|July 18, 2014|
Previously published on July 1, 2014
In a closely watched decision, a majority of the New York Court of Appeals has held that local anti-hydrofracking zoning rules can trump the state’s pro-energy development oil and gas law. The Court’s decision came in a pair of cases, In the Matter of Mark S. Wallach, as Chapter 7 Trustee for the Norse Energy Corp, USA v. Town of Dryden, et al. and Cooperstown Holstein Corp. v. Town of Middlefield.
Briefly, the energy company defendants argued that the state’s oil and gas law - known formally as the Oil, Gas and Solution Mining Law (OGSML) - contained a so-called “supersession clause” that preempted all local zoning laws, such as the anti-hydrofracking rules at issue. The municipalities countered that zoning regulations were lawfully enacted pursuant to the home rule authority provided them by the state constitution. The Court sided with the municipalities.
At the outset of its opinion, the Court said that, pursuant to the “home rule” provision, Article IX of the New York State Constitution, the Legislature had enacted the Municipal Home Rule Law empowering municipalities to enact laws promoting the “protection and enhancement of their physical and visual environment.” In keeping with this, the Court noted that the State Legislature has acknowledged the importance of local land use regulation, noting that it “is among the most significant powers and duties granted - to a town government.”
The Court acknowledged that “adoption of zoning ordinances is one of the core powers of local governance.” Nevertheless, the Court also noted that, as a political subdivision of the state, a municipality’s home rule authority could be superseded by legislation under the preemption doctrine. The question here is whether it was, and the Court’s answer was “no.”
The Court began its discussion of the preemption issue by examining the supersession clause in the OGSML, which states, in relevant part:
“For the purposes stated herein, this title shall supersede all other state and local laws relating to the extractive mining industry; provided however that nothing in this title shall be construed to prevent any local government from enacting local zoning ordinances - which impose stricter - standards or requirements than found herein.”
The energy defendants argued that the highlighted language broadly preempted any zoning rules restricting energy developing activities, including hydrofracking. In rejecting this argument, the Court conducted a three-part analysis looking at the plain language of OGSML, the overall legislative scheme and the legislative history. On the plain language point, the Court noted that, “It is instructive to compare OGSML’s supersession clause to other statutes that clearly preempt home rule zoning powers.” (Emphasis supplied) Contrasting the preemption language in these other statutes with the text of OGMSL, the Court stated that these other “provisions often explicitly include zoning in the preemptive language employed by the legislature. (Emphasis supplied)
On the statutory scheme point, the Court reviewed the stated purposes of the OGSML set out in the statute and said, “we perceive nothing in the various provisions of the OGSML indicating that the supersession clause was meant to be broader than required to preempt conflicting local laws directed at the technical operations of the industry.” (Emphasis supplied)
Lastly, on the legislative history point, after reviewing the original OGSML statute and its subsequent amendments, the Court ruled, “Nothing in the legislative history undermines our view that the supersession clause does not interfere with local zoning laws regulating the permissible and prohibited uses of municipal land. Indeed the pertinent passages make no mention of zoning at all, much less evince an intent to take away local land use powers.” (Emphasis supplied)
The Court also rejected as meritless a “fallback position” advanced by the energy defendants - and endorsed by the dissent here - that, even if the OGSML suppression clause does not preempt all zoning regulation, it does prohibit zoning rules that ban hydrofracking.
In conclusion, the Court stated:
“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. These are major policy questions for the coordinate branches of government to resolve. 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. There is no dispute that the legislature has this right.” (Emphasis supplied)
The Dryden/Middlefield decision represents the second ruling by a state supreme court sustaining local zoning regulations banning hydrofracking. The Pennsylvania Supreme Court issued a ruling at the beginning of the year endorsing this same result - albeit on somewhat different grounds. The key passage in the Dryden/Middlefield decision is the closing paragraph where the Court confirms that, notwithstanding its decision, the State Legislature has the absolute right to enact preemptive legislation barring municipalities from regulating hydrofracking. Other states have done just that. Last month, for example, North Carolina passed legislation placing limitations on the powers of municipalities to regulate hydrofracking. The question here is whether there is the political will to do so. Energy companies may view the court’s decision as a “green light” to pressure the Legislature to enact clear preemptive legislation. However, given the deep partisan political divide on this issue and the fact that this is a state-wide election year, the legislature may be more inclined to defer addressing the issue - at least until after this election cycle.