New York State Allows Water Grab

John Marvinstands beside Painted Post Water Train on Oct 24, 2014 (Photo by Peter Mantius)

Withdrawal Permits, Bulk Water Sales Approved Without Environmental Reviews

PAINTED POST, N.Y. — Barely a football field away from John Marvin’s modest house, 42 black railcars full of water sit waiting for the signal to begin rolling south to supply fracking drill pads across the Pennsylvania border. When the water train lurches and clanks through the village — often at pre-dawn hours — it sounds ear-splitting whistles at each street crossing.

“How is everybody supposed to sleep at night?” asked Marvin, who tends his stroke-slowed wife in the family living room. “And what happens if they deplete our water supply? Do we go to water rationing?”

Painted Post siphons water from a shallow, rain-dependent aquifer it shares with several neighboring communities, including the town of Corning. In 2012 the village signed a five-year deal reportedly worth up to $20 million with a subsidiary of Royal Dutch Shell to sell up to 1 million gallons a day used to frack Shell’s natural gas wells in Pennsylvania. The village has called the sale a routine disposal of “surplus property.” 

Marvin is the unlikely linchpin in one of a pair of lawsuits that seek to compel the state to enforce its tough environmental law amid a statewide scramble for water rights. Corporations and municipalities are now trying to lock in rights to withdraw water and in some cases sell water to the highest bidder, and they do not want environmental reviews to slow them down. So far, the state is complying.

Maude Barlow

That’s the wrong path, according to Maude Barlow, a Canadian water rights activist who chairs the advocacy group Food & Water Watch in Washington, D.C. “It is an extremely dangerous practice to allow the commercial sale of public water and sets a precedent for the commodification of our water supplies,” Barlow said. “Water is a public trust, in law and in practice. When fracking or other private interests get the green light to buy water, the nature of this public trust is violated.”

Marvin, the Sierra Club and others filed a suit against Painted Post and Shell, arguing that state law requires an environmental review of bulk water withdrawals, especially since the preservation of one of the state’s 18 primary aquifers is at stake. Last week Marvin’s case headed to the Court of Appeals, the state’s highest court, where the outcome could have sweeping implications for many New York municipalities.

The state Conference of Mayors and Municipal Officers says its members deserve unfettered rights to cash in on water sales — even water exports for fracking in other states. “These water agreements are a significant source of revenue for local governments that are struggling financially,” the mayors group wrote in an amicus curiae brief in a lower court last year.

Meanwhile, dozens of corporations, municipalities and other private players are now jockeying for water withdrawal rights. Under a 2011 state law, long-time users with the capacity to withdraw at least 100,000 gallons per day are required to obtain state permits for the first time. The permits are free, and the state Department of Environmental Conservation has decided to issue them to applicants at their highest reported level of usage without any environmental review.

Last November, the DEC awarded its first permit under the 2011 act to Ravenswood, a power generating station in Queens across the East River from Manhattan. The permit allows the plant to withdraw up to 1.5 billion gallons a day from the brackish river.

Ravenswood Power Generation Plant

The Sierra Club sued DEC and Ravenswood, arguing that the State Environmental Quality Review Act, or SEQRA, requires an environmental evaluation of any project that uses more than 2 million gallons of water a day. But on Oct. 1, a state Supreme Court judge in Queens County agreed with the DEC that issuing the permit was a mere ministerial act that did not trigger a formal SEQRA review. The Sierra Club plans to appeal.

In fast-tracking the Ravenswood permit application, the DEC waived its own best practices standard that calls for utilities to switch to closed-cycle cooling systems. Ravenswood’s “once-through” system uses many times more water, and the plant’s giant water-intake system sucks in and kills hundreds of millions of eggs, larvae and small fish each year, the plaintiffs claim.

“The performance goal for all existing industrial facilities in New York is closed-cycle cooling or the equivalent,” the DEC said in a July 2011 policy statement that reflected a national trend among regulators discouraging once-through systems. Closed-cycle systems are common where water is not as plentiful, and they are required for new power plants.

In recent weeks, a least one other water permit applicant in the Finger Lakes region of western New York has asked the DEC to overlook its policy favoring closed-cycle cooling systems. U.S. Salt seeks the right to take 13.5 million gallons a day from Seneca Lake, the amount needed for its inefficient once-through cooling system. The DEC has yet to rule on the U.S. Salt application or on dozens of others filed in recent weeks in response to the 2011 water permit law.

The Ravenswood and Painted Post lawsuits are not directly related, and they pose different sets of legal questions. But both argue that state law requires the DEC to take a more active role in evaluating the environmental costs of bulk water allocations.

In the Painted Post case, Rochester state Supreme Court Judge Kenneth R. Fisher ruled last year that the village had attempted to “short-circuit” the environmental review process mandated by the state’s SEQRA law. He banned further water sales to Shell, pending such a review.

Fisher’s March 2013 decision halted the trains that the Shell subsidiary SWEPI LP had been running from a specially built new siding in Painted Post to gas drilling sites in Tioga County, Pa., where officials have expressed deep concern about local water shortages.

Fracking a single natural gas well requires 3-4 million gallons of water. SWEPI has drilled dozens of gas wells in Pennsylvania, where it owns some 900,000 acres and recently acquired 155,000 more in Tioga and Potter counties to tap the Marcellus and Utica shales. That has forced the company to look beyond its several water withdrawal sites in Pennsylvania to the fragile New York aquifer.

But that Corning aquifer is the only one of New York’s 18 primary aquifers designated by the Susquehanna River Basin Commission as an area “where the utilization of groundwater resources is potentially approaching or has exceeded the sustainable limit of the resources.” Gene Stolfi, a Sierra Club volunteer who has conducted tests of water from the aquifer, reported that his samples often exceeded the Environmental Protection Agency’s standard for totally dissolved solids allowed in potable water. “Only after a heavy rain would the number dip (below the EPA standard) for a short time — one or two days,” Stolfi wrote in a recent blog on a Sierra Club website.

And the water Shell removes from the Corning aquifer is not returned to its hydrological cycle. In fact, many of the tens of millions of gallons of water it uses to frack wells return to the surface as wastewater that requires special disposal.

Water withdrawals for use at SWEPI’s gas wells are part of a dangerous worldwide trend, Barlow said. “Groundwater takings are doubling around the world every 20 years and in many places are becoming seriously compromised,” Barlow told DCBureau. “Water is being pumped faster than it can be replenished. The Ogallala aquifer (in the U.S. Midwest) will be ‘gone’ in our lifetime, says the U.S. Department of Agriculture, killed by hundreds of thousands of bore wells mercilessly pumping the source. Is this the future for the Finger Lakes?”

Rachel Treichler

Painted Post holds a state permit that allows it to withdraw up to 4 million gallons of water a day, well over 10 times what it actually uses. The generous permit limit dates back decades when the Dresser-Rand facility in the village was far more active than it is today, according to Rachel Treichler, an attorney for the plaintiffs.

The village has argued that the water it could — but does not — withdraw is “surplus property.”  In his order halting the water trains, Judge Fisher rejected that notion, writing: “A large volume daily withdrawal of a resource vital to the well being of our state is not a mere surplus sale of village property akin to selling a bus or a fire engine no longer needed by the village.”

Richard Lippes

Five other Supreme Court judges had recused themselves from the Painted Post case before Fisher finally took it on, according to Richard Lippes, the Buffalo attorney representing Marvin, the Sierra Club, People for a Healthy Environment and other plaintiffs. Lippes, who served as lead plaintiff attorney in the notorious Love Canal toxic waste case 35 years ago, said he had never before seen a case bounce from judge to judge to judge in such a way.

Fisher’s injunction was promptly challenged by Shell and overturned. The water trains got the green light to roll again in April 2014 after a unanimous five-judge panel of mid-level appellate judges reversed Fisher on the grounds that Marvin never had legal standing to sue. The water trains have been operating sporadically ever since.

Standing to sue is a highly complex legal issue. Fisher had based his ruling on the conclusion that Marvin was the only plaintiff who met the formal legal test. But the Fourth Appellate Division panel held that Marvin did not qualify either, and it dismissed the entire case without addressing the central environmental issues it raised.

Marvin had no standing, the appellate judges wrote, because the water train passed through the village and made noise heard by many of its residents. Therefore, the panel reasoned, Marvin did not suffer “noise impacts different in kind or degree from the public at large.” Furthermore, “none of the individual (plaintiffs) alleges a unique, direct environmental injury.”

Lippes argued that the panel’s decision, as well as the case law it draws on, results in “the absurd situation where the more people that are adversely affected by an environmental action, the less likely that anyone will have standing to require an environmental review under SEQRA.” In other words, he said, such a restrictive interpretation of legal standing effectively guts the state’s environmental law by disqualifying virtually every attempt to compel its enforcement.

In asking the Court of Appeals to intervene, Lippes wrote that the mid-level appellate panel never addressed the core issues that led Fisher to issue his injunction against the water shipments. “Issues discussed by the trial court are of great public importance, since these issues will repeat as each village, town or city in New York State decides to sell a portion of their public water supply for revenue purposes,” he wrote in his petition.

The high court only agrees to hear about 7% of cases it is asked to consider — even less when lower level appellate rulings are unanimous. But on Oct. 23, the court agreed to hear the Painted Post case.

The Ravenswood lawsuit, also argued by Lippes, did not fare well at the trial court level. An appeal is all but certain. In early October, the Queens judge rejected the contention that SEQRA specifically requires an environmental review of any project that would use 2 million gallons a day of surface or ground water. Ravenswood, a subsidiary of TransCanada, owners of the proposed Keystone XL pipeline, would be allowed to withdraw 750 times that amount.

Joseph Martens

DEC Commissioner Joseph Martens classified the Ravenswood withdrawal permit application and others as exempt from SEQRA, allowing them to be fast-tracked.

The DEC and Ravenswood argued that Martens’ hands are tied by the 2011 law that requires water withdrawal permits for the first time. They quote the bill sponsor’s memorandum of support, which states: “Existing water withdrawals would be entitled to an initial permit based on their maximum water withdrawal capacity reported to DEC on or before February 15, 2012 pursuant to existing law.”

That raises the question of whether the referenced “existing law” applies solely to the 2011 water withdrawal act or to both the 2011 act and SEQRA of 1975, one of the nation’s stricter state environmental laws.

Three years ago, the state Legislature was under time pressure to act on water withdrawal legislation. Several other states and groups representing regional water basins such as the Delaware, Susquehanna and Great Lakes-St. Lawrence were signing pacts to efficiently manage water. When New York signed the Great Lakes Compact in December 2008, it accepted a five-year deadline to adopt its own water withdrawal act.

By 2011, water-intensive hydraulic fracturing, or fracking, for gas drilling was prevalent in Pennsylvania, and New York was poised to begin allowing it that year (though it still has not). A few months earlier, Shell had paid $4.7 billion to acquire East Resources, mostly for its Marcellus Shale natural gas properties in Pennsylvania.

New York state’s 2011 water bill passed easily with broad bipartisan support after the Business Council of New York State, which lobbies for corporations, demanded that permits be issued at each applicant’s highest water usage rate. The bill did not explicitly require environmental reviews or guarantee the rights of water users who are too small to obtain permits.

In a pleading filed earlier this year in support of Martens’ action on Ravenswood, Assistant Attorney General Laura Heslin noted that the 2011 act distinguishes between water users as of Feb. 15, 2012, and anyone making their first withdrawals after that date. Heslin interpreted the law to say that existing users were entitled to automatic “initial” permits, while “new” users faced more rigorous scrutiny. Martens, she wrote, was merely following the narrow “statutory directive” in approving the plant’s permit.

But the DEC had previously acknowledged its duty under SEQRA and its intent to impose appropriate conditions on “initial” water permits. After one power plant operator expressed concern that environmental reviews could delay the issuance permits, the DEC said: “While the department expects the initial permit process to be an expedited and less costly permit process, it will review the permit applications and include in the permit appropriate conditions, including water conservation measures.”

Lippes argued that an environmental impact statement, or EIS, should guide the development of those legally required conditions. So far the DEC has not ordered any applicants for “initial” withdrawal permits to prepare an EIS.

In any action with potential environmental consequences, the DEC is required to consider an EIS. Its first step is to classify the action as Type I,Type II or “Unlisted.” Under SEQRA, Type I actions involve water withdrawals of at least 2 million gallons a day and are “likely” to require an EIS, while actions listed as Type II are exempt from environmental review. “Unlisted” actions fall in a gray area. In the Ravenswood case, the DEC’s Martens classified its permit application as a “Type II” action exempt from environmental review, purportedly because of requirements in the 2011 law. In the Painted Post case, the DEC deferred to the village’s determination that its water sale to Shell was a “Type II” action because it was a mere sale of surplus property.

The DEC has already granted several large “initial” water withdrawal permits, including Ravenswood (1.5 billion gallons per day from the East River), Empire State Plaza (92 million gpd from the Hudson River), Alcoa Massena (47.7 million gpd from the St. Lawrence River) and Mohawk Valley Water Authority (32 million gpd from the Hinkley Reservoir). It is reviewing roughly three dozen other permit applications from electric power plants, manufacturing plants, universities, sand and gravel operations, fish hatcheries, municipal water authorities and villages.

While additional applications are expected to flood in, they will have to be processed by a DEC water quality staff decimated by budget cuts. Between fiscal years 2007 and 2013, the DEC’s divisions of Air and Water Quality Management were cut by 28%, losing 235 full-time positions, the watchdog group Environmental Advocates of New York reported last year. Under Gov. Andrew Cuomo, the DEC’s water quality enforcement program has been forced to rely increasingly on corporate self-monitoring, EANY said.

Meanwhile, a few private players are hoping the state’s laissez faire approach to water quality regulation in general and SEQRA in particular will open the door for them to quickly cash in on the sale of water from local rivers.

The Susquehanna River Basin Commission is another agency that regulates ground and surface water withdrawals of more than 100,000 gallons a day within the basin. SRBC also regulates every single gallon of water withdrawn for use by gas drillers.

Shell’s SWEPI subsidiary won SRBC approval to draw 107,000 gallons a day from the Chemung River in Big Flats, while Talisman Energy USA Inc., won permission to take up to 2 million gallons a day from the same river at the town of Chemung.

In a handful of other cases, private entities in New York have sought SRBC withdrawal permits to sell river water to the Pennsylvania gas driller who bids the highest price. For example, in 2011, Crooker Trucking LLC applied to the SRBC for a permit to withdraw almost 300,000 gallons per day from its site on the Cohocton River in Bath. That application is pending.

Bending River Estates in Lindley, NY

The SRBC moved more decisively on a January 2013 application from Bending River Estates LLC in Lindley, a casually maintained mobile home park on the west bank of the Tioga River two miles north of the New York-Pennsylvania border. The company sought SRBC’s permission to withdraw up to 400,000 gallons a day from the river for export to fracking operations in Pennsylvania. On Sept. 19, 2013, the SRBC granted it a permit to withdraw 300,000 gpd.

For many years, Bending River Estates was co-owned by Congressman Tom Reed (R-Corning), whose 23rd Congressional District includes the Corning aquifer, Painted Post and Lindley. Reed is a vocal advocate for natural gas drilling.

Reed acquired his Bending River stake in 2004, court records show. He has claimed he sold that interest in July 2011, but he neglected to report the sale on his required Congressional Disclosure Statement for almost two years. He finally corrected his incomplete 2011 Disclosure Statement with an amendment filed May 15, 2013 — four months after his long-time Bending River business partner Bonnie Brutsman of Horseheads had applied to SRBC for the water withdrawal permit. Reed’s filing amendment said he had sold his interest in Bending River for between $15,000 and $50,000 on July 23, 2011. Six months earlier, on his January 2011 Disclosure Statement, Reed had valued his interest in Bending River at between $250,000 and $500,000.

Reed’s Corning office agreed to accept questions on his relationship to Bending River Estates and water sales to fracking operators in Pennsylvania, but Dina Fraioli, Reed’s Washington-based new media director, and Joe Sempolinski, his Corning-based district director, did not respond to or acknowledge the questions.

Congressman Tom Reed

Reed was first elected to Congress in 2010, and he is seeking his third term in the election Nov. 4. Most polls show him leading his Democratic challenger, Martha Robertson of Ithaca.

From the beginning of his Congressional career, Reed has shown an interest in water rights and fracking issues. For example, on Feb. 3, 2011 an SRBC official notified the freshman Congressman on his personal “” email account when the commission approved a bulk purchase of water from Painted Post by Triana Energy, a gas driller. That heads-up came two weeks after Reed had been appointed to the Water Resources subcommittee of the House Transportation and Infrastructure Committee (TIC). Reed had also been named vice chair of the TIC’s subcommittee on Railroads, Pipelines and Hazardous Materials.

On April 1, 2011, Reed and Mark Critz, then a Democratic Congressman from Pennsylvania, announced the creation of the Marcellus Shale Caucus to promote natural gas development. Four days later, Reed announced that he would “take a leave of absence” from the House Transportation and Infrastructure Committee (and its subcommittees) to become a member of the House Rules Committee. He has since been shifted to the House Ways and Means Committee. Critz has since left Congress, and the pro-gas group, which Reed still co-chairs, is now called the Congressional Natural Gas Caucus.

Earlier this year, Reed was able to secure a financial benefit from his prior ownership interest in Bending River Estates. During his first campaign for Congress in June 2010, Reed had filed suit in Steuben Supreme Court to contest the tax assessed value of the mobile home park. His complaint sought to cut the property’s “full value assessment” from $580,000 to $73,500.

In a settlement reached this past April, Reed was awarded $12,000 to compensate for Bending River Estate’s overpayment of property taxes for the years 2008, 2009 and 2010. Brutsman, his long-time partner in the firm and the named applicant for the SRBC water withdrawal permit, was awarded $6,000.

(For filings in the Painted Post and Ravenswood court cases, see:

Reed Reports Capital Loss on Bending River Sale on May 15, 2013