The controversy over hydraulic fracturing in New York State has entered a new phase with the release of a draft Supplemental Generic Environmental Impact Statement (“DSGEIS”) by the New York State Department of Environmental Conservation (“DEC”) containing recommendations for the implementation of high-volume hydraulic fracturing in New York.  If implemented, these recommendations would end a moratorium on permits for drilling new wells for high-volume hydraulic fracturing (also known as “hydrofracking”).  The moratorium has effectively been in place since 2008 and was made official by an Executive Order issued by then-Governor David Paterson in December 2010.

High-volume hydrofracking involves the high-pressure injection of a mixture of water, sand and chemicals into underground shale. The process fractures the shale, releasing deposits of natural gas.  There are believed to be enormous deposits of natural gas in the Marcellus Shale, an underground formation that underlies parts of southern and western New York State (as well as parts of Pennsylvania, West Virginia and Ohio).  High-volume hydrofracking is considered an efficient and cost-effective method of withdrawing natural gas, but has raised concerns about the release of chemicals to groundwater, and the potential adverse effects on drinking water sources.  Communities where wells would be located also have concerns about increased truck traffic, as well as the proper management and disposal of wastewater generated by the hydrofracking process.

The hydrofracking issue stands at the confluence of concerns about economic development and alternative energy sources as well as environmental protection.  The natural gas industry and other business interests believe that high-volume hydrofracking will bring significant numbers of new jobs to the Southern Tier of New York State as well as other parts of the State undergoing economic hard times.  The availability of large deposits of natural gas as an energy source could conceivably decrease dependence on foreign oil.  But, as noted above, a number of issues have been raised that call into question whether high-volume hydrofracking can be conducted in a manner that is sufficiently protective of the environment.

In the DGSEIS, which was released on July 1, DEC has stated its intention to create a permitting program and to issue permits for hydrofracking wells.  DEC estimates that, under its recommendations, approximately 80 per cent of the Marcellus Shale will be accessible to high-volume hydrofracking.

DEC does not propose to allow hydrofracking everywhere in the Marcellus Shale.  Hydrofracking would be prohibited in the watersheds that supply drinking water to New York City and Syracuse (the New York City watersheds are located in the Hudson Valley and Catskill Mountain regions), as well as in a 4000-foot buffer zone around those watersheds.  It would be prohibited on land that sits above primary aquifers (i.e.–groundwater aquifers that are presently used as sources of drinking water by major municipal water supply systems), as well as in a 500-foot buffer zone around those aquifers.  In addition, hydrofracking would not be permitted on certain State-owned lands, including forests, state parks, wildlife preserves and recreation areas.  Finally, hydrofracking would not be permitted in floodplains, within 2000 feet of public drinking water supplies or within 500 feet of private drinking water wells.

DEC also plans to impose certain mandates as conditions for the issuance of well permits.  These would include three tiers of casing for the wells and the public disclosure of the contents of the specific chemicals used in the hydrofracking process.  Permits would also have to contain DEC-approved plans for wastewater disposal, air quality monitoring, mitigation of greenhouse gas impacts and mitigation of effects on wildlife.

In conjunction with its recommendations, DEC has appointed a “Hydraulic Fracturing Advisory Panel”, consisting of representatives from business and industry, environmental advocacy organizations, two sitting state legislators from the Southern Tier and former Lieutenant Governor Stan Lundine.  The panel is charged with making recommendations regarding DEC’s oversight and monitoring of hydrofracking activities, as well as recommendations for avoiding or mitigating impacts to local communities where the wells are located.

The DSGEIS will not actually be complete until the end of July, when DEC will receive a consultant’s report on the impact of hydrofracking on economic development and local communities.  This report will be incorporated into the DSGEIS.  A 60-day public comment period will begin on August 1.  Some time after the close of the comment period, DEC will issue a Final GSEIS (“FSGEIS”).  No permits will be issued until after the FSGEIS is issued, which DEC expects will be sometime early in 2012.

DEC also plans to promulgate regulations governing the well permits (procedures for application and review as well as standards for operation).  However, DEC plans to accept applications and issue permits after the FSGEIS is released, even if the permit regulations have not yet been promulgated.

Understandably, DEC’s action has certainly not resolved the controversy, but it has brought the issues into sharper focus.  Numerous organizations, elected officials and citizens remain unalterably opposed to hydrofracking.  Industry groups appear to be taking a “wait-and-see” posture.  Meanwhile, a new controversy has arisen (at least judging by a number of editorials and op-ed articles that have been published in the past week) about DEC purportedly giving undue protection to New York City’s water supply to the detriment of the upstate population.  Meanwhile, the United States Environmental Protection Agency (“EPA”) has been conducting a study of hydrofracking at the national level.  The study is expected to be released sometime in 2012.  Some elected officials, including State Assembly Speaker Sheldon Silver, has suggested that DEC should continue the moratorium at least until EPA has released its findings.

There will be much more to come on this issue in the coming months.