ALBANY, N.Y. — (Mealey’s) A divided New York Court of Appeals on June 30 ruled that local municipalities may pass bans on the oil and gas extraction procedure that uses hydraulic fracturing because the supersession clause in the statewide Oil, Gas Solution Mining Law (OGSML) does not preempt the home rule authority vested in municipalities to regulate land use (Norse Energy Corp. USA v. Town of Dryden, et al., No. APL-2013-00245, N.Y. App.).
(Opinion available. Document #94-140708-017Z.)
In 2011, Norse Energy Corp. USA's predecessor-in-interest filed a lawsuit in the Tompkins County Supreme Court challenging the validity of the town's prohibition on hydraulic fracturing, which was codified in an amendment passed by the Town Board.
Specifically, the town expressly prohibited “all oil and gas exploration, extraction, processing and storage and support activities,” which effectively banned all oil and natural gas drilling within the geographical borders of the town.
Norse contended that the town’s decision deprived it and all other mineral rights owners of their respective oil and gas estates in the town.
In 2012, the Supreme Court determined that the town was entitled to summary judgment, concluding that the town’s prohibition was not preempted by the OGSML. Norse appealed to the Third Department Supreme Court Appellate Division, which affirmed the Supreme Court’s ruling.
Norse then appealed to the Court of Appeals, contending that the policy implications of the appellate court decision are “severe, as there could not be a starker example of local control that will wholly discourage, in fact, preclude, oil and gas development.”
At the Court of Appeals, Norse’s action was consolidated with Cooperstown Holstein Corporation v. Town of Middlefield (No. 131. N.Y. App.). Cooperstown Holstein Corp. (CHC) filed a lawsuit against the Town of Middlefield in the Ostego County Supreme Court, alleging that the town could not pass zoning laws banning hydraulic fracturing.
A majority of the appeals court comprising Judges Victoria A. Graffeo, Jonathan Lippman, Jenny Rivera, Susan P. Rea and Sheila Abdus-Salaam said that “the operative text” of the OGSML’s supersession clause is quite close to the provision the court analyzed in In The Matter of Frew Run Gravel Prods. V. Town of Carroll (71 NY 2d 126 ) [enhanced opinion available to lexis.com subscribers], which dealt with local laws relating to the regulation of oil, gas and solution mining industries.
The majority added that based on the similarities between the case at hand and Frew Run, it declined Norse’s invitation to ascribe a broader meaning to the language used in the OGSML.
The majority said that at issue in Frew Run was the validity of the Town of Carroll’s zoning ordinance establishing a zoning district where sand and gravel operations were not permitted. A company seeking to open a sand and gravel mine in the town challenged the zoning law, arguing that it was preempted by the supersession clause in the statewide Mined Land Reclamation Law (MLRL), the majority added.
The majority said that in Frew Run, the court “rejected” the mining company’s contention that the clause preempted the land use restriction, explaining that the plain language of the phrase “local laws relating to the extractive mining industry” did not encompass zoning provisions. Instead, the court held that the zoning law “relates not to the extractive mining industry but to an entirely different subject matter and purpose . . . the use of land in the Town of Carroll,” the majority said.
The majority also said that in Frew Run, the court noted that the binary purposes of the MLRL were “to foster a healthy, growing mining industry” and to “aid in assuring that land damaged by mining operations is restored to a reasonably useful and attractive condition.” Moreover, the majority said that the legislative history reflected a goal of promoting the “mining industry by the adoption of standard and uniform restrictions and regulations to replace the existing patchwork system of local ordinances.”
By contrast, zoning laws restricting the location of mining operations within a town fell outside the preemptive orbit of the clause because “nothing in the Mined Land Reclamation Law or its history . . . suggests that its reach was intended to be broader than necessary to preempt conflicting regulations dealing with mining operations and reclamation of mined lands,” the majority said.
Furthermore, the majority said that the legislative schemes of which these preemption clauses are a part “typically include other statutory safeguards that take into account local considerations that otherwise would have been protected by traditional municipal zoning powers.”
“Norse and CHC are unable to point to any comparable measures in the OGSML that account for the salient local interests in the context of drilling and hydrofracking activities,” the majority ruled.
Judge Eugene F. Pigott wrote a dissenting opinion that was joined by Robert S. Smith. Judge Pigott said that “municipalities may without a doubt regulate land use through enactment of zoning laws, but, in my view, the particular zoning ordinances in these cases relate to the regulation of the oil, gas and solution mining industries and therefore encroach upon the Department of Environmental Conservation's regulatory authority.”
Judge Pigott said that in Frew Run, the court “made clear” that there is a distinction between zoning ordinances that regulate land use and local ordinances that regulate the mining industry. “The former, which involve the division of the municipality into zones and the establishment of permitted uses within those zones, relate not to the extractive mining industry, but rather, to the regulation of land use generally,” the judge said.
The judge said that the ordinances in the cases at hand do more than just “regulate land use generally,” they purport to regulate the oil, gas and solution mining activities within the respective towns, creating a blanket ban on an entire industry without specifying the zones where such uses are prohibited.
The Town of Dryden is represented by Deborah Goldberg and Bridget M. Lee of EarthJustice in New York. Norse is represented by Thomas S. West and Cindy Monaco of the West Firm in Albany. The Town of Middlefield is represented by John J. Henry of Whiteman Osterman & Hanna in Albany. CHC is represented by Scott R. Kurkowski of Levene Gouldin & Thompson in Binghamton, N.Y.
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