Thank you very much, Carol. And thank you to this distinguished
organization for having me here today.
Before we get started, when I see people I know I like to talk about our common backgrounds or mention a few anecdotes. John Salvador is responsible for making me become a lawyer because when I was in college he was proposing some docks and we live right across the bay from John and I opposed and I won the first round and he won the second round and I said I've got to figure out how that can't happen again. So, I went to law school, okay? So, John, thank you.
John also knows that I tend to wear a green hat in Lake George Basin and sometimes we're not on the same side of the fence but we always get along in every debate we have. Every place else in the world I'm considered a black hat. I represent industry and developers, and people who are trying to use their property for whatever purpose it should be used. And, again, John, thank you.
I also want to talk about a couple of things that Tom Miller mentioned because they triggered some thoughts. And one of the things that are important to understand about oil and gas law is the concept of a severance. Most real property lawyers don't have to deal with this. It's something that we deal with in the oil and gas arena. You can have oil and gas rights, which are sometimes called mineral rights, that can be severed from the rest of the property rights: your fee rights, your surface rights. Most people don't have any idea what I'm talking about when I talk about this but it's fundamental to oil and gas law.
We write title in New York and Pennsylvania for the oil and gas industry. There's no title insurance. So, you have to go back to one hundred and twenty-five year abstract, going back into hand-written deeds and you have to look for these hidden severances where somebody said, "I'm going to sell you the surface but I'm going to keep the oil and gas rights." That began happening in Pennsylvania and New York many, many years ago, back in the late 1800s when we had this oil boom in northern Pennsylvania and southwestern New York.
I'm going to come back to that a little bit later but Tom mentioned the authorities coming in and trying to force people to clean up old oil and gas wells in southwestern New York. That is in fact true. We're representing Danzer Forestland, the big land company that does a lot of forestry. They're being pursued by the Coast Guard, believe it or not, because the Coast Guard is in charge with the cleanups under the Oil Pollution Act (OPA). They contract with the EPA and they're coming after Danzer. Danzer just owns the surface. They don't own the mineral rights. They don't have any right to those wells. It's not their property. And yet, the Coast Guard is trying to say they have to pay $1.3 million for the cleanup costs of just a couple of well fields on their property. So, that's going to be an interesting case if it goes to court. We don't think they have any responsibility under OPA but if it goes to court, though, that will be the argument. So, that's one thing I wanted to mention.
The other thing I want to mention is that Tom also mentioned (John D.) Rockefeller. Rockefeller was an oil baron. He made all his money at oil. One of the things he did after the oil lines in Pennsylvania to the East Coast put his trains at risk, he built his own oil lines. I think there were four six-inch oil lines that ran across the entire Southern Tier down into the New York City-New Jersey area and that's how he ended up transporting most of the oil from western New York and northern Pennsylvania. When I was involved with the Millennium Pipeline which was certificated by FERC (Federal Energy Regulatory Commission) and permitted by New York back in 2006, we were able to translate those old oil line rights, the rights of way associated with those, into a modern pipeline and I actually consider that to be one of my greatest achievements being able to convince the state that we can go through a park like the Palisades Park and across state reforestation lands and other constitutionally protected lands.
So, enough of the tidbits. Let's get on to the war on fossil fuel development in New York State. Today Carol wanted me to talk about the pipelines. Everybody's been reading about how New York has been blocking all these interstate pipelines. What does that mean? What does it mean to the people in the Northeast, what does it mean to the landowners, and how did we get into this mess? So, I'm going to talk about what I call the Pipeline Trilogy. That's three pipelines that have been very controversial and have been blocked by New York State.
Next I'm going to talk about what is sort of the best example of government interference with private property rights. It is the ban on high-volume hydraulic fracturing in New York State. We'll get into how we got into that mess and why we probably won't ever get out of it. And we'll talk a little bit about what impact that has on landowners.
So, let's talk about these pipelines. Constitution is probably the largest of them. It's a 121-mile pipeline that is designed to take natural gas produced in Pennsylvania - and we all know there's lots of gas being produced in Pennsylvania - up to New York State and the northeastern markets. It was going to come up, go into Schoharie County and connect to other interstate pipelines. The way the interstate pipeline system works is that they're all connected and you can run from one system to the next. The pipeline operators make their money by their tariff that they charge to let the gas go through.
What happened here is that when you have a big project like this you have to get a multitude of permits. But the FERC, the Federal energy Regulatory Commission, is at the forefront of that. Under the Natural Gas Act they're responsible for issuing the certificates to make those projects go, but you still have to get other permits and approvals. You need the Army Corps of Engineers to approve all the impacts on wetlands and water bodies and you need what is called a 401 Water Quality Certification from the State of New York. It's a very unusual system. What they did was, when they created the system they decided that most of these permits would be issued by the federal agencies but we would allow the states to control their water quality under this Section 401 Water Quality Certification and that seemed to make sense at the time. It does make sense in most of the country where the state regulators work cooperatively to get these infrastructure projects built, but in New York State it hasn't worked. So, what's interesting with each one of these projects is the DEC, as directed by Governor Cuomo, also known as King Cuomo, who controls all of his agencies, denied the water quality certification as a way to stop the project.
The next one is the National Fuel Project. Now, that's a project that's designed to bring natural gas from Pennsylvania up the western part of the state into the Buffalo area and connect in with interstate pipelines at that location. Again, it would connect into Millennium and other projects so gas can go to the Midwest. It can go up to the Northeast. It can go to Canada. Believe it or not, we're actually at the point where we used to import a lot of natural gas from Canada but now we're going the other way. Once again, they got all their federal approvals that they needed and everything looked good to go. Then one day before the one year deadline for issuing a 401 Water Quality Certification, New York's DEC denied the 401 Water Quality Certification. This is pretty much a carbon copy of what happened in Constitution.
Let me just stop a minute and talk about the one year deadline. Section 401 of the Clean Water Act says that the states have this authority to review these issues and they had to do so in a reasonable time but not longer than one year. And so, that's become a very big issue in this debate right now.
The Millennium Valley Lateral Project. As I told you I was involved with the Millennium Project back in 2006. That came all the way from Corning, all the way to the Hudson River, then it connected in with other pipelines. This is a sixteen-inch pipeline to go up to the CPV Valley Energy Center in Orange County, New York. That project is already under construction and is scheduled to be online next year. But it doesn't have a gas line to feed it. One would have thought that since New York State approved the project, they would approve the gas line. Right? No. So, what happened here is a very controversial project because somebody the CPV Valley Energy hired was a close confidant of Andrew Cuomo, a guy by the name of Joe Percoco, who's now under indictment. Maybe that's what's at issue here. Who knows what Governor Cuomo does on the second floor or wherever he is? But he ended up denying the project. Now, this is a little bit interesting because they didn't have grounds under Section 401 to deny the project and there had just been a recent case annulling a FERC certificate based upon the failure under NEPA (National Environmental Policy Act) to consider downstream impacts on greenhouse gas emissions and so they latched upon that decision which was only a week old and said it was because the FERC had not considered downstream impacts on greenhouse gas emissions.
Oh, by the way, in case anybody doubts it, the reason why our air is much cleaner today than it was twenty years ago is because of natural gas. Because we've replaced a lot of other fossil fuel burning facilities with clean burning natural gas. But that was the reason that they gave.
Again, I talk about this D.C. Court of Appeals decision that talked about downstream markets but that made this different but it just goes to show the lengths to which the State will go to block these important energy infrastructure projects.
Now, what's happened. All of these cases have ended up in court. These are projects that are worth hundreds of millions of dollars. They're not going to take "no" for an answer. So, Constitution challenged its denial in District Court and the United States Court of Appeals for the Second Circuit. National Fuels has followed the same path without going to District Court but going to the Second Circuit. And Millennium went to the D.C. Circuit. So, they took a little different path. Their lawyers thought they had a pretty good argument on that one-year issue. Where do these cases stand now?
The Constitution challenge was dismissed in the District Court. It said that that wasn't really the right court to be in. The Second Circuit took the case on the merits and really hammered the project hard. First, they took a look at the timeliness argument which is a good, strong argument because DEC strung them along for a couple of years. And they said, "We don't have jurisdiction to do that and it was timely in, any event, because you never gave DEC the information that they had requested." The National Fuel challenge is just getting off the ground but the decision on the Constitution Pipeline by the D.C. Circuit was so strong against the project that it's very foreboding that the Second Circuit is not likely to bail out the National Fuel's project. And then the Millennium - this is where it gets a little bit interesting - the Millennium Valley Lateral challenge was dismissed but the court ruled that if they have a question of timeliness of the DEC under 401 of the Clean Water Act, they should go to the FERC first. So, guess where Millennium went?
So, Millennium goes to the FERC and FERC declared that the DEC had waived its right to object to the project based upon the language requiring it be acted upon in a reasonable time but not more than one year. And they said that they were too late. Now, these court cases are moving so quickly that I had to update my paper which is in your packet and the PowerPoint a number of times in the last week. Just the day before yesterday, for example, the Constitution project had requested rehearing by the entire Second Circuit. They call that "en banc." And that was denied. They just denied it without any opinion whatsoever. But this FERC ruling on September 15th, that DEC was too late, really brought some promise for that project. DEC has asked the FERC to reconsider that issue. It's likely that this issue of timeliness will end up in the D.C. Circuit because that's where it will go from FERC. There may be some perceived conflict with the Second Circuit. So, it may go to the U.S. Supreme Court. It's too early to tell. But what does this mean? Well, fortunately, it may be good for Millennium and the FERC may bail out Constitution based upon the same theory. The problem with Constitution is Constitution voluntarily withdrew their request for a 401 certification and then resubmitted it in order to be nice guys. Even though there are people whispering in their ear, don't be nice guys, but that's what they got. And also the issues of little utility for future projects because the D.C. Circuit said, "Well, if you don't like the project just deny it within one year. You don't have to ask for more information. If they're not giving you the information, deny it because you haven't received what you're supposed to get."
Now, against this backdrop of cases that were started by the project sponsors, there's a whole other list of cases out there that have been brought by project opponents. Project opponents have seized upon this as a way to try to stop the use of fossil fuels in this country. If you can stop the pipelines then you can't get the gas to market and it will force the renewable agenda. That is, without a doubt, the not-so-hidden agenda here.
I was at a Bar Association program yesterday. I got to listen
to some presentations on some of those cases. There not in my
materials but they're very interesting. They're mostly by landowner
groups and project opponents that come in all sizes and shapes
and forms of groups. They're trying to argue that the 401 Certification
has to be issued first before the FERC can act. There is some
support for that in the statutory provisions. They're looking
for any argument that they can make that will keep these pipelines
from getting approved. This is not just a New York problem. The
Fourth Circuit sent back a pipeline to West Virginia for failure
to consider what they call the "antidegradation rule"
under the Clean Water Act, which is degradation of water bodies
taking into account the cumulative impacts of all the dischargers.
That tells me that liberal judges and opposition groups are going
to advance this cause in other parts of the country. And what
does that mean? It means we're all in trouble.
Well, I want to go back to what I said about these being property owner groups because there was an attorney very passionate about her cause. She spent the last four years pro bono opposing this Constitution pipeline. She's very knowledgeable and she's a very good attorney. So, I commended her for her passion and the hard work that she's done and I also commended her for keeping many of my colleagues gainfully employed because they're on the other side of those cases. But then I said I'm just interested to know who are the property owners that you are supposed to represent? Because the property owners I know from the Southern Tier - and I know there's some here today - generally support natural gas infrastructure projects and the development of natural gas. So, I said, "How many actual clients do you have that are in the right-of-way for this project?" And she said, "Well, I don't really represent individual clients that much but I do have six clients." So, out of this 121 miles, she has six people who are opposed to it and she's making all of this hay out of very little. The only thing I can say that is going to solve this is legislation.
Before I get to that We all know we have a fairly dysfunctional congress right now. One would hope that the Republicans will get their act together soon. Hopefully they'll find a way to do tax reform and fix health care. And then go on to some really fun issues like property rights. This is one area where they're going to have to fix the way the statutory scheme is set because you can't allow these states to have veto power over projects that are sorely needed for our natural gas infrastructure which is a national and international issue. I think it's a matter of national security because if you have all this good infrastructure - modern infrastructure - fueling clean-burning plants and in our homes and our buses and trucks, I think it's in the best interest of the country. I do believe that at some point they're going to have to address this issue and find a way to fix it. Exactly how that will come out, who knows? Hopefully, they do get their act together.
Let's talk about the ban on high-volume hydraulic fracturing. I think this will go down in history as the greatest assault on individual property rights of all time because there's really never been anything like this. New York State has a long history of oil development and a long history of natural gas development. At one point we were producing about five percent of our natural gas usage locally in New York State. It primarily came from this play called the Trenton Black River play, which is a play of dolomitized limestone. It's filled with natural gas and it's usually under high pressure. One well that was drilled in about 2000 was the largest producing natural gas well in the country for a year or two. They tend to come on very strong and then they taper off like most oil and gas wells.
I love the historic oil stuff. I love seeing the seventy-five-foot wooden draw rig and all. I've been on draw rigs that can drill a hole ten to twelve thousand feet deep and then turn the corner and go for a mile. In the Marcellus Shale development they don't go quite that deep. It's anywhere from four to eight thousand feet. But they're now drilling laterals that run out two miles or more. This is incredible technology. And they have these rigs designed so that they can break them apart and take them and move them to the next location.
Again, this is a huge issue for the landowners in New York
State and unfortunately without some sort of legislative fix we
may not be able to help them. How did we get into this mess? High-volume
hydraulic fracturing really came to the fore in the mid-2000s.
Range Resources brought it to the Northeast and they demonstrated
that you could drill these deep wells through these horizontal
legs and then hydraulic fracture them. What does it mean "hydraulically
fracture" a well?
Lets' talk about that a little bit. They start by drilling a well bore at a fairly large diameter. You start usually with a first casing that is about 100 feet deep. The next layer of casing goes all the way past the water-bearing zone. That's usually about 1,000-foot deep. That casing can be twelve inches in diameter or more - fourteen, sixteen. It's very thick-gauge steel. It's all bound together from an engineering standpoint so that it's leak proof. Then what they do for each piece of casing that they put in, they cement it, so that the outside of the casing is cemented. They take cement and they force it down the hole under great pressure until it comes up the outside and it fills the annular space between the hole that they drilled and the metal pipe. Then they go back in and now they drill another hole. They go down to the formation that's the target formation and they turn the drill bit. It's kind of a fascinating thing.
I like the technology which is why I've always liked environmental law. This technology is pretty simple. The drill bit is a long pipe with a drill cutting on the end. And somebody has figured out that if you have a six-degree bend in that pipe, if you're always spinning the pipe you go straight. If you stop spinning it, it goes at six degrees and makes the turn. They engineered it so what's the turn that we can expect the steel to bend and be able to get our casing to bend and have everything work? So, that's what they do. They go down maybe seven, eight thousand feet. In the Marcellus they turn into it and then they go out for a mile or so. And then that pipe is also cemented in place. Now, they take cement, they force it all the way down to the end of that hole. It comes all the way back up. Now, you have: cement, steel, cement, steel, cement, steel, and cement, steel, cement, steel, cement, steel all protecting that well.
You say, "How do they get gas out of that well if they've
already just made it impermeable to anything, right?" What
they then do is to go down to the bottom of the hole and they
set plugs and then they go in there with a device that actually
punctures holes in the pipe and shoots holes through the pipe,
through the cement into the formation. They back it off. They
do that in stages. Here's where the high-volume hydraulic fracturing
I've spent my whole career as an environmental lawyer helping industries wean off of chemicals to use water because that was always considered to be the cleanest thing to do. What this industry does is to take water and put it under high pressure. And there's a few chemicals, but it's like a biocide, like a cleaner you'd use in your house, in your swimming pool or your hot tub. These are not exotic chemicals. They put that water down the hole. They put it under great pressure and it's usually a pound of pressure for every foot of depth. If you're at 7,000 feet you've got 7,000 pounds of pressure built up and you've got all these holes that have been blown in that pipe in the formation.
And, again, they go stage by stage and they open up the rock and once they know that they've got the rock fracturing - or breaking apart - they then add sand in the mix. The sand goes down there and goes out into those fissures and it's called propping. That's exactly right. It props it open so that when they turn the pump off that rock doesn't totally close. That's what produces the gas. They go and they do all the stages.
I used to go around and give speeches all over, including New
York City with most of the people are not so open in respect to
defending Willets Point there but they all think that this is
horrible. That we're poisoning with the chemicals. They think
that the chemicals are going to come up through the ground. I
ask them, "How many of you have ever heard of Darcy's law?
They say, "What? What's Darcy's law?" It's a very simple
principle that water and gas flow from high pressure to low pressure.
As soon as you turn those pumps off at the surface anything that's
down there is going to try to come back up through the hole. And
they do. It's called flowback. And they have to take it and they
have to treat it just like you would with any other industrial
process. But it's never going to go a mile up into the ground
and contaminate the ground water because there's no pressure gradient
to make that happen. Occasionally, you get somebody who actually
knows what I'm talking about and they acknowledge that that probably
makes sense. But they don't believe that the world is going to
come to an end with fracking. That's just a little lesson in these
There's one other thing that's really cool about it that you have to understand. It is the ability to drill multiple wells from a common well pad. That was really a game changer. What they found out that they could do is that you could drill multiple holes from a common well pad just ten or fifteen feet apart and you can have those go in different directions. And so, they end up with these pitchforks of pipe that's been put in the formation. It goes out in both directions. They can cover areas easily as big as a mile, probably up to two or three square miles now, with one well pad. Instead of having all these pads on the surface like we used to have for vertical drilling. With horizontal drilling you need much bigger units. That's a long-winded introduction of how we get into this. The industry came into New York State. We were actively involved with this. And they said that we need to create new spacing legislation in New York State to accommodate these big horizontal units. They wanted units of 640 acres. Now, 640 acres is one square mile. So, one well pad, which may involve a couple of acres of land, to be able to develop one square mile is pretty amazing. It's a lot different than what you have down in your neck of the woods. What did you say? You have two per acre even more traditional
Audience member: Hydraulic fracturing is also used in our shallow wells. The vertical wells have nowhere near the volume or anything like that. The well locations are maybe have the size of this room.
Mr. West: It's all relative. We were successful in getting this legislation passed. All the fractivists came out of the woodwork. They're all opposed to legislation. They made a big deal in front of the Governor's office and the Governor decided that they would approve the legislation but they would direct the Department of Environmental Conservation to supplement the environmental impact statement that had been prepared in 1992 relative to oil and gas drilling. That's called the generic environmental impact statement or GEIS. When this happened we were told, and we thought this would be literally - this was before Cuomo, by the way, this was Governor Patterson - we were told this would take about a year for them to get through this supplement and you couldn't drill in the meantime but you could continue leasing. You could file all your permits. A number of companies were doing just that.
They were leasing land paying good money to Southern Tier landowners, thousands of dollars per acre sometimes. I think the highest one I heard was - down in Broome County - was around $5,700 an acre for a five year lease to build and develop that. If you're a landowner in the Southern Tier, that's more than the property is worth, by the way. It was a great financial boon for the Southern Tier. Everybody thought that this would just be like a one-year process, we'd get through it. What happened was it just went on and on. Then Yoko Ono came out. They had thousands and thousands of comments - forty thousand comments in opposition - to the first draft of the supplemental GEIS. It ended up taking more than seven years.
And somewhere along the line Governor Cuomo, who had been elected and inherited this problem decided that he was going to bring an end to fossil fuels. He decided that that would be his political future in New York State. He would kill high-volume hydraulic fracturing. He'd be a hero to these millions of people who had been fed a line of misinformation. When you talk about "fake news," this is the original fake news. You had professors from Cornell who would come out and scare people to death saying that this is going to contaminate your water, etc., etc. A lot of people believed that.
So, when it went more than seven years later, what they did
is they got the Department of Health involved. The Department
of Health reviewed some of the health studies that were being
done in areas that were being developed and they came out and
said, "We don't have enough information to be able to approve
this in New York State. It's uncertain as to whether or not the
public health impacts outweigh the benefits and whether or not
the environmental consequences outweigh the benefits." And
so, they ended up finishing the SEQRA process saying that it's
too dangerous now until we know more. While they were finishing
this up, study, after study, after study was coming down around
the country all concluding that this hydraulic fracturing can
be done safely if it's properly engineered and properly regulated.
That's true of anything we do. Right? You wouldn't drive a car
if it wasn't properly engineered and properly regulated.
Secondly, these health impacts they found to be nonexistent. You wouldn't want to live next to a draw rig 365 days a year but they're only there it only takes about a month to drill these wells and hydraulically fracture them and then you're out. They're now being done in conformity with all air quality standards. By the time you get to the property line the impacts are considered to be acceptable. This is a charade of a finding but what it did is it left the landowners high and dry. Okay. New York landowners continue to sit in poverty while they look at their neighbors in Pennsylvania enjoying prosperity. I can't tell you how many times I've heard this. People in the Southern Tier, who have lived on the border, literally watch their neighbors in Pennsylvania all getting paid good money.
It's not just the signing bonuses for the leases. Once those
leases are developed they get their royalties. Everything got
competitive. The old one-eighth royalty went out the door. These
royalties are much higher now. These people get what they call
mailbox money in the industry. Every month they get a check. Right?
And they're very happy about it. People who were losing their
families, the younger generation who was moving away - because
farming in Northern Pennsylvania was no longer a viable thing
- they're staying because now they've got viable businesses.
Now we go back to the boring stuff a little bit. We'll go back to the issue of "why haven't there been takings claims?" We're not the only law firm to look at this. A number of law firms have looked at this. There are significant problems with takings jurisprudence that make these types of claims very difficult. And again, I'm not going to bore you with it or all the case law in it, but there's really two types of takings. The categorical taking where they come in and they take your property and they say we need it for a road and you lose one hundred percent of the value and you get paid one hundred percent of the value. And then there's the Penn Central where you have a regulatory taking. This gentleman can't develop his property because of this frog from an adjoining state. If he could show that that was a substantial deprivation to his property, like ninety percent of its value, then he could bring a takings claim. But they're very, very hard because the burden on the plaintiff is very, very high.
I mentioned this at the beginning. I told the story about the severance for a purpose and that is because of the problem that landowners face in bringing a takings claim. If they own the oil and gas rights and the fee rights - the surface rights - government is just going to argue in response to a takings claim, "We just took your oil and gas rights and we only did so temporarily. This is not permanent. We're just waiting for the science to develop to tell us that this can be done safely without adverse health impacts." Then the question becomes what's the denominator in the equation to get your percentage. If your mineral rights, your oil and gas rights, have been impacted, your surface rights are still viable, you're never going to be able to meet the test.
New York follows the aggregate rule. Which I think most states do. So, you look at the aggregate of all the interests involved. The only potentially viable claim would be to take somebody who has a severed oil and gas interest. You remember I talked about that. You can own the oil and gas rights but not the fee. If that person brought a claim, they could probably make the argument that the denominator doesn't matter because all of their oil and gas rights have been impacted. However, even there, there would be problems because the government is going to say, "Well, we just said you can't develop it with high-volume hydraulic fracturing. You can use some other technique in development." Well, unfortunately, there is no technique to get the resources out of the shales because unless you crack that rock and prop it open with sand you're never going to be able to get the gas out of that or whatever else is available. Sometimes, there are oils and other liquids. They're going to argue that you can use other technologies. You can drill conventional wells. You can go back to forty-acre spacing. You can use a low-volume hydraulic frack. Right now in New York State high volume is considered anything over 300,000 gallons. That would make it very difficult to bring that kind of claim.
There's also procedural hurdles. You'd have to go to the New York Court of Claims and bring your claim there first. All the judges in the New York State are afraid of King Cuomo because they all need him one way or another to continue. Many of them in the Court of Claims are appointed, they're all appointed. A lot of them sit as acting Supreme Court judges. When we were in the middle of litigation over some of these issues, we couldn't find a judge who would be objective. Some of these issues were so straightforward, like the fact that we brought a mandamus claim to compel the department to finish the EIS process and get on with it and the judges was just afraid of it. He tossed it. He said that the company that had permits pending before the DEC did not have standing to challenge that. It was crazy.
Unfortunately, takings claims are not going to be the answer. Once again, I think it's going to have to come from Washington. It's going to have to come from Congress. We need something that authorizes takings claims from partial takings. I'm all in favor of giving government the power to condemn property if it's really needed. If they need to protect wetlands for some reason and they want to take half of John Salvador's property, God bless them. But pay the man what he's entitled to for that taking. Don't put him through a ringer with these complex legal theories and say that you've got plenty of use of the rest of your property. We should just have a law on the books that says, "Government can do this. State and local governments can do this, but if they do take your property, regardless of whether it's a partial taking or not, you get compensated." I don't know that that will happen. Congressman Reed has some legislation. He's been promoting this. But you know what's happening in Washington. They're totally dysfunctional. Maybe there's a chance they'll get tax reform done and go back and do something with healthcare. Maybe there's a chance that before we get to the midterm elections in 2018, they'll take a run at a few of these issues. I think there's strong support for this nationally. It's important to have organizations like this pushing for these kinds of changes. But without legislative change, I think, unfortunately, the landowners in New York State are pretty much stuck. That's the end of my remarks. I have plenty of time for some questions. Yes?
Audience member: What do you think about the taking by the DRBC? Are you familiar with that?
Mr. West: I'm very familiar with that.
Audience member: I'm from Southern Tier, kind of. I'm in Delaware County. I'm on the border deposit which is bordered by Delaware and Broome.
Mr. West: Yes, I know the area very well. DRBC is the Delaware River Basin Commission. We have these basic commissions that were created to regulate water, mostly water flow like the Susquehanna River Basin Commission only regulates quantity. They don't get into quality as much. The DRBC very much gets into substantially regulating quantity and quality. For example, when we were permitting the Millennium project, we had to go see the DRBC. We had to agree when they build a new pipeline like that, a big pipeline for high-pressure gas, they test it with water. You can imagine if you fill up three miles of a pipeline with water, it's a lot of water. Then you have to discharge it someplace. We had to get permits for every test that was done. We had to designate where the water was going to come from, how it was going to be put back in the same place, and how we would take measures to make sure it wasn't contaminated from this brand new, clean pipe. That gives you a little example. The DRBC taking is another example of a taking. Again, you face the same issues whether it's the DRBC or King Cuomo, right?
Audience member: They are kind of outside of their scope of what they should be doing, as I see it. Most of the landowners in New York State and in the Delaware River Basin see it, too. Is it something where we can go to a litigation?
Mr. West: Based upon the scope of authority, you could challenge that.
Audience member: Because where I'm located, we have a double-headed dragon. We have Governor Cuomo and we have the DRBC. It's not easy for landowners. There's a lot of people losing their property because they're waiting on their income tax return to pay their taxes. They can't pay their mortgage.
Mr. West: It's been devastating to the people in the Southern Tier and I've spent many, many hours down there talking to people, working with Karen Moreau. Do you know Karen?
Audience member: I know Karen extremely well.
Mr. West: Karen and I are very close. I've worked with her. I've worked with landowners groups. I've worked with the attorney Scott Kurkoski from the LGT (Levene Gouldin & Thompson). Scott and I are very close. I just saw him yesterday. We all came to the conclusion that there was nothing we could do because of the clever way that they buried this. Carol?
Ms. LaGrasse: There's so much history on conservation easement, railroad right-of-way and split tile. Why isn't this title in the Pennsylvania Coal case. It's such a clear split of title, mineral rights
Mr. West: It is. For those of you in this organization, you understand this. But most people when you tell them about the difference between an oil and gas estate or a coal estate, that's like minerals versus oil and gas sometimes becomes a critical issue. The problem is in a takings case you're going to look at the entire bundle of property rights: the surface, the minerals, and the oil and gas. If only the oil and gas has been impacted you're never going to get your percentage high enough because the denominator is too big.
Audience member: Boots on the ground is what you've got now because you lack a pipeline into New England. And here's the boots on the ground. Yours truly. I'm in St. Johns right around Christmas morning. There's a 30,000 gallon propane tank at the senior center and it's has got a hundred gallons left in the tank. If I don't get there it's critical. The federal government knows this. They give us a letter to keep right in the truck. I drive ten hours a day work fifteen a day. A hundred hours a week was nothing. I haul propane everywhere. This has been going on thirty, forty years. Here's another thing that is factual. The problem is that of every paper mill that International Paper owns anywhere in the whole world, the one that's the most costly energy-wise is Ticonderoga, New York.
Mr. West: Guess what's going to happen to that. They're going to shut it down, right?
Audience member: I went around Christmas morning to other places. People come out and they've got their cylinders that they want me to fill.
Mr. West: There's a company in the Southern Tier. I don't remember the name of it. Somebody else can.
Audience member: Was it Dick's that just opened up the new distribution center?
Mr. West: No, there was a company that was depending upon Constitution for expansion.
Audience member: Uh, yeah. Amphenol.
Mr. West: Amphenol. That's it. Amphenol can't get the gas now so they can't expand. What does this mean for Upstate New Yorkers? It means no jobs. We can't survive on gambling and marijuana. That's what Governor Cuomo has given us.
Audience member: And windmills.
Audience member: But the governor offers all these incentives to Dick's to open a distribution center. They're not going to pay taxes for ten years. Who suffers for that? The landowners. The taxpayers. We're getting - excuse my language - screwed and Dick's can come in and make a profit. It's not fair. But I did have another question and that was, "What about landowners that purchase their property with the intention to lease and they didn't close their property. Their purchase didn't close within time to get their lease or they would have had a lease, and then they lose their property?"
Mr. West: The architect of this whole thing is Judith Enck. She used to be with Scenic Hudson and then she was the secretary to the governor for environment. She was there when this whole legislation came in. She was the one that threw it into SEQRA. She's very smart and knew that that would be a very difficult path. First of all they'd have total control over it, how it comes out. And the way they killed it, it would take two to three years to reopen plus countless years of litigation because now the department would have to reopen the SEQRA process.
We have all these studies now. It's not bad. We want to do it. Let's say we elect Rob Astorino. Rob comes in. He says, "I'm all in favor of natural gas development." He was. I went and briefed him on it very early on in his campaigns. I also briefed Donald Trump. Anybody know him? I sat in his office for two-and-a-half hours when he was considering running for governor against Cuomo. I often kick myself for talking him out of it. Three times, while we're going over all this stuff, three times during the meeting he said, "Tom, you're in Albany. You know how things work. Should I run for governor?" I said, "No. It's a waste of time, a waste of money." One of his sons came in so he had me go through the whole thing again. He said it three times. He pulled out the next day. I've often blamed myself for taking him out of New York politics.
Audience member: But national is better than Hopefully he's fighting a bigger fight, overall.
Mr. West: Yes?
Audience member: Did any of the drilling operations that originate on the Pennsylvania side of the border drill horizontally into New York State.
Mr. West: That's a good question. I've got some clients. We do work in Pennsylvania. We work for big companies and I had the DEC contact some of our clients and they said, "We think that you're too close to the border and that if you go into the border we're going to make you go through the permitting process, etc." This is a very sophisticated process. They know where that drill bore is at any point in time. When you see all these pictures, these diagrams that are drawn, all looks level. it's not. It's all down here. They have to take that drill bit and they have to go up and down, over hill and through dale, and then they know where it is in any point in time. They just stop. I think most of them stopped one hundred or two hundred feet south of the border. Do you know what the travesty is? Some of those wells are test Utica wells. They're some of the biggest wells in the area. That tells us that the Utica formation would be very good in New York State. Probably a much bigger fairway than the Marcellus.
Audience member: Can I just ask one more question? I know it's time. I'm so sorry. Now that fracking has changed a bit and there's not a containment pond, there's closed loops, why can't the governor just get his head out of his butt and get it done? The science is different.
Mr. West: I'll just give you the same answer. The science was always there to prove that it can be done safely. It was his political move to follow the money. He's got all the rich fractivists from New York City and Long Island who oppose this and gave him a lot of money. He thinks it's going to be his claim to future. He's going to have windmills and solar farms all over the state and he's going to do away with fossil fuels. It's as simple as that.