Posted on April 3, 2012 by Eileen Millett
For anyone who thought New York State was galloping toward exploration, development and regulation of drilling for natural gas, and for anyone who wondered how and when you’d see the brakes applied, two towns did just that during the third week of February. Using local zoning ordinances, the towns of Dryden and Middlefield banned drilling for natural gas within their geographic boundaries. How they did so, whether they are on solid legal ground for their bans, and what, if anything, the state can or should do to further enhance the development of natural gas are important questions.
Drilling for natural gas, which has gone on for decades in the west, has expanded rapidly in the east in recent years, largely due to a technique known as hydraulic fracturing or hydrofracking. For property owners, leasing land for gas drilling has created an economic boon, and with it the potential for bringing jobs to a portion of the state that has long been economically depressed, along with the prospect of lessening the nation’s dependence on foreign energy sources. At the same time, hydrofracking has heightened concerns about contamination of well water, air pollution, and the generation of hazardous waste, as well as other environmental concerns.
For now at least, it appears that towns in New York State may ban gas drilling within their borders if they choose to do so. Two statutes in particular – aided by judicial interpretation – support bans like those enacted by the Town of Dryden and the Town of Middlefield. In regulating oil and gas development, the Oil, Gas and Solution Mining Law (OGSML), set forth in Environmental Conservation Law (“ECL”) Article 23, Title 3, and the Mined Land Reclamation Law (“MLRL”), set forth in ECL Article 23, Title 27, come into play.
On February 21, 2012, in Anschutz Exploration Company v. Town of Dryden, Index No. 2011-0902, Tompkins County Supreme Court Justice Phillip Rumsey ruled that the OGSML does not preempt local restrictions that ban gas drilling within the geographic boundaries of the municipality. Similarly, on February 24, 2012, in Cooperstown Holstein Corp. v. Town of Middlefield, Index No. 0011-0930, Otsego County Acting Supreme Court Justice Donald F. Cerio ruled that the OGSML does not preempt a local municipality from enacting a land use regulation within its geographic jurisdiction, and that a local municipality may permit or prohibit gas drilling in conformity with statutory authority.
The New York State Court of Appeals reached a similar decision in Frew Run Gravel v. Carroll, 71 N.Y.2d 126 (1987) with respect to a comparable provision of the MLRL that empowers the New York State Department of Environmental Conservation (“NYDEC”) to regulate mining and the reclamation of mined lands. The Frew Run court held that zoning ordinances were not the type of regulatory provision that the legislature foresaw as being preempted by the MLRL and made a distinction between the regulation of how property may be used, i.e., the local zoning ordinance, and the regulation of mining activities. Just 11 years later, the Court of Appeals again examined the supersession claim clause of the MLRL in In the Matter of Gernatt Asphalt Products, Inc. v. Town of Sardinia, 87 N.Y.2d 668 (1996) and likewise concluded that zoning ordinances were not the type of regulatory provision that the legislature foresaw as being preempted by the MLRL.
The Town of Dryden and the Town of Littlefield decisions relied on these authorities, and thus are on solid legal footing. As a result, a municipality in New York State is free to ban operations related to oil and gas production within its borders just as towns are free to use zoning ordinances to ban mining activity, even recognizing an incidental effect on the oil, gas drilling or mining industry.
What does this mean for gas drilling in New York State? Dryden and Middlefield are but two towns in upstate New York that have taken action. Whether these towns are outliers or the start of a trend remains to be seen. Many citizens of New York long have said that towns should have the authority to block natural gas drilling within their boundaries. However, towns may forego bans on gas drilling because of the perceived economic benefits.
The development of natural gas drilling in New York is in its early stages. During the early run-up to exploration and development of natural gas, the NYSDEC Commissioner, with one stroke of a pen, banned natural gas drilling in the entire New York City watershed, as well as in the City of Syracuse watershed. The Commissioner’s action alleviated concern that hydraulic fracturing might harm pristine drinking water for those two major cities. Such environmental concerns could be the subject of sharp debate in other towns where gas drilling is proposed.
NYSDEC is still six months to a year or more away from adopting a final environmental impact Statement regarding drilling, and ultimately, it may not even be up to New York. The Environmental Protection Agency has empowered a team of experts to examine the technology and the science of hydraulic fracturing, and to make recommendations that could include extensive federal regulation. When New York is ready to look at permit applications, the NYSDEC can evaluate the legal landscape to determine how the courts have handled the fracking cases. As for the New York legislature, assuming that the bans on natural gas drilling are upheld, its willingness to tackle an issue as controversial as natural gas drilling will depend on the price of natural gas, the economic landscape, and the will of the State Executive branch. For those of you keeping score, for now, it is towns, two, New York State, zero.
1Using water at high pressure, hydrofracking can break rocks deep underground. In using this technique, drilling begins vertically and is then done horizontally, opening a larger land area to well placement and allowing for the extraction of more product.
2The OGSML contains the following statement: “The provisions of this article 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.” ECL 23-0303(2) (emphasis added).
3In Frew Run, the Court of Appeals examined the supersedure provision of the MLRL, which at that time provided: “For purposes stated herein, this title shall supersede all other state and local laws relating to the extractive mining industry; provided, however, that nothing in this title shall be construed to prevent any local government from enacting local zoning ordinances or other local laws which impose stricter mined land reclamation standards or requirements than those found herein.” ECL 23-2703(2) (emphasis added).