Home Rule vs. State Rule – Can communities in New York State stop or regulate drilling activities?

Many municipalities in Upstate New York have passed bans on gas drilling. Many more municipalities have enacted moratoriums in anticipation of the DEC’s completing its environmental review. If the DEC lifts the four year old State moratorium, these local regulations will directly affect drilling activities in the subject municipalities. One company, Lenape Resources, has already sent a letter to the Department of Environmental Conservation Commissioner Joe Martens warning that a moratorium prohibiting natural gas development of wells located in the town of Avon forced them to
shut down wells there, we can expect to see these threats turn into lawsuits in New York State Courts in the not too distant future.

So far the towns issuing bans have been successful because judges have ruled that the bans are not regulations, and therefor they do not violate the New York State law against local regulation of gas development. Other states have been dealing with this  same issue. In Pennsylvania a court has ruled that a state can’t restrict localities
from using zoning laws to regulate oil and gas drilling within their borders. The state of Ohio passed a law in 2004 banning townships from passing local ordinances. West Virginia courts have overturned ordinances passed by local municipalities that banned gas drilling.

The basic legal issue at stake here is called “preemption”. Everybody recognizes that Federal Government can preempt State Government on issues such as constitutionality, federal taxes, and interstate trade. Likewise, in theory, States can preempt local municipalities on issues of public policy that affect the entire state.  New York is somewhat unique as its governance model is based upon the Dutch model, which allows for more discretion at the local government level. This is why New York is known as a “Home Rule” state. It will be interesting to see how this issue is ruled upon by Appellate Divisions in the State of New York. In all likelihood, the New York Court of Appeals will have to rule to resolve any conflicting case decisions that are decided here in New York.

 

 

Transparency Ordered in Public Land Fracturing

The Obama Administration has adopted New York State’s approach to full disclosure
of chemicals being used in hydraulic fracturing. The proposal will allow companies to file disclosure reports after drilling operations are completed rather than before as required in New York State. Interior Secretary Ken Salazar has been quoted as saying “that the public will now be fully aware of the chemicals that are being injected into the underground”. The new regulation will not affect drilling on private land.

To view the EPA Rule please see the following link:

www.epa.gov/hydraulicfracturing

 

Definitions

New York’s SGEIS and media reports regarding it have used several technical terms that are not well-defined in the articles that the terms appear in. Below is a glossary of terms listed in alphabetical order to help you to understand the terms used in hydraulic and horizontal drilling:

Black shales: such as Marcellus Shale and Utica Shale, are fine grain sedimentary rocks that contain high levels of organic carbon.

Directional well: while these wells are drilled at angles other than 90 degrees from the surface designed to access suspected or proven reservoirs of natural gas located in target areas beneath the surface generally in a straight line, albeit slanted, from the well pad.

Environmental Assessment Form (EAF): this is a shortened, program specific environmental assessment form which was included in the 1992 GEIS. What is expected to be a 2012 EAF addendum has been developed for gathering and compiling the information needed to evaluate high volume hydraulic fracturing projects, whether for horizontal or vertical wells (greater than or equal to (>/=) 300,000 gallons).

Fairway: gas production fairway is the portion of the shale most likely to produce gas
based on evaluation.

High volume hydraulic fracturing: defined in the SGEIS as hydraulic fracturing that uses 300,000 or more gallons
of water, regardless of whether the well is vertical, directional or horizontal.

Horizontal well: this well is drilled initially at a 90 degree angle to the earth’s surface but then completes a 90 degree turn to access the target geological formation containing the gas reservoir sought by the driller.

Marcellus Shale: another name for the Marcellus formation, a middle Devonian aged member of the Hamilton group, that underlies approximately 18,700 square miles in New York with surface outcrops to the norht and east and reaching depths of 5,000 feet in the Southern Tier.

Naturally Occurring Radioactive Materials (NORM): is present in varying degrees in virtually all environmental medium, including rocks and soils. Black shale typically contains trace levels of uranium and gamma ray logs that indicate that Marcellus shale is known to contain concentrations of NORM.

Proppants: generally this word describes the additive to the hydraulic fracturing fluid that keeps the veins open after fracturing to allow the nature gas to escape into the well bore. Most of the time, the proppant is some form of sand, although other proppants are being experimented with and utilized by certain operators.

Slick water fracturing: this term is used to describe high volume hydraulic fracturing utilizing special chemical agents and additives to create improved conditions for the hydraulics involved and pumping water into and out of the gas reservoir areas of low permeability reservoirs of shale and rocks.

Supplemental Generic Environmental Impact Statement (SGEIS): in final form, this is expected to be issued in 2012 regulating high volume hydraulic fracturing projects (> or = to 300,000 gallons) as well as horizontal drilling projects.

Utica Shale: an upper Ordovician-aged black shale that extends across New York from Lake Erie to the Catskills front covering approximately 28,500 square miles in New York. It is exposed in outcrops along the southern and western Adirondack Mountains
and dips gently south to depths of more than 9,000 feet in the Southern Tier of New York.

Vertical well: This is a well generally drilled 90 degrees from the well pad to the target formation, where fracturing occurs to release the gas for production.