Thursday, October 4, 2012

So what’s next for fracking policy in New York state...? Hint: Cuomo’s move buys time prior to elections

Governor Andrew Cuomo’s administration is keeping doors open both for an extended review of New York’s shale gas policy, and for lifting a moratorium that has prevented exploration for more than four years.

This ambivalence (which I’ve written about here) makes sense given the uncertainty of the state’s legislative composition pending elections. In another month, Cuomo will know whether he is working with a Legislature ruled by Democrats, who are wary of embracing the industry that is aggressively developing the Marcellus Shale in Pennsylvania; or whether he is working with a Republican controlled Senate, lead by pro-drilling leadership that has effectively quelled any attempts to pass legislation to hinder fracking in New York.

Political uncertainties aside, there are three major administrative pieces in play to New York’s fracking policy puzzle.

One is a review on the environmental impacts of high volume hydraulic fracturing. That review, in the form of a document called the Supplemental Generic Environmental Impact Statement (SGEIS), has been through various drafts and has been evolving in the face of public criticism since 2008. The final version of the review has been widely anticipated by year’s end, although it has no legal deadline. The review outlines conditions under which permits would be granted.

The second piece – called rulemaking – is designed to produce regulations, and it's to be built on the findings of the SGEIS. There is a Nov. 29th deadline to complete rulemaking, and, accordingly, finalize regulations that would apply to shale gas development. Unlike the SGEIS, which produces outlines that leave oversight to the discretion of permitting officials, the regulations would create standards that can be uniformly enforced.

The third piece is a health review of fracking. DEC Commissioner Joseph Martens announced last month that will turn that part of the process to Department of Health Commissioner Nirav R. Shah, who will set up an independent advisory panel to help with the job. The health assessment was a late addition by the Cuomo administration after environmental groups threatened to sue the state if the DEC began issuing permits for high volume fracking before public health impacts were documented. Activists are now bringing even more pressure to bear. Today, a group of public health professionals gathered at the Capitol Building in Albany to urge the administration to make the review transparent and open. “No one in the public or medical community has seen the DEC’s review of health impacts, nor has the administration shared details regarding who was involved in its development or what the process and opportunity for input will be,” said David O. Carpenter, director of the Institute for Health and the Environment at the University at Albany's School of Public Health.

So with all this unresolved, when will the shale gas era begin in New York?

Last week, DEC spokeswoman Emily DeSantis stated that agency officials do not expect to meet the Nov. 29 rulemaking deadline. That would mean effectively re-starting the rulemaking process, with at least one public hearing and an indefinite delay. DeSantis also confirmed the possibility that the state could begin issuing shale gas permits after the SGEIS is completed, while the regulations are still being developed.

Where does the health study fit in? Responding to my questions to clarify the timeline, DeSantis said the health study would be factored into both the SGEIS and the rulemaking process, but, she added, “It is undetermined if permits would be issued before rulemaking is complete.” Officials remain unclear on that point, I suspect, because their boss in the governor’s mansion has no reason to commit himself before he has to.

I asked several attorneys representing key stakeholders how they see the process unfolding from here. Here’s a sampling of responses:

Tom West, of West Law Firm, represents the industry. He anticipates the state will begin issuing permits after the SGEIS is complete, and prior to the completion of the rulemaking process. “In order for DEC to refuse to process permits following the issuance of the final SGEIS, they will have to declare some sort of moratorium,” West said.

Kate Sinding, a senior attorney with the National Resources Defense Council, represents environmental interests in line to challenge the industry. She sees things differently. “From our perspective, it would be a huge mistake – and quite possibly illegal – to issue permits prior to completing the rulemaking process,” she said. In addition to a completed health assessment, “It is essential that the public have the opportunity to see and weigh in on the state’s planned approach before it allows drilling companies to start breaking ground.”

Roger Downs, representing the Atlantic Chapter of the Sierra Club, said he would not be surprised if the agency moves forward sooner, rather than later, depending on political circumstances. “We see no evidence that they will wait for a completed rule making process before issuing permits to drill. The terms of the Health study are still vague and we have no doubt that the Governor can rush a review that may satisfy the state's legal obligations without providing any new insight into the true effects of fracking's dangers.”

My take: Cuomo is buying as much time as he can for his staff to work through all the legal permutations, and to better gauge the political climate that he will face in another month.

8 comments:

  1. Great stuff Tom. I have a very cynical question after another skimming of the dsgeis. During this waiting period, what would prohibit permit authorization for a horizontal fracking well that produces less than 300,000 gallons of fluid? Could an operator not use the 1992 GEIS as guidance or "cover" as long as essential permit(s) application submittals were filed (and assuming compliance with public comment periods). So to get around the high volume criteria, an anxious driller could use an alternative fluid material like liquid propane or liquid carbon dioxide? The water volumes from fracking operations and formation may be appreciably reduced. I believe there are some staging area and operations foot print issues germane to the dsgeis. But workaround-able if the driller and pro gas extraction state agents were interested in proving something.

    I've read to many orders and permits over the years and they seem to all read the same. Hopefully I'm dead wrong on this musing.

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    1. Good question Michael. In short, the industry could technically begin producing shale gas if it wanted to go through the hassle and paperwork of site specific reviews, or of finding alternatives that would comply with the old GEIS. Some company reps have talked about low-volume fracking into the Marcellus with vertical wells to prove-up the play and lock in lease holds, but I do not know of any instances where this is now going on. There is little incentive to go too far out afield with exploration with the abundance of production in Pa. and the low price of gas. If (and when) we see the price of gas rise significantly, then there will be more of a push for companies to get things going in New York and, if necessary, work around the current regulatory impasse.

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    2. There's a vertical "test" Marcellus well being drilled in Owego, NY. See:

      http://marcelluseffect.blogspot.com/2012/10/wetterling-well-under-way-in-owego-ny.html

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    3. Mary, Thanks for pointing that out. Some time ago, I heard of similar plans for vertical shale gas "test" wells by Inflection in the Town of Main, and by Norse in Monroe and Chenango counties. But I don't know of any. Doesn't mean that they aren't out there, though.

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    4. I believe(?) there was at least one test well in Chenango County; not sure about the Town of Maine.

      Anyone wishing to check on the status of permits can consult the following link (although there is no guarantee that the DEC's database will be completely up to date at any given moment):


      http://www.dec.ny.gov/cfmx/extapps/GasOil/search/wells/index.cfm

      You can search for all wells with Marcellus as the objective formation to get a list of permits and then check the spud date to see which wells have actually been drilled.

      BTW, for anyone living in potential drilling areas, the above link is handy to have as there is no requirement for the DEC to notify adjacent landowners if drilling is going to take place near them. As I understand it, the only landowners who will receive notification are those whose land will actually be disturbed by surface operations. If you want to find out if there are permits near you, this is one way to do it (although as I said, the database may not always be 100% up to date).


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  2. Where does the Health study fit in? Depends: Is the Health study going to be a full review from square one by DoH of the health risks and potential impacts, or is it going to be more of a second opinion of the SGEIS spotting issues that DoH thinks the SGEIS should have dealt with in more detail? Big difference and the answer will affect more than just timing.

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    1. You raise a great point. If the study is a full Health Impact Assessment, it will involve much scoping, vetting, and sanctioned review that will not be a speedy process. If it is an informal “second opinion” of an (unknown?) advisory board pulled together at the discretion of the DEC to shore up the agency’s legal defense of the SGEIS, it could be a matter of weeks. The administration has not been clear on this, and it looks like it could go either way or something between. As mentioned in the post, activist are already questioning the process with a very critical eye.

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  3. Tom,
    Something else that confuses me about the dsgeis is the reliance on the "Groundwater Protection Council." Here's their website: http://www.gwpc.org/. From the first paragraph of the section in the dsgeis stating NYDEC reliance:

    8.4.1 Ground Water Protection Council
    GWPC‟s overall conclusion, based on its review of 27 states‟ regulations, including New York‟s,is that state oil and gas regulations are adequately designed to directly protect water resources. Hydraulic fracturing is one of eight topics reviewed.
    The other seven topics were permitting,well construction, temporary abandonment, well plugging, tanks, pits and waste handling/spills.

    All the background and affiliation information on GWPC I could find on its website:

    Officers & Supporters
    The GWREF Board is currently made up three representatives from state agencies with plans to expand the board size to incorporate additional members.

    President - Dave Bolin, Alabama State Oil and Gas Board
    Vice-President - Stan Belieu, Nebraska Oil and Gas Conservation Commission
    Treasurer - Jamie Crawford, Mississippi Department of Environmental Quality

    There is something curious about the GWPC. This group seems to be loosely affiliated with the National Ground Water Association (NGWA), which I'm familiar with. I have never heard of GWPC - conversly I'm sure they never heard of me - but there is something weird here. Chapter 8 of the dsgeis was written in the tone of, "hey, everybody's doing it, why can't we in NYS." Interestingly Pro-public has an article about fracking written in 2011 which says something to the affect that GWPC is a front group. I have no idea. Like I said I never heard of them.

    Anyway, my take on the dsgeis use of precedent can work both ways, i.e. environmental and societal degradation in PA, AR, TX and WY gas fields have been reported just this past year. I believe the NYSDEC needs to update the dsgeis to include those most recent findings. Put it this way - the dsgeis is out of date pursuant to its own declaration of limitations.

    BTW - I'm not a lawyer, but a Chemical engineer who's been doing groundwater remediation for the past 26 years or so - so take my use of words like precedent and pursuant with a grain of salt.


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