Empire Pipeline, Inc. et al v. Town of Pendleton

Filing 45

DECISION AND ORDERIT IS HEREBY ORDERED, that Plaintiffs Empire Pipeline, Inc., and National Fuel Gas Supply Corporation's Motion for Partial Summary Judgment (Docket No. 10) is GRANTED IN PART (granting declaratory judgment), DENIED IN PART (denying injunctive relief).IT IS FURTHER ORDERED, that judgment be entered declaring that defendant Town of Pendleton's building permit requirements are preempted by the Natural Gas Act and FERC proceedings issued thereunder for Plaintiffs' FERC-approved gas pipeline project.IT IS FURTHER ORDERED, that a status conference shall be held on Wednesday, August 26, 2020, at 2:15 pm, by Zoom teleconference. Chambers will provide directions for attending this conferenc e.IT IS FURTHER ORDERED, that Plaintiffs' Motion for Leave to File Supplemental Authority (Docket No. 44) is deemed MOOT.SO ORDERED.Signed by William M. Skretny, United States District Judge on 7/14/2020. (JCM)-CLERK TO FOLLOW UP-

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 1 of 38

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
EMPIRE PIPELINE, INC., and
NATIONAL FUEL GAS SUPPLY
CORPORATION,
Plaintiffs,
v.

DECISION AND ORDER
17-CV-141S

TOWN OF PENDLETON,
Defendant.

I.

Introduction

Before this Court is Plaintiffs’ Motion 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).

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 2 of 38

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 Plaintiffs’ motion 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, Plaintiffs’ Motion for Partial Summary Judgment
(Docket No. 10) is granted in part, granting declaratory judgment to them.
II.

BACKGROUND

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
2

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 3 of 38

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. ¶¶ 603

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 4 of 38

64), delaying the siting, construction, and operation of the compression station (id. ¶¶ 7475, 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

4

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 5 of 38

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. Plaintiffs’ Motion 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

5

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 6 of 38

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 applied (id. ¶ 9).

The Town argued that alternative sites outside of

Pendleton should be chosen for the compression station (id. ¶ 11). In granting the
Certificate, FERC disagreed and found that the compression station should be built on
the proposed Killian Road site in Pendleton (see id. ¶ 12), deeming the alternative sites
proposed “were more severely constrained for space or had considerable additional
resource impacts, including proximity to residences, wetland impacts, and forestclearing,” (Certificate ¶ 101; Docket No. 10, Pls. Statement ¶ 13; see also Docket No. 10,
Pls. Statement ¶¶ 14-16 (FERC considering merits of alternative sites)).

FERC

considered other environmental concerns for the Pendleton site (see Docket No. 10, Pls.
Statement ¶¶ 17 (zoning issues), 18-25, citing Certificate ¶¶ 125 (zoning), 194 (local land

6

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 7 of 38

use laws), 127-28 (noise), 116 (wetlands), and Docket No. 10, Pls. Atty. Aff. Ex. B, FERC
Environmental Assessment, at 92-97, 95).
Aware of the Certificate, the Town nevertheless denied a building permit for the
compressor station (Docket No. 10, Pls. Statement ¶¶ 26-27). Without a permit, Plaintiffs
contend that the Town could issue a stop work order with potential penalties and
incarceration (id. ¶ 28). Plaintiffs declare that the Town’s interpretation and application
of its Code conflict with the Certificate (id. ¶ 29).
Plaintiffs note that FERC issued the Certificate after conducting an environmental
assessment of the site (Docket No. 10, Pls. Atty. Aff. ¶ 6, Ex. B). This assessment
considered the water resources implicated by the project (id., Ex. B at 34-54) as well as
above ground facility alternatives for the Pendleton compressor station (id. at 166-75).
Defendant Town contends that the Natural Gas Act does not provide FERC with
the authority to determine permissible land use under the Town’s zoning Code (Docket
No. 14, Def. Memo. at 21-24). The Town notes that the Natural Gas Act does not
expressly preempt matters other than the siting, construction, expansion, or operation of
liquid natural gas terminal (id. at 25, quoting 15 U.S.C. § 717b(e)(1)). Instead, conflict
preclusion should apply where the federal and local interests clash (id. at 26-27). Citing
Oneok, Inc. v. Learjet, 575 U.S. 373 (2015), the Town concludes that field preemption
was rejected (id. at 29-32). The Town also concludes that the Natural Gas Act does not
occupy the field of local regulation of natural gas facilities (id. at 32-33). The Town urges
this Court abstain pending final resolution by the FERC and agencies determining nonFERC approvals (such as the DEC and water quality permits) (id. at 33-36), arguing that
the parallel federal agency proceedings are similar to a parallel state judicial proceeding
7

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 8 of 38

for Colorado River abstention, Colorado River Water Conservation District v. United
States, 424 U.S. 800 (1976) (id. at 33-36).
The Town also argues that this case is not ripe because Plaintiffs lack all necessary
federal approvals for the compression station, in particular both sides’ appeals to the
FERC (id. at 36-38) and approvals from New York State (id. at 38-39) (presumably the
Clean Water Quality certification from the DEC).

The Town notes that the FERC

Certificate is not final given the pending appeal (id. at 38).

Also, Plaintiffs did not

challenge the denial of the building permit by appeal to the Town Zoning Board of Appeal,
hence not administratively exhausting that remedy (id. at 39).
In their reply (Docket No. 15), Plaintiffs deny that this Court should abstain because
they were injured and would continue to be until the compression station issue is resolved
(id. at 1-3). They contend the dispute is ripe because all pre-construction conditions did
not need to be met before this action could be filed (id. at 4-5, citing Pacific Gas & Elec.
Co. v. State Energy Res. Conserv. and Dev. Comm’n, 461 U.S. 190, 198 (1983)).
Furthermore, they contend that this building permit dispute did not need to be exhausted
before the Pendleton Zoning Board of Appeal because the Natural Gas Act does not
require exhaustion before seeking federal judicial relief (id. at 5). Plaintiffs have not
waived their right to appeal (id. at 5 n.6) and later appealed (see Docket No. 24, Pls.
Letter motion of Nov. 30, 2017, at 5). Further, there was no parallel proceeding to justify
abstention (Docket No. 15, Pls. Reply Memo. at 6-7). They next argue that conflict
preemption applies to have the Natural Gas Act preempt the Town Code because
Congress preempted the field (id. at 7-10), arguing that the Town misinterprets Oneok,
Inc., supra, 575 U.S. 373 (id. at 8-9).
8

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 9 of 38

In the Town’s Sur-Reply (Docket No. 16), the Town urges this Court to consider
facts it raises in its Memorandum as establishing issues of material fact to deny Plaintiffs’
motion for summary judgment (id. at 1-2), notwithstanding this Court’s Local Rule 56. The
Town points out that the DEC (on April 7, 2017) denied Plaintiffs’ a water quality
certification during the pendency of this motion, therefore this action is not ripe (id. at 2,
Ex. A).

The Town disputes Plaintiffs’ conclusion that the Certificate authorized the

compressor station in Pendleton (id. at 3-4). The Town disputes factual assertions of
Plaintiffs, such as Plaintiffs would face penalties if they proceeded with construction
without the building permit and the fact Plaintiffs have pending a rehearing request before
FERC (id. at 4-5), although the Town has not presented a counterstatement of fact. The
Town argues that Plaintiffs do not have a final approval authorizing construction since
they sought a rehearing before FERC (id. at 5), thus this case is not ripe.
The Town next distinguishes this Court’s decision in National Fuel Gas Supply v.
Town of Wales, No. 12CV34, 2013 WL 5739033 (W.D.N.Y. Oct. 22, 2013) (Skretny, C.J.)
(hereinafter “Town of Wales”), since the zoning permit in Wales sought to regulate the
noise levels at National Fuel’s proposed facility when noise levels were considered by
FERC and thus preempted local control, whereas the Pendleton building permit
considered siting the compression station (id. at 5-7). The Town continues to argue that
this case was not ripe because Plaintiffs did not have authorization for construction (id. at
7-9). The Town relies upon the decision from the Northern District of New York in
Constitution Pipeline Co., LLC v. New York State Dep’t of Envtl. Conserv. (Delaware
Riverkeeper Network), No. 1:16CV568 (N.D.N.Y. Mar. 16, 2017), where that court found
a similar natural gas company suffered no actual or imminent injury to have standing upon

9

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 10 of 38

the DEC’s denial of a similar water quality certification for Constitution Pipeline’s project
(id. at 7-8, Ex. B).
The extensive supplementation of authorities in this case followed discussing the
status of Plaintiffs’ Clean Water Act application with the DEC and whether such
authorization is necessary.

Defendant Town first cited the Second Circuit decision

Constitution Pipeline v. New York State Dep’t of Envtl. Conserv. (Stop the Pipeline),
868 F.3d 87 (2d Cir. 2017), cert. denied, 584 U.S. ___, 138 S.Ct. 1697 (2018) (cf. Docket
No. 16, Def. Sur-Reply at 7, Ex. B, Constitution Pipeline (Delaware Riverkeeper
Network)), that the DEC could uphold clean water quality standards and block this gas
pipeline project (Docket Nos. 21, 22).
Plaintiffs moved to respond (Docket No. 24, Pls. Motion for Leave to Supplement,
cf. Docket No. 27, Order granting leave) distinguishing the importance of the Second
Circuit’s Constitution Pipeline (Stop the Pipeline) decision for this case (Docket No. 24,
Pls. Memo. at 1-3). They cite to a FERC order regarding DEC waiver of Section 401 of
Clean Water Act holding that the DEC cannot block a FERC-approved project (id. at 3-4,
Ex. B, citing 160 FERC ¶ 61,065). They also argue that the New York State Supreme
Court decided the condemnation sought in National Fuel v. Schueckler, Index No. 45092
(N.Y. Sup. Ct. Allegany County May 26, 2017), rev’d, 167 A.D.3d 128, 88 N.Y.S.3d 305
(4th Dep’t 2018), rev’d, No. 29, ___ N.Y.3d ___, ___ N.Y.S.3d ___, 2020 WL 3453939
(N.Y. June 25, 2020) (cf. Docket No. 44, Pls. Motion to Supplement Authority), after
National Fuel received a FERC Certificate; that court did not await other proceedings or
decline to act on ripeness grounds (Docket No. 24, Pls. Memo. at 4-5, Ex. D). The
Supreme Court there rejected arguments now raised by the Town that the action was
10

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 11 of 38

premature, that National Fuel lacked standing and that the FERC Certificate there was
only conditional which National Fuel had yet to meet all conditions (id. at 4-5, Ex. D).
Plaintiff Empire Pipeline states that it appealed the denial of the building permit to the
Pendleton Zoning Board of Appeals with that appeal stayed pending resolution of this
case (id. at 5-6, Ex. E).
The Town responded to the motion for leave to supplement asserting that Plaintiffs’
arguments were illogical and irrelevant, distinguishing Plaintiffs’ discussion of Constitution
Pipeline (Stop the Pipeline) (Docket No. 25, Def. Memo. at 2-4). Plaintiffs replied that the
Town distorted and misquoted Constitution Pipeline and distorts Plaintiffs’ standing
position (Docket No. 26, Pls. Memo.). They deny that this case is about the DEC’s denial
of water quality certification but about preventing the Town from vetoing the FERCapproved project (id. at 3).
Plaintiffs further supplemented by noting another New York Supreme Court,
Niagara County, action by Empire Pipeline against the DEC, Matter of Empire Pipeline
Inc. v. NYSDEC, Index No. E16542/2017 (N.Y. Sup. Ct. Niagara County Mar. 30, 2018)
(Docket No. 31, Pls. Atty. Aff. Ex. A 1), rejecting arguments the Town now raised in
opposition to this case. Justice Daniel Furlong held that the state court had subject matter
jurisdiction and, relying upon New York Court of Appeals precedent, that the DEC permit
was preempted by federal law (id., Pls. Atty. Aff. ¶ 10 and page 3 n.2, Ex. A), see also
Matter of Niagara Mohawk Power Corp. v. New York State Dep’t of Envtl. Conserv.,
82 N.Y.2d 191, 604 N.Y.S. 18 (1993) (preemption by the Federal Power Act, 16 U.S.C.

1

See Docket Nos. 28 (arguments in letter format); cf. Docket No. 30, text Order denying leave to
file letter motion, Docket No. 28, without prejudice.

11

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 12 of 38

§§ 791a, et seq.). Plaintiffs note that the DEC here waived its opposition to issuing the
water quality certification by being late and that issue then was both before FERC (later
referred to as the “Waiver Order,” discussed below) and the DEC’s purported denial was
on appeal before the Second Circuit (Docket No. 31, Pls. Atty. Aff. at page 2 n.1),
discussed below in a further supplemental filing (see Docket No. 40, Pls. Atty Decl. ¶ 2,
Ex. C; National Fuel v. Dep’t of Envtl. Conserv., 761 F. App’x 68 (2d Cir. 2919) (summary
Order)). The Town opposed, arguing the irrelevance of the Niagara County case to the
case at a bar (Docket Nos. 29 (also in letter format), 32). Plaintiffs replied that Niagara
County case was analogous (Docket No. 33).
Plaintiffs then submitted further briefing discussing the FERC Waiver Order, Order
on Rehearing and Motion for Waiver Determination under Section 401 of the Clean Water
Act, 164 FERC ¶ 61,084, 2018 WL 3751716 (Aug. 6, 2018) (“Waiver Order”), wherein the
agency asserted federal exclusivity (consistent with Town of Wales) (Docket No. 35, Pls.
Atty. Aff. Ex. A). Plaintiffs argue that this Waiver Order reaffirmed preemption that
supports summary judgment to Plaintiffs here. That Order held that National Fuel need
not obtain a water quality certification from the DEC because the DEC waived its
delegated authority through an untimely action. (Docket No. 35, Pls. Atty. Affirm. Ex. A.)
FERC also rejected the other arguments the Town now raises, with FERC asserting
exclusive federal jurisdiction over the pipeline project (Docket No. 35, Pls. Atty. Aff. ¶ 4,
Ex. A, Waiver Order, 164 FERC ¶ 61,084, ¶¶ 49-50, 2018 WL 5739033, at *12). FERC
then rejected the Town’s objections to siting the compression station, noting the
Commission’s consideration of alternative sites (id., Ex. A, Waiver Order, 164 FERC
¶ 61,084, ¶¶ 84-85, 2018 WL 5739033, at *21). FERC also addressed the Town’s noise

12

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 13 of 38

objections, rejecting application by the Town of state noise standards rather than federal
standards (id., Ex. A, Waiver Order 164 FERC ¶ 61,084, ¶¶ 86-88, 2018 WL 5739033, at
*22). The Town responded that the National Fuel-DEC dispute was not final, hence this
Court should not act because the matter was not yet ripe (Docket No. 36).
Plaintiffs then updated the Niagara County case, stating that National Fuel there
received summary judgment (Docket No. 40, Pls. Atty. Decl. Ex. A). FERC also issued
an order denying rehearing, 167 FERC ¶ 61,007, 2019 WL 1981663 (Apr. 2, 2019) (id.,
Pls. Atty. Aff. ¶ 18, Ex. B). Plaintiffs also reported the recent decision of the Second
Circuit, National Fuel v. Dep’t of Envtl. Conserv., 761 F. App’x 68 (2d Cir. 2019) (summary
Order), that they contend reached a similar result as this Court did in Town of Wales (id.,
Pls. Atty. Decl. ¶ 2, Ex. C; id., Pls. Memo. at 6). Plaintiffs cite the First Circuit’s decision
in Algonquin Gas Transmission, LLC v. Weymouth, Massachusetts, 919 F.3d 54 (1st Cir.
2019), reinforcing their arguments of conflict preemption; the First Circuit rejected the
Town of Weymouth’s attempt to halt FERC-approved compression stations by denying
permits (id., Pls. Memo. at 6-8).
Characterizing this supplement as re-argument of Plaintiffs’ case, the Town replied
in similar fashion (Docket No. 42). The Town contended that Plaintiffs still awaited finality
on the water quality certification from the DEC, contested before the FERC and then the
D.C. Circuit (id. at 1-4). The Town reasserted that the FERC’s Certificate “is not a final
decision until the conditions precedent to the Order are satisfied, and until National Fuel
so certifies to FERC” (id. at 2 n.1; see Docket No. 14, Def. Town Memo. at 38). The Town
then distinguished Algonquin Gas Transmission and the Niagara County Supreme Court
decision in National Fuel v. DEC (Docket No. 42, Town Supp’al Memo. at 5-8, 4).
13

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 14 of 38

Plaintiffs replied that the Waiver Order was not appealed or stayed (Docket No. 43,
Pls. Reply Memo. at 1-3; id., Pls. Atty. Decl. ¶¶ 2-3). They contended that local land use
ordinances are subject to federal preemption (Docket No. 43, Pls. Reply Memo. at 3-5),
explaining Oneok and distinguishing the Town’s construction (id. at 4-5). They also point
out that the Town conceded conflict preemption and hence is opposite to its argument
that local land use ordinances are not subject to preemption (id. at 5-6). Plaintiffs argued
that Justice Furlong’s decision in Matter of Empire Pipeline v. NYSDEC, Index
No. E161542/2017, is relevant because it eliminated one roadblock to Plaintiffs’ project
(id. at 6).
C. FERC Proceedings
To understand the administrative issues in this case, analysis of the administrative
proceedings and some ancillary to Plaintiffs’ gas pipeline project is in order. Plaintiffs
applied to construct the pipeline project (including compression stations) and the FERC
issued the Certificate, Order Granting Abandonment and Issuing Certificates, Nos. CP15115-000, CP15-115-001, 158 FERC ¶ 61,145, 2017 WL 496277 (Feb. 3, 2017) (Docket
No. 1, Compl. Ex. A), stay denied, 160 FERC ¶ 61,043, 2017 WL 3835866 (Aug. 31,
2017). According to the FERC’s environmental assessment, Plaintiffs had to obtain
numerous permits and approvals from various governments, including water quality
certification from the DEC (Docket No. 10, Pls. Ex. B, FERC Environmental Assessment
at 19-21, 21). The list of permits, while not comprehensive, did not include town or zoning
permits (see id. at 19).
Plaintiff National Fuel sought reconsideration of rate determination in the
Certificate and sought clarification or a rehearing, National Fuel Gas Request for
14

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 15 of 38

Reconsideration and Clarification, Nos. CP15-115-000, CP15-115-001 (Mar. 3, 2017)
(Docket No. 7, Ans., Ex. C).

FERC decided this with other applications in 2018,

164 FERC ¶ 61,084, 2018 WL 3751716 (Aug. 6, 2018).
The Town, with other applicants, also sought a stay of the Certificate, which the
FERC denied on August 31, 2017, 160 FERC ¶ 61,043, 2017 WL 3835866 (see also
Docket No. 14, Town Memo. in Opposition Ex. G (Town’s Petition for Rehearing and
Request for Stay to FERC).

FERC issued this denial of the Town (with affected

landowners who sought the stay) because they failed to explain “why they would suffer
irreparable injury in the absence of a stay or otherwise address any of the factors used
by the [FERC] to evaluate requests for stay,” 160 FERC ¶ 61,043, ¶ 7, 2017 WL 3835866,
at *2.
FERC then issued an Order on Rehearing and Motion for Waiver Determination
under Section 401 of the Clean Water Act, 164 FERC ¶ 61,084, 2018 WL 3751716
(Aug. 6, 2018) (Waiver Order under Clean Water Act Sec. 401), denying rehearing sought
by Plaintiffs (Docket No. 35, Pls. Atty. Aff., Ex. A; see Docket No. 40, Pls. Memo. at 3
(“Waiver Order”)).

DEC then sought reconsideration of the FERC Waiver Order,

167 FERC ¶ 61,007, 2019 WL 1981663 (Apr. 2, 2019) (Order denying Rehearing, No. 40,
Pls. Atty. Decl. Ex. B). This Waiver Order addressed reconsideration and rehearing by
National Fuel (id., 167 FERC ¶ 61,007, at ¶¶ 25-32, 2019 WL 1981663, at *6-8). DEC
also has appealed the Waiver Order to the United States Court of Appeals for the Second
Circuit, NYSDEC v. FERC, Case No. 19-1610, and that appeal is pending as of June 3,
2020, the date of the last filing in this case (see Docket No. 43, Pls. Atty. Decl. ¶ 6).

15

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 16 of 38

According to Plaintiffs, they did not appeal the FERC’s Waiver Order (Docket
No. 43, Pls. Atty. Decl. ¶ 2; id., Pls. Memo. at 1-2). National Fuel has a separate appeal
stayed before the D.C. Circuit, National Fuel Gas Supply Corp. v. FERC, Case No. 171143 (cf. Docket No. 42, Def. Town Supp’al Memo. at 1), on whether FERC’s Secretary
had the authority to issue Tolling Orders in 2017 when the FERC lacked a quorum (to
forestall judicial review pending action by FERC) (Docket No. 43, Pls. Atty. Decl. ¶¶ 3-4;
id., Pls. Memo. at 2; see also 164 FERC ¶ 61,084, ¶¶ 4-5, 2018 WL 3751716, at *1). The
D.C. Circuit stayed that appeal pending its decision in another appeal of FERC, Allegheny
Defense Project v. FERC, No. 17-1098, National Fuel Gas Supply, supra, No. 17-1143,
per curiam Order of Mar. 12, 2020.
On June 30, 2020, the D.C. Circuit decided Allegheny Defense Project, No. 171098, 2020 WL 3525547, with mandate pending on July 7, 2020. There, the en banc
D.C. Circuit held that FERC Tolling Orders were “not the kind of action on a rehearing
application that can fend off a deemed denial and the opportunity for judicial review,”
2020 WL 3525547, at *1, see id., at 14, 15; see also 15 U.S.C. § 717r(a) (rehearing
exhaustion requirement before seeking judicial review of FERC action). Accordingly, the
National Fuel Gas parties were to move within 30 days of issuance of the Allegheny
Defense Project mandate, National Fuel Gas Supply, supra, No. 17-1143, per curiam
Order of Mar. 12, 2020, they would have to act by approximately August 7, 2020. For
purposes of this Court, the intricacies of the Natural Gas Act exhaustion provision of 15
U.S.C. § 717r(a) and FERC Tolling Orders are not necessary to decide this motion; thus,
this Court did not delay this decision for the parties to await action on National Fuel’s

16

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 17 of 38

Tolling Order appeal pending in the D.C. Circuit following the Allegheny Defense Project
decision.
III.

DISCUSSION

A. APPLICABLE STANDARDS
1. Motion for Summary Judgment
Rule 56 of the Federal Rules of Civil Procedure provides that “[t]he court shall grant
summary judgment if the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law,” Fed. R. Civ. P. 56(a). A
fact is “material” only if it “might affect the outcome of the suit under governing law,”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A “genuine” dispute, in turn,
exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party,” id. In determining whether a genuine dispute regarding a material fact
exists, the evidence and the inferences drawn from the evidence “must be viewed in the
light most favorable to the party opposing the motion,” Adickes v. S.H. Kress & Co.,
398 U.S. 144, 158-59 (1970) (internal quotations and citations omitted).
Summary judgment is appropriate only if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment
as a matter of law. Ford v. Reynolds, 316 F.3d 351, 354 (2d Cir. 2003); Fed. R. Civ.
P. 56(a). The party seeking summary judgment has the burden to demonstrate that no
genuine issue of material fact exists. In determining whether a genuine issue of material
fact exists, a court must examine the evidence in the light most favorable to, and draw all
inferences in favor of, the nonmovant. Ford, supra, 316 F.3d at 354.
17

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 18 of 38

The Local Civil Rules of this Court require that movant and opponent each submit
“a separate, short, and concise” statement of material facts, and if movant fails to submit
such a statement it may be grounds for denying the motion, W.D.N.Y. Loc. Civ.
R. 56(a)(1), (2). The movant is to submit facts in which there is no genuine issue, id.
R. 56(a)(1), while the opponent submits an opposing statement of material facts as to
which it is contended that there exists a genuine issue to be tried, id. R. 56(a)(2). Each
numbered paragraph in the movant’s statement will be deemed admitted unless
specifically controverted by a correspondingly numbered paragraph in the opponent’s
statement, id. Absent such an opposing statement, the facts alleged by the movant are
deemed admitted. Each statement of material fact is to contain citations to admissible
evidence to support the factual statements and all cited authority is to be separately
submitted as an appendix to that statement, id. R. 56(a)(3).
Summary judgment is “a permissible vehicle in which to grant a permanent
injunction,” U.S. S.E.C. v. Monarch Funding Corp., No. 85 CIV. 7072(LBS), 1996 WL
348209, at *9 (S.D.N.Y. June 24, 1996) (citation omitted); Town of Wales, supra, 2013 WL
5739033, at *3.
2. Declaratory Judgment
For declaratory judgment on a motion for summary judgment, as held in Town of
Wales, supra, 2013 WL 5739033, at *3,
“‘[t]he merits’ of such a motion ‘may be properly asserted by the parties in
a motion for summary judgment.’ Allstate Ins. Co. v. Martinez, No. 3:11
CV574 VLB, 2012 WL 1379666, at *4 (D.Conn. Apr.20, 2012). ‘[D]istrict
courts possess discretion in determining whether and when to entertain an
action under the Declaratory Judgment Act, even when the suit otherwise

18

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 19 of 38

satisfies subject matter jurisdictional prerequisites.’ Wilton v. Seven Falls
Co., 515 U.S. 277, 282 (1995).”
Under the Declaratory Judgment Act, “any court of the United States . . . may declare the
rights and other legal relations of any interested party seeking such declaration,”
28 U.S.C. § 2201(a). “It is well-settled that the trial court’s decision to exercise declaratory
jurisdiction is a discretionary one,” Sheet Metal Div. v. Local 38 of the Sheet Metal
Workers Int’l Ass’n, 208 F.3d 18, 22 (2d Cir. 2000); Islander E. Pipeline Co., L.L.C. v.
Blumenthal, 478 F. Supp. 2d 289, 297 (D. Conn. 2007).
3. Natural Gas Act and Preemption
State regulations that interfere with FERC’s regulatory authority under the Natural
Gas Act over the transportation of natural gas are preempted, Schneidewind v ANR
Pipeline Co., 485 U.S. 293, 310 (1988); see Dominion Transmission, Inc. v. Summers,
723 F.3d 238, 245 (D.C. Cir. 2013) (state and local regulation is preempted by the Natural
Gas Act to the extent it conflicts with federal regulation or would delay the construction
and operation of a facility approved by the FERC) (see Docket No. 1, Compl. ¶ 10, Ex. A,
FERC Certificate ¶ 194 & n.267). “When a state regulation ‘affect[s] the ability of [FERC]
to regulate comprehensively . . . the transportation and sale of natural gas, and to achieve
the uniformity of regulation which was an objective of the Natural Gas Act’ or presents the
‘prospect of interference with the federal regulatory power,’ then the state law may be
pre-empted even though ‘collision between the state and federal regulation may not be
an inevitable consequence,’” Schneidewind, supra, 485 U.S. at 310, quoting Northern
Natural Gas Co. v. State Corp. Comm’n of Kan., 372 U.S. 84, 91-92 (1963)). The Second
Circuit in National Fuel Gas v. Public Service Commission, 894 F.2d 571, 579 (2d Cir.
1990)) held that New York’s environmental regulations of plaintiff’s FERC-approved
19

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 20 of 38

project were preempted under Schneidwind, see 485 U.S. at 293; Islander E. Pipeline v.
Blumenthal, supra, 478 F. Supp. 2d at 294.
Plaintiffs argue that the United States Constitution’s Supremacy Clause requires
the Natural Gas Act (and FERC proceedings) preemption of the Town Code.

The

Supremacy Clause states
“the Constitution, and the Laws of the United States which shall be made in
Pursuance thereof; and all Treaties made, or which shall be made, under
the Authority of the United States, shall be the supreme Law of the Land;
and the Judges in every State shall be bound thereby, any Thing in the
Constitution or Laws of any State to the Contrary notwithstanding.”
U.S. Const. art. VI, cl. 2. Congress may pre-empt, “i.e., invalidate a state law through
federal legislation,” Oneok, supra, 575 U.S. at 376, and may do so implicitly, id. at 377;
see Sprietsma v. Mercury Marine, a Div. of Brunswick Corp., 537 U.S. 51, 64 (2002).
Preemption may occur through “field,” that is, Congress intends to foreclose any state
regulation in the area, or “conflict,” where “compliance with both state and federal law is
impossible” or where “the state law ‘stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress,’” California v. ARC America
Corp., 490 U.S. 93, 100, 101 (1989) (quoting Hines v. Davidowitz, 312 U.S. 52, 67
(1941)); Oneok, supra, 575 U.S. at 377. The First Circuit in Algonquin Gas Transmission
noted that conflict preemption is the narrower ground than field preemption, 919 F.3d at
63.
4. Ripeness
The Town argues that this action is not yet ripe (Docket Nos. 14, Def. Memo. at
36-28; 16, Def. Sur-Reply at 2, 5). Ripeness occurs when a case matures to a point that
it warrants a decision, 13B Charles A. Wright, Arthur R. Miller & Edward H. Cooper,
20

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 21 of 38

Federal Practice and Procedure—Civil § 3532, at 365 (3d ed. 2008).

Ripeness is

determined when the issue is fit for judicial decision and the hardship to the parties of
withholding court consideration, id. at 369; Pacific Gas & Elec., supra, 461 U.S. at 201
(quoting Abbot Labs. V. Gardner 387 U.S. 136, 148049 (1967)).
The Town’s argument, however, is one of standing (see Docket No. 16, Def. SurReply at 8), see Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (constitutional
minimum for standing plaintiff must have suffered an injury in fact, causally connected
with conduct complained of, and it is likely and not speculative that injury would be
redressed by favorable decision).
5. Abstention
Abstention doctrines often involve the federalism interaction of federal Courts with
state courts, see generally 17A Charles A. Wright, Arthur R. Miller, Edward H. Cooper,
and Vikram D. Amar, Federal Practice and Procedures--Jurisdiction § 4241, at 306 (3d
ed. 2008). The doctrine is the by-product of potential concurrent jurisdiction between the
federal judiciary and the state courts or administrative agencies. Commentators describe
four types of abstention recognized by the courts: Pullman (Railroad Comm’n of Tex. v.
Pullman Co., 312 U.S. 496 (1941)) avoidance of federal constitutional question when
case can be decided on state law; Burford (Burford v. Sun Oil Co., 319 U.S. 315 (1943))
abstention in favor of state administration of its laws (including state agency action);
abstention for unsettled questions of state law; and Colorado River (Colorado River Water
Conserv. Dist. v. United States, 424 U.S. 800, 818-19 (1976)) abstention to avoid
duplicative federal and state litigation, id. at 295-98, 315-18. Abstention doctrine is for
sound judicial administration in the context of “duplicative, concurrent federal-state
21

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 22 of 38

litigation,” 17A Moore’s Federal Practice Ch. 122, Synopsis (emphasis added) (2020).
This applies when there is a state court proceeding pending, Aurelius Capital Master, Inc.
v. MBIA Ins. Corp., 695 F. Supp. 68, 73 (S.D.N.Y. 2010) (emphasis added).
The Colorado River doctrine, cited by the Town (see Docket No. 14, Def. Memo.
at 34-36), addresses parallel, duplicative litigation; for example, a repetitive lawsuit where
a plaintiff files the same suit in federal and state courts, see 17A Moore’s Federal Practice,
supra, § 122.90. Colorado River abstention is exceptional, and this Court has a duty to
adjudicate matters properly before it, Niagara Mohawk Power Corp. v. Hudson RiverBlack River Regulating Dist., 673 F.3d 84, 100 (2d Cir. 2012); see also 17A Moore’s
Federal Practice, supra, § 122.91. Exceptional circumstances for exercising Colorado
River abstention are determined by review of six factors, including the presence of a
federal law issue, and whether the state forum would adequately protect the parties’
interest, see Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25-26
(1983); see also 17A Moore’s Federal Practice, supra, § 122.92.
Another recognized basis for abstention is to avoid deciding unsettled questions
of state law where there is a proceeding pending before a state administrative agency as
a matter of deference to that agency, Burford, supra, 319 U.S. 315. Such deference to
state agency procedures is appropriate in some circumstances, 17A Moore’s Federal
Practice, supra, § 122.50. Here, however, there is no question of state law being raised
or a state agency being directly involved (despite Plaintiffs’ dispute with the DEC
regarding the Clean Water Act water quality certification for this project).
Burford requires that
“Where timely and adequate state-court review is available, a federal court
sitting in equity must decline to interfere with the proceedings or orders of
22

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 23 of 38

state administrative agencies: (1) when there are “difficult questions of state
law bearing on policy problems of substantial public import whose
importance transcends the result in the case then at bar”; or (2) where the
“exercise of federal review of the question in a case and in similar cases
would be disruptive of state efforts to establish a coherent policy with
respect to a matter of substantial public concern,”
New Orleans Pub. Serv., Inc. v. Council of New Orleans, 491 U.S. 350, 361 (1989); see
17A Moore’s Federal Practice, supra, § 122.52. “The Second Circuit looks at several
factors to determine the applicability of Burford abstention, including (1) the degree of
specificity of the state regulatory scheme, (2) the need to give one or another debatable
construction to a state statute, and (3) whether the subject matter of the litigation is
traditionally one of state concern,” 17A Moore’s Federal Practice, supra, § 122.56, citing
Planned Parenthood of Dutchess-Ulster, Inc. v. Steinhaus, 60 F.3d 122, 127 (2d Cir.
1995).
Federal courts have the discretion in these abstention contexts to abstain and
decline the exercise of jurisdiction, Niagara Mohawk, supra, 673 F.3d 100-01. Abstention,
like preemption, is generally disfavored with federal courts having a “‘virtually unflagging
obligation’ to exercise their jurisdiction,” id. at 100 (quoting Colorado River, supra,
424 U.S. at 817). In the purported parallel federal litigation/state administrative agency
situation, deference to the state agency may not necessarily occur. In Zablocki v. Redhail,
434 U.S. 374, 379 n.5 (1978), the Court did not abstain from a constitutional challenge to
a requirement for issuance of marriage licenses that child support payments be current.
As noted by one commentator, “the Court explained that in contrast to Burford, the case
did not involve complex issues of state law, resolution of which would be disruptive to
state efforts to establish a coherent policy with respect to a matter of substantial public

23

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 24 of 38

concern,” or that resolution of the federal question might result in overturning a state
policy, 17A Moore’s Federal Practice, supra, § 122.51.
Abstention also is not available if this Court has exclusive jurisdiction over the
matter, id., § 122.06.
6. Exhaustion of Administrative Remedies
Finally, courts generally expect a party challenging agency action to first exhaust
available administrative remedies, 33 Charles A. Wright, Charles H. Koch, Jr., and
Richard Murphy, Federal Practice and Procedure § 8363, at 214 (2d ed. 2018). It “serves
the twin purposes of protecting administrative agency authority and promoting judicial
efficiency,” McCarthy v. Madigan, 503 U.S. 140, 145 (1992). Distinct from finality, “the
exhaustion requirement generally refers to administrative and judicial procedures by
which an injured party may seek review of an adverse decision and obtain a remedy if the
decision is found to be unlawful or otherwise inappropriate,” Williamson County Regional
Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 193 (1985);
33 Federal Practice and Procedure § 8363, at 215. Exhaustion may be imposed by
statute, regulation, or by court decision, 33 Federal Practice and Procedure § 8363, at
215. Exhaustion is an affirmative defense and can be waived, id. at 216. Absent (as with
the Natural Gas Act) a statutory exhaustion requirement, courts “apply a prudential,
judicially-developed form of the doctrine [of exhaustion] that generally contemplates that
litigants should exhaust administrative remedies but also allows judicial discretion to
excuse this requirement,” id. at 220-21 & n.29; see McCarthy, supra, 503 U.S. at 144.

24

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 25 of 38

B. Summary Judgment and Facts
This Court first must determine if there are material issues of fact in Plaintiffs’
summary judgment motion. The Town did not file a Rule 56 statement opposing the facts
asserted by Plaintiffs in their motion for summary judgment. Instead, the Town now cite
to facts asserted in its Memoranda (Docket No. 16, Def. Sur-Reply at 1-2, 4; see Docket
No. 14, Def. Memo. at 11-21). This Court’s Local Civil Rule 56, however, requires
opponent to summary judgment like the Town to submit a response to each numbered
statement Plaintiffs claim are facts not in dispute; absent such an opposing statement
“the moving party’s statement of material facts may be deemed admitted for purposes of
the motion unless specifically controverted by a correspondingly numbered paragraph in
the opposing statement,” W.D.N.Y. Loc. Civ. R. 56(a)(2). The purpose of this rule is to
provide to this Court what the parties believe to be the uncontroverted and controverted
facts with reference to materials in the records supporting that factual assertion. The
Town is correct that Federal Rule 56(c)(1) does not specify the manner for an opponent
to raise material issues of fact (see Docket No. 16, Def. Sur-Reply at 1); this Court by
local rule (Local Civil Rule 56(a)(2)) has specified the appropriate method. The Town has
not followed that method; instead the Town asserted its version of the facts within legal
memoranda and attached exhibits (see Docket No. 14, Def. Exs. A-H; Docket No. 16,
Def. Sur-Reply, Ex. A). Therefore, the facts alleged by Plaintiffs not to be in dispute will
be deemed admitted, despite contrary arguments raised by the Town in unsworn
Memoranda of Law.
C. Preemption

25

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 26 of 38

In Oneok, the parties contested whether the Natural Gas Act preempted the field
of gas price regulation to preclude state antitrust laws to apply to gas rate setting. No
one claimed that federal statute expressly preempted state law or that the state suits
conflicted with federal law. Oneok, supra, 575 U.S. at 377; see id. at 390. The Court held
that Congress had not preempted the field to preclude state antitrust laws applying to
natural gas rates, id. at 385, 387, 390 (see Docket No. 14, Def. Memo. at 29-31). The
Court then recognized that conflict preemption “should prove sufficient to address” any
conflict between federal gas law and state antitrust law, noting that it was not at issue in
that case because none of the parties argued conflict preemption, id. at 390, see also id.
at 377.
Thus, the Town is correct that the Natural Gas Act does not expressly preempt
local zoning and land use laws. This Court need not determine whether the Natural Gas
Act preempts the field for construction and maintenance of the infrastructure to transport
natural gas in interstate commerce, see Algonquin Gas Transmission, supra, 919 F.3d at
63. Preemption here falls under the narrower conflict preemption doctrine.
This Court in Town of Wales, applied the doctrine that “‘matters sought to be
regulated by [The Town] were [ ] directly considered by the FERC, . . . such direct
consideration is more than enough to preempt [Town] regulation,’” 2013 WL 5739033, at
*4 (quoting Nat'l Fuel Gas Supply Corp. v. Pub. Serv. Comm'n, supra, 894 F.2d at 579
(citing Schneidewind, supra, 485 U.S. 293)); see also Islander E. Pipeline Co., LLC v.
Connecticut Dep't of Envtl. Prot., 482 F.3d 79, 90 (2d Cir. 2006)). This Court then held
that the Town of Wales’ noise ordinance permit was “plainly inconsistent and in conflict
with—and thereby preempted by—the FERC Certificate,” Town of Wales, supra,
26

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 27 of 38

2013 WL 5739033, at *4 (emphasis added). As with the noise issue in Town of Wales,
FERC here considered the disputed location for the compression station. The Town of
Pendleton’s zoning regulations conflicts with FERC’s approved determination for where
that station is to be built as part of this interstate gas pipeline.
Both sides introduce facts about the merits (or lack thereof) of the FERC-approved
Killian Road, Pendleton, New York, site for a gas compressor station (e.g., Docket No. 10,
Pls. Statement ¶¶ 6, 7, 13-25; Docket No. 14, Def. Memo. at 18-21). At issue here,
however, is not whether one site in Pendleton or a site is another town is optimal. FERC
resolved that issue in approving Plaintiffs’ application for the Killian Road site, considering
siting issues in the environmental review, and affirming that determination in the Waiver
Order, 164 FERC ¶ 61,084 ¶¶ 84-85, 2018 WL 3751716, at *21. As detailed in Algonquin
Gas Transmission, supra, 919 F.3d at 64, FERC regulations require the Commission to
consider environmental, siting, safety factors when issuing a Certificate, including an
environmental assessment, and require a pipeline developer to include with its application
“all information necessary to advise [FERC] fully concerning the . . . construction . . . for
which a certificate is requested,” 18 C.F.R. § 157.5(a); Algonquin Gas Transmission,
supra, 919 F.3d at 64. That information includes the location and size of proposed facility
and environmental reports on the projected local and environmental consequences,
Algonquin Gas Transmission, supra, 919 F.3d at 64; 18 C.F.R. § 157.14(a)(6)-(7), with
the environmental reports identifying (among topics) the land use, public health, safety,
and aesthetic consequences of the project, Algonquin Gas Transmission, supra, 919 F.3d
at 64; 18 C.F.R. § 380.12(j).

27

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 28 of 38

In the present case, FERC considered many of the topics the Town considers in
zoning the parcel that is intended for the compression station. The issue before this Court
is whether federal law preempts local zoning and land use regulations regarding the siting
of the compressor station. This Court holds that the Town’s zoning laws conflict with the
FERC Certificate and is thus preempted.
The Town argues that the FERC’s Certificate “is not a final decision until the
conditions precedent to the Order are satisfied, and until National Fuel so certifies to
FERC” (Docket No. 42, Def. Response Memo. at 2 n.1; see Docket No. 14, Def. Town
Memo. at 38), contra Islander E. Pipeline v. Blumenthal, supra, 478 F. Supp. 2d at 295
(town permit requirements preempted by FERC certificate and order), implying that town
permits and DEC water quality certificates were prerequisites to construction (hence town
building permits). First, Plaintiffs’ conditions under this Certificate do not require the prior
approvals the Town now argues, cf. 158 FERC ¶ 61,145 Ordering Paragraph (C), 2017
WL 496277, at *48. As the New York State Court of Appeals recently noted in Schueckler,
2020 WL 3453939, at *6,
“While it is true that the [Certificate] contains numerous ‘conditions’—
including, that of obtaining a water quality certificate and other preconstruction conditions that might affect the ultimate completion of the
project—these conditions cannot reasonably be understood to render the
certificate provisional . . . inasmuch as they are not conditions precedent to
the validity of the certificate itself.”
Next, finality of the FERC decision also is immaterial for determination of
preemption; the preemption question remains whether the Town Code can alter, delay,
or hinder this federal project (authorized by the Natural Gas Act) at whatever stage it
might be. If there is any finality applicable it is whether the Act of Congress is final.

28

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 29 of 38

The District of Connecticut held in its Islander East Pipeline v. Blumenthal case
that “requiring plaintiff [pipeline company] to obtain a state [Structures, Dredging and Fill]
permit for the pre-construction, construction, and operation of its federally authorized gas
pipeline conflicts with FERC’s orders certifying this project, and the permit requirement is
therefore preempted by the federal [Natural Gas Act],” 478 F. Supp. 2d at 291. There,
the court held that the Connecticut Structures, Dredging and Fill Act conflicted with the
comprehensive scheme for interstate natural gas sale under the Natural Gas Act and the
exclusive jurisdiction the Natural Gas Act confers upon FERC, id. at 294. Enforcement
of the Structures, Dredging, and Fill permit would prohibit or delay the federal project,
hence the District Court held that the permit requirement was preempted by the FERC
Orders “which has ‘exclusive jurisdiction over the transportation and sale of natural gas
in interstate commerce for resale,’” id. at 295.
In this case, the Town’s building permit is a similar delay or barrier to a federally
approved natural gas project. Thus, the Town’s building permit here is also preempted
by the Natural Gas Act.
This Court considered a similar FERC certificate order in Town of Wales, where
that certificate order said that local permits needed to be consistent with the certificate
and it did not “mean that state and local agencies may prohibit or unreasonably delay the
construction or operation of facilities approved by the Commission,” 2013 WL 5739033,
at *2. The Certificate in this case has nearly identical language (as stated above) (Docket
No. 1, ¶ 10, Ex. A, Certificate, 158 FERC ¶ 61,145, ¶ 194, 2017 WL 496277, at *47). As
was held in Town of Wales, the defendant Town of Pendleton’s permit here “is plainly
inconsistent and in conflict with—and thereby preempted by—the FERC Certificate,”
29

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 30 of 38

2013 WL 5739033, at *4. The fact that the Town of Wales considered a sound abatement
provision in the FERC certificate is not distinguishing. The point of the FERC certification
process is to deem interstate pipeline projects as consistent with the Natural Gas Act and
hence that Act preempts contrary state and local laws that may affect the project.
Therefore, Plaintiffs’ Motion for Partial Summary Judgment (Docket No. 10) is
granted on their preemption arguments.
D. Exhaustion of Administrative Remedies
The Town points to three different areas it believes Plaintiffs failed to exhaust their
administrative remedies before commencing this action:

the Town’s zoning appeal

process, the required state approvals, and the Certificate itself given Plaintiffs’ appeal
(Docket No. 14, Def. Memo. at 36-39; see Docket No. 16, Def. Sur-Reply at 7-9 (Plaintiffs
lack DEC water quality certification to commence construction).
Considering first Plaintiffs’ purported FERC appeal, they sought reconsideration
on a rate setting issue that FERC resolved, 164 FERC ¶ 61,084, 2018 WL 3751716,
rehearing denied, 167 FERC ¶ 61,007, 2019 WL 1981663. As stated above in reviewing
the administrative proceedings, plaintiffs did not appeal this decision to the D.C. Circuit,
(see Docket No. 43, Pls. Memo. at 1-2), thus, that decision is final. The matter pending
before the D.C. Circuit is on the issue of the authority of FERC to toll orders when it lacked
a quorum; no one here is challenging the legality of the Certificate based upon the
composition of FERC. Furthermore, Plaintiffs are not appealing FERC’s decision before
this Court to require exhaustion of administrative procedures before FERC.

30

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 31 of 38

As for the Town’s contention that state approvals were a prerequisite for this suit,
as the New York Court of Appeals found in Schueckler, supra, 2020 WL 3453939, at *6,
the conditions within the Certificate are “not conditions precedent to the validity of the
certificate itself.” FERC, in finding that the DEC waived and in denial of rehearing, the
agency concluded that “Congress expressly provided for projects to move forward without
state water quality certification when the state waives its authority,” 167 FERC ¶ 61,007,
¶ 19, 2019 WL 1981663, at *5. The First Circuit in Algonquin Gas Transmission rejected
similar arguments that the FERC Certificate there was conditional hence somehow lacked
preemptive effect, 919 F.3d at 65-66. For the same reason that case was ripe, id., the
court held that “FERC had conclusively and finally weighed the environmental, safety,
and siting considerations associated with this project in its [Certificate], and FERC’s
determination that the project is necessary and in the public interest is at this point only
‘conditional’ in that it awaits” state permits that, under Massachusetts’ process, required
a town permit and, ultimately, decision on the question of preemption, id. at 66.
As for the Town’s zoning appeal process, if federal law preempts (as was held
above), the Town’s administrative processes (including administrative or zoning board
appeals of the denied building permit) are also preempted.
This Court agrees with Plaintiffs’ argument (Docket No. 15, Pls. Reply Memo., at
5) that the Natural Gas Act does not have an exhaustion predicate before they could sue
to enforce its preemptive effect over Town ordinances. Thus, applying common law
exhaustion principles, Plaintiffs exhausted when they obtained the Certificate. This Court
also accepts Plaintiffs’ contention that there was no appeal from the FERC’s decision

31

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 32 of 38

(see Docket No. 43, Pls. Atty. Decl. ¶ 2; id., Pls. Memo. at 1-2), hence any exhaustion of
the FERC’s decision-making process has been met.
E. Abstention
The Town analogizes FERC proceedings for a parallel state court proceeding that
this Court should abstain in the face of the federal agency proceeding (see Docket No. 14,
Def. Memo. at 33-36). As Plaintiffs noted (Docket No. 15, Pls. Reply at 6-7), there is no
pending parallel state court proceeding, thus Colorado River abstention is not applicable.
Abstention doctrines arises from federalism and the relationship of federal judiciary with
the states (either their judiciary or agencies). What the Town appears to argue is ripeness
and Courts traditionally decline to act when an agency decision is not final, and the matter
is not ripe.
Possible abstention by federal Courts to not act in matters before federal agency
is under separation of powers and depends upon the grants of jurisdiction by Congress
to the Court and to the agency. Conceptually, it would be exhaustion of administrative
remedies that was discussed and dismissed above. The Town has not cited authority for
federal Courts abstaining in the face of pending federal agency action or showed that the
Natural Gas Act gave FERC exclusive jurisdiction over pending administrative matters
from judicial action. Again, this lawsuit is not challenging FERC’s action.
One court has rejected abstention in a similar circumstance, Midwestern Gas
Transmission Co. v. McCarty, 270 F.3d 536, 537-38 (7th Cir. 2001) (Posner, J.). A pipeline
company there sought a declaration that FERC had exclusive jurisdiction over bypass

32

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 33 of 38

arrangements. The Seventh Circuit reversed the district court abstention on Younger v.
Harris, 401 U.S. 37, 43-53 (1971), grounds, Midwestern Gas, supra, 270 F.3d at 537-38.
Burford abstention also is not applicable, see New Orleans Public Service, supra,
491 U.S. at 362; see also Sevigny v. Employers Ins. of Wausau, 411 F.3d 24, 27 (1st Cir.
2005) (noting New Orleans Public Service “quite possibly concerned with a threat to the
supremacy of the federal regulatory scheme if the meaning of the FERC order were left
to state court interpretation on review of the city council order”). As with New Orleans
Public Service (which involved rates set by FERC that plaintiff utility sought state agency
permission to pass along in rate increases) this “case does not involve a state-law claim,
nor even an assertion that the federal claims are ‘in any way entangled in a skein of statelaw that must be untangled before the federal case can proceed,’” Burford, supra,
491 U.S. at 361 (quoting McNeese v. Board of Educ. For Community Unit School Dist.
187, Cahokia, 373 U.S. 668, 674 (1963)); see also Public Util. Comm’n of Ohio v. United
Fuel Gas Co., 317 U.S. 456, 468-69 (1943) (state attempt to fix interstate gas rates
enjoined on preemption grounds, abstention not justified). Abstention is not required even
if “resolution of a federal question may result in the overturning of a state policy,” Zablocki,
supra, 434 U.S. at 380 n.5; New Orleans Public Service, supra, 491 U.S. at 363.
Where applicable, abstention is discretionary, this Court recognizes that the norm
is for judicial resolution of cases rather than avoidance by abstention.
declines to abstain here.

33

This Court

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 34 of 38

F. Ripeness
Finally, the Town argues that this action is not ripe since Plaintiffs lack final
authorization to build the project. The conditions in the Certificate need not be met before
Plaintiffs can assert federal preemption, see Pacific Gas & Elec., supra, 461 U.S. at 198.
Alternatively, if finality is required, as provided in the supplementation FERC
approved the project definitively on April 2, 2019, FERC Order Denying Rehearing,
167 FERC ¶ 61,007, 2019 WL 1981663 (Docket No. 40, Pls. Atty. Decl. ¶ 18, Ex. B). In
denying rehearing, FERC held that “Congress expressly provided for projects to move
forward without state water quality certification when the state waives its authority” (id.;
167 FERC ¶ 61,007, ¶ 19, 2019 WL 1981663, at *5).
The Town argues that this case is like the Northern District of New York decision
in Constitution Pipeline (Delaware Riverkeeper Network), slip op. Mar. 16, 2017 (Docket
No. 16, Def. Sur-Reply at 7-9, Ex. B). The plaintiff pipeline company in that case had
pending a challenged water quality certification before the DEC, see Constitution Pipeline
(Stop the Pipeline), supra, 868 F.3d 87. The DEC also stated that other permits were
pending. Plaintiff disagreed and sought a declaratory judgment that the other state
permits were preempted by the Natural Gas Act, Constitution Pipeline (Delaware
Riverkeeper Network), supra, slip op. at 3. As the Town notes here (Docket No. 16, Def.
Sur-Reply at 8), Judge Norman Mordue for the Northern District of New York held that
plaintiff had not alleged an actual injury for Article III standing because the DEC had yet
to act upon the permit applications, id. at 13. Inaction on plaintiff’s permit was held not to
constitute an actual injury for Article III subject matter jurisdiction, see id. The plaintiff

34

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 35 of 38

there also had not pled an actual injury in fact because its injury claims were speculative,
thus the Court lacked subject matter jurisdiction as well as plaintiff lacking standing.
Constitution Pipeline (Delaware Riverkeeper Network) is distinguishable. That
action was a challenge to the DEC’s denial of water quality certification. Plaintiffs’ action
here seeks a declaration about the Town’s building permit and whether the Natural Gas
Act preempts it for an approved gas pipeline project. Factually, that case and the one at
bar are similar in that both sets of plaintiffs seek natural gas pipelines and have pending
denial of DEC water quality certificates. The differences, however, between them are
stark. In Constitution Pipeline (Delaware Riverkeeper Network), the DEC had not yet
acted on the pipeline’s application for water quality certification when Judge Mordue ruled
thus depriving that plaintiff of an injury in fact, slip op. at 13. Plaintiffs here, however,
have applied to the DEC and are appealing the denial of that water quality certification.
Further, the proceeding that brings this case here is the Town’s inaction and later denial
of Plaintiffs’ building permit (see Docket No. 1, Compl. ¶¶ 93-98, 105-12; see also id.
¶¶ 60-64, 74-75, 77-90), a ripe dispute. These Plaintiffs have alleged an injury in fact
here, thus granting them standing.
Plaintiffs have multiple permits and applications before construction can begin on
the pipeline and compression station. The FERC Certificate is conditioned upon obtaining
these permits. Plaintiffs, however, do not gain standing (and their Complaint does not
become ripe) upon merely receiving every other permit or approval save the Town’s
building permit.

Plaintiffs’ challenge here is whether the Town’s permit process is

preempted by the Natural Gas Act. Plaintiffs have standing to raise this challenge and

35

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 36 of 38

they need not wait until they have in hand every other permit required for construction
and operation of the compression station and interstate pipeline.
The question of preemption here is ripe, see also Algonquin Gas Transmission,
supra, 919 F.3d at 62-63. The Town has denied a building permit. Looking at the agency
action (if necessary, to do so), the Certificate is final; any pending administrative action
involves rate setting that does not involve the issue presented in this action—whether a
town can deny a building permit for this federal gas line project. Hence, claims arising
from the Certificate are ripe. Town has not shown that Plaintiffs needed to exhaust all
permits required to construct and operate the compression station.
Therefore, Plaintiffs’ action is ripe; Plaintiffs need not exhaust FERC, DEC, or
Town administrative procedures prior to commencing this action challenging the
applicability of the Town’s permit process for a preemptive federal gas pipeline.
IV.

CONCLUSION

The Natural Gas Act preempts the Town’s land use ordinances to preclude the
Town to prevent construction by denying a building permit. Plaintiffs have standing to
raise this preemption and raising it now is ripe. Plaintiffs need not exhaust other remedies
before commencing this action. This Court will not exercise its discretion and abstain
from hearing this case; instead, this Court will do its duty and adjudicate this case.
This Court grants Plaintiffs’ Motion (Docket No. 10) for partial Summary Judgment.
Pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, this Court enters judgment
declaring that defendant Town of Pendleton’s building permit requirements are
preempted by the Natural Gas Act and FERC proceedings issued thereunder for Plaintiffs’
36

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 37 of 38

FERC-approved gas pipeline project, see Islander E. Pipeline v. Blumenthal, supra,
478 F. Supp. 2d at 297, including the siting, construction and operation of the Pendleton
compression station.
As was found in Town of Wales, supra, 2013 WL 5739033, at *6 and Islander East
Pipeline v. Blumenthal, supra, 478 F. Supp. 2d at 297, the permanent injunction also
sought by Plaintiffs here is unnecessary.

With the declaration of preemption, the

substantive equitable dispute between the parties is resolved. As with Town of Wales,
supra, 2013 WL 5739033, at *6, there is no evidence that the Town of Pendleton will
enforce the building permit requirement despite this Decision and Order; thus, Plaintiffs
have not shown irreparable harm or that there is a threat of continuing violation if the
Town enforced its building code requirements. Therefore, so much of Plaintiffs’ Motion
for Partial Summary Judgment (Docket No. 10) is denied in seeking an injunction.
As a result, a status conference will be held on Wednesday, August 26, 2020, at
2:15 pm (by Zoom teleconference), to discuss what is left for determination in this action,
including scheduling for briefing on Plaintiffs’ claimed damages (see Docket No. 1, Compl.
WHEREFORE Cl. (e), at page 25) and whether this Court should retain jurisdiction over
this project (see id., WHEREFORE Cl. (d), at page 25).
Plaintiffs’ latest motion (Docket No. 44) for leave to supplement authorities is
deemed moot; this Court above referenced the New York State Court of Appeals
decision in Schueckler, 2020 WL 3453939.

37

Case 1:17-cv-00141-WMS-HKS Document 45 Filed 07/14/20 Page 38 of 38

V.

ORDERS

IT IS HEREBY ORDERED, that Plaintiffs Empire Pipeline, Inc., and National Fuel
Gas Supply Corporation’s Motion for Partial Summary Judgment (Docket No. 10) is
GRANTED IN PART (granting declaratory judgment), DENIED IN PART (denying
injunctive relief),
IT IS FURTHER ORDERED, that judgment be entered declaring that defendant
Town of Pendleton’s building permit requirements are preempted by the Natural Gas Act
and FERC proceedings issued thereunder for Plaintiffs’ FERC-approved gas pipeline
project,
IT IS FURTHER ORDERED, that a status conference shall be held on
Wednesday, August 26, 2020, at 2:15 pm, by Zoom teleconference. Chambers will
provide directions for attending this conference,
IT IS FURTHER ORDERED, that Plaintiffs’ Motion for Leave to File Supplemental
Authority (Docket No. 44) is deemed moot.
SO ORDERED.

Dated:

July 14, 2020
Buffalo, New York

s/William M. Skretny
WILLIAM M. SKRETNY
United States District Judge

38