To be Argued by: SCOTT R. KURKOWSKI

(Time Requested: 30 Minutes) Otsego County Clerk’s Index No. 0930/11

Appellate Division–Third Department Docket No. 515498

Court of Appeals of the

State of New York

COOPERSTOWN HOLSTEIN CORP.,

Appellant,

– against –

TOWN OF MIDDLEFIELD,

Respondent.

BRIEF FOR APPELLANT

THOMAS S. WEST, ESQ. CINDY MONACO, ESQ. THE WEST FIRM, PLLC 677 Broadway, 8th Floor Albany, New York 12207 Tel.: (518) 641-0500 Fax: (518) 615-1500

SCOTT R. KURKOSKI, ESQ. LEVENE GOULDIN & THOMPSON, LLP 450 Plaza Drive Binghamton, New York 13902 Tel.: (607) 763-9200 Fax: (607) 763-9211

Attorneys for Appellant

Dated: October 25, 2013 APL-2013-00242

i

DISCLOSURE STATEMENT

Plaintiff is a corporation organized and existing under the laws of the State

of New York. It has no parents, subsidiaries or affiliates.

ii

TABLE OF CONTENTS

PRELIMINARY STATEMENT .................................................................... 1

QUESTIONS PRESENTED ........................................................................... 3

STATEMENT OF THE CASE ....................................................................... 4

I. THE STATUTORY FRAMEWORK AND UNDERLYING POLICY ...........................................................................................

4

II. FACTUAL BACKGROUND AND PROCEEDINGS BELOW ...........................................................................................

12

JURISDICTIONAL STATEMENT ............................................................... 22

ARGUMENT: THE TOWN PROHIBITION IS PREEMPTED BY STATE LAW PURSUANT TO THE DOCTRINES OF EXPRESS PREEMPTION, FIELD PREEMPTION, AND CONFLICT PREEMPTION ................................................................................................

23

I. ECL 23-0303 (2) EXPRESSLY PREEMPTS THE TOWN PROHIBITION GIVEN THE COMMON AND ORDINARY MEANING OF “REGULATION” AS WELL AS GIVEN THE LEGISLATURE’S INTENT TO LIMIT LOCAL JURISDICTION TO ONLY ROADS AND TAXES .....................

25

A. The Supersession Clause Expressly Preempts the Town

Prohibition Because the Common and Ordinary Meaning of “Regulation” Encompasses Local Zoning Regulation .........................

27

B. Legislative Intent to Expressly Preempt the Local Zoning

Regulation is Evidenced by the Statutory Town Law Definition ........

29

iii

C. Legislative Intent to Expressly Preempt Local Zoning

Regulation is Evidenced by Local Zoning Regulation Not Being Enumerated as an Exception to Preemption in the Supersession Clause....................................................................................................

32

D. The Legislature’s Intent to Expressly Preempt Local Zoning

Regulation is Evident Upon Construing the Supersession Clause as a Whole .............................................................................................

33

E. Legislative History Confirms That ECL 23-0303 (2) Expressly

Preempts Local Zoning Regulation ......................................................

35

F. The MLRL, Matter of Frew Run Gravel Prods., and Matter of

Gernatt Asphalt Prods. Are Not Relevant to the OGSML Express Preemption Analysis ...............................................................

40

i. The Supersession Language of the OGSML and the MLRL is Materially Different ....................................................

41

ii. The Evolution and Legislative History of the OGSML Is Materially Different from that of the MLRL .............................

46

iii. Matter of Frew Run Gravel Prods. and Matter of Gernatt Asphalt Prods. Are Distinguishable in That Each Fails to Undertake an Implied Preemption Analysis ..............................

48

II. THE OGSML OCCUPIES THE ENTIRE FIELD OF OIL

AND GAS REGULATION THEREBY PREEMPTING ANY RELATED LOCAL REGULATION ....................................

49

III. THE TOWN PROHIBITION CONFLICTS WITH STATE

LAW AND POLICY, THEREFORE, IT IS PREEMPTED ...........

55

iv

IV. DECISIONS REACHED BY OTHER JURISDICTIONS

SUGGEST THAT THE OGSML PREEMPTS LOCAL MUNICIPALITIES FROM ENACTING A TOTAL BAN ON OIL AND GAS DEVELOPMENT ..........................................

61

CONCLUSION .............................................................................................. 63

v

TABLE OF AUTHORITIES

CONSTITUION N.Y. Const., art. IX .................................................................................................. 43

CASES

Albany Area Bldrs. Assn. v Town of Guilderland, 74 NY2d 372 (1989) .......................................................................... 24, 49, 50 Anonymous v. City of Rochester, 13 NY3d 35 (2009) ........................................................................................ 60 Anschutz Exploration v Town of Dryden, 35 Misc 3d 450 (Sup Ct, Tompkins County 2012) ....................................... 44 Balbuena v IDR Realty LLC, 6 NY3d 338 (2006, Graffeo, J. ) .............................................................. 24, 48 Consolidated Edison Co. of N.Y. v Town of Red Hook, 60 NY2d 99 (1983) ........................................................................................ 55 Commonwealth of the N. Mariana Is. v Canadian Imperial Bank of Commerce, 21 NY3d 55 (2013, Rivera, J. ) ...................................................................... 31 Criscione v. City of New York, 97 NY2d 152 (2001) ...................................................................................... 35 D’Amico v Christie, 71 NY2d 76 (1987) ........................................................................................ 34 DJL Rest. Corp. v City of New York, 96 NY2d 91 (2001) ...................................................................... 23, 24, 43, 56 Doomes v. Best Transit Corp., 17 NY3d 594 (2011) ...................................................................................... 48 Drattel v Toyota Motor Corp., 92 NY2d 35 (1998) ........................................................................................ 48

vi

Energy Mgmt. Corp. v City of Shreveport, 397 F3d 297 (5th Cir 2005) ..................................................................... 25, 61 Freightliner Corp. v Myrick, 514 US 280 (1995)......................................................................................... 48 Incorporated Vil. of Nyack v Daytop Vil., 78 NY2d 500 (1991) ...................................................................................... 49 Matter of Gernatt Asphalt Prods. v Town of Sardinia, 87 NY2d 668 (1996) .............................................................16, 41, 42, 45, 48 Jancyn Mfg. Corp. v County of Suffolk, 71 NY2d 91 (1987). ....................................................................................... 56 Kamhi v Town of Yorktown, 74 NY2d 423 (1989) ...................................................................................... 23 Matter of Lansdown Entertainment Corp. v New York City Dept. of Consumer

Affairs, 74 NY2d 761 (1989) ...................................................................................... 60 Leader v. Maroney, Ponzini & Spencer, 97 NY2d 95 (2001) ........................................................................................ 35 Little v Young,

82 NYS2d 909 (Sup Ct, Nassau County 1948) ............................................. 31 Lundberg v State of New York, 25 NY2d 467 (1969) ................................................................................ 34-35 Matter of Albany Law School v New York State Off. of Mental Retardation &

Dev. Disabilities, 19 NY3d 106 (2012, Graffeo, J. ) ................................................ 29, 31, 33, 35 Matter of Cohen v. Board of Appeals of Vil. of Saddle Rock, 100 NY2d 395 (2003) ............................................................24, 26, 49, 50, 60 Matter of Envirogas, Inc. v. Town of Kiantone,

112 Misc 2d 432 (Sup Ct, Erie County 1982) ............................................... 11

vii

Matter of Frew Run Gravel Prods. v. Town of Carroll, 71 NY2d 126 (1987) .................................................. 16, 20, 41, 45, 46-47, 48 Matter of Grand Jury Subpoena Duces Tecum Served on Museum of Modern Art, 93 NY2d 729 (1999) ...................................................................................... 31 Matter of Jewish Home & Infirmary of Rochester v Commissioner of N.Y. State Dept. of Health,

84 NY2d 252 (1994) ................................................................................ 32, 33 Matter of Kamhi v. Planning Bd. of Town of Yorktown, 59 NY2d 385 (1983) .......................................................................... 23, 42, 43 Matter of Lower Manhattan Loft Tenants v New York City Loft Bd.,

66 NY2d 298 (1985) ...................................................................................... 29 Matter of Norse Energy Corp. USA v Town of Dryden,

108 AD3d 25 (3d Dept 2013) .................................................................. 18, 31 Matter of Plato’s Cave Corp. v State Liq. Auth., 68 NY2d 791 (1986) ...................................................................................... 29 Matter of Richardson v Felder Roofing, 67 NY2d 246 (1986) ...................................................................................... 22 Matter of Sylvania Corp. v Kilbourne, 28 NY2d 427 (1971) .................................................................................... 7, 8 New York State Club Assn. v City of New York, 69 NY2d 211 (1987) ................................................................................ 24, 55 New York State Psychiatric Assn., Inc. v New York State Dept. of Health, 19 NY3d 17 (2012) ........................................................................................ 46 Oil Heat Inst. of Long Is. V Town of Babylon, 156 AD2d 352 (2d Dept 1989) ...................................................................... 26 Northeast Natural Energy, LLC v City of Morgantown, Civ Act No 11-C-411, 2011 WL 3584376

(W Va Cir Ct Aug 12, 2011)… ......................................................... 25, 61, 62

viii

People v Couser, 94 NY2d 631 (2000) ................................................................................ 28, 29 People v Hedgeman, 70 NY2d 533 (1987) ...................................................................................... 28 People v Thompson, 99 NY2d 38 (2002) ........................................................................................ 29 Rentways, Inc. v O’Neill Milk & Cream Co., 308 NY 342 (1955) ........................................................................................ 22 Robin v Incorporated Vil. of Hempstead, 30 NY2d 347 (1972) ................................................................................ 49, 50 State ex rel. Morrison v Beck Energy Corp., 989 NE2d 85 (Ohio Ct App 9th Dist 2013) ............................................. 25, 61 Voss v Lundvall Bros., 830 P2d 1061 (Colo 1992) ....................................................................... 25, 61 Wagner v. Mallory, 169 NY 501 (1902) .......................................................................................... 8 Weingarten v. Board of Trustees of N.Y. City Teachers’ Retirement Sys., 98 NY2d 575 (2002, Graffeo, J.) ............................................................. 32, 33 Western Lands Servs., Inc. v Department of Envtl. Conservation of State of N.Y., 26 AD3d 15 (3d Dept 2005) ........................................................................ 6, 9 Vatore v Commissioner of Consumer Affairs of City of N.Y., 83 NY2d 645 (1994) ...................................................................................... 26 Zakrzewska v New School, 14 NY3d 469 (2010, Read, J. ) ...................................................................... 55

STATUTES Conservation Law, article 3-A ................................................................................. 14 CPLR 5501 ............................................................................................................... 22 CPLR 5602 (a) ......................................................................................................... 22

ix

ECL, article 23, title 13 ............................................................................................ 57 ECL 21-1107 ...................................................................................................... 30, 32 ECL 23-0101 (4) ................................................................................................ 10, 50 ECL 23-0101 (11) ...................................................................................................... 7 ECL 23-0101 (20) (c) ........................................................................................... 7, 58 ECL 23-0301 .....................................................................................................passim ECL 23-0303 (1) ...................................................................................................... 10 ECL 23-0303 (2) ...............................................................................................passim ECL 23-0303 (3) ...................................................................................................... 38 ECL 23-0305 ...................................................................................................... 10, 52 ECL 23-0305 (8) .......................................................................................... 52, 53, 57 ECL 23-0501 ........................................................................................................ 9, 56 ECL 23-0501 (1) (b) ................................................................................ 9, 51, 52, 57 ECL 23-0501 (2) ..................................................................................................... 52 ECL 23-0503 .................................................................................................... 6, 9, 56 ECL 23-0503 (2) . .................................................................................................... 52 ECL 23-0901 ........................................................................................................ 9, 52 ECL 23-2101 .............................................................................................................. 5 ECL 23-2703 (2) ................................................................................................. 2, 41 Energy Law § 3-101 (5) ................................................................................. 2, 15, 36 General City Law § 20 (24) ..................................................................................... 30 McKinney’s Cons of Laws of NY, Book 1, Statutes § 97 ....................................... 34 McKinney’s Cons of Laws of NY, Book 1, Statutes § 124 ..................................... 35 McKinney’s Cons of Laws of NY, Book 1, Statutes § 222 ..................................... 31 McKinney’s Cons of Laws of NY, Book 1, Statutes § 223 ..................................... 31 McKinney’s Cons of Laws of NY, Book 1, Statutes § 231 ..................................... 35 McKinney’s Cons of Laws of NY, Book 1, Statutes § 234 ..................................... 28 McKinney's Cons of Laws of NY, Book 1, Statutes § 240 ..................................... 32 Municipal Home Rule Law, article 3 ....................................................................... 44 Municipal Home Rule Law § 2 (9) .......................................................................... 44 Municipal Home Rule Law § 10 ........................................................................ 43, 44 Statute of Local Governments § 10 (6) .............................................................. 30, 43 Town Law § 130 ...................................................................................................... 44 Town Law § 131 ...................................................................................................... 44 Town Law § 261 ..............................................................................29, 31, 42, 43, 44 Town Law § 264 ...................................................................................................... 44

x

Village Law § 7-700 ................................................................................................ 30

LEGISLATIVE HISTORY DOCUMENTS L 2008, ch 376 ........................................................................................................... 2 L 1987, ch 618 ......................................................................................................... 32 L 1981, ch 846 ....................................................................................... 16, 26, 32, 37 L 1978, ch 396 ............................................................................................. 15, 36, 37 L 1974, ch 1043 ....................................................................................................... 41 L 1963, ch 959 ............................................................................................. 14, 25, 36 L 1932, ch 634 ............................................................................................. 30, 31, 42 A6928 ....................................................................................................................... 39 Bill Jacket, L 1981, ch 846 ...................................................................................... 48 Governor’s Approval Mem, Bill Jacket, L 1981, ch 846 ........................................ 38 Mem in Support S6455-B / A8475-B ...................................................................... 37 REGULATIONS 6 NYCRR part 550 ............................................................................................... 8, 53 6 NYCRR part 551 ................................................................................................... 53 6 NYCRR part 553 ................................................................................. 51, 52, 56, 57 6 NYCRR ch V ........................................................................................................ 10 6 NYCRR 550.3 (ao) ................................................................................................. 8 6 NYCRR 550.6 ....................................................................................................... 53 6 NYCRR 553.1 ....................................................................................................... 51 6 NYCRR 553.2 ....................................................................................................... 51 6 NYCRR 554.7 ....................................................................................................... 53 SEQRA DOCUMENTS Generic Environmental Impact Statement on the Oil [1992] ............................ 10, 51 Revised Draft SGEIS [September 2011] ................................................................. 11 EXECUTIVE ORDERS Executive Order (Paterson) No. 41 (9 NYCRR 7.41) ............................................. 13 Executive Order (A. Cuomo) No. 2 (9 NYCRR 8.2) .............................................. 13

OTHER AUTHORITIES Assn. of Towns of the State of New York, Town Manual ..............29, 42, 43, 44, 45

xi

Black’s Law Dictionary (9th ed 2009) .............................................................. 28, 33 Martin & Kramer, Oil and Gas Law (2008) .......................................................... 1, 8 25 NY Jur 2d Counties, Town, and Municipal Corporations § 123) ....................... 24 25 NY Jur 2d Counties, Town, and Municipal Corporations § 328) ....................... 44 77 NY Jur 2d, Mines and Minerals § 83) .................................................................. 6 77 NY Jur 2d, Mines and Minerals § 87) .................................................................. 6 Patricia E. Salkin, NY Zoning Law & Practice) .................................... 29-30, 42, 43 Terry Rice, Zoning and Land Use, 43 Syracuse L Rev 615 (1992) ........................ 42

1

PRELIMINARY STATEMENT

This case concerns one town’s use of zoning and land use authority to

supplant a comprehensive and detailed statutory scheme created and

enforced by the State of New York for the purposes of regulating oil and gas

development in a manner that prevents waste, provides for a greater ultimate

recovery of oil and gas and protects mineral owners’ correlative rights (see

ECL 23-0301).1 In the aftermath of the energy crisis of the 1970s, the

Legislature enacted amendments to the Oil, Gas Solution Mining Law

(“OGSML”) to further enable the efficient and safe development of oil and

gas in this State [R: 727, 840].2 In this regard, a supersession clause was

inserted into the statute stating that this law “shall supersede all local laws or

ordinances relating to the regulation of the oil, gas and solution mining

industries; but shall not supersede local governments jurisdiction over local

roads or rights . . . under the [RPTL]” (ECL 23-0303 [2]).

Subsequently, after the OGSML provisions on well permitting and

spacing were expanded in response to the advent of horizontal and high-

1 Correlative rights is a legal theory pertaining to the nature of the landowner’s interest in

minerals (see 1 Martin & Kramer, Oil and Gas Law §§ 203, 203.2 at 27-32.1, 39-43 [2008]; 8 Martin & Kramer, Oil and Gas Law at 214-217 [2008]). The theory is that “all land owners whose tracts overlay a producing formation have . . . rights in the formation” (8 Martin & Kramer, Oil and Gas Law at 214-217 [2008]). This is discussed in greater detail at pp. 5-7, infra.

2 All citation references preceded by “R” are to the original record entitled “Record on Appeal.”

2

volume drilling (see L 2008, ch 376), defendant enacted a local law broadly

prohibiting within its geographic borders all oil and gas activities, including,

but not limited to, the “extraction, production, transportation, purchase,

processing, and storage of oil or gas” [R: 98, 100, 114].

Accordingly, plaintiff commenced this action and, among other

things, moved for summary judgment seeking a declaration that defendant’s

local law is preempted because it is contrary to the expressed and implied

intentions of the Legislature [R: 26-36, 43-44]. Supreme Court, in turn,

granted defendant’s cross motion dismissing the complaint, and the

Appellate Division, Third Department affirmed [5-15, 88-89, 1029-1031].

This Court should reverse and grant summary judgment in plaintiff’s

favor finding that defendant’s local law is preempted because it bans activity

that is expressly, exclusively, and exhaustively reserved to the State. The

implications here cannot be understated. If the Appellate Division’s ruling

is permitted to stand, it would obliterate the rights of mineral owners

throughout this State and in effect ban an entire industry from New York –

all in conflict with the policy declarations of the OGSML and Energy Law

(see ECL 23-0301; Energy Law § 3-101 [5]). More broadly, if the OGSML

does not preempt defendant’s local law, then municipalities will be

encouraged to ban other industries of statewide importance through the guise

3

of land use. This Court simply cannot authorize a municipal “not in my back

yard” approach to a matter of vital State importance – particularly where, as

here, the Legislature’s express intent is to promote development of

indigenous energy resources through a comprehensive uniform statewide

scheme of regulation.

Here, the Appellate Division failed to give express meaning to the

provisions of ECL 23-0303 (2) by implementing all of the applicable tools

of statutory construction and failed to consider the broader policy

implications of the OGSML and the “promote development” objective of the

Energy Law. Municipal drilling bans, like that at issue here, preclude

resource recovery, and result in the ultimate in waste and destruction of a

landowner’s correlative rights. Accordingly, by simply giving meaning to

the expressed and implied intentions of the Legislature, this Court should

reverse the Appellate Division and thereby allow the Department of

Environmental Conservation to continue safely and efficiently regulating oil

and gas development.

QUESTIONS PRESENTED

Q1. Under the doctrine of express preemption, is defendant’s zoning law

preempted by the OGSML because the state law expressly provides

that it “shall supersede all local laws and ordinances relating to the

4

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”?

Q2. Under the doctrine of field preemption, is defendant’s zoning law

specifically banning all oil and gas activities preempted by the

OGSML because the state law outlines a comprehensive and detailed

statutory scheme that indicates the need for statewide uniformity in

the field of oil and gas development?

Q3. Under the doctrine of conflict preemption, is defendant’s zoning law

preempted by the OGSML because defendant’s zoning law imposes

inconsistent restrictions that inhibit the state law specifically designed

to promote the efficient and safe development of oil and gas, so as to

prevent waste, provide for greater ultimate recovery of oil and gas and

protect mineral owners’ correlative rights?

STATEMENT OF THE CASE

I. THE STATUTORY FRAMEWORK AND UNDERLYING POLICY

The Oil, Gas and Solution Mining Law (see ECL article 23) governs

regulation of the oil and gas industry by, among others things, outlining the

well permitting process, well spacing requirements, and the Department of

5

Environmental Conservation’s broad enforcement authority. The statutory

scheme is one of a kind given the geophysical nature of oil and gas, and

given the scientific expertise required to undertake such regulation. The

OGSML is the result of New York’s membership in the Interstate Oil and

Gas Compact Commission (hereinafter Commission), a multi-state

governmental agency of a group of oil and gas producing states, whose

purpose “is to conserve oil and gas by the prevention of physical waste from

any cause” (ECL 23-2101) [R: 719-720]. The Commission arose in a time

period in which the lack of regulation was resulting in overproduction and

the waste of oil and gas resources in producing states [R: 719-720]. The

participating states endorsed, and Congress ratified, the Interstate Compact

to resolve these issues [R: 719-720].

The Interstate Compact requires each member state to enact laws that

prevent, among other things, “[t]he drilling, equipping, locating, spacing or

operating of a well or wells so as to bring about physical waste of oil or gas

or loss in the ultimate recovery thereof” (ECL 23-2101) [R: 720]. New

York became a member state of the Commission, enacted the Interstate

Compact in 1941, and remains a member state today [R: 720]. New York

thus adopted the OGSML which, from its initial enactment in 1963 through

the present day, incorporates the requirements of the Interstate Compact (see

6

Matter of Western Lands Servs., Inc. v Department of Envtl. Conservation

of State of N.Y., 26 AD3d 15, 17 [3d Dept 2005], lv denied 6 NY3d 713

[2006]) [R: 719-725].

In accord with the Interstate Compact, the OGSML is designed to

create uniform statewide regulation of all aspects of the oil and gas industry,

including the exploration, development, production, and utilization of oil

and gas [R: 46-47, 720, 721-723, 736-780]. To that end, the OGSML

contains terms of art informing statutory policy objectives that are wholly

unique to the oil and gas industry. Moreover, considering the complex and

scientific nature of oil and gas development, these policy objectives

specifically guide the Department of Environmental Conservation

(hereinafter DEC) in the well spacing and well permitting determinations

(see ECL 23-0503, 23-0901; 77 NY Jur 2d, Mines and Minerals §§ 83, 87).

Accordingly, the policy objectives of OGSML and the unique terms

contained therein are of great significance in this action.

In this regard, the OGSML’s declaration of policy states:

It is … in the public interest to regulate the development, production, and utilization . . . of oil and gas in this state in such a manner as will prevent waste; to authorize and to provide for the operation and development of oil and gas properties in such a manner that a greater ultimate recovery of oil and gas may be had, and that the correlative rights of all owners and the rights of all persons including landowners and the general public may be fully protected (ECL 23-0301).

7

Thus, the OGSML has four policy objectives that underpin the statute and

the DEC’s authority enumerated therein.

First, the OGSML regulates oil and gas in a manner that will prevent

waste. In accord with the Interstate Compact, the OGSML defines the term

of art “waste” as, among other things, “locating, spacing [or] drilling” a well

“in a manner which causes or tends to cause reduction in the quantity of oil

or gas ultimately recoverable[,] or which causes or tends to cause

unnecessary surface loss or destruction of oil and gas” (ECL 23-0101 [20]

[c]). Second, the OGSML regulates oil and gas in a manner that will

provide for a greater ultimate recovery of oil and gas (see ECL 23-0301).

Collectively, these two policy objectives form the basis for the DEC’s

oversight of well location and well spacing to ensure market efficiencies.

The third policy objective – protecting the “correlative rights of all

owners” – is also a phrase of art as it is a statutory policy wholly unique to

the oil and gas industry. The OGSML defines “owner” to be “the person

who has a right to drill into and produce from a pool” (ECL 23-0101 [11]).

The protection of an owner’s “correlative rights” means that the owner is

entitled to a reasonable opportunity to recover or receive the oil or gas (or

the equivalent thereof) attributable to its property, regardless of where the

well is drilled (see Matter of Sylvania Corp. v Kilbourne, 28 NY2d 427, 431

8

n 3, 433 [1971]; 6 NYCRR 550.3 [ao]; 1 Martin & Kramer, Oil and Gas

Law §§ 203, 203.2 at 27-32.1, 39-43 [2008]; 8 Martin & Kramer, Oil and

Gas Law at 214-217 [2008]).

The protection of correlative rights, coupled with the objectives

supporting the DEC’s oversight of well location and well spacing, reflect the

unique geophysical nature of oil and gas, as distinguished from solid

minerals such as sand and gravel. That is, oil and gas are substances that

exist in underground pools, and their movement in the subsurface is

determined by geophysical properties. Thus, a well drilled on one property

may result in draining the resource underlying other properties, thereby

depriving those property owners of the ability to recover the resource or

receive compensation for it. Indeed, under the pre-statutory “rule of

capture,” this was precisely what happened (see e.g. Wagner v. Mallory, 169

NY 501, 504-506 [1902]). The OGSML, however, modified the rule of

capture through its spacing and location-related provisions which prevent

wasteful practices; thereby, “all [mineral] owners” in a common source of

supply are assured an opportunity to either recover the resource or be

compensated in kind, thus protecting their “correlative rights” (ECL 23-

0301; see Matter of Sylvania Corp. v Kilbourne, 28 NY2d at 433; Matter of

9

Western Lands Servs., Inc. v Department of Envtl. Conservation of State of

N.Y., 26 AD3d at 16-17).

Accordingly, the OGSML implements “pooling” whereby oil and gas

drilling may occur only if the drilling operator has “control” over a

substantial part of the land over which an underground oil or gas pool exists,

referred to as a spacing unit (see ECL 23-0501, 23-0503; Matter of Western

Lands Servs., Inc. v Department of Envtl. Conservation of State of N.Y., 26

AD3d at 17-18. Further, to the extent that an operator does not have control

over a portion of a spacing unit, the landowner not providing control to the

operator must nonetheless still receive compensation (see ECL 23-0901;

Matter of Western Lands Servs., Inc. v Department of Envtl. Conservation

of State of N.Y., 26 AD3d at 18; Bradley J. Field, DEC Program Policy

DMN-1: Public Hearing Processes for Oil and Gas Well Spacing and

Compulsory Integration, Department of Environmental Conservation [2006],

available at http://www.dec.ny.gov/energy/28013.html [accessed Oct 23,

2013] [discussing “Compulsory Integration”]). The setback requirements

preventing drilling near the borders of these spacing units is intended to

ensure oil and gas extraction in one unit does not affect the minerals in an

adjacent unit or pool (see ECL 23-0501 [1] [b] [1]). A full examination of

the OGSML reveals that there is no comparable concept, policy, or related

10

terminology in any other New York law, even in mining law pertaining to

sand and gravel.

Finally, the OGSML seeks to protect the rights of all landowners and

the general public (see ECL 23-0301). This general welfare policy is

achieved, however, through the comprehensive scheme contained in the

OGSML. The statute is entrusted to the DEC to administer statewide (see

ECL 23-0101 [4], 23-0303 [1]), and DEC is granted significant enforcement

authority to ensure compliance (see ECL 23-0305). Further, the DEC has

promulgated uniform rules and regulations thereto to account for the

complex nature of oil and gas regulation (see 6 NYCRR ch V). Supporting

the scheme is also the State Environmental Quality Review Act (see ECL

article 8 [hereinafter SEQRA]), which provides additional DEC oversight

because the DEC prepared a Generic Environmental Impact Statement

(hereinafter the “1992 GEIS”) applicable to conventional oil and gas

development (see Generic Environmental Impact Statement on the Oil, Gas

and Solution Mining Regulatory Program, Department of Environmental

Conservation [1992], available at

ftp://ftp.dec.state.ny.us/dmn/download/geismaster.pdf). With the advent of

high-volume hydraulic fracturing, the DEC began preparing an applicable

Supplemental Generic Environmental Impact Statement (hereinafter the

11

“SGEIS”), a process that has been ongoing for more than five years (see

SGEIS on the Oil, Gas and Solution Mining Regulatory Program,

Department of Environmental Conservation,

http://www.dec.ny.gov/energy/47554.html) [R: 912]. The draft SGEIS

incorporates even more stringent regulatory controls and prohibitions for

well permitting and well location of oil and gas drilling, including locational

prohibitions, setbacks, and restrictions (see Revised Draft SGEIS on the Oil,

Gas, and Solution Mining Regulatory Program [September 2011],

http://www.dec.ny.gov/energy/75370.html) [R: 919-921].

Thus, the general welfare is protected pursuant to these

comprehensive, uniform statewide controls, which are to be implemented

consistently with the OGSML’s other explicit policies derived from the

Interstate Compact – i.e., preventing waste, providing for greater ultimate

resource recovery, and protecting the correlative rights of “all owners” (see

Matter of Envirogas, Inc. v. Town of Kiantone, 112 Misc 2d 432, 433, 434-

35 [Sup Ct, Erie County 1982], affd 89 AD2d 1056 [4th Dept 1982], lv

denied 58 NY2d 602 [1982]). In sum, the OGSML has unique policy

objectives which result in a detailed and comprehensive scheme intended to

be applied uniformly to oil and gas activities statewide.

12

II. FACTUAL BACKGROUND AND PROCEEDINGS BELOW

A. Nature of the Dispute

By way of background, conventional vertical natural gas drilling has

long existed in New York with active operations even to this day [R: 45-47].

Oil, gas and solution salt mining wells are economically important in New

York State with more than 75,000 wells drilled in the state since the late

1800's; about 14,000 of these are still active and new drilling continues (see

New York State Department of Environmental Conservation, Oil, Gas and

Solution Salt Mining in New York State,

http://www.dec.ny.gov/energy/205.html [accessed Oct 21, 2013]).

Extraction of oil and gas contributes half a billion dollars to the state's

economy each year (id.).

Plaintiff operates a dairy farm. In 2007, plaintiff executed two oil

and gas leases with Elexco Land Services, Inc. with respect to property it

owned in the Town of Middlefield, Otsego County [R: 28-29, 54-55]. The

purpose of the oil and gas leases was to explore and develop natural gas

resources underlying the property [R: 29, 55].

In June 2011, defendant enacted a zoning law, entitled “A Local Law

Repealing the Town of Middlefield Zoning Ordinance and Adopting the

Town of Middlefield Zoning Law” [R: 98-128]. Collectively, subsection B

13

(7) of article II and subsection A of article V broadly prohibit all oil and gas

exploration, drilling, extraction, production, transportation, purchase,

processing and storage (hereinafter Town Prohibition), thereby effectively

banning all oil and gas activities within the geographical borders of the

Town [R: 100, 114]. Prior to the enactment of the Town Prohibition,

plaintiff could have been granted a permit for conventional vertical natural

gas drilling, even with the existence of the statewide moratorium applying

only to high-volume hydraulic fracturing (see Executive Order [Paterson]

No. 41 [9 NYCRR 7.41]; Executive Order [A. Cuomo] No. 2 [9 NYCRR

8.2]).

B. The Instant Action

On September 15, 2011, plaintiff commenced this action in Supreme

Court, Otsego County, challenging the validity of the Town Prohibition [R:

26-36]. On October 28, 2011, plaintiff moved for summary judgment,

seeking a declaration that the Town Prohibition is expressly preempted by

the OGSML’s supersession clause, ECL 23-0303 (2), as well as impliedly

preempted because the Town Prohibition infringes upon and conflicts with

the language and objectives of the OGSML (as codified in ECL article 23)

and section 3-301 (5) of the Energy Law [R: 43-44]. By cross motion dated

December 5, 2011, defendant opposed plaintiff’s motion and sought

14

dismissal of the complaint [R: 88-89]. In January 2012, the court granted

the amicus curiae applications of both EARTHJUSTICE (on behalf of a

number of environmental groups) and the Town of Ulysses, and received

supplemental submissions from all parties [R: 5, 57-87]. Supreme Court

then rendered its decision on February 24, 2011, rejecting the preemption

claims and granting defendant’s cross motion dismissing the complaint [R:

5-15].

C. Supreme Court Decision

In its decision, Supreme Court analyzed only the express preemption

claim, in effect finding that the existence of the supersession clause at ECL

23-0303 (2) foreclosed any implied preemption challenges [R: 7]. In

holding that the Town Prohibition was not expressly preempted, Supreme

Court focused predominantly on the legislative history of article 3-A of the

Conservation Law (which later became known as the OGSML) and its

successor provisions in ECL article 23 [R: 7-10]. Citing the Memorandum

in Support of the 1963 legislation (see L 1963, ch 959), the court

acknowledged that the statute, even as initially enacted, provided the

Conservation Department (now the Department of Environmental

Conservation [hereinafter “DEC” or “Department”]) with “regulatory

powers pertaining to the determination and establishment of proper well

15

spacing and well locations,” and “empowered [the Department] to make an

early determination as to all the lands believed underlaid by a pool [in order

to] fix the proper size drilling units and well locations” [R: 9 (emphasis

added)]. Yet, the court concluded that nothing in the statute (as initially

enacted or as later amended) or its legislative history addressed the

Legislature’s intent “to impact . . . a local municipality’s right to enact

legislation pertaining to land use” [R: 12].

The court also found significant the 1978 amendments to ECL 23-

0301 (see L 1978, ch 396), which concerned the stated declaration of policy

[R: 10]. These amendments replaced the phrase “foster, encourage and

promote” the development of oil and gas with the phrase “regulate” the

development of oil and gas [R: 10, 725]. However, as the court noted, this

same legislation also simultaneously amended Energy Law § 3-101 (5) to

declare that it was the energy policy of the state “to foster, encourage and

promote the prudent development and wise use of . . . all indigenous state

energy resources, including, but not limited to, on-shore oil and natural gas,

[and] natural gas from Devonian shale formations” [R: 725-726].

Nonetheless, the court found that this change “streamlin[ed] the regulatory

function of the Department of Environmental Conservation” [R: 10] even

though the bill’s stated purpose – now reflected not only in the ECL, but also

16

in the Energy Law – was to “encourage the State to develop all of its

indigenous energy resources,” thus, again reaffirming the overarching policy

objectives of providing for greater ultimate recovery, preventing waste, and

protecting mineral owners’ correlative rights [R: 726].

The court then examined the 1981 amendments (see L 1981, ch 846),

which added the supersession clause (see ECL 23-0303 [2]), and reiterated

its view that promotion and regulation were separate activities, and that the

DEC was responsible only for the latter [R: 11-12]. The court summarily

concluded that “regulation” dealt only with the “activity of the industry,”

meaning the “method and manner of drilling and the like, but not the broader

component of the development of this natural resource” [R: 11-12]. To

support this determination the court relied on the Merriam-Webster

Dictionary definition of “regulation” to conclude that the statute empowers

the DEC to regulate only the “how” of drilling, but not the “where” [R: 12].

Finally, the court stressed Court of Appeals’ rulings in Matter of Frew

Run Gravel Prods. v Town of Carroll (71 NY2d 126 [1987]) and Matter of

Gernatt Asphalt Prods. v Town of Sardinia (87 NY2d 668 [1996]), based on

constructions of a supersession clause in the Mined Land Reclamation Law

(“MLRL”), to support its finding that the Town Prohibition was not

expressly preempted [R: 12-14]. The court reached this conclusion

17

notwithstanding that the supersession language and the objectives of the

MLRL are substantially different relative to the supersession language and

the objectives of the OGSML. In sum, the court erred in failing to apply all

the applicable tools of statutory construction and in failing to apply the

implied preemption doctrines.

D. Plaintiff’s Motion to Renew

On March 29, 2012, plaintiff moved to renew based on newly

discovered facts, namely, additional legislative history that was not in the

official Bill Jacket of the 1981 amendments, but, instead, was buried deep in

the New York State Archives [R: 940-941, 942-995]. This information was

not in the official Bill Jacket because the final amendments enacted in 1981

had incorporated three individual program bills presented by the Governor

on behalf of the DEC, however, the legislative history of the three separate

bills had never been consolidated or included in the Bill Jacket of the

omnibus legislation [R: 944-950].

The Memorandum in Support of one of the separate bills (see A6928)

specifically addresses the supersession clause, stating:

The provision for supersedure by the [OGSML] of local laws and ordinances clarifies the legislative intent behind the enactment of the oil and gas law in 1963. The comprehensive scheme envisioned by this law and the technical expertise required to administer and enforce it, necessitates that this authority be reserved to that State. Local government’s diverse

18

attempts to regulate the oil, gas, and solution mining activities serve to hamper those who seek to develop these resources, with Statewide repercussions. With adequate staffing and funding, the State’s oil, gas, and solution mining regulatory program will be able to address the concerns of local governments and assure the efficient and safe development of these energy resources [R: 949, 995]. Defendant opposed plaintiff’s motion to renew, and by a decision

dated June 19, 2012 and entered on June 20, 2012, Supreme Court found

that there was no basis to change its prior decision and denied plaintiff’s

motion to renew [R: 18-21]. On August 8, 2012, the court then entered

judgment, dated August 1, 2012, as to both decisions [R: 24-25]. Plaintiff

timely filed a notice of appeal, dated August 24, 2012 [R: 2].

E. Appellate Division Decision

On May 2, 2013, the Appellate Division, Third Department, rendered

its decision affirming Supreme Court by incorporating the reasoning it

outlined in Matter of Norse Energy Corp. USA v Town of Dryden, 108

AD3d 25 (3d Dept 2013), lv granted 21 NY3d 863 (2013) [R: 1029-1031].

Accordingly, the Appellate Division held that ECL 23-0303 (2) does not

expressly preempt the Town Prohibition, and that the OGSML does not

impliedly preempt the Town Prohibition as there is no inconsistency in the

provisions and objectives of the OGSML compared to the Town Prohibition.

19

On the issue of express preemption, the Appellate Division focused

solely on the first clause within the supersession clause that “[t]he provisions

of this article shall supersede all local laws or ordinances relating to the

regulation of the oil, has and solution mining industries,” in effect ignoring

the second clause that the provisions of the article “shall not supersede local

government jurisdiction over local roads or the rights . . . under the

[RPTL]” [R: 1038-1044]. Thereafter, the court administered a plain

language analysis, using the Merriam-Webster On-line dictionary to define

the term “regulation,” and concluded that the phrase “regulation of the …

industr[y]” pertained narrowly to the “details or procedure” of the oil and

gas industry, and thus the clause did not concern land use regulation [R:

1038-1039].

The Appellate Division then examined the legislative history, also

noting that the OGSML’s declaration of policy was modified in 1978 to

replace “foster, encourage and promote development” with “regulate the

development” [R: 1040]. Accordingly, the court summarily concluded that

“the Legislature clearly acknowledged that promotion and regulation were

considered separate and distinct activities,” thereby tasking the Energy

Office with promotion of energy and tasking the DEC with regulation of the

oil, gas and solution mining industries [R: 1040]. The court then looked to

20

the 1981 amendments to the OGSML, which enacted the supersession

language, and again concluded that the DEC is tasked only with regulating

the “technical, operational” aspects of oil and gas activities, but not where

drilling may occur [R: 1041-1042]. Lastly, the court also relied on the Court

of Appeals’ rulings in Matter of Frew Run Gravel Prods. v Town of Carroll

and Matter of Gernatt Asphalt Prods. v Town of Sardinia to support finding

that the Town Prohibition was not expressly preempted even though the

supersession language and the objectives of the MLRL are substantially

different from the supersession language and the objectives of the OGSML

[R: 1042-1044].

As for implied preemption, the Appellate Division first determined

correctly that the OGSML’s express supersession clause does not foreclose

an implied preemption analysis [R: 1044-1045]. However, in conducting the

substantive implied preemption analysis – while the court acknowledged the

statutory provisions relating to unit size, spacing and well location – it

nonetheless classified these matters as “regulatory” and thereby concluded

that these provisions relate only “to the details and procedures” of the well

[R: 1045]. Then, rather than undertaking the relevant inquiry of whether

local bans on oil and gas activities infringe on compliance with these

requirements, the court simply concluded that because these provisions do

21

not relate to “traditional land use considerations,” there was no conflict [R:

1045]. Indeed, the court concluded that a local ban “may harmoniously

coexist [with the OGSML]; the zoning law will dictate in which, if any,

district drilling may occur, while the OGSML [will] instruct[] operators as to

the proper spacing . . . to prevent waste” [R: 1045].

Finally, despite the explicit statutory directive that “the correlative

rights of all [mineral] owners . . . be fully protected,” the Appellate Division

found no inconsistency between the policy objectives of the OGSML and the

enactment of the Town Prohibition banning all oil and gas activities [R:

1045-1046].3 The court reasoned that nothing in the OGSML or its

legislative history suggested an intention to maximize recovery at the

expense of local land use regulation [R: 1045-1046], and stated that the

OGSML seeks to protect the rights of all persons, including the general

public [R: 1046]. The court stated that individual municipalities could use

the provisions of the OGSML to protect the rights of “all persons including

landowners and the general public,” but in so doing, misapplied the OGSML

since its provisions are exclusively within the authority of DEC [R: 1046].

Furthermore, the Appellate Division did not explain how the OGSML’s

3 Correlative rights is a legal theory that “all land owners whose tracts overlay a

producing formation have . . . rights in the formation” (see n 1, supra; pp, 5-7, supra).

22

policy objectives of protecting correlative rights and preventing waste could

possibly be achieved by a municipal-wide drilling ban that precludes any

resource recovery [R: 1044-1046].

In sum, the Appellate Division erred in failing to give express

meaning to the provisions of ECL 23-0303 (2) by implementing all of the

applicable tools of statutory construction and in failing to properly apply an

implied preemption analyses.

JURISDICTIONAL STATEMENT

Plaintiff moved for leave to appeal to the Court of Appeals, which

was granted by a decision and order dated August 29, 2013 [R: 1026-1027].

This Court has jurisdiction to review the questions raised in this brief

because plaintiff fully briefed and argued the legal theories of express and

implied preemption in both Supreme Court and the Appellate Division [7,

33-34, 43-51, 1038-1046] (see CPLR 5501, 5602 [a]; see also Matter of

Richardson v Felder Roofing, 67 NY2d 246, 250 [1986]; Rentways, Inc. v

O’Neill Milk & Cream Co., 308 NY 342, 349 [1955]).

23

ARGUMENT

THE TOWN PROHIBITION IS PREEMPTED BY STATE LAW PURSUANT TO THE DOCTRINES OF EXPRESS PREEMPTION, FIELD PREEMPTION, AND CONFLICT PREEMPTION

The Town Prohibition violates the expressed and implied intentions of

the State Legislature. Defendants cannot, under the guise of their municipal

home rule powers, justify a local zoning law that is contrary to language

expressed in this State’s general laws and which, further, infringes upon a

comprehensive State regulatory scheme and conflicts with specific State

statutory provisions and policies. Thus, the Town Prohibition is preempted

pursuant to the doctrines of express preemption and implied preemption.

By way of background, it is well-settled that “[t]owns . . . have no

inherent power to enact or enforce zoning or land use regulations. They

exercise such authority solely by legislative grant and in the absence of

legislative delegation of power their actions are ultra vires and void” (Matter

of Kamhi v. Planning Bd. of Town of Yorktown, 59 NY2d 385, 389 [1983];

see DJL Rest. Corp. v City of New York, 96 NY2d 91, 94 [2001]; Kamhi v

Town of Yorktown, 74 NY2d 423, 427 [1989]). In this regard, towns have

historically been granted authority to enact local zoning and land use

ordinances and, more recently, were granted authority to enact local zoning

and land use laws; however, both actions are subject to the Legislature’s

24

oversight (see 25 NY Jur 2d Counties, Town, and Municipal Corporations §

123).4

Thus, especially considering the Legislature’s oversight in zoning and

land use regulation, “[t]he preemption doctrine represents a fundamental

limitation on home rule powers” (Matter of Cohen v Board of Appeals of

Vil. of Saddle Rock, 100 NY2d 395, 400 [2003], quoting Albany Area

Bldrs. Assn. v Town of Guilderland, 74 NY2d 372, 377 [1989]). This Court

has articulated two distinct, yet related, preemptions doctrines, express

preemption and implied preemption; further, this Court has determined that

implied preemption can be analyzed pursuant to the theories of field

preemption and conflict preemption (see DJL Rest. Corp. v City of New

York, 96 NY2d at 95; New York State Club Assn. v City of New York, 69

NY2d 211, 217 [1987], affd 487 US 1 [1988]; 25 NY Jur 2d, Counties,

Towns, and Municipal Corporations §§ 349-351; cf. Balbuena v IDR Realty

LLC, 6 NY3d 338, 356 [2006, Graffeo, J.]). Here, it is submitted that the

Town Prohibition is preempted on all three grounds. In addition, further

support for finding the Town Prohibition preempted by the OGSML is

offered by distinguishing the precedent relied upon by Supreme Court and

the Appellate Division, as well as by outlining the decisions of other state 4 The distinctions between ordinances and local laws, and State oversight over each, are

addressed in detail at Point I, F, i, infra.

25

courts, which have all held that similar zoning bans are preempted (see Voss

v Lundvall Bros., 830 P2d 1061 [Colo 1992]; State ex rel. Morrison v Beck

Energy Corp., 989 NE2d 85 [Ohio Ct App 9th Dist 2013], appeal allowed

989 NE2d 70 [2013]; see also Energy Mgmt. Corp. v City of Shreveport,

397 F3d 297 [5th Cir 2005]; Northeast Natural Energy, LLC v City of

Morgantown, Civ Act No 11-C-411, 2011 WL 3584376 [W Va Cir Ct Aug

12, 2011]).

Accordingly, plaintiff respectfully urges this Court to reverse the

orders of Supreme Court and the Appellate Division, declare that the Town

Prohibition is preempted, and, thereby, allow the DEC to continue safely and

efficiently regulating oil and gas development in New York.

POINT I ECL 23-0303 (2) EXPRESSLY PREEMPTS THE TOWN

PROHIBITION GIVEN THE COMMON AND ORDINARY MEANING OF “REGULATION” AS WELL AS GIVEN THE

LEGISLATURE’S INTENT TO LIMIT LOCAL JURISDICTION TO ONLY ROADS AND TAXES

The OGSML (codified at ECL article 23) was originally enacted in

1963 based on an interstate model designed to achieve uniform Statewide

regulation of all aspects of the oil and gas industry, including exploration,

development, production and utilization (see L 1963, ch 959) [R: 46-47, 721,

736-80]. The supersession clause at issue here (see ECL 23-0303 [2]) was

26

enacted by amendment to the OGSML in 1981 (see L 1981, ch 846, § 4) [R:

727-728]. In full, ECL 23-0303 (2) states:

The 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 added].

The intent of this language is unambiguous, and its application is

straightforward: with the sole exception of local roads and real property

taxation, all local laws or ordinances that would purport to relate to the

regulation of the oil and gas industry are expressly preempted, including, as

here, a local zoning law that bans all oil and gas activities within the Town’s

geographic borders.

The doctrine of express preemption renders void local laws and

ordinances that are expressly prohibited by State statute (see Matter of

Cohen v Board of Appeals of Vil. of Saddle Rock, 100 NY2d at 400; Oil

Heat Inst. of Long Is. V Town of Babylon, 156 AD2d 352, 352 [2d Dept

1989]). The inquiry into express preemption routinely turns on principles of

statutory construction, in which the primary consideration is to ascertain and

give effect to the intention of the Legislature (see e.g. Vatore v

Commissioner of Consumer Affairs of City of N.Y., 83 NY2d 645, 647, 650

[1994]). Here, the supersession clause, ECL 23-0303 (2), expressly

27

preempts the Town Prohibition given the common and ordinary meaning of

“regulation,” which includes land use prohibitions or restrictions. The

Legislature’s intent to expressly preempt can be further ascertained from (i)

other statutes pertaining to local zoning regulation, (ii) the limitation of local

government “jurisdiction” to discrete enumerated exceptions to preemption

(i.e., local roads and property taxes) that do not pertain to local zoning, (iii)

a reading of the statute as a whole, and (iv) the overall legislative history.

In this regard, Supreme Court and the Appellate Division erred in

failing to utilize all of these tools to determine the Legislature’s intent and,

instead, assigned a technical definition to “regulation” derived primarily

from distinguishable decisions of this Court, which concerned statutory

construction of a distinguishable statute.

A. The Supersession Clause Expressly Preempts the Town Prohibition Because the Common and Ordinary Meaning of “Regulation” Encompasses Local Zoning Regulation.

Focusing specifically on the first clause within the supersession clause

that “this article shall supersede all local laws or ordinances relating to the

regulation of the oil, gas and solution mining industries,” this Court’s

determination on express preemption turns on whether the term “regulation”

encompasses local zoning regulation or, as the Appellate Division found,

more narrowly pertains only to the regulation of the technical operational

28

activities of the oil, gas, and solution mining industries. The OGSML does

not define “regulation.” In similar circumstances, however, this Court has

routinely turned to Black’s Law Dictionary to determine the common and

ordinary meaning of terms expressed in a statute (see e.g. People v Couser,

94 NY2d 631, 636-637 [2000]; People v Hedgeman, 70 NY2d 533, 538

[1987]; see also McKinney’s Cons of Laws of NY, Book 1, Statutes § 234).

In this regard, Black’s Law Dictionary defines “regulation” as “[t]he act or

process of controlling by rule or restriction” (Black’s Law Dictionary [9th ed

2009], regulation).

The Town Prohibition falls within this definition of “regulation” and

is, thus, preempted. The Town’s Prohibition, by its own terms, controls and

restricts oil and gas activities by banning all such activities within its

geographic borders [R: 100, 114]. In this regard, the Town Prohibition is

itself enacted though a section entitled “General Regulations Applying To

All Districts,” which states that “all oil, gas or solution mining and drilling

are prohibited uses” [R: 114 (emphasis added)].

Accordingly, the Supreme Court and the Appellate Division erred in

assigning a narrow, constrained definition to the term “regulation,” taken

from the Merriam-Webster On-line dictionary – i.e. that regulation only

pertains to details or procedures. This Court should adopt the broader

29

definition in line with the common and ordinary meaning of regulation – i.e.

the act or process of controlling by rule or restriction (as confirmed in, inter

alia, the Town Law) – and, thus, find that the supersession clause expressly

preempts the Town Prohibition (see e.g. People v Thompson, 99 NY2d 38,

41-42 [2002]; compare People v Couser, 94 NY2d at 636-637).

B. Legislative Intent to Expressly Preempt the Local Zoning Regulation is Evidenced by the Statutory Town Law Definition.

Further, this Court also routinely applies the canon of in pari materia

in construing the Legislature’s intent in the terms expressed in its statute (see

e.g. Matter of Albany Law School v New York State Off. of Mental

Retardation & Dev. Disabilities, 19 NY3d 106, 121 [2012, Graffeo, J.];

Matter of Lower Manhattan Loft Tenants v New York City Loft Bd., 66

NY2d 298, 304 [1985]). This canon explains that “[s]tatutes that relate to

the same subject are in pari materia and should ‘be construed together unless

a contrary intent is clearly expressed by the Legislature’” (Matter of Albany

Law School v New York State Off. of Mental Retardation & Dev.

Disabilities, 19 NY3d at 121, quoting Matter of Plato’s Cave Corp. v State

Liq. Auth., 68 NY2d 791, 793 [1986]). In this regard, the State has

historically granted zoning and land use authority to towns through the

enactment of Town Law § 261 (see Assn. of Towns of the State of New

York, Town Manual §§ 6-1, 6-4, at 109-110, 113; Patricia E. Salkin, NY

30

Zoning Law & Practice § 2:12; see also L 1932, ch 634), which provides

further support that “regulation” encompasses local zoning regulation, as it

states:

“town board[s are] hereby empowered by local law or ordinance to regulate and restrict . . . the location and use of . . . land for trade [and] industry . . . provided that such regulations shall apply to and affect only such part of a town as is outside the limits of any incorporated village or city” [emphasis added].

The analogous enabling statutes through which the State has granted zoning

and land use authority to villages and cities also contain language that

supports “regulation” encompassing local zoning regulation (see Village

Law § 7-700; General City Law § 20 [24]; see also Statute of Local

Governments § 10 [6]). Collectively, in reviewing these related statutes

pertaining to local zoning authority, it is apparent that the term regulation is

to be broadly defined to encompass local zoning regulation. It is noted that

Supreme Court and the Appellate Division did not undertake this particular

analysis in determining the legislative intent in the supersession clause.

Nonetheless, the Appellate Division did make light of an unrelated

statute concerning the operation of hazardous waste facilities, ECL 27-1107,

in which “the Legislature expressly prohibited local municipalities from

requiring ‘any approval consent, permit, certificate or other condition,

including conformity with local zoning or land use laws and ordinances’”

31

(Matter of Norse Energy Corp. USA v Town of Dryden, 108 AD3d 25, 35 n

7 [2013], supra) [R: 1042 n 7]. It was suggested that this indicates that the

Legislature specifically prohibits local zoning and land use regulation if that

is its intention (see id.). Initially, it is submitted that any comparison to a

statute on hazardous waste facilities is misguided as it is unrelated to the

subject matter at issue (cf. Matter of Albany Law School v New York State

Off. of Mental Retardation & Dev. Disabilities, 19 NY3d at 121).

Nonetheless, the canon of in pari material provides that in construing a

statute, while comparison to subsequently enacted statutes may be helpful,

comparisons should predominantly focus on previously enacted statutes as

the Legislature is presumed to be familiar with legislation of the same

subject that is already enacted (see Commonwealth of the N. Mariana Is. v

Canadian Imperial Bank of Commerce, 21 NY3d 55, 62 [2013, Rivera, J.];

Matter of Grand Jury Subpoena Duces Tecum Served on Museum of

Modern Art, 93 NY2d 729, 745-746 [1999]; McKinney’s Cons of Laws of

NY, Book 1, Statutes §§ 222-223). Thus, it is noted that the language in

Town Law §261 indicating that local zoning is the regulation of land for

trade and industry was enacted in 1932 (see L 1932, ch 634; Little v Young,

82 NYS2d 909, 915 [Sup Ct, Nassau County 1948], affd 274 AD 1005

[1948], affd 299 NY 699 [1949]), the supersession clause at issue was

32

enacted in 1981 (see L. 1981, c. 846, § 4), and ECL 21-1107 was amended

specifically to mention local zoning or land use laws and ordinances in 1987

(see L 1987, ch 618, §10). Accordingly, conferring the appropriate statute

of the same subject matter, it is apparent that the Legislature intended that

the supersession clause preempt local zoning regulation as the term

regulation has historically encompassed local zoning regulation.

C. Legislative Intent to Expressly Preempt Local Zoning Regulation is Evidenced by Local Zoning Regulation Not Being Enumerated as an Exception to Preemption in the Supersession Clause.

The Legislature’s enumeration of discrete exceptions to the scope of

supersession – with no reference to local zoning ordinances among those

exceptions - confirms legislative intent not to except zoning restrictions. In

construing the Legislature’s intent “where the Legislature lists exceptions in

a statute, items not specifically referenced are deemed to have been

intentionally excluded” (Weingarten v. Board of Trustees of N.Y. City

Teachers’ Retirement Sys., 98 NY2d 575, 582-583 [2002, Graffeo, J.];

Matter of Jewish Home & Infirmary of Rochester v Commissioner of N.Y.

State Dept. of Health, 84 NY2d 252, 262-263 [1994]; see also McKinney's

Cons Laws of N.Y., Book 1, Statutes § 240).

Thus, now focusing on the second clause within the supersession

clause which states that the article “shall not supersede local government

33

jurisdiction over local roads or the rights of local governments under the

[RPTL],” this clause speaks specifically to the “jurisdiction” retained by

local governments under the OGSML with such jurisdiction being excluded

from preemption. “Jurisdiction” is a term of art, which, in pertinent part, is

defined as “[a] government’s general power to exercise authority over . . .

things within its territory” (Black’s Law Dictionary [9th ed 2009],

jurisdiction). Accordingly, the Legislature’s intent – with respect to oil and

gas regulation – was to confine local authority specifically and solely to two

discrete areas – local roads and property taxes – and not zoning and land use

restrictions. Further, it is noted that Supreme Court and the Appellate

Division erred in not applying this Court’s precedent with regard to

construing exceptions enumerated within a statute (see Weingarten v. Board

of Trustees of N.Y. City Teachers’ Retirement Sys., 98 NY2d at 582-583;

Matter of Jewish Home & Infirmary of Rochester v Commissioner of N.Y.

State Dept. of Health, 84 NY2d at 262-263).

D. The Legislature’s Intent to Expressly Preempt Local Zoning Regulation is Evident Upon Construing the Supersession Clause as a Whole.

In matters of statutory interpretation, “it is well settled that a statute

must be construed as a whole” (Matter of Albany Law School v New York

State Off. of Mental Retardation & Dev. Disabilities, 19 NY3d 106, 120

34

[2012, Graffeo, J.]; see McKinney’s Cons of Laws of NY, Book 1, Statutes

§ 97). Now focusing on the two clauses within the supersession clause

together, it is noted that the supersession clause first outlines local

preemption with respect to oil and gas regulation, and then enumerates local

roads and taxation as exceptions to preemption. Construing the supersession

clause as a whole, the Legislature’s intent to preempt local zoning regulation

is apparent as the supersession clause first preempts all local regulation –

encompassing zoning regulation – and then carves out two specific

exemptions to preemption concerning local roads and taxation.

In this regard, Supreme Court and the Appellate Division determined

that the supersession clause first narrowly preempts local regulation of the

technical operational activities of the oil, gas, and mining industries, and that

the clause then apparently carves out two specific exemptions concerning

local roads and taxation. This construction of the statute as a whole makes

little sense because road usage and property taxes have nothing to do with

technical operations, i.e., the “method and manner” of conducting oil and

gas drilling. The mere fact that a drilling operator may use local roads in the

course of conducting drilling operations (e.g., to get to and from the drill

site) does not transform local road usage into a drilling operation (cf.

D’Amico v Christie, 71 NY2d 76, 88 [1987]; Lundberg v State of New

35

York, 25 NY2d 467, 471 [1969]). Likewise, ad valorem taxes – imposed by

the State on all industries to varying levels – have nothing to do with the

specific industry’s “operations,” i.e., the technical aspects of conducting the

industry’s physical activities. Accordingly, the Legislature’s intent to

expressly preempt local zoning regulation is apparent because the

Legislature would not have needed to carve out these two exceptions if

“regulation” was confined only to technical operations.

It is noted that Supreme Court and the Appellate Division erred in not

applying this statutory construction analysis. Further, the lower court

decisions render the exceptions to preemption mere surplusage and, thus,

their construction of the statute should not be affirmed (see Criscione v. City

of New York, 97 NY2d 152, 157 [2001, Graffeo, J.]; Leader v. Maroney,

Ponzini & Spencer, 97 NY2d 95, 104 [2001]; see also McKinney’s Cons of

Laws of NY, Book 1, Statutes § 231).

E. Legislative History Confirms That ECL 23-0303 (2) Expressly Preempts Local Zoning Regulation.

In determining the Legislature’s intent, this Court also considers the

corresponding legislative history (see Matter of Albany Law School v New

York State Off. of Mental Retardation & Dev. Disabilities, 19 NY3d at 120;

McKinney’s Cons of Laws of NY, Book 1, Statutes § 124). In this regard,

the legislative history of the supersession clause and, more generally, the

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OGSML confirms the Legislature’s intent to expressly preempt local zoning

regulation and confine local jurisdiction solely to roads and property taxes.

As originally enacted in 1963, the OGSML sought to “foster,

encourage and promote” natural gas development in a manner that would

prevent waste, maximize recovery of the State’s oil and gas resources, and

protect correlative rights [R: 721-723, 748-750] (see L 1963, ch 959; ECL §

23-0301 [as originally enacted]). Both the language of the statute and its

legislative history reveal that the manner in which this was to be achieved

was by vesting administration of the statute in the State, including the

responsibility for establishing well spacing and wellbore location based on

sound geologic and geophysical principles [R: 722-725, 800-816].

In 1978, the statute’s declaration of policy (codified in ECL § 23-

0301) was amended, such that the words “foster, encourage and promote” oil

and gas development were replaced with the word “regulate” [R: 725] (see L

1978, ch 396). At the same time, the Legislature also amended Energy Law

§ 3-101 (5) to declare it to be the energy policy of the State “to foster,

encourage and promote the prudent development and wise use of all

indigenous state energy resources including, but not limited to, on-shore oil

and natural gas, off-shore oil and natural gas, natural gas from Devonian

shale formations” [R: 725-726] (see L 1978, ch 396). Thus, as of 1978, the

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“promote development” policy language was added to the Energy Law,

while regulatory responsibility remained with the DEC. Accordingly, the

State’s overarching objective – as reflected in both the Energy Law and the

ECL – remained the same as it had been since 1963 – to maximize the

recovery of indigenous oil and gas resources and prevent waste [R: 725-

726]. Further, nothing was changed in the remainder of the OGSML (i.e.,

the objectives of preventing “waste,” providing for greater ultimate

recovery, and protecting correlative rights) relative to the DEC’s authority to

“where” drilling occurred by virtue of DEC’s control over the size, shape,

and location of spacing units and the proper designation of drilling location

(see L 1978, ch 396).

The 1981 amendments to the ECL (see L 1981, ch 846), which added

the supersession clause, came into being with the advent of the energy crisis

of the 1970s and after almost two decades of problems resulting from

piecemeal local regulation of the oil and gas industry [R: 46-48, 727, 840].

Thus, the 1981 amendments sought to “promote the development of

domestic energy supplie[s], including NYS’s resources of oil and natural

gas” [R: 727, 840] (see Mem in Support S6455-B / A8475-B). To that end,

the 1981 amendments updated the regulatory program, granting the DEC

additional powers “to enable it to provide for the efficient, equitable and

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environmentally safe development of the State’s oil and gas resources,” by,

among other things, adding the supersession clause of ECL 23-0303 (2) [R:

727-728, 843-844] (see Governor’s Approval Mem, Bill Jacket, L 1981, ch

846) – i.e., directing that the OGSML “shall supersede all local laws or

ordinances relating to the regulation of the oil, gas and solution mining

industries”, with the only exceptions being relative to local roads and real

property taxes.

Concomitantly, in exchange for definitively removing local control

over oil and gas development, the 1981 amendments gave two new “rights”

to localities: (1) a liability fund to compensate municipalities for damages

related to oil and gas activities, ECL 23-0303 (3); and (2) ad valorem taxing

authority (accomplished by amending the RPTL), authorizing municipalities

to levy a real property tax on oil and natural gas based upon production [R:

728-729, 838, 840-841, 846-849]. In other words, the Legislature gave

municipalities these two trade-offs because it was “cracking down” on years

of local regulation of oil and gas development, which hampered efficient

resource development. Accordingly, the Legislature’s intent was to

expressly preempt all local control of oil and gas activities, including any

effort to determine or otherwise regulate “where” those activities could

occur (i.e., local zoning ordinances) [R: 47-50, 729-730, 949-51, 995].

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Indeed, legislative history to a separate bill (A6928) that was

ultimately incorporated into the omnibus 1981 legislation makes plain that

the Legislature intended ECL 23-0303 (2) to preclude local control over oil

and gas development. Specifically, the Memorandum in Support of A6928

states:

The provision for supersedure by the [OGSML] of local laws and ordinances clarifies the legislative intent behind the enactment of the oil and gas law in 1963. The comprehensive scheme envisioned by this law and the technical expertise required to administer and enforce it, necessitates that this authority be reserved to the State. Local government’s diverse attempts to regulate the oil, gas, and solution mining activities serve to hamper those who seek to develop these resources and threaten the efficient development of these resources, with Statewide repercussions. With adequate staffing and funding, that State’s [OGSML] regulatory program will be able to address the concerns of local government and assure efficient and safe development of these energy resources [R: 949, 995 (emphasis added)].

The Legislature’s intent and purpose for its supersession clause could

not be stated more clearly: to create a “comprehensive scheme” for oil and

gas regulation that would “be reserved to the State and would avoid the

“[l]ocal government’s diverse attempts to regulate the oil [and] gas”

industries that for years had “serve[d] to hamper those who seek to develop

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these resources and threaten the efficient development of these resources”

[R: 949, 995].

The Legislature also determined that local concerns would be

adequately accommodated through State regulation. In other words, the

State preempted all local laws and ordinances relating to oil and gas activity

(including zoning), with the only exceptions being local roads and taxes [R.

949, 950-951]. Accordingly, both the factual circumstances and legislative

history of the 1981 amendments establish the Legislature’s intent to

expressly preempt local zoning authority. Thus, it is submitted that Supreme

Court and the Appellate Division’s findings, that nothing in the legislative

history indicates the intent to preempt local zoning authority, are without

merit.

F. The MLRL, Matter of Frew Run Gravel Prods., and Matter of Gernatt Asphalt Prods. Are Not Relevant to the OGSML Express Preemption Analysis

The marked differences between the OGSML and the MLRL in all

pertinent respects – i.e., supersession language, subject matter of regulation,

statutory evolution and legislative history – establish that MLRL precedent

does not inform the preemption analysis under the OGSML, and the lower

courts erred in finding otherwise. Accordingly, this Court’s holdings in

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Matter of Frew Run Gravel Prods. and Matter of Gernatt Asphalt Prods. can

be reconciled with a finding of express preemption here.

i. The Supersession Language of the OGSML and the MLRL is Materially Different.

The distinctions between the OGSML and MLRL supersession

clauses center on the important differences between local laws and

ordinances, and, relatedly, the OGSML’s uses of the words “regulation” and

“jurisdiction.” The OGSML supersession clause codified at ECL 23-0303

(2) states:

“The 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 [RPTL]” [emphasis added].

The MLRL supersession clause analyzed in Matter of Frew Run Gravel

Prods., codified at ECL 23-2703 (2) (see L 1974, ch 1043), stated:

“For the purposes stated herein, this article shall supersede all other state and local laws relating to the extractive mining industry; provided, however, that nothing . . . shall be construed to prevent any local government from enacting local zoning ordinances or other local laws which impose stricter mined land reclamation standards or requirements than those found herein” (71 NY2d 126, 129 [1987] [emphasis added]).

The MLRL supersession clause analyzed in Matter of Gernatt Asphalt

Prods. is the clause in existence today, which differs primarily in that it

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ends “nothing . . . shall be construed to prevent any local government

from . . . enacting or enforcing local zoning ordinances or laws which

determine permissible uses in zoning districts” (87 NY2d 668, 682

[1996]).

Accordingly, the OGSML clause broadly supersedes “all local

laws or ordinances,” whereas, the MLRL clause supersedes only “local

laws” and affirmatively leaves local zoning ordinances and laws

specifically exempted from preemption. Remembering that towns have

no inherent power to enact zoning or land use regulations absent the

delegation of such authority (see Matter of Kamhi v. Planning Bd. of

Town of Yorktown, 59 NY2d 385, 389 [1983]), it is critical here to detail

the historical distinctions between ordinances and local laws.

Since at least the 1930s, the State enabled towns to narrowly

legislate through ordinances, including specifically by enacting zoning

ordinances pursuant to statutory authority now codified at Town Law §

261 (see Assn. of Towns of the State of New York, Town Manual § 6-1,

at 109-110; Terry Rice, Zoning and Land Use, 43 Syracuse L Rev 615,

616-617 [1992]; Patricia E. Salkin, NY Zoning Law & Practice § 2:12;

see also L 1932, ch 634). After increased concerns arose regarding

localities’ overall affirmative home rule authority, significant overall

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reforms were enacted in the 1960s (see Kamhi v Town of Yorktown, 74

NY2d 423, 428-429 [1989]; Assn. of Towns of the State of New York,

Town Manual § 6-1, at 109-110; Patricia E. Salkin, NY Zoning Law &

Practice §§ 2:04, 2:05). Initially, the New York Constitution was

amended through the enactment of article IX, which in pertinent part

states that “every local government shall have power to adopt and amend

local laws with the provisions of this constitution or any general law . . .

except to the extent that the legislature shall restrict the adoption of such

a local law” [emphasis added] (see DJL Rest. Corp. v City of New York,

96 NY2d 91, 94 [2001]). Pursuant thereto, the Legislature then enacted

Municipal Home Rule Law §10 authorizing local governments to, among

other things, adopt and amend any local law relating to “its physical and

visual environment” so long as such local law is not “inconsistent with

the provisions of the constitution or any general law” (Municipal Home

Rule Law § 10 [1] [i], [ii] [a] [11]). Further, the legislature enacted the

Statute of Local Governments § 10 granting local governments “the

power to[, among other things,] adopt, amend and repeal zoning

regulations” (Statute of Local Governments § 10 [6]). Accordingly, the

effect is that towns are authorized to adopt local zoning ordinances

pursuant to Town Law § 261 and authorized to adopt local zoning laws

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pursuant to the Constitution, Municipal Home Rule Law, and Statute of

Local Government, so long as such local laws are not inconsistent with

the Constitution or general laws of the State (see Anschutz Exploration v

Town of Dryden, 35 Misc