NY Gov Ends Moratorium, Stops High Volume Hydro Fracing

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New York Governor Vetoes Moratorium Bill; Issues Executive Order Prohibiting High-Volume, Horizontal Hydraulic Fracturing until July 1, 2011

New York Governor David Paterson has issued an executive order prohibiting the use of high-volume, horizontal hydraulic fracturing as a means of oil and gas exploration in New York until at least July 1, 2011.

But the outgoing governor also rejected a more expansive natural gas exploration moratorium by vetoing on Saturday legislation passed by the New York Legislature. The latest action by the governor is another attempt to balance environmentalists? worries about the potential harm to groundwater resulting from natural gas development with business groups? concerns that the moratorium legislation as drafted would adversely impact more than just high-volume hydraulic fracturing and horizontal well drilling.

The governor?s order prohibits the use of high-volume, horizontal hydraulic fracturing in New York?s Marcellus shale while the New York Department of Environmental Conservation continues its review of the Supplemental General Environmental Impact Statement, which it is developing to regulate high-volume hydraulic fracturing and the use of horizontal wells.

The governor stated that although the bill may have been well intended, it would have had a negative impact on the economy by prohibiting drilling that ?causes no demonstrated environmental harm, in order to effectuate a moratorium that is principally symbolic.? He added, ?Symbols can have great importance, but particularly in our current terrible economic straits, I cannot agree to put individuals out of work for a symbolic act.?

Business groups agreed. Brad Gill, the executive director of the Independent Oil and Gas Association, said the industry is ?grateful to Governor Paterson for his courage and clear-headed judgment.? The group estimated that the moratorium passed by the Legislature would have imperiled 300 companies currently drilling in New York, along with 5,000 employees.

These moves on the political front only concentrate more attention on New York?s incoming governor, Andrew Cuomo, who has not stated clearly his own position on the future of natural gas development in the state.

Should you have questions about this or any matter involving energy law, please contact the Energy Group at Steptoe & Johnson PLLC.

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