Despite being home to the first natural gas well in the United States, the State of New York has prohibited the use of hydraulic fracturing within its borders. Since the election of Governor Andrew Cuomo, the question in the oil and gas industry is whether he will lift the ban. Shortly after his election, Governor Cuomo tasked the Department of Environmental Conservation with drafting rules to allow for hydraulic fracturing. While the DEC issued proposed rules and held public hearings on those proposed rules, the likelihood of hydraulic fracturing coming to New York hit a major stumbling block.

Initially, there were reports indicating that the DEC was close to publishing its final rules allowing hydraulic fracturing. However, the DEC Commission recently announced that the implementation of the proposed rules was going to be delayed pending input from the New York Department of Health. The DEC requested the Health Department’s input in response to concerns that the DEC did not adequately address potential health consequences in its environmental assessment.

Almost a week later, the Cuomo Administration hit the reset button and announced that, instead of waiting for the Health Department’s input, the DEC would scrap the proposed rules and start the process all over again.

This restart will require the DEC to repeat several formal requirements that were already completed, including public hearings.

It is unclear what any revised proposed rules will now look like, if the DEC even decides to issue proposed rules. Prior to the withdrawal of the proposed rules, the DEC was prepared to allow hydraulic fracturing but

• prohibit high-volume hydraulic fracturing (“HVHF” and defined as the use of more than 300,000 gallons of water) within 4,000 feet of any unfiltered water supply watershed, 2,000 feet from any public water supply, and 500 feet from a primary aquifer;
• prohibit HVHF well pads within any 100-year floodplain;
• require that HVHF operations be conducted at depths at least 2,000 feet below the surface and at least 1,000 feet below the base of fresh groundwater;
• require operators to have a Spill Prevention Control and Countermeasure Plan;
• require operators to identify all fracturing water additives and the concentration of those additives in the fracturing water;
• regulate disposal of flowback, whether the disposal is by underground injection or by sending the flowback to a publicly owned treatment facility for treatment and discharge to a body of surface water;
• require operators to sample and test all residential water wells located within 1,000 feet (if the water well owner will give permission) of a planned oil or gas well prior to beginning drilling, and to provide results to the water well owner; and,
• generally require HVHF operators to contain all drilling fluids and cuttings within a closed system of piping and equipment, rather than in open pits.

Thus, while it appeared that there would soon be light at the end of the tunnel, hydraulic fracturing in New York will continue to be delayed, if it is permitted at all. There has been no word from the DEC as to how long the process will take, but it is unlikely that New York will issue any proposed rules before the end of the year and, realistically, the process will likely drag on well into 2013.