Wallach v. Town of Dryden

OPINION OF THE COURT

We are asked in these two appeals whether towns may ban oil and gas production activities, including hydrofracking, within municipal boundaries through the adoption of local zoning laws. We conclude that they may because the supersession clause in the statewide Oil, Gas and Solution Mining Law (OGSML) does not preempt the home rule authority vested in municipalities to regulate land use. The orders of the Appellate Division should therefore be affirmed.

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Matter of Wallach v Town of Dryden

Respondent Town of Dryden is a rural community located in Tompkins County, New York. Land use in Dryden is governed by a comprehensive plan and zoning ordinance. The underlying goal of the comprehensive plan is to “[p] reserve the rural and small town character of the Town of Dryden, and the quality of life its residents enjoy, as the town continues to grow in the coming decades.” Despite the fact that oil and gas drilling has not historically been associated with Dryden, its location within the Marcellus Shale region has piqued the interest of the natural gas industry.

The Marcellus Shale formation covers a vast area across sections of a number of states, including New York, Pennsylvania, Ohio and West Virginia. Natural gas — primarily methane — is found in shale deposits buried thousands of feet below the surface and can be extracted through the combined use of horizontal drilling and hydrofracking. To access the natural gas, a well is drilled vertically to a location just above the target depth, at which point the well becomes a horizontal tunnel in order to maximize the number of pathways through which the gas may be removed. The process of hydraulic fracturing — commonly referred to as hydrofracking — can then commence. Hydrofracking involves the injection of large amounts of pressurized fluids (water and chemicals) to stimulate or fracture the shale formations, causing the release of the natural gas (see generally US

Cooperstown Holstein Corporation v Town of Middlefield

Defendant Town of Middlefield, which includes a portion of the Village of Cooperstown, is located in Otsego County, New York, and its principal industries are agriculture and tourism. Its land use is regulated by a master plan and zoning ordinance. Similar to Dryden, there has been no oil or gas presence in Middlefield until 2007, when plaintiff Cooperstown Holstein Corporation (CHC) executed two leases with a landowner to explore the possibility of developing natural gas resources through hydrofracking.

Although the Town claimed that its zoning ordinance already prohibited natural gas exploration on the basis that it was not listed as a permissible land use, it undertook a lengthy and detailed review of the issue in 2011. After commissioning a study to weigh the impacts that hydrofracking would have on Middlefield and conducting public meetings, the Town Board, by a unanimous vote, amended its master plan to adopt a zoning provision classifying a range of heavy industrial uses, including oil, gas and solution mining and drilling, as prohibited uses. The Town Board reasoned that the “Cooperstown area is known worldwide for its clean air, clean water, farms, forests, hills, trout streams, scenic viewsheds, historic sites, quaint village and hamlets, rural lifestyle, recreational activities, sense of history, and history of landscape conservation,” and concluded that industrialization, such as hydrofracking, would “eliminate many of these features” and “irreversibly overwhelm the rural character of the Town.”

CHC promptly brought this action to set aside the zoning law, contending that it was preempted by the supersession provision in the OGSML. CHC and Middlefield each moved for summary judgment. Supreme Court denied CHC’s motion and granted Middlefield’s cross motion to dismiss the complaint, upholding the legality of the zoning law ( 35 Misc 3d 767 [Sup Ct, Otsego County 2012]). The Appellate Division affirmed ( 106 AD3d 1170 [3d Dept 2013]), and we granted CHC leave to appeal ( 21 NY3d 863 [2013]).

Our analysis begins with a review of the source of municipal authority to regulate land use and the limits the State may impose on this power. Article IX, the “home rule” provision of the New York Constitution, states that “every local government shall have power to adopt and amend local laws not inconsistent with the provisions of this constitution or any general law . . . except to the extent that the legislature shall restrict the adoption of such a local law” (NY Const, art IX, § 2 [c] [ii]). To implement this constitutional mandate, the state legislature enacted the Municipal Home Rule Law, which empowers local governments to pass laws both for the “protection and enhancement of [their] physical and visual environment” (Municipal Home Rule Law § 10 [1] [ii] [a] [11]) and for the “government, protection, order, conduct, safety, health and well-being of persons or property therein” (Municipal Home Rule Law § 10 [1] [ii] [a] [12]). The legislature likewise authorized towns to enact zoning laws for the purpose of fostering “the health, safety, morals, or the general welfare of the community” (Town Law §261; see also Statute of Local Governments § 10 [6] [granting

We, too, have designated the regulation of land use through the adoption of zoning ordinances as one of the core powers of local governance (see DJL Rest. Corp. v City of New York, 96 NY2d 91 , 96 [2001]). Without question, municipalities may “enact land-use restrictions or controls to enhance the quality of life by preserving the character and desirable aesthetic features of [the community]” (Trustees of Union Coll, in Town of Schenectady in State of N.Y. v Members of Schenectady City Council, 91 NY2d 161 , 165 [1997] [internal quotation marks and citation omitted]). And we have repeatedly highlighted the breadth of a municipality’s zoning powers to “provide for the development of a balanced, cohesive community” in consideration of “regional needs and requirements” (Matter of Gernatt Asphalt Prods. v Town of Sardinia, 87 NY2d 668 , 683 [1996]; see also Udell v Haas, 21 NY2d 463 , 469 [1968] [“Underlying the entire concept of zoning is the assumption that zoning can be a vital tool for maintaining a civilized form of existence”]).

That being said, as a political subdivision of the State, a town may not enact ordinances that conflict with the State Constitution or any general law (see Municipal Home Rule Law § 10 [1] [i], [ii]). Under the preemption doctrine, a local law promulgated under a municipality’s home rule authority must yield to an inconsistent state law as a consequence of “the untrammeled primacy of the Legislature to act with respect to matters of State concern” (Albany Area Bldrs. Assn. v Town of Guilderland, 74 NY2d 372 , 377 [1989] [internal quotation marks, ellipses and citation omitted]). But we do not lightly presume preemption where the preeminent power of a locality to regulate land use is at stake. Rather, we will invalidate a zoning law only where there is a “clear expression of legislative intent to preempt local control over land use” (Gernatt, 87 NY2d at 682).

Aware of these principles, Norse and CHC do not dispute that, absent a state legislative directive to the contrary, municipalities would ordinarily possess the home rule authority to restrict the use of land for oil and gas activities in furtherance of local interests. They claim, however, that the state legislature has clearly expressed its intent to preempt zoning laws of local governments through the OGSML’s “supersession clause,” which reads:

prevent any local government from enacting local zoning ordinances or other local laws which impose stricter mined land reclamation standards or requirements than those found herein” (ECL 23-2703 [former (2)] [emphasis added]).

We rejected the mining company’s contention that the clause preempted the land use restriction, explaining that the plain language of the phrase “local laws relating to the extractive mining industry” did not encompass zoning provisions. Instead, we held that the zoning law “relates not to the extractive mining industry but to an entirely different subject matter and purpose . . . the use of land in the Town of Carroll” (Frew Run, 71 NY2d at 131 [internal quotation marks and citation omitted]). Drawing a distinction between local regulations addressing “the actual operation and process of mining” and zoning laws regulating land use generally, we concluded that only the former category was preempted by the MLRL’s supersession clause (id. at 133). In effect, local laws that purported to regulate the “how” of mining activities and operations were preempted whereas those limiting “where” mining could take place were not (see id. at 131).

We further determined that our plain language construction of the supersession clause in Frew Run was consistent with the MLRL as a whole and its legislative history — the second and third factors. We noted that the binary purposes of the MLRL were “to foster a healthy, growing mining industry” and to “aid in assuring that land damaged by mining operations is restored to a reasonably useful and attractive condition” (id. at 132 [internal quotation marks and citation omitted]), and that the legislative history reflected a goal of promoting the “mining industry by the adoption of standard and uniform restrictions and regulations to replace the existing patchwork system of local ordinances” (id. [internal quotation marks, brackets and citation omitted]). From the statutory scheme and legislative history, we discerned that the “sole purpose” of the supersession clause was to prevent localities from enacting ordinances “dealing with the actual operation and process of mining” because such laws would “frustrate the statutory purpose of encouraging mining through standardization of regulations pertaining to mining operations” (id. at 133). In contrast, zoning laws restricting the location of mining operations within a town fell outside the preemptive orbit of the clause because “nothing in the Mined Land Reclamation Law or its history

Guided by these principles, we now apply Frew Run’s three-part inquiry to the OGSML’s supersession clause.

(1) Plain Language

The first factor in assessing whether a supersession provision preempts local control over land use requires us to examine the words of the clause itself. And because the text of a statutory provision “is the clearest indicator of legislative intent” (Matter of DaimlerChrysler Corp. v Spitzer, 7 NY3d 653 , 660 [2006]), this factor is most important.

The operative text of the OGSML’s supersession clause is quite close to the provision we analyzed in Frew Run, preempting local laws “relating to the regulation of the oil, gas and solution mining industries” (ECL 23-0303 [2]; compare ECL 23-2703 [former (2)] [preempting local laws “relating to the extractive mining industry”]). Based on the similarities between the two state statutes, we decline the invitation of Norse and CHC to ascribe a broader meaning to the language used in the OGSML. To the contrary, the distinction we drew in Frew Run applies with equal force here, such that ECL 23-0303 (2) is most naturally read as preempting only local laws that purport to regulate the actual operations of oil and gas activities, not zoning ordinances that restrict or prohibit certain land uses within town boundaries. Plainly, the zoning laws in these cases are directed at regulating land use generally and do not attempt to govern the details, procedures or operations of the oil and gas industries. Although the zoning laws will undeniably have an impact on oil and gas enterprises, as in Frew Run, “this incidental control resulting from the municipality’s exercise of its right to regulate land use through zoning is not the type of regulatory enactment relating to the [oil, gas and solution mining industries] which the Legislature could have envisioned as being within the prohibition of the statute” (Frew Run, 71 NY2d at 131).

Nevertheless, Norse and CHC, relying on the secondary clause in the OGSML’s supersession provision — preserving “local government jurisdiction over local roads or the rights of local governments under the real property tax law” (ECL 23-0303 [2]) — contend that the operative text cannot be limited to local laws that purport to regulate the actual operations of oil and

Further, the legislative schemes of which these preemption clauses are a part typically include other statutory safeguards that take into account local considerations that otherwise would have been protected by traditional municipal zoning powers (see e.g. ECL 27-1103 [2] [g] [requiring the Department of Environmental Conservation to consider the “impact on the municipality where the facility is to be sited in terms of health, safety, cost and consistency with local planning, zoning or land use laws and ordinances”]; Mental Hygiene Law § 41.34 [c] [allowing municipalities a means of objecting to the placement of community residential facilities]; Racing, Pari-Mutuel Wagering and Breeding Law § 1320 [2] [mandating the consideration of local impacts and community support in the siting of gaming facilities]). Norse and CHC are unable to point to any comparable measures in the OGSML that account for the salient local interests in the context of drilling and hydrofracking activities.

(2) Statutory Scheme

The second factor relevant to discerning whether a supersession clause preempts local zoning powers involves an assessment of the clause’s role in the statutory framework as a whole. We therefore turn to the OGSML — article 23 of the Environmental Conservation Law.

The stated purposes of the OGSML are fourfold: (i) “to regulate the development, production and utilization of natural resources of oil and gas in this state in such a manner as will prevent waste”; (ii) “to authorize and to provide for the operation and development of oil and gas properties in such a manner that a greater ultimate recovery of oil and gas may be had”; (iii) to protect the “correlative rights of all owners and the rights of all persons including landowners and the general public”; and (iv) to regulate “the underground storage of gas, the solution mining of salt and geothermal, stratigraphic and brine disposal wells” (ECL 23-0301).

In furtherance of these goals, the OGSML sets forth a detailed regime under which the New York State Department of Environmental Conservation is entrusted to regulate oil, gas and solution mining activities and to promulgate and enforce appropriate rules. In particular, the Department is empowered to “[r]equire the drilling, casing, operation, plugging and replugging of wells and reclamation of surrounding land in accordance with the rules and regulations of the department” (ECL 23-0305 [8] [d]); enter and plug or replug abandoned wells when the owner has violated Department regulations (ECL 23-0305 [8] [e]); compel operators to furnish the Department with a bond to ensure compliance (ECL 23-0305 [8] [k]); order the immediate suspension of drilling operations that are in violation of Department regulations (ECL 23-0305 [8] [g]); require operators to file well logs and samples with the Department (ECL 23-0305 [8] [i]); grant well permits for oil and gas drilling (ECL 23-0501); issue orders governing the appropriate spacing between oil and gas wells to promote efficient drilling and prevent waste (ECL 23-0503); oversee the integration of oil and gas fields to prevent waste (ECL 23-0701, 23-0901); execute leases on behalf of the State for oil and gas exploration and production (ECL 23-1101); and issue permits for underground storage reservoirs (ECL 23-1301).

And contrary to the position advanced by Norse and CHC, we see no inconsistency between the preservation of local zoning authority and the OGSML’s policies of preventing “waste” and promoting a “greater ultimate recovery of oil and gas” (ECL 23-0301), or the statute’s spacing provisions for wells (see ECL 23-0501, 23-0503). Waste is used as a term of art in the OGSML meaning, among other things, the “inefficient, excessive or improper use of, or the unnecessary dissipation of reservoir energy” and the “locating, spacing, drilling, equipping, operating, or producing of any oil or gas well or wells in a manner which causes or tends to cause reduction in the quantity of oil or gas ultimately recoverable” (ECL 23-0101 [20] [b], [c]). The OGSML’s overriding concern with preventing waste is limited to inefficient or improper drilling activities that result in the unnecessary waste of natural resources. Nothing in the statute points to the conclusion that a municipality’s decision not to permit drilling equates to waste. The OGSML’s related goal of ensuring a “greater ultimate recovery” and its well-spacing provisions — designed to limit the number of wells that may be drilled into an underground pool of oil or gas — are likewise directly related to the concept of waste prevention and do not compel a different result. As the Appellate Division below aptly observed in the Dryden case:

“the well-spacing provisions of the OGSML concern technical, operational aspects of drilling and are separate and distinct from a municipality’s zoning authority, such that the two do not conflict, but rather, may harmoniously coexist; the zoning law will dictate in which, if any, districts drilling may occur, while the OGSML instructs operators as to

Subsequently, the supersession clause at issue was adopted by the state legislature in 1981 in conjunction with amendments to various statutes such as the Finance Law, the ECL and the Real Property Tax Law (L 1981, ch 846). The 1981 amendments also imposed new drilling fees (see ECL 23-1903, as added by L 1981, ch 846, § 14), created monetary sanctions for violations of the OGSML (see ECL 71-1307, as added by L 1981, ch 846, § 17), and set up an oil and gas fund. The legislative history reflects that, prior to the amendments, the Department of Environmental Conservation had been unable “to effectively regulate and service the industry” because recent growth in drilling had exceeded the Department’s capabilities (Sponsor’s Mem at 2, Bill Jacket, L 1981, ch 846). Explaining that the Department was finding it difficult to fulfill its “regulatory responsibilities” under its existing funding and powers, Governor Hugh Carey confirmed that the amendments were needed to provide the Department with the monies required to implement its “updated regulatory program” as well as “additional enforcement powers necessary to enable it to provide for the efficient, equitable and environmentally safe development of the State’s oil and gas resources” (Governor’s Approval Mem at 1-2, Bill Jacket, L 1981, ch 846). The legislative history, however, sheds no additional light on the supersession clause, referencing it only once with no elaboration (see Budget Report on Bills at 1, Bill Jacket, L 1981, ch 846 [“The existing and amended oil and gas law would supersede all local laws or ordinances regulating the oil, gas, and solution mining industries”]).

In sum, application of the three Frew Run factors — the plain language, statutory scheme and legislative history — to these appeals leads us to conclude that the Towns appropriately acted within their home rule authority in adopting the challenged zoning laws. We can find no legislative intent, much less a requisite “clear expression,” requiring the preemption of local land use regulations.

As a fallback position, Norse and CHC suggest that, even if the OGSML’s supersession clause does not preempt all local zoning laws, it should be interpreted as preempting zoning ordinances, like the two here, that completely prohibit hydrofracking. In their view, supported by the dissent, it may be valid to restrict oil and gas operations from certain residential areas of a town — much like the zoning law in Frew Run — but an outright ban goes too far and cannot be seen as anything but a local law that regulates the oil and gas industry, thereby running afoul of the supersession clause. But this contention is foreclosed by Matter of Gernatt Asphalt Prods. v Town of Sardinia ( 87 NY2d 668 [1996]), our decision following Frew Run.

In Gernatt — decided after the legislature had codified Frew Run’s holding in an amendment to the MLRL’s supersession clause — the Town of Sardinia amended its zoning ordinance to eliminate all mining as a permitted use throughout the town. A mining company challenged the zoning law under the MLRL’s supersession clause and, in an argument mirroring the one advanced by Norse and CHC, asserted that Frew Run left “municipalities with the limited authority to determine in which zoning districts mining may be conducted but not the authority to prohibit mining in all zoning districts” (Gernatt, 87 NY2d at 681). We squarely rejected this cramped reading of Frew Run, reiterating that “zoning ordinances are not the type of regula

“A municipality is not obliged to permit the exploitation of any and all natural resources within the town as a permitted use if limiting that use is a reasonable exercise of its police powers to prevent damage to the rights of others and to promote the interests of the community as a whole” (id. at 684).

Manifestly, Dryden and Middlefield engaged in a reasonable exercise of their zoning authority as contemplated in Gernatt when they adopted local laws clarifying that oil and gas extraction and production were not permissible uses in any zoning districts. The Towns both studied the issue and acted within their home rule powers in determining that gas drilling would permanently alter and adversely affect the deliberately-cultivated, small-town character of their communities. And contrary to the dissent’s posture, there is no meaningful distinction between the zoning ordinance we upheld in Gernatt, which “eliminate[d] mining as a permitted use” in Sardinia (id. at 683), and the zoning laws here classifying oil and gas drilling as prohibited land uses in Dryden and Middlefield. Hence, Norse’s and CHC’s position that the town-wide nature of the hydrofracking bans rendered them unlawful is without merit, as are their remaining contentions.

At the heart of these cases lies the relationship between the State and its local government subdivisions, and their respective exercise of legislative power. 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

The ordinances here, however, do more than just “regulate land use generally” (id.), they purport to regulate the oil, gas and solution mining activities within the respective towns, creating a blanket ban on an entire industry without specifying the zones where such uses are prohibited. In light of the language of the zoning ordinances at issue — which go into great detail concerning the prohibitions against the storage of gas, petroleum exploration and production materials and equipment in the respective towns — it is evident that they go above and beyond zoning and, instead, regulate those industries, which is exclusively within the purview of the Department of Environmental Conservation. In this fashion, prohibition of certain activities is, in effect, regulation.

Unlike the situation in Matter of Gernatt Asphalt Prods. v Town of Sardinia ( 87 NY2d 668 [1996]) — which involved a zoning ordinance that eliminated mining as a permitted use in all districts — the ordinances in these appeals do more than just delineate prohibited uses. Where zoning ordinances encroach upon the DEC’s regulatory authority and extend beyond the municipality’s power to regulate land use generally, the ordinances have run afoul of ECL 23-0303 (2).

Chief Judge Lippman and Judges Read, Rivera and AbdusSalaam concur with Judge Graffeo; Judge Pigott dissents in an opinion in which Judge Smith concurs.

In each case: Order affirmed, with costs.