In a highly unusual move, the New York Court of Appeals has decided to hear an appeal despite an intermediate appeals court’s unanimous ruling. It was no surprise that Norse Energy Corp. USA appealed that lower court ruling upholding the right of New York municipalities to regulate fracking through local land use laws. But court watchers in general, as well as fracking followers, were surprised by the high court’s ruling, are looking forward to that court’s ruling in Matter of Norse Energy Corp. USA, v. Town of Dryden et al., APL-2013-00245, that will offer the most authoritative state-level ruling possible on the fate of fracking in New York State.
As visitors to this blog will recall, the case arises from similar zoning laws enacted by the Towns of Dryden and Middlefield which effectively prohibited high fracking within their municipal boundaries. The zoning laws survived a legal challenge based on the premise that they properly limited the local regulation of fracking to merely dictating the location of fracking operations. This limit ensured that the local regulations did not run afoul of the New York State Oil, Gas, and Solution Mining Law (“Mining Law”), which reserves all authority to regulate the details of fracking operations to the New York State Department of Environmental Conservation. This analysis has came to be known as the “where versus how” distinction.
The intermediate appeals decision in the Appellate Division for the Third Judicial Department was a second consecutive win for fracking opponents, who had also prevailed at the trial level in 2012. Coverage of the trial and Appellate Division decisions on the Periconi, LLC Environmental Law Blog is available here, here and here.
As the highest state court, the Court of Appeals will determine whether the where versus how” distinction is a meaningful one or simply an improper fig leaf for illegal local regulation of oil and gas operations.
Norse Energy argues that local bans inevitably conflict with the Mining Law, because the law contains a declaration of policy for maximizing recovery of oil and gas, preventing waste, and protecting correlative rights. Norse Energy cites to a Colorado Supreme Court ruling entitled Voss v. Lundvall Bros. Inc., 830 P.2d 1061, 1067 (Colo. 1992), which struck down a similar local ban on oil and gas production on the premise that “[b]ecause oil and gas production is closely tied to well location, [a municipality’s] total ban on drilling . . . could result in uneven and potentially wasteful production. . . .” Since New York and Colorado are both members of the same Interstate Oil and Gas Compact Commission, which requires each member state to enact laws to prevent waste in the recovery of oil and gas, Norse Energy urges the Court of Appeals to correct the lower courts and set a precedent more akin to Colorado’s in Voss.
The Court of Appeals decision promises to impact in a big way the legal landscape of fracking. As previously explained here on the Periconi, LLC Environmental Law Blog, the New York State Department of Conservation’s own rulemaking process has been stalled pending the results of a (now very delayed) study by the New York State Department of Health. A fracking-favorable ruling by the Court of Appeals would not directly affect the NYSDEC rulemaking process, but it could pressure the NYSDEC to proceed. Norse Energy’s appellant brief was due October 28, 2013, with Dryden’s respondent brief due on December 12, 2013. No date has been set by the high court for oral argument, and the towns argue that none may be necessary. In its letter in opposition to Norse Energy’s Motion for Leave to Appeal to the New York State Court of Appeals, Dryden asks the Court to “address the interest in speedy, statewide resolution of the dispute by deciding the appeal on the Appellate Division record and briefs and summarily affirming the decision below for the reasons stated by the Third Department.”
Stay tuned to the Periconi, LLC Environmental Law Blog for further updates.