MEMORANDUM Date: To: Firm: From: Subject: Dear Nan: Yesterday we discussed prohibition of gas drilling and formulation of definitions

. This memo follows up that discussion. I have deferred the discussion of the definitions to a later time. From a legal standpoint, prohibition as a legally sustainable technique is the more important issue at this juncture. I. Summary & Recommendation 06 January 2011 Nan Stolzenburg Community Planning & Environmental Associates John F. Lyons Town of Middlefield - Zoning Revision

Prohibition of gas drilling through the local zoning law is the technique best suited to Middlefield’s practical needs. And based on present knowledge, it is the technique most likely to be sustained by the courts. It is also the most efficient technique in terms of effort, time and expense. My reasons in support appear below. Also I recommend that the prohibition should be expressly stated in the revised zoning law and the revised zoning law be passed as a local law pursuant to the procedures of the NYS Municipal Home Rule Law. II. Prohibition of Gas Drilling via Local Zoning Law

Oil, gas and solution mining is regulated in New York State pursuant to Article 23 of the NYS Environmental Conservation Law (ECL). ECL § 23-0303(2) contains a supersession provision which states that the State's oil, gas and solution mining regulatory program "supercedes all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries; but shall not supercede local government jurisdiction over local roads or the rights of local governments under the real property tax law." In New York, the scope of a local municipality's ability to exercise its home rule authority over natural gas drilling will hinge on how the supersession language will be construed by the courts. So far, that hasn't happened yet, so this is uncharted territory. One way for us to navigate this uncharted territory is to look at similar situations. We can look to the State Mined Land Reclamation Law (MLRL) (governing excavation mining) for guidance in how the supersession provisions of ECL § 23-0303(2) might be applied by the courts. The 1974 version of the MLRL contained a supersession clause similar to, but not the same

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as, the supersession clause in ECL § 23-0303(2). The MLRL clause stated: [T]his title shall supersede all other state and local laws relating to the extractive mining industry; provided, however that nothing in this title shall be construed to prevent any local government from enacting local laws which impose stricter mined land reclamation standards or requirement than those found herein. In Frew Run Gravel Products, Inc. v. Town of Carroll,1 the State’s highest court upheld the authority of local municipalities to establish zoning districts where mining was explicitly not a permitted use. The court held that “[t]he zoning ordinance relates not to the extractive mining industry but to an entirely different subject matter and purpose.”2 Later, after the MLRL supersession provisions were amended, the State’s highest court issued a second landmark ruling built upon its Frew Run decision. In Gernatt Asphalt Products, Inc. v. Town of Sardinia,3 the court ruled that the MLRL did not preempt a town’s authority to totally prohibit mining throughout the municipality. The court held the complete ban was not superseded by the MLRL because municipalities have “broad authority to govern land use,” even to the extent of abolishing a particular land use.4 The Frew Run and Gernatt cases draw an important distinction between regulation of local land use and regulation of a particular industry or activity. The decisions draw a line. On one side, if a town prohibits the use or activity, the town is within its authority to regulate local land uses. On the other side of the line is the choice to allow the use. In that case, the story is completely different. Once that line is crossed, thereafter the town will have little to say about how that use is conducted. Applied gas drilling, this is precisely the reason why outright prohibition holds a better prospect for success. The problem with choosing to allow the use but attempting to regulate it, can be seen in the only reported court decision interpreting ECL § 23-0303(2). In Envirogas, Inc. v. Town of Kiantone,5 the town adopted a zoning ordinance imposing a $2,500 compliance bond and a $25.00 permit fee requirement on any person wanting to construct an oil or natural gas well. The court invalidated the ordinance holding that the ordinance requirements were an attempt to regulate gas and oil well drilling operations and such was prohibited by the supersession clause. It is important to keep in mind that application by analogy of the reasoning from the extractive mining decisions to natural gas drilling contains inherent uncertainties.

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71 N Y2d 126 (1987). Id. at 131. see also Salkin, N ew York Zoning Law and Prac tic e , Section 15:05. 87 N Y2d 668 (1996). Id. at 682, see also Salkin, N ew York Zoning Law and Prac tic e , Section 15:09. 12 Misc 2d 432 (s up 1982), judgm ent affirm ed, 89 AD 2d 1056 (4 th D ept. 1982).

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Because there are key differences between the language of the MLRL supersession and ECL § 23-0303(2), the Frew Run and Gernatt decisions cannot be said to insure that a prohibition against gas drilling will be upheld by the courts. Besides the difference in supersession language, there are differences in the scope of the NYS Department of Environmental Conservation’s regulatory jurisdiction in the extractive mining and gas drilling regulatory programs. It has been noted that an important difference between excavation mining and gas drilling is that, with gas drilling, natural gas permit applicants are not required to control the entire resource area and that the State’s regulatory jurisdiction is broader because it regulates natural gas well spacing throughout the state, and not just individual well locations.6 These differences could form a basis for the courts to apply a different line of legal reasoning in their analysis of local attempts to prohibit gas drilling. Additionally, courts may decide that complete supersession has taken place. For example, the State used Article VIII and later Article X of the New York State Public Service Law to take away all local authority over the siting of major steam and electric generating plants. The complete supersession of local authority was upheld by the courts.7 However, for complete supersession, courts may decide the legislation should be patent. Nevertheless, sufficient similarity exists between the issues presented in the cases of both extractive mining and natural gas drilling that the Frew Run and Gernatt cases offer encouragement to the argument that localities do have the authority to prohibit the natural gas drilling use of land. My research revealed only two articles discussing the legal subject of localities authority to regulate natural gas drilling in New York.8 In the article Natural Gas Production and Municipal Home Rule in New York,9 speaking of the supersession language in ECL § 23-0303(2), the authors point out: Article IX of the New York State Constitution provides broad authority to local governments to enact local laws relating to their property, affairs or government, and for the protection, order, conduct, safety, health and well-being of persons or property therein.10 Accordingly, the Constitution directed the State Legislature to enact a “Statute of Local Governments” that confers certain authority upon
6 Kenneally and Mathes, N atural G as Production and M unicipal H om e R ule in N ew York , N ew York Z oning Law & Prac tice R eport, January/F ebruary 2010, Volum e 10, N o. 4. 7 C onsolidated Edison C om pany of N ew York, Inc. v. Tow n of R ed H ook 60 N Y2D 99 (1983), M atter of Inc orporated Village of Poquott , 1125-2002, N YLJ 32 (col. 4)(Sup C t Suffolk C o. 2002). 8 Kenneally and Mathes, N atural G as Production and M unicipal H om e R ule in N ew York , N ew York Z oning Law & Prac tice R eport, January/F ebruary 2010, Volum e 10, N o. 4., G uardino, M arcellus Shale “G as R ush” R aises Local Zoning Iss ues , N ew York Law Journal, Volum e 244, 09-22-2010. Kenneally and Mathes, N atural G as Production and M unicipal H om e R ule in N ew York , N ew York Z oning Law & Prac tice R eport, January/F ebruary 2010, Volum e 10, N o. 4. 10 N YS C onstitution Article IX, Sections 2(c)(i) and 2(c)(ii)(10). 9

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local governments, and further protected any such conference of authority against future legislative diminution. Specifically, Article IX, Section 2(b)(1) of the Constitution requires that any legislation that would diminish or impair a power conferred by the Statute of Local Governments be re-enacted during a subsequent term of the legislature. The authority of local governments to regulate the use of land within their jurisdiction is one of the powers expressly conferred by the [New York State] Statute of Local Governments.11 Seemingly, therefore, any law that would impair the power of a local government to establish zoning regulations, including ECL 23-0303(2), would be subject to the re-enactment requirement of Article IX, Section 2(b)(1) of the Constitution. ECL Section 23-0303(2) was enacted in 1971 and amended in 1982 by single enactment.12 The authors discuss the implications of the analogy to the MLRL and say that the Frew Run and Gernatt cases are both “important to the future debate concerning the preemptive scope of ECL Article 23, title 3".13 They conclude: The relevance of the qualifying language contained in ECL § 23-0303(2) “relating to the regulation” - may ultimately boil down to the whether or not Article IX of the Constitution, Section 10 of the Statute of Local Governments, municipal legislation enacted pursuant to the Municipal Home Rule Law, and ECL Article 23, title 3 can be harmonized. While distinguishing facts and law exist, in reading a statute similar to ECL Article 23, title 3, the Court of Appeals has previously recognized that to preempt local zoning laws would “drastically curtail” a local government’s power to adopt zoning regulations as provided for in the Statute of Local Governments, and such a curtailment should only occur under a circumstance in which the legislature’s preemptive intent is absolutely clear. A plain meaning interpretation of the statute may, therefore, support the argument that while municipalities in New York may not regulate the industry within the scope of the State’s regulatory program, municipalities may continue to regulate land use or other matters involving public health, safety and welfare which fall outside the State’s regulatory program.14 In conclusion, my opinion is that the prohibition of oil and gas drilling using the local zoning law is the technique which makes the most sense for Middlefield. The reasons are several. First, the legal perspective. The legality of prohibition cannot be assured because the courts

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N Y Stat. of Local G ovt § 10(6).

Kenneally and Mathes, N atural G as Production and M unicipal H om e R ule in N ew York , N ew York Zoning Law & Practice R eport, January/F ebruary 2010, Volum e 10, N o. 4., at Page 3. 13 14 Id. at 4. Id. at 5-6.

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haven’t yet spoken. So the only alternative is to evaluate the legal landscape and to make an educated estimate about how the courts will decide the issue. As a technique, prohibition finds important support in the powers granted to local municipalities under the Statute of Local Governments and the protections from State preemption found in both the Statute of Local Governments and the Municipal Home Rule Law. Also, while not a perfect analogy, there are significant similarities between the supersession clauses of extractive mining and gas drilling. And there is most definitely available an intellectually reasonable basis for the courts apply to the supersession language of ECL § 23-0303(2) the same reasoning which compelled the conclusion that localities may prohibit extractive mining. For these reasons, based on the what is known at this time, prohibition is the technique with the best chance of being sustained by the courts. The other alternatives are not attractive. To allow gas drilling while trying to regulate around its edges using the zoning law is not likely to withstand legal challenge. Indeed, as the Envirogas court decision showed, once a town crosses the line in attempting to regulate an allowed activity, supersession will be hard to avoid. An indirect approach can be conceived. This technique requires using strict zoning regulation of all uses across the board, regulation so strict that its practical effect would be to prohibit gas drilling. My opinion is that this technique would likely be doomed by the law of unintended consequences. Zoning legislation in New York State must be an open process and the public would have to agree with all of the across-the-board changes necessary for such a scheme. It would be unavoidable that many uses, otherwise not objectionable, would be swept up in the net and end up not being allowed. This could easily imperil public support. In addition, such sweeping revisions would trigger a comprehensive and lengthy SEQRA review process. This could push actual enactment of a law off for possibly for years. That segues to the practical perspective. This is a pressing issue time-wise for Middlefield. In addition to having the soundest legal basis, the prohibition technique is the easiest to implement. It should be relatively simple, fast and (again, relatively) inexpensive. III. Regulating Truck Traffic as a Back-up Plan to Prohibition

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

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IV.

Prohibition Should be Specifically Stated in the Revised Zoning Law

The Middlefield Zoning Law, like many zoning laws, contains a provision that states that all uses not allowed are deemed prohibited. However, in this case, if Middlefield chooses to prohibit oil and gas drilling and well operation, I recommend that the prohibition be specifically stated in the revised zoning law. The object is to leave as little doubt as is humanly possible about the intentions of the zoning law regarding the prohibition of this use. First, its existence may have a deterrent effect since it will make a clear statement to all readers of the zoning law that Middlefield has considered this possible use and decided not to allow it. It will signal the fact that the use is unwelcome and perhaps send potential gas drillers to other communities that are more welcoming, or at least, less determined in their opposition. Second, if it ends up the subject of litigation, it makes the Town’s intention clear to a court. And court’s gravitate to clarity. V. Adopt Revised Zoning Law Pursuant to NYS Municipal Home Rule Law

The revised Middlefield Zoning Law should be adopted as a local law (not as an ordinance) pursuant to the authority and procedures of the New York State Municipal Home Rule Law (MHRL). The MHRL and the Statute of Local Governments (discussed above) are the two primary conduits of constitutional authority conveyed to local governments.15 It is necessary to pass the new zoning law pursuant to the MHRL so as to take full advantage of the protections from State preemption inherent in the MHRL. END

Salkin, Local H om e Rule Authority in Planning and Zoning: An O pportunity or a Landm ine? , N ew York Zoning Law and Practice R eport, January/F ebruary 2004, Volum e 4, N o. 4., at Page 2.

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