ST. PAUL — DFL Gov. Mark Dayton said Tuesday he does not support a statewide moratorium on silica sand mining at this time but does back tougher regulations.
"If the industry starts to spiral out of control, then I wouldn't hesitate to call for a moratorium. But I don't think we've reached that point," he said.
The governor also praised St. Charles officials for their recent decision not to move ahead with a silica-sand processing and transportation project.
"The actions the citizens of St. Charles took are really courageous and compelling," he said, "and it says to the Legislature that there are a lot of people in that area affected by this who are very concerned."
The issue of what to do about silica sand mining has been a hot topic in St. Paul this session, with committee hearings routinely drawing overflow crowds. The fine sand is a key ingredient in the process of hydraulic fracturing, or "fracking." The technique involves pumping sand, water and chemicals into oil and natural gas wells within shale formations. The high-pressure mixture creates fractures in the rock, releasing the oil and gas trapped inside.
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Several southeastern Minnesota counties have passed temporary moratoriums on new silica-sand mines as officials weigh the potential effects of the industry, including heavy truck traffic and the threat of lung disease from airborne crystalline silica.
In his revised budget, the governor sets aside $3.4 million to deal with silica sand mining, with $1.9 million of that going to create a Silica Sand Mining Technical Assistance Team to help provide technical expertise to local units of government. He proposes that money come from new mining fees.
Meanwhile, two bills offering different approaches to regulating the industry are working their way through the Legislature. One bill, authored by Sen. Matt Schmit, DFL-Red Wing, would impose a temporary statewide moratorium on silica sand mining and require a statewide Generic Environmental Impact Statement be completed by May 2014. Another bill, backed by Rep. Rick Hansen, DFL-South St. Paul, does not include a moratorium. It requires the Environmental Quality Board to create a silica sand technical assistance team comprised of state agency representatives with expertise in mining-related issues. That team would be available to offer recommendations to local governments regarding silica sand proposals. Schmit has agreed to sponsor a similar bill in the Senate.
Environmental groups are pushing hard for a statewide moratorium on mining. Bobby King, program organizer with the Land Stewardship Project, said it's critical that mining be put on hold until an in-depth environmental study is done and the state adopts strict standards.
"The reason we're not spiraling out of control is because citizens have organized by the hundreds at the local level," King said. "But at some point, the state needs to step up."
During an interview, Schmit said getting a statewide moratorium passed "is going to be the hardest sell" at the Capitol. Still, he said he is optimistic a strong package can pass, and said the governor's willingness to invest so much money in the issue is a big deal.
The silica sand mining industry is fiercely opposed to a moratorium, arguing that companies already spend millions of dollars on required environmental reviews. Mine owners are also upset at the idea of additional taxes. On Tuesday, the House Taxes Committee held a hearing on a bill sponsored by Hansen to impose a $1 per ton tax on the extraction of silica sand. The bill would also allow counties to impose an aggregate tax of up to 30 cents per ton of material and add a tax on the processing of silica sand equal to 3 percent of the sand's market value. Money raised from the tax would be used to help cover transportation costs related to mining, acquire land to protect environmentally sensitive areas from mining and acquire permanent easements to protect drinking water.
Mike Wallenius, vice president of operations for Unimin, told committee members the legislation would increase the Mankato mining company's taxes anywhere from $16 million to $27 million per year.
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"Taxation of this magnitude will significantly damage the ability of Unimin operations to remain competitive in the frac sand industry," he said.
He added that the state already gives counties the option of imposing a 15-cent-per-ton aggregate tax on mining operations.
House Taxes Committee member Greg Davids, R-Preston, said this level of taxation would serve as a de facto moratorium by "pricing folks out of the market."
Hansen emphasized that the bill is not aimed at stopping silica sand mining in the state. Instead, it is geared towards protecting residents.
"I don't want to have something happen where we have a mine and all of a sudden we have a town that has run out of drinking water because we have impacted the wellhead drinking area," he said.
The committee did not take a vote on the bill. It will be considered for possible inclusion in a larger tax bill.
