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August 29, 2013

NY’s Highest Court to Consider Whether Local Municipalities Can Ban Oil/Gas Development

Did the Third Department, Appellate Division get Dryden and Middlefield wrong when it determined that municipal bans on natural gas development were a valid exercise of home rule?  On August 29, 2013, the New York Court of Appeals decided to consider that question when it granted leave to appeal in both the Dryden and Middlefield cases. On May 2, 2013, the Third Department, Appellate Division upheld lower court decisions in Norse Energy Corp. USA v. Town of Dryden and Cooperstown Holstein Corp. v. Town of Middlefield and unanimously held that a New York State law that expressly preempts local laws regulating how natural gas is developed neither expressly nor impliedly preempts a local zoning ordinance banning natural gas development.  This holding, however, was replete in errors both as to why bans on natural gas development are expressly preempted under the Environmental Conservation Law as well as why they are preempted under implied preemption principles.  Indeed, the Third Department seems to have misapprehended the fundamental purpose of the Oil, Gas and Solution Mining Law (OGSML), the implications of which can be easily derived from the State’s long-standing regulation of the oil and gas industry under the OGSML and the distinct differences between surface mining and natural gas drilling. The Court’s conclusions that the local zoning bans have only an “incidental” effect on regulation of the industry, and that the OGSML and the State’s long-standing policy to promote the development of natural gas can “harmoniously coexist” with municipal-wide drilling bans, also signals some fundamental misunderstandings about oil and gas exploration and development. It is therefore appropriate and encouraging that the Court of Appeals has decided to step in and hear the Dryden and Middlefield cases.


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