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Paterson Remains Undecided on New York Fracking Ban

Nearly a week after a bill that would temporarily block hydraulic fracturing (fracking) in the Empire State landed on his desk, New York Gov. David Paterson has not decided if he will sign or veto the legislation.

"It's something that I've got to come to a conclusion on," Paterson said Thursday morning on Ithaca, NY's WHCU-radio. Paterson has until the end of the day Monday (Dec. 13) to act on the bill, a Paterson spokesman told Shale Daily. If the bill isn't signed or vetoed by the deadline it would automatically become law, Paterson said.

Paterson said he questioned the state legislature's inclusion of a temporary ban on vertical drilling in the bill.

"I don't really understand why this was put in the bill, because this has been going on for a long time, and to delay this type of action for four months theoretically could cause us to lose jobs," he said.

The bill (A11443), which would place a moratorium on fracking permit approvals by the New York Department of Environmental Conservation (DEC) until May 15, was approved by the New York State Assembly Nov. 29 (see Shale Daily, Dec. 1) and delivered to the governor's office Dec. 3. The New York Senate approved the temporary drilling ban in August (see Daily GPI, Aug. 5).

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 generic environmental impact statement 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 draft [SGEIS] approved the use of hydrofracking, but there was a lot of information raised to us at town meetings and in the public comment period that caused me realize we had to examine this further," Paterson said. "We cannot, by any means, ruin water quality or the environment any more than we have to. So we have got to be right on this issue, and if it takes longer, it takes longer."

Paterson is set to leave office at the end of the month. 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."

Groups on both sides of the fracking debate have been "advocating strongly" since the bill reached his office, Paterson said.

The Independent Oil and Gas Association of New York (IOGA) asked its members and landowners to sign petitions and send letters to Paterson asking that the bill be vetoed. The governor's signature on the legislation would impact more than 300 employers across the state, jeopardizing 5,000 industry jobs and derailing the DEC's review of the SGEIS, IOGA said.

At the same time, the Working Families Party, which has lobbied for a ban on fracking, asked its members to flood Paterson's office with e-mails and telephone calls urging the governor to stand up for "regular New Yorkers...who value safe drinking water [and] not cave to the false claims of the drilling industry."

Officials from Broome County, NY, which is located on the Pennsylvania border, are opposed to the ban. They have sought to promote natural gas drilling in an effort to regain jobs that have left the area since the state instituted a de facto moratorium on drilling two years ago (see Shale Daily, Oct. 25). Earlier this week, Broome County Executive Barbara Fiala and representatives of area business and landowners groups said the ban would kill thousands of jobs across the state.

"Real people are going to be getting pink slips this Christmas," said Scott Kurkoski, an attorney representing the Joint Local Landowners Coalition at the press conference. "That cannot happen in New York right now."

Some landowners who signed leases for as little as $15/acre more than a decade ago fear that the ban could result in force majeure clauses kicking in, preventing the leases from expiring and new, higher price leases from being signed, according to WENY-TV in New York's Southern Tier.

While the fracking ban could curb drilling activities in the Marcellus and pose downward risk to domestic production projects, it would have "very little impact on overall production volumes," according to Teri Viswanath and Stefan Revielle of Credit Suisse.

Paterson has asked that the Delaware River Basin Commission, which on Thursday proposed rules that would allow natural gas development projects -- with conditions -- in affected areas of the Marcellus Shale (see related story), "halt its efforts to enact regulations covering certain elements of natural gas extraction activities within New York state" until New York officials are able to review fracking practices (see Shale Daily, Dec. 9).

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