January 9, 2012
As the controversy surrounding high-volume hydraulic fracturing, or “hydrofracking”, in New Yorkcontinues to swirl, the question of whether local government has the power to limit or ban hydrofracking through local zoning is emerging as one of the central and most fractious issues in the debate. The New York State Assembly passed a bill in 2011 that would subject hydrofracking to local land use laws, but the New York State Senate did not. Similar legislation is highly likely to be introduced in both houses of the Legislature in 2012. According to a recent report by the Associated Press, one of the co-sponsors of the 2011 legislation in the Senate, Senator James Seward of Oneonta, has requested that the Commissioner of the New York State Department of Environmental Conservation, Joe Martens, address the power of local governments to regulate hydrofracking in State administrative rules the DEC has proposed adopting and is currently studying.
A number of municipalities chose not to await action by either the State Legislature or the DEC and enacted land use laws banning hydrofracking. Litigation against two of these municipalities was commenced and both court battles are moving close to decision. Both cases involve legal challenges to municipal zoning changes that effectively ban hydrofracking activities within municipal boundaries. The outcome of these high profile cases will have far-reaching implications for municipal zoning inNew YorkState and for the future of hydrofracking in the state.
In Cooperstown Holstein Corporation v. Town of Middlefield (Sup. Ct. Otsego Co.), the plaintiff corporate landowner entered into two leases in 2007 granting the lessee the right to explore, develop, produce and market oil and gas resources on approximately 380 acres of plaintiff’s land. In June 2011, the Town of Middlefield amended its zoning ordinance to provide, among other things, that “[h]eavy industry and all oil, gas or solution mining or drilling are prohibited uses” within the town. Cooperstown Holstein filed suit in September 2011 challenging the zoning amendments on the ground that such municipal action concerning oil and gas operations is preempted by state law and asking the court to declare the amendments void.
In Anschutz Exploration Corporation v. Town of Dryden (Sup. Ct. Tompkins Co.), plaintiff driller and developer of oil and natural gas wells owns oil and gas leases covering approximately 22,000 acres in the Town of Dryden. The leases allow Anschutz to explore for, develop and produce natural gas from the lease holdings. In August 2011, the Town of Dryden amended its zoning ordinance to, among other things, specify that “[n]o land in the Town shall be used” for exploration or drilling for natural gas and/or petroleum, or for the transfer, storage, processing, treatment or disposal of natural gas and/or petroleum. Anschutz filed suit in September 2011 seeking to have the zoning amendments declared void on the ground of state preemption.
Plaintiffs’ legal challenges in Cooperstown Holstein and Anschutz are primarily based on Article 23 of the Environmental Conservation Law (ECL), which sets forth the state’s policy regarding development of mineral resources and authorizes the Department of Environmental Conservation to regulate and issue permits for oil and natural gas development. In particular, plaintiffs rely on ECL § 23-0303(2), which provides:
“The provisions of this article shall supersede all local laws or ordinances relating to the local regulation of the oil, gas and solution mining industries; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law.”
Plaintiffs argue that this provision preempts all local regulation, including zoning, of oil and gas development except for matters relating to local roads and property taxes. The defendant towns have responded by claiming that ECL § 23-0303(2), while limiting local regulation of oil and gas activities, does not affect or override traditional home rule powers of municipalities on zoning matters. In support of their argument the towns cite a 1987 New York Court of Appeals decision interpreting New York’s Mined Land Reclamation Law in which the Court held that a similar provision did not prohibit municipalities from exercising their traditional zoning authority to restrict or ban mining. Frew Run Gravel Products, Inc. v. Town of Carroll, 71 N.Y.2d 126 (1987).
Oral argument in Anschutz was held in November. The court reserved decision but is expected to issue its ruling soon. Cooperstown Holstein was argued in December, and the court agreed to accept additional written submissions until mid-January 2012. A ruling in that case is not expected until February at the earliest. Whatever the initial resolution in these two closely watched cases may be, a final determination of the preemption issue will depend on the outcome of the nearly certain appeals to follow.
For more information on hydrofracking issues contact Christopher Amato or Steven Barshov.
January 4, 2012
In a December 1, 2011 decision, the Supreme Court, Albany County, dismissed on procedural grounds two lawsuits challenging newly promulgated regulations by the New York State Department of Environmental Conservation (DEC) governing permits for projects that may affect species listed as endangered or threatened under State law (6 NYCRR Part 182). Among other things, the new regulations set forth application requirements, review procedures and standards for “incidental take” permits that must be obtained for any activity that may result in a “take” of a listed species. The regulations define “take” to include both direct taking by killing, capturing, harassing or similar acts, and indirect taking through the adverse modification of occupied habitat. The two lawsuits, Association for a Better Long Island et al. v. New York State Department of Environmental Conservation and Town of Riverhead, et al. v. New York State Department of Environmental Conservation (Index No. 1268-11) were consolidated for decision.
Petitioners challenged the regulations on numerous grounds, including that in adopting the regulations, DEC had failed to seek approval from the State Environmental Board, failed to hold public hearings, and violated the State Administrative Procedures Act and the State Environmental Quality Review Act; that the regulations are ultra vires and constitute an improper delegation of a governmental function; and that petitioners’ due process rights had been violated. DEC moved to dismiss both proceedings on the grounds that the issues raised were not ripe for review and that petitioners lacked standing.
In considering the ripeness issue, the court reviewed appellate case law establishing that ripeness turns on whether the potential harm from a challenged administrative action is sufficiently concrete. The court noted that none of the petitioners had shown that they were undertaking or planned to undertake an activity subject to Part 182. Although one petitioner alleged that future development of its land may require review under the new regulations, the court found that “[t]he fact that petitioners may be required, in the future, to undergo the DEC Part 182 review process is insufficient to constitute an actual or concrete injury.” Because petitioners had failed to demonstrate any concrete injury resulting from the regulations, the court concluded that petitioners’ actions were not ripe for judicial review.
With respect to standing, petitioners argued that, as owners of land that may be utilized by endangered or threatened species, they had standing similar to that of landowners who challenge a zoning change in their zoning district. The court rejected this argument, noting that, in contrast to a municipal zoning ordinance, Part 182 has statewide application “and does not impose any immediate and tangible change in land use.” The court went on to conclude that petitioners had failed to establish standing because they had not shown any injury different from the public at large, and had not applied for an incidental take permit, sought a jurisdictional determination from DEC under Part 182 or been subject to an enforcement action under the regulations.
The court also rejected the claim by two petitioners that they had standing as citizen-taxpayers under State Finance Law 123-b, finding that their allegations with regard to the alleged unlawful expenditure of state funds were “nonspecific and conclusory and thus fail[ed] to support a claim of standing.”
For more information on DEC’s endangered species regulations, contact Christopher Amato.
December 16, 2011
In a 5-2 decision issued on December 15, 2011, New York’s highest court upheld Department of Environmental Conservation (“DEC”) regulations authorizing the cleanup of state Superfund sites to “pre-disposal conditions, to the extent feasible.” The ruling also affirms that DEC can and will consider technical feasibility and cost-effectiveness, as well as the intended use of a subject property, when setting cleanup requirements at approximately 950 contaminated sites in New York State.
The New York State Superfund Coalition (the “Coalition”), a group consisting of owners of inactive hazardous waste disposal sites, challenged DEC’s regulations as exceeding the authority derived from the state Superfund law, which calls for the “complete cleanup” of sites through the elimination of the “significant threat” posed by hazardous wastes. The Coalition argued that the regulations’ reference to “pre-disposal conditions” went beyond this statutory authority, and allowed DEC to order the removal of “every last molecule” of contamination and to return sites to “pre-Columbian” conditions.
The Court of Appeals rejected this claim, stressing that the stated goal of a “complete cleanup” is “aspirational” because that goal “can be constrained by technological feasibility, cost-effectiveness, and procedural due process, among other things.”
Before initiating a remedial investigation at a state Superfund Site, DEC must first determine that site presents a “significant threat” to public health or the environment. In his dissent from the Court of Appeals’ decision, Judge Eugene Pigott wrote: “[I]t is clear from the statutory language that the Legislature intended to limit the reach of the remedial program to the ‘elimination of the significant threat’ … [and that] DEC’s interpretation of [this provision] goes beyond what any competent Legislature would permit.”
Both the majority opinion and the dissent, however, emphasize that DEC cannot make arbitrary or draconian remedial decisions without such decisions being subject to challenge under the rules. DEC has recognized in practice and in its regulations that it may not be feasible to return industrial sites to a state of nature given the complexity of issues presented by such sites, and that technical and economic feasibility are, therefore, appropriate considerations under the Superfund scheme. The Court of Appeals found that the challenged regulations were consistent with DEC’s current practice of making remedial decisions that involve less than complete removal, provided that the remedial action protects public health and the environment.
For more information on the remediation of inactive hazardous waste sites in New York, contact Mark Chertok, Michael Bogin, or Jennifer Coghlan.
December 14, 2011
On November 23, 2011, the New York Department of Environmental Conservation (“DEC”) proposed regulations implementing the Water Resources Protection Act, a new law requiring a DEC permit for water withdrawals exceeding 100,000 gallons per day. In addition to setting forth permitting procedures, the regulations contain additional exceptions and critical deadlines for incorporating existing water usage requirements into the new regulatory scheme.
Under existing state requirements, agricultural, commercial and industrial facilities that withdraw more than 100,000 gallons per day or surface or groundwater must file annual reports with DEC, but those facililties had not previously been required to apply for a withdrawal permit. To ease the transition into the new permitting program, parties who have reported their water withdrawals to DEC by February 15, 2012 would qualify for an “initial permit” under the proposed rules, streamlining the permitting process and incorporating their maximum reported withdrawal capacity. Initial permits would also be considered “minor projects” under the Environmental Conservation Law, so they are less likely to require permit hearings or to trigger review under the State Environmental Quality Review Act (“SEQRA”).
DEC also proposed new exemptions to the permitting requirements. The Water Resources Protection Act contains six statutory exemptions, including groundwater pumping at certain contaminated sites, and closed loop, standing column, or other non-extractive geothermal heat pumps. DEC’s regulations would add eight more exemptions, such as withdrawals from the Atlantic Ocean or Long Island Sound, ballast water necessary for lawful vessel activity, and certain construction and maintenance activities that do not impact the capacity of a water withdrawal system.
Notably, while the statute authorizes DEC to establish “quantitative standards that maintain stream flows protective of aquatic life,” DEC has not chosen to propose such standards at this time. However, DEC will consider “significant individual or cumulative adverse impacts” on aquatic life in its water withdrawal permitting decisions.
DEC has estimated that approximately 400 industrial, commercial, and agricultural users would be covered by the new permitting requirements, including high volume hydraulic fracturing operations, which can require millions of gallons of water at a single well. DEC is accepting public comment on the proposed regulations until January 22, 2012.
For more information on water issues or the proposed withdrawal permitting scheme, contact Michael Bogan or Michael Lesser.
December 8, 2011
On November 17, 2011, the New York State Public Service Commission (“PSC”) decided to postpone its decision on Covanta Energy Corp.’s (“Covanta’s”) petition to classify waste-to-energy power as “renewable” under New York’s Renewable Portfolio Standard (“RPS”). New York’s RPS aims to produce 30% of the state’s electricity from “renewable sources” by 2015, up from approximately 21% in 2009.
To attain that goal, the RPS provides production incentives for renewable electricity generation, funded through a surcharge on ratepayers’ electricity bills and administered by the New York State Energy Research and Development Authority (“NYSERDA”). Eligible renewable electricity generators participate in a competitive solicitation process for the incentives, which are provided based on the megawatt-hours of renewable electricity delivered toNew York ratepayers or used on site. Additionally, the generator transfers all rights to the “RPS attributes” to NYSERDA, so the generator cannot benefit from the resulting pollution reductions under other emissions trading programs.
Most of the incentives to date have gone to wind, hydroelectric, biomass, and landfill gas projects, though a range of other sources – from solar, tidal and wave energy to anaerobic digesters converting agricultural biogas into electricity and heat – are also eligible. Covanta’s prior requests to include waste-to-energy facilities in the RPS, in 2004 and 2010, were both denied by the PSC.
Covanta’s petition presents a controversial question, as waste-to-energy plants provide an alternative to fossil fuels, but simultaneously present a number of environmental issues that are different from those associated with traditional renewable energy sources. Environmentalists and the New York Attorney General’s Environmental Protection Bureau have opposed the petition, citing, among other things, concerns regarding mercury emissions.
Proponents of waste-to-energy facilities argue that incineration for power production is better for the environment than transporting the waste to landfills. Covanta submitted a letter to the PSC on December 6th clarifying its position and highlighting the greenhouse gas benefits of waste-to-energy facilities. Covanta reasons that environmental benefits from waste-to-energy production make waste-to-energy a more environmentally-attractive option than landfill gas recovery, a method which is currently RPS-eligible.
A middle ground approach has been adopted in other states, including Connecticut, New Jersey, Massachusettsand Pennsylvania, whereby waste-to-energy facilities may receive subsidies, but not to the same degree as their zero emissions renewable generator counterparts. DEC officials have supported this compromise as an appropriate measure in the event that the PSC decides to allow waste-to-energy plants in the RPS.
For more information on the firm’s practice in the areas of energy and waste-management, contact Jeff Gracer and Paul Casowitz.
Update (December 14, 2011): In a recent letter to the PSC, Covanta withdrew its petition to classify waste-to-energy power as renewable under the New York RPS.
December 7, 2011
Developers of brownfield sites are required to file an annual report with the Tax Department (DTF-70). The report is first due within one year after the execution of a Brownfield Cleanup Agreement and for 11 years thereafter. The annual reporting period covers all activity occurring on the site from December 1 through November 30. The report is due by December 31 of each year.
For more information about reporting requirements associated with the Brownfield Cleanup Program, contact Jennifer Coghlan.
November 21, 2011
As part of its Final 2010 Effluent Guidelines Program Plan, EPA recently announced its intent to develop pretreatment requirements for discharges of wastewater from shale gas extraction to sewage treatment plants.
Shale gas extraction involves hydraulic fracturing or “fracking” – the injection of large amounts of water mixed with sand and chemicals known as “frac fluids” at high pressures. This high-pressure injection breaks up the shale, releasing natural gas which can then be recovered. At most wells, however, a significant fraction of the injected water returns to the surface as “flowback” or “produced water.” Some industry data suggests that up to one million gallons of flowback may be produced from a well in the month following fracturing.
Produced water generally contains not only sand and frac fluids, but also other contaminants, including metals, organic pollutants such as benzene, naturally occurring radioactive material (“NORM”) such as radium, and very high levels of dissolved salts like chlorine and bromine. In fact, produced water is often several times saltier than sea water.
Existing regulations already prohibit direct discharges of wastewater from shale gas extraction to surface waters. Some produced water is re-used to fracture additional wells, and a significant portion is disposed of deep underground in brine injection wells. Some produced water, however, is discharged to sewage treatment plants, which are generally ill-equipped to treat water as salty as shale gas wastewaters. Discharge of shale gas wastewaters to treatment plants has raised concerns that contaminants could pass through those plants without being effectively treated or interfere with the operation of the plants. EPA’s existing pretreatment regulations already include a general prohibition on discharges to sewage treatment plants that would either pass through or interfere with such plants; however, sewage treatment plants do not typically test their discharges for organic pollutants, NORM, or salts, making it difficult to determine whether they are effectively treating fracking contaminants before discharging them to rivers and streams.
In response to these concerns, EPA is considering proposing regulations requiring that shale gas wastewaters undergo some form of pretreatment before being discharged to sewage treatment plants. EPA is now gathering data on shale gas extraction wastewater, and expects to propose a regulation in 2014. Additional details on this proposal can be found in EPA’s 2010 Effluent Guidelines Program Plan, which was published in the Federal Register on October 26, 2011. Comments on the plan are due on or before November 25, 2011.
New York has also proposed its own pretreatment regulations for shale gas wastewater. These regulations would require sewage treatment plants to show that they are capable of removing contaminants expected to be present in flowback – including organic pollutants, NORM, and salts – before accepting any shale gas wastewater. Comments on these and otherNew York fracking regulations, are due before 5 p.m. on December 12, 2011.
For additional information on the proposed wastewater standards, contact Ed Roggenkamp or Steven Barshov.
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