NY Home Rule Decision: All About the Meaning of “All”

Fracking - Tom ShepstoneTom Shepstone
Shepstone Management Company, Inc.

   

While there will be a lot written over the next few days about the New York State Court of Appeals decision regarding “home rule” laws banning natural gas development in New York, it’s far from the end of the story.

The decision was disappointing, to be sure. The reasoning of the five justices who sacrificed Jennifer Huntington’s property rights on the altar of political correctness speaks for itself and may be summed up as this; “all” doesn’t mean all. Nonetheless, the judges have spoken and now we must look forward.

Home Rule Decision Perspective Needed
home rule decision - piggot

Judge Eugene Piggot

Is there anything to look forward toward, though, after this? Well, yes, there most definitely is. There are several good takeaways from the decision.

First, with regard to the decision itself, we must remember it is sometimes the dissents to decisions that shape future law. Judge Pigott’s dissent neatly summarizes what happened in this case. It’s worth reading and here it is (emphasis added):

Environmental Conservation Law § 23-0303 (2) states that “[t]he provisions of this article shall supersede all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law” (emphasis supplied). Municipalities may without a doubt regulate land use through enactment of zoning laws, but, in my view, the particular zoning ordinances in these cases relate to the regulation of the oil, gas and solution mining industries and therefore encroach upon the Department of Environmental Conservation’s regulatory authority. For this reason, I respectfully dissent.

The zoning ordinances of Dryden and Middlefield do more that just regulate land use, they regulate oil, gas and solution mining industries under the pretext of zoning (see Zoning Ordinance of the Town of Dryden § 2104 [1] [Prohibited Uses: (1) Prohibition against the Exploration for or Extraction of Natural Gas and/or Petroleum] and Zoning Ordinance of the Town of Middlefield, Article II [B] [7] and Article V [a] [“Prohibited Uses: Heavy industry and all oil, gas or solution mining and drilling are prohibited uses”]).

In Matter of Frew Run Gravel Prods. v Town of Carroll (71 NY2d 126 [1987]) — a case involving a supersession clause contained in the Mined Land Reclamation Law (“MLRL”) (see former ECL 23-2703 [2])* — we made clear that there is a distinction between zoning ordinances that regulate land use and local ordinances that regulate the mining industry. The former, which involve the division of the municipality into zones and the establishment of permitted uses within those zones, relate not to the extractive mining industry, but rather, to the regulation of land use generally (see Frew Run, 71 NY2d at 131).

The ordinances here, however, do more than just “regulate land use generally” (id.), they purport to regulate the oil, gas and solution mining activities within the respective towns, creating a blanket ban on an entire industry without specifying the zones where such uses are prohibited. In light of the language of the zoning ordinances at issue — which go into great detail concerning the prohibitions against the storage of gas, petroleum exploration and production materials and equipment in the respective towns — it is evident that they go above and beyond zoning and, instead, regulate those industries, which is exclusively within the purview of the Department of Environmental Conservation. In this fashion, prohibition of certain activities is, in effect, regulation.

Unlike the situation in Matter of Gernatt Asphalt Prods. v Town of Sardinia (87 NY2d 668 [1996]) — which involved a zoning ordinance that eliminated mining as a permitted use in all districts — the ordinances in these appeals do more than just delineate prohibited uses. Where zoning ordinances encroach upon the DEC’s regulatory authority and extend beyond the municipality’s power to regulate land use generally, the ordinances have run afoul of ECL § 23-0303 (2).

* This statute provided that the MLRL “shall supersede all state and local laws relating to the extractive mining industry, provided, however, that nothing in this title shall be construed to prevent any local government from enacting local ordinances or other local laws which impose stricter mined land reclamation standards or requirements that those found herein.”

Sooner or later, the legislature will have to deal with the issue, just as they did following the mining case that prompted all this, by amending their statute. When they do so, the differences between natural gas extraction, which covers multi-municipal geographies, will become crystal clear and one can expect the legislation will be tailored to those differences, perhaps giving municipalities rights to regulate some aspects of development (e.g., setbacks from residential zones) but prohibiting them from regulating natural gas development out of their communities when the needs of other communities would be impacted. Don’t expect the legislature to just codify the recent decision.

Home Rule Is Not Guaranteed

Secondly, one phrase from the majority decision caught my eye in this regard. This is where the court says:

“The discrete issue before us, and the only one we resolve today, is whether the State Legislature eliminated the home rule capacity of municipalities to pass zoning laws that exclude oil, gas and hydrofracking activities in order to preserve the existing character of their communities. There is no dispute that the State Legislature has this right if it chooses to exercise it.

Those of you who watched the video of the oral arguments will recall the judges made this point even then. They aren’t going to let the legislature off the hook from its responsibilities and make it explicitly clear the lawmakers have the power to remedy this situation. Therefore, the way is now clear for them to do so.

Thirdly, we cannot lose sight of the fact both Dryden and Middlefield are well outside the area where horizontal drilling and hydraulic fracturing of the Marcellus Shale are expected to take place on any significant scale. Both are on the fringe areas of economic viability and have far more potential for other oil and gas development than Marcellus Shale development. Many municipalities with that potential, by contrast, have endorsed it.

home rule - gas support resolutions

There has, in fact, been a complete dearth of bans or moratoriums enacted in communities with real Marcellus Shale drilling potential. Only communities well outside the gas region, or so urban as to preclude development anyway, have enacted them. The anti-gas radicals have only prevailed in communities with no real stake in Marcellus Shale development.

This doesn’t mean there isn’t enough threat of such willy-nilly bans to discourage investment in New York. This leaves state policy at the whim of local elected officials. Still, bans have only been enacted where it doesn’t matter all that much (notwithstanding the fear of development is wrecking the lives of some Dryden and Middlefield landowners who just want to do what’s always been allowed). This fact will mean something when legislation is written to clarify matters.

Finally, whatever we may think of Andrew Cuomo, there is no question he can lead when he wants to lead and economic development has been one of his priorities. He will, as he moves forward with whatever he wants to do, desire a much better economic record with respect to the Southern Tier than he has now. Moreover, some of his natural constituencies very much want natural gas development, including, perhaps, some who are now ostensibly against it.

One suspects, for this reason, that Cuomo could well lead on the issue post-election, assuming victory. If Andrew Cuomo wants it, and it’s reasonable, it will happen. Democrats in the legislature will do as he asks. It’s not too hard to envision him picking up where the court left off and offering a grand compromise sort of comprehensive solution that allows development to go forward and addresses the pre-emption issue by giving municipalities some rights to control location of drilling, but not the ability to exclude it.

The world has moved on, as Nick Grealy noted yesterday. Entertaining the self-important gets tiring and costly when your state is left behind. Something tells me Andrew Cuomo doesn’t want to be left behind. That’s why I’m betting he may show some leadership after November, so let our opponents have their victory, such as it is. It could be very short-lived.

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8 thoughts on “NY Home Rule Decision: All About the Meaning of “All”

  1. Sadly as long as we have the likes of Sheldon Silver and downstate Democrats in charge of the legislature, we will not get any relief from that quarter. However, it seems to me that there is a case to be made for sending these cases to the Federal courts, since the towns have effectively siezed the property rights without compensation, a clear violation of the takings clause of the Fifth Amendment to the Constitution. In the Norse case, the leases had certain value that has now been rendered useless. Those leases amounted to millions of dollars. And in the Cooperstown Holstein case, I would think that since permitting was in process, there would be information available as to the expected recovery of gas; the royalties that have been stolen from Jennifer Huntington can be easily estimated from that. Towns that take property rights need to be punished severely.

  2. This court may come to regret its decision, because the court has now stated that banning is not regulating. The concept that banning is not regulating is foreign to common sense, ‘though apparently not to the judges who count how many angels can dance on the head of a pin. Considering the fact that DEC can and does establish set-backs for wellsites, wellbores, etc. and that setbacks are part and parcel of every zoning ordinance, the everyday person must truly wonder what species of logic this court has cultivated. Like most ideological statements, which is what this court has promugated, this decision comes with the very heavy freight of unintended consequences, which only time will reveal.

  3. Hi Tom,

    all great articles however I believe the main idea has been lost. People are seeking clean energy are afraid of Global Warming! and so are rejecting any fossil fuels. Well tell you what; it’s a must in this world and anyone who chalenges otherwise is certainly either making money off their views or is uneducated about the use of clean fossil fuels like natural gas. They all use it!!! So what’s the problem?

    Al

  4. Pingback: The Lipstick on New York's Court Decision | Natural Gas NowNatural Gas Now

  5. Amen Al, that’s the irony of the whole thing, all of these phonies are heating their homes with natural gas, and at the same time, railing against drilling for it! Furthermore, the deed to my property states that I own the mineral rights on my property, not Cuomo. It’s mind-boggling to witness a handful of appointed individuals arbitrarily denying me, or any other New York State Landowner the right to mine those minerals? This my friend, has to be unconstitutional, because it is based entirely on the contrived and false accusation that natural drilling is contaminating the water everywhere. Unfortunately,under Cuomo’s misguided and total lack of any basic leadership qualities whatsoever, the people in the small villages are dictating to the New York State Landowners as to what they can and cannot do with their own land. If Cuomo, and his sidekick, read mentor, Robert Kennedy, Jr., were real environmentalists they would get the hell out of New York City, (their favorite environment) and buy land in the Southern “Tear” that they created.

  6. Here’s a great post from either a lawyer or a real sharp person in POLHUDSON that needs repeating with regard to mineral rights and tax assessments and land values that may one day come to haunt all these lunatic town board members who drank the Gasland kool aid and listened to the Slottjes –

    “If a Ban is in your Town/Village /County You might want to grievance your assessment. If your land is devalued from a ban then I would think your taxes should also go down. It seems to me this is a form of Eminent domain from a municipality. I would think just compensation should come in somewhere? Maybe in the form of tax break for the devaluing of your minerals? They might have the option but that doesn’t mean it comes without a price.
    This should reach across all sides!
    If you own even a 1/4 acre you are affected Town or Village.
    Will a Fracking Ban cause problems with mortgages with lending institutions?
    Appraisals are based on recent sales to determine a value.
    If values drop due to Bans you can bet your bottom dollar that will be have impact.
    Read on….
    Natural Gas Bans devalues your land by HALF!
    For or against “Fracking” it doesn’t matter this is about property value.
    This has resulted in quite the mess as some boards falling prey to shallow
    The worst aspect, though, is how little discussion there has been on the property value impacts in the course of these decisions. Is a ban a form of
    eminent domain without just compensation? I suggest it is and I can prove it.
    Enacting a ban municipalities are devaluing property on the supposition there is a case for restricting something what is, in effect, an accessory use of a property for an
    activity for which there is a 1,500+ page SGEIS prepared by the DEC documenting its safety. That’s a tough case if you ask me and the evidence of property devaluation is clear.
    Why? Because mineral rights can be separated from the land and a value can be established for them. Land with minerals in Chenango County, New York, for example, sells for $1,800 to $2,200 per acre land, whereas land with mineral
    rights separated out sells for $750 to $1,100 per acre. This indicates a mineral rights value of roughly $1,000 per acre.
    A review of six recent sales of mineral rights for purposes of natural gas production, in fact, indicates a value of slightly over $1,200 per acre. These prices generally prevail throughout the Utica and Marcellus region of New York.
    Therefore, by banning development of those minerals, town board members instantly cut the value of the land in their communities by half.
    Think about that. A ban potentially destroys the tax base of the community, at least until enough landowners wake up to the fact they’re entitled to a tax reduction because their land value has been halved. Town officials implicated
    in a ban face a dilemma when property owners realize what’s been done to them.
    If assessments are lowered to reflect the very real loss of value, then the burden of their decision will fall on remaining taxpayers, which consist of homeowners and small businesses without significant acreage. If, on the other
    hand, the assessments are not adjusted then the town has clearly subjected itself to valid takings claims. Given that mineral rights represent 100% of the
    value in the case where companies have acquired them for development separate from our land rights, there is little available in the way of a defense.
    Towns are clearly vulnerable. They must either shift their tax burden to homeowners and small businesses. It’s lose-lose all the way down. If you fully understand the impact of this you might want to start paying attention to your town planning boards to make sure there are no new comprehensive plans that will zone areas that PROHIBIT or BAN natural gas development. Don’t take my word for it, call your local Realtor ask them if there is a price difference between land with mineral rights and land without.
    Look up all the current active land listings in the MLS in the 75-300 acre size range in Chenango County. You will find most of the listings the seller is retaining the mineral rights. Look at the price difference with mineral rights and with out.”

  7. Pingback: The New York State of Mind on Shale Gas DevelopmentNatural Gas Now

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