Periconi, LLC Environmental Law Blog

Posted By James J. Periconi, Esq. on March 7, 2012

So far in the Periconi, LLC “Fracking NY Blog Series,” we’ve outlined state, interstate, and federal regulation of high volume horizontal hydraulic fracturing (or “fracking”).  We now turn to yet another layer of potential regulation of fracking in New York State: local zoning ordinances.  Two towns – Dryden and Middlefield – which have enacted zoning ordinances that ban fracking within their borders have had those zoning ordinances challenged by industry and/or landowners. In the past week, both of these cases were decided in favor of upholding the bans. This blog post will cover the Town of Middlefield case. (Click here for the Town of Dryden case.)

Legal & Factual Background

In the State of New York, the legislature expressly delegated the ability to regulate land use to local municipalities through their zoning powers. See Statute of Local Governments §10(6) and Town Law §261.  Thus, municipalities – such as the Town of Middlefield – have the sole authority to regulate (or “zone”) traditional land use concerns such as traffic, noise, or industry that they consider to be suitable for a particular community or neighborhood within their boundaries.

As our previous posts have pointed out, fracking is a contentious issue in New York, where fears of contamination of the water supply run high.  On June 14, 2011, the Town of Middlefield enacted a new zoning law which, in relevant part, prohibited “Heavy industry and all oil, gas or solution mining and drilling.” See Town of Middlefield Zoning Law (“MZL”), Art. V, Subsec. A (effective June 28, 2011).  In relevant part, the newly promulgated law defined “gas, oil, or solution drilling or mining” to include exploration and drilling of wells for oil or gas and extraction, production, transportation, purchase, processing, and storage of oil and gas. See MZL, Art. II, Subsec. B(7).  Moreover, the MZL defines “heavy industry” to include “industry [that] has the potential for large-scale  environmental pollution when equipment malfunction or human error occurs.” See MZL, Art. II, Subsec. B(8).

Natural gas exploration in New York is regulated by the State Oil, Gas and Solutions Mining Law (“State Mining Law”) which, in relevant part, states: “The provisions of this article shall supersede all local laws or ordinances relating to the regulation of the oil, gas and solutions mining industries; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law.” ECL 23-0303(2).

The Plaintiff in this case, Cooperstown Holstein Corp., owns land in the Town of Middlefield and had executed two oil and gas leases on its property in 2007, approximately four years prior to the Town of Middlefield’s enactment of the new MZL which banned fracking in the town.  Cooperstown Holstein Corp. commenced a declaratory judgment action seeking to invalidate the MZL provisions banning fracking on the basis that it is preempted by the State Mining Law.  Cooperstown Holstein Corp. argued that the new MZL was improper because it was expressly preempted by the supersession clause of the State Mining Law, and that the purpose of its oil and gas leases would be frustrated by the enforcement of the MZL, as enacted.

The Decision

The New York Supreme Court, Otsego County, in the case of Cooperstown Holstein Corp. v. Town of Middlefield, Civ. 2011-0930 (February 24, 2012), was asked to decide “whether the State of New York, by the enactment of [the State Mining Law] prohibit local municipalities from enacting legislation which may impact upon the oil, gas and solution drilling or mining industries other than that pertaining to local roads and the municipalities’ rights under the real property law.”

To answer this question, the court focused on the legislative intent and legislative history of the State Mining Law to determine to what extent does the State Mining Law’s supersession clause apply to preempt local zoning of oil and gas operations.  As the court noted, “it is evident that [the Town of Middlefield] has, by enactment of the June 2011 zoning law, effectively banned oil and gas drilling within the geographical borders of the township.”

After a lengthy analysis of the legislative history behind the State Mining Law, the court determined that “[t]here is no language contained within the legislative history which serves to support plaintiff’s claim that the supersession clause enacted was intended to impact, let alone diminish or eliminate, a local municipality’s right to enact legislation pertaining to land use.”  The State Mining Law and its subsequent amendments “specifically dealt with the activity of the industry, i.e., method and manner of drilling and the like,” and the supersession clause was not intended by the State Legislature “to abrogate the constitutional and statutory authority vested in local municipalities to enact legislation affecting land use.” (emphasis in original).

Like the court in the Town of Dryden case, this court also followed the precedent set down in Matter of Frew Run Gravel Prods. v. Town of Carroll, 71 NY2d 126 (1987) and Matter of Gernatt Asphalt Prods. v. Town of Sardinia, 87 NY2d 668, 681-21 (1996), holding that the express supersession clause in the State Mining Law (like the supersession clause of the Mined Land Reclamation Law at issue in those two cases), does not preempt local regulations that address land use which may have an “incidental” impact on the oil, gas, and solution drilling or mining industry within the State. Nor does the MZL conflict with the State’s interest in regulating the “manner and method of the industry” or impede the State’s declared policy with respect to these natural resources.

The court concluded that the State Mining Law and the MZL can be harmonized: “The state maintains control over the ‘how’ of such [oil, gas and solution drilling or mining] procedures while the municipalities maintain control over the ‘where’ of such exploration.”

For these reasons, the court upheld the Town of Middlefield’s newly enacted MZL which completely bans fracking within its boundaries.

Conclusion

This decision (along with the Town of Dryden decision) is a huge win for municipalities that are thinking about banning fracking within their respective borders.  This case makes clear that the courts have an unambiguous precedent to follow both in Matter of Frew Run and Matter of Gernatt.  Town of Middlefield adds one more case in favor of the authority of municipalities to protect their citizens and communities through local land use regulations.  Although with the Governor’s current support of the natural gas industry in the State, it will be interesting to see whether the Court of Appeals will uphold this precedent or overrule itself in light of the current national and State energy and economic circumstances.

However, this is unlikely to be the end for the Town of Middlefield’s fracking ban: Cooperstown Holstein Corp. can, and most likely will, appeal this decision, or it can challenge this zoning ban as an outright taking of its property, rather than as a reasonable regulation of where, in a given town, mining is appropriate, and where it is not.  Cooperstown Holstein Corp. could also challenge the decision as a violation of its right to substantive due process by alleging that the MZL, as enacted, impermissibly singles out fracking as opposed to other natural resource extraction operations.

As well, the Legislature can also step in to these muddy waters and promulgate statutes that either reinforce a municipality’s authority or to restrict local control over fracking.  In fact, the “Home Rule Bill,” which would legislatively guarantee a municipality’s right to limit or ban fracking through zoning by amending the State Mining Law, has been proposed in both the New York State Senate and Assembly. (See A8557/A3245/S5380)

We will keep you updated on this matter.

Categories: Fracking, Land Use Law, New York State Environmental Law
Tags: fracking, Marcellus Shale, New York municipal law, NYC watershed, preemption, zoning & local land use