To be Argued by: SCOTT R. KURKOSKI

(Time Requested: 30 Minutes)

APL-2013-00242 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.

REPLY 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: January 7, 2014

i

TABLE OF CONTENTS

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

ARGUMENT ……………………………………………………………………... 6

I. DEFENDANT IS MISTAKEN REGARDING HOME RULE AUTHORITY

IN LIGHT OF STATE PREEMPTION …………………………………… 7

A. THE DOCTRINE OF PREEMPTION IS A FUNDAMENTAL

LIMITATION ON HOME RULE ZONING POWERS ……………….. 7

B. THE REGULATORY SCHEME PROVIDES SIGNIFCANT STATE

OVERSIGHT AND ACCOUNTS FOR LOCAL INPUT ……………. 10

II. THE RPTL SUPERSESSION EXEMPTION DEMONSTRATES THE

LEGISLATURE’S INTENT TO EXPRESSLY PREEMPT LOCAL

ZONING REGULATION AND DISTINGUISHES THIS CASE FROM

THE MLRL PRECEDENT ………………………………………………..17

III. EVEN IF THE COURT DETERMINES THAT THE

TOWN PROHIBITION IS NOT EXPRESSLY PREEMPTED, THE

COURT MAY STILL APPLY THE DOCTRINE OF IMPLIED

PREEMPTION ……………………………………………………...……. 22

IV. THE TOWN PROHIBITION IS PREEMPTED PURSUANT TO THE

DOCTRINES OF FIELD PREEMPTION AND CONFLICT PREEMPTION

BECAUSE THE REGULATORY SCHEME PROVIDES THAT THE

PERMIT APPLICANT DETERMINES THE WELL LOCATION WITH

DEC OVERSIGHT ………………………………………………………. 23

V. THE PENNSYLVANIA CASES, AND THE OTHER STATE COURT

DECISIONS, SUPPORT PREEMPTING TOTAL TOWN-WIDE BANS

ON ALL OIL AND GAS ACTIVITIES ……………………………….… 29

CONCLUSION …………………………………………………………………. 34

ii

TABLE OF AUTHORITIES

CONSTITUTION

NY Const, art IX, § 2 (c) ……………………………………………………….… 8

Pa Const, art I, § 27 …………………………………………………………. 32, 33

US Const, art VI, § 2 ……………………………………..………………….…… 8

CASES

Albany Area Bldrs. Assn. v Town of Guilderland,

74 NY2d 372 (1989) ………………….. ……………………………… 7, 26

Asian Ams. for Equality v Koch,

72 NY2d 121 (1998) ………………………………………………………. 8

Balbuena v IDR Realty LLC,

6 NY3d 338 (2006, Graffeo, J.) ………………………..……………… 9, 23

Bates v Dow Agrosciences LLC,

544 US 431 (2005) …………………………………………………..……. 9

Church v Town of Islip,

8 NY2d 254 (1960) ………………………...……………………………… 8

Cipollone v Liggett Group, Inc.,

505 US 504 (1992) ………………………………………………….……. 22

DeStafano v Emergency Hous. Group,

281 AD2d 449, 451 (2d Dept 2001), lv denied 96 NY2d 715 (2001) …….. 4

DJL Rest. Corp. v City of New York,

96 NY2d 91 (2001) ………………………………………...…….. 7, 8, 9, 16

Doomes v. Best Transit Corp.,

17 NY3d 594 (2011) …………………………………………………..…. 23

Drattel v Toyota Motor Corp.,

92 NY2d 35 (1998) …………………………………………...…….....…. 23

Freightliner Corp. v Myrick,

514 US 280 (1995) ……………………………………………...……. 22, 23

iii

Goodrich v Town of Southampton,

39 NY2d 1009 (1976) ……………………………………………………... 8

Huntley & Huntley, Inc. v Borough Council of Borough of Oakmont,

600 Pa 207 (Pa 2009) …………………………………..………… 30, 31, 33

Incorporated Vil. of Nyack v Daytop Vil.,

78 NY2d 500 (1991) ……………………………………….……………… 9

Kamhi v Town of Yorktown,

74 NY2d 423 (1989) …………………………………………………….… 8

Matter of Cohen v Board of Appeals of Vil. of Saddle Rock,

100 NY2d 395 (2003) ……………………………………..……. 7, 9, 10, 26

Matter of County of Cayuga v McHugh,

4 NY2d 609 (1958) ……………………………………………………..…. 9

Matter of Gernatt Asphalt Prods. v Town of Sardinia,

87 NY2d 668 (1996) ……………………………………………..……… 20

Matter of Frew Run Gravel Prods. v Town of Carroll,

71 NY2d 126 (1987) …………………………………………………. 19, 20

Matter of Jackson v New York State Urban Dev. Corp.,

67 NY2d 400 (1986) ……………………………………...………....…… 13

Matter of Nornew, Inc. v Marsh,

301 AD2d 206 (4th Dept 2002) ………………………….………….... 18, 19

Matter of Norse Energy Corp. USA v Town of Dryden,

108 AD3d 25, lv granted 21 NY3d 863 (2013) ……………..…………… 23

Matter of People v Applied Card Sys., Inc.,

11 NY3d 105 (3d Dept 2008), cert denied 555 US 1136 (2009) ……...…. 22

Matter of Sylvania Corp. v Kilbourne,

28 NY2d 427 (1971) ………………………………………………...…… 26

iv

Matter of Town of Bedford v Village of Mount Kisco,

33 NY2d 178 (1973) …………………………………………...………….. 8

Matter of Van Berkel Power,

16 NY2d 37 (1965) …………………………………………..……………. 9

Medtronic, Inc. v Lohr,

518 US 470 (1996) ……………………………………………………….... 9

Oil Heat Inst. of Long Is. v Town of Babylon,

156 AD2d 352 (2d Dept 1989) ………….……………………….…… 10, 23

Poplar Lane Farm LLC v Fathers of Our Lady of Mercy,

2010 WL 3303852 (WD NY, Aug. 19, 2010, No. 08-CV-509S) …………18

Range Resources—Appalachia, LLC v Salem Twp.,

600 Pa 231 (Pa 2009) …………………………………….………. 30, 31, 33

Robinson Twp. v Commonwealth,

52 A3d 463 (Pa Commonwealth Crt 2012) ……………………………… 31

Robinson Twp., Washington County, Pa v Commonwealth,

___ Pa ___, 2013 WL 6687290 (Pa 2013) ……………………….. 31, 32, 33

Rodgers v Village of Tarrytown,

302 NY 115 (1970) ……………………………………………………..…. 8

Sprietsma v Mercury Marine,

537 US 51 (2002) ………………………………………………………… 23

Stringfellow’s of N.Y. v City of New York,

91 NY2d 382 (1998) ………………………………………………………. 8

Town of Black Brook v State of New York,

41 NY2d 486 (1977) ………………………...…………………………….. 9

Voss v Lundvall Bros. Inc.,

830 P2d 1061 (Colo 1992) …………………………………….... 5, 6, 16, 27

v

STATUTES

ECL 8-0103 …………………………………………………………………...… 13

ECL 8-0109 (2) …………………………………………………………………. 13

ECL 23-0101 (4) …………………………………………………………..……. 24

ECL 23-0301 …………………………………………………..…11, 12, 24, 25, 28

ECL 23-0303 (1) ………………………………………………………….……. 25

ECL 23-0303 (2) ……………………………………..………. 3, 16, 17, 21, 30, 31

ECL 23-0501 ………………………………………………………………….….23

ECL 23-0501 (1) (b) (1) …………………………………………….. 11 n 1, 13, 24

ECL 23-0501 (2) ………………………………………………………………... 11

ECL 23-0501 (2) (a) ………………………………………………………….…. 24

ECL 23-0503 ……………………………………………………………………. 25

ECL 23-0503 (2) ………………………………………………………... 11, 23, 24

ECL 23-0503 (3) ……………………………………………………………..…. 11

ECL 23-0901 ……………………………………………………………..…….. 12

ECL 23-0901 (2) ………………………………………………………….….11, 25

Municipal Home Rule Law § 10 (1) (ii) ………………………………………… 21

RPTL 102 (12) (a) ……………………………………………………………..... 18

Town Law §130 ……….……………………………………………………….... 21

58 Pa Stat § 602 ……………………………………………………………... 30, 32

58 Pa Stat § 3302 ………………………………………………………….…….. 32

58 Pa Stat § 3303 …………………………………………………………….….. 32

58 Pa Stat § 3304 ………………………………………………………..………. 32

LEGISLATIVE HISTORY DOCUMENTS L 1981, ch 846 ……………………………………………………………….…. 18

Memorandum in Support of Bill A6928 …………………………………..…. 4, 25

REGULATIONS AND REGULATORY DOCUMENTS 6 NYCRR part 552 ……………………………………………………………... 24

6 NYCRR part 553 ……………………………………………………………… 24

6 NYCRR part 617 ……………………………………………………………… 13

6 NYCRR 553.1 …………………………………………………………….. 12, 13

6 NYCRR 553.2 ……………………………………………………………….... 12

6 NYCRR 617.10 ……………………………………………………………….. 14

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) …………………..……. 12 n 2

vi

Dept. of Envtl. Conservation, Landowner’s Guide to Oil & Gas Leasing .……... 13

New York State Dept. of Taxation and Fin., Overview Manual for

Valuation and Assessment of Oil and Gas Producing Property in

New York State (Jan. 2013) ……………………….……………………………. 18

SEQRA DOCUMENTS

Dept. of Envtl. Conservation, Final Generic Environmental

Impact Statement on the Oil, Gas and Solution Mining Regulatory

Program (July 1992) ………………………………………………………….14, 15

Dept. of Envtl. Conservation, Draft: Supplemental Generic

Environmental Impact Statement on the Oil, Gas and Solution Mining

Regulatory Program (Sept. 2009) …………………………………...… 14, 16, 24

Dept. of Envtl. Conservation, Revised Draft: Supplemental Generic

Environmental Impact Statement on the Oil, Gas and Solution Mining

Regulatory Program (Sept. 2011) …………………………………… 14, 15, 16, 24

OTHER AUTHORITIES

12 NY Jur 2d, Buildings, Zoning, and Land Controls § 146 …………………..… 8

12 NY Jur 2d, Buildings, Zoning, and Land Controls § 172 …………………….. 8

12 NY Jur 2d, Buildings, Zoning, and Land Controls § 205 ……………………. 26

25 NY Jur 2d, Counties, Towns, and Municipal Corporations § 349 ……………. 8

Assn. of Towns of the State of New York, Town Manual ………………..… 20, 21

Local Laws of the Town of Vestal ch 21 ………………………………..……… 21

1

PRELIMINARY STATEMENT

Plaintiff submits this reply brief in response to defendant’s brief and in

further support of plaintiff’s appeal from the decision of the Appellate Division,

Third Department, which found that defendant’s local zoning law specifically

banning all oil and gas activities within its borders (hereinafter the “Town

Prohibition”) is not preempted by the State regulatory scheme applicable to oil and

gas development.

It is important to note the context by which this case comes to this Court.

Our nation has sought energy independence since the energy crisis of the 1970s.

That goal has been out of reach – until now. The process of high volume hydraulic

fracturing has made it possible for the first time in 40 years.

President Obama stated in his 2013 State of the Union Address that “the

natural gas boom has led to cleaner power and greater energy independence”

(Remarks by the President in the State of the Union Address,

http://www.whitehouse.gov/the-press-office/2013/02/12/remarks-president-state-

union-address [accessed Jan. 5, 2013]). Further, he stated that “[w]e produce more

natural gas than ever before – and nearly everyone’s energy bill is lower because

of it. And over the last four years, our emissions of the dangerous carbon pollution

that threatens our planet have actually fallen” (id.).

2

Tom Donilon, National Security Advisor to the President, said on April 24,

2013:

“U.S. energy-related greenhouse gas emissions have fallen to 1994

levels due in large part to our success over the past four years in

doubling electricity from renewables, switching from coal to natural

gas in power generation, and improving energy efficiency. . . . But

after years of talking about it, we are poised to control our own energy

future. Under President Obama’s leadership, we are moving the U.S.

energy position from a liability we manage into an asset that secures

U.S. strength at home and leadership in the world” (Remarks by Tom

Donilon, National Security Advisor to the President At the Launch of

Columbia University’s Center on Global Energy Policy,

http://www.whitehouse.gov/the-press-office/2013/04/24/remarks-tom-

donilon-national-security-advisor-president-launch-columbia-

[accessed Jan. 5, 2013])

Accordingly, this case represents a crossroad in our quest for energy

independence. Americans understand that energy is important to our way of life.

We know that greater production of domestic energy will improve our economy

and reduce our need to put our young men and women in harm’s way defending

our oil interests in foreign countries. But, the movement to ban drilling through

zoning represents the “not in my back yard” mentality that will frustrate important

state and federal interests. This new shale gas opportunity has come with the

realization that production of our domestic resources requires domestic activity.

Now we see some of our neighbors trading in their “No Blood For Oil” signs for

“No Frack” signs. We cannot have it both ways.

3

Understanding this broader context of achieving energy independence, it

follows that the interpretation of ECL 23-0303 (2) does not involve a decision for

or against the environment. All of our energy options have environmental impacts.

Coal mining causes the destruction of our mountain tops and pollutes our air.

Nuclear energy subjects us to devastating impacts like those experienced by Japan

from the Fukushima power plant. Windmills kill birds and solar panels are

produced from the mining of rare earth metals which releases toxins into the

environment; both cause vast surface disruption for relatively small amounts of

energy. Our regulatory scheme requires the State to evaluate all of these risks,

benefits and environmental impacts, and to decide which option, or which

combination of options, are best for New York. These decisions cannot be made

by New York’s 932 towns and 62 cities.

A decision by this Court upholding the Appellate Division decision will

effectively make an energy choice for the State – New York will never see

meaningful oil and gas development. The lower court decisions have already

encouraged more than 70 New York localities to enact bans on oil and gas

development, with another 100 towns enacting moratoriums (see FracTracker

Alliance, Current High Volume Horizontal Hydraulic Fracturing Drilling Bans and

Moratoria in NY State, http://www.fractracker.org/map/ny-moratoria/ [accessed

Jan. 5, 2013]). Conversely, more than 40 towns in the heart of the Marcellus Shale

4

region recognize the statewide consequences of the lower court decisions and

oppose bans like the Town Prohibition (see Joint Landowners Coalition of New

York, Inc., Map of Town Resolutions Passed to Support NYDEC Efforts and

Findings, http://www.jlcny.org/site/index.php/town-resolutions-efforts-and-

landowner-info/1349-map-of-town-resolutions-passed-to-support-nydec-efforts-

and-findings [accessed Jan. 5, 2013]). The State’s energy objectives will not be

achieved if town boards, on a 3 to 2 vote, can ban the production of our natural

resources and all other activities related thereto.

There are many important state and federal interests that must trump

exclusive local control. For example, the siting of many group homes is often

challenged by local governments, but is nonetheless preempted by overriding state

interests (see e.g. DeStafano v Emergency Hous. Group, 281 AD2d 449, 451 [2d

Dept 2001], lv denied 96 NY2d 715 [2001]). The production of our domestic

resources is similar. New York’s interests on this issue are unequivocal.

The OGSML declares it to be in the public interest to pursue a greater

ultimate recovery of oil and gas. The Energy Law establishes a state policy to

foster, encourage and promote the prudent development and wise use of all

indigenous state energy resources - including natural gas. The Memorandum in

Support of Bill A6928, enacting the supersession clause at issue, stated: “Local

government’s diverse attempts to regulate the oil, gas, and solution mining

5

activities serve to hamper those who seek to develop these resources, with

Statewide repercussions.” And, New York has confirmed the statewide

importance of energy by becoming a member in the Interstate Oil and Gas

Compact Commission whose purpose “is to conserve oil and gas by the prevention

of physical waste from any cause.” In sum, town-wide municipal drilling bans,

like that at issue here, preclude resource recovery, frustrate the public policies set

forth in the OGSML and Energy Law, and result in the ultimate in waste and

destruction of a landowner’s correlative rights.

There are no similar public policy statements relating to the development of

sand and gravel. In fact, no court in the country has used its mined land

reclamation law to interpret laws preempting local oil and gas zoning bans. The

interests of producing energy from our domestic resources and the production of

sand and gravel are so different that mining law precedent should not be applied.

This Court’s decision will have far reaching impacts on energy production

throughout the nation. So far, courts around the country have determined that

energy is a state interest and, no court has ever allowed a total town-wide ban on

drilling. The decisions from other state courts emphasize that the state’s interests

on energy are superior to local or municipal interests.

The Colorado Supreme Court in Voss v Lundvall Bros., Inc. (830 P2d 1061

[Colo 1992]) recognized the State’s interest when it said “the state's interest in the

6

efficient and fair development and production of oil and gas resources in the state,

including the location and spacing of individual wells, militates against a [town’s]

total ban on drilling”; “the regulation of oil and gas development and production

has traditionally been a matter of state rather than local control”; and “a [town]

can exercise control over [oil and gas development and production] only to the

extent that it does not materially impede the significant state goals” (id. at 1067-

1068).

The issues in this case go far beyond land use. Middlefield may have an

opinion about what is best for Middlefield, but it does not follow that Middlefield

is acting in the best interests of the State.

ARGUMENT

With respect to expressed preemption, this reply brief highlights the Real

Property Tax Law supersession exemption and its support for finding the Town

Prohibition preempted. Next, it is clarified that the well locations are selected by

the permit applicant with broad oversight from the DEC in regards to compliance

with the spatial requirements, indicating that the regulatory scheme implies

preemption of total town-wide bans on all oil and gas activities. Also, for good

reason, the Pennsylvania cases relied on by defendant, as well as all the other state

court decisions, have not authorized total town-wide bans on all oil and activities

through local zoning as defendant has done here. As an initial matter though, this

7

reply brief begins by refuting defendant’s underlying arguments that local zoning

laws are always entitled to some presumption of validity and that the Town

Prohibition is necessary to ensure safe and reasonable development of oil and gas

resources.

POINT I

DEFENDANT IS MISTAKEN REGARDING HOME RULE AUTHORITY

IN LIGHT OF STATE PREEMPTION

A. THE DOCTRINE OF PREEMPTION IS A FUNDAMENTAL

LIMITATION ON HOME RULE ZONING POWERS

Defendant’s argument that the Town Prohibition should be presumed valid

is incorrect [Respondent’s Brief, at 19-28]. The issue here is whether the OGSML

preempts the Town Prohibition [Appellant’s Brief, at 23-24]; the issue is not

whether defendant has the general right to enact local zoning laws [Respondent’s

Brief, at 22-28], or whether plaintiff should be granted a “unique exemption,” i.e.

variance, to drill for oil and gas [Respondent’s Brief, at 19-20]. Where the State

has enacted a statutory scheme in which a supersession clause and comprehensive

regulatory scheme apply to a particular subject matter, a local zoning law

pertaining to that same subject matter is not entitled to any presumption of validity

because “[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]; see DJL Rest. Corp. v City of New York, 96 NY2d 91,

8

94-95 [2001]; see also 12 NY Jur 2d, Buildings, Zoning, and Land Controls § 146;

25 NY Jur 2d, Counties, Towns, and Municipal Corporations § 349) [Appellant’s

Brief, at 23-24]. This is logical because, “[i]n general, towns have only the

lawmaking powers [that] the Legislature confers on them” (Kamhi v Town of

Yorktown, 74 NY2d 423, 427 [1989]; accord DJL Rest. Corp. v City of New York,

96 NY2d at 94; see NY Const, art IX, § 2 [c]) [Appellant’s Brief, at 23-24].

The authority that defendant cites does not apply to the issues on appeal.

Much of defendant’s cited authority is applicable where a zoning law is challenged

as unconstitutional (compare Stringfellow’s of N.Y. v City of New York, 91 NY2d

382, 395-396 [1998]; Asian Ams. for Equality v Koch, 72 NY2d 121, 126, 131-

132 [1988]) or, similarly, where it is challenged as illegal “spot” zoning and in

violation of a town’s comprehensive plan (compare Goodrich v Town of

Southampton, 39 NY2d 1008, 1008 [1976]; Matter of Town of Bedford v Village

of Mount Kisco, 33 NY2d 178, 182-183 [1973]; Church v Town of Islip, 8 NY2d

254, 256-259 [1960]; Rodgers v Village of Tarrytown, 302 NY 115, 120-124

[1970]; see generally 12 NY Jur 2d, Buildings, Zoning, and Land Controls § 172)

[Respondent’s Brief, at 20-22].

To the extent that defendant does address preemption, the authority cited is

applicable only in the context of federal preemption of state law pursuant to the

Supremacy Clause at clause 2 of article VI of the US Constitution [Respondent’s

9

Brief, at 20-21] (compare Matter of Van Berkel Power, 16 NY2d 37, 39-41

[1965]). Only in this distinct context is there a presumption that the state law is

valid because, since “the States are independent sovereigns in our federal system[,

it has] long [been] presumed that Congress does not cavalierly pre-empt state-law”

(Medtronic, Inc. v Lohr, 518 US 470, 485 [1996]; accord Bates v Dow

Agrosciences LLC, 544 US 431, 449 [2005]; see Balbuena v IDR Realty LLC, 6

NY3d 338, 356 [2006, Graffeo, J.]) [emphasis added]. This reasoning is not

applicable where state law preempts a local law because “[a] local government is

merely a political subdivision created by the sovereign [s]tate” (Town of Black

Brook v State of New York, 41 NY2d 486, 488 [1977]; cf. Matter of County of

Cayuga v McHugh, 4 NY2d 609, 647 [1958]).

Defendant is also misinformed to the extent that it argues that “any

legislative attempt at preemption must explicitly usurp local land use powers since

the Legislature is presumed to know the status of New York law” [Respondent’s

Brief, at 27-28]. None of the authority that defendant cites indicates local land use

powers must be explicitly preempted to any degree beyond the ordinary standards

applied in state preemption cases [Respondent’s Brief, at 27-28] as this would be a

gross mischaracterization (compare Matter of Cohen v Board of Appeals of Vil. of

Saddle Rock, 100 NY2d at 398, 400-403; DJL Rest. Corp. v City of New York, 96

NY2d at 93, 95; Incorporated Vil. of Nyack v Daytop Vil., 78 NY2d 500, 503-504,

10

505-507 [1991]). Further, the preemption of local laws and ordinances stemming

from the OGSML applies broadly to all local laws and ordinances that restrict or

control the oil and gas industry [Appellant’s Brief, at Point I.A., pp. 27-29], except

for local jurisdiction with respect to local roads and the RPTL. Thus, expressly

indicating each specific preempted activity potentially undertaken by a local

government is not feasible and is not required (compare Matter of Cohen v Board

of Appeals of Vil. of Saddle Rock, 100 NY2d at 400-403; Oil Heat Inst. of Long

Is. v Town of Babylon, 156 AD2d 352, 353-354 [2d Dept 1989]).

Accordingly, the Town Prohibition is not entitled to any presumption of

validity. The Town Prohibition should be analyzed exclusively pursuant to the

preemption doctrines looking at the whole of the OGSML, its history and unique

terms, as well as its underpinning policy, purpose and effect. Defendant in effect

concedes that the preemption doctrines limit home rule zoning powers

[Respondent’s Brief, at 29-30], thus, defendant’s arguments indicating that the

Town Prohibition should be presumed valid are irrelevant pursuant to the facts

underlying this appeal [Respondent’s Brief, at 19-28].

B. THE REGULATORY SCHEME PROVIDES SIGNIFCANT

STATE OVERSIGHT AND ACCOUNTS FOR LOCAL INPUT

Underpinning defendant’s arguments is some notion that the Town

Prohibition is necessary to ensure local input, that the Town Prohibition serves to

prevent oil, gas, and solution mining from occurring whenever and wherever, and

11

that the State is somehow indifferent to the concerns of localities [Respondent’s

Brief, at 3-8, 24-27, 45]. This is fear-mongering and it is misleading. Defendant’s

arguments fail to address the regulatory scheme’s uniqueness with respect to

pooling and setback requirements, and the interconnection with the State

Environmental Quality Review Act (see ECL art. 8 [hereinafter SEQRA]).

The regulatory scheme mandates that, prior to even applying for a well

permit, drilling operators must amass control, typically through leases, of 60% of

the acreage in a spacing unit (see ECL 23-0501 [2]).1 Further, all spacing units

must be “of approximately uniform shape with other spacing units within the same

field or pool, and abut[] other spacing units in the same pool, unless sufficient

distance remains between units for another unit to be developed” (ECL 23-0503

[2]), or else the DEC must “determine [that] the proposed spacing unit satisfies the

policy objectives of [ECL] 23-0301” (ECL 23-0503 [3]). If after obtaining the

permit the operator does not have 100% control over all the owners in the spacing

unit, either by lease or voluntary agreement, then there must be a public hearing in

which, only “after detailed study and analysis,” the DEC must determine that

“integration of interests in spacing units . . . is necessary to carry out the policy

provisions of the [OGSML at ECL] 23-0301” (ECL 23-0901 [2]). As long as the

1 In effect, to commence with conventional vertical shale gas drilling, the operator must obtain

control over a 40-acre spacing unit (see ECL 23-0501 [1] [b] [1] [v]) and, to commence with

horizontal shale gas drilling the operator must obtain control over a spacing unit of “up to 640

acres with the initial horizontal wellbore or wellbores within the target formation approximately

centered” (see ECL 23-0501 [1] [b] [1] [vi]).

12

policies of ECL 23-0301 are met, then the regulatory scheme requires integration

of the uncontrolled interests into the spacing unit, even if counter to local zoning

laws (see ECL 23-0901).2

In carrying out the policy provisions at ECL 23-0301, the DEC must, among

other things, ensure that “the rights of all persons including landowners and the

general public [are] fully protected” (ECL 23-03101) [Appellant’s Brief, at 4-11].

This obligation is exclusively within the authority of the DEC and does not grant

authority to local governments as is argued by defendant. [Respondent’s Brief, at

66, 68-69, 71-73, 73-75]. Accordingly, oil and gas drilling will only occur where

the vast majority of landowners lease their land, thereby consenting to

development, and where the DEC has determined, in consideration of the concerns

of the general public, that such development is in the State’s best interests.

Despite defendant’s offering of doomsday scenarios [Respondent’s Brief, at

4, 7-8], the regulatory scheme also outlines setback requirements to address

localities’ concerns over well locations. The scheme outlines distance

requirements between a well and another well (see 6 NYCRR 553.1 [a]), as well as

between a well and homes, public buildings, public areas, roads, streets, streams,

rivers, and other bodies of water (see 6 NYCRR 553.2). Further, well locations are

2 ECL 23-0901 offers three distinct integration options to an “uncontrolled” landowner (see

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 Dec. 31, 2013] [discussing

“Compulsory Integration”]).

13

constrained near the boundaries of every leasehold within the spacing unit (see 6

NYCRR 553.1 [a]) as well as near the boundaries of the spacing unit itself (see

ECL 23-0501 [1] [b] [1]). Lastly, landowners are able to negotiate, among other

things, setbacks and other limitations that exceed the regulatory requirements when

entering into a lease with a drilling operator (see Dept. of Envtl. Conservation,

Landowner’s Guide to Oil & Gas Leasing,

http://www.dec.ny.gov/energy/1553.html [accessed Dec. 31, 2013]).

The State Environmental Quality Review Act (see ECL art. 8 [hereinafter

SEQRA]) is also applicable because it outlines a review process that must be

followed any time a State or local agency, or similar governing body, proceeds

with any action, including as here the issuance of a drilling permit (see generally

Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400, 414-416

[1986]; see also 6 NYCRR part 617). This process “insures that agency decision-

makers . . . minimize adverse environmental effects to the maximum extent

practicable” (Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d at

414-415; ECL 8-0103). “The heart of SEQRA is the Environmental Impact

Statement [(hereinafter “EIS”), which] must be prepared regarding any action that

‘may have a significant effect on the environment’” (Matter of Jackson v New

York State Urban Dev. Corp., 67 NY2d at 415, quoting ECL 8-0109 [2] [citation

omitted]). In sum, given that the issuance of a drilling permit encompasses

14

repeated consideration of similar environmental issues, the DEC utilizes a Generic

Environmental Impact Statement setting forth that SEQRA compliance is deemed

satisfied if certain specific conditions are met and, if not, then the typical EIS

process or an abbreviated EIS process must be undertaken (see generally 6

NYCRR 617.10). The DEC adopted a Generic Environmental Impact Statement in

1992 with respect to oil and gas development (hereinafter the “GEIS”) (see Dept.

of Envtl. Conservation, Final Generic Environmental Impact Statement on the Oil,

Gas and Solution Mining Regulatory Program [July 1992], available at

ftp://ftp.dec.state.ny.us/dmn/download/geismaster.pdf [hereinafter cited as “GEIS

1992”]), and, more recently, issued a drafted Supplemental Generic Environment

Impact Statement in 2009 and a revised drafted Supplemental Generic Impact

Statement in 2011 specific to hydraulic fracturing (see Dept. of Envtl.

Conservation, Draft: Supplemental Generic Environmental Impact Statement on

the Oil, Gas and Solution Mining Regulatory Program [Sept. 2009], available at

ftp://ftp.dec.state.ny.us/dmn/download/OGdSGEISFull.pdf [hereinafter cited as

“SGEIS 2009”]; Dept. of Envtl. Conservation, Revised Draft: Supplemental

Generic Environmental Impact Statement on the Oil, Gas and Solution Mining

Regulatory Program [Sept. 2011], available at

http://www.dec.ny.gov/data/dmn/rdsgeisfull0911.pdf [hereinafter cited as “SGEIS

2011”]) that apparently will not be finalized and adopted until the completion of a

15

Public Health Review by the State Department of Health (see Dept. of Envtl.

Conservation, Statement from Commissioner Joseph Martens,

http://www.dec.ny.gov/press/89195.html [Feb. 12, 2013]). In effect, the GEIS, and

eventually the Supplemental Generic Environmental Impact Statement, outline

additional oversight and setback requirements (see generally GEIS 1992 at p.

FGEIS3, supra; SGEIS 2011 at Executive Summary, supra, available at

http://www.dec.ny.gov/docs/materials_minerals_pdf/rdsgeisexecsum0911.pdf).

Most importantly though, the GEIS and draft Supplemental Generic

Environmental Impact Statements directly address the issue of local zoning. The

GEIS requires every permit applicant to submit an Environmental Assessment

Form to the DEC (see GEIS 1992 at pp. FGEIS30 – FGEIS34, supra). The revised

drafted Supplemental Generic Environmental Impact Statement in 2011 “require[s]

the applicant to identify [therein] whether the proposed location of the well pad, or

any other activity under the jurisdiction of the [DEC], conflicts with local land use

laws[,] regulations, plans[,] polices[,] comprehensive plan[s] or other local land

use plan[s]” (SGEIS 2011 at p. 8-4, supra). If there is any inconsistency in this

respect or if the DEC “receives notice of an asserted conflict by the potentially

impacted local government[, then the DEC] would request additional information

so that it can consider whether significant adverse environmental impacts would

result from the proposed project that have not been addressed in the SGEIS and

16

whether additional mitigation or other action should be taken in light of such

significant adverse impacts” (SGEIS 2011 at pp. 8-4 – 8-5, supra). Accordingly,

the scheme requires that the DEC consider local input, among other things, but

ultimately, as provided in both of the drafted Supplemental Generic Environmental

Impact Statements: “[t]he [DEC’s] exclusive authority to issue well permits

supersedes local government authority relative to well siting” (SGEIS 2011 at p.

8-4, supra; SGEIS 2009 at p. 8-4, supra).

In regards to other considerations for the protection of the general public, the

supersession clause expressly provides that local governments retain jurisdiction

over the oil and gas industry with respect to regulation of local roads (see ECL 23-

0303 [2]). Further, towns could enact local laws and ordinances of general

applicability, such as noise ordinances, to the extent that such laws and ordinances

do not materially impede the State’s overall interests herein or otherwise, in effect,

regulate the industry by controlling or restricting it (see DJL Rest. Corp. v City of

New York, 96 NY2d 91, 97 [2001]; see also Voss v Lundvall Bros., Inc., 830 P2d

1061, 1066-1069 [Colo 1992]) [Appellant’s Brief, at Point I.A., pp. 27-29].

Conversely, defendant purports that it does not regulate the industry, yet the Town

Prohibition is a total town-wide exclusion of all oil and gas activities, even the

“transportation, purchase[,] and storage of oil or gas,” including even subsurface

17

gas pipes that enter defendant’s borders from wells drilled in adjacent towns [R:

100, 114].

In sum, the regulatory scheme accounts for local input, defendant’s

description of where and when oil and gas drilling can occur is misleading, and the

State is adequately equipped to ensure safe and efficient regulation of the oil and

gas industry while serving the best interests of the State set forth in ECL 23-0301

[Appellant’s Brief, at 51-53]. Stated differently, the regulatory scheme merely

supplants local review of land use with respect to well siting.

POINT II

THE RPTL SUPERSESSION EXEMPTION DEMONSTRATES THE

LEGISLATURE’S INTENT TO EXPRESSLY PREEMPT LOCAL ZONING

REGULATION AND DISTINGUISHES THIS CASE FROM THE

MLRL PRECEDENT

The Town Prohibition is “regulation of the oil, gas and solution mining

industries” because defendant has enacted a specific total town-wide ban on all oil

and gas activities. Focusing specifically on the supersession exception for the

“rights of local governments under the [RPTL],” it is apparent that defendant’s

construction of the supersession clause as a whole is misguided. Defendant argues

that the term “regulation” in ECL 23-0303 (2) means only technical “details and

procedure” applying to the oil and gas industries [Respondent’s Brief, at Point II,

pp. 28-62], yet it offers no reasonable explanation as to how this definition does

18

not render meaningless the expressed RPTL exception [Respondent’s Brief, at 38-

42].

Defendant is correct that the supersession clause was enacted through

legislation that also authorized local governments to institute a special assessment

tax on real property specific to production of oil and gas thereon, now codified at

title 5 of article 5 of the RPTL [R: 840] (see L 1981, ch 846; see also Matter of

Nornew, Inc. v Marsh, 301 AD2d 206, 211-212 [4th Dept 2002]). However,

defendant misses the point in that this property tax was enacted entirely for local

benefit [Respondent’s Brief, at 40-42]. The State Office of Real Property Tax

Services uses the statutory methodology to determine the assessment – called an

economic unit – which, like a home value, is then placed on the local assessment

roll and subject to all the local property levies – i.e. county, school, fire district –

but paid by the drilling operator, not the landowner (see New York State Dept. of

Taxation and Fin., Overview Manual for Valuation and Assessment of Oil and Gas

Producing Property in New York State [Jan. 2013], available at

http://www.tax.ny.gov/pdf/publications/orpts/oilgasoverviewmanual.pdf). The

assessment recognizes that, while oil and gas are in effect real property (see Poplar

Lane Farm LLC v Fathers of Our Lady of Mercy, 2010 WL 3303852, *4 [WD NY,

Aug. 19, 2010, No. 08-CV-509S]; see also RPTL 102 [12] [a]), neither has

19

economic value until each is captured for use (see Matter of Nornew, Inc. v Marsh,

301 AD2d at 211-213).

The implementation of this special assessment upon real property specific to

production of oil and gas thereon is a tax and has nothing to do with regulating the

details and procedure of oil and gas operations [Appellant’s Brief, at Point I.D., pp.

33-35]. Thus, the tax is codified in the RPTL and not in ECL article 23. The more

logical construction of the supersession clause is that all local laws and ordinances

broadly restricting or controlling the oil and gas industries are preempted

[Appellant’s Brief, at Point I.A., pp. 27-29], except that all such local laws and

ordinances pertaining to real property taxation, levies and assessments are

exempted from preemption, in addition to the exemption for jurisdiction over local

roads [Appellant’s Brief, at Point I.D., pp. 33-35].

Further, this special assessment tax specific only to the production of oil and

gas on real property demonstrates that this case is entirely distinguishable from the

Mined Land Reclamation Law (see ECL 23-2701 et seq. [hereinafter MLRL]) and

its precedent, which form the entire foundation of defendant’s argument against

preemption [Respondent’s Brief, at 33, 35-36, 38, 42, 52-62, 66-67, 72]. In

contrast, the RPTL contains no similar tax on sand and gravel mining governed by

the MLRL. This is critical because the MLRL supersession clause analyzed in

Matter of Frew Run Gravel Prods. stated:

20

“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 exemption in this clause was later amended, in pertinent part, to state “that

nothing in this title shall be construed to prevent any local government from . . .

enacting or enforcing local zoning ordinances or laws which determine permissible

uses in zoning districts” (Matter of Gernatt Asphalt Prods. v Town of Sardinia, 87

NY2d 668, 682 [1996], quoting ECL 23-2703 [2] [emphasis added]). Accordingly,

while there are other relevant distinctions in this case as compared to the MLRL

and its precedent [Appellant’s Brief, at Point I.F., pp. 40-48], the key distinction to

focus on here is that the OGSML supersession clause applies to all local laws and

local ordinances, and exempts jurisdiction of local governments under the RPTL;

whereas, the MLRL supersession clause applies to just local laws, and exempts

from preemption certain local zoning laws and ordinances.

As previously outlined, there are important distinctions between local laws

and local ordinances [Appellant’s Brief, at 42-45]. The first important distinction

is that, “[h]istorically, the most prevalent use of a town’s ordinance powers had

been in the adoption of land use regulations” (Assn. of Towns of the State of New

York, Town Manual § 6-4, at 113). The next important distinction is that, in

21

conjunction with authorization from the legislature, local laws exclusively govern a

town’s levy, collection, and administration of all local taxes, charges, rates, and

fees (compare Municipal Home Rule Law § 10 [1] [ii] [8], [9], [9-a] and Assn. of

Towns of the State of New York, Town Manual § 6-11, at 127-129, with Town

Law § 130 and Assn. of Towns of the State of New York, Town Manual § 6-2, at

110-111). As a result, all administration of the special assessment tax on

production of oil and gas on real property must be accomplished through the

enactment of local laws, not local ordinances (cf. Local Laws of the Town of

Vestal ch 21, at 1413-1416, available at

http://www.vestalny.com/DeptPage.aspx?pID=113). Collectively, comparing the

texts of the OGSML and MLRL supersession clauses, and understanding that the

unique special assessment tax is applicable only to oil and gas production, it is

further apparent that the OGSML supersedes local exclusionary zoning while

expressly permitting the administration of certain real property taxation;

conversely, the MLRL achieves the exact opposite by preempting only local laws

and exempting from preemption certain local zoning laws and ordinances.

In sum, construing the supersession clause as a whole, the reference to the

RPTL in ECL 23-0303 (2) demonstrates the Legislature’s intent to expressly

preempt regulation enacted through total town-wide zoning bans on all oil and gas

22

activities. Further, the lower courts erred in not undertaking any analysis with

respect to the exceptions expressed in the supersession clause.

POINT III

EVEN IF THE COURT DETERMINES THAT THE TOWN PROHIBITION

IS NOT EXPRESSLY PREEMPTED, THE COURT MAY STILL APPLY

THE DOCTRINE OF IMPLIED PREEMPTION

Defendant argues that the Court need not consider the doctrine of implied

preemption given the existence of a supersession clause, even stating “[p]laintiff

makes no effort to refute, or even distinguish, this long line of case law”

[Respondent’s Brief, at 63-64]. This is inaccurate as this issue was adequately

addressed previously by plaintiff [Appellant’s Brief, at 48]. Nonetheless, in this

respect, defendant cites to one case from this Court – Matter of People v Applied

Card Sys., Inc., (11 NY3d 105 [2008], cert denied 555 US 1136 [2009]), pertaining

to federal preemption of state law – that relies on Cipollone v Liggett Group, Inc.,

(505 US 504 [1992]), which indicates that where there is a federal statutory

provision “explicitly addressing that issue[,] there is no need to infer congressional

intent to pre-empt state laws from the substantive provisions of the legislation” (id.

at 517 [internal quotation marks and citations omitted]). As discussed previously

herein, federal preemption of state law is doctrinally different than state

preemption of local law because of constitutional and sovereignty distinctions (see

pp. 8-9, supra).

23

Further, the United States’ Supreme Court later clarified Cipollone, stating

that an express preemption clause does not foreclose the possibility of implied

preemption (see Freighliner Corp. v Myrick, 514 US 280, 287-288 [1995]).

Accordingly, in spite of the one case cited by defendant, both this Court and the

United States’ Supreme Court routinely apply the doctrine of implied preemption

even after determining that express preemption fails (see e.g. Doomes v Best

Transit Corp., 17 NY3d 594, 602-603 [2011]; Balbuena v IDR Realty LLC, 6

NY3d 338, 357-358 [2006, Graffeo, J.]; Drattel v Toyota Motor Corp., 92 NY2d

35, 48-49 [1998]; Sprietsma v Mercury Marine, 537 US 51, 64-65 [2002];

Freighliner Corp. v Myrick, 514 US at 287-288; see also Matter of Norse Energy

Corp. USA v Town of Dryden, 108 AD3d 25, 36-37 [3d Dept 2013], lv granted 21

NY3d 863 [2013]; Oil Heat Inst. of Long Is. v Town of Babylon, 156 AD2d 352,

353-354 [2d Dept 1989]).

POINT IV

THE TOWN PROHIBITION IS PREEMPTED PURSUANT TO THE

DOCTRINES OF FIELD PREEMPTION AND CONFLICT PREEMPTION

BECAUSE THE REGULATORY SCHEME PROVIDES

THAT THE PERMIT APPLICANT DETERMINES THE WELL

LOCATION WITH DEC OVERSIGHT

In sum, preemption is implied because the comprehensive and detailed laws

of the State permit oil and gas development yet the Town Prohibition specifically

bans it in its entirety. Here, more narrowly, the critical issue is that the OGSML

expressly provides that so long as the applicant complies with the DEC’s broad

24

oversight, then the DEC “shall issue a permit to drill” (ECL 23-0503 [2]; see ECL

23-0501; 6 NYCRR parts 552, 553). In this regard, the OGSML provides that

“[e]very person who applies for a permit to drill an oil or gas well . . . shall provide

the [DEC] with [a] map . . . depicting[, among other things,] the proposed spacing

unit for the well, the surface and bottom hole locations of the well[, and] the

location of the wellbore in the target formation” (ECL 23-0501 [2] [a]). Next,

assuming that the applicant’s proposal complies with the setback requirements,

among other things, (see e.g. ECL 23-0501 [1] [b] [1]; 6 NYCRR parts 552, 553)

then “[t]he [DEC] shall issue a permit to drill . . . if the proposed spacing unit

submitted . . . conforms to statewide spacing and is of approximately uniform

shape with other spacing units within the same field or pool, and abuts other

spacing units in the same pool, unless sufficient distance remains between units for

another unit to be developed” (ECL 23-0503 [2] [emphasis added]).

Accordingly, as provided in the drafted Supplemental Generic

Environmental Impact Statement in 2009 and 2011, “[t]he [DEC’s] exclusive

authority to issue well permits supersedes local government authority relative to

well siting” (see SGEIS 2011 at p. 8-4, supra; SGEIS 2009 at p. 8-4, supra).

The crux of defendant’s arguments on implied preemption is some notion

that local governments have the responsibility pursuant to the OGSML to ensure

that “the rights of all persons including landowners and the general public may be

25

fully protected” (ECL 23-0301) [Respondent’s Brief, at 66, 68-69, 71-73, 73-75].

Again, this is incorrect as this policy consideration is entrusted to the DEC because

it is the DEC that administers the OGSML (see ECL 23-0101 [4]; ECL 23-0303

[1]) and enforces the broad oversight stemming therefrom [Appellant’s Brief, at

51-53]. For example, the DEC is specifically called upon to consider the full

protection of all landowners and the general public in determining whether to

allow a non-conforming spacing unit (see ECL 23-0503) or in determining whether

to order integration of a land interest within a spacing unit after the issuance of the

permit but prior to when drilling can proceed (see ECL 23-0901 [2]; see also ECL

23-0301). Thus, despite defendant’s assertions to the contrary, the State regulatory

scheme does not eliminate the rights and protections provided to all landowners

and the general public; instead, the scheme merely supplants local authority over

land use with respect to well siting (see Point I.B., supra).

Hence, the Memorandum in Support of Bill A6928, enacting the

supersession clause, provided:

“Local government’s diverse 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].

26

Focusing specifically on field preemption, plaintiff and defendant essentially

agree that the doctrine applies to preempt local law if a comprehensive and detailed

State regulatory scheme applies to the same subject matter as the local law or if

preemption is otherwise indicated given the nature of the subject matter and the

need for statewide uniformity [Appellant’s Brief, at 49-50; Respondent’s Brief, at

64-66] (see Matter of Cohen v Board of Appeals of Vil. of Saddle Brook, 100

NY2d 395, 400 [2003]; Albany Area Bldrs. Assn. v Town of Guilderland, 74

NY2d 372, 377 [1989]). This Court has acknowledged that the regulatory scheme

at issue is “comprehensive” (Matter of Sylvania Corp. v Kilbourne, 28 NY2d 427,

432 [1971]), as has been outlined previously [Appellant’s Brief, at 51-53] and

herein (see Point I.B., supra). Defendant in effect concedes this much, but states:

“Although the Legislature has indeed enacted detailed statutory provisions

governing the technical operations of the oil and gas industries, generally

applicable zoning ordinances determining whether, and in which districts, heavy

industrial uses such as oil and gas drilling may be permitted . . . are not

inconsistent with the State regulations since they do not impact the day-to-day

operations of the industry” [Respondent’s Brief, at 67].

Defendant’s characterization of the Town Prohibition as a “generally

applicable zoning ordinance” is inaccurate because the Town Prohibition is

specific in implementing a total town-wide ban of all oil and gas activities and,

27

thus, constitutes exclusionary zoning specific to the oil and gas industry [R: 100,

114]. Generally, towns may enact such exclusionary zoning based on public health

and safety concerns (see 12 NY Jur 2d Buildings, Zoning, and Land Controls §

205), but, here, a comprehensive and detailed scheme has been enacted by the

State that implicitly provides that these concerns are within the State’s purview

(see Point I, supra) [Appellant’s Brief, at 10-11] (see Voss v Lundvall Bros., Inc.,

830 P2d 1061, 1066-1069 [Colo 1992]). Further, unlike other specific

exclusionary zoning bans, the development of oil and gas occurs pursuant to a

State regulatory scheme entirely predicated on spatial requirements that are

separate and distinct from geographic and surface borders. The spatial

requirements are intricate to the regulatory scheme because, unlike sand and gravel

mining, the OGSML regulates the development of liquid or gaseous substances

found in subterranean pools that do not conform to typical geographic and surface

borders [Appellant’s Brief, at 53-54].

Further, it is not relevant that defendant also excludes other “heavy industry”

within its border [Respondent’s Brief, at 8, 26-27]. Oil and gas drilling is not an

“industrial” activity as that term is commonly understood because drilling does not

result in an expansive surface disruption and does not create long-term sacrifice of

community character and quiet enjoyment of land. In contrast, defendant allows

breweries, which create long-term surface disruption with sustained noise, truck

28

traffic and industrial waste [R: 600]. Moreover, any inquiry into other activities

confuses the issue at hand of whether State law preempts defendant’s total town-

wide ban on all oil and gas activities (see Point I, supra).

Also with respect to field preemption, defendant again asserts that it is not

regulating the oil and gas industry because, for example, it is not “impos[ing]

farther setbacks or maximum acreage limits” [Respondent’s Brief, at 68]. But,

defendant is regulating the industry by broadly banning all oil and gas activities

from occurring within a potential spacing unit. This effectively alters all the

spatial requirements. Further, if all New York localities have the power to enact

total bans similar to the Town Prohibition, then it follows that most of the policies

expressed at ECL 23-0301 will be obliterated.

Focusing next on conflict preemption, the Town Prohibition conflicts with

the regulatory scheme because a drilling operator could comply with the regulatory

scheme by, among other things, creating a spacing unit encompassing defendant’s

geographic borders and selecting a well location within defendant’s geographic

border, and then nonetheless be prohibited by local law or ordinance, although the

DEC determines otherwise. This could be the case even if the DEC considers the

local input required by the Supplemental Generic Environmental Impact

Statement, determines that drilling should be permitted, and thereby exercises its

authority with respect to well siting (see pp. 15-16, supra). Accordingly, a direct

29

conflict exists between the laws of the State and the Town Prohibition because

defendant can ban an activity that the State would permit.

Further, defendant is incorrect in suggesting that no conflict exists with

respect to horizontal drilling activities beneath the boundaries of such exclusionary

zoning, arguing that the “[Town Prohibition], as currently phrased, regulates only

surface uses of land [and] it does not purport to regulate subsurface activities that

result from land uses in other municipalities” [Respondent’s Brief, at 73]. This is a

complete mischaracterization of the pervasive and broad effect of the Town

Prohibition which bans “subsurface excavations for oil and gas” as well as, in

effect, all oil and gas activities including specifically all “[g]as pipes, water lines,

or other gathering systems and components” [R: 100]. Accordingly, given the

comprehensive and detailed regulatory scheme and given the broad oversight

provided to the DEC, including its required consideration of public interests and

local interests, it is apparent that the regulatory scheme preempts town-wide

exclusionary zoning bans applicable to all oil and gas activities, such as the Town

Prohibition.

POINT V

THE PENNSYLVANIA CASES, AND THE OTHER STATE COURT

DECISIONS, SUPPORT PREEMPTING TOTAL TOWN-WIDE BANS ON

ALL OIL AND GAS ACTIVITIES

Defendant attempts to distinguish the text of other states’ home rule and

preemptive provisions, but cannot, for good reason, refute the basic proposition

30

that no other state court has authorized total town-wide bans on all oil and gas

activities through zoning [Respondent’s Brief, at Point IV, pp. 75-84].

Defendant’s comparison of this case to cases and laws in Pennsylvania is

grossly misleading [Respondent’s Brief, at 79-84]. At issue are two cases decided

pursuant to Pennsylvania’s former supersession statute, then codified at 58 Pa Stat

§ 602, and a more recent decision pertaining to the later enactment of 58 Pa Stat §§

2301-3504, commonly known as Act 13.

With respect to the initial cases, Huntley & Huntley, Inc. v Borough Council

of Borough of Oakmont (600 Pa 207 [Pa 2009]) and Range Resources—

Appalachia, LLC v Salem Twp. (600 Pa 231 [Pa 2009]), defendant incorrectly

states that the text of 58 Pa Stat § 602 is similar to ECL 23-0303 (2). Defendant’s

assertion that 58 Pa Stat § 602 contains two “non-relevant exceptions” is

misleading [Respondent’s Brief, at 80]. In full, 58 Pa Stat § 602 then provided:

“Except with respect to ordinances adopted pursuant to the . . .

Municipalities Planning Code, and the . . . Flood Plain Management

Act, all local ordinances and enactments purporting to regulate oil and

gas well operations regulated by this act are hereby superseded. No

ordinances or enactments adopted pursuant to the aforementioned acts

shall contain provisions which impose conditions, requirements or

limitations on the same features of oil and gas well operations

regulated by the act or that accomplish the same purposes as set forth

in the act. The Commonwealth, by this enactment, hereby preempts

and supersedes the regulation of oil and gas wells as herein defined”

(Huntley & Huntley, Inc. v Borough Council of Borough of Oakmont,

600 Pa at 212; accord Range Resources—Appalachia, LLC v Salem

Twp., 600 Pa at 233 n 1).

31

Defendant neglects to mention that both cases considered local ordinances adopted

pursuant to Pennsylvania’s Municipalities Planning Code (see Huntley & Huntley,

Inc. v Borough Council of Borough of Oakmont, 600 Pa at 214-215; Range

Resources—Appalachia, LLC v Salem Twp., 600 Pa at 233, 240-244).

Accordingly, the most pertinent text is whether the “ordinances or enactments . . .

contain provisions which impose conditions, requirements or limitations on the

same features of oil and gas well operations regulated by the act or that accomplish

the same purposes as set forth in the act.” This pertinent text is distinct from ECL

23-0303 (2) in unambiguously specifying that supersession applies to operational

matters already covered by the regulatory act.

Hence, in Huntley & Huntley, Inc., a markedly different zoning ordinance

excluding oil and gas development in certain zoning districts was upheld (id. at

224-226). In Range Resources—Appalachia, LLC, a local ordinance was

invalidated for imposing technical oversight on the industry that overlapped with

the Pennsylvania regulatory scheme (id. at 240-244).

With respect to the more recent case cited by defendant, Robinson Twp. v

Commonwealth (52 A3d 463 [Pa Commonwealth Crt 2012]), it must be

acknowledged that the Pennsylvania Supreme Court, after defendant submitted its

respondent’s brief, handed down the final decision of the appeal in Robinson Twp.,

Washington County, Pa v Commonwealth, ___ Pa ___, 2013 WL 6687290 (Pa

32

2013). Nonetheless, again, relative to this New York matter, the Pennsylvania

legal texts are markedly different. Even the Pennsylvania Supreme Court

acknowledged that Pennsylvania’s law is different from New York’s saying,

“Pennsylvania deliberately chose a course different from virtually all of its sister

states” (Robinson Twp., Washington County, Pa v Commonwealth, ___ Pa at ___,

2013 WL 6687290, *43). The state and local factual circumstances are also

completely opposite. In Robinson Twp., local towns and residents, among others,

challenged Act 13 as, among other things, in violation of the Pennsylvania

Constitution, which contains a longstanding and unique provision at section 27 of

article I, more commonly known as Pennsylvania’s Environmental Rights

Amendment (see generally Robinson Twp., Washington County, Pa v

Commonwealth, ___ Pa at ___, 2013 WL 6687290, *2-*4).

In pertinent part, Act 13 made minor textual changes to the former 58 Pa

Stat § 602 in recodifying it at 58 Pa Stat § 3302, but implemented major

distinguishable provisions within the same Chapter 33 of Act 13 (see generally

Robinson Twp., Washington County, Pa v Commonwealth, ___ Pa at ___, 2013

WL 6687290, *3). First, 58 Pa Stat § 3303 was added stating, “The

Commonwealth by this section, preempts and supersedes the local regulation of oil

and gas operations regulated by the environmental acts, as provided in this

chapter.” Second, 58 Pa Stat § 3304 was added, which, in effect, affirmatively

33

barred all local governments from enacting any zoning pertaining to the oil and

gas industry as it states, among other things, “all local ordinances regulating oil

and gas operations shall allow for the reasonable development of oil and gas

resources.”

Initially, it must be noted that the plain language of Act 13 supports the

notion that “regulation” encompasses certain local zoning powers and not just

authority with respect to technical details and operations. Nonetheless, now

responding to defendant’s assertions, in Robinson Twp., Washington County, Pa v

Commonwealth, ___ Pa ___, 2013 WL 6687290, the court determined that 58 Pa

Stat §§ 3303, 3304 were unconstitutional because each was in violation of section

27 of article I of the Pennsylvania Constitution (id. at *55-*60). Accordingly, not

only are the statutory texts markedly different, the legal issues decided are also

remarkably different. Further, the local zoning that towns had implemented in

Robinson Twp., as well as in Huntley & Huntley, Inc., were not total town-wide

bans on all oil and gas activities (see Robinson Twp., Washington County, Pa v

Commonwealth, ___ Pa at ___, 2013 WL 6687290, *6-*7; Huntley & Huntley,

Inc. v Borough Council of Borough of Oakmont, 600 Pa at 210-211, 225-226). In

sum, the simple fact remains that, for the same regulatory and policy reasons

existing in this case, no other state court has authorized total town-wide bans on all

oil and gas activities through zoning [Appellant’s Brief, at Point IV, pp. 61-63].

34

CONCLUSION

Accordingly, plaintiff respectfully requests that this Honorable Court reverse

the orders of the Supreme Court and the Appellate Division, determine that the

Town Prohibition is preempted, and thereby allow the Department of

Environmental Conservation to continue safely and efficiently regulating oil and

gas development in New York.

I

i I ,

01

1

Dated: January 7, 2014 Albany, New York

LEVENE GOULDIN & THOMPSON, LLP

By: --:'7/~~tv-:-;-,v---:/~~-:-:-,-:://...:-----,-, ,--;:",_~-,--_. _ stott R. Kurkoski, Esq. Allomeys for Plaintiff-Appellant Coopers/own Holstein Corporation

Office Address: 450 Plaza Drive Vestal, NY 13850 Mailing Address: P.O. Box F-1706 Binghamton, NY 13902-0 I 06 Telephone: (607) 763-9200 Fax: (607) -92 11

~((i¢1., LLC

, Esq. Monaco, Esq.

itllomeys for Plaintiff-Appellant Cooperstown Holstein Corporation 677 Broadway, 81h Floor Albany, New York 12207 Tel.: (5 18) 64 1-0500 Fax: (518) 615-1500

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