Although the Marcellus and Utica shale plays at the center of the shale gas development boom extend well into New York,1 and the State maintains an established regulatory program for oil and gas exploration and production operations,2 hydraulic fracturing had been the subject of a de facto moratorium in New York since 2008.3 This de facto moratorium turned into an outright ban in June of 2015.4
Statutory and Regulatory Framework
The New York State Department of Environmental Conservation (DEC or the Department) is the state agency charged with implementing the oil and gas exploration and production regulatory program in the State.5 The DEC determined in 2008 that a Supplemental Generic Environmental Impact Statement (SGEIS) was necessary to assess the environmental impacts resulting from horizontal drilling and high-volume hydraulic fracturing (HVHF).6 While the DEC worked on the SGEIS, it did not authorize any drilling permit applications for horizontal wells using HVHF, resulting in a de facto moratorium.7 DEC released an initial draft SGEIS in September 2009,8 and, following a large volume of public comments, performed an additional review of the environmental impacts associated with HVHF.9 The Department released a “Revised Draft SGEIS” in 2011, accompanied by proposed rules regarding HVHF that address well permitting, siting, construction and operation, recordkeeping, and waste management and reclamation.10 Significant comments were received on the Revised Draft SGEIS,11 and the DEC filed for a 90-day extension from its November 2012 deadline to develop regulations to allow State Department of Health (DOH) Commissioner Nirav Shah and his team to complete their assessment of the health effects of hydraulic fracturing.12 In the meantime, DEC released revised proposed regulations for hydraulic fracturing in November 2012.13
In December 2014, the DOH finally concluded its study, releasing its report entitled “A Public Health Review of High-Volume Hydraulic Fracturing for Shale Gas Development.”14 The report recommended that HVHF not proceed in the State at this time because the available information was insufficient to assess the risks involved.15 Nevertheless, the report claimed that existing information was sufficient to conclude that HVHF has resulted in environmental impacts that are “potentially adverse to the public health.”16
Based on the DOH report and recommendation, the DEC published the final SGEIS in May 201517 and issued a Findings Statement banning HVHF in New York in June 2015.18 After analyzing additional scientific evidence regarding the potential significant adverse impacts of HVHF, the Final SGEIS explained that the DEC considered expanding the mitigation measures proposed in the draft SGEIS “to protect public health and the environment with a greater margin of safety.”19 DEC decided that even with the implementation of these mitigation measures, the significant adverse public health and environmental impacts could not be adequately avoided.20
Moreover, the SGEIS concluded that these measures would result in increased costs to industry and make a significant portion of the Marcellus Shale unavailable for HVHF operations, thereby impacting the potential economic benefits associated with HVHF in New York.21 In light of these considerations, the final SGEIS concluded that the benefits of HVHF do not outweigh its substantial risks to public health and the environment and, as a result, banning HVHF is the only reasonable action.22
Recent News and Developments
Local Bans
While DEC was preparing the SGEIS, several localities in the State moved forward with efforts to ban hydraulic fracturing. Several such efforts have resulted in subsequent litigation. For example, in May 2013, two separate New York Appellate Division decisions held that zoning ordinances barring various exploration and production activities, including hydraulic fracturing, were not preempted by New York’s Oil, Gas and Solution Mining Law.23 Those decisions were appealed to the New York Court of Appeals (the State’s highest court), which affirmed the Appellate Division’s rulings in June 2014.24 Thus, even if future legal challenges to the DEC’s current ban on HVHF were successful, local governments would remain able to enact zoning ordinances banning or restricting HVHF activities under current New York law.
Last updated September 2016.