•  
  •  
  •  
  •  
  •  
  • Untitled Document
    Untitled Document

    New York high court upholds local bans on hydraulic fracturing

    Heather Palmer, Michael Weller, Bracewell & Giuliani LLP

    On June 30, 2014, the New York State Court of Appeals, the highest court in the state, held that municipalities can effectively “zone out” oil and gas operations by passing zoning ordinances that ban oil and gas production activities, including hydraulic fracturing, within municipal boundaries.  The court rejected claims that the state’s Oil Gas and Solution Mining Law (OGSML) preempts efforts on behalf of local authorities to ban hydraulic fracturing operations.

    In 2011, the Town of Dryden, New York banned hydraulic fracturing by passing a zoning ordinance that prohibited “all activities related to the exploration for, and the production or storage of, natural gas and petroleum.” Norse Energy challenged the ordinance, arguing that the Town of Dryden lacked authority to prohibit natural gas exploration and extraction activities because the OGSML preempts local zoning laws that curtail energy production.  The lower court concluded there was no evidence of express or implied preemption in the OGSML.   

    In May 2013, an appellate panel of the New York Supreme Court affirmed the decision of the lower court, holding that local municipalities have the power to enact zoning ordinances that ban “all activities related to the exploration for, and the production or storage of, natural gas and petroleum within its borders.”

    The Dryden case was heard with a similar case between the Town of Middlefield, New York and Cooperstown Holstein Corporation (“CHC”).  In 2011, the Town of Middlefield adopted a zoning ordinance prohibiting “oil, gas and solution mining and drilling” within its boundaries.  CHC brought an action to set aside the zoning law, claiming that it was preempted by the OGSML.  As in the Town of Dryden case, both the lower court and the appellate court upheld the legality of the zoning law.

    In its June 30th decision, the New York State Court of Appeals considered the power ceded to municipalities in New York under their home rule authority and whether the text of the OGSML includes any provisions that preempt zoning ordinances that ban oil and gas activities in the state.

    The court distinguished between local laws that purport to regulate the actual operations of oil and gas activities (which are preempted by the OGSML) and zoning ordinances that restrict or prohibit certain land uses within town boundaries (which are not).  In the court’s view, the zoning laws at issue were directed at regulating land use generally and did not attempt to govern the details, procedures or operations of the oil and gas industry.

    While the court recognized that the local bans would undeniably have an impact on oil and gas businesses and individual landowners in Dryden and Middlefield, the court found that the plain language of the OGSML, the statutory scheme, and the legislative history did not support preemption.  The court affirmed the decisions of the appellate courts.

    The dissent points out that the “zoning ordinances of Dryden and Middlefield do more than just regulate land use, they regulate oil, gas and solution mining industries under the pretext of zoning.”  By creating a blanket ban on oil and gas activities within their boundaries, the dissent noted that these towns were going above and beyond zoning and, instead, regulating those industries.

    The court’s decision in the Dryden and Middlefield cases will have a significant impact on future development of the New York Marcellus Shale.  Although the State of New York placed a moratorium on hydraulic fracturing in July 2008, any future attempts to lift the moratorium could prove irrelevant in light of this ruling.  With as many as 170 municipalities enacting bans or moratoriums on hydHeather Palmerraulic fracturing and more expected to follow, absent a change in the OGSML, future oil and gas development in the state is at risk.

    About the author
    As a partner in the environmental strategies group, Heather Corken Palmer helps energy, petrochemical and pipeline companies and private equity firms that are seeking guidance on environmental compliance and the allocation of environmental liabilities in mergers and acquisitions. Her areas of focus include onshore and offshore oil and gas regulation; solid and hazardous waste; oil and gas waste; environmental remediation; water quality; water rights; wetlands; endangered species; Superfund litigation; and compliance with the National Environmental Policy Act. She plays a major role in advising clients on the environmental issues surrounding shale play development, hydraulic fracturing and the permitting, construction and operation of liquefied natural gas (LNG) import/export facilities in the US.

    Michael Weller
    Michael Weller is an attorney in the environmental strategies group at Bracewell & Giuliani. He advises clients in the energy sector in the context of government investigations and enforcement actions, regulatory compliance and advocacy, litigation, permitting and in quantifying and allocating liabilities during business transactions. 

    Most Popular

    Related Articles

    Shale oil production in Bakken, Eagle Ford grew slightly in June

    08/03/2015

    Oil production from the Bakken and Eagle Ford shale plays increased marginally in June vs. May, according to Bentek Energy, an analytics and forecasting unit of Platts.

    France’s Seisquare Holdings to open Americas headquarters in Houston

    07/29/2015 Seisquare Holdings SA, a French software company providing products that help improve oil and gas exploration, plans to open a new headquarters in Houston, which will serve the Americas and house a...

    EIA forecasts US shale production to fall 91,000 b/d next month

    07/14/2015 Next month, shale oil production in the US is forecast to decline 91,000 barrels per day (b/d) to 5.36 million b/d, according to the US Energy Information Administration’s (EIA’s) latest Drilling P...

    Report: US natural gas production in June fell slightly from May

    07/13/2015 Natural gas production in the US Lower 48 averaged 72 billion cubic feet per day (Bcf/d) in June, down about 0.6 Bcf/d from the May average, according to Bentek Energy, an analytics and forecasting...

    PA Resources: Court approves extension of corporate reorganization

    07/09/2015 The Stockholm District Court in Norway has approved PA Resources AB’s June 25 petition to extend its corporate reorganization. With the court’s ruling, the company’s reorganization has been extende...

    Algeria: Finding The Gas Oasis

    07/08/2015 Despite possessing some of the world's largest resources of oil and gas, Algeria wants more. "There is a need to considerably expand the nation's hydrocarbon reserves to meet long term demand,...

    More Oil & Gas Financial Articles

    Shale oil production in Bakken, Eagle Ford grew slightly in June

    Mon, Aug 3, 2015

    Oil production from the Bakken and Eagle Ford shale plays increased marginally in June vs. May, according to Bentek Energy, an analytics and forecasting unit of Platts.

    France’s Seisquare Holdings to open Americas headquarters in Houston

    Wed, Jul 29, 2015

    Seisquare Holdings SA, a French software company providing products that help improve oil and gas exploration, plans to open a new headquarters in Houston, which will serve the Americas and house a new product development team, according to the Houston Business Journal.

    EIA forecasts US shale production to fall 91,000 b/d next month

    Tue, Jul 14, 2015

    Next month, shale oil production in the US is forecast to decline 91,000 barrels per day (b/d) to 5.36 million b/d, according to the US Energy Information Administration’s (EIA’s) latest Drilling Productivity Report.  

    Report: US natural gas production in June fell slightly from May

    Mon, Jul 13, 2015

    Natural gas production in the US Lower 48 averaged 72 billion cubic feet per day (Bcf/d) in June, down about 0.6 Bcf/d from the May average, according to Bentek Energy, an analytics and forecasting unit of Platts. On a month-over-month basis, June natural gas production was down less than 1% from May.

    PA Resources: Court approves extension of corporate reorganization

    Thu, Jul 9, 2015

    The Stockholm District Court in Norway has approved PA Resources AB’s June 25 petition to extend its corporate reorganization. With the court’s ruling, the company’s reorganization has been extended a further three months until Sept. 28.

    OGFJ photo of the day


    Click to view slideshow

    Oil & Gas Jobs

    Search More Job Listings >>
    Subscribe to OGFJ