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MEMORANDUM

Date: 06 January 2011To: Nan StolzenburgFirm: Community Planning & Environmental AssociatesFrom: John F. LyonsSubject: Town of Middlefield - Zoning Revision

Dear Nan:

Yesterday we discussed prohibition of gas drilling and formulation of definitions. This memofollows up that discussion. I have deferred the discussion of the definitions to a later time.From a legal standpoint, prohibition as a legally sustainable technique is the more importantissue at this juncture.

I. Summary & Recommendation

Prohibition of gas drilling through the local zoning law is the technique best suited toMiddlefield’s practical needs. And based on present knowledge, it is the technique most likelyto be sustained by the courts. It is also the most efficient technique in terms of effort, time andexpense. My reasons in support appear below.

Also I recommend that the prohibition should be expressly stated in the revised zoning law andthe revised zoning law be passed as a local law pursuant to the procedures of the NYSMunicipal Home Rule Law.

II. Prohibition of Gas Drilling via Local Zoning Law

Oil, gas and solution mining is regulated in New York State pursuant to Article 23 of the NYSEnvironmental Conservation Law (ECL). ECL § 23-0303(2) contains a supersession provisionwhich states that the State's oil, gas and solution mining regulatory program

"supercedes all local laws or ordinances relating to the regulationof the oil, gas and solution mining industries; but shall notsupercede local government jurisdiction over local roads or therights of local governments under the real property tax law."

In New York, the scope of a local municipality's ability to exercise its home rule authority overnatural gas drilling will hinge on how the supersession language will be construed by thecourts. So far, that hasn't happened yet, so this is uncharted territory.

One way for us to navigate this uncharted territory is to look at similar situations. We can lookto the State Mined Land Reclamation Law (MLRL) (governing excavation mining) for guidancein how the supersession provisions of ECL § 23-0303(2) might be applied by the courts.

The 1974 version of the MLRL contained a supersession clause similar to, but not the same

71 NY2d 126 (1987).1

Id. at 131.see also Salkin, New York Zoning Law and Practice , Section 15:05.2

87 NY2d 668 (1996).3

Id. at 682, see also Salkin, New York Zoning Law and Practice , Section 15:09.4

12 Misc 2d 432 (sup 1982), judgm ent affirm ed, 89 AD2d 1056 (4 Dept. 1982).th5

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as, the supersession clause in ECL § 23-0303(2). The MLRL clause stated:

[T]his title shall supersede all other state and local laws relating to the extractivemining industry; provided, however that nothing in this title shall be construed toprevent any local government from enacting local laws which impose strictermined land reclamation standards or requirement than those found herein.

In Frew Run Gravel Products, Inc. v. Town of Carroll, the State’s highest court upheld the1

authority of local municipalities to establish zoning districts where mining was explicitly not apermitted use. The court held that “[t]he zoning ordinance relates not to the extractive miningindustry but to an entirely different subject matter and purpose.”2

Later, after the MLRL supersession provisions were amended, the State’s highest court issueda second landmark ruling built upon its Frew Run decision. In Gernatt Asphalt Products, Inc. v.Town of Sardinia, the court ruled that the MLRL did not preempt a town’s authority to totally3

prohibit mining throughout the municipality. The court held the complete ban was notsuperseded by the MLRL because municipalities have “broad authority to govern land use,”even to the extent of abolishing a particular land use.4

The Frew Run and Gernatt cases draw an important distinction between regulation of localland use and regulation of a particular industry or activity. The decisions draw a line. On oneside, if a town prohibits the use or activity, the town is within its authority to regulate local landuses. On the other side of the line is the choice to allow the use. In that case, the story iscompletely different. Once that line is crossed, thereafter the town will have little to say abouthow that use is conducted. Applied gas drilling, this is precisely the reason why outrightprohibition holds a better prospect for success.

The problem with choosing to allow the use but attempting to regulate it, can be seen in theonly reported court decision interpreting ECL § 23-0303(2). In Envirogas, Inc. v. Town ofKiantone, the town adopted a zoning ordinance imposing a $2,500 compliance bond and a5

$25.00 permit fee requirement on any person wanting to construct an oil or natural gas well.The court invalidated the ordinance holding that the ordinance requirements were an attemptto regulate gas and oil well drilling operations and such was prohibited by the supersessionclause.

It is important to keep in mind that application by analogy of the reasoning from the extractivemining decisions to natural gas drilling contains inherent uncertainties.

Kenneally and Mathes, Natural Gas Production and Municipal Hom e Rule in New York , New York Zoning Law & Practice Report,6

January/February 2010, Volum e 10, No. 4.

Consolidated Edison Company of New York, Inc. v. Tow n of Red Hook60 NY2D 99 (1983), Matter of Incorporated Village of Poquott, 11-7

25-2002, NYLJ 32 (col. 4)(Sup Ct Suffolk Co. 2002).

Kenneally and Mathes, Natural Gas Production and Municipal Hom e Rule in New York , New York Zoning Law & Practice Report,8

January/February 2010, Volum e 10, No. 4., G uardino, Marcellus Shale “G as Rush” Raises Local Zoning Issues , New York Law Journal, Volum e 244,

09-22-2010.

Kenneally and Mathes, Natural Gas Production and Municipal Hom e Rule in New York , New York Zoning Law & Practice Report,9

January/February 2010, Volum e 10, No. 4.

NYS Constitution Article IX, Sections 2(c)(i) and 2(c)(ii)(10).10

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Because there are key differences between the language of the MLRL supersession and ECL§ 23-0303(2), the Frew Run and Gernatt decisions cannot be said to insure that a prohibitionagainst gas drilling will be upheld by the courts. Besides the difference in supersessionlanguage, there are differences in the scope of the NYS Department of EnvironmentalConservation’s regulatory jurisdiction in the extractive mining and gas drilling regulatoryprograms. It has been noted that an important difference between excavation mining and gasdrilling is that, with gas drilling, natural gas permit applicants are not required to control theentire resource area and that the State’s regulatory jurisdiction is broader because it regulatesnatural gas well spacing throughout the state, and not just individual well locations. These6

differences could form a basis for the courts to apply a different line of legal reasoning in theiranalysis of local attempts to prohibit gas drilling.

Additionally, courts may decide that complete supersession has taken place. For example, theState used Article VIII and later Article X of the New York State Public Service Law to takeaway all local authority over the siting of major steam and electric generating plants. Thecomplete supersession of local authority was upheld by the courts. However, for complete7

supersession, courts may decide the legislation should be patent.

Nevertheless, sufficient similarity exists between the issues presented in the cases of bothextractive mining and natural gas drilling that the Frew Run and Gernatt cases offerencouragement to the argument that localities do have the authority to prohibit the natural gasdrilling use of land.

My research revealed only two articles discussing the legal subject of localities authority toregulate natural gas drilling in New York. 8

In the article Natural Gas Production and Municipal Home Rule in New York, speaking of the9

supersession language in ECL § 23-0303(2), the authors point out:

Article IX of the New York State Constitution provides broad authority to localgovernments to enact local laws relating to their property, affairs or government,and for the protection, order, conduct, safety, health and well-being of personsor property therein. Accordingly, the Constitution directed the State Legislature10

to enact a “Statute of Local Governments” that confers certain authority upon

NY Stat. of Local Govt § 10(6).11

Kenneally and Mathes, Natural Gas Production and Municipal Hom e Rule in New York , New York Zoning Law & Practice Report,12

January/February 2010, Volum e 10, No. 4., at Page 3.

Id. at 4.13

Id. at 5-6.14

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local governments, and further protected any such conference of authorityagainst future legislative diminution. Specifically, Article IX, Section 2(b)(1) ofthe Constitution requires that any legislation that would diminish or impair apower conferred by the Statute of Local Governments be re-enacted during asubsequent term of the legislature.

The authority of local governments to regulate the use of land within theirjurisdiction is one of the powers expressly conferred by the [New York State]Statute of Local Governments. Seemingly, therefore, any law that would impair11

the power of a local government to establish zoning regulations, including ECL23-0303(2), would be subject to the re-enactment requirement of Article IX,Section 2(b)(1) of the Constitution. ECL Section 23-0303(2) was enacted in1971 and amended in 1982 by single enactment.12

The authors discuss the implications of the analogy to the MLRL and say that the Frew Runand Gernatt cases are both “important to the future debate concerning the preemptive scopeof ECL Article 23, title 3". They conclude:13

The relevance of the qualifying language contained in ECL § 23-0303(2) -“relating to the regulation” - may ultimately boil down to the whether or notArticle IX of the Constitution, Section 10 of the Statute of Local Governments,municipal legislation enacted pursuant to the Municipal Home Rule Law, andECL Article 23, title 3 can be harmonized. While distinguishing facts and lawexist, in reading a statute similar to ECL Article 23, title 3, the Court of Appealshas previously recognized that to preempt local zoning laws would “drasticallycurtail” a local government’s power to adopt zoning regulations as provided forin the Statute of Local Governments, and such a curtailment should only occurunder a circumstance in which the legislature’s preemptive intent is absolutelyclear. A plain meaning interpretation of the statute may, therefore, support theargument that while municipalities in New York may not regulate the industrywithin the scope of the State’s regulatory program, municipalities may continueto regulate land use or other matters involving public health, safety and welfarewhich fall outside the State’s regulatory program.14

In conclusion, my opinion is that the prohibition of oil and gas drilling using the local zoning lawis the technique which makes the most sense for Middlefield. The reasons are several.

First, the legal perspective. The legality of prohibition cannot be assured because the courts

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haven’t yet spoken. So the only alternative is to evaluate the legal landscape and to make aneducated estimate about how the courts will decide the issue. As a technique, prohibition findsimportant support in the powers granted to local municipalities under the Statute of LocalGovernments and the protections from State preemption found in both the Statute of LocalGovernments and the Municipal Home Rule Law. Also, while not a perfect analogy, there aresignificant similarities between the supersession clauses of extractive mining and gas drilling.And there is most definitely available an intellectually reasonable basis for the courts apply tothe supersession language of ECL § 23-0303(2) the same reasoning which compelled theconclusion that localities may prohibit extractive mining. For these reasons, based on the whatis known at this time, prohibition is the technique with the best chance of being sustained bythe courts.

The other alternatives are not attractive.

To allow gas drilling while trying to regulate around its edges using the zoning law is not likelyto withstand legal challenge. Indeed, as the Envirogas court decision showed, once a towncrosses the line in attempting to regulate an allowed activity, supersession will be hard toavoid.

An indirect approach can be conceived. This technique requires using strict zoning regulationof all uses across the board, regulation so strict that its practical effect would be to prohibit gasdrilling. My opinion is that this technique would likely be doomed by the law of unintendedconsequences. Zoning legislation in New York State must be an open process and the publicwould have to agree with all of the across-the-board changes necessary for such a scheme. Itwould be unavoidable that many uses, otherwise not objectionable, would be swept up in thenet and end up not being allowed. This could easily imperil public support. In addition, suchsweeping revisions would trigger a comprehensive and lengthy SEQRA review process. Thiscould push actual enactment of a law off for possibly for years.

That segues to the practical perspective. This is a pressing issue time-wise for Middlefield. Inaddition to having the soundest legal basis, the prohibition technique is the easiest toimplement. It should be relatively simple, fast and (again, relatively) inexpensive.

III. Regulating Truck Traffic as a Back-up Plan to Prohibition

Besides prohibition, the supersession language may also create some room for a incorporationof a back-up technique. ECL § 23-0303(2) states that localities shall retain jurisdiction overlocal roads. Since gas well construction and gas transportation would both likely require heavytruck traffic, there is room here to craft some revisions to the zoning law which could result inimposition of permissible restrictions on the kind of truck traffic that would be necessary toeffectively construct and operate a natural gas well. The key would be establishing a crediblethreshold that would have the intended effect without crimping other kinds of construction andtransportation activities.

Salkin, Local Home Rule Authority in Planning and Zoning: An O pportunity or a Landmine?, New York Zoning Law and Practice Report,15

January/February 2004, Volum e 4, No. 4., at Page 2.

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IV. Prohibition Should be Specifically Stated in the Revised Zoning Law

The Middlefield Zoning Law, like many zoning laws, contains a provision that states that alluses not allowed are deemed prohibited. However, in this case, if Middlefield chooses toprohibit oil and gas drilling and well operation, I recommend that the prohibition be specificallystated in the revised zoning law.

The object is to leave as little doubt as is humanly possible about the intentions of the zoninglaw regarding the prohibition of this use. First, its existence may have a deterrent effect since itwill make a clear statement to all readers of the zoning law that Middlefield has considered thispossible use and decided not to allow it. It will signal the fact that the use is unwelcome andperhaps send potential gas drillers to other communities that are more welcoming, or at least,less determined in their opposition. Second, if it ends up the subject of litigation, it makes theTown’s intention clear to a court. And court’s gravitate to clarity.

V. Adopt Revised Zoning Law Pursuant to NYS Municipal Home Rule Law

The revised Middlefield Zoning Law should be adopted as a local law (not as an ordinance)pursuant to the authority and procedures of the New York State Municipal Home Rule Law(MHRL). The MHRL and the Statute of Local Governments (discussed above) are the twoprimary conduits of constitutional authority conveyed to local governments. It is necessary to15

pass the new zoning law pursuant to the MHRL so as to take full advantage of the protectionsfrom State preemption inherent in the MHRL.

END