1:48pm

Thu May 2, 2013
Energy

Court upholds 'home rule' over drilling laws

In two separate rulings Thursday, New York's appellate court, the state's second highest court, ruled that the state's Oil, Gas and Solution Mining Law (OGSML) does not preempt municipal land use laws.

The decision on so-called 'home rule', was being closely monitored because of the implications for future resource development, which could include hydraulic fracturing or fracking. The ruling could signify local towns can ban fracking.

In the first case, NORSE ENERGY U.S.A. vs TOWN OF DRYDEN et al., Anschutz Exploration Corporation and subsequently Norse Energy sought a court ruling to support its argument that the state’s OGSML should override local laws.

The Oil, Gas and Solution Mining Law is contained in the state's Environmental Conservation Law, overseen by the state's environmental protection agency.

In August 2011 the Town of Dryden had amended a local zoning ordinance to ban all activity related to exploiting oil and gas resources, driven by local concerns over the potential fracking operations. Oil and gas leases owned by Anschutz, (and later Norse Energy) covered some 22,000 acres in the town.

On Thursday, the Appellate panel of four judges ruled in favor of the Town of Dryden, and its co-respondents the Dryden Resources Awareness Coalition, made up of over 70 residents and landowners.

There is nothing in the statute or its legislative history suggesting, as petitioner does, that it is the policy of this state to "maximize recovery" of oil and gas resources at the expense of municipal land use decision making.

The ruling continues:

Thus, we hold that the OGSML does not preempt, either expressly or impliedly, a municipality's power to enact a local zoning ordinance banning all activities related to the exploration for, and the production or storage of, natural gas and petroleum within its borders.

In the second decision, COOPERSTOWN HOLSTEIN CORPORATION vs TOWN OF MIDDLEFIELD, the panel ruled along similar lines, regarding a zoning change made in the town in June 2011.

For the reasons set forth in Matter of Norse Energy Corp. USA v Town of Dryden (supra), we find plaintiff's claim to be without merit and affirm Supreme Court's judgment declaring that defendant's zoning law is valid.

(Here's additional background on the story from the Innovation Trail's Matt Richmond.)

Put to rest?

Because of the unanimous decisions, the State Supreme Court would have to grant 'leave' for the decisions to be appealed. Lawyers for the drilling companies have told the Associated Press they will do so.

Earthjustice attorney Deborah Goldberg argued for the Town of Dryden. She says the unanimous decisions by the four judge panel that heard both cases puts to rest the question of whether New York towns can ban drilling.

“I think that it’s quite clear that there is no dispute among them and there should be no dispute generally on this issue,” she told the Innovation Trail.

The defendants relied on a case called Frew Run which said towns in New York can ban gravel mines within their borders. Plaintiff’s lawyer Tom West says the court was wrong to determine the state’s energy policy based on a decision about gravel mines. As a result, they might appeal to the state’s highest court where that gravel mining case was decided.

“They need to correct what they said in that case and define its limitations.”

West says allowing towns to ban drilling will keep the industry from ever fully developing in New York. While about 150 towns have either banned or placed a moratorium on drilling, many town boards in the potentially gas-rich Southern Tier have expressed support for drilling. West says allowing local bans makes industry investment too risky, even where it’s supported for now.

“So if you’re an operator and you want to spend tens of millions or hundreds of millions of dollars acquiring mineral rights in a group of towns, only to have those towns decide by a 3-2 town board vote that they want to ban oil and gas development, you’re going to look like you were very imprudent in your decision making."

A statewide hold on fracking has been in place for five years while the Department of Environmental Conservation completes its environmental review.

Goldberg of Earthjustice says local control over industry is the way things have always worked in New York, no matter what the DEC decides.

“It leaves open the opportunity to operate where they’re welcome instead of you know forcing themselves down the throat of people.”

Goldberg says the Court of Appeals may still take the case because it’s such a high-profile issue.