NY Anti-Fracking Ruling Deals Blow to Shale Industry
A recent court ruling giving cities and towns in New York State the authority to ban hydraulic fracturing ("fracking") represents an enormous blow to the shale gas industry, which has been hoping to expand operations into the state for several years.
New York imposed a moratorium on fracking in 2008 so it could study the environmental impact, which industry opponents say includes adverse effects on groundwater supplies and public health. Fracking involves injecting a cocktail of water, sand, and chemicals deep underground at pressure high enough to fracture shale rock so the oil or gas within can be extracted.
Governor Andrew Cuomo has been under significant pressure from the industry to lift the moratorium, but has punted on the issue -- some say to avoid making a politically controversial decision.
New York sits atop the vast Marcellus and Utica shale formations, which hold huge volumes of shale oil and gas. But due to the moratorium, the state has not seen the expansion of drilling that nearby states like Pennsylvania and Ohio have experienced.
In the past six years, towns and cities across New York have acted on their own, passing municipal bans. One, the upstate town of Dryden, was taken to court by an energy company after it prohibited fracking.
By a 5-2 vote, the New York Court of Appeals, the state's highest court, ruled that the actions taken by local communities to restrict fracking amounted to a "reasonable exercise" of their zoning authority, particularly since high levels of drilling "would permanently alter and adversely affect the deliberately cultivated small-town character of their communities."
The court decision could have a deflating effect on future drilling prospects in New York, even if the statewide moratorium is lifted. Although there are plenty of counties and cities that would support fracking, the patchwork of municipal bans could make drilling on a large scale difficult. Navigating the maze of municipal zoning laws could deter investment altogether.
"It's going to have a real chilling effect on the investment in New York," Thomas West, an attorney for Norse Energy, told Bloomberg News in an interview. "Most of the major companies are not going to see New York as open for business if they have to develop the resource around municipalities with bans."
Brad Gill, executive director of the Independent Oil and Gas Association of New York, put in more bluntly, saying the decision is "one more nail in the coffin" for fracking in the Empire State.
A map put together by FracTracker.org shows why drillers would hesitate before pouring millions of dollars into leases and infrastructure. Over 75 towns have banned fracking, with many more considering provisions to restrict the drilling practice.
"The oil and gas industry tried to bully us into backing down, but we took our fight all the way to New York's highest court." Mary Ann Sumne, the Dryden, NY town supervisor, said in response to the ruling, "I hope our victory serves as an inspiration to people in Pennsylvania, Ohio, Texas, Colorado, New Mexico, Florida, North Carolina, California and elsewhere who are also trying to do what's right for their own communities."
Local control over fracking has cropped up as a major issue in several states across the country. The highest profile battleground is Colorado, where several cities have passed fracking bans, including Fort Collins, Longmont, and Lafayette. The oil and gas industry is fighting the bans in court, and trying to head off more bans in cities that have experienced an increase in drilling activity.
A movement to put the issue on a statewide ballot in November's election is gaining steam. The industry has criticized the ballot push for being a stealth effort to enact an outright state ban on fracking while cloaking itself in the language of local sovereignty.
On June 30, the Colorado Supreme Court handed ballot organizers a victory with a ruling that says they can proceed with gathering signatures on petitions to put as many as six anti-fracking measures up for a vote. A deadline of August 4 has been set for the submission of signatures -- 86,105 of which are needed for each measure organizers want to see the public decide.
Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.
The article NY Anti-Fracking Ruling Deals Blow to Shale Industry originally appeared on Fool.com.Written by Nick Cunningham at Oilprice.com.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.