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Legal Update

Another New York Trial Court Upholds Local Ban on Gas Drilling

27 February 2012
Mayer Brown Legal Update

Just days after a New York trial court, in a matter of first impression, upheld a New York town’s zoning ban on natural gas exploration and production (see Anschutz Exploration Corp. v. Town of Dryden, Index No. 2011-0902 (Sup. Ct. Tompkins Cnty., Feb. 21, 2012)),1 a second New York trial court has addressed a nearly identical question and reached the same conclusion.

In Cooperstown Holstein Corporation v. Town of Middlefield, Index No. 2011-0930 (Sup. Ct. Otsego Cnty., February 24, 2012), a landowner challenged the validity of a new zoning law enacted in Middlefield in June 2011, that “effectively banned oil and gas drilling within the geographical borders of the township.” The plaintiff argued that the zoning law was preempted by the New York State Environmental Conservation Law (ECL), which provides that it “shall supersede all local laws or ordinances relating to the regulation of oil, gas and solution mining industries.” 

In 2007, the plaintiff executed two oil and gas leases with respect to property situated in Middlefield. It asserted that the purpose of these leases was frustrated by the enactment of the zoning law, which impermissibly encroached on the state’s exclusive authority to regulate the industry. The town of Middlefield argued that land use regulation, while it may have an incidental impact on the oil and gas industry, was not a law “relating to the regulation” of the industry for the purposes of ECL preemption.

The court conducted an extensive review and analysis of the legislative history of the ECL to discern the scope of its preemption provision. It determined that:

[n]either the plain reading of the statutory language nor the history of ECL §23-08303(2) would lead this court to conclude that the phrase “this article shall supersede all local laws or ordinances relating to the regulation of oil, gas and solution mining industries” was intended by the Legislature to abrogate the constitutional and statutory authority vested in local municipalities to enact legislation affecting land use.

The court relied on much the same decisional law as was cited by the Tompkins County trial court in Anschutz to reach the conclusion that municipalities are not preempted by the ECL from enacting local zoning ordinances that have the effect of prohibiting oil and gas drilling. The Middlefield court distinguished between regulation of the manner and method of mining activities (the exclusive province of the state) and regulation of land use generally (which is within the purview of local governments). The court concluded that “preemption does not apply to local regulations addressing land use which may, at most, ‘incidentally’ impact upon the ‘activities’ of the industry of oil, gas and solution drilling or mining.”

This is the second time a New York trial court has concluded that towns may exercise their authority to regulate land use even when doing so has the effect of completely prohibiting oil and gas exploration and mining activities.

For more information about this decision, or any other matter raised in this Legal Update, please contact at +1 212 506 2680, at +1 212 506 2562 or at +1 212 506 2297.

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Footnotes:
  1. See Mayer Brown Legal Update: “New York Court Upholds Zoning Ban on Hydrofracking,” February 23, 2012, available at: https://www.mayerbrown.com/publications/New-York-Court-Upholds-Zoning-Ban-on-Hydrofracking-02-23-2012.

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