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 Dryden case. (Click here for the Town of Middlefieldcase.)
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 Dryden - 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. Over 1,500 residents in the Town of Dryden petitioned the Town Board to amend the Dryden Zoning Ordinance ("DZO") to prohibit fracking within the town's borders; the result was the August 2, 2011 amendment to the DZO. In relevant part, the newly promulgated section of Article XXI of the DZO prohibited exploration for natural gas and/or petroleum; well drilling; transfer, storage, process, treatment, or disposal of natural gas and/or petroleum or such wastes; erecting any derricks or similar structures; placement of any machinery and natural gas and/or petroleum "support activities." See DZO, Section 2104.
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, Anschutz Exploration, is a Colorado-based energy company that owns natural gas leases on approximately 22,000 acres in the Town of Dryden, over one-third of the total town area. These gas leases were acquired prior to the 2011 amendment to the DZO which banned fracking in the town. Anschutz commenced a hybrid Article 78 proceeding and declaratory judgment action seeking to invalidate the DZO amendment banning fracking on the basis that it is preempted by the State Mining Law. Anschutz argued that the amendment was improper because (1) it was expressly preempted by the supersession clause of the State Mining Law, and (2) it impermissibly conflicts with the substantive provisions of the State Mining Law which regulated natural gas production in the State. (The Article 78 action was dismissed because an Article 78 action cannot be used to challenge the substantive validity of a legislative act, such as a zoning amendment; it can only be used to challenge the procedure of a legislative act.)
The New York Supreme Court, Tompkins County, in the case of Anschutz Exploration Corp. v. Town of Dryden, Civ. 2011-0902 (February 21, 2012), was asked to decide, inter alia - in a case of first impression - "whether a local municipality may use its power to regulate land use to prohibit exploration for, and production of, oil and natural gas."
Following the precedent set down in Matter of Frew Run Gravel Prods. v. Town of Carroll, 71 NY2d 126 (1987) (holding that a similar supersession clause in the Mined Land Reclamation Law did not preempt local zoning ordinances), the court held that the DZO's fracking ban was not preempted by the State Mining Law.
First, the court illustrated the similarities in the supersession clauses at issue in Matter of Frew Run and this case, holding that "[n]otwithstanding the incidental effect of local land use laws upon [the oil and gas industry], zoning ordinances are not the type of regulatory provision the Legislature foresaw as preempted by [the State Mining Law]." (quoting Matter of Gernatt Asphalt Prods. v. Town of Sardinia, 87 NY2d 668, 681-21 (1996) (insertions added)). The State Mining Law regulates the oil and gas extraction industry; zoning laws regulate an entirely different subject - land use. Thus, by its plain meaning, the State Mining Law preempts only local laws "relating to" (i.e., "regulating") oil and gas extraction and does not expressly preempt local control over land use and zoning. Because of that, the State Mining Law does not expressly preempt the DZO amendment that bans fracking in the Town of Dryden. To read otherwise would be an "abridgement of a town's powers to regulate land use through zoning powers expressly delegated" to it by the Legislature. (quoting Matter of Frew Run, 71 NY2d at 134.)
Second, the court held that there was no conflict preemption that would invalidate the Town of Dryden's zoning amendment banning fracking. The State Mining Law regulates the "technical operational concerns" of oil and gas extraction in the State for the "stated statutory purpose of avoiding wastes, providing for greater ultimate recovery of oil and gas, and protecting correlative rights." Zoning regulations, on the other hand, regulate "traditional land use concerns" such as noise, traffic, or suitable industries for a particular community. Because the State Mining Law and the DZO amendment regulate different things, they cannot be - and are not - directly in conflict.
Finally, the court noted that case law precedent specifically allows a municipality to "exercise its zoning authority to completely ban mining within its jurisdiction."
"A municipality is not obliged to permit the exploitation of any and all natural resources within the town as a permitted use if limiting that use is a reasonable exercise of its police powers to prevent damage to the rights of others and to promote the interests of the community of a whole." Matter of Gernatt, 87 NY2d at 684. Thus, because the State Mining Law does not preempt a municipality's authority to regulate land use through zoning, the State Mining Law does not preempt a municipality's authority to completely ban operations related to oil and gas production within its borders.
For these reasons, the court upheld the Town of Dryden's DZO amendment which completely bans fracking within its boundaries.
This decision (along with the Town of Middlefield 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 unambiguous precedent to follow both in Matter of Frew Run and Matter of Gernatt. Town of Dryden 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 Dryden's fracking ban: Anschutz can, and most likely will, appeal this decision, or Anschutz 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. Anschutz could also challenge the decision as a violation of its right to substantive due process by alleging that the DZO amendment 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.