Two cases decided in New York recently have taken the attention away from that state’s environmental study on hydraulic fracturing. According to reports, the oil and gas industry’s attention definitely shifted last month from the “regulatory” front to the “litigation” front when New York’s highest court upheld ordinances enacted by two municipalities banning fracking within its borders.
Many cities and towns across the country have enacted similar ordinances that effectively ban fracking where state regulations permit such activities. Many of these local ordinances have been challenged by companies on the basis of preemption. Those challenges will continue. Courts around the country will have to address the relationship between state and local governments and their respective legislative powers when it comes to regulating the highly debated subject of fracking. The two New York cases will be discussed below:
In Matter of Wallach v. Town of Dryden, Norse Energy Corp.
The Town of Dryden was sued over its amendment to a zoning ordinance that effectively banned all activities related to fracking within the town’s borders. Dryden is a rural community where Norse began acquiring leases for fracking. The company claimed that the ordinance was preempted by the supersession clause of the Oil, Gas and Solution Mining Law (OGSML), which regulates the production and development of oil and gas in New York. The company argued that the statute demonstrates the Legislature’s intention to preempt local zoning laws interfering with energy production.
Cooperstown Holstein Corp. v. Town of Middlefield.
Cooperstown Holstein Corp., a dairy farm that had previously entered into oil and gas leases, filed suit against the Town of Middlefield, challenging on preemption grounds the town’s zoning law that prohibited fracking. The town board emphasized that the town was “known worldwide for its clean air, clean water, farms, forests, hills … and concluded that fracking would eliminate these features” and “irreversibly overwhelm the rural character of the town.”
The trial court in each of the above cases rejected the preemption claim and upheld the local zoning ordinance. The New York Appellate Division, Third Department unanimously affirmed, holding that OGSML did not preempt the towns’ zoning ordinances banning all fracking activities within its borders. The New York Court of Appeals has agreed to hear appeals from these two cases. The court’s decision to grant leave to appeal was expected due to the ongoing debates surrounding the policy, scientific research and regulatory issues on fracking, not only in New York, but around the country.
It’s unclear what effect the decisions will have on the current moratorium on fracking currently in effect in New York. Now, even if the state’s moratorium is lifted, absent further action by the Legislature to make preemption explicit, oil and gas companies may still be prohibited from fracking in the majority of the state. That’s due to individual municipalities’ enactment of zoning laws that ban fracking within their borders. The lack of uniformity and uncertainty across New York may deter oil and gas companies from investing in fracking operations throughout the state. It may also require a closer look at the practice of fracking with both need and safety being addressed.
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