NORWICH – About 100 municipal officials hailing from central New York learned the nuts and bolts at a recent conference about what towns can do to regulate the impact of natural gas exploration and drilling.
The gathering was held Saturday at the State University of New York at Morrisville. It was sponsored by Chenango and Madison counties, the Association of Towns of New York State, the New York State Association of Counties and SUNY Morrisville.
The event brought out New York State Assemblyman William McGee, D-Nelson, who has been working closely with Madison County officials since 2003 as they struggle to keep up with exploration, permitting, drilling and pipeline development. McGee and Senator James Seward, R-Milford, co-sponsored legislation in 2007 that would have enabled counties to impose a production tax on natural gas.
McGee said he realized that local municipalities don’t have the resources to take care of the consequences.
“There’s a strong feeling that we need to do something at the state level. We can’t stop this from happening and probably shouldn’t, but we are working with the DEC (New York State Department of Environmental Conservation) to help the counties and towns,” he said.
Environmental and municipal attorney Kimberly Rea of Bronxville, one of a handful of experts who spoke at the conference, said there will be “profound impacts and unintended consequences” of natural gas drilling, and having a tax on gas returned to the localities where it is produced would not drive out industry.
“It hasn’t driven them out of Texas and other areas where drilling has been ongoing. Taxes are shared between state and local with emphasis on local. There will be more local costs. New York State needs to make developers pay up front for that,” she said.
Rae said she was honored to be presenting to those “in the vanguard” of natural gas drilling in New York.
Madison and Chenango County officials have been closely monitoring industry activity over the past few years, almost all of it by Norse Energy, Inc. of Norway. There are currently 55 wells from the town of Plymouth to the town of Lebanon, with 30 more in various stages of development. Norse has also constructed two pipelines that bring natural gas from producing wells to markets via the state’s Dominion pipeline.
Norse has been targeting sandstone formations, such as the Herkimer and Oneida, and its activity has not been hampered by a halt placed last fall on hydrofraking in the abundant Marcellus Shale formation. Drilling is at a standstill throughout the rest of the state. Companies, including Norse, are awaiting updated environmental quality review regulations (SEQRA) from the NYSDEC. The update will enable permitting in shale formations to proceed.
That document, originally due in March, is expected in late summer or, some say, not until the end of the year.
Both Chenango and Madison have struggled to keep ahead of the activity since the company’s permitting process is authorized through the NYSDEC and not local highway nor planning departments.
In addition to the heavy rig, gas companies need up to 1 million gallons of water trucked in per well. The water is mixed with sand and chemicals to hydrofrak shale and ‘produce’ gas. Both formation water, called brine, and produced water needs to be hauled away post drilling.
In most rural towns, the budget for road maintenance makes up three-quarters of the entire levy. In Lebanon, officials estimated approximately $325,000 in damages to town roads from the traffic associated with drilling wells in 2007. Supervisor James Goldstein said his town’s road budget of $60,000 barely puts a dent in the bill.
“This is almost the total tax levy of the town,” he said.
While Goldstein said was successful in negotiating a bonding agreement with Norse for potential road damages, he says he worries that there will be “disagreements down the road as to who caused what damage.”
“We need a provision for upfront money to take care of roads, bridges, paramedic training and other emergency response needed for spills or rollovers,” he said.
In Preston, Supervisor Peter C. Flanagan said there was $35,000 in damages from drilling operations in 2007 on a road that had recently been chip sealed. Nornew later repaired the road per a bonding agreement with the town, he said.
The Town of Smyrna Highway Department has not reported any damages specific to drilling.
Towns do not have control over state or county roadways within their boundaries, but according to Rea, municipalities can enact local laws for their own roads under the state’s Environmental Conservation’s Oil and Gas, Mining and Reclamation Law. Such local laws can regulate truck traffic by requiring bonding and limiting weight, light, noise, clearance, traffic, tree cutting and general nuisances.
Rea suggested that town planning boards initiate the process of enacting an “umbrella law” for natural gas operations that police can then enforce.
“It would force drillers to meet with you at the start, present their plans and allow you to give them an application for a permit. ... You can’t zone out natural gas drilling and development, but you have almost unfettered regulation of your own roads,” she said.
Local officials may need to hire traffic specialists and/or engineers to evaluate roadways, create a baseline and estimate anticipated damages. Rea suggested local officials evaluate, record and protect the following areas in their towns as well: environmental, recreational and historical.
An umbrella permit in turn arms town officials with the ability to comment during the DEC’s permitting process. “You become the permitting authority by enacting a local law. They will seek your comments. This is a very important provision to DEC,” according to Rea.
Furthermore, Rea said municipalities can go so far as to require natural gas companies to disclose the contents of the fluids used to drill. “Emergency responders cannot adequately respond to accidents without knowing this information,” she said.
Natural gas companies are currently exempt from federal laws that regulate air and water and protect the environment, which help them keep their drilling mixes confidential from competitors and from the public. Some of the elements commonly used to hydrofrak shale have come under intense scrutiny and are being heavily protested by environmentalists.
Conference speaker Mark R. Millspaugh, president of Sterling Engineering, PC, in Latham, advised town officials to turn to NYS Article 78 if they need to challenge the new SEQRA permitting standards.
“It is incumbent upon local governments to monitor and review well applications as they come out. Do the independent review and write to the DEC with your comments. ... The DEC has a lot of latitude within SEQRA,” he said.
With 19 people currently overseeing the natural gas industry at the NYSDEC, versus the 40,000 applications for drilling into the Marcellus and other shale formations expected over the next 5 to 10 years, Millspaugh said the permitting process is going to be “woefully undermanned.”
“I’ve worked for 35 years in environmental conservation, four of them at the DEC. I can tell you that they are concerned,” he said.
He suggested that local officials “operate on a technical and professional level,” “err on the side of over communication,” and “keep comments positive.”
In addition, he suggested a united push for the NYSDEC to extend the permitting comment period longer than the current 30 days, and to ask them to take samples of all wells.
The upside from such conferences and workshops that purport to educate the community about the natural gas industry is that town and county planning boards have become “in vogue,” said Supervisor Bays.
“We need to look forward at what could be a win for individuals, cities and the state and to spend time looking at economic development and the potential of having this happening in our backyards,” he said.
Former candidate for the New York Senate Don Barber, D-Caroline, said the 40 acre spacing units stipulated for siting wells will represent “the biggest impact on our land since it was cleared of trees back in the mid 1800s.”
Town of Eaton Supervisor Priscilla Suits said one of her constituents had complained about noise from a compressor station located in the town that moves natural gas along the pipeline to Dominion.
Goldstein said of the $5 million of wholesale production of natural gas in 2007 in Lebanon, only $16,000 came back to the town in property taxes, the bulk of which went to schools and Madison county. He said it doesn’t begin to cover the local costs of drilling.
As for imposing a tax on production at the county level, Town of Preston Supervisor Peter Flanagan pointed to real property tax law that would proportion revenues to towns based on assessment rates rather than actual drilling activity.