Fuel Fix ? Legal questions raised on NY's gas-drilling rules

A natural gas well in the Greater Natural Buttes (Photo: Anadarko)

ALBANY, N.Y. ?? While an energy industry economist says New York?s proposal to place large areas off-limits to gas drilling is overly restrictive, an environmental lawyer says the proposed watershed protections don?t go far enough.

The Department of Environmental Conservation posted its 700-plus-page blueprint for hydraulic fracturing in the lucrative Marcellus Shale region on its website on Friday, allowing industry and environmental groups to start dissecting the proposed plan to allow gas drilling in an area where it?s been on hold since 2008.

More than 3,300 gas wells have been drilled since 2005 across the border in Pennsylvania, bringing new jobs and economic benefits as well as environmental problems such as accidental chemical spills, gas-tainted well water and river pollution. New York state regulators have upheld permitting for three years while they conduct an environmental review and draft new regulations.

The proposed New York rules include a section describing several gas-drilling operation accidents in Pennsylvania and outlining New York?s measures designed to mitigate such incidents.

?Our biggest concern is the restrictions that have been added,? said John Felmy, chief economist for the American Petroleum Institute. ?In particular, the New York City and Syracuse watersheds, and taking state lands off the table. Those are big areas.?

Felmy said natural gas development in New York?s economically depressed Southern Tier would bring billions of dollars in economic activity, thousands of jobs, and new tax revenues. But a coalition of 47 health and environmental groups has called for a statewide ban on hydraulic fracturing for natural gas, saying it poses unacceptable risks.

Joe Martens, the state?s environmental commissioner, said the watersheds and state lands where gas-drilling would be prohibited amount to about 15 percent of the land in New York?s part of the Marcellus Shale, the nation?s largest-known natural gas reservoir. The formation underlies southern New York, much of Pennsylvania, and parts of Ohio and West Virginia.

?We think the drilling in watersheds needs to be reviewed,? Felmy said. ?We think it can be done properly. To unilaterally take it offline is a concern.?

Kate Sinding, an attorney for the Natural Resources Defense Council, said the proposal to place the watersheds off-limits to drilling doesn?t go far enough because it doesn?t include a sufficient buffer around the ancient underground tunnels that carry water to New York City from its upstate reservoirs.

?We?re very worried about that,? Sinding said. ?This is a far cry from what the city?s Department of Environmental Protection has argued for.?

Tom West, an oil and gas attorney who represents operators in New York state, said the industry is unlikely to mount any court challenge to the ban on drilling in the watersheds because those areas aren?t considered as gas-rich as other areas.

The first wave of Marcellus development in New York would likely run along Interstate 86 from Binghamton through Tioga and Chemung counties, near the Millennium Pipeline, according to Penn State geologist Terry Engelder.

More likely to spur lawsuits are attempts by municipal governments to use zoning or local ordinances to regulate natural gas activities, West said. A drilling company recently filed a court challenge to such an ordinance in Morgantown, W. Va.

?We believe the environmental conservation law in New York is very clear in that it pre-empts the municipality from enacting any ordinance or law, including zoning, regulating natural gas activities,? West said.

Sinding said environmental groups have long believed that the local authority issue would have to be resolved by the courts or the state Legislature.

?It?s safe to say that very good legal minds have come up with opposing conclusions,? Sinding said. ?There?s enough ambiguity in the law that one could make a persuasive argument either way.?

If local bans on gas drilling end up in court and industry wins, it could provide momentum for state lawmakers to pass home rule laws supporting the right of municipalities to enact such bans, Sinding said.

Other legal questions are whether the DEC has the statutory authority to ban drilling in certain areas, and whether such a ban amounts to an illegal taking of mineral rights, West said.

?I don?t think the industry will be inclined to go down that path,? West said. ?Clearly, the government is trying to strike a balance and open up as much of the state as they can and trying to give additional protection to areas they deem warrant additional protection.?

The environmental review and proposed regulations will be opened to an official 60-day public comment period after the addition of a section on economic and community impacts in early August, according to DEC. Permits won?t be issued until the regulations are finished, likely in 2012, the agency has said.

Source: http://fuelfix.com/blog/2011/07/12/legal-questions-raised-on-nys-gas-drilling-rules/

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