January 29, 2010
On January 26, 2010, shareholders for twelve natural gas companies requested disclosure of environmental and financial risks associated with extracting gas from the underground Marcellus Shale formation through hydraulic fracturing or “hydofracking. ” This proposed process has received a great deal of attention in recent months. Environmental organizations and others have expressed concern that the fracturing chemicals utilized in the process have not been disclosed to the public and are guarded by companies as a trade secret.
The companies from which shareholders are seeking reports include Cabot Oil & Gas Corp., Chesapeake Energy, Exxon Mobil Corp., Hess Corp., El Paso Corp., Energen Corp., EOG Resources, EQT Corp., Range Resources, Ultra Petroleum Corp., Williams Companies Inc., and XTO Energy Inc. In addition to seeking information about the chemicals to be utilized, shareholders are requesting increased transparency of potential environmental impacts, substitution of less-toxic fracturing fluid, and adoption of best practices for drilling activities. As quoted by BNA, Larisa Ruoff of Green Century Capital Management, one of a group of advocacy organizations leading the new shareholder campaign, said “[s]hareholders believe that through the adoption of best practices and policies to phase out the most toxic chemicals used in this process, companies can ensure that they are both protecting the environment and their balance sheets from unnecessary and potentially devastating risks.”
January 4, 2010
On December 30, Sive, Paget & Riesel (“SPR”) submitted a comment letter on behalf of the Natural Resources Defense Council (“NRDC”) addressing deficiencies in the Draft Supplemental Generic Environmental Impact Statement (“DSGEIS”) prepared by the New York State Department of Environmental Conservation (“NYSDEC”) regarding proposed natural gas extraction from the Marcellus Shale formation in the Southern Tier of New York State. SPR’s comment letter, prepared by Steven Barshov and Jessica Steinberg, focused principally on matters of concern to towns and other units of local government within whose territory such proposed natural gas drilling would occur.
SPR’s comment letter identified multiple deficiencies in the DSGEIS related to potential impacts of concern to units of local government, including traffic, noise, visual, community character and land use impacts. SPR’s comment letter also encouraged DEC to adopt regulations that would provide units of local government with meaningful advisory input to NYSDEC during well permitting. Access a complete copy of SPR’s comment letter—which is attached to NRDC’s comment letter—here (pdf).
December 29, 2009
Last week, New York City’s Department of Environmental Protection (“DEP”) called upon New York State’s Department of Environmental Conservation (“DEC”) to rescind its Draft Supplemental Generic Environmental Impact Statement (“DSGEIS”) addressing natural gas drilling in the Marcellus Shale formation. The Marcellus Shale formation, which contains large quantities of natural gas, extends from Ohio and West Virginia through parts of Pennsylvania and into New York’s Southern Tier. Notably, the formation includes lands in the watershed that provides drinking water to New York City and, in total, approximately half of the state’s population.
DEP has taken the position that any drilling in the watershed should be banned due to risks posed to the drinking water supply by the technique used to extract gas from the underground shale, known as high-volume hydraulic fracturing. In its comments on the DSGEIS, DEP makes a number of arguments to support its contention that the DSGEIS does not adequately analyze the potential significant adverse environmental impacts of drilling in the Marcellus Shale formation, including the following:
The DSGEIS does not adequately analyze the possibility that contaminants may spill into surface waters or migrate underground into natural drinking water supplies or water supply tunnels;
- The DSGEIS’s requirements for the disclosure of the chemicals used in the hydraulic fracturing process are insufficiently protective of human health and the environment;
- The DSGEIS engages in “segmentation” in violation of the New York State Environmental Quality Review Act (“SEQRA”) by failing to adequately analyze potential significant adverse environmental impacts associated with waste disposal, surface water withdrawals, induced growth, cumulative impacts, air quality impacts, pipeline construction, and ancillary infrastructure;
- The no-drill buffer zones proposed in the DSGEIS are inadequate to protect New York City’s drinking water supply; and
- The DSGEIS does not sufficiently analyze alternatives to hydraulic fracturing, and does not at all address alternatives to natural gas development.
DEP also issued a report in conjunction with its comments.
The comment period for DEC’s DSGEIS has been extended to December 31, 2009. While New York City’s interest in upstate drilling is based primarily on potential impacts to its watershed and water supply infrastructure, upstate municipalities are likely to focus on other issues, including tax revenues, road and truck traffic impacts, noise impacts, and preemption of local regulatory authority.
December 15, 2009
Green Inc. reports that Mayor Michael Bloomberg, who is currently in Copenhagen, Denmark for the United Nations Framework Convention on Climate Change (“UNFCCC”) Conference of the Parties, is advocating that a wind power complex be constructed off the shores of Long Island, similar to the giant wind turbines in the North Sea off the coast of Denmark. Mayor Bloomberg and his sustainability director, Rohit Aggarwala, have called on government agencies and utilities in New York to create a 700-megawatt offshore wind power complex. The project would cost $3 billion and be the largest wind project in the world.
Mayor Bloomberg argues that wind power is “a lot better than digging up coal and transporting it and belching pollutants into the air” and is superior to “buying foreign oil.” He goes on, “it’s good for the planet long term. It’s good for the air right now … and it makes economic sense.” However, offshore wind power has been the subject of opposition by some New York residents who claim that wind farms may negatively impact views, and may cause other potential impacts. In response, Mayor Bloomberg notes that the wind power complex he is proposing would be further offshore than the previous proposals which have garnered opposition. With greater distance, however, comes greater expense and complexity from a permitting and operations perspective.
If the project does come to fruition, it will provide less than one percent of New York City’s peak electricity needs, with 350 megawatts distributed to Long Island and 350 megawatts distributed to New York City. In response to questions about whether New York should spend billions of dollars on a project that will meet just a percentage of electricity needs, Mr. Aggarwala stated that the wind project is just one part of the bigger energy efficiency picture, which includes a new natural gas plant in Astoria that will displace older, less efficient facilities, and new legislation in New York City aimed at improving energy efficiency in the city’s buildings.
December 3, 2009
Earlier this week, the New York Power Authority (NYPA) released a request for proposals for the development of offshore wind power projects in the New York State waters of Lake Erie, Lake Ontario, or both. According to the NYPA, this initiative represents the first wind power development in a fresh water body in the United States. Other offshore wind power initiatives in the Great Lakes include the acquisition of a 4.4 gigawatt project by the Canadian energy company Canadian Hydro and the exploration of such projects by U.S. firms such as Duke Energy.
The Great Lakes Offshore Wind Project aims to generate 120 to 500 megawatts of power. One megawatt powers about 800 homes in New York. The successful implementation of the project would help New York meet its requirements under the state’s renewable portfolio standard, which requires that 25 percent of its electricity come from renewable sources by 2013.
Proposals from developers are due on June 1, 2010, and the state will announce any winners by December 2010. Power purchase agreements are to be completed by May 31, 2011.
November 10, 2009
Last week, Congress passed legislation that “formally urges the U.S. Environmental Protection Agency to conduct a new study on the risks that hydraulic fracturing poses to drinking water supplies.” The statement, which is found in the 2010 Department of Interior, Environment, and Related Agencies Appropriations Act, calls for a “transparent, peer-reviewed process that will ensure the validity and accuracy of the data.” An earlier EPA study, conducted in 2004, found no risk, but has faced criticism. Current EPA administrator Lisa Jackson has acknowledged that a new study is needed.
Earlier this year, the Fracturing Responsibility and Awareness of Chemicals Act of 2009 (“FRAC Act”) was introduced in both houses of Congress. Currently, hydraulic fracturing is exempted from regulation under the Safe Drinking Water Act (“SDWA”). The FRAC Act, if enacted, would repeal the exemption, thus subjecting hydraulic fracturing to the SDWA’s regulatory scheme and requiring drillers to disclosure the chemical ingredients of fracturing fluid.
Hydraulic fracturing, a process used to extract natural gas from shale, involves the use of high-pressure fluid to fracture underground rock. The exact components of the fracturing fluid are unknown to the public, as drilling companies have maintained that the ingredients are proprietary. Nationwide, concerns have been raised about potential contamination of underground and surface drinking water by the agents and byproducts of hydraulic fracturing.
Last week’s legislation is of particular interest to New Yorkers because a gas shale formation underlies a significant part of the Catskill watershed which provides much of the City’s drinking water supply. New York’s Department of Environmental Conservation has recently released a draft Supplemental Generic Environmental Impact Statement (“DSGEIS”) on drilling in this shale formation. The comment period for the DSGEIS closes on November 30, 2009.
October 6, 2009
On September 30, Sens. Barbara Boxer (D-CA) and John Kerry (D-MA) introduced their long-anticipated global warming bill, a counterpart to legislation passed by the House of Representatives last June. As the starting point for the Senate climate debate, the Clean Energy Jobs & American Power Act (S. 1733) would cap greenhouse gas emissions from approximately 7,500 power plants, industrial facilities and other covered sources at 20 percent below 2005 levels by 2020, and 83 percent below 2005 levels by 2050. The Senate bill proposes more aggressive reductions of greenhouse gas emissions than the House bill (20 percent by 2020 as opposed to 17 percent in the House bill), and would provide EPA with broader authority to regulate greenhouse gas emissions than is contemplated in the House bill.
Senate consideration of the Kerry-Boxer bill is unfolding against a continued credible threat from EPA to regulate greenhouse gases under the existing Clean Air Act if Congress does not enact more comprehensive legislation. After finalizing its greenhouse gas reporting rule, last week EPA took another significant step by announcing proposed greenhouse gas regulations that would apply to thousands of stationary sources, mostly power plants and industrial facilities (full text available here in PDF). This EPA rule, coupled with the heightened prospect of climate change litigation arising from a recent Second Circuit decision upholding common law nuisance actions against electric utilities, creates strong incentives for industry to seek a comprehensive solution from Congress.
The Kerry-Boxer bill remains subject to revision by various committees and lawmakers over the months ahead. We will provide updates as it moves through the Senate, beginning with this analysis of the bill’s impacts on New York. As one of the first states to cap global warming pollution through the 10-state Regional Greenhouse Gas Initiative (RGGI), New York has a large stake in federal climate policy.
Like the House bill, the Senate proposal would preempt state cap-and-trade climate programs, and would most likely also preempt regional cap-and-trade programs, including RGGI, for the first five years of its national emissions trading system. In a new provision, however, the Kerry-Boxer bill provides that if the federal program is delayed beyond its scheduled 2012 start date, preemption would not kick in until “at least 9 months from the first [national] auction” of greenhouse gas allowances.
New York City also has developed its own climate policies, including a plan to reduce transportation emissions by phasing in a more efficient, all-hybrid taxi fleet. The U.S. District Court for the Southern District of New York twice rejected those policies as preempted by federal law, but the Senate climate bill incorporates a proposal to effectively overturn those rulings and authorize the city’s plans suggested by New York Sen. Kirsten Gillibrand and Rep. Jerrold Nadler.
Finally, various sections of the Kerry-Boxer bill provide state and local governments with grants, free emissions allowances, and other incentives to promote water conservation, energy-efficient building retrofits, renewable energy and more. Many of these opportunities require advanced planning, so state and local officials can begin positioning themselves to take advantage of this developing climate policy today.
More on the bill, and the broader climate debate, to follow.
We gratefully acknowledge the valuable assistance of Jonathan Kalmuss-Katz, 2009 summer associate at SPR, in drafting this article.
Older Posts »
|
|
| |
|
