LEGAL ISSUES INVOLVED WITH THE
DRILLING FOR NATURAL GAS AND
THE SITING OF ELECTRIC
GENERATING FACILITIES IN THE
STATE OF NY
OCTOBER 18, 2012
Wendy A. Marsh, Esq.
Hancock Estabrook, LLP
100 Madison Street, 1500 AXA Tower I
Syracuse, NY 13202
Phone: (315) 565-4500
wmarsh@hancocklaw.com
Program Overview
 New York State regulation of high volume hydraulic
fracturing in New York State
 Municipal regulation of drilling activities
 Landowners’ involvement in the drilling process
 Regulation of other electric generating facilities
under Article X of the NYS Public Service Law
 Thoughts on the future
“Hydrofracking”
 What is it?
State Regulation
 State Environmental Quality Review Act
– Environmental Impact Statement
– Public Comment
– Findings
 SEQRA History
– Generic Environmental Impact Statement (GEIS) on
the Oil, Gas and Solution Mining Regulatory Program
• 1992
Potential Environmental Impacts
Associated with Hydrofracking
 Chemicals in the process water
 Noise
 Traffic
 Well casing problems
 Etc.
SGEIS
 First Supplemental Draft Generic Environmental Impact
Statement (SDGEIS)
– September 2009
 Revised draft SDGEIS
– September 2011
 Public Comment Period ended on January 11, 2012
 Next Step in the Process
NYSDEC Regulations
 Oil, Gas, and Solution Mining Law
– Application requirements
– Permit Conditions
– Technical requirements
 Proposed regulations
– Permitting process
– Surface activities on state-owned lands
– SPDES Permits
NYSDEC Regulations
 Proposed rules released on September 28, 2011
 Public comment ended on January 11, 2012
 Recent requirement to study health impacts
 Likely need to begin the regulatory process over
State Regulatory Process
Summary
 NYSDEC to complete SEQRA
 NYSDEC to issue final regulations for hydrofracking
activities
 Litigation over SEQRA
 Litigation over regulations
Local Authority
 Can a municipality regulate hydrofracking?
Some Things Can’t Be Completely Regulated Locally
 Adult Entertainment
 Sand and Gravel Mining
 Wind Turbines
WHY CAN’T YOU REGULATE LOCALLY?
 Some authority is preempted
 Constitutional Law
 Statutory Law
 New York courts have examined this limitation
Matter of Frew
Run Gravel
Prods. v.
Town of Carroll
71 N.Y.2d 126 (1987)
ARTICLE 23 OF THE ECL – MINERAL RESOURCES
Title 27: Mined Land Reclamation Law
Frew Run Legal Issue
MLRL states:
“For the purposes stated herein, this title shall supersede all
other state and local laws relating to the extractive mining
industry; provided, however, that nothing in this title shall
be constructed to prevent any local government from
enacting local zoning ordinances or other local laws which
impose stricter mined land reclamation standards or
requirements than those found herein.”
ECL 23-2703[2]
Frew Run Holding
The Mined Land Reclamation Law
does not preempt municipalities
from banning sand and gravel
mining
ARTICLE 23 OF THE ECL – MINERAL RESOURCES
Titles 1 – 21: Oil, Gas & Solution Mining
Anschutz Exploration
Corporation v.
Town of Dryden
35 Misc.3d 450
(2012)
Dryden Facts
 August 2, 2011 Zoning Ordinance Amended
 Ban all activities related to the exploration for, and
production or storage of, natural gas and petroleum
 Anschutz owned gas leases covering approximately
22,200 acres in the Town and had invested
approximately $5.1 million in activities
20
Legal Issue
Is the ability to prohibit activities associated with the
exploration for, and production or storage of natural gas
and petroleum
PREEMPTED BY THE OIL, GAS
AND SOLUTION MINING LAW
(OGSML)?
Dryden Legal Issue
OGSML states:
“The provisions of this article shall supercede all local laws
and ordinances related to the regulation of the oil, gas and
solution mining industries; but shall not supercede local
government jurisdiction over local roads or the rights of
local government under the real property tax law”
ECL 23-0303[2]
Dryden Holding
 Judge Rumsey reviewed the Frew Run Court of Appeals
decision and determined:
– The supercedure clauses are “nearly identical”
– Neither contains a clear expression of legislative intent
to preempt local control over land use and zoning
– The ban was upheld for the same reasons as set forth
in Frew Run
Cooperstown Holstein
Corporation v. Town of
Middlefield
35 Misc.3d 767 (2012)
Middlefield Facts
 Town of Middlefield Board amended its zoning law in June
2011 to:
 Prohibit “heavy industry . . . and all oil, gas or solution
mining and drilling”, which, according to the court,
effectively banned oil and gas drilling with the Town.
 Plaintiff had two oil and gas leases
Middlefield Legal Issue
 Same as Dryden:
 Does OGSML prohibit local municipalities from enacting
legislation which may impact upon the oil, gas and
solution drilling or mining industries other than that
pertaining to local roads and the municipalities’ rights
under the real property law?
Middlefield Decision
 Detailed review of the legislative history and intent of
OGSML, to hold that it “finds no support within the
legislative history leading up to and including the 1981
amendment of the ECL as it relates to the supersession
clause which would support plaintiff’s position . . . .”
 “[T]he state’s interests may be harmonized with the
home rule of local municipalities in their determination of
where oil, gas and solution drilling or mining may occur.
The sate maintains control over the “how” of such
procedures while the municipalities maintain control over
the “where” of such exploration.”
Is The Ban a Taking?
 This legal issue has not yet been raised or litigated
Appeals
 Both decisions at the Supreme Court level
 Both appealed to the Third Department
 No decisions yet from the Third Department
City of Binghamton
Elvin Jeffrey, Vestal Gas Coalition, Arena Hotel Corporation,
Nelson Holdings Ltd., and Binghamton-Conklin Gas Coalition
Steering Committee v. Matthew T. Ryan, in his official
Capacity as Mayor, City of Binghamton, and The City
Council, City of Binghamton
Broome County Supreme Court
Index No. CA2012-001254
RJI No: 2012-0695-M
October 2, 2012
Binghamton Facts
 City Council enacted “Prohibition of Gas and Petroleum
Exploration and Extraction Activities, Underground
Storage of Natural Gas, and Disposal of Natural Gas or
Petroleum Extraction, Exploration, and Production Waste”
in December 2011
Binghamton Legal Issue
 Was the prohibition merely a moratorium?
 Court held that Respondent City failed to provide any
evidentiary proof that would provide a justification, based
upon the health and safety of the community, for the
banning of gas exploration, storage and extraction.”
 The law was held to be a moratorium, and the City must
satisfy the well established legal requirements that show
a dire emergency; that the moratorium is reasonably
calculated to alleviate a crises; and that they are taking
steps to solve the problem.
Binghamton Decision
 Local law overturned because it failed to meet the criteria
for a properly enacted moratorium
 The Judge did agree with the holdings in the previous
cases that the OGSML did not preempt the local law
Landowner Regulation
 Land Contracts / Lease Agreements
 Compulsory Integration in New York State
Litigation
 Courts decide on SEQRA Process and NYSDEC regulations
 Courts decide the preemption arguments
 Economic Reality
Wind Energy Regulation :
What can be learned?
 Law of the past:
 SEQRA Review at local level
 Site Plan / Special Use Permit issued at local level
 License / Host Community Agreement at local level
Potential Wind Environmental Impacts
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Visual Impacts
Shadow Flicker
Noise Impacts
Wetlands
Birds and Bats
Habitat
Agricultural Impacts
Traffic
Property value
Archeological
Etc.
Complete Local Control
of the Process
ARTICLE X OF THE PUBLIC SERVICE LAW
Siting of Major Electrical Generating Facilities
TAKES AWAY THE LOCAL
CONTROL
ARTICLE X OF THE PUBLIC SERVICE LAW
 Applies to Siting of Major
Electrical Generating Facilities
– 25 MW or Greater
 NYS Board on Electric Generation Siting and
the Environment reviews projects and grants
or denies “Certificate of Environmental
Compatibility and Public Need”
ARTICLE X OF THE PUBLIC SERVICE LAW
SITING BOARD
 5 Permanent Members are the Chair of the
Department of Public Service, Commissioners of
DEC, DOH, and Economic Development, and the
Chair of NYSERDA
 2 ad hoc public members from municipality where
facility is proposed
ARTICLE X OF THE PUBLIC SERVICE LAW
SUPERSESSION PROVISION
 Siting Board may grant a Certificate in
contravention of local law if it determines that
the law is “unreasonably burdensome in view of
the existing technology or the needs of or costs to
taxpayers”
 Stop Shopping - No other state or local permits
required for certified facility
ARTICLE X OF THE PUBLIC SERVICE LAW
PRELIMINARY SCOPING STATEMENT
 Need to identify the local laws and regulations to be
preempted by the Siting Board
 Notice to the residents in the municipality where
facility is proposed 3 days before filing of the
scoping document
ARTICLE 10 OF THE PUBLIC SERVICE LAW
PUBLIC PARTICIPATION
- “To facilitate the pre-application and application processes
and enable citizens to participate in decisions that affect their
health and safety and the environment, the department and
such person shall provide opportunities for citizen
involvement.”
- “Such opportunities shall encourage consultation with the
public early in the pre-application and application processes.”
- “The primary goals of the citizen participation process shall
be to facilitate communication between the applicant and
interested or affected persons. The process shall foster the
active involvement of the interested or affected persons.”
ARTICLE 10 OF THE PUBLIC SERVICE LAW
INTERVENOR ACCOUNT
 Preliminary scoping statement shall be
accompanied by a fee in an amount equal to
$350 for each thousand kilowatts . . .
but no more than $200,000
 to defray pre-application expenses incurred
by municipal and local parties for expert
witness, consultant, administrative and legal
fees

Not for litigation
ARTICLE X OF THE PUBLIC SERVICE LAW
APPLICATION
 Fee in an amount equal to $1,000 for
each 1000 kW of capacity, not to
exceed $400,000 for intervenor fund
SEQRA
Type II Action
ARTICLE 10 OF THE PUBLIC SERVICE LAW
DECISIONS
The Siting Board shall make the final decision upon the record
The Siting Board shall not grant a CECPN without making explicit
findings:
- Probable environmental impacts
- Beneficial addition or substitution of capacity
- Project is in public interest
- Adverse environmental effects will be minimized or
avoided to the maximum extent practicable
- EJ impacts avoided, offset, or minimized
What Does This Mean?
 Municipalities will continue to bear the burden of the
visual impacts, but not have the financial benefits
afforded in the Host Community Agreements
 Decisions about siting are no longer local decisions that
are ultimately made by the majority of the voters in a
municipality
The Future?
Q&A
Wendy A. Marsh, Esq.
Hancock Estabrook, LLP
100 Madison Street
Syracuse, New York 13202
(315) 565-4500
wmarsh@hancocklaw.com
www.hancocklaw.com