New York Formally Bans High-Volume Hydraulic Fracturing to Develop Marcellus Shale

On June 29, 2015, the New York State Department of Environmental Conservation issued its Findings Statement which officially prohibits high-volume hydraulic fracturing to develop natural gas resources in the Marcellus Shale.  The issuance of the Findings Statement concludes a nearly seven-year endeavor by the Department to evaluate the environmental impacts of hydraulic fracturing under the State Environmental Quality Act.  The Department relied upon information in the Supplemental Generic Environmental Impact Statement, issued by the Department on May 13, 2015, and more than 260,000 public comments in making the determination that hydraulic fracturing should be banned statewide.  Specifically, the Department found that “there are no feasible or prudent alternatives that would adequately avoid or minimize adverse environmental impacts and that address the scientific uncertainties and risks to public health from” hydraulic fracturing.  As a result, the Department concluded that prohibiting high-volume hydraulic fracturing “is the best alternative based on the balance between protection of the environment and public health and economic and social considerations.”

New York Issues Final Environmental Review on High-Volume Hydraulic Fracturing

On May 13, 2015, the New York State Department of Environmental Conservation (NYSDEC) released its Final Supplemental Generic Environmental Impact Statement (SGEIS) on the Oil, Gas and Solution Mining Regulatory Program, signaling the completion of its environmental review of high-volume hydraulic fracturing.  NYSDEC previously released drafts of the SGEIS in September 2009 and September 2011, which generated more than 260,000 public comments during the applicable review periods.  The final SGEIS will be followed by the issuance of a legally-binding Findings Statement  by the NYSDEC Commissioner, Joseph Martens.  Last December, the New York State Department of Health recommended prohibiting hydraulic fracturing, based upon the agency’s public health review, and Commissioner Martens anticipated that his Findings Statement would include a ban on high-volume hydraulic fracturing.

Congressman Introduces Bill to Allow Landowners to Sue New York Over Hydraulic Fracturing Ban

U.S. Representative Tom Reed (R-NY) recently introduced into Congress the Defense of Property Rights Act (H.R. 510), which would allow landowners affected by New York’s hydraulic fracturing ban to sue the government over agency action that “unreasonably impedes the use of property or the exercise of property interests or significantly interferes with investment-backed expectations.”  The bill was introduced in response to the December 17, 2014 announcement by New York Governor Andrew Cuomo of a statewide ban on hydraulic fracturing.  Representative Reed stated in a press release that “these actions by government entities often leave our neighbors and friends with property that is worth much less, hurting their families and leaving them little choice but to accept the lower value.”  Under the proposed legislation, property owners could receive compensation if the agency action diminishes the fair market value of their property by at least 20 percent or $20,000.  The bill has been referred to the House Judiciary Committee.

New York Will Prohibit Hydraulic Fracturing for Shale Gas Development

On December 17, 2014, New York Governor Andrew Cuomo’s administration said it would ban hydraulic fracturing for shale gas development throughout the state.   Dr. Howard Zucker, the Acting Commissioner of Health, announced that the state Department of Health (DOH) completed its long-awaited public health review report, which recommended prohibiting hydraulic fracturing in New York.  Citing significant uncertainties regarding risks to public health, Dr. Zucker said “it would be reckless to proceed [with hydraulic fracturing] in New York until more authoritative research is done.”  Based upon the DOH report, New York State Department of Environmental Conservation (NYSDEC) Commissioner Joe Martens announced that the NYSDEC will issue a legally-binding findings statement that will prohibit hydraulic fracturing in the state.  Martens noted that “with the exclusion of sensitive natural, cultural and historic resources and the increasing number of towns that have enacted bans and moratoria, the risks substantially outweigh any potential economic benefits” of hydraulic fracturing.  A copy of the DOH public health report can be found here.

New York Court Declines to Re-Hear Land Use Case as Governor Anticipates Health Report by End of 2014

On October 16, 2014, the New York Court of Appeals denied a request by the bankruptcy trustee for Norse Energy to re-hear arguments in the landmark case affirming local zoning laws adopted by two upstate towns that prohibited oil and gas-related activities within their borders.  In June 2014, the Court of Appeals issued an opinion that the New York Oil, Gas and Solution Mining Law did not preempt a municipality’s home rule authority to regulate land use.  Meanwhile, since June 2008, New York has imposed a de facto moratorium on high-volume hydraulic fracturing. Governor Andrew Cuomo has stated that a decision on whether to lift the moratorium will not be made until the New York Commissioner of Health finalizes a study on the public health effects of hydraulic fracturing.  During a gubernatorial debate on October 22, 2014, Governor Cuomo said that the highly anticipated report should be done by the end of the year,  but he did not indicate whether the moratorium would be lifted at that time.

New York Attorney General Seeks Dismissal of Lawsuits

The New York Attorney General’s office has filed motions to dismiss two lawsuits that seek to force Governor Cuomo to end a delay in deciding the future of shale drilling within the State.  The two lawsuits, filed separately by a group of landowners and the bankruptcy trustee for Norse Energy, argue that that the State’s delay in issuing an environmental review of hydraulic fracturing is illegal and amounts to an unconstitutional “taking” of the plaintiffs’ property without just compensation.  The State asserts in the motions for dismissal that the landowner group and the bankruptcy trustee lack standing to bring the suits.

Draft New York State Energy Plan Does Not Include Marcellus Shale Drilling

The New York State Energy Planning Board released its Draft 2014 State Energy Plan on January 7, 2014.  Although one of the draft plan’s key initiatives includes expanding access to natural gas as an alternative to petroleum products for heating and power generation, the Energy Planning Board does not take a position on whether the State should allow Marcellus Shale drilling.  The Energy Planning Board notes in the draft plan that, although “both horizontal drilling and hydraulic fracturing are not new to natural gas development in New York, Marcellus Shale drilling using these techniques is on hold pending additional review.”  According to the Energy Planning Board, natural gas production in other states currently satisfies 97 percent of New York’s demand, with a growing proportion of that supply coming from the Marcellus and other shale plays.

The Energy Planning Board predicts that New York’s natural gas production will continue to decrease significantly unless the State’s Marcellus Shale reserves are developed.  Regardless of New York’s decision on whether to lift its five-year moratorium on hydraulic fracturing, the Energy Planning Board concluded that sufficient natural gas supplies should be available from other states to meet future demand, as long as interstate pipeline capacity exists to serve New York.  The Energy Planning Board intends to hold public hearings in several cities and is currently accepting public comments in writing or electronically at energyplan.ny.gov.

Sen. Ferlo Intends to Introduce Pennsylvania Moratorium Bill

WFMJ reports that  State Sen. Jim Ferlo (D-Allegheny) announced that he will introduce Senate Bill 1100 next week, which will place a moratorium on new permits for hydraulic fracturing.  The bill, known as the Natural Gas Drilling Moratorium Act, will also seek to create a commission to analyze the agricultural, economic, environmental and social effect of Marcellus Shale drilling.  WESA indicates that such a commission would be comprised of seven individuals from various backgrounds, including a nonprofit environmental organization, an academic institution, the oil and gas industry, a geologist, a medical or public health expert, the Pennsylvania Secretary of Environmental Protection and the Pennsylvania Secretary of Conservation and Natural Resources.  The bill would halt any new permits for natural gas drilling.  StateImpact reports that the bill does not provide a time limit on the proposed moratorium.

Companies End Fight to Extend New York Leases

Chesapeake Energy Corp. and lease partner StatoilHydro have reportedly agreed to end a two-year legal battle to extend 200 natural gas drilling leases covering approximately 13,000 acres in southern New York, near the Pennsylvania border.  In a settlement announced on September 9, 2013, the companies agreed to drop the appeal of a November 2012 federal district court ruling in Aukema v. Chesapeake Appalachia LLC, which found that New York’s moratorium on high-volume hydraulic fracturing was not a force majeure event capable of unilaterally extending the leases.  New York officials recently told a state legislative committee that there is still no timeframe for a decision on whether to lift the moratorium.

New York DEC Official: Still No Timetable on Hydraulic Fracturing Decision

On September 6, 2013, the New York State Department of Environmental Conservation’s Deputy Commissioner for Administration told a legislative committee there is no timeframe for a decision on whether to lift a state moratorium on hydraulic fracturing.  In testimony before the State Assembly Environmental Conservation Committee, Anne Reynolds said that the DEC is in the midst of reviewing more than 100,000 public comments submitted on the agency’s 2011 draft environmental review of hydraulic fracturing in the Marcellus Shale.    Reynolds also told the committee that she did not have any information on the status of the state Department of Health’s review of the public health effects of hydraulic fracturing, which Governor Cuomo has said must be completed before a decision on whether to lift the moratorium is made.

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