New York Court of Appeals Considers Fracking Bans
In August 2011, the Town of Dryden, New York amended its zoning ordinance to ban all activities related to the exploration, production or storage of natural gas and petroleum. Petitioner Norse Energy’s predecessor in interest, Anschutz Exploration Corporation, owning leases covering approximately 22,200 acres of land in the Town of Dryden, initiated an action seeking declaratory judgment invalidating the zoning amendment on the grounds that it was preempted by New York’s Oil, Gas and Solution Mining Law (“OGSML”).
New York’s Appellate Division of the Supreme Court of the Third Judicial Department issued a ruling on May 2, 2013, finding that the OGSML does not preempt a municipality’s power to enact such an ordinance. Despite Norse’s argument that the OGSML “supersedes all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries” and thus explicitly preempts the ban, the Court held that the zoning ordinance at issue does not seek to regulate oil, gas and mining but rather establishes permissible and prohibited uses of land. Therefore, despite the ordinance’s “incidental” effect on the oil, gas and mining industries, it is not the type of regulation contemplated by the OGSML.
The Court also rejected the argument that Dryden’s zoning ordinance was invalid because of implied preemption. In New York, a local government may not adopt laws inconsistent with constitutional or general law. Norse claimed that the OGSML directs “where” drilling should occur to maximize resource recovery and minimize waste, meaning the directive cannot be complied with if municipalities are permitted to ban drilling. The Court, however, found these provisions of the OGSML address technical details and procedures regarding well spacing, but do not include traditional land use considerations. Thus, there is no conflict, and the implied preemption argument failed.
In August 2013, the New York State Court of Appeals, the highest state court, agreed to review the case. On June 03, 2014, the Court of Appeals heard oral arguments on Dryden’s zoning ordinance.
Several judges appeared concerned about the clarity of the statute. Judge Jenny Rivera asked one of the attorney’s challenging the ban whether “the state could very easily pass an express statute” if the Court affirmed the prior decision. Judge Jonathan Lippman similarly questioned why the OGSML is not clearer with respect to a locality’s ability to ban fracking. This suggests that the Court may defer to the legislature rather than overturn a number of similar local actions.
Opponents of the ban are primarily concerned with the potentially negative backlash if the Court of Appeals upholds the ability of localities to ban hydraulic fracturing (“fracking”) and other similar activities, as gas and oil companies would likely be discouraged from pursuing projects in New York. Additionally, opponents worry that if each locality has significant authority over extraction issues, there will be a disjointed energy policy comprised of 932 localities rather than a single state. The decision rendered by the Court of Appeals will affect more than 170 localities that have already enacted similar bans or moratoriums.
Even if Norse prevails, they will still be subject to a six-year-old state moratorium on fracking. In 2008, then-governor David Patterson halted the well approval process while ordering the Department of Environmental Conservation (“DEC”) to conduct a new environmental assessment of fracking. The DEC published its draft report in September 2009 and circulated it for public comment, after which Patterson issued an executive order in December 2010 requiring further review. The DEC and the New York Department of Health began a health impact study in September 2012. Although there is no definitive timeline for completion of the environmental or health impact studies, Joe Martens, head of the DEC, said they will not issue regulations until at least April 2015.
Norse Energy Corp. U.S.A. v. Town of Dryden et al., 964 N.Y.S.2d 714 (N.Y. App. Div. 2013).
The appeal to the New York State Court of Appeals is Norse Energy Corp. U.S.A. v. Town of Dryden et al., APL-2013-00245.