Shale Gas Perspectives - Recent Actions By New York Assembly and State Senators Are An Attack On Home-Rule Rights of Local Governments That Favor Responsible Natural Gas Drilling (Vol. I, No. 4) (updated Mar. 20, 2013)

A Periodic Blog on the Status of Marcellus Shale Development in the Southern Tier of New York--and Other Interesting and Exciting Developments in the Law, Science, and Politics of Natural Gas Development (Or Not) in the Empire State

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 (March 7, 2013) 

On March 6th, the NYS Assembly passed a bill (A.5424-A) to impose a two-year moratorium (until May 15, 2015) on natural gas extraction in low-permeability natural gas reservoirs such as the Marcellus and Utica shale formation.  This bill, co-sponsored by Assembly Speaker Sheldon Silver, passed by a largely party-line vote 103-40.  (Similar legislation, A.11443-B, was vetoed by the Governor in 2010 [Veto Memo 6837]).

Meanwhile, somewhat similar legislation (S.4046) was introduced in the State Senate by Senator David Carlucci, a Rockland County Democrat, and was referred to the Committee on Environmental Conservation on March 6th.  The Senate bill, which is co-sponsored by Senator Jeffrey D. Klein (D-Bronx), Chairman of the Independent Democrat Coalition, and 12 other downstate Democratic Senators, would prohibit the DEC from proceeding "to finalize and publish the revised SGEIS [supplemental generic environmental impact statement] for 24 months from the bill's effective date or "until the commissioner of Health determines that the completion of the studies deemed relevant by the commissioner of health have produced data sufficient to make a recommendation to DEC regarding the permitting of HVHF [high-volume hydraulic hydrofracturing] in the state, and until the completion of the United States Environmental Protection Agency 'Study of the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources" and the Geisinger Marcellus Shale Initiative."  These are separate and cumulative prerequisites to the issuance of the SGEIS.  So, even if the Health Commissioner decided next week that he had sufficient information to make a recommendation to DEC, the moratorium would remain in place for however long it took for the Geisinger and EPA studies to be completed.

A previous moratorium bill sponsored by Senator Carlucci (S. 1201) earlier this year would have prohibited the issuance of new gas and oil permits involving HVHF for one year (until June 1, 2014).

These moratorium bills would extend the de facto moratorium that has been in effect in New York State since 2008.

On a separate front, lower court decisions that upheld gas-drilling bans by the Towns of Dryden and Middlefield are headed to an intermediate appellate court (the Appellate Division, Third Department) for oral argument on March 21st.  The bans were upheld on the basis of the asserted home-rule authority of local governments to control land-use and zoning within their boundaries.

Friend-of-the-court briefs by the NYS Association of Towns and NYS Conference of Mayors were submitted to the Appellate Division supporting the home-rule rights of local governments as articulated in the Dryden and Middlefield decisions.  This led to a flurry of letters to the Appellate Division in late January from numerous Town officials, expressing “a grave concern” with the submission of these briefs and asking the Court “to recognize that the Association of Towns does not speak for a significant number of its members to the extent that it supports either the pro natural gas development or anti natural gas development positions,” point out that “the Association’s town members were never asked to vote on whether the Association would submit Amicus Curiae briefs in these cases.”

This seems to raise the question of whether Home-Rule rights in New York are one-way or two-way streets.  Do they protect the ability of cities, towns, villages, and counties to ban or restrict gas drilling within their boundaries, but not protect the ability of local governments that support gas drilling to allow and welcome it within their jurisdictions?

What limits, if any, exist under New York law on the ability of the State to impose moratoria on gas drilling against the wishes and interests of localities that desperately need and desire the economic boost that expanded natural gas drilling and associated support activities would provide?

There are two categories of legal concerns: (1) limits on the infringement of Home-Rule rights; and (2) restrictions on the power to impose moratoria.  I will address these in turn.

Limits on the Infringement of Home-Rule Rights
The New York State Constitution, in Article IX, required the State Legislature to enact a “Statute of Local Governments” to grant certain powers to municipalities.  These powers include (Sections 10.6. and 10.7.) the power “to adopt, amend and repeal zoning regulations” and the “power to perform comprehensive and planning work relating to [the municipality’s] jurisdiction.”  (Excluded from these delegated powers is “any law relating to a matter other than the property, affairs or government of a local government.”)  The powers so granted cannot be repealed, diminished, impaired or suspended except by the action of two successive Legislatures and with the concurrence of the Governor.  (Sections 2 and 20.3.).

Measured against these requirements and restrictions, the moratorium bill passed by the Assembly would appear to be especially suspect because it imposes a moratorium on permits on natural gas extraction on particular areas of the State in which the local support for gas drilling is especially strong—namely, “in low permeability natural gas pools such as the Marcellus and Utica shale formations.”

The 1977 New York Court of Appeals case, Wambat Realty Corp. v. State, which upheld the State’s right to establish the Adirondack Park Agency to preserve “the priceless Adirondack Park through a comprehensive land use and development plan” despite its effect of preventing localities within the Adirondack Park from “freely exercising their zoning and planning powers,” does not validate the proposed gas drilling ban.  For one thing, the Assembly bill is not directed at preserving a priceless natural resource of overriding State concern.   For another, it is not predicated on any finding of a significant environmental or public health threat that would justify intervention by the State Legislature.  (At most, it imposes a further two-year delay to allow study by a school of public health within the SUNY system of “potential public health impacts that could be caused by the extraction of natural gas using horizontal drilling and high-volume hydraulic fracturing” on top of nearly five years of such studies by the NYS Department of Environmental Conservation, including a not-yet-completed health-effects assessment by the NYS Department of Health.)

In any case, it would be inconsistent and disingenuous, for New York’s appellate courts to uphold, on the one hand, the overriding power of local governments to ban gas drilling within their borders (even in the face of a preemption clause in the Oil, Gas and Solution Mining Law which expressly “supersedes all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries” (ECL §23-0303(2)), while on the other hand, allowing the State to step in, after five years of study and delay (and studied delay?), to blanketly brush aside the home-rule interests of local governments which support and desire natural gas drilling in lands under their jurisdiction.

Limits on the Imposition of a Moratorium
Even if the proposed moratoria do not run afoul of Home-Rule restrictions under the Statute of Local Governments and the State Constitution, it is likely that they butt up against constitutional and case-law restrictions on establishment of governmental moratoria.

Technically, there are two types of moratoria—each with their own rules: (a) Land-Use Moratoria, which temporarily suspend a landowner’s development rights while the community considers changes to its land-use regulations; and (b) General Police Power Moratoria, which are justified by the need to take action to advance the public health, safety and welfare. 

Although the moratorium bills passed by the Assembly and introduced in the Senate, if they became law, would suspend the development rights of affected landowners for two years or more, their sponsors would undoubtedly justify them as a general police-power action.

As recently decided in the New York Supreme Court case of Jeffrey v. Ryan, which invalidated the City of Binghamton’s two-year moratorium against gas drilling, a General Police Power Moratorium can only justify the temporary interference with beneficial use of private property where three prerequisites are met:

  • The moratorium was adopted “in response to a dire necessity”;
  • The moratorium “is reasonably calculated to alleviate or prevent a crisis “; and
  • The governmental entity adopting the moratorium "is presently taking steps to rectivy the problem."

As explained by the New York State Department of State in its publication, Land Use Moratoria (Revised 2010, Reprinted 2011): “Land use moratoria… are not a permissible approach [where immediate health and safety problems are at issue]” and “other [general] police power controls must be used.”  But “[t]hose controls, whether legislative or administrative in nature, must not single out particular types of land use, but must instead address the immediate problem itself, and in a way which is fair to all landowners.”  Land Use Moratoria, page 5.

The Assembly moratorium bill is suspect in relation to these considerations in several respects.  Absent clear evidence of immediate health and safety problems, even after nearly five years of intensive study by DEC and a shortly-to-be-concluded health assessment by the State Department of Health, it is highly questionable that a “dire necessity” for this action could be shown.  Nor is the action reasonably calculated to alleviate or prevent a crisis condition.  How is a health-effects study by a SUNY institution in New York, where high-volume horizontal fracturing of deep gas shale formations has not been allowed to occur (as a result of an existing de facto moratorium of nearly five years), going to alleviate or prevent a crisis (presumably, by forestalling serious health effects on New Yorkers if gas drilling is allowed to proceed here), to any greater extent than already-ongoing health effects studies by Pennsylvania institutions (and nationally, by U.S. EPA) in areas where high-volume horizontal drilling has already been underway and there is actually something to study?  And, finally, it is hard to see how one more study in New York will help rectify the problem, if one exists, in any meaningful incremental way, relative to other ongoing studies in other states and to the nearly five-year SGEIS effort in New York.  It would seem that a more constructive approach would be to allow a modest number of gas wells to be drilled in selected, productive gas shale deposits, under closely monitored and controlled conditions—to see if there is a problem, much less a potential crisis.  If such pilot wells were drilled in the deepest shale formations with the tightest, impervious soils overlying them, the potential for adverse impacts could be minimized while useful data are gathered.  Yet, these are precisely the areas targeted by the Assembly drilling moratorium.

The Senate bill differs from the Assembly bill in not calling for a new study in New York.  However, in requiring completion of multi-year EPA and Geisinger studies before DEC would be allowed to complete the SGEIS needed to enable HVHF gas drilling permits to be issued, the Senate bill would result in even longer delays (of up to 4 or 5 years) and more negative impacts on landowners.

In addition, a two-year moratorium, as adopted by the Assembly, and the even longer moratorium proposed in the Senate, could be considered as unreasonably long—particularly in light of the tenuous justifications for it.  The U.S. Supreme Court in a 2002 decision, Tahoe-Sierra Pres. Council v. Tahoe Reg’l Planning Agency, recognized that “a moratorium lasting more than one year should be viewed with special skepticism.”

Although case-law restrictions on adoption of moratoria generally relate to moratoria adopted by local governments rather than the State, this is by no means universally the case.  See, e.g., Russo v. New York State Department of Environmental Conservation, 55 A.D.2d 935 (2nd Dept., 1977) (DEC ordered to set a date certain for the termination of a moratorium on the alteration of wetlands).

New York’s landowners in gas-shale-rich areas of Upstate are already justifiably disgruntled by the already interminable delays in State decisionmaking concerning the right to allow drilling on their land.  An additional moratorium on gas-shale decisionmaking, particularly with the paper-thin justifications put forward to support such a step, would only add insult to injury and fuel the already wide divide between Upstate and Downstate.

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 Article written by Kenneth S. Kamlet, Esq. For more information, contact Mr. Kamlet at (607) 231-6914 or via email at kkamlet@hhk.com .

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