In a stunning setback for shale development in New York state, an appellate court ruled unanimously to uphold two local bans on oil and gas activities.
Attorneys representing landowners and energy companies told NGI's Shale Daily that they have already started the process to appeal to the top court in the state, the Court of Appeals.
On Thursday, a four-judge panel at Appellate Division Third Department in Albany issued rulings in two cases that are under intense scrutiny by supporters and opponents of shale development: Norse Energy Corp. USA v. Town of Dryden (No. 515227), and Cooperstown Holstein Corp. v. Town of Middlefield (No. 515498). At issue was whether the towns violated the state's Oil, Gas and Solution Mining Law (OGSML).
"We hold that the OGSML does not pre-empt, either expressly or impliedly, a municipality's power to enact a local zoning ordinance banning all activities related to the exploration for, and the production and storage of, natural gas and petroleum within its borders," Presiding Justice Karen Peters wrote in the opinion for the Dryden case, which was then applied to Middlefield.
Justices Leslie Stein, Edward Spain and Elizabeth Garry concurred in both decisions.
"We don't have any automatic appeal, but we can seek leave to appeal from the Court of Appeals," Thomas West, an attorney from The West Firm PLLC, told NGI's Shale Daily on Friday. "Two of the criteria [for an appeal] are whether it's a novel question, and whether it's a question of statewide significance. We think we have both."
Scott Kurkoski, an attorney with the Binghamton, NY, firm Levene Gouldin & Thompson LLP, concurred. "It falls into the category of a case that they would want to entertain. It's an important state interest," he said Friday, adding that they should know if the high court will hear the case in the next few months.
According to the attorneys, opening arguments in both cases could begin before the end of the year if the appeals are successful.
Court documents show the appellate court used a Court of Appeals' ruling from a 1987 case, Frew Run Gravel Products Inc. v. Town of Carroll, to support their decisions in the Dryden and Middlefield cases. In Frew Run, the high court reversed a lower court ruling and allowed a town to enforce its zoning laws, which prohibited extractive mining operations.
"I think it's unfortunate that the court relied as heavily as it did on Frew Run," Kurkoski said. "This decision is going to have to be made by the Court of Appeals. It's their Frew Run decision that all of the courts are relying on. But that was a mining case, not an oil and gas case. The language is different and the interests are clearly different. We have a greater interest in producing energy than producing sand and gravel.
"They need to have a ruling in an oil gas case that really addresses this issue."
West agreed. "All of the lower courts, including the appellate division, relied upon their precedent from the sand and gravel cases. We think the Court of Appeals should really clarify whether their precedent under sand and gravel is going to govern our energy policy in this state."
West is representing Norse Energy Corp. ASA in the Dryden case, while Kurkoski is representing dairy company Cooperstown Holstein Corp. (CHC) and its owner, Jennifer Huntington, in the Middlefield case.
Both said they were surprised by Thursday's rulings.
"I thought we would get a fresher look," West said. "I thought I detected some rumors that there might be a split in the court, so they must have found a way to achieve consensus. We thought we would at least get a couple of dissents, but obviously we didn't.
"It's surprising, but it's still a question of law. If we can get it to the Court of Appeals, we still remain confident in our position and we think the Court of Appeals is the right court to answer this question."
The group Joint Landowners Coalition of New York Inc. (JLCNY) said it was disappointed in the decisions handed down by the appellate court.
"These decisions continue to wreak havoc in our towns, displacing most town business with issues that should be decided at the state level," JLCNY said Thursday. "Local municipalities are simply not equipped to decide issues affecting our state and national interests in producing clean domestic energy. New York cannot have a 'not in my back yard approach' to energy development."
Huntington also voiced frustration in a separate statement Thursday, calling the local zoning laws at issue in the Frew Run, Dryden and Middlefield cases "vastly different."
"The mining law specifically allows zoning, but the oil and gas law does not," Huntington said. "Most importantly, New York will never have an effective energy policy if our courts equate the state's interests in promoting the production of sand and gravel with the production of energy. It is clear that only the Court of Appeals can resolve this conflict."