The Cardno ChemRisk View
Energy Companies' Leases Not Extended in New York State
Posted on behalf of the author, Michael Ierardi
In mid-August, a U.S. Court of Appeals for the Second Circuit sustained a previous judge’s ruling that New York State’s 2010 moratorium on hydraulic fracturing (fracking) did not constitute a force majeure in Tioga County, New York.
Approximately 35 landowners sued three energy companies in 2012, arguing that the companies could not remain in possession of expired drilling leases just because the moratorium prohibited fracking on their lands. Under the leases, signed between 2001 and 2009, energy companies were granted a five-year primary term for drilling on leased lands, and so the companies believed that the terms of the leases would be extended due to the unforeseen statewide fracking moratorium. U.S. District Judge David N. Hurd ruled in December 2012 that these companies could have operated under New York State’s existing drilling rules, which allow for vertical drilling of wells; hydraulic fracturing is characterized by high-volume horizontal extraction of natural gas.
However, even if the leases had been extended, the companies would not have been permitted to engage in fracking activities as a result of New York State’s fracking ban that went into effect in June 2015.