Town bans on gas and oil industry allowed

ALBANY — Town bans that would prohibit hydrofracking were upheld in a 5-2 decision by the state’s highest court on Monday.

The majority opinion, written by Judge Victoria A. Graffeo, said the state’s Environmental Conservation Law does not preempt local zoning laws prohibiting gas and oil extraction activities within town boundaries but relates to the regulation of how it can occur.

The plaintiffs — the Norse Energy Corporation and Cooperstown Holstein Corporation that had drilling leases and wanted hydrofracking allowed in southern Central New York towns with bans — argued that the state statute’s supercession clause describing “all local laws” applied to the municipal zoning laws in the case. Judge Eugene F. Pigott did the same in his dissent, with Judge Robert S. Smith concurring.

“The Towns 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.

Arguments heard from lawyers in two separate cases on June 3 cast the state’s Oil, Gas and Solution Mining Law for an against the towns of Dryden and Middlefield in central New York. Its supercession clause says, “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.”

The decision weighs on the public debate over whether hydraulic fracturing should be allowed in the state. The executive branch has deliberated for several years over permitting the intensive process of extracting natural gas known as hydrofracking.

Towns in the meantime have passed moratoria or bans on hydrofracking, citing potential risks of polluting natural resources with the fluid pumped into shale formations or from the influx of people and heavy machinery used at the well pads.

“I think what opinions like this do is put issues to rest so that towns can act with confidence going forward,” said Dana L. Salazar, an attorney with the law firm Tabner, Ryan and Keniry, who is advising the Rensselaerville town board as it prepares revisions to its zoning law.

Rensselaerville, Berne, and Westerlo are planning to change their zoning laws to address hydrofracking in some way. Knox is in the process of revising its comprehensive plan, a guiding document for zoning laws. The town of Guilderland passed a ban on hydrofracking in 2012, although the town does not lie over the gas-rich Marcellus Shale formation that reaches to the southwestern corner of Albany County. Prospects for gas extraction are greater in the Southern Tier region of New York.

Councilman William Bichteman in Westerlo indicated at the May town board meeting that he doesn’t favor a ban on gas drilling. The board extended its moratorium on the process this month in order to further consider the issue.

Frew Run

Using a three-part analysis from a case where Frew Run Gravel Prods. took on the Town of Carroll, the court’s majority examined the supercession clause for what it plainly says, the intention of the whole statute, and the legislative history surrounding it.

In Frew Run, the court held that the phrase “local laws relating to the extractive mining industry” did not apply to local zoning ordinances, which apply instead to the use of the land within a municipality.

“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,” Graffeo wrote.

The plaintiffs in the case said that, if the Environmental Conservation Law’s supercession clause applied only to regulation of operations, it would not include the two exceptions given for local jurisdiction over local roads and real property taxes, which, they argued, were not related to operations.

“Local laws dictating the number of daily truck trips or the weight and length of vehicles bear directly on industry operations and would otherwise be preempted absent the secondary clause,” she wrote.

Graffeo cited real property tax law’s allowance for municipalities to tax oil and gas operations.

“Because these special taxes are based on the level of production, they can be viewed as affecting the operations of the oil and gas industry, such that it was reasonable for the Legislature to carve out an exception from the preemptive scope of the operative text,” wrote Graffeo.

Relating to the statute as a whole, the majority pointed to various technical parameters that the Department of Environmental Conservation is entrusted in the Environmental Conservation Law with regulating and enforcing.

In light of the overriding interest in a comprehensive energy policy for the state, which the plaintiffs argued would be disrupted by local zoning authority, Graffeo quoted from the Appellate Division, the middle-level court in a three-tiered system, when it upheld Dryden’s ban.

“The well-spacing provisions of the OGSML [Oil, Gas, and Solution Mining Law] concern technical, operational aspects of drilling and are separate and distinct from a municipality's zoning authority, such that the two do not conflict, but rather, may harmoniously coexist; the zoning law will dictate in which, if any, districts drilling may occur, while the OGSML instructs operators as to the proper spacing of the units within those districts in order to prevent waste.”

In his dissent, Pigott cited Frew Run, as well, writing, “we made clear that there is a distinction between zoning ordinances that regulate land use and local ordinances that regulate the mining industry. The former, which involve the division of the municipality into zones and the establishment of permitted uses within those zones, relate not to the extractive mining industry, but rather, to the regulation of land use generally.”

He went on to say that the laws passed in Dryden and Middlefield amounted to a “blanket ban” on an entire industry, with a high level of detail and without specified zones, which was regulation under the supercession clause of the Environmental Conservation Law.

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