American Oil and Gas Reporter - October 2015 - 110

ConventionSection: Independent Oil & Gas Association of New York
NY's radar is DEC's produce or plug
policy, Gill says. The association's position
is that unless a well has demonstrated an
environmental or safety problem, the operator should not be forced to plug it.
"DEC always has held that operators
have to plug these wells after a certain
time," Gill says. "I think we are making
some inroads in getting DEC to be a little
more lenient. That is very, very important.
It is those kinds of things that the association
is working on. I think IOGA NY is doing
a great job of protecting the interests of its
members."
Two DEC officials who were very familiar with and supportive of the state's
oil and gas industry no longer are with the
agency, Gill points out. Jack Dahl, director
of the Bureau of Oil and Gas Regulations,

passed away several months ago, and
Bradley Field, head of the DEC's Division
of Mineral Resources, recently retired.
"We lost two men whom I would call
friends to the industry," Gill worries.
"But we still have one or two great folks
in the DEC minerals division who are
go-to people who understand us and are
friendly to the industry."
The industry's relationship with the
New York Public Service Commission
is following a trajectory similar to the
DEC, Gill assesses. "Ten years ago,
IOGA NY and operators had a great relationship with DEC and the PSC. Those
agencies always would send people to
meetings with us and interact with the
industry," he says.
For most of the past six years, as state

officials moved toward limiting highvolume hydraulic fracturing, the New
York regulatory atmosphere got chillier,
and the number of interactions declined
significantly, he recalls. That cold wave
seems to have ended with the December
release of the supplemental generic environmental impact statement that formally
prohibited high-volume fracturing in the
state, he assesses.
"Maybe now, DEC and PSC are more
agreeable to meeting with the industry,"
Gill says, adding that two DEC regulators-Cynthia McCarran, deputy director
of gas and water, and Kevin Speicher,
chief of the safety section in the office of
electric, gas and water-are scheduled to
give an update on safety regulations at
the Amherst meeting.
r

Attorney Sues State Over Fracture Ban
HAMBURG, N.Y.-A western New
York landowner will provide an update
on his attempt to sue New York over its
ban on high-volume hydraulic fracturing
at the Independent Oil & Gas Associationof New York's annual convention.
David Morabito, who also is a lawyer
in East Rochester, N.Y., will close the
general session at the IOGA NY meeting
on Oct. 22 in Amherst, N.Y., with his
talk, "David versus Goliath: How to Sue
the State of New York."
The association is supporting Morabito's efforts by offering to provide expert
witnesses, and may consider filing an
amicus brief, says IOGA NY Executive
Director Bradley Gill.
Morabito filed his lawsuit in the state
Supreme Court in Allegeny County, alleging that arbitrary and capricious actions
by the New York Department of Environmental Conservation led to the prohibition that is blocking him from securing
a permit to fracture a well on land he
owns in the county (AOGR, August 2015,
pg. 21).
"The department has conducted very
extensive and detailed studies for (fracturing) to be conducted in the state of
New York," Morabito says in his lawsuit.
"The department has generated many
thousands of pages in its generic environmental impact statement, supplemental
GEIS, and draft supplemental GEIS.
These studies have clearly set forth that
high-volume hydraulic fracturing in the
state is a viable and acceptable practice."
The lawsuit contends that the state

Department of Health's review of the
draft supplemental GEIS was in direct
conflict with more than 25 years of DEC
studies that affirmed fracturing was a
safe practice. Morabito says in his filing
that the department's study was not based
on science or technology, but rather politics.
News accounts indicate he is seeking,
through legal action, permission to conduct
high-volume hydraulic fracturing activities
on his acreage.
In a separate filing, Morabito also
asks the court to deny state officials' request for a change of venue to Albany
County, arguing his lawsuit depends on
testimony from expert witnesses who
live mainly in western New York and
Pennsylvania.

Force Majeure
Gill says IOGA NY also continues to
monitor a lawsuit revolving around the
primary terms of oil and gas agreements.
In late August, New York's 2nd Circuit
Court of Appeals ruled that the fracturing
prohibition didn't constitute a force majeure event, which would trigger the
habendum clause and extend the primary
term of a lease.
The case, Beardslee v. Inflection Energy LLC, involves leases in Tioga County,
N.Y., owned by Inflection Energy, Victory
Energy Corp. and Megaenergy Inc. The
leases were signed between 2001 and
2006. In 2012, according to court documents, 35 landowners sought to terminate
the leases, arguing no wells had been

110 THE AMERICAN OIL & GAS REPORTER

drilled. The three companies sought force
majeure protection because of New York's
fracturing ban. They claimed the state
action was an unforeseen circumstance
out of their control, and asked that the
primary terms of the leases be extended.
2nd Circuit Judge David Hurd rejected
that request, saying the companies could
have held the acreage by drilling vertical
wells. His ruling followed a March decision issued by the New York State of
Appeals that held under state law, a clause
on unforeseen circumstances didn't extend
a lease's primary term, regardless whether
the fracturing ban prevented drilling activities, a legal analysis says.
According to court documents, "We
interpret the 'notwithstanding' language
of the force majeure clause as excusing
the energy companies' performance only
during the secondary term of the habendum
clause, during which production of oil
and gas would be necessary for leases to
remain viable. To read the force majeure
clause as applying to the primary term
would be to interpret the leases in a
manner contrary to the plain intent."
Media reports cite Thomas West, an
attorney for West Firm PLLC who represented the energy companies, terming
the decision a tortured analysis.
"Drilling is the only mechanism to
get a lease from a primary term to the
secondary term," West told reporters.
"So, the fact that it mentions drilling sort
of demonstrates how much they misunderstood the language of the lease." r



American Oil and Gas Reporter - October 2015

Table of Contents for the Digital Edition of American Oil and Gas Reporter - October 2015

Contents
American Oil and Gas Reporter - October 2015 - Cover1
American Oil and Gas Reporter - October 2015 - Cover2
American Oil and Gas Reporter - October 2015 - 3
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American Oil and Gas Reporter - October 2015 - Contents
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American Oil and Gas Reporter - October 2015 - Cover3
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