Municipal Bans On Fracking...Who Has It Right, New York or Colorado?

Municipal Bans On Fracking…Who Has It Right, New York or Colorado?

by Cindy M. Monaco

In decisions rendered in mid-2014, the New York State Court of Appeals upheld the validity of municipal bans on hydraulic fracturing (“fracking”) against a preemption challenge. See Wallach v. Town of Dryden, 23 N.Y.3d 728 (2014); Cooperstown Holstein Corp. v. Town of Middlefield, 23 N.Y.3d 728 (2014). The New York Court found such bans to not be expressly preempted by state law, specifically the New York State Oil, Gas and Solution Mining Act (“NY OGSML”). Moreover, despite plaintiffs’ vigorous argument that, even if not expressly preempted, such bans patently conflicted with the language and policy objectives of the NY OGSML and thus were conflict preempted, the New York Court refused to address the conflict preemption question.

In stark contrast, on May 2, 2016, the Colorado Supreme Court held that a city’s ban on fracking and the storage and disposal of fracking waste within city limits operationally conflicted with state law and, thus, was conflict preempted and, hence, invalid and unenforceable. The case – City of Longmont v. Colo. Oil & Gas Assn. – was decided under the Colorado Oil and Gas Conservation Act (“Colorado OGCA”), the language and policy objectives of which are nearly identical to the NY OGSML, as both statutes are based on the Model Interstate Compact Commission Oil and Gas statute. Case No. 15SC667, 2016 WL 1757509 (Colo. Sup. Ct. May 2, 2016)

In City of Longmont, the Colorado Supreme Court clarified and expanded upon its articulations in two prior decisions, Bd. of Cnty. Comm’rs v. Bowen/Edwards Assocs., 830 P.2d 1045 (Colo. 1992), and Voss v. Lundvall Bros., Inc., 830 P.2d 1061 (Colo. 1992), wherein the Court had (1) noted the potential for operational conflicts between local regulation and state law where local regulation conflicts with achieving a state interest, and (2) found that a home rule city’s ban on drilling within city limits was conflict preempted because it impeded the state’s interest in fostering the efficient development and production of oil and gas resources. See Bowen/Edwards, 830 P.2d at 1059; Voss, 830 P.2d at 1068.  

In its analysis in City of Longmont, the Colorado Court first analyzed the nature of the interest at stake, finding that oil and gas development was a matter of mixed local and state concern. Then, the Colorado Court performed its preemption analysis, evaluating whether the city’s prohibition on fracking was preempted by state law expressly, impliedly by field preemption, or by virtue of an operational conflict.

Ultimately, the Colorado Court found that while there was no express preemption or field preemption, the city’s fracking ban was invalid because it operationally conflicted with the Colorado OGCA and its implementing regulations. Citing the statutory objectives of, inter alia, maximizing efficient production, preventing waste and protecting correlative rights, the Colorado Supreme Court noted the “exhaustive set of rules and regulations” promulgated by the state agency to achieve these objectives, i.e., “to prevent waste and to conserve oil and gas in the State of Colorado while protecting public health, safety and welfare.” This pervasive set of rules and regulations, said the Court, “convinces us that the state’s interest in the efficient and responsible development of oil and gas resources includes a strong interest in the uniform regulation of fracking.” Because the city’s ban prevented operators from using the fracking process even if they complied with state rules and regulations the Court found that the city’s ban “materially impede[d] the effectuation on the state’s interest.”

Notably, during briefing and argument before the New York State Court of Appeals in Dryden, the plaintiffs-appellants pointed to the Voss and Bowen/Edwards decisions with the hope of providing guidance to the Court on the issue of conflict preemption, given the legally indistinguishable language and policies of both states’ oil and gas statutes. The New York Court, however, never addressed the conflict preemption issue or the Colorado decisions.

Subsequent to the Dryden and Middlefield decisions, the Colorado District Court decided City of Longmont. Therein, based on Voss and Bowen/Edwards, the Colorado District Court held that the city’s fracking ban presented an operational conflict with state law (which result, the Colorado Supreme Court has now affirmed).  

Based on the Colorado District Court’s decision, the plaintiffs-appellants in Dryden moved for reargument and renewal before the New York State Court of Appeals. Specifically, the movants urged the New York Court to decide the conflict preemption question, as this issue had been squarely before the Court below, albeit ignored and left unanswered in the Dryden decision. Without explanation, the New York Court of Appeals denied the motion, thereby yet again electing to bypass this issue of critical state importance to both landowners and industry alike.

The profound differences in the approaches taken and the results reached by the Colorado Supreme Court versus the New York Court of Appeals – evaluating legally indistinguishable statutes/regulatory regimes under legally indistinguishable conflict preemption doctrines – demonstrates just how strongly political vagaries control legal outcomes in New York State.   

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