Oct. 9 (Bloomberg) -- New York Governor Andrew Cuomo is caught between gas-rich Marcellus shale and a hard place.
On one side are the thousands of jobs that might be created if New York approves hydraulic fracturing for natural gas. On the other are fellow Democrats and a coalition of celebrities including Lady Gaga who say that forcing millions of gallons of chemically treated water into the underground rock will damage the environment. How Cuomo extricates himself from the dilemma may affect his political career beyond the state.
The governor, 54, must issue fracking regulations by Nov. 29 or risk having the issue sent back for a two-month public-comment period, further delaying a decision that has already taken the state more than four years. Should Cuomo decide to run for president in 2016, a permanent drilling ban may hurt his chances in states such as Ohio and Pennsylvania, where fracking has been a boon to the economy.
“Guys that are slow to the party are going to suffer some damage,” said Mike McKenna, an oil-industry lobbyist and president of MWR Strategies Inc. in Washington. “It’s going to be very difficult for a guy like Cuomo to go into Ohio with his record and say, ‘I’m pro gas.’”
Like former President Bill Clinton, who appointed Cuomo U.S. housing secretary in 1997, the governor has positioned himself as a political centrist. He cut more than $12 billion in budget deficits in two years and instituted a property-tax cap similar to one championed by New Jersey Governor Chris Christie, a Republican. At the same time, he pushed through a law making New York the most populous state to legalize same-sex marriage.
His efforts to create jobs have so far been in arenas that raised little opposition. He held a “yogurt summit” to boost the dairy industry and plans a similar event for breweries and winemakers this month.
Cuomo, who has enjoyed record approval ratings near 70 percent in his first two years in office, has amassed $19.3 million for his 2014 re-election run, according to campaign filings. He’s been reluctant to discuss the presidency, saying at an April news conference that talking about aspirations only makes his work more difficult.
“All I’m working on is being the best governor I can be,” he said. In part, that means adding jobs in a state with a 9.1 percent unemployment rate as of Aug. 31, a percentage point above the national average at the time.
Fracking would create from 15,000 to 18,000 mining, construction and other jobs in southern and western New York, areas that lost a combined 48,000 positions in the previous decade, according to a 2011 report bythe Manhattan Institute, a New York-based organization that has supported drilling.
New York sits on the northern edge of the Marcellus shale, which may hold enough natural gas to supply the U.S. for two decades, according to Terry Engelder, a geosciences professor at Pennsylvania State University. Yet, the drilling process has been linked to groundwater contamination in Pennsylvania, high ozone levels in Wyoming and to headaches, sore throats and difficulty breathing for people living close to wells in Colorado.
“He’s balancing economic considerations in New York state with the opinions of his liberal base,” Robert Shapiro, a political science professor at Columbia University in Manhattan. “If he has presidential ambitions, he’ll have to get the nomination, which increasingly means focusing on the partisan base.”
U.S. Secretary of State Hillary Clinton, who may run for the Democratic presidential nomination again in 2016, has already proved she has a hold on that bloc. A former senator from New York, she almost beat Barack Obama for the nomination four years ago by carrying 21 states in primaries.
Cuomo has a good relationship with the secretary of state, said Mo Elleithee, a Washington-based political consultant and Hillary Clinton’s traveling press secretary for her 2008 presidential campaign.
“It would be difficult for him to get into the race if Hillary runs,” Elleithee said in an interview. “If Hillary gets into the field, it will winnow dramatically. That said, it’s so far away, it’s hard to say what the dynamic would be.”
Rich Azzopardi, a Cuomo spokesman, declined to comment.
Last month, the Cuomo administration said Health Commissioner Nirav Shah will review how the gas-drilling technique would affect residents. The governor has said the extra step would allow fracking to happen faster in New York by diminishing the potential for lawsuits.
Moratorium in Place
The health study is the latest step in a regulation-writing process that began in July 2008. Two years later, New York placed a moratorium on fracking while state regulators developed environmental rules. With the Nov. 29 deadline for final regulations approaching, and the possibility that the study could cause the state to miss it, pressure on Cuomo is intensifying.
Environmental groups such as Catskill Mountainkeeper say Shah’s review won’t be thorough enough. Instead, they want outside experts to do it, which would take longer and cause the state to miss the deadline, said Kathleen Nolan, a regional director for the organization.
“I don’t see any way you can do a really rigorous, comprehensive, transparent participatory review and come to a good decision within that time frame,” Nolan said at an Oct. 4 news conference in Albany. “The information, when brought forward and reviewed carefully, fully, comprehensively, would stop this process.”
Missing the deadline would mean reopening the comment period on the draft rules. The last time, the state received 80,000 messages as environmental groups staged protests at the Capitol. They’ve since been joined by artists including Lady Gaga and Yoko Ono, the type of celebrities whose endorsements can help fundraising in a Democratic campaign.
Regulations that New York proposed last year would ban fracking near the watershed that feeds the more than 8 million people living in New York City. The ban may be included in the final rules the state is seeking to adopt.
For landowners and business groups in gas-rich central and southern New York, the health study is a setback as they await the economic gains seen across the border in Pennsylvania, said Brian Conover, head of Central New York Landowners Coalition, which supports drilling.
In Pennsylvania, natural-gas companies spent $20 billion on leases, drilling rigs and royalty payments from 2008 to 2010. Ohio, a key presidential swing state, is projecting $5 billion in additional economic output from fracking by 2014.
Their patience with Cuomo has run out, Conover said.
“We’ve given him a long leash and now it does look like politics is coming into play,” Conover said in an interview. “Either there’s incompetence, where they just can’t handle a complex technical study like this, or the potential of cowardice, where he isn’t being decisive and is floundering with decisions.”
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