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New York County Demands $81.3B For Lost Property Rights

Elected officials in Delaware County, NY, are demanding that the state and New York City pay $81.3 billion in reparations over 60 years for lost property rights, on the grounds that a proposal to ban hydraulic fracturing (fracking) in the city's extended watershed would exclude 80% of the county's land from Marcellus Shale drilling.

At its meeting on Feb. 22, the Delaware County Board of Supervisors voted 12-4 to pass Resolution No. 40, which demands the city and the state reimburse county landowners who want to lease their property to oil and gas companies.

The $81.3 billion figure was based upon the projected gross value of lost revenue. Specifically, the county cited a city study that projected the concentration of well drilling sites, and on well yield totals from the Department of Environmental Conservation's (DEC) revised supplemental generic environmental impact statement (SGEIS) on fracking. The county said millions more could be lost in real property tax revenues and lost employment opportunities.

"Everybody has natural gas as part of their energy plan for the future -- New York City, the United States -- and we're sitting on top of a lot of it," Samuel Rowe Jr., a supervisor who voted in favor of the resolution, told NGI's Shale Daily on Monday. "If they're going to prohibit the people from selling their private property landowner rights, then New York City or New York State should reimburse those people for the money they're not getting."

At issue is a proposal in the SGEIS to not only ban fracking in the New York City watershed, but to also ban the practice from an adjacent 4,000-foot buffer zone and within 1,000 feet of any of the city's subsurface infrastructure. The county said 503,000 acres would be off limits to fracking from the watershed requirement alone, but an additional 33,000 acres would be lost with the additional setbacks.

Two tunnels of New York City's water supply system originate in Delaware County, connecting the city to the Catskill/Delaware Watershed. The West Delaware Tunnel links the Cannonsville Reservoir to the Rondout Reservoir in neighboring Sullivan County. Meanwhile the East Delaware Tunnel connects the Pepacton Reservoir to the Rondout.

Last month DEC commissioner Joe Martens told state legislators that the agency was concerned that allowing fracking in the watershed for New York City would jeopardize renewal of the five-year Filtration Avoidance Determination (FAD) issued by the U.S. Environmental Protection Agency (EPA), which is currently under review (see Shale Daily, Feb. 8). Martens estimated that a water filtration system could cost $9 billion.

Rowe, a Republican who represents The Town of Hancock on the Delaware County board, said the West Delaware Tunnel traverses his community but they don't receive any economic benefits, such as low interest business loans.

"It puts a bad taste in your mouth when they say the only reason they don't want any drilling activity within 4,000 feet is so that they can continue to get their FAD determination, when they all agreed that the setbacks in the DEC's first draft were good enough," Rowe said Monday. He said that such a setback "would take a pretty good chunk of us out [for drilling consideration] and knock off some of our big landowners.

"There are a lot of small parcels, too. I know people were interested in at least hearing what the natural gas industry had to say. In a lot of cases, this will be the difference between people being able to keep their property and pass it along to their children, or not."

Rowe said there were four active permit applications in the county before the DEC. He said several private landowner coalitions were active in the area, but they haven't signed leases yet as all sides await the regulatory decisions by the DEC.

Keitha Capouya, a Democrat who represents the Town of Meredith, cast one of the four dissenting votes.

"This is a very complicated issue and there's a side that we are not talking about," Capouya told NGI's Shale Daily. "The thrust of [Resolution No. 40] is all about the loss incurred by people who wanted a gas lease but can't get one because of what the city is doing. I feel that we're not paying enough attention to the question of compulsory integration, which is in fact a declaration of eminent domain and the taking of property rights from people who do not want their land drilled under."

Rowe and Capouya also gave differing predictions over how the fracking debate in the Empire State would ultimately turn out.

"I don't think there's any kind of compromise when it comes to New York City," Rowe said. "They just get all of the benefit of the doubt. They're trying to avoid spending $8 billion for a filtration system, but they'll hit the upstate people for $80 billion over 60 years."

Capouya said the issue would be "decided elsewhere, but I do think to canonize compulsory integration is not a good thing."

Legislators introduced a series of Marcellus Shale bills in January, including one to extend a moratorium on the practice until June 1, 2013 (see Shale Daily, Jan. 10).

The SGEIS is to provide the framework for DEC's fracking permit process. In July 2008 then-Gov. David Paterson ordered the DEC to complete the SGEIS, which effectively placed a moratorium on drilling horizontal wells in the New York portion of the Marcellus Shale. Paterson requested the SGEIS because the original impact statement was completed in 1992, before technological changes in shale development. In the closing days of his term Paterson extended the SGEIS deadline until July 1, 2011 (see Shale Daily, Dec. 14, 2010).

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