As we previously reported, on December 17, 2014, New York State’s environmental review of high-volume hydraulic fracturing—a technology necessary to develop deep shale formations—came to a sudden end. Then NYS Governor Andrew Cuomo determined that there were too many unanswered questions to move forward. With that decision, the hope for a replay of the shale boom for economically depressed areas of Upstate New York enjoyed by Pennsylvania landowners just over the border, ended as quickly as it started. Thereafter, New York State doubled down on Governor Cuomo’s decision, and, in 2020, the legislature codified the ban in statute (ECL § 23-0501) and imposed an indefinite moratorium on propane gel fracturing. This was followed by a 2024 ban on CO2-based fracturing.
Frustrated and unable to reap the promised economic return on their land, landowners in New York State’s Southern Tier have filed a federal lawsuit alleging that the state’s comprehensive ban on high-volume hydraulic fracturing, carbon dioxide (CO2) fracturing, and propane gel fracturing, which effectively prohibits all development of the Marcellus and Utica Shale formations, effectuates a taking-in violation of the Fifth Amendment of the US Constitution.
The lawsuit is expected to garner significant attention. Environmental groups will likely decry the lawsuit, focusing on alleged environmental harms, and their push to transition away from fossil fuels. A favorable ruling, however, could be a game changer for New York State, landowners across the Southern Tier, and the oil and gas industry. It also is extremely relevant to the current concerns centered on energy independence and affordability given the vast shale resources left untapped in New York State. As highlighted by the complaint, “New York imports nearly 85 percent of its energy, a substantial portion of it natural gas from Pennsylvania. New York prohibits extraction within its own borders while purchasing natural gas (that high-volume hydraulic fracturing produced) from its neighbor to meet its energy needs. New York consumers pay the price: the State’s residential electricity costs average between 24 and 27 cents per kilowatt-hour—approximately 40 percent above the national average—and natural gas prices run approximately 22.8 percent above the national average.”
Barclay Damon’s Oil & Gas Team attorneys will continue to monitor this litigation.
If you have any questions regarding the content of this alert, please contact Yvonne Hennessey, Environmental Practice Area chair and Oil & Gas Team co-leader, at yhennessey@barclaydamon.com.