New York’s top court recently ruled that municipalities may ban fracking as part of their “home rule” authority to regulate land use. In a 5-2 decision, the Court of Appeals on June 30, 2014, ruled that state law did not preempt two local zoning ordinances that banned fracking.
Parts of New York sit atop the Marcellus Shale, which contains rich natural-gas reserves accessible by fracking. Although New York currently has a moratorium on fracking, several towns have sought to ban the practice. The Town of Dryden in 2011 adopted a zoning ordinance that prohibited all oil and gas exploration, extraction, and storage activities, and the Town of Middlefield in 2011 adopted a similar zoning ordinance that prohibited all oil, gas, and solution mining and drilling.
These two zoning ordinances were based on the towns’ home-rule authority to regulate land use. Home rule is based on the New York Constitution and its implementing statute. Section 2(c)(ii) of Article IX of the New York Constitution states that “every local government shall have power to adopt and amend local laws not inconsistent with the provisions of this constitution or any general law . . . Except to the extent that the legislature shall restrict the adoption of such a local law . . .” And Section 10(1)(ii)(a) of the state’s Municipal Home Rule Law states that every local government may pass laws for “(11) The protection and enhancement of its physical and visual environment,” and “(12) The government, protection, order, conduct, safety, health and well-being of persons or property therein.”
Two energy companies in 2011 filed separate suits challenging the validity of the two ordinances. Norse Energy Corp. USA, through its predecessors, had executed oil and gas leases in Dryden, while Cooperstown Holstein Corp. had done the same in Middlefield. Both companies claimed that the “supersession” clause of the state’s Oil, Gas and Solution Mining Law (OGSML) preempted the towns’ fracking bans.
The supersession clause of the OCSML is found in § 23-0303(2) of the Environmental Conservation Law, and states:
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 preempt a municipality’s home-rule authority to regulate land use. (Emphasis added.)
Norse and Cooperstown claimed that the ordinances should be preempted because they “related” to the regulation of the oil, gas and solution mining industries. But the trial courts held that the zoning ordinances were not preempted, and the intermediate appeals courts affirmed.
The Court of Appeals affirmed the lower courts’ holdings that the ordinances were not preempted, and based its decision on Frew Run Gravel Prods. v. Town of Carroll, 71 N.Y.2d 126 (1987). Frew Run involved a local zoning ordinance that prohibited sand and gravel operations in one part of a town. A company challenged the ordinance, claiming that it was preempted by the supersession clause in the state’s Mind Land Reclamation Law. This suppression clause, which was similar to the one in the OCSML, stated that “this title shall supersede all other state and local laws relating to the extractive mining industry.” The Frew Run court rejected the company’s argument, and held that the suppression clause preempted only local laws regulating the “how” of mining, but not those limiting “where” mining could occur.
The Court of Appeals followed Frew Run, and held that, while municipalities could not regulate the “how” of fracking, they could limit “where” it could occur.
[T]he distinction we drew in Frew Run applies with equal force here, such that ECL 23-0303 (2) 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. 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.
The majority noted that the state legislature could amend the OCSML to preempt municipalities from banning fracking. “There is no dispute that the State Legislature has this right.”
The dissent argued that the local ordinances should be preempted by the supersession clause because they “relate to the regulation of the oil, gas and solution mining industries.” According to the dissent, the zoning ordinances did “more than just regulate land use, they regulate oil, gas and solution mining industries under the pretext of zoning.” Unlike in Frew Run, which involved a ban in just one part of a town, the ordinances here applied to all – not just part – of the two towns. So the ordinances “go above and beyond zoning and, instead, regulate those industries, which is exclusively within the purview of the Department of Environmental Conservation. In this fashion, prohibition of certain activities is, in effect, regulation.”
In the wake of this opinion, it will be interesting to see whether the state legislature amends the OCSML to preempt municipalities from banning fracking, and whether more New York municipalities adopt zoning ordinances that ban fracking.