Fracking Bans in Upstate New York Affirmed

ALBANY, N.Y. (CN) - Communities in upstate New York that used zoning to ban hydrofracking found support this week from the state's highest court.

Nothing in state environmental-conservation law regulating the activities of oil, gas and mining companies in New York pre-empts "the home rule authority vested in municipalities to regulate land use," the Monday ruling by the Court of Appeals says.

In the mid-2000s, companies interested in exploring for natural gas in the vast Marcellus Shale formation that stretches east from Ohio began securing land leases with property owners across upstate New York.

The mining technique they planned to use, hydraulic fracturing, involves pumping water and chemicals under high pressure into horizontal wells to rupture the shale and release the gas. As safety and environmental concerns over "hydrofracking" grew, some towns enacted moratoriums or bans against the practice.

Norse Energy Corp. USA and Cooperstown Holstein Corp. actively sought such leases in the towns of Dryden and Middlefield, respectively. Both rural towns - Dryden, near Ithaca in the Finger Lakes, and Middlefield, about two hours to the east near Cooperstown - had land-use master plans in place that precluded activities not specifically allowed, such as natural-gas extraction.

After reviewing studies on hydrofracking and holding public hearings on the issue, both towns passed zoning ordinances that banned oil and gas drilling and storage within their borders. Each promptly was sued - Dryden by Norse and Middlefield by Cooperstown Holstein - for running afoul of the so-called supersession clause in the state's Oil, Gas and Solution Mining Law, part of environmental conservation law.

The clause, the companies said, pre-empts local zoning laws that restrict oil and gas operations on land within a municipality. The towns countered that they were within their home-rule authority in adopting the challenged codes.

At state Supreme Court and the Appellate Division, the town ordinances prevailed. The companies then took their arguments to the Court of Appeals, but the towns prevailed again Monday.

"We believe that the towns have the better argument," Judge Victoria Graffeo wrote for the five-judge majority.

The New York Constitution has a home-rule provision, fleshed out by the state Legislature's Municipal Home Rule Law, which empowers local governments to pass laws to protect the health and well-being of citizens and property within their boundaries, the court found.

Zoning laws are recognized as an important tool in that endeavor, but they can be pre-empted if they conflict with a state law, Graffeo said.

Norse and Cooperstown Holstein had contended just that in arguing for the supersession clause: that the town zoning codes trampled on the state Department of Environmental Conservation's prescribed oversight of the industry.

Graffeo said the court reached back to its 1987 decision in Matter of Frew Run Gravel Prods. v. Town of Carroll to weigh the companies' appeals. Frew, she wrote, "articulated the analytical framework to determine whether a supersession clause expressly preempts a local zoning law."

The case involved sand and gravel mining and a different state law, the Mined Land Reclamation Law, but the key issue was whether a supersession clause in the statute pre-empted the town from establishing a zoning district where sand and gravel mining was prohibited.

Graffeo said the court used a "tripartite test" on the mining law's supersession clause that evaluated its plain language, overall statutory scheme and legislative history.

From that, "we discerned that the 'sole purpose' of the supersession clause was to prevent localities from enacting ordinances 'dealing with the actual operation and process of mining' because such laws would 'frustrate the statutory purpose of encouraging mining through standardization of regulations pertaining to mining operations,'" the majority opinion states.

Since the Carroll zoning laws governed land use, they "fell outside the preemptive orbit" of the mining statute's focus on mining operations and reclaimed mined lands, the ruling continues.

Similarly, the Oil, Gas and Solution Mining Law "is most naturally read as preempting only local laws that purport to regulate the actual operations of oil and gas activities, not zoning ordinances that restrict or prohibit certain land uses within town boundaries," Graffeo wrote.

"Plainly, the zoning laws in these cases are directed at regulating land use generally and do not attempt to govern the details, procedures or operations of the oil and gas industries," she continued.

The appellate court also rejected the companies' alternative theory: that even if the supersession clause did not pre-empt all zoning laws, it should not be interpreted as allowing zoning that bans hydrofracking - a drilling technique.

Graffeo deemed this argument "foreclosed" by the court's 1996 decision in Matter of Gernatt Asphalt Prods. v. Town of Sardinia, which found that municipalities are "not obliged to permit the exploitation of any and all natural resources within the town" if that activity is seen as damaging the community as a whole.

Dryden and Middlefield "both studied the issue and acted within their home-rule powers in determining that gas drilling would permanently alter and adversely affect the deliberately cultivated, small-town character of their communities," Graffeo wrote.

"These appeals are not about whether hydrofracking is beneficial or detrimental to the economy, environment or energy needs of New York, and we pass no judgment on its merits," the 28-page opinion states.

In applying the tripartite test on the Oil, Gas and Solution Mining Law, however, "we cannot say that the supersession clause - added long before the current debate over high-volume hydrofracking and horizontal drilling ignited - evinces a clear expression of preemptive intent. The zoning laws of Dryden and Middlefield are therefore valid," Graffeo concluded.

Chief Judge Jonathan Lippman and Judges Susan Read, Jenny Rivera and Sheila Abdus-Salaam concurred.

Judge Robert Smith meanwhile joined a three-page dissent by Judge Eugene Pigott that called the zoning ordinances a "pretext" for regulating industry.

"Municipalities may without a doubt regulate land use through enactment of zoning laws," Pigott wrote, "but, in my view, the particular zoning ordinances in these cases relate to the regulation of the oil, gas and solution mining industries and therefore encroach upon the Department of Environmental Conservation's regulatory authority."

In the Dryden case, Thomas West of The West Firm in Albany argued for Norse. Deborah Goldberg of EarthJustice in New York City represented the town.

In the Middlefield case, Scott Kurkoski of Levene, Gouldin & Thompson in Binghamton represented Cooperstown Holstein. John Henry of Whiteman, Osterman & Hanna in Albany argued for the town.

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