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New York Fracking Ban Bill Vetoed; SGEIS Deadline Extended

Outgoing New York Gov. David Paterson took the high road on Saturday, vetoing a bill that would have codified into law a moratorium on hydraulic fracturing (fracking) in the state through May 15, and at the same time extending until July 1 a deadline for the state's Department of Environmental Conservation (DEC) to prepare a supplemental generic environmental impact statement (SGEIS).

Paterson's double-header decision affecting new horizontal drilling in the Marcellus Shale of New York effectively keeps the fracking question at the administrative level, subject to change by the next administration. Turning the moratorium into law would have made it easier for the state legislature to amend and extend it.

"We in government must always focus on protecting the well-being of those whom we represent and serve, but we also have an obligation to look to the future and protect the long-term interests for our state and its residents," Paterson said.

In an executive order Paterson directed the DEC to conduct further comprehensive review and analysis of high-volume fracking in the Marcellus Shale. Permitting for vertical drilling will continue in New York "unless the DEC's comprehensive review requires it to be stopped," according to Peter Kiernan, counsel to the governor.

The veto was cheered by industry groups including the Independent Oil and Gas Association of New York (IOGA), which had argued that the bill would jeopardize as many as 5,000 jobs.

"We are very pleased that the governor saw the bill for what it was -- a flawed piece of legislation replete with unintended and dire consequences for the people and businesses in our industry," said IOGA Executive Director Brad Gill.

Environmental groups that had lobbied for passage of the bill also voiced their support for Paterson's decision. The executive order was a "historic victory for the citizens of New York state," according to Youngsville, NY-based Catskill Mountainkeeper. But, while the order "proves that our concerns over hydrofracking are legitimate, it is also a disappointment because vertical wells are also dangerous," the group said.

In July 2008 Paterson directed the DEC to prepare a supplemental generic environmental impact statement (SGEIS), effectively placing a moratorium on most of the Marcellus development in the state (see Daily GPI, July 28, 2008). The SGEIS was requested because the original GEIS was completed in 1992, before current shale development technology was on the table. The SGEIS is not expected to be completed until next year (see Shale Daily, Oct. 13).

In a draft SGEIS released last year, the DEC recommended that exploration and production companies wanting to drill New York's gas-rich Marcellus Shale should have to disclose the contents of fracking fluid they would use, test water wells in drilling areas and meet a series of other requirements before fracking or drilling (see Daily GPI, Oct. 2, 2009).

The bill (A11443) vetoed by Paterson would have placed a moratorium on fracking permit approvals by DEC until May 15. The legislation had been approved by the New York State Assembly (see Shale Daily, Dec. 1) and the New York Senate (see Daily GPI, Aug. 5).

"This legislation, which was well intentioned, would have a serious impact on our state if signed into law," Paterson said. "Enacting this legislation would put people out of work -- work that is permitted by the Department of Environmental Conservation and causes no demonstrated environmental harm, in order to effectuate a moratorium that is principally symbolic. Symbols can have great importance, but particularly in our current terrible economic straits, I cannot agree to put individuals out of work for a symbolic act."

If it had been signed, the legislation would have gone beyond a ban on fracking and would have effectively resulted in a moratorium on all new oil and gas well drilling in this state, a spokesman for Paterson said. Even if it had only been temporary, such a ban "would have substantial negative financial consequences for the state, local governments, landowners and small businesses involved in conventional oil and gas production," the spokesman said.

Because fracking permits cannot be issued by DEC until after the SGEIS is completed, "there is already in place a de facto moratorium on such permits," according to the spokesman.

With Paterson set to leave office at the end of the month, the issue could resurface before the DEC deadline. Gov.-elect Andrew Cuomo has signaled that he may not approve the use of fracking in the Marcellus Shale until "bona fide studies" indicate that it can be done safely (see Shale Daily, Nov. 23). Attorney General-elect Eric Schneiderman has said he would file a lawsuit to stop drillers from fracking wells until the "process is proven safe."

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