On February 13, 2013, The West Firm took an important step in righting a wrong in New York State concerning the authority of lessees to declare force majeure and extend the term of their leases based upon the highly extraordinary circumstances associated with the 4 1/2 year ban on high-volume hydraulic fracturing in New York State. In a case entitled Beardslee v. Inflection Energy, et al., The West Firm filed a brief before the United States Court of Appeals for the Second Circuit explaining the reasons why the lower court decision and judgment should be reversed. Tom West, leading the team at The West Firm concerning this appeal, said: “When operators are prevented from developing oil and gas resources because of extraordinary regulatory developments, like those in New York State, they should have the right to have their leases extended. We are optimistic that the judges in the Second Circuit Court of Appeals will give this issue a fresh look and are hopeful that they will recognize the merits of this appeal.”
Click here to read the Brief.
The West Firm, on behalf of IOGA New York, filed comments on the revised proposed high-volume hydraulic fracturing regulations last Friday. Tom West, Managing Partner of The West Firm, PLLC, offers the following summary of the IOGA comments:
IOGA New York (“IOGA”) supports a high environmental bar to ensure that the production of shale resources in New York is protective of public health, safety and the environment, but that bar must be attainable, consistent with the mandate of law (Environmental Conservation Law Section 23-0303), that requires the Department of Environmental Conservation (“Department” or “DEC”) to prevent waste, promote the greater ultimate recovery of oil and gas resources in this state and protect the correlative right of landowners to have their oil and gas resources developed.
The overarching concern of industry remains the failure of the Department to include provisions in the regulations that will allow Department Staff to implement the regulations in a manner that protects the environment to the maximum extent practicable, but does so in a manner that provides the necessary flexibility for the orderly development of the shale resources in New York State consistent with the mandates of New York law. The Department has achieved this balance with the 14,000 wells that operate in this state today without compromising environmental quality. The revised proposed regulations will distort this balance, create waste and destroy the correlative rights of landowners.
The prohibitions, setbacks and restrictions set forth in the revised proposed regulations, without any variance mechanism, create an unworkable system that will render yet larger areas of the state off limits to shale development than prior proposals. In contrast, virtually every regulatory program administered by the Department includes a comprehensive variance mechanism. The proposed standards, without revision, will result in a taking of mineral rights, without just compensation, in violation of the due process rights of the mineral owners.
The Department has violated the State Administrative Procedure Act and is proceeding ultra vires in a number of fundamental ways that render the revised proposed regulations legally defective unless the corrections and changes identified in the IOGA Comments are made. These include, but are not limited to:
IOGA looks forward to the day when the shale resources of this state can be developed in an orderly, responsible and sustainable manner.Click here to read the Comments.
On Monday, January 14, 2013, The West Firm filed reply briefs in support of the appeals in the Dryden and Middlefield cases. Both briefs put forth a comprehensive analysis of the reasons why both lower courts were in error and why the decision should be reversed by the Appellate Division, Third
Department. Tom West, Managing Partner of The West Firm, PLLC, said the following: "This is the final step in the process to set the record straight in New York State concerning the preemptive effect of the New York Environmental Conservation Law on the ability of municipalities to ban or regulate natural gas exploration and development. We expect that these cases will be argued in March, which will lead to decisions this spring that will determine the fate of natural gas drilling in New York."
Click here to read the Middlefield Reply Brief.
Click here to read the Dryden Reply Brief.
On Monday, October 15, 2012, The West Firm filed briefs and records on appeal in support of the appeals in the Dryden and Middlefield cases. Both briefs put forth a comprehensive analysis of the reasons why both lower courts were in error and why the decision should be reversed by the Appellate Division, Third Department. Tom West, Managing Partner of The West Firm, PLLC, said the following: "By filing these documents with the Appellate Division, Third Department, we have perfected both appeals, which is an important step to setting the record straight in New York State concerning the preemptive effect of the New York Environmental Conservation Law on the ability of municipalities to ban or regulate natural gas exploration and development."
The Appellate Division, Third Department will establish a briefing schedule and ultimately schedule these cases for oral argument. There will be briefing from the Respondents and Amicus filings in support and in opposition to these appeals. We are cautiously optimistic that the matter will be scheduled for the February Term of the Appellate Division, which occurs in early February. Typically, the Appellate Division renders a decision 6 to 8 weeks after the oral argument.
Copies of the briefs can be found at the following links:
New York City has finally realized that the sky is not pink, but it is black with soot from the #4 and #6 fuel oil that is used to heat and power 10,000 major apartment complexes. Kudos to Mayor Bloomberg for having the political fortitude to recognize that natural gas is the solution for New York City: http://online.wsj.com/article/APc4db078291344f95998cb5f994a5173d.html Of course, it is so ironic that New York City, which stands to benefit the most from natural gas production, has led the opposition to natural gas production in New York State.
Thomas S. West responds to Times Union writer, Brian Nearing, on his recent article, "DEC gives edge to gas drilling lobby." See the email chain between Tom and Brian below and click here to view the Times Union article.
From: Thomas West
To: Brian Nearing
Sent: Thursday, June 28, 2012 3:37PM
Brian, your article today is lazy reporting at best. The combination of your failure to reach out to me for a comment and the multiple undisclosed sources demonstrates that the article was written to sensationalize what is otherwise a very common practice that is very much a part of good government. In my 30 years of practice before the New York DEC, I cannot think of a major rulemaking where the agency did not reach out to the regulated community as part of its statutory obligation to minimize the economic burden to industry while achieving environmental goals.
Moreover, industry was not given any unfair advantage. The public announcement concerning the revised draft SGEIS in early July made it clear that there would be regulations and a robust stormwater permitting program. DEC has a statutory obligation to look at the cost of its proposals upon the regulated community. This is even more important for small businesses, where the DEC's is obligated by law to minimize undue economic burden on small businesses. There are many small oil and gas companies in New York State that have been put out of business or will be put out of business by the excessive regulatory proposals.
The DEC made it very clear when they reached out to The West Firm on behalf of industry that they needed cost information from industry concerning the cost of the proposed regulations. It is for that reason that we asked for a copy of the proposed regulations. After all, how could industry comment on the cost of proposed regulations without reviewing them? The DEC was not able to provide us with copies of the proposed regulations until well into August, at which point we did not have enough time to provide meaningful cost information to the DEC. As a result, we identified a number of regulatory provisions that were unnecessarily burdensome and very costly to industry that could have been changed to reduce economic burdens without compromising environmental quality. Unfortunately, our efforts had no impact on the regulatory proposals, which were released to the public without any material changes concerning the issues of concern to industry.
In addition, you seem to make the presumption that the environmental groups have not had any dialogue with, or influence upon, the DEC concerning hydraulic fracturing issues. I can assure you that is not the case. We continue to believe that the DEC has had numerous meetings with the environmental community concerning the proposed standards. We also continue to believe that the dialogue between the environmental community and the DEC directly affected what was put out for public comment last summer. If someone were to make a Freedom of Information Law Request to the right sources concerning the DEC's dialogue with environmental groups relative to hydraulic fracturing issues, you should find that their access exceeds industry access by a significant order of magnitude. Of course, the FOIL request that was made to the DEC regarding industry contacts was one-sided by design.
Lastly, there is the issue of unreported lobbying. There was nothing secretive about our dialogue with the DEC concerning the proposed regulations and we reported our effort as part of our lobbying disclosures on behalf of our clients. This is because any attempt to influence the outcome of proposed regulations is lobbying in New York State. Unfortunately, the environmental NGOs have not reported their efforts to influence the outcome of the proposed regulations. Even more unfortunate is the fact that the agency charged with responsibility for unreported lobbying activities has not taken any action even though this issue has been brought to their attention. Proper reporting by the environmental NGOs of their lobbying activities would let the sun shine in on their attempts to influence the final regulatory standards.
In the final analysis, agency interaction with the regulated community is good government and there was nothing illegal or wrong about the dialogue that occurred last summer. In fact, I would go as far as saying is that the DEC is guilty of not working with the regulated community enough concerning these issues that will affect the extraction of indigenous, clean burning natural gas resources in this state for many years to come. The industry favors a high environmental bar, but one that can be achieved through reasonable regulatory requirements. One only has to look at Ohio for how they have handled the hydraulic fracturing issues. When the industry rushed in to develop the Utica shale, the regulators and politicians acknowledged that the regulatory standards needed upgrading. They worked with industry and other stakeholders to craft regulatory requirements that are both protective of the environment and not unduly burdensome to industry. Their legislative and regulatory measures were enacted recently, while industry was allowed to continue to develop the resource. Ohio is a model of how open dialogue between government and the regulated industry, with input from stakeholder groups, can solve problems without adversely impacting our fragile economy. Years from now, people will find that Ohio has reaped a substantial economic benefit from the extraction of its shale resources, totaling billions of dollars of value, without significant adverse environmental consequences. Where New York State will stand in the future will depend upon how workable the final standards are, which we all expect to see very soon.
Please forward this e-mail on to your Editorial Board as a request that they print this response to your misguided article.
From: Brian Nearing
To: Thomas West
Sent: Thursday, June 28, 2012 4:50PM
The central issue was whether DEC was proper in providing such access prior to the public release of draft regulations and GP. That was DEC's call, not yours. So I did not see the necessity of seeking your comments, which I felt were not germane to the access issue. Your conclusions could hardly be considered that of a disinterested party.
Ask you can see, I spoke to two former DEC officials, neither whom wanted their names used, who were split on whether this is in fact done all the time. Another expert in access, Robert Freeman, from the state Committee on Open Governmen, also was quoted on this point.
DEC has been aware for two weeks of what I was working on. Given your contacts there, I am surprised you did not hear from them.
I recall meeting Elliot Richardson many years ago, when he was in Albany advocating for campaign finance reform. He talked about campaign contributions leading to access to lawmakers by those making the contributions. I remember him saying wryly to me, "What an effective lawyer I could have been, if I had had access to the judge before the decision, and my esteemed legal advisary did not."
As you can see, I have CCed this to my editors at your request. I will also post it, in its entirity, to my blog to give your viewpoint a public airing.
From: Thomas West
To: Brian Nearing
Sent: Thursday June 28, 2012 5:12 PM
Thanks for the prompt response. The State Administrative Procedure Act is very clear in its mandate the DEC must consider regulatory costs, both as it relates to large and small businesses. They cannot and do not do this in a vacuum. They always communicate with the regulated community concerning these issues. The regulated community cannot evaluate the cost of a proposal without seeing the proposal. An article that has too many undisclosed sources should not be published. I do not know with whom you consulted regarding the SAPA issues, but I am told it may have been a newspaper lawyer. Anyone with any experience in administrative law would understand the requirements that are imposed upon the DEC and why they regularly reach out to the regulated community for input on draft regulations before they are made public.
As an aside, we continue to hear that the environmental community is lobbying for changes in the regulatory proposals and the changes are being made in response to their outreach. It is comical to suggest that industry has an unfair advantage when it comes to access to state government concerning hydraulic fracturing in New York State.
West Firm attorneys Tom West and Cindy Monaco will be presenting on the need for changes to model form oil and gas leases at the 3rd Law of Shale Plays Conference, to take place at the Hilton Fort Worth Hotel in Fort Worth, Texas on June 6-7, 2012. Their presentation, Do Conventional Leases Work for Unconventional Plays in Unconventional Times?, discusses the areas where the standard oil and gas lease forms need to be revised to deal with the new realities of shale play operations. The presentation will examine the special problems caused by horizontal drilling, governmental moratoria and other realities that should be addressed in the oil and gas lease.