New York state sued over hydraulic fracturing moratorium

On December 17, 2013, the trustee for a bankrupt energy company and a shareholder in that company sued New York State’s Department of Environmental Conservation (“DEC”) and other state officials, including the governor, asserting that the shareholder has lost almost his entire investment of $21,305.52 due to the decrease in the value of the company’s stock and that the company has lost more than $100 million due to the hydraulic fracturing moratorium that has been in place since 2008.

The energy company has 27 well-permit applications pending before the DEC. As part of the bankruptcy proceedings, the trustee tried to sell these assets at auction, but received no bids. According to the complaint, “the only way to salvage the value of [the company’s] assets is to complete the SGEIS [Supplemental Generic Environmental Impact Statement] Process.” The plaintiffs seek a mandamus to compel completion of the SGEIS Process and a determination that government officials have “arbitrarily and capriciously, abused their discretion.”

In 2008, the New York legislature passed regulations covering hydraulic fracturing. Then-governor David Patterson ordered the DEC to conduct an environmental evaluation of fracking and ordered the well approval process halted until the study was completed which was anticipated to be November 2009. A draft report was published in September 2009, but the DEC spent more than one year reviewing public comments. In December 2010, Patterson issued an executive order requiring further environmental review. Gov. Andrew Cuomo kept the order in place when he took office. In September 2012, the DEC and the Department of Health began a study of the health impacts associated with hydraulic fracturing.

At a news conference on December 16, 2013, Gov. Cuomo and Dr. Nirav R. Shah, the New York State Health Commissioner, stated that there was no time-line to complete the study. Mr. Cuomo said, “My timeline is whatever commissioner Shah needs to do it right and feel comfortable.” The governor said he did not want “to put undue pressure on them that would artificially abbreviate what they’re doing.” Dr. Shah indicated that he was still conducting his review, collecting “new data from Texas and Wyoming.” When asked about transparency of the study, he stated that “the process needs to be transparent at the end, not during.” See Jesse McKinley, Still Undecided on Fracking, Cuomo Won’t Press for Health Study’s Release, N.Y. Times, December 16, 2013.

This post was written by Barclay Nicholson ( or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.