New York High Court Upholds Local Laws, Could Be Fracking’s Last Stand in State

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By Gerald B. Silverman  

June 30 --New York state's highest court issued a landmark decision June 30 that upholds the right of local governments to ban the natural gas drilling practice known as fracking.

The Court of Appeals, in a 5-2 decision, ruled the state's Oil, Gas and Solution Mining Law (OGSML) does not preempt the central New York towns of Dryden and Middlefield from banning fracking under their local zoning laws.

The decision could effectively kill any prospect of fracking in New York, because at least 170 local governments have banned the drilling practice. Moreover, there has been an effective statewide moratorium on fracking in New York, as the state Department of Environmental Conservation awaits the release of a public health study by the Department of Health .

The two local bans were challenged by the bankruptcy trustee for Norse Energy Corporation ASA, an energy company that had applied for permits to conduct hydraulic fracturing, and Cooperstown Holstein Corp., a dairy farm in central New York that has leased its land for natural gas drilling.

Preserve Existing Character of Communities

The court said the central issue was whether or not the Legislature “eliminated the home rule capacity of municipalities to pass zoning laws that exclude oil, gas and hydrofracking activities in order to preserve the existing character of their communities.”

“At the heart of these cases lies the relationship between the State and its local government subdivisions, and their respective exercise of legislative power,” the court said in a decision by Judge Victoria A. Graffeo in two consolidated cases.

“These appeals are not about whether hydrofracking is beneficial or detrimental to the economy, environment or energy needs of New York, and we pass no judgment on its merits.”

At issue in the cases is the supersession clause of the OGSML, which says its provisions “shall supersede all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law.”

The state's trial level courts and the New York State Supreme Court Appellate Division all upheld the local bans .

Law of Land for Long Time

“This is it for (the) home rule (cases),” Thomas S. West of The West Firm, PLLC in Albany, N.Y., told Bloomberg BNA June 30.

West, who represents Mark S. Wallach, the bankruptcy trustee, said “There certainly is no opportunity to change this law in the Legislature,” where there is opposition to fracking.

“It will be the law of the land for a long time” he said. “We've already chased the industry away with a six-year moratorium. This will certainly be perceived as another nail in the coffin.”

Earthjustice Managing Attorney Deborah Goldberg, who represented the town of Dryden, told Bloomberg BNA in a June 30 e-mail that “there are likely to be many more communities that stand up for themselves and say 'no’ to the oil and gas industry.”

In a statement, she said the decision “has settled the matter once and for all across New York State.”

The high court said the adoption of zoning ordinances is “one of the core powers of local governance” and it does not “lightly presume preemption where the preeminent power of a locality to regulate land use is at stake.”

“Rather, we will invalidate a zoning law only where there is a 'clear expression of legislative intent to preempt local control over land use,' ” it said, citing its 1996 decision in Gernatt Asphalt Products v. Sardinia.

Tri-Partite Analysis, Precedent

The court applied a three-part analysis to determine whether the OGSML supersession clause preempted the local bans, citing a 1987 decision in Frew Run Gravel Products v. Town of Carroll.

It examined the plain language of the supersession clause, the statutory scheme and the legislative history. In all three areas, it said the supersession clause doesn't preempt local zoning laws.

The court cited Frew Run and upheld the arguments of the local governments by ruling that the zoning laws “are directed at regulating land use generally and do not attempt to govern the details, procedures or operations of the oil and gas industries.”

It said the zoning laws “will undeniably have an impact on oil and gas enterprises,” but they amounted to “incidental control” that was not the type of regulation the Legislature prohibited in the OGSML statute.

The court rejected plaintiffs' argument that the zoning bans went too far and effectively regulated the oil and gas industry.

“The towns both studied the issue and acted within their home rule powers in determining that gas drilling would permanently alter and adversely affect the deliberately cultivated, small-town character of their communities,” the court said.

Dissenting Opinion

In a dissenting opinion in which Judge Robert S. Smith concurred, Judge Eugene F. Pigott wrote that the zoning bans “related” to the regulation of the oil and gas industry within the meaning of the OGSML supersession clause and, therefore, were preempted. He said the bans encroached on the authority of the state Department of Environmental Conservation to regulate the industry.

“The zoning ordinances of Dryden and Middlefield do more than just regulate land use, they regulate oil, gas and solution mining industries under the pretext of zoning,” Pigott said in the dissenting opinion.

“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.

“In light of the language of the zoning ordinances at issue--which go into great detail concerning the prohibitions against the storage of gas, petroleum exploration and production materials and equipment in the respective towns--it is evident that they go above and beyond zoning and, instead, regulate those industries, which is exclusively within the purview of the Department of Environmental Conservation.”

 

To contact the reporter on this story: Gerald B. Silverman in Albany, N.Y., at gsilverman@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com


The decision is available at http://www.nycourts.gov/ctapps/Decisions/2014/Jun14/130-131opn14-Decision.pdf.