CASPER, Wyo. — The Wyoming Department of Environmental Quality’s Industrial Siting Council distributes funding to counties and municipalities to offset “unmitigated impact” costs associated with large industrial projects.
The council distributes such funding when projects are greater than $213 million, though oil and gas field projects are exempted from these industrial siting rules.
The City of Casper, Natrona County and Converse County, for example, all were awarded some funding to cover the cost of impacts from a $490 million Cedar Springs Wind Energy Project.
The maximum amount of funding eligible to cover “unmitigated impacts” is currently set at 2.76% of the “total estimated material costs of the facility, as those costs are determined by the council.”
Severance tax revenue is used to pay out such costs.
The House of Representatives are considering a bill that would lower maximum amount of funding that could be provided and would aim to more clearly define what constitutes an “unmitigated impact.”
House District 08 Representative Bob Nicholas explained House Bill 237 during the House’s Tuesday, Feb. 25 floor session. He said that the legislature made changes to the formula in 2015 which drastically increased the amount of money the state pays out to counties and municipalities to cover the impact costs.
He said that in the five years prior to that 2015 rule change, the state paid out a total of $10 million. He said that in the last two years, the Industrial Siting Council has awarded $68.6 million of $109.6 million which counties and municipalities were eligible to receive.
He said that projects currently in the queue for consideration could lead to an additional $50-$70 million paid out in the next five years.
“We had no idea was how much this was going to sap out of our general fund dollars,” Nicholas said. “We went from not awarding enough to awarding way too much.”
He said that reducing the amount of support provided to counties and municipalities would help the state address its own budget deficits.
The original version of the proposed bill would have reduced the maximum amount of funding eligible to cover “unmitigated impacts” to counties and towns to 1.75% of the total cost of a project rather than 2.76%.
However, Nicholas explained that counties had asked that this figure be set at 2%. The House adopted an amendment to the bill which sets this as the maximum threshold under the proposal.
Other new provisions are included in the proposed legislation. Nicholas said that “unmitigated impacts” are not clearly defined under current rules.
The bill proposes defining such impacts in the following manner:
“Unmitigated impact” means an expense incurred by a county, city or town directly attributable to the construction of an industrial facility and which:
(A) Is not otherwise mitigated by the person constructing the industrial facility;
(B) Is limited to expenses for medical services, fire and police department services, roads and public utilities and is supported by an analysis of the current excess capacity in each of these areas;
(C) May include the expenses of employing additional employees or officers only if the county, city or town has determined overtime compensation or contract labor would not be appropriate; and
(D) Excludes the following:
(I) Improvements to existing structures beyond that necessary to return the structure to the condition in which the structure existed before the construction of the industrial facility;
(II) Expenses for which a county, city or town previously received an impact assistance payment unless the county, city or town can demonstrate the expenses are ongoing. Wyoming Legislative Service Office
House District 23 Representative Andy Schwartz said he was contemplating proposing a further amendment to the bill on second reading.
He said that “at one time the developer paid for the impact fees…one-third of these costs.”
“These are large projects that [developers] should be responsible for some of these impact fees,” he said.
The House passed the bill on first reading on Tuesday. If they pass the bill on two further readings, it would move to the Senate for consideration.
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This article originally appeared on Oil City News. Used with permission.