NY fracking scenarios clouded by legislative, legal issues Expectations for Cuomo’s plan build amid uncertainties

A plan by Gov. Andrew Cuomo to permit high volume hydraulic fracturing to develop vast shale gas reserves in New York state will rely on state lawmakers to resolve a host of unknowns, including funding for regulatory oversight, according to sources familiar with it.

The much-anticipated plan – more than four years in the making with several trips back to the drawing board in the face of public criticism – is expected by the end of summer after it’s reviewed by stakeholders, including environmental groups, according to sources. Permitting could technically begin within months after the state issues its final policy, called the Supplemental Generic Environmental Impact Statement (SGEIS). While it would take several weeks or months for operators to reapply for permits under the new plan, legal and legislative complications remain practical barriers to shale gas development in the Empire State, especially with a weak market and low prices dampening economic incentives to explore new areas in the near term.

Earlier this summer, Cuomo proposed beginning shale gas development on a trial basis in New York’s Southern Tier counties, which overlie the richest parts of the Marcellus and Utica shales. That plan would allow for permitting 50 wells in the first year in towns that approved of shale gas development. The plan, as reported by Danny Hakim of the New York Times, met opposition from activists, who said it would make impoverished communities guinea pigs for assessing risks of fracking, a process to extract gas from bedrock by injecting the well bore with a pressurized solution of chemicals, many of them toxic.

Yesterday, Times Union columnist Fred LeBrun wrote that environmental groups were reviewing the most recent version of Cuomo’s plan that will be formally released before Labor Day. The article, titled End of the Anti-fracking World Near states: “For those desperately hoping against hope that high volume, horizontal hydraulic fracturing for natural gas will be blocked from coming into New York state, sorry. For you, the end of the world arrives before Labor Day.” LeBrun explains that shale gas development would begin along lines that Cuomo had outlined previously, with no additional DEC staff members to oversee “the first run of wells,” and without substantive changes to regulate waste water removed from the sites.

I have since heard different assessments from anti-fracking camps familiar with aspects of the plan. Contrary to the thrust of LeBrun’s report –- that the Cuomo plan marks the beginning of the shale gas era in New York -- some anti-frackers see Cuomo’s approach as a victory because it ultimately depends on involvement from the legislature. A primary monkey wrench, according to anti-fracking activists, will be a battle over funding -– never a sure thing in Albany and subject to even more uncertainty when it comes in the form of a controversial issue in the hands of partisan lawmakers. One advocacy group, Gas Drilling Awareness of Cortland County, advised members on its website that Cuomo’s plan “requires budget and legislative action … in the next legislative session delaying a final decision into 2013.” As reported by Jon Campbell of Gannett, state estimates show the Department of Environmental Conservation will need to come up with an average of $20 million each of the next five years to regulate the natural gas industry.

Opening the door to permitting, even on a limited basis, would be a problem for Democratic lawmakers, said Assemblywoman Donna Lupardo, a member of the Assembly’s Environmental Conservation Committee. Lupardo also sits on a panel assembled by DEC Commissioner Joseph Martens to advise the Cuomo administration on funding and other issues related to shale as development, including the prickly point of assessing health impacts. The panel, which has been inactive, has questionable clout, and it remains to be seen whether Cuomo will move ahead without its input.

“There are a lot of issues that have to be worked out, and there are many of my colleagues who are not comfortable with fracking,” said Lupardo, who predicted the fight over funding would be “epic.” The Republican controlled Senate, on the other hand, is lead by fracking proponents, including Senate Deputy Majority Leader Tom Libous representing Brome County – an area designated as a starting point for permits. The Senate is in the position to block any attempts by the Assembly to ban fracking. Conversely, the Assembly can block any attempts to legislate funding and necessary regulatory pieces that could arise, depending on the approach Cuomo takes. The 2012 legislature session is over, but lawmakers could decide to reconvene in the event of shale gas developments. The legislative picture is further complicated by elections in November that could change control of the Senate.

The future of fracking in New York is also hinged to the idea of Home Rule, which cedes the decision to allow or ban shale gas development to town officials. New York’s Supreme Court (the state’s lower court) has upheld drilling bans in the towns of Dryden and Middlefield. The industry has filed a notice of appeal.

Still, there are scenarios where the DEC could begin issuing permits before other issues are resolved. The agency could finalize the SGEIS this year as promised by Cuomo, and begin issuing permits in areas designated for fracking on a trial basis, while leaving the courts and legislature to sort out funding mechanisms and the legality of Home Rule.

“We know that the legislature in this state is very dysfunctional, and it will would be very hard for him (Cuomo) to wait for them to do anything,” said Deborah Goldberg, an attorney for Earthjustice, an environmental advocacy group. “If he’s going to go forward, he’s going to go forward.” How events will unfold, Goldberg added, is still a matter of speculation.