Court ruling muddies prospects
The New York State Court of Appeals effectively ruled recently that local town zoning takes precedence over the Department of Environmental Conservation (DEC) when it comes to regulating the natural gas drilling business.
This was a bad decision for New York. There will be less exploration for natural gas which, in the long-term, will result in higher costs to consumers. (Less supply means higher prices.)
The action by the Court of Appeals was a sad day for the judiciary. The New York State Legislature some 35 years ago passed legislation which gave the DEC primacy over regulating this important industry.
I know, because I was there and represented the county in the state most affected by the then nascent but growing natural gas industry. The court’s recent action was a victory for judicial “activism” where the debates and policy set by the state legislature were “swept under the rug.”
For the opponents of natural gas it was a victorious day. They know, better than the general public, that the natural gas producing industry needs statewide regulation in order to prosper and grow. If the rules and regulations can change from town-to-town, then there is no common ground upon which to produce this valuable resource.
The natural gas business needs state regulation. There are environmental and spacing considerations that can only be done on a regionwide or statewide basis. The business also needs prudent and informed regulation. It needs governmental regulation where petroleum geologists and engineers look at issues from a scientific and safety perspective, not from a political perspective.
The DEC has shown its ability over nearly 35 years of providing this kind of informed and effective regulation. Unfortunately, Albany leadership (which has stopped issuing permits to produce gas) decided to remain mute in the recent debate, and now local towns, who have no expertise in the field, will be able to shut down an important industry by just saying “No.”
Back when the oil and gas laws were changed to provide effective regulation of drilling in the state (during the Hugh Carey administration), local governments essentially asked the state to assume primacy in the regulation of the industry. Local governments wanted to see natural gas development but were not equipped to provide needed regulation. They were also interested in insuring that a process be established so that real property taxes from gas wells could be levied and standardized throughout the state.
In response, the state legislature passed legislation affirming DEC regulatory control of the natural gas and oil drilling industry in the state. The Real Property Tax law was also changed to standardize the real property tax assessment process which brought in additional revenue to the towns affected.
In addition, the DEC was given more money to pay for needed regulation through an increase in permitting fees.
The recent court decision in Albany was an override of legislative intent. It was a setback for the natural gas industry. At the same time, New Yorkers continue to consume over 1 trillion cubic feet of gas per year to heat their homes and run their electric plants. In the long run, the decision in New York not to produce natural gas is a mistake and will end-up raising gas bills for everyone.
Rolland Kidder was a Democratic member of the New York State Assembly from 1975 to 1982 and of its Environmental Conservation Committee. He is former owner and CEO of a Western New York natural gas exploration and production company.