NO PROTECTION BY NEW YORK STATE LAWS OR REGULATIONS

NORTHRUP testifies:

December 31, 2012Chairman Robert K. SweeneyCommittee on Environmental ConservationChairman Richard N. GottfriedCommittee on HealthChairman Charles D. Lavine Assembly Administrative Regulations Review CommissionRe: High Volume Hydraulic Fracturing (HVHF) regulations proposed by theDepartment of Environmental Conservation (DEC)Chairmen and Members of the Committees:

 Thank you for the opportunity to present testimony on the proposed regulations. While grateful to you for the opportunity to comment on the proposed regulations to your committees,I am commenting to the

DEC under protest to their irrational, arbitrary andcapricious issuance of these proposed regulations.

I have been a private investor in the energy sector and in real estate development for over 30years. I have been a general and limited partner in over twenty offshore drilling rigs. I have owned and operated oil and gas properties in Texas and New Mexico. I have been the general partner in suburban and urban land developments. I have challenged municipal zoning ordinances and have had such ordinances overturned at trial. I have won a regulatory takings case against a Texas town. I have owned and operated vehicles that run on naturalgas, and have owned a company that converted vehicles to run on natural gas. I have served

on the Governor of Texas’s Energy Advisory Board.

I have reviewed the proposed regulations in some detail  and would like to bring yourattention to the following points.

1.

 The regulations have been proposed out of context of the dSGEIS.

 The DEC cannot issue drilling permits for HVHF wells under the proposedregulations, because the DEC has not complied with the State AdministrationProcedures Act (SAPA), which requires the DEC to first complete the draft

Supplemental Generic Impact Statement (dSGEIS), which governs SEQRA reviewsof HVHF well permits. The DEC failed to finalize the dSGEIS within a year from its

last hearing. Absent the guidance of a completed dSGEIS, the proposed regulationsare invalid and unenforceable. Proposing a final draft, out of context of a completeddSGEIS, is irrational, arbitrary and capricious.

 The SGEIS cannot be invoked to address the shortcomings of the proposedregulations, since we do not have it in final form as a reference

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Absent the guidance of a completed dSGEIS, the proposed regulations are invalid and unenforceable. Proposing a final draft, out of context of a completeddSGEIS, is irrational, arbitrary and capricious.

 The SGEIS cannot be invoked to address the shortcomings of the proposedregulations, since we do not have it in final form as a reference.2.

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Only two protected land uses are listed in section 560.4 Setbacks of HVHF wells:

“inhabited dwellings,” which is not defined in 560.2 or anywhere

else, but which is defined in New York codes as “residences,” which does not include hospitals, hotels,

etc. and “places of assembly” which likewise is not defined, but which is

commonly considered as auditoriums, theatres, public restaurants, etc. in fire codes and zoning ordinances. This means the DEC proposes no setbacks for HVHF wells from gas stations, warehouses, office buildings, out-patient clinics, daycare centers, parks, cemeteries,barns, houses under construction or vineyards.

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 While ECL 23 requires the DEC to protect the rights of landowners, there are no specific protections in the regulations for surface property rights owners, ie.landowners. There are no HVHF well setbacks proposed in the regulations from any property lines. The HVHF setbacks proposed for spacing units in 553 are for  mineral rights, ie. subterranean rights, not surface rights. Since mineral and surfacerights can be owned by different persons or entities, this means that wells can be drilled where the landowner has no interest in the well. And as previously mentioned, without regard to most surface uses – the landowner’s barn, garage, corn

field, etc. The lack of protections for surface rights are exacerbated under compulsory integration.

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 The setbacks for HVHF wells proposed in 560.4 are for the drilling rig only, not forthe mud pits, the flowback ponds, the compressors, the gas processing plants,gathering systems or gas compression stations. Any of these hazardous industrialsystems can be located next to any land use

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a house, school, power station orhospital

 –

because there is no setback proposed for anything but the drilling rig.

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556.2 would allow a gas well to vent or flare raw gas for over 168 hours, or seven days. Since there is no setback of the vent or flare from any land use, this means that a well could vent or flare next to a milking barn, winery, hotel or marina

for 7 days.

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 There are no prohibitions of HVHF wells or infrastructure for state parks or historic sites, although such protections are not uncommon in other states.

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There are nosetbacks for HVHF wells or gas field infrastructure from state lakes, rivers, streams or forests. There is no prohibition for drilling HVHF laterals under any state-owned property which would include all major lakes and most rivers. This lack of protection in Section 52 and 190 would virtually guarantee that such resources would be contaminated by HVHF industrialization.

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Much of Upstate New York depends on water from Principal Aquifers, which have no protections under 560.4, whereas Primary Aquifers are specifically protected. There is no scientific basis for such disparate treatment. Indeed, no scientific basis is cited by the DEC for any of these proposed regulations.

8.

No scientific basis for proposed regulations

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 The DEC does not cite any scientific studies in the revised regulatory impactstatement as the basis of any of the proposed regulations, though it is required to doso by law. In fact, the DEC does not cite any basis for its proposals at all

nostudies, no statistics, no reports, nothing are mentioned in its comments on theproposed regulations. One might be left to conclude that these regulations weremerely crafted out of bureaucratic expediency with most input from the industry theDEC purports to regulate.

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9.

 The DEC misconstrues ECL 23

ECL 23 empowers the

DEC to “regulate” oil and gas

activities. Yet the DEC states

that is empowered to “promote” oil and gas activities, not “regulate” them in 550.1

(a) its policy statement.

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Open pits are allowed for drilling mud on HVHF wells, and any open pit forflowback, fracking fluids, or drilling mud can be filled to the brim

 –

without any “freeboard” requirement between the fluid level and the top. In fact, the DECinexplicably removed the “freeboard” requirement in 560.6 from the September2011 draft of the regulations!

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By making the Division of Mineral Resources responsible for the environmentaloversight of the HVHF permits it issues, the DEC has virtually guaranteed thatregulatory protections will be lax. The DMR cannot serve two masters The oil and

gas industry it seeks to “promote” and the

environment, landowners and general

protect, which it is tasked to “protect.”

 Most states have an agency with separate, autonomous environmental oversight overoil and gas activities. New York has no such separate oversight. Nor does the statehave any state tax on gas production to pay for such regulatory oversight since it will derive no direct revenue from the industry – a phenomenon among states: a taxhaven for frackers.

In my opinion, the Governor has frittered away an opportunity to bring New York’s

regulatory regime into the

21st century. Given the opportunity to create a paragon of regulatory oversight, he has allowed the rule-making process to be compromised such that  The state would be little more than a gas colony of corporations from Oklahoma, Texas and Colorado because that is what the lobbyists from those states have paid for

to the Stateof New York’s disgrace. James L. NorthrupNew Northrup RoadPipe Creek, Texas

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