On Tuesday, February 21, 2012, Tompkins County Supreme Court Justice Phillip R. Rumsey upheld the Town of Dryden's total ban on any exploration for natural gas within the Town. A few days later, on Friday, February 24, 2012, Madison County Acting Supreme Court Justice Donald F. Cerio upheld the Town of Middlefield's total ban on the exploration for natural gas. Both courts found that a state law that expressly "supersede[s] all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries" did not preempt the applicable local zoning ordinance. Opponents of hydraulic fracturing are heralding these decision as a complete affirmation of the power of home rule. Unfortunately, for those opponents, there is a fair chance that those courts got it wrong and will be reversed on appeal either in their entirety, or with respect to their leap from finding a legitimate role for local zoning to upholding complete, municipality-wide bans.
Both courts rested their decisions on the Court of Appeals decision in Frew Run Gravel Prods. v. Town of Carroll, 71 NY2d 126 (1987) where the Court held that the supersession clause contained in the Mined Land Reclamation Law ("MLRL") did not preempt local zoning ordinances. As enacted in 1974 (L.1074, c. 1043), the MLRL's supersession language in ECL §23-2703(2)(b) provided:
For the purposes stated herein, this article shall supersede all other state and local laws relating to the extractive mining industry; provided, however, that nothing in this article 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.
As can be seen in the highlighted text of the MLRL, it was intended only to supersede "local laws relating to the mining industry," but not "local zoning ordinances," at least not to the extent that those local zoning ordinances imposed stricter mined land reclamation standards. In Frew Run, the Court of Appeals held that the MLRL's supersession clause also preempted local zoning ordinances that directly regulated mining activities but not those regulating land use.
In a subsequent case after the MLRL supersession provision had been amended in 1991, the Court of Appeals stated that "in the absence of a clear expression of legislative intent to preempt local control over land use, the statute could not be read as preempting local zoning authority." Gernatt Asphalt Prods. v. Town of Sardinia, 87 NY2d 668, 681-682 (1996). At the time of the Gernatt decision, ECL §23-2703(2)(b) had been amended to provide that:
For the 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 or enforcing local zoning ordinances or laws which determine permissible uses in zoning districts.
The supersession clause in the Oil, Gas and Solution Mining Law ("OGSML"), however, expressly includes "local ordinances" as well as "local laws" in its supersession provision and does not expressly carve out "local zoning ordinances or laws which determine permissible uses in zoning districts" as the MLRL now does. Rather, it reads:
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). Without considering the words of the statute further, both the Dryden and Middlefield courts looked to the legislative history of the OGSML to determine whether the Legislature intended to preempt local zoning ordinances relating to the natural gas industry. Arguably, those courts should only have looked at legislative history if section 23-0303(2) was not clear on its face. It is hard to imagine a clearer statute than one which states that it supersedes "all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries."
Nevertheless, both the Dryden and Middlefield courts found that the supersession provision in the OGSML preempted local zoning law only in so far as it purported to regulate "how" natural gas drilling would occur, but not "where" it would occur. However, ECL §23-0303(2) expressly states that it does not supersede "the rights of local governments under the real property tax law." The real property tax law does not regulate "how" gas drilling occurs. Therefore, because the Legislature found it necessary to insert an exception to its supersession of "all local laws or ordinances relating to" gas extraction for a tax provision that does not regulate "how" such extraction is conducted, it can be inferred that the Legislature did intend to preempt more than just ordinances regulating "how" gas drilling occurs.
Regardless of whether an appeals court sustains the Dryden and Middlefield courts' conclusions that the OGSML did not preempt local zoning ordinances in so far as they purport to regulate "where" natural gas drilling may occur, an appeals court could readily find that those ordinances' total, municipality-wide ban on the oil, gas and solution mining industries to be arbitrary and capricious and in error of law. To the extent that these local ordinances hold that the "where" is "no where" in the Town, they are also "no how" ordinances, and even the Dryden and Middlefield courts recognize that ECL §23-0303(2) superseded all local laws and ordinances affecting "how" natural gas drilling is to occur.
Put another way, the Dryden and Middlefield zoning ordinances are subject to implied preemption where each "conflicts with or frustrates" the statute's purpose. The declared policy of the OGSML is set forth in ECL §23-0301 which states:
It is hereby declared to be in the public interest to regulate the development, production and utilization of natural resources of oil and gas "¦ in such a manner that a greater ultimate recovery of oil and gas may be had, and that the correlative rights of all owners and the rights of all persons including landowners and the general public may be fully protected ....
The OGSML's purpose of attaining a "greater ultimate recovery of oil and gas" is clearly being frustrated by the total ban on oil, gas and solution mining established by these two local ordinances.
The extraction, processing and sale of natural gas is a necessary service in our region. We need to heat our homes. Like animal husbandry, retail stores and gasoline stations, the regional benefit of natural gas is accompanied by some level of local nuisance. People in the municipality need the meat products supplied by animal husbandry, even if the animals make noise or have an odor that offends; they need the miscellaneous goods and services provided by a retail business, even if the stores draw more cars to the location; and they needs fuel for their vehicles, even if that fuel produces odors and is combustible. Accordingly, the courts routinely find these uses must be accommodated insofar as they can be in a manner consistent with a sound plan for community development. The courts have regularly held invalid exclusionary zoning ordinances, i.e., bans.
One of the few recognized exceptions to this general rule of accommodation involves a ban on industrial uses including quarries and clay, sand, and gravel pits. The Court of Appeals in Gernatt Asphalt Prods. upheld the town's gravel mining ban because the town already had 600 acres devoted to mining so mining was not in fact excluded from the community. In addition, the Court noted that the town board was concerned that further mining would have an adverse impact on growth, the town's source of drinking water, the rural/agricultural character of the community, and the existing residences and future residential development. So, under the circumstances, it was a "reasonable exercise of its police powers to prevent damage to the rights of others and to promote the interests of the community as a whole."
However, there is no indication that the courts in the Town of Dryden and Middlefield cases explored whether the towns already have a large number of natural gas wells. Moreover, the New York State Department of Environmental Conservation's regulations governing "how" the Utica and Marcellus shale formations would be hydraulically fractured mandate standards that will minimize local adverse impacts and prevent damage to the rights of others, especially to any residential districts.
As regulated by the Department of Environmental Conservation, hydraulic fracturing will not be a nuisance under any circumstance. This is because, contrary to the two courts' assertion, the OGSML does give the Department authority over the "where" of natural gas drilling through rules governing well spacing and setback requirements. Section 553.2 of the Department of Environmental Conservation's regulations already prohibits gas extraction within 100 feet of any private dwelling, 150 feet of any building or area used by the public (store, office or park), 75 feet of a public road and 50 feet of a stream or lake. The Department's proposed new regulations would also prohibit any gas extraction within 4,000 feet of the NYC or Syracuse watersheds, 2,000 feet of any public water supply or lake, 500 feet of a primary aquifer, and 500 feet of any private water well.
Because these setback and other requirements of the Department of Environmental Conservation's regulations governing the hydraulic fracturing will prevent natural gas extraction from ever being a nuisance to or otherwise destructive of residential and agricultural uses, natural gas extraction clearly falls outside the Gernatt exception and clearly falls within the general rule that commercial and industrial uses must be accommodated when they can operate and grow with a minimum of conflict with other essential uses. Therefore, it is very possible that the portion of the Dryden and Middlefield courts' decisions, which upheld the town-wide bans on natural gas extraction, will be overturned on appeal.
Hiscock & Barclay LLP has extensive experience in successfully challenging regulatory over reach if there is a particular state regulation or local zoning ordinance about which you have a question. If you require further information regarding the issues presented in this article, feel free to contact the author and chair of our municipal and zoning practice area, Tom Walsh, at twalsh@hblaw.com.