Posted by: Patricia Salkin | February 24, 2012

NY Trial Court Finds Town Has Authority to Zone Out Gas Drilling

Special thanks to Professor John R. Nolon of Pace Law School for this posting:

Anschutz Exploration Corporation v. Town of Dryden and Town of Dryden Town Board

  John R. Nolon[1]

Professor, Pace Law School

Counsel, the Land Use Law Center

February 23, 2012

On February 21st, the Supreme Court in New York found that local governments are empowered to regulate hydrofracking under their delegated zoning and land use authority, despite preemptive language in the state’s Oil, Gas and Solution Mining Law (OGSML).[2] To fully understand the importance of this holding, some context is helpful.

Over the past three years, state and local officials, business leaders, environmentalists, and the public in New York have been locked in a fractious and escalating debate about whether and how to allow horizontal drilling for natural gas in New York.  Nearly every day for the past year a new article, report, or study appears that either lauds or vilifies hydrofracking.  Much of the attention regarding the promise and perils of drilling for shale gas is focused on the Marcellus Shale formation, which is the one of the largest shale gas formations in the U.S., underlying several mid-Atlantic states including 18,700 square miles in New York.[3]  Estimates of the number of wells that will result in this vast Marcellus region in New York alone range up to 40,000. Drilling in New York awaits the completion of a study on the draft rules issued by the Department of Environmental Conservation (DEC) that will govern state-issued permits.

Hydraulic fracturing, or hydrofracking, is a well stimulation technique designed for areas underlain by large shale formations in which millions of gallons of water containing thousands of gallons of proprietary chemical slurries and a propping agent, such as sand, are pumped under high pressure down a wellbore to create fractures in the hydrocarbon-bearing shale.[4]  This causes the release of the natural gas that the shale contains and allows it to be pumped to the surface.  It is stored on the surface and then transported off-site for treatment and disposal.  Some of the fluid mixture, known as “flow-back water,” returns to the surface where it is disposed of by being trucked to injection wells or water treatment plants. In New York this raises a further complication since its geology is not favorable to injection wells. This, in turn, has led to a search for appropriate injection wells in other states and for waste water treatment plants that can handle this waste water, which are in short supply.

Under OMSML, DEC is the permitting agency for hydrofracking operations and must study the potential environmental impacts of hydrofracking before finalizing its regulations.[5]  The DEC has released a revised Draft Supplemental Generic Environmental Impact Statement (dSGEIS) regarding hydrofracking.[6]  The gas drilling industry is waiting the completion of the environmental impact statement and the finalization of drilling regulations before filing for permits.  In the meantime, the industry is laying the groundwork for obtaining permits by leasing land.

DEC and industry forces read the OMSML as preempting local zoning and land use control of the location and land use impacts of wells.  In response, some localities whose lawyers read the law differently have enacted various controls on the location of gas wells to protect their community character and environment.  Landowners and the industry, in turn, have sued these municipalities.  Deciding the underlying issues in these cases will take years to wind their way through the New York court system.  Largely absent from the decision-making process is the federal government.  Although federal policy regarding the regulation of hydrofracking is under review, the mining process is largely exempt from current federal law.[7]

Dozens of towns in the Marcellus Shale region have taken affirmative action against hydrofracking in their communities by temporarily or permanently banning it within their borders.  Proponents of hydrofracking have brought legal challenges against the towns of Dryden and Middlefield, which have permanently banned gas drilling through zoning; the plaintiffs assert that the towns lack legal authority to adopt such laws in light of preemptive language contained in the relevant language of the Environmental Conservation Law.

The Town of Dryden is located in Tompkins County, New York.  On August 2, 2011, following the receipt of a petition signed by 1,594 individuals, the Town amended its zoning ordinance to explicitly prohibit natural gas drilling.[8]  The ordinance was amended to add new definitions for “natural gas” and “natural gas and/or petroleum exploration,” “natural gas exploration and/or petroleum production wastes” and to prohibit the “exploration for or extraction of natural gas and/or petroleum.”[9]

The Town of Dryden’s law was challenged by the Anschutz Exploration Corporation (“Anschutz”), a Colorado-based driller and developer of natural gas wells.  Anschutz is the owner of oil and gas leases on approximately 22,200 acres in the Town of Dryden.[10]  In its declaratory judgment challenge, Anschutz claims that the OGSML preempts all local regulation of gas drilling.  

On February 21, 2012, the Supreme Court Justice handling the Dryden case decided in the Town’s favor by granting its Motion for Summary Judgment, upholding the Town’s total ban on hydrofracking within its borders.[11] The court’s holding was straightforward: “In light of the similarities between the OGSML and the Mined Land Reclamation Law as it existed at the time of Matter of Frew Run, the court is constrained to follow that precedent in this case.”[12]  The court found that the OGSML did not expressly preempt local zoning and that the town’s zoning amendment did not regulate gas production; it validly regulated land use, not the operation of gas mining, which was preempted by the statute.

The court noted that “[n]one of the provisions of the OGSML address traditional land use concerns, such as traffic, noise or industry suitability for a particular community or neighborhood.”[13]  It cited other preemptive statutes with provisions requiring the relevant state agency to consider the traditional concerns of zoning in deciding whether a permit is to be issued.  “Under this construction, local governments may exercise their powers to regulate land use to determine where within their borders gas drilling may or may not take place, while DEC regulates all technical operational matters on a consistent statewide basis in locations where operations are permitted by local law.”[14]


[1]Prepared with Victoria Polidoro for a forthcoming article on the regulation of hydrofracking.  Ms. Polidoro is an associate at Rapport Meyers LLP, which represents the Town of Middlefield in Cooperstown Holstein Corporation v. Town of Middlefield.

[2] Anschutz Exploration Corporation v. Town of Dryden and Town of Dryden Town Board, Tompkins County Index No. 2011-0901; RJI No. 2011-0499-M

[3]N.Y. State Dep’t of Envtl. Conserv., Revised Draft Supplemental Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program: Well Permit Issuance for Horizontal Drilling and High-Volume Hydraulic Fracturing to Develop the Marcellus Shale and Other Low-Permeability Gas Reservoirs 4-14 (2011) [hereinafter NYSDEC dSGEIS], available at http://www.dec.ny.gov/data/dmn/rdsgeisfull0911.pdf. 

[4]See NYSDEC dSGEIS, supra note 2, at 5-5.

[5] See Marcellus Shale, N.Y. St. Dep’t of Envtl. Conservation, http://www.dec.ny.gov/energy/46288.html (last visited Feb. 22, 2012).

[6] See NYSDEC dSGEIS, supra note 3, (released Sept. 7, 2011).

[7] The discharge of flow-back water and the disclosure of chemicals used in hydrofracking and contained in that flow-back fluid were exempted from the permitting that would otherwise be required under the Safe Drinking Water Act by the Energy Policy Act of 2005.  42 U.S.C. § 300h(d)(1) (2006).  In October 2011, EPA Administrator Lisa P. Jackson announced that the EPA will draft standards for regulating the handling and disposition of this wastewater.  See EPA’s Study of Hydraulic Fracturing and Its Potential Impact on Drinking Water Resources, U.S. Envtl. Protection Agency, http://www.epa.gov/hfstudy/index.html (last visited Feb. 22, 2012).

[8]See Town of Dryden, N.Y., Resolution 126, supra note 9.

[9]See id.  Section 2104 provides that “[n]o land in the Town shall be used: to conduct any exploration for natural gas and/or petroleum; to drill any well for natural gas and/or petroleum; to transfer, store, process or treat natural gas and/or petroleum; or to dispose of natural gas and/or petroleum exploration or production wastes; or to erect any derrick, building, or other structure; or to place any machinery or equipment for such purposes.” Id. at 2.

[10]Complaint at 3, Anschutz Exploration Corp. v. Town of Dryden, No. 000902/2011 (N.Y. Sup. Ct. Sept. 16, 2011), available at http://catskillcitizens.org/learnmore/drydenlawsuit.pdf.

[11]Anschutz Exploration Corporation v. Town of Dryden, No. 2011-0902 (N.Y. Sup. Ct. Feb. 21, 2012), available at http://ecowatch.org/wp-content/uploads/2012/02/dryden.pdf.

[12]Id. at 12. Id. at 12.  The Few Run court determined that local governments had zoning authority over extractive mining despite the existence of preemptive language in the MLRL, ECL 23-2703 [2], similar to that contained in the OGSML.

[13]Id. at 18.

[14]Id. at 20.


Responses

  1. The last sentence in the 3rd paragraph: “Some of the fluid mixture, known as “flow-back water,” returns to the surface where it is disposed of by being injected into wells or by being trucked off-site for disposal.” is quite inaccurate. ALL flow-back water is is trucked offsite for disposal. Some of the flow-back goes to injection wells offsite for disposal, some of it goes to municipal watsewater treatment plants ofsite for disposal, and some of it goes to new, privately operate treatment plants offsite. None of flow-back is disposed of in injection wells onsite, as the sentence implies.

    At the private treatment plants it is treated and in many cases recycled back to the drilling companies for use again.

    • Mr. Franz is correct. The statement is ambiguous. Well injection of flow-back water is done off-site. In New York this raises a further complication since our geology is not favorable to injection wells. This, in turn, has led to a search for appropriate injection wells in other states and for waste water treatment plants that can handle this wastewater, which are in short supply. All wastewater has to be trucked somewhere and appropriate locations are scarce. The only exception to this, according to the DEC’s environmental impact study, is when there is on-site retention of wastewater for drilling multiple wells.


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