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2339268_1I recently received a telephone call from a landowner in the Town of Sanford, Broome County, who has not yet signed a gas lease, but is interested in doing so under the right terms. She indicated she had been advised by “well-informed persons” that the State Department of Environmental Conservation (NYSDEC) would not meet its November 29th “deadline” and, consequently, the entire Environmental Review (SGEIS) process – now four years in the making – would have to start over from the beginning. I advised her that is totally incorrect. WAIT! It’s partially correct, but mostly incorrect. Let me explain.

Compliance with the State Environmental Quality Review Act (SEQRA) for major proposed actions can be complex and lengthy almost to the point of being Byzantine. The obligation to comply with SEQRA arises when someone (in this instance NYSDEC) proposes to take an “action” as defined by SEQRA. The “action” which has been the subject of the four-year SEQRA review is DEC’s proposed revisions to the regulations governing issuance of permits for drilling natural gas wells and producing natural gas.

When a New York governmental department proposes to adopt new, or amend existing, regulations, in addition to complying with SEQRA, it must comply with the requirements of the State’s Administrative Procedures Act (APA). The purpose of the APA is to make sure that before any proposed regulations are adopted, the public receives appropriate notice with the opportunity to submit comments, either written or at public hearings. The APA has very strict time frames for publication of the proposed regulations, the opportunity for comment – including public hearings – and then adoption of the final regulations. If all of the various elements of the APA process cannot be concluded within the required time frame – usually 60-90 days (the “window”) – the APA process must start over.

NYSDEC relatively recently determined to conduct a public health impacts study of “fracking” to incorporate it into the SEQRA analyses. Some argue that after 4 years of study this decision is late and others may say it is unnecessary. NYSDEC has delegated the responsibility for that study to the NYS Department of Health (DOH) – but it’s going to be done. The latest news on the study is that DOH has not even finalized the proposed scope of their study effort. Once the DOH study is complete, its report will be incorporated by NYSDEC into the Final SGEIS and there will likely be at least one more public hearing on the Final SGEIS.

Consequently, even though the current APA process, with a November 29th deadline, will likely be cancelled to no effect, the SEQRA process, to be supplemented by DOH’s public health impacts study, will continue to drag on. In my opinion (and I hope) there will be a combined APA and SEQRA hearing on the Final SGEIS sometime in the early spring of 2013.

The issue that no one can truly answer at this time is, What is Governor Cuomo thinking? Will the Governor’s apparent delay in biting the bullet and making a decision on gas drilling in New York help or hurt him in his campaign for re-election and, perhaps, his even greater ambitions? Do the scope and magnitude of the alleged environmental risks outweigh the economic and tax benefits that, based on actual evidence from other states, will surely come from an active natural gas program? While I may have my own opinion, it’s the opinions of all of New York’s voters that will matter less than two years from now. When the economies of Pennsylvania, West Virginia and Ohio will be booming 2 years from now, in part from Marcellus Shale natural gas development, how will voters react when New York is still tangled up in the regulatory review process or the litigation sure to follow after New York finally makes a decision? Stay tuned.

The members of the firm’s Natural Gas Working Group work with landowners who desire to preserve, protect and exercise their real property rights – including their mineral rights relevant to any natural gas activities – whether or not they choose to enter into a natural gas lease. If they do decide to enter into such a lease arrangement, we assist in negotiating for adequate provisions that provide protections and enforcement rights to preserve the current and future intended use of the property – not just for the period of drilling but for future generations as well.

Gerald A. Lennon is a partner on the Real Estate Team and is in charge of the firm’s Natural Gas Working Group. He can be reached by phone at 845-778-2121 toll free or 845-778-2121 and by email.

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Jacobowitz and Gubits Counselors at Law