Barclay Damon
Barclay Damon

Legal Alert

New York Shale Development to Yield Significant Economic Benefits at the Local Level If And When State-Wide Moratorium Lifted

Industry has long touted the economic benefits of hydraulic fracturing and a Manhattan-based policy group agrees. On May 6, 2013, The Empire Center for New York State Policy (“Center”), a project of the Manhattan Institute for Policy Research, released its report, entitled “The Economic Effects of Hydrofracturing on Local Economies: A Comparison of New York and Pennsylvania.”

Looking at the experience in Pennsylvania, the Report projects the benefits that localities in New York could realize if and when the almost five-year moratorium on shale development in New York is lifted. More specifically, the Center analyzed the effects of modest, moderate and high levels of hydraulic fracturing on jobs and income growth throughout Pennsylvania at the local level. It then used this data to project the potential benefits for New York localities overlaying the Marcellus Shale if drilling is allowed to occur. Its findings were remarkable and include the following:

  • Counties in Pennsylvania where shale wells were drilled performed better economically than those counties with no shale activity and the more wells, the better a county performed.
  • If New York’s moratorium is lifted, the income of residents in counties sitting above the Marcellus Shale in New York “has the potential to expand by 15 percent or more over the next four years[.]”
  • Had New York permitted Marcellus Shale development to date, counties sitting above the resource “would have seen income-growth rates of up to 15 percent for a given four-year period, or as much as 6 percent more than they are experiencing.”

The Report’s findings are aptly timed. Less than a week ago a New York appellate court held that local governments are not preempted from enacting zoning and other local land use laws that dictate if and where drilling can occur in a particular locality. (See our May 2013 Alert http://hblaw.com/alerts/New-York-Appellate-Court-Upholds-Drilling-Bans-05-06-2013). So, unless and until the New York Court of Appeals weighs in, localities in New York will be faced with the decision of whether to allow drilling within their borders and, if so, to what degree. The significant economic benefits projected by the Center should inform the debates that likely will precede these decisions.

You can access a full copy of the report at: http://www.empirecenter.org/Reports/2013/05/econeffectfracking050613.cfm

If you require further information regarding the issues presented in this alert, feel free to contact the chair of our Oil & Gas team, Yvonne E. Hennessey, at yhennessey@hblaw.com.