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.
New York State Department of Health Commissioner Nirav Shah announced earlier this week that his public health review of hydraulic fracturing will continue in private until it is complete. Despite facing harsh criticism for a lack of transparency in the review process, Shah told reporters that the scientific work surrounding hydraulic fracturing must be conducted in a “sacred space” to maintain objectivity. “The process needs to be transparent at the end, not during,” Shah said. Governor Andrew Cuomo said that there is no timetable for completion of the health review, although he reportedly anticipates it will be finished in 2014. “But my timeline is whatever Commissioner Shah needs to do it right and feel comfortable,” Cuomo said. “It’s a major decision.” Governor Cuomo previously said in June 2013 that he would make a decision on the State’s hydraulic fracturing moratorium before the 2014 election.
Environmental groups and industry organizations are at an impasse over regulations proposed by the New York State Department of Environmental Conservation (DEC) that would lift the state’s 40-year ban on the construction and operation of liquefied natural gas (LNG) facilities. New York enacted a moratorium on the construction of LNG storage facilities after the explosion of an LNG tank in Staten Island killed 40 workers in 1973. Several environmental groups that oppose the proposed regulations commented that lifting the LNG ban will open the door for shale gas development through hydraulic fracturing in New York. Industry groups and the DEC, however, said that the regulations would facilitate the use of LNG in long-haul trucks, a cheaper and cleaner option to diesel fuel. “These regulations have nothing whatsoever to do with fracking and everything to do with putting cleaner trucks on our highways,” said a spokeswoman for the DEC. The DEC is expected to finalize the proposed regulations in early 2014.
On November 12, 2013, the Joint Landowners Coalition of New York announced that it has finalized a complaint which the group intends to file in New York state court over the delay in deciding the future of shale drilling in the State. The complaint, which names New York State, Governor Cuomo and the commissioners of the Department of Environmental Conservation and the Department of Health as defendants, asserts that the State’s five-year-old hydraulic fracturing moratorium is illegal and amounts to an unconstitutional “taking” of the plaintiffs’ property without just compensation. Before filing the lawsuit, however, the group is seeking funds to finance the lawsuit.
The New York Court of Appeals on September 30, 2013 set a schedule for the parties to file briefs in two cases that will likely have a substantial impact on the future of hydraulic fracturing in the state. In August of this year, the Court of Appeals granted review of two cases which upheld local natural gas drilling bans in the upstate towns of Dryden and Middlefield. The Appellants in the two cases, which include Norse Energy Corp. and an owner of several oil and gas leases, must file their initial briefs by October 28, 2013, and the towns must file their response briefs by December 16, 2013. Reply briefs from the Appellants are due by January 6, 2014. The Court of Appeals has not set a date for oral arguments.
The Court will determine whether the New York Oil, Gas, and Solution Mining Law preempts a municipality’s authority to enact a zoning ordinance that prohibits drilling within its jurisdiction. To date, more than 50 municipalities in New York have banned gas drilling.
An environmental advocacy group reportedly filed a lawsuit against the New York Department of Health on September 13, 2013, seeking to force the release of documents related to the agency’s public health review of hydraulic fracturing. The Seneca Lake Pure Waters Association filed the action after the Department of Health rejected the group’s earlier request to obtain the documents under the State Freedom of Information Law. Groups on both sides of the debate on whether the state’s hydraulic fracturing moratorium should be lifted have criticized the lack of transparency in the Department of Health’s public health review. Currently the State has no timetable for completion of the public health review.
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.
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.
On August 29, 2013, the New York Court of Appeals announced that it has granted appeals to review two cases which upheld local natural gas drilling bans in the upstate towns of Dryden and Middlefield. The lower court decisions, both of which were issued on May 2, 2013, held that the New York Oil, Gas, and Solution Mining Law does not preempt a municipality’s authority to enact a zoning ordinance that prohibits drilling within its jurisdiction. Over the past few years, more than 50 municipalities in New York have banned gas drilling. A spokesman for the Court of Appeals told the Associated Press that the cases will likely be heard and decided in Spring 2014.
New York Governor Andrew Cuomo reportedly stated in a radio interview on August 19, 2013 that although the economic benefits of shale gas drilling are “obvious,” the question of whether such benefits outweigh potential environmental and public health impacts remains unanswered. Governor Cuomo was asked about the support of shale gas drilling by President Obama, who is scheduled to visit Upstate New York this week. “The President’s point that fracking has economic benefits, energy benefits for this country—that’s inarguable,” Cuomo responded. “The question is: is there a cost to the environment, et cetera? And that’s what has to be assessed and that’s what has to be weighed and that’s what we’re going through now,” added Cuomo.
During a recent radio interview, New York Governor Andrew Cuomo said that additional initiatives beyond hydrofracking, including reducing taxes and increasing tourism and manufacturing, will be required to improve the economy of Upstate New York. “If we approved hydrofracking today, that is not in and of itself going to change the trajectory of the upstate economy,” Cuomo said. Governor Cuomo also indicated that the New York Department of Health has not provided an update on its review of the potential health impacts of hydrofracking, which Cuomo previously said needs to be completed before a decision is made on lifting the state’s five-year-old moratorium.
New York’s moratorium on hydraulic fracturing has entered its sixth year. On July 23, 2008, former Governor David Paterson directed the New York State Department of Environmental Conservation (DEC) to conduct an environmental review of high-volume hydraulic fracturing. After taking office, Governor Andrew Cuomo continued the order, and the DEC has not yet finalized its environmental review. Gov. Cuomo said that he will not make a decision on lifting the moratorium until the New York Commissioner of Health performs a public health review of the DEC’s work. No timetable for the completion of the public health review has been announced.
On July 1, 2013 the New York State Department of Environmental Conservation (DEC) released its annual oil and natural gas production data for 2012. While oil production in New York increased by 1%, the 2012 reported total gas production of 26.424 billion cubic feet (bcf), representing a decrease of 15 percent from 2011’s posted production of 31.1 bcf. The 2012 natural gas production was the lowest level in New York since 2000’s production of 17.8 bcf.
Democrats in the Monroe County Legislature are seeking to permanently ban fracking on county-owned land. If they succeed, Monroe County would join 13 other counties in New York that have enacted similar fracking bans on county land. However, the Democrats have not introduced proposed legislation, and they hope to work with Republicans, who hold a 19 – 10 majority in the Legislature, on developing specific legislative language. Several municipalities in Monroe County, including the towns of Brighton, Rush, Perinton, Mendon, Penfield and the City of Rochester, have banned fracking within their borders. New York’s highest court is currently considering whether to accept a request to review recent state appeals court decisions that upheld local laws banning gas drilling.
On June 13, 2013, Constitution Pipeline Company, LLC filed an application with the Federal Energy Regulatory Commission to construct a 122-mile interstate transmission line from Susquehanna County, Pennsylvania, to Schoharie County, New York. The line, if approved, would transport approximately 650,000 dekatherms per day of natural gas, enough to supply 3 million homes. Reuters reports that the project is expected to cost $683M.