Wallach v. Town of Dryden
23 N.Y.3d 728, 16 N.E.3d 1188 (2014)
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Rule of Law:
New York's Oil, Gas and Solution Mining Law (OGSML) does not preempt a municipality's home rule authority to enact zoning ordinances that prohibit oil and gas exploration and production within its borders, because such ordinances regulate land use rather than the operational details of the industry.
Facts:
- The Town of Dryden, a rural community in Tompkins County, NY, is located within the Marcellus Shale region, which has significant natural gas deposits.
- In 2006, Norse Energy Corp. USA began acquiring oil and gas leases from landowners in Dryden for the purpose of natural gas exploration.
- The Town of Middlefield, a community in Otsego County, NY, whose principal industries are agriculture and tourism, also sits atop the Marcellus Shale.
- In 2007, Cooperstown Holstein Corporation (CHC) executed leases with a landowner in Middlefield to explore for natural gas using hydrofracking.
- After conducting studies and public hearings, the Town of Dryden amended its zoning ordinance in August 2011 to explicitly prohibit all oil and gas exploration, extraction, and storage activities.
- Following a similar review process, the Town of Middlefield amended its zoning ordinance in 2011 to classify heavy industrial uses, including oil, gas, and solution mining, as prohibited uses throughout the town.
Procedural Posture:
- In the first case, Norse Energy Corp. USA commenced a CPLR article 78 proceeding in New York Supreme Court, Tompkins County (trial court), challenging the Town of Dryden's zoning amendment.
- The trial court granted Dryden's motion for summary judgment, upholding the zoning amendment.
- Norse, as appellant, appealed to the Appellate Division, Third Department (intermediate appellate court), which affirmed the trial court's decision in favor of appellee Dryden.
- In the second case, Cooperstown Holstein Corporation (CHC) sued the Town of Middlefield in New York Supreme Court, Otsego County (trial court), to set aside its zoning law.
- The trial court granted Middlefield's cross-motion for summary judgment, upholding the zoning law.
- CHC, as appellant, appealed to the Appellate Division, Third Department (intermediate appellate court), which affirmed the trial court's decision in favor of appellee Middlefield.
- The New York Court of Appeals (the state's highest court) granted both Norse and CHC leave to appeal and consolidated the cases.
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Issue:
Does the supersession clause of New York's Oil, Gas and Solution Mining Law (ECL 23-0303 [2]) preempt a town's zoning ordinance that prohibits all oil and gas exploration and production activities, including hydrofracking, within its municipal boundaries?
Opinions:
Majority - Graffeo, J.
No. The supersession clause of the Oil, Gas and Solution Mining Law does not preempt a town's home rule authority to regulate land use through zoning, even when that zoning prohibits all oil and gas activities. Applying the three-part test from Matter of Frew Run, the court found no clear legislative intent to preempt local zoning power. First, the plain language of the clause, preempting local laws 'relating to the regulation of the oil, gas...industries,' pertains to the 'how' of industry operations, not the 'where' of land use. Second, the overall statutory scheme of the OGSML focuses on the technical, operational, and safety aspects of drilling, which is the purview of the state's Department of Environmental Conservation, not on local land use planning. Third, the legislative history shows a concern for standardizing regulations and preventing waste, not for usurping local control over community character. Citing Matter of Gernatt, the court confirmed that a municipality's power to regulate land use includes the ability to prohibit an activity entirely, not just restrict it to certain zones.
Dissenting - Pigott, J.
Yes. The towns' zoning ordinances are preempted because they directly relate to the regulation of the oil and gas industries. These ordinances are not general land use regulations but are instead blanket bans that specifically target and prohibit an entire industry, going 'above and beyond zoning.' By doing so, the towns are regulating the industry 'under the pretext of zoning,' which encroaches upon the exclusive regulatory authority of the state's Department of Environmental Conservation. The dissent argues that a complete prohibition of an industry is, in effect, a form of regulation that falls within the scope of the OGSML's supersession clause.
Analysis:
This decision firmly establishes a municipality's power in New York to use its zoning authority to control or even completely ban industrial activities like hydrofracking, despite a comprehensive state-level regulatory scheme for that industry. It solidifies the 'where' versus 'how' distinction from Frew Run, confirming that local governments retain control over land use decisions (where) while the state controls industry operations (how). This ruling creates a significant barrier for the energy industry by allowing a patchwork of local regulations, where drilling may be permitted in one town but banned in the next, thereby empowering local communities to prioritize environmental and character concerns over statewide energy policy.
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