Last Friday, a four judge panel of a New York appeals court upheld two local zoning laws that prohibit activities related to oil and gas exploration and development, including hydraulic fracturing.  The decisions in Norse Energy Corp. USA v. Town of Dryden and Cooperstown Holstein Corp. v. Town of Middlefield mark the first appellate ruling on the legality of such zoning bans in New York.  Copies of the court’s opinion in Dryden and Middlefield are available here and here, respectively.

In August 2011, the Town of Dryden amended its zoning ordinance to ban all activities related to the exploration, production, and storage of natural gas and petroleum within the town limits.  Prior to the amendment, Anschutz Exploration Corporation, the predecessor in interest of Norse Energy Corporation USA (“Norse”) had acquired gas leases covering approximated 22,000 acres in Dryden.  In September 2011, Anschutz sued the town seeking to invalidate the ordinance on the ground that it was preempted by the Oil, Gas and Solution Mining Law (“OGSML”).

In February 2012, the trial court granted the Dryden’s summary judgment motion, finding that the amended ordinance was not preempted, and dismissed the complaint.  Anschutz appealed.  During the pendency of the appeal, Norse acquired Anschutz’s interests in the Dryden and was substituted in the proceeding.  

Affirming the lower court, the four judge panel concluded that the OGSML does not preempt, either expressly or impliedly, a municipality’s power to enact a local zoning ordinance banning all activities related to the exploration, production, or storage of natural gas and petroleum within its borders.

The court reasoned that the zoning ordinance did not regulate the “details or procedure of the oil, gas and solution mining industries.  Rather, it simply establishes permissible and prohibited uses of land within the Town for the purpose of regulating land generally . . . .”  The court noted: “While the Town’s exercise of its right to regulate land use through zoning will inevitably have an incidental effect upon the oil, gas and solution mining industries, we conclude that zoning ordinances are not the type of regulatory provision the Legislature intended to preempt by the OGSML.”

The Town of Middlefield, New York enacted a similar zoning law in June 2011.  That ordinance was also challenged on preemption grounds.  Opponents of the ordinance lost at the trial court, and the New York appeals court affirmed the decision, relying entirely on the reasoning in Dryden to uphold that Town’s ordinance.

The challengers of the ordinances are likely to appeal the decisions to the state’s highest court, the New York State Court of Appeals. 

The North American Shale Blog will continue to track the progress of this case and report on important developments.