The New York Court of Appeals, in a landmark ruling, recently upheld bans imposed by municipalities on oil and gas production activities, including fracking, in their communities. On June 30, in Wallach v. Town of Dryden, the court affirmed a ruling by the Appellate Division, Third Department, allowing the towns of Middlefield and Dryden to forbid gas drilling within their borders. This decision came about despite the industry’s argument that only the state could regulate gas drilling.
According to the Court of Appeals, the Oil, Gas and Solution Mining Law (OGSML) did not preempt the towns’ zoning laws prohibiting oil and gas production activities or natural gas exploration. Because there was no legislative intent evidenced within OGSML’s plain language, overarching statutory structure, or legislative history, much less any “clear expression,” requiring preemption of local land use regulations, the court held that the towns acted within their “home rule authority.” New York courts have traditionally given deference to a local municipality’s zoning authority.
The Wallach court explained that the text of a statutory provision is the clearest indicator of legislative intent. The language of OGSML’s supersession clause states that it “shall supersede all local laws or ordinances relating to the regulation of the oil, gas, and solution mining industries.” The court found that the clause did not preempt zoning ordinances that restrict or prohibit certain land uses within a town’s boundaries. Instead, the statute only preempts local laws that purport to regulate actual operations of oil and gas activities, which was not at issue here.
Further, the legislative history of OGSML did not evidence an intention to preempt the towns’ zoning laws. There was no mention of zoning or any intent to take away local land use powers. Instead, the legislative history was designed to prevent wasteful oil and gas practices by creating uniform statewide regulations.
Shale gas development using high-volume horizontal hydraulic fracturing, commonly referred to as hydrofracking, remains a controversial issue in New York as elsewhere. Fracking can allow for the extraction of enormous amounts of previously unavailable natural gas, but the practice has become subject to intense scrutiny by environmental advocates and upstate rural communities.
Hydrofracking involves drilling a vertical well thousands of feet into the ground to reach a shale rock formation. Once shale is found, the well is turned horizontally to stay within the formation and a high-pressure mixture of water, chemicals, and sand is injected into the wellbore. The procedure creates small cracks in the shale, “fractures,” which release trapped oil or natural gas.
Natural gas offers enormous benefits including the reduction of greenhouse gases, decreased reliance on foreign oil suppliers, and an economic boon to New York upstate communities. However, environmentalists continue to be concerned that fracking may contaminate groundwater and create air pollution. At the same time, some local communities fear that natural gas exploration will increase the burdens on municipal resources such as police and health care, and cause undesirable shifts in local economies and demographics. While some states have embraced fracking, Gov. Andrew Cuomo and many of his constituents have been hesitant to permit natural gas exploration.
There has been a moratorium on fracking in New York since 2008. While the Department of Environmental Conservation is creating a regulatory framework for hydrofracking in New York in the event the moratorium is lifted, the governor is anticipating the results of a long-awaited health study that the Department of Health commissioned in 2012.
On June 16, 2014, New York’s General Assembly passed a three-year moratorium on fracking to allow for more time to fully study environmental impacts. Full passage of the moratorium now depends on the New York State Senate and ultimately, Cuomo. Thus, even with the issuance of Wallach, affirming the rights of municipalities to prohibit fracking, this decision does not change the existing status quo in New York. The larger fate of hydrofracking in New York ultimately will be left in the hands of the executive and legislative branches of government, which must decide whether to allow New York to engage in natural gas exploration – at least where not prohibited by local zoning laws.
Alexana Gaspari is a law clerk in Gordon & Rees’s New York office.