Monday, October 1, 2012
The natural gas industry has generally supported state regulation of fracturing, as I discussed in a post several weeks ago. Whether one views this as part of a broader "states' rights" approach grounded in federalism theory or a belief that state regulation is adequate and/or less burdensome than a federal approach, its repercussions are beginning to emerge. The New York Times reports that the Cuomo administration has ordered the initiation of a new environmental study of high-volume fracturing in the state, which the Times characterizes as restarting the regulatory process. This follows a lengthy environmental impact statement already prepared by the state's Department of Environmental Conservation. As the Times reports, this is an unusual display of the strength of grassroots action. While it appears that many New Yorkers oppose fracturing (also called fracing, fracking, or hydrofracking), some landowners in the state could make millions from leases. New York's actions, in short, are an unusual example of a state's willingness to fully consider the negative effects of an industrial process that could send large amounts of revenue into the state. Cuomo's action to further delay high-volume fracturing in the state follows an earlier proposal to allow fracturing only in economically-struggling counties near the Pennsylvania border that express support for shale gas development.
New York is not the only state that has taken a more cautious approach to shale gas development and fracturing. As that state looks to Pennsylvania--which has rushed ahead with this development--for potential pitfalls, Maryland and Delaware, too, have expressed concerns. In a letter, Delaware's Governor Jack Markell worried that fracturing regulations proposed by the Delaware River Basin Commission for gas development within its watershed were inadequate, and he indicated that he would vote against them. Maryland, in turn, formed an advisory commission to determine "whether and how gas production from the Marcellus shale in Maryland can be accomplished without unacceptable risks of adverse impacts to public health, safety, the environment and natural resources."
Despite New York's general ability to delay fracturing within its boundaries under its Environmental Quality Review Act, it faces other shale gas-related jurisdictional battles within its territory. A federal judge recently dismissed its complaint against federal members of the Delaware River Basin Commission and agencies associated with that Commission. New York had argued that a federal environmental review under the National Environmental Policy Act was required before the DRBC could finalize its draft regulations for gas development within the watershed. Although New York failed in its efforts to require further environmental study prior to the finalization of these regulations, it is not clear what will happen with the regulations, which require a vote of the Commission's state members (including Delaware, New Jersey, New York, and Pennsylvania) and its federal representative in order to be finalized. The proposed regional regulations rely substantially on the states for implementation, and New York could both oppose the passage of the regulations and, potentially, attempt to resist cooperation with the DRBC if the regulations are finalized. If New York sues the DRBC after its regulations are finalized--as the court suggested it may do--questions about whether to characterize this Commission as "federal" will continue to raise interesting issues regarding the Commission's powers over its member states and the extent to which it must comply with NEPA, if at all.
As shown by Pennsylvania's recent efforts to prevent municipalities from zoning out shale gas development and New York's latest delay of shale gas activity, important federalism issues will continue to dominate this field. These questions will require more careful thinking about state laboratories, a more complete analysis of whether regulatory experimentation in this area will lead to adequate control of the risks, and a better understanding of the boundaries of regional governance within the interstices of federal and state authority.