Gas transmission facilities: the limits on home rule.

AuthorPodolny, Konstantin
PositionFractured Communities: Hydraulic Fracturing and the Law in New York State
  1. INTRODUCTION

    High volume hydraulic fracturing (HVHF) is currently at the forefront of many New Yorkers' minds. The battle over the practice is proceeding on multiple fronts. In 1992, in accordance with the New York State Environmental Quality Review Act (SEQRA), the Department of Environmental Conservation (DEC) completed a Final Generic Environmental Impact Statement (FGEIS) for oil and gas wells, and determined that oil and gas wells do not have a significant adverse impact on the environment. (1) In 2009, the DEC issued a draft supplement to the FGEIS to consider environmental impacts relating to HVHF, as it was determined that HVHF and HVHF-related technologies were outside the scope of the FGEIS. (2)

    In 2011, in response to an executive order by then-Governor Patterson, the DEC issued a Draft Supplemental Generic Environmental Impact Statement (DSGEIS) and proposed HVHF regulations, as well as amendments to the Environmental Conservation Law (ECL) for HVHF. (3) More than eighty thousand comments were received. (4) Currently, no timetable is set for the completion of the SEQRA review. (5) At the same time, numerous local governments have taken it upon themselves to ban HVHF within their borders. (6) The best known of these are the towns of Dryden and Middlefield. (7) These towns, along with many others, passed local zoning ordinances with broad prohibitions against many kinds of gas extraction activities, including HVHF. (8) However, most of these ordinances also prohibit activities secondary to actual gas extraction, including the construction of gas gathering lines and compressor facilities. (9)

    Both the Dryden and Middlefield ordinances were challenged in court. (10) Landowners and gas developers challenged the legality of the ordinances, arguing that they were preempted by state law to the extent that they prohibited natural gas extraction. (11) The challenges failed at the supreme court level, with two judges deciding that the ECL only preempted municipalities from regulating the manner of gas exploration. (12) However, the courts held that the municipalities retained their broader power to regulate land use within their borders. (13) Basically, according to the supreme court judges, localities are forbidden from prescribing how gas is extracted, yet are free to prohibit gas extraction in toto. (14)

    Numerous articles and commentaries have been written on both the logic and legal validity of these decisions. (15) Nevertheless, both decisions were affirmed by the appellate division. (16) Last August, the Court of Appeals agreed to hear the two cases. (17) No matter how the Court of Appeals rules, one thing is certain. Both the Dryden and Middlefield zoning laws are excessively broad, in that in their zeal to ban all things "fracking," both towns undertook to ban gas gathering lines and compressor stations from within their borders, along with wells and other gas-extraction activities. Under Article VII of the New York Public Service Law (PSL), both laws will be ineffective in preventing the construction of gas gathering lines and compressor stations. (18)

    As explained in more detail below, gas transmission is at least as vital to increased natural gas use as increased local production. Even if HVHF is never permitted in New York, the state nevertheless has expressed a clear preference for increased natural gas use, whether it be natural gas extracted from conventional wells locally or using HVHF elsewhere. (19) In order for natural gas to reach consumers, it will need to be gathered and transported, which will require the construction of new transmission lines. (20) Article VII of the PSL gives the New York Public Service Commission (PSC) explicit authority to site gas transmission lines. (21) Part of that authority allows the PSC to refuse to apply local laws, such as those passed and (at least for the moment) still operative in Dryden, Middlefield, and dozens of other localities in New York. (22)

    This article does not provide any commentary on the legality of the Dryden and Middlefield ordinances. Instead, it seeks to describe the futility of those and similar laws, at least in terms of their attempt to exclude gathering lines and compression facilities.

  2. NEW YORK'S PREFERENCE FOR NATURAL GAS USE

    The State of New York has expressed a long-standing and consistent preference for the increased use of natural gas, both for electricity generation and home heating. (23) Natural gas is cheaper than other available fossil fuels and provides environmental benefits in the form of reduced emissions. (24)

    As early as 1985, the state legislature codified a preference for natural gas in the PSL. (25) The legislature explicitly stated that "[development and encouragement of indigenous natural gas production is in the best interest of the state of New York." (26) The statute further stated that "[t]he indigenous natural gas of the state is a vital natural resource and to the extent practicable should be used to satisfy energy needs within the state and to promote the economic well-being of the people of the state." (27) While that particular statute applies to indigenous New York natural gas, (28) the state has since encouraged both the development of local gas supplies and imports of gas from outside the state. (29)

    More recently, in 2012, at the direction of Governor Cuomo, the New York Energy Highway Task Force issued the New York Energy Highway Blueprint (Blueprint). (30) The Blueprint contained thirteen recommended actions designed to advance the Governor's goal of modernizing New York's statewide energy system. (31) One of those recommended actions was to "[accelerate investments in natural gas distribution to reduce cost to customers and promote reliability, safety, and emission reductions." (32) The Blueprint recommended that $500 million be spent to upgrade the gas distribution system in the state by 2017. (33) To that end, the Blueprint charged the PSC with developing a natural gas expansion policy by the end of 2012, and subsequently promoting projects to replace existing, aging gas infrastructure as well as expand the distribution system to promote the conversion of heating customers from oil to natural gas. (34)

    In response to the Blueprint's mandate, the PSC initiated a proceeding to review existing regulations and policies that may reduce the availability of natural gas to customers in New York. (35) The PSC reiterated that "[n]atural gas is cleaner than other fossil fuels used for home heating and under current market conditions costs a third as much." (36) The PSC also noted that:

    New York State is well-located geographically to take advantage of existing and newly developed natural gas supplies located outside our State but which, when competitively-priced, are available to supply customers within the State. New York's location relatively close to these new sources of supply could provide the State a competitive advantage in attracting and retaining employers concerned about costs of, and access to, a reliable source of energy. In addition, consumers may enjoy significant savings in household fuel expenses which in turn could benefit the State's economy to the extent that households redeploy those savings. (37) The PSC also extolled the emissions benefits of natural gas, stating, inter alia, that natural gas use results in emission reductions in particulate matter, nitrous oxide, sulfur dioxide, and carbon dioxide. (38) In addition to emission benefits, the PSC stated that expansion of natural gas use would promote economic development in the state and enhance reliability of the state energy system. (39)

    The PSC has expressed similar concerns when permitting gathering lines in the state. (40) While authorizing construction of a gathering line and associated compressor station which brings natural gas produced in Susquehanna County, Pennsylvania, to the Millennium Pipeline in Broome County, New York, the PSC found that:

    Transporting gas from Pennsylvania to the Millennium Pipeline would benefit the customers of certain New York State gas local distribution companies and gas marketers by offering access to Pennsylvania (and possibly future New York State) shale gas supplies. Purchasing such gas close to the market area, as compared to current procurement from the United States Gulf Coast and western Canada gas supply regions, offers a multitude of customer benefits. Such benefits would include reliability of supply, diversity of supply, lower commodity and upstream pipeline costs, and reduced cost volatility. In addition to those benefits to New York, installation of the pipeline produces local benefits to the landowners that Applicants have negotiated easements with and the Town of Windsor through tax revenues levied on the pipeline. (41) The State's preference for the increased use of natural gas has been well established and recently reaffirmed. However, increased natural gas use can only be made possible if sufficient supplies of both foreign and domestic gas are available. (42) Increased gas supplies require the construction of new transmission facilities, including gathering lines and compressor stations. (43) This is true regardless of whether HVHF is ever permitted in New York. Gathering lines are still needed to collect gas produced domestically from conventional wells and gas extracted from the Marcellus Shale in Pennsylvania using HVHF. (44)

  3. THE NATURAL GAS SUPPLY CHAIN

    While this article focuses on regulation of gas transmission line siting, it is helpful to provide some basic background information on the anatomy of the gas transmission system used to bring natural gas from the well to the end user.

    Natural gas travels from the wells to end consumers through a series of pipelines. (45) These pipelines, in order to get from well to home, are flowlines, gathering lines, transmission lines, distribution lines, and service lines. (46) Flowlines collect gas from a single...

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