Troutman Sanders LLP: New York Moves To Allow, While New Jersey May Ban, Shale Fracking

On Friday, July 1, 2011, the New York Department of Environmental Conservation ("DEC") released its draft supplemental generic environmental impact statement ("SGEIS"), a proposal that would grant access to more than 80% of the shale formations within the state of New York.  Notably, the SGEIS would still prohibit drilling in the watersheds that serve New York City and Syracuse, any state owned lands, and all primary and principal aquifers. In 2009, the DEC released a similar SGEIS on hydraulic fracturing, or "fracking," a process that injects large volumes of water, mixed with sand and chemicals, into shale formations deep below the earth's surface in order to release natural gas that is otherwise trapped.  However, the 2009 SGEIS was heavily criticized for not doing enough to protect New York's water supplies.  Eventually, then-Governor David Paterson blocked all shale gas permitting in the state. 

While the new SGEIS does allow fracking on privately owned lands, it contains new regulations that aim to increase safety and transparency during the fracking process.  First, drillers would be required to use three layers of cemented well casings in order to prevent gas from leaking into drinking water supplies.  Second, the SGEIS requires drillers to take several steps to better control fracking fluids and any "produced water" used in the fracking process.  Third, the DEC will monitor the disposal of produced water, production brine, drill cuttings, and other drilling waste streams produced in the process.  And finally, drillers will have to disclose to the DEC and the public all of the chemicals used in their operations.  While drillers can claim "trade secret" protections from the public during the disclosure process, they will still have to identify all of their chemicals confidentially to the DEC.

Moving forward, the DEC will allow for a lengthy comment period before making its final decision.  Additionally, the DEC will begin to write rules implementing the SGEIS.  The DEC expects to begin issuing permits before the rules are completed, with the first permits likely to be issued in early 2012. 

Meanwhile, on Wednesday, June 30, 2011, the New Jersey Senate passed legislation, by a vote of 32-1, which banned the use of fracking for natural gas in all of New Jersey.  The bill, which was previously passed by the New Jersey Assembly 56-11, will now move to Governor Chris Christie's desk for signature. 

While New Jersey does not yet produce natural gas from shale formations, part of the state's northwest corner sits above a largely unexplored formation that stretches from Tennessee to Ontario, called the Utica Shale.  As of publication of this article, Governor Christie was still reviewing the bill that would create the first statewide ban on fracking in the U.S.

An executive summary of the SGEIS can be found here, while the New Jersey bill to ban fracking can be found here.

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