New York Governor Issues Temporary Moratorium On Drilling, Vetos Moratorium Bill

New York Gov. David A. Paterson today issued an Executive Order directing the Department of Environmental Conservation to conduct further comprehensive review and analysis of high-volume hydraulic fracturing in the Marcellus Shale.
The Executive Order requires that, if approved, high-volume, horizontal hydraulic fracturing would not be permitted until July 1, 2011, at the earliest. This should allay any fears that high-volume hydraulic fracturing and horizontal drilling under study by DEC will commence without assurances of safety.
“We in government must always focus on protecting the well-being of those whom we represent and serve, but we also have an obligation to look to the future and protect the long-term interests for our State and its residents,” Gov. Paterson said. “Therefore, I am proud to issue this Executive Order, which will guarantee that before any high-volume, horizontal hydraulic fracturing is permitted, the Department of Environmental Conversation will complete its studies and certify that such operations are safe.”
Permits for high-volume, horizontal hydraulic fracturing can not be issued until the Department of Environmental Conservation completes a Supplemental Generic Environmental Impact Statement, which is currently being developed. As a result, there is already in place a de-facto moratorium on such permits.
The Governor issued the Executive Order contemporaneously with his veto of S.8129-B/A.11443-B, which would have suspended the issuance of new oil and gas drilling permits through May 15, 2011, including all conventional, low-volume, vertical oil and gas wells.
“This legislation, which was well intentioned, would have a serious impact on our State if signed into law. Enacting this legislation would put people out of work – work that is permitted by the Department of Environmental Conservation and causes no demonstrated environmental harm, in order to effectuate a moratorium that is principally symbolic,” Gov. Paterson said. “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.”
“I am sympathetic to the sponsors’ desire to protect the environment and public health, and I respect the concerns that produced this legislation,” the Governor continued. “But this legislation does not accomplish this purpose, since the activities at the heart of the moratorium are not currently taking place, and would not take place until well after the legislation’s proposed moratorium.”
The bill goes well beyond high-volume, horizontal hydraulic fracturing and effectively would result in a moratorium on all new oil and gas well drilling in this State. The cessation of such new activity, even for a limited period, would have substantial negative financial consequences for the State, local governments, landowners and small businesses involved in conventional oil and gas production.
The Division of the Budget estimates that the bill would cause a substantial reduction in State revenues from the loss of permit fees and tax revenue. With a $315 million budget gap in the current fiscal year, and a projected gap of over $9 billion in the 2011-12 State fiscal year, New York simply cannot afford to send hundreds and perhaps thousands of jobs, and millions of dollars in capital investment to Pennsylvania and other states to our south.