by the Mining and Energy Commission, that appears to be a likely risk. The public cost of road damage compared to the paltry state revenue from our small gas reserves raises yet another question among a host of others, about the economic feasibility of fracking in NC.

 

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