Empire Pipeline, Inc. v. Town of Pendleton

Decision Date14 July 2020
Docket Number17-CV-141S
Parties EMPIRE PIPELINE, INC., and National Fuel Gas Supply Corporation, Plaintiffs, v. TOWN OF PENDLETON, Defendant.
CourtU.S. District Court — Western District of New York

John G. Schmidt, Jr., JoAnna Jung-Yao Chen, Kenneth A. Manning, Phillips Lytle LLP, Buffalo, NY, for Plaintiffs.

Gary A. Abraham, Law Office of Gary A. Abraham, Great Valley, NY, for Defendant.


WILLIAM M. SKRETNY, United States District Judge

I. Introduction

Before this Court is PlaintiffsMotion for Partial Summary Judgment (Docket No. 10) arguing that the Natural Gas Act, 15 U.S.C. §§ 717, et seq., and FERC regulations preempt Defendant Town of Pendleton's ("Town") ordinance restricting Plaintiffs’ proposed gas pipeline project, construction and operation of a compression station in Pendleton. They seek declaratory judgment or an injunction against enforcement of the Town's zoning ordinance against their gas pipeline project.

Plaintiffs also moved for expedited hearing of this motion (Docket No. 11), which was granted (Docket No. 13).

Responses to the summary judgment motion initially were due on April 3, 2017, with replies due April 7, 2017 (id. ). Defendant responded (Docket No. 14), Plaintiffs replied (Docket No. 15). Defendant then submitted a sur-reply (Docket No. 16) but Plaintiffs moved to strike the sur-reply (Docket No. 18). After briefing on the motion to strike (Docket Nos. 19, 20), this Court denied the motion to strike (Docket No. 39).

The parties meanwhile supplemented the motion for summary judgment and defense opposition (Docket Nos. 21, 22, 24, 25, 26, 28, 29, 31, 35, 36, 44; see Docket Nos. 23, 27, 34 (Orders granting leave to supplement); cf. Docket No. 30 (Order denying supplemental motion, Docket No. 28)) supplying and updating authorities. On October 10, 2018, this Court granted leave Plaintiffsmotion to supplement and deemed briefing completed (Docket No. 38; see also Docket No. 39, deeming briefing completed). On May 8, 2020, Plaintiffs moved to further supplement authorities (Docket No. 40), which this Court granted (Docket No. 41). Final responses to the supplemental authorities were due by May 26, 2020, and Plaintiffs’ reply were due June 3, 2020 (id. ). Defendant filed its supplemental submission (Docket No. 42) and Plaintiffs replied (Docket No. 43). Plaintiffs on July 10, 2020, moved to further supplement authorities to update a previously cited case (Docket No. 44). With the motion thus fully briefed, it was submitted without oral argument.

Upon consideration of the above-cited briefing and the arguments made therein and for the reasons stated herein, PlaintiffsMotion for Partial Summary Judgment (Docket No. 10) is granted in part , granting declaratory judgment to them.

A. Complaint

This is an action commenced by a natural gas transmission company and a natural gas supplier (Docket No. 1, Compl.). This is an action for declaratory judgment and permanent injunction under the Natural Gas Act (id. ¶ 4). In March 17, 2015, National Fuel Gas Supply ("National Fuel") filed an application with the Federal Energy Regulatory Commission ("FERC") seeking an Order and Certificate of Public Convenience and Necessity ("Certificate") for the construction, operation, and maintenance of a new pipeline and compression facilities from McKean County, Pennsylvania, to Niagara County, New York (id. ¶ 7). Included with this pipeline project is construction of a compressor station in the Town of Pendleton, New York ("Town") (id. ¶ 9). The FERC granted the Certificate on February 3, 2017, National Fuel Gas Supply Corp., 158 FERC ¶ 61,145, 2017 WL 496277 (2017) (id. ¶¶ 8, 99, Ex. A; see also Docket No. 10, Pls. Atty. Aff. ¶ 3, Ex. A; id., Pls. Statement ¶ 3). Near the end of the Certificate, FERC declared

"Commenters, including the Town of Pendleton, state that local land use laws do not allow for development of the Pendleton Compressor Station at the proposed location. We note that any state or local permits issued with respect to the jurisdictional facilities authorized herein must be consistent with the conditions of this certificate. We encourage cooperation between interstate pipelines and local authorities. However, this does not mean that state and local agencies, through application of state or local laws, may prohibit or unreasonably delay the construction or operation of facilities approved by this Commission. "

(Docket No. 1, ¶ 10, Ex. A, 158 FERC ¶ 61,145, Certificate ¶ 194, 2017 WL 496277, at *47 (emphasis added)). After concluding that the project (if consistent with Plaintiffs’ application) would not affect the quality of the environment (id., Ex. A, 158 FERC ¶ 61,145, Certificate ¶ 197, 2017 WL 496277, at *47 ), FERC issued the Certificate conditioned upon Plaintiffs completing authorized construction within two years of date of the Certificate; compliance with applicable FERC regulations; compliance with environmental conditions; and executing contracts (id., Ex. A, 158 FERC ¶ 61,145, Certificate, Commission Ordering Paragraph (C), 2017 WL 496277, at *48 ).

Plaintiffs allege that this Certificate, among other things, bars defendant Town from prohibiting, interfering with, or unreasonably delaying the construction or operation of the pipeline project (id. ¶ 11). Plaintiffs assert that the Town opposed construction (id. ¶¶ 60-64), delaying the siting, construction, and operation of the compression station (id. ¶¶ 74-75, 77-90, 93-98, 105-12). They allege that the Town building inspector refused to act on their building permit application (id. ¶¶ 93-98) and, after plaintiffs obtained the Certificate, the Town denied the building permit (id. ¶¶ 105-12).

The First Claim seeks a declaratory judgment that National Fuel need not comply with the Town Code as they related to siting, constructing, or operating the compression facility as the Code was interpreted by the Town or declare "that the Town Building Inspector must issue a Building Permit for the Facility and Project in accordance with and consistent with the Certificate" (id. ¶¶ 121, 114-21, WHEREFORE Cl. ¶ (a), (b)). The Second Claim seeks an injunction against enforcing the Town Code and future attempts to interfere with, delay, or prevent the siting, construction, or operation of the compression station (id. ¶¶ 130, 131, 123-31, WHEREFORE Cl. ¶ (c)). Plaintiffs also seeks continued jurisdiction over this matter "to address any future actions by defendant that contravene this Court's Order, the Certificate or the Natural Gas Act" (id., WHEREFORE Cl. ¶ (d)) and direct and consequential damages from the wrongful enforcement of the Town Code (id., WHEREFORE Cl. ¶ (e)).

The Town answered (Docket No. 7). The Town raised an affirmative defense that this claim was not ripe (id. ¶¶ 132-36) because Plaintiffs entered a stipulation with the New York State Department of Environmental Conservation ("DEC") agreeing to allow the DEC to determine Plaintiffs’ application for a Clean Water Act Section 401 Water Quality Certification by April 7, 2017 (id. ¶ 134, Ex. B). The Town argues that Plaintiffs’ claims are not ripe until they obtain the Clean Water Act Water Quality Certification or a waiver of the requirement (id. ¶ 135). Alternatively, the Town contends that Plaintiffs had not obtained all federal approvals and had appealed to the FERC conditions under the Certificate, thus the Town argues that this Court should abstain from deciding this case until the FERC had decided Plaintiffs’ appeal (id. ¶¶ 137-41, Ex. C). The Town also asserts that Plaintiffs failed to exhaust administrative remedies by not appealing the denial of the building inspector to the Town's Zoning Board of Appeals or seeking a special exception permit (id. ¶¶ 142-50).

Plaintiffs obtained the Certificate in February 2017 and appealed a month later (id., Ex. C). The appeal sought reconsideration of rate determination (id., Ex. C, at 2-3). They also sought clarification whether the DEC's failure to issue a decision on their application for the Clean Water Act Water Quality Certification resulted in a waiver of that requirement (id. at 3-4, 17-26). Plaintiffs also contend that they were not required to seek state law permits (id. at 3-4), arguing that the state requirements were preempted by federal law (id. at 4-17).

Magistrate Judge Schroeder then ordered the parties to submit proposed deadlines for a Case Management Order (Docket No. 9). Plaintiffs moved for summary judgment on the same day (Docket No. 10). While their motion was pending, plaintiffs also submitted a proposed Case Management Order (Docket No. 17); a Scheduling Order or Case Management Order has not been entered.

B. PlaintiffsMotion for Partial Summary Judgment (Docket No. 10)

Plaintiffs moved for partial summary judgment (Docket No. 10). They argue that the Natural Gas Act and the FERC preempts the Town Code and its restrictions on the construction and operation of the compression station (id., Pls. Memo. at 12-23). They seek summary judgment for a declaration of this preemption (id. at 12-20) and an injunction against the Town (id. at 21-23). If granted, the issues remaining for adjudication would be any monetary damages Plaintiffs incurred (see Docket No. 1, Compl., WHEREFORE Cl. ¶ (e)).

The material facts are not in dispute (the Town did not submit a Statement of Facts, although the Town's Memorandum of Law includes a statement of fact, Docket No. 14, Def. Memo. at 11-21; see also Docket No. 16, Def. Sur-Reply Memo. at 3-5). Plaintiffs engage in the transportation of natural gas in interstate commerce and are regulated by FERC (Docket No. 10, Pls. Statement ¶ 1). Plaintiffs jointly filed an application with the FERC for a Certificate of Public Convenience and Necessity for the Northern Access 2016 Project (id. ¶ 2). FERC approved the project, including construction of the compressor station in Pendleton (id. ¶¶ 3-5). The Town intervened in the FERC proceeding shortly after Plaintiffs ap...

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