United States v. Town of Dryden (In re Wallach)

Land Use
Oil & Gas

United States v. Town of Dryden (In re Wallach), 2014 NY Slip Op 4875 (N.Y. 2014)
New York State Court of Appeals

The towns of Dryden and Middlefield in the state of New York each have local zoning ordinances that regulate land uses.  After certain of their residents leased natural gas exploration and mining rights, each town amended its laws to specifically prohibit all oil and gas exploration, extraction and storage activities within town boundaries. The companies who leased the rights objected and challenged the validity of each of the town’s zoning laws.  Pages 2-6. The companies argued that a supersession clause of the state’s Oil Gas and Solution Mining Law preempts any local ordinances prohibiting fracking.

The Court of Appeals applied a three-part test for evaluating the scope and effect of the supersession clause: 1) the plain language of the supersession clause; 2) the statutory scheme as a whole; and 3) the relevant legislative history. Page 10.

The Court of Appeals held that the most natural reading of the supersession clause only prohibited local laws that regulated the operations of oil and gas activities, but not zoning ordinances that restrict or prohibit land uses within a town’s limit. The Court rejected the Companies’ argument that the second part of the supersession clause, which created specific exemptions for local regulation of roads and taxes, indicated that all other areas of regulation were preempted.  Although the Court acknowledged that zoning laws could impact oil and gas enterprises, it would be incidental and not reach the level of regulatory oversight the supersession clause was intended to address.  Pages 13-18.

Looking to the purpose of the state law, the Court concluded that the New York State Department of Environmental Conservation (NYSDEC) was charged with, among other things, reducing waste and creating uniform operations standards for oil and gas producers so that the producers would not be subject variable exploratory and extraction requirements across the state. The local laws subject to preemption under the supersession clause, therefore, are laws relating to operational standards and not general land use laws. Pages 18-21.

Lastly, the Court held that the legislative history indicated that the supersession clause was intended to prevent wasteful oil and gas practices by giving state regulators exclusive jurisdiction over the operations of oil and gas producers, not to interfere with local land use laws. Pages 21-25.

The Court concluded: “At the heart of these cases lies the relationship between the State and its local government subdivisions, and their respective exercise of legislative power. These appeals are not about whether hydrofracking is beneficial or detrimental to the economy, environment or energy needs of New York, and we pass no judgment on its merits. . . . The discrete issue before us, and the only one we resolve today, is whether the State Legislature eliminated the home rule capacity of municipalities to pass zoning laws that exclude oil, gas and hydrofracking activities in order to preserve the existing character of their communities. . . . [W]e cannot say that the supersession clause — added long before the current debate over high-volume hydrofracking and horizontal drilling ignited — evinces a clear expression of preemptive intent. The zoning laws of Dryden and Middlefield are therefore valid.” Pages 27-28