In the past few years, developments in the technology used to extract oil and gas from shale rock formations — particularly improvements in hydraulic fracturing,1 commonly known as “fracking” or “hydrofracking” — have made it economically feasible to reach previously inaccessible mineral deposits. As a result, the energy industry has increased gas production in the Marcellus shale formation, which extends through parts of Ohio, West Virginia, Pennsylvania, and southern and central New York.2 Fracking raises a variety of health, safety, and environmental concerns, and many New York municipalities have enacted local zoning provisions effectively prohibiting fracking activities.3 Last June, in Wallach v. Town of Dryden,4 the New York Court of Appeals, the state’s highest court, ruled that the state’s Oil, Gas and Solution Mining Law5 (OGSML) does not preempt local zoning ordinances that effectively ban oil and gas extraction.6 In upholding the local bans as a matter of statutory interpretation, the Court of Appeals relied on a traditional vision of zoning and may have underestimated the way some modern local zoning practices not on display in Wallach may intersect with state policy. Although Department of Environmental Conservation (DEC) Commissioner Joe Martens announced in December that he would issue a legally binding findings statement prohibiting high-volume hydraulic fracturing in New York State,7 the Court of Appeals’ opinion remains good law relevant to other New York preemption cases. The opinion’s failure to acknowledge when state law might preempt legitimate zoning methods could chill valuable experimentation in local land use regulation.
In the town of Dryden, the town board amended its zoning ordinance in August 2011 to ban all activities related to oil and gas exploration, extraction, and storage, effectively banning fracking.8 A month later, Norse Energy Corp. USA (Norse),9 which owned gas leases covering 22,200 acres in Dryden, or approximately one-third of the town, challenged the zoning amendment on the ground that it was expressly preempted by the OGSML.10 The OGSML contains a supersession clause, section 23-0303(2), added in 1981, that preempts “all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries” excluding “local government jurisdiction over local roads or the rights of local governments under the real property tax law.”11
The Tompkins County Supreme Court, the trial-level court, granted the town’s motion for summary judgment.12 The court stated that it was constrained by precedent13: in Frew Run Gravel Products, Inc. v. Town of Carroll,14 the Court of Appeals had rejected a challenge to local zoning ordinances based on a similar supersession clause in the state’s Mined Land Reclamation Law15 (MLRL).16 The Third Department of the Appellate Division affirmed the grant of summary judgment for Dryden, examining the legislative history of the OGSML, in particular the 1981 amendments, and construing the law “as preempting only local legislation regulating the actual operation, process and details of”17 the oil and gas industry and “thus avoiding any abridgment of [a] town’s powers to regulate land use.”18
Combining the action with a similar case from the town of Middlefield,19 the New York Court of Appeals affirmed the judgments of the Appellate Division.20 Writing for the court, Judge Graffeo21 characterized a municipality’s power to enact zoning laws for the “health, safety, morals, or the general welfare of the community”22 as “one of the core powers of local governance” contemplated by the New York Constitution’s “home rule” provision.23 In light of this power, Judge Graffeo explained, the court would interpret a state statute as preempting a locally enacted zoning law only “where there is a ‘clear expression of legislative intent.’”24 In determining whether the statute demonstrates such intent, the court was guided by its decision in Frew Run, which considered three factors: the plain language of the supersession clause, the statutory scheme as a whole, and the legislative history.25
First analyzing the plain language, the court stated that given the striking similarities between the OGSML’s supersession clause and the MLRL’s supersession clause,26 found in Frew Run not to preempt local zoning ordinances, no “broader meaning” could be ascribed to the OGSML.27 In Frew Run, the court recounted, “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.”28 In light of the similarities between the statutes,29 the court read section 23-0303(2) “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.”30
The court next looked to the statutory scheme. The stated purposes of the OGSML are to “prevent waste,” to authorize the “development of oil and gas properties” in order to ensure “a greater ultimate recovery of oil and gas,” to protect the rights of all property owners and the general public, and to regulate underground gas storage.31 To further these goals, the statute creates a detailed regime of operations standards and empowers the DEC to further regulate by, for example, issuing permits, executing leases, and requiring well plugging.32 Thus, the court found it “readily apparent” that the OGSML as a whole is concerned with “the safety, technical and operational aspects of oil and gas activities across the State.”33
The court then considered the last Frew Run factor: legislative history. According to the court, the OGSML was enacted to conserve oil and gas resources.34 The state legislature passed the 1981 amendments, including the supersession clause, to increase the DEC’s funding and enforcement capacity after finding that “recent growth in drilling had exceeded the Department’s capabilities.”35 The court found no historical materials that shed additional light on the supersession clause.36 Ultimately, the court found nothing in the OGSML’s text, structure, or legislative history to demonstrate a clear intent to preempt zoning ordinances such as those at issue in the case.
The court concluded by responding to Norse’s argument that, regardless of the validity of other types of zoning provisions, local zoning laws that create an “outright ban” should be considered regulation of the oil and gas industry preempted by section 23-0303(2).37 The court found this interpretation foreclosed by its decision in Gernatt Asphalt Products, Inc. v. Town of Sardinia.38 Whereas Frew Run upheld a local law that authorized sand and gravel operations in certain districts but not in the district in question,39 the Court of Appeals in Gernatt upheld a town’s total ban on mining because the MLRL does not create an obligation to allow mining somewhere within each municipality.40 Applying the same logic, the Wallach court upheld the outright bans before it under the OGSML.41
Judge Pigott dissented.42 In his view, by “creating a blanket ban on an entire industry”43 rather than specifying zones for different uses, the local laws at issue “go above and beyond zoning”44 and effectively “regulate oil, gas and solution mining industries under the pretext of zoning.”45 He distinguished the prohibition of mining in Gernatt, opining that the Middlefield and Dryden zoning ordinances “go into great detail concerning the prohibitions against the storage of gas, petroleum exploration and production materials and equipment.”46
At the time of the Wallach decision, New York had a statewide temporary moratorium on the use of fracking pending further study of its environmental and health risks.47 Six months after the decision, following a two-year public review, the state’s Department of Health (DOH) published a study recommending a prohibition of fracking due to “significant uncertainties” about the health risks associated with high-volume fracking.48 At a state cabinet meeting on December 17, 2014 DOH Commissioner Howard Zucker described these findings, and DEC Commissioner Martens announced his decision to issue a legally binding findings statement prohibiting fracking in New York State.49
The Court of Appeals’ discussion of zoning techniques leaves uncertainty about the preemption of other regulations that a locality might employ to restrict, but not altogether ban, fracking uses. Also, by sharply distinguishing the purposes of local zoning from those of state environmental regulation, the court sidestepped the question of which objectives of zoning are legitimate when there is potential for interference with state policy. While the Cuomo Administration’s recent decision to ban fracking statewide attenuates the immediate practical impact of the Wallach court’s opinion, future courts could chill innovation in local land use regulation by relying on the Wallach court’s characterization of zoning.
Under traditional Euclidean zoning, towns are carved into geographically mapped zones, and each zone allows a preset list of land uses as of right.50 However, starting in the 1950s, and partly motivated by growing concerns about land development and environmental impact, American municipalities moved far from early iterations of Euclidean zoning. Zoning ordinances today are increasingly complex, particularized, and discretionary.51 Among the zoning innovations, special exception or conditional use regulations allow uses by special permit if certain conditions related to the use of the land are met.52
The Dryden and Middlefield ordinances took the classic as-of-right form by banning oil and gas production outright, and the Wallach and Frew Run courts relied on that vision of zoning when interpreting the OGSML and the MLRL. In Frew Run, the court explained that municipal zoning ordinances “regulate land use generally” by “dividing a governmental area into districts and establishing uses to be permitted within the districts,”53 essentially describing Euclidean zoning. In characterizing zoning this way, the Frew Run court concluded that zoning’s “incidental” effect on all “uses or businesses”54 does not raise the concerns associated with “patchwork”55 local regulation of industry.56 By also distinguishing the “how” of “details, procedures or operations”57 from the “where” of land use,58 the Wallach court appeared to have as-of-right Euclidean zoning — district-by-district or total bans on certain uses — in mind when answering the preemption question.
More flexible zoning techniques like special permits, however, might not fall neatly into the “how” versus “where” framework from Frew Run. Rather than banning oil and gas production from a given zoning district based on concerns about odors, air pollution, visual impacts, or water use, a town may prefer to issue special permits for fracking that would mitigate those risks.59 For example, a town may wish to condition a special permit for fracking near residential areas on the applicants’ agreement to limit fracking to certain hours of operation. Such a special permit would arguably impose more than an “incidental”60 effect on the “actual operations of oil and gas activities”61 and thus straddle the line between “where” and “how” regulation.
No New York court has considered whether a special permit for fracking is preempted by section 23-0303(2), but a comparison to case law interpreting the MLRL’s preemption clause suggests that at least some special permits might face preemption risk. In one MLRL case — decided at a time when the MLRL preemption clause mirrored section 23-0303(2) — a lower court ruled that a town could not impose hours of operations on a mining site as a condition on a special permit.62 Subsequently, in 1991, the MLRL preemption clause was amended, both codifying Frew Run and enumerating the types of conditions a locality can place on a mining special permit.63 Although a locality may consider factors other than those statutorily enumerated in the MLRL when choosing to deny a special permit for mining, New York cases indicate that these factors must be designed to “regulate land use generally, not to regulate the actual operation of extractive mining.”64 Thus it seems likely that, despite the lack of explicit statutory limitations on special permit conditions for oil and gas operations, the OGSML would be interpreted as preempting some zoning rules, like hours-of-operations conditions, that attempt to impose restrictions on fracking with methods short of an outright ban. For this reason, the Wallach court’s explanation that the OGSML preempts only regulation of the details, operations, and procedures of oil and gas operations does not actually immunize all common zoning measures.
Just as the court’s tidy division between “where” and “how” regulation relied on an outdated vision of how zoning law operates, its failure to see overlap between the purposes of local zoning and statewide regulation of the oil industry also ignores modern zoning practices. As the court noted, the state legislature authorizes towns to enact zoning provisions to protect “the health, safety, morals, or the general welfare of the community,”65 language which invokes the police power.66 While zoning was initially understood to address nuisance issues like detrimental noise and odors, promoting safety, and preserving neighborhood character,67 the adoption of more complex, flexible techniques coincided with “expanding the concept of ‘public welfare.’”68 New York courts have accepted a wide range of legislative purposes for zoning, including environmental concerns, growth management, preserving property values, economic development, and aesthetics.69 Thus, the permissible purposes of zoning regulation surely encompass the stated goals of the OGSML, which include the “development of oil and gas properties”70 and protection of the “rights of all . . . landowners and the general public.”71 But the Wallach court appeared to rely on Frew Run’s claim that zoning laws relate “to an entirely different subject matter and purpose”72 than state laws governing natural resources. In this way, both the court’s explanation of zoning techniques as “where” rules and the court’s description of zoning’s purposes fail to account for the increasing potential for modern zoning law’s means and ends to overlap with other legislative efforts.
Wallach nicely illustrates the potential for conflict between modern zoning measures and statewide policy, as well as the difficulty in determining when such a conflict is present. The majority understood Dryden and Middlefield’s total bans as intended to preserve the “small-town character of their communities,”73 a traditional goal of Euclidean zoning.74 In dissent, Judge Pigott attributed a different purpose to the local ordinances by describing them as having the “pretext”75 of zoning but actually regulating oil, gas and solution mining operations.76 The majority failed to engage with this version of legislative intent and left an important question open: How should a court analyze a zoning regulation that could be justified both by traditional zoning goals and as a direct regulation of business activity? Should a court consider which is the primary purpose or take total or district-wide bans as presumptively valid? The Wallach court might have been using the where-versus-how framework as a proxy to distinguish between rules pursuing traditional land use objectives and those attempting to implement economic or environmental policy of statewide concern, but this assumption is faulty given the ubiquity of discretionary zoning measures. The Supreme Court of Colorado, in comparison, has consistently held that a total ban on oil and gas production amounts to a regulation of the industry, which is traditionally a matter of state control, but has left open the door for “land-use regulations applicable to various aspects of oil and gas development and operations” that do not frustrate the goals of state law.77
Because the DEC subsequently decided to ban fracking statewide, New York courts will not soon have the opportunity to resolve these open questions in the fracking context. Yet the Court of Appeals’ characterization of zoning will guide other New York preemption cases and could influence other state court decisions on local fracking bans. In New York, other state laws, such as environmental laws or laws regulating different industries, can give rise to preemption challenges regarding local land use laws. If the court maintains a narrow understanding of zoning techniques, use of other innovative methods like special permits will be cast into doubt. To avoid a potential legal challenge, a New York municipality may shy away from experimenting with its land use toolbox when state laws also speak to a particular issue.78
This chilling effect on local zoning authority undermines New York’s commitment to home rule values. Of course, the New York home rule constitutional provision does not legally prevent the state from preempting local laws.79 Yet by downplaying the overlap in legislative purpose, the Court of Appeals’ opinion purports to preserve local zoning authority80 and fails to address the ways in which its ruling in fact hampers local control. Land use is the prototypical subject of local politics.81 Thus, the lingering uncertainty regarding modern zoning approaches hinders a municipality’s ability to exercise a “core power[] of local governance”82 by employing the most effective and innovative regulatory tools available. Going forward, a more realistic assessment of the potential for conflict between innovative zoning and state legislation would allow courts to more precisely define a statute’s preemptive scope, freeing a municipality to exercise home rule authority within those bounds.
Courts in other states, too, should be mindful of the breadth of land use goals and zoning techniques when considering preemption challenges to local fracking regulation. The legal issue has gained national attention in recent years as more and more localities try to regulate fracking, forcing future litigation on the subject.83 The outcome of each case will depend on an individual state’s oil and gas laws, home rule tradition, and precedent regarding preemption. These cases will give courts the opportunity to reflect on the scope of local authority over land use in light of contemporary practice.