Posted by: Patricia Salkin | August 30, 2013

NY Appellate Court Holds No Preemption of Local Ordinance Banning Drilling and State Law Regulating Drilling

The Town of Dryden, NY enacted a zoning ordinance banning all activities related to the exploration for, and the production or storage of, natural gas and petroleum. The amendment was enacted in August 2011, at a time where the Town was in the midst of a growing concern over the proposed use of high volume hydraulic fracturing, also known as “hydrofracking,” to recover natural gas from underground shale deposits. The petitioner, Norse Energy Corp, is the successor in interest to Anschutz Exploration Corporation, a driller and developer of oil and natural gas wells that owned leases covering approximately 22,200 acres of land in the Town of Dryden, which is located in Tompkins County. Norse commenced this action for declaratory judgment seeking invalidation of the zoning amendment on the ground that it was preempted by the Oil, Gas and Solution Mining Law (OGSML). A group of homeowners, banded together to form the Dryden Resources Awareness Coalition (DRAC) moved to intervene in the matter to defend the ordinance. After both the Town and Norse opposed DRAC’s motion, the Court denied DRAC’s motion to intervene and granted summary judgment to the Town concluding that the ordinance was not preempted by OGSML. Norse and DRAC appealed.

The Court first looked to determine whether the trial court erred in denying DRAC’s motion to intervene. Even though members of DRAC submitted affidavits identifying effects that hydrofracking may have on their daily lives, the claimed impacts were largely speculative according to the Court, and failed to demonstrate a substantial interest in the outcome of the action different from other residents of the Town. Therefore, because the Town was already defending the law, and no member of DRAC had suffered an actual, specialized injury, the trial court did not err in denying DRAC intervening status and was proper in granting them amicus curie status to consider their argument in that context.

The substantive issue was whether the ordinance is preempted by the OGSML. The Court first examined the supersession clause in the OGSML to determine whether that provision supersedes the zoning ordinance. The plain language of the OGSML provision at issue here prohibits municipalities from enacting laws or ordinances ‘relating to the regulation of the oil, gas and solution mining industries.’ The Court interpreted this by determining that the zoning ordinance at issue does not seek to regulate the details or procedures, as regulation is defined in Merriam-Webster’s Dictionary, rather it simply establishes permissible and prohibited uses of land within the Town for the purpose of regulating land generally. Despite the incidental effect the ordinance has on the oil, gas and solution mining industries, the Court concluded that the ordinance is not the type of regulatory provision that the Legislature intended to be preempted by the OGSML.

Norse argued that even if the amendment to the zoning ordinance is not expressly preempted by the OGSML, it is nevertheless invalid under principles of implied preemption. The Court rejected this argument stating that the zoning amendment neither conflicts with the language nor the policy of the OGSML. Norse claimed that the OGSML does now allow municipalities to enact zoning ordinances banning drilling within their jurisdictions. Disagreeing with this argument, the Court said that it is not the policy of the OGSML to ‘maximize recovery’ of oil and gas resources at the expense of municipal land use decision making. Instead, what the OGSML restricts is local laws regulating established, and legal uses of land for drilling purposes, such as requirements of spacing between wells and safety procedures. The Court concluded that the OGSML does not preempt, either expressly or impliedly, a municipality’s power to enact a local zoning ordinance banning all activities related to the exploration for, and the production or storage of, natural gas or petroleum within its borders.

Norse Energy Corp. USA v. Town of Dryden, 108 A.D.3d 25 (3d Dept. 2013)

The opinion may be accessed at: http://www.decisions.courts.state.ny.us/ad3/Decisions/2013/515227.pdf


Responses

  1. The NYS Court of Appeals has just agreed to take a discretionary appeal from the referenced opinion of the Appellate Division, Third Department.


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