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Energy Terminal Servs. Corp. v. New York State Dep't of Envtl. Conservation

ELR Citation: 11 ELR 20871
Nos. No. 77 C 1869, (E.D.N.Y., 06/19/1981)

Adopting the recommended decision of a magistrate, the district court rules that the New York Liquified Natural and Petroleum Gas Act (New York Act), N.Y. ENVIR. CONSERV. LAW §§23-701 et seq. (McKinney), is not preempted by the Natural Gas Act, 15 U.S.C. §§717 et seq., or the Natural Gas Pipeline Safety Act of 1968 (Pipeline Safety Act), 49 U.S.C. §§1671 et seq. Plaintiff, operator of a proposed liquified natural gas facility on Staten Island, initiated suit against the New York Department of Environmental Conservation seeking a declaratory judgment that the New York Act is unconstitutional as applied to it. Plaintiff contends that the Natural Gas Act and the Pipeline Safety Act have preempted the licensing by states of liquified natural gas facilities to be used in interstate commerce. Initially, the court rules that the case is ripe for adjudication. Defendant's letter to plaintiff's parent corporation stating that a failure to comply with the New York Act could result in the imposition of sanctions and defendant's action in assessing plaintiff's parent corporation for the costs of administering that statute indicate that plaintiff is in fact obligated under the New York Act. Next the court determines, based on the Supreme Court's sub silentio determination of federal question jurisdiction in Lake Carriers' Ass'n v. MacMullan, 406 U.S. 498 (1972), and Ray v. Atlantic Richfield Co., 435 U.S. 151 (1978), that is has subject matter jurisdiction. Turning to the merits of the case, the court first notes that the preemption inquiry begins with the premise that the historic police powers of the states are not preempted by a federal statute unless such is the explicit intent of Congress. The New York Act is an exercise of the traditional state police powers of land use and environmental management, and its thrust is the regulation of the siting of liquified natural gas facilities within the state. The Natural Gas Act was enacted to protect consumers from exploitation by natural gas companies. The court rules that the New York Act is not preempted by the Natural Gas Act since neither the language nor the legislative history of the federal statute evidence a congressional intent to supersede state siting laws. The Federal Energy Regulatory Commission's (FERC's) authority to consider safety and siting when deciding whether to grant a liquified natural gas facility a §7 certificate of "public convenience and necessity" is not determinative because FERC has never issued guidelines pursuant to the Natural Gas Act for the regulation of liquified natural gas facilities. Absent the exercise of a power by the federal government, in contrast to its mere possession, there is no preemption. In addition, the court rules that the New York Act is not preempted by the Pipeline Safety Act, which was enacted to establish and enforce safety standards for the transportation of natural and other gas by pipeline and for pipeline facilities. The New York Act focuses on siting, which is not identical to the federal interest in safety since siting includes the legitimate local interest in environmental protection as well as the public health and welfare. Given the complementary roles of the state and federal governments under the Pipeline Safety Act, the court concludes that the state law must stand.

The full text of this opinion is available from ELR (44 pp. $6.00, ELR Order No. C-1250).

Counsel for Plaintiff
James B. Liberman
Berlack, Israels & Liberman
26 Broadway, New York NY 10004
(212) 258-6900

Harold W. Borden, Ass't Solicitor
Public Service Electric & Gas Co.
80 Park Pl., Newark NJ 07101
(201) 430-7000

Counsel for Defendant
Robert Abrams, Attorney General; Ezra I. Bialik, Ass't Attorney General
World Trade Center, New York NY 10047
(212) 488-4141

Counsel for Intervenor-Defendant City of New York
Allen G. Schwartz, Corp. Counsel; Nancy Stassinopoulos
100 Church St., New York NY 10007
(212) 566-3929

Bramwell, J.