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In a case of first impression, a New York trial court has
considered "whether a local municipality may use its power to
regulate land use to prohibit exploration for, and production of,
oil and natural gas." In Anschutz Exploration Corp. v.
Town of Dryden, Index No. 2011-0902 (RJI No. 2011-0499-M)
(Sup. Ct. Tompkins Cnty., Feb. 21, 2012), the court concluded that,
but for one small and severable part of the challenged zoning law,
the Town's land use regulations are permissible and not
preempted by state law.
In 2011, the Town of Dryden amended its zoning ordinance to
broadly prohibit the use of land within the Town "to conduct
any exploration for natural gas and/or petroleum; to drill any well
for natural gas and or petroleum; to transfer, store, process or
treat natural gas and/or petroleum" and numerous other uses
associated with oil and gas production. Anschutz, which stated that
it had gas leases covering about 22,200 acres in the
Town—over one-third of its total area—and had
invested over $5 million in its operations within Dryden, sued the
Town. It sought a declaration that the Town's zoning ordinance
was expressly superseded by New York's Oil, Gas and Solution
Mining Law (OGSML), or that it was preempted as inconsistent with
the substantive provisions of that law. The Town moved to dismiss
the action and for summary judgment declaring its change to the
zoning ordinance valid.
The OGSML provides that it "shall supersede all local laws
or ordinances relating to the regulation of the oil, gas and
solution mining industries ...." The court looked to how the
New York Court of Appeals interpreted similar language in the Mined
Land Reclamation Law, and to the legislative history of OGSML. The
court concluded that, "as both statutes preempt only local
regulations 'relating' to the applicable industry, they
must be afforded the same plain meaning—that they do not
expressly preempt local regulation of land use, but only
regulations dealing with operations."
The court explained that "[u]nder this construction, local
governments may exercise their powers to regulate land use to
determine where within their borders gas drilling may or may not
take place, while [the Department of Environmental Conservation]
regulates all technical operational matters on a consistent
statewide basis in locations where operations are permitted by
law." The court saw no difficulty in the fact that
Dryden's zoning law prohibited all drilling activity. It noted
that the Court of Appeals had previously approved such blanket
restrictions, and that "a municipality may exercise its zoning
authority to completely ban mining within its
jurisdiction."
The court did find that the Town had gone too far in one
respect: the zoning statute purported to invalidate permits
"issued by any local, state or federal agency, commission or
board for a use which would violate" the zoning ordinance. The
court held that while the Town of Dryden could regulate land use
within the Town, it could not "invalidate a permit lawfully
issued by another governmental entity." This provision was,
however, severable, and did not affect the validity of the
remainder of the zoning ordinance.
Town governments, which exercise fairly broad regulatory powers
in New York State, may now feel free to implement highly
restrictive zoning statutes—even to the point of
completely banning hydrofracking operations within their borders.
We presume that an appeal as of right to the Appellate Division
will follow, and expect to report on further developments as they
occur.
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