New York Formally Bans High-Volume Hydraulic Fracturing to Develop Marcellus Shale

On June 29, 2015, the New York State Department of Environmental Conservation issued its Findings Statement which officially prohibits high-volume hydraulic fracturing to develop natural gas resources in the Marcellus Shale.  The issuance of the Findings Statement concludes a nearly seven-year endeavor by the Department to evaluate the environmental impacts of hydraulic fracturing under the State Environmental Quality Act.  The Department relied upon information in the Supplemental Generic Environmental Impact Statement, issued by the Department on May 13, 2015, and more than 260,000 public comments in making the determination that hydraulic fracturing should be banned statewide.  Specifically, the Department found that “there are no feasible or prudent alternatives that would adequately avoid or minimize adverse environmental impacts and that address the scientific uncertainties and risks to public health from” hydraulic fracturing.  As a result, the Department concluded that prohibiting high-volume hydraulic fracturing “is the best alternative based on the balance between protection of the environment and public health and economic and social considerations.”

New York Issues Final Environmental Review on High-Volume Hydraulic Fracturing

On May 13, 2015, the New York State Department of Environmental Conservation (NYSDEC) released its Final Supplemental Generic Environmental Impact Statement (SGEIS) on the Oil, Gas and Solution Mining Regulatory Program, signaling the completion of its environmental review of high-volume hydraulic fracturing.  NYSDEC previously released drafts of the SGEIS in September 2009 and September 2011, which generated more than 260,000 public comments during the applicable review periods.  The final SGEIS will be followed by the issuance of a legally-binding Findings Statement  by the NYSDEC Commissioner, Joseph Martens.  Last December, the New York State Department of Health recommended prohibiting hydraulic fracturing, based upon the agency’s public health review, and Commissioner Martens anticipated that his Findings Statement would include a ban on high-volume hydraulic fracturing.

Constitution Pipeline Can Be Built Across Holdout Properties reports that the U.S. District Court for the Middle District of Pennsylvania recently ruled that the Constitution Pipeline can be built across seven northeastern Pennsylvania properties despite the fact that the respective landowners had not agreed to the construction.  The Constitution Pipeline is a 124-mile pipeline project designed to transport Marcellus Shale gas from Pennsylvania to New York and New England.  It would connect with the existing Tennessee and Iroquois pipelines in New York.  Its partner companies, including Williams Partners LP and Cabot Oil & Gas Corp., sought access to 130 properties in Pennsylvania and filed condemnation proceedings regarding 20.  Agreements were reached with 13 of the 20 landowners.  Judge Malachy Mannion ruled that the pipeline has the necessary permits from the Federal Energy Regulatory Commission, and that it serves the public interest by increasing gas pipeline capacity.  Judge Mannion also noted that the landowners stood to gain adequate compensation from the pipeline’s owners.  A spokesman for Williams stated that the group hopes to begin construction by June 1st after obtaining additional permits and posting the necessary bond.

New York Lifts 40-Year Ban on New Liquefied Natural Gas Facilities

This week the New York State Department of Environmental Conservation adopted regulations establishing a permitting program for the siting, construction and operation of liquefied natural gas (LNG) facilities in New York State.  The New York Legislature previously enacted a statewide moratorium on the construction of LNG storage facilities after the explosion of an LNG tank on Staten Island killed 40 workers in 1973.  The new regulations, which take effect on February 26, 2015, require owners and operators to obtain a permit prior to the preparation of a site for, construction of, or operation of facilities that store LNG or convert LNG into natural gas.  The regulations include a maximum storage capacity of 70,000 gallons of LNG at each permitted facility.  Intrastate transportation of LNG is prohibited unless the route has been certified by the New York State Department of Transportation.  The regulations do not affect the statutory moratorium prohibiting the siting of LNG facilities within New York City.  Furthermore, the regulations do not apply to compressed natural gas or liquefied petroleum gas, and LNG-fueled vehicles and vessels are exempt from the permitting requirements.

Congressman Introduces Bill to Allow Landowners to Sue New York Over Hydraulic Fracturing Ban

U.S. Representative Tom Reed (R-NY) recently introduced into Congress the Defense of Property Rights Act (H.R. 510), which would allow landowners affected by New York’s hydraulic fracturing ban to sue the government over agency action that “unreasonably impedes the use of property or the exercise of property interests or significantly interferes with investment-backed expectations.”  The bill was introduced in response to the December 17, 2014 announcement by New York Governor Andrew Cuomo of a statewide ban on hydraulic fracturing.  Representative Reed stated in a press release that “these actions by government entities often leave our neighbors and friends with property that is worth much less, hurting their families and leaving them little choice but to accept the lower value.”  Under the proposed legislation, property owners could receive compensation if the agency action diminishes the fair market value of their property by at least 20 percent or $20,000.  The bill has been referred to the House Judiciary Committee.

New York Will Prohibit Hydraulic Fracturing for Shale Gas Development

On December 17, 2014, New York Governor Andrew Cuomo’s administration said it would ban hydraulic fracturing for shale gas development throughout the state.   Dr. Howard Zucker, the Acting Commissioner of Health, announced that the state Department of Health (DOH) completed its long-awaited public health review report, which recommended prohibiting hydraulic fracturing in New York.  Citing significant uncertainties regarding risks to public health, Dr. Zucker said “it would be reckless to proceed [with hydraulic fracturing] in New York until more authoritative research is done.”  Based upon the DOH report, New York State Department of Environmental Conservation (NYSDEC) Commissioner Joe Martens announced that the NYSDEC will issue a legally-binding findings statement that will prohibit hydraulic fracturing in the state.  Martens noted that “with the exclusion of sensitive natural, cultural and historic resources and the increasing number of towns that have enacted bans and moratoria, the risks substantially outweigh any potential economic benefits” of hydraulic fracturing.  A copy of the DOH public health report can be found here.

FERC Approves Interstate Pipeline from Pennsylvania to New York and New England

StateImpact, a reporting collaboration supported by NPR, that the Federal Energy Regulatory Commission has approved a proposed interstate pipeline that would transport Marcellus Shale natural gas from Pennsylvania to New York and New England markets.  The 30-inch pipeline would cover 124 miles, connecting gas production in Susquehanna County, Pennsylvania to existing transmission lines in New York.  The pipeline will be operated by subsidiaries of Williams Partners, Cabot Oil and Gas, Piedmont Natural Gas, and WGL Holdings.   The Pennsylvania Department of Environmental Protection, the U.S. Army Corps of Engineers and the New York Department of Environmental Conservation must still issue final permits.

New York Court Declines to Re-Hear Land Use Case as Governor Anticipates Health Report by End of 2014

On October 16, 2014, the New York Court of Appeals denied a request by the bankruptcy trustee for Norse Energy to re-hear arguments in the landmark case affirming local zoning laws adopted by two upstate towns that prohibited oil and gas-related activities within their borders.  In June 2014, the Court of Appeals issued an opinion that the New York Oil, Gas and Solution Mining Law did not preempt a municipality’s home rule authority to regulate land use.  Meanwhile, since June 2008, New York has imposed a de facto moratorium on high-volume hydraulic fracturing. Governor Andrew Cuomo has stated that a decision on whether to lift the moratorium will not be made until the New York Commissioner of Health finalizes a study on the public health effects of hydraulic fracturing.  During a gubernatorial debate on October 22, 2014, Governor Cuomo said that the highly anticipated report should be done by the end of the year,  but he did not indicate whether the moratorium would be lifted at that time.

New York Governor Signs Climate Change Preparedness Bill

On September 22, 2014, New York Governor Andrew Cuomo signed into law the “Community Risk and Resiliency Act”, which amends several provisions of the Environmental Conservation Law (ECL) to incorporate consideration of potential climate change impacts, including physical risks due to sea level rise, storm surges and/or flooding, when evaluating projects under a number of existing programs.  The law amends ECL Article 23, also known as New York’s Oil, Gas and Solution Mining Law, in a manner that will prompt the New York State Department of Environmental Conservation (DEC) and applicants for oil and gas well permits to consider the effects of climate change.  One provision within the law requires DEC, in consultation with the Department of State, to prepare guidance on implementing the law’s requirements, including development of “relevant data sets and risk analysis tools and available data predicting the likelihood of future extreme weather events,” by January 1, 2017.  Applications and/or permits received after the adoption of the Department’s guidance must comply with the law.  However, the statute also sets a final effective date of January 1, 2017, indicating that applicants must comply with the law even if the Department has not completed its guidance by that date.

New York High Court Asked to Re-hear Arguments in Case Banning Oil and Gas Activities

Citing a recently decided case in Colorado, the bankruptcy trustee for Norse Energy filed a motion in early August urging the New York Court of Appeals to re-hear arguments in the case.  In June, the Court of Appeals issued an opinion which affirmed local zoning laws adopted by two upstate towns that prohibited oil- and gas-related activities within their borders.  The motion filed by the trustee in August asserted that a Colorado court’s rationale in striking down a voter-approved local law prohibiting hydraulic fracturing provides support for the position that municipal-wide drilling bans directly conflict with New York’s Oil, Gas and Solution Mining Law.  In response, the environmental group Earthjustice recently filed a motion urging the Court of Appeals to reject the trustee’s request on the grounds that the motion for reargument was untimely and the Colorado decision was based on different laws and legal analyses.

New York Court Dismisses Suits Seeking to Compel State’s Environmental Impact Statement

On July 11, 2014, a New York state trial court dismissed two similar cases in which the plaintiffs sought to compel the State to finalize a Supplemental Generic Environmental Impact Statement (“SGEIS”) pursuant to the State Environmental Quality Review Act (“SEQRA”) (Wallach v. N.Y. State Dep’t of Envtl. Conservation, N.Y. Sup. Ct., No. 6773-2013;  Joint Landowners Coal. of New York Inc. v. Cuomo, N.Y. Sup. Ct., No. 843-2014).  The court dismissed both suits based on the plaintiffs’ lack of standing after finding that a party raising a SEQRA challenge “must demonstrate that it will suffer an injury that is environmental and not solely economic in nature,” and that in both suits the plaintiffs’ injuries were purely economic.  Although a draft version of the SGEIS was first published in September of 2009, a final version has yet to be issued. The delay is due in part to a decision by the New York Department of Environmental Conservation to withhold its release of the SGEIS until the state health commissioner issues his findings on hydraulic fracturing.

New York’s Highest Court Upholds Right of Municipalities to Ban Oil and Gas Activities

Today the New York Court of Appeals issued an opinion affirming local zoning laws adopted by two upstate towns that prohibited oil and gas-related activities within their borders.   Specifically, the Court ruled that there was nothing within the plain language, statutory scheme and legislative history of the New York Oil, Gas and Solution Mining Law (“OGSML”) that manifested an intent by the legislature to preempt a municipality’s home rule authority to regulate land use.  The Court expressly stated in the decision that it was not passing judgment on “whether hydrofracking is beneficial or detrimental to the economy, environment or energy needs of New York,” noting that the cases only “concerned the relationship between the State and its local government subdivisions, and their respective exercise of legislative power.”  A copy of the Court’s opinion can be found here.

New York Assembly Passes Three-Year Fracking Moratorium; Bill Now Moves to Senate

New York Assembly Speaker Sheldon Silver announced that the Assembly passed a bill on June 16, 2014, that would impose a moratorium on hydraulic fracturing for a period of three years.  The legislation, which passed by a vote of 96 to 37, calls for the New York Department of Environmental Conservation to suspend issuing permits for hydraulic fracturing until 2017.  The bill’s memo indicates that the delay is necessary to provide the legislature with additional time to review the effects of hydraulic fracturing on public health and the environment, citing several ongoing national studies that are not expected to be finalized within the next three years.  “We do not need to rush into this.  The natural gas deposits within the Marcellus Shale are not going to go anywhere,” Silver said.  The Assembly passed similar legislation in 2013 that would have established a two-year moratorium, but that measure died in the Senate and was returned to the Assembly in January 2014.  Observers believe that the Senate is unlikely to act on the bill before the lawmakers adjourn for the summer.

New York’s Highest Court Hears Oral Arguments on Local Bans

Yesterday the New York Court of Appeals heard oral arguments in two cases challenging the authority of a municipality to ban certain oil and gas activities within its jurisdiction.  The Court is reviewing two lower court decisions from May 2013 which held that New York’s Oil, Gas, and Solution Mining Law (OGSML) does not preempt local zoning laws.

During the oral arguments, Chief Judge Jonathan Lippman stated that both sides present valid public policy issues.   “On the one hand, you’re saying yes, we should have a comprehensive strategy to deal with such an important issue to our state–energy,” Lippman said.  “And on the other hand, municipalities believe (they can) determine how they’re going to live. They want some voice in how they live.”  Attorneys representing the parties challenging the bans argued that New York’s interests in pursuing a uniform energy policy are paramount.  In response, the attorneys for the municipalities argued that because the OGSML does not expressly supersede zoning laws, local governments are free to regulate land use within their borders as they see fit.  The Court of Appeals is expected to issue its decisions in July 2014.

New York Attorney General Seeks Dismissal of Lawsuits

The New York Attorney General’s office has filed motions to dismiss two lawsuits that seek to force Governor Cuomo to end a delay in deciding the future of shale drilling within the State.  The two lawsuits, filed separately by a group of landowners and the bankruptcy trustee for Norse Energy, argue that that the State’s delay in issuing an environmental review of hydraulic fracturing is illegal and amounts to an unconstitutional “taking” of the plaintiffs’ property without just compensation.  The State asserts in the motions for dismissal that the landowner group and the bankruptcy trustee lack standing to bring the suits.