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DISCLAIMER: This is an outline of issues and potential issues and is not intended as legal advice; this presentation is no substitute for legal advice and analysis from experienced counsel for your municipality.
Copyright 2012 Whiteman Osterman & Hanna LLP. All rights reserved.

Municipal Preemption ! Municipalities are preempted by State law from regulating natural gas drilling except: (1) local roads (2) real property taxes ! 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 industry; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law.

What Can a Municipality Do Under the Preemption?

(1) Establish a local road preservation program (2) Possibly adopt zoning laws related to natural gas drilling discuss pending lawsuits (3) Adopt other local laws of general applicability (4) Participate in the NYSDECs permitting process for natural gas wells

Why Should a Municipality Establish a Road Preservation Program?

Anticipated Traffic Impacts (from SGEIS Section 6.11) ! General rule of thumb: a single large truck = 9,000 automobiles ! Truck traffic will be two (2) to three (3) times greater than for a vertical well ! DEC estimates 3950 one way heavy truck trips and 2840 one way light truck trips PER HORIZONTAL WELL (Section 6.11.1.1-Table 6.62) ! If multiple wells are developed at a single well pad, these trips will repeat for each well (see SGEIS Figure 6.22)

Why Should a Municipality Establish a Road Preservation Program?

Anticipated Traffic Impacts (from SGEIS Section 6.11) ! Local roads are not typically designed to sustain a high level of vehicle trips or loads (Section 6.11.3) ! In 2010, natural gas companies had spent $200 million in repairing roads damaged in Pennsylvania from gas drilling operations

Municipal Regulation of Roads

Authority to Regulate Local Roads:

! The NY Constitution and the Municipal Home Rule Law (MHRL) give municipalities the power to adopt local laws related to the acquisition, care, management and use of its highways, roads, streets, avenues and property. N.Y. Const. art 9, 2(a)(6) and MHRL 10(1)(ii)(a)(6). ECL 23-0303(2) allows municipalities to regulate local roads used in gas drilling operations NY Vehicle and Traffic Law (VTL) allows municipalities to regulate roads VTL imposes limitations on municipalities to require permits and fees for road use Under MHRL municipalities can adopt laws requiring payment of road damage caused by users

! ! ! !

Municipal Regulation of Roads

! Municipal Powers Under VTL:

! Exclude trucks and commercial vehicles from certain roads ! Establish truck routes for trucks in excess of 10,000 pounds (gross weight) ! Exclude trucks and commercial vehicles in excess of any designated weight, length or height ! Exclude trucks with gross weight over four tons to prevent road damage and issue permits based on hardship ! Adopt local laws and ordinances with respect to traffic as local conditions may require

Municipal Regulation of Roads

! Municipal Limitations Under VTL: ! Section 1604 generally prohibits municipalities from requiring any tax, fee, license or permit for use of public highways or excluding an owner or operator from the free use of public highways EXCEPT as authorized in the VTL

Who Pays for Highway Repairs?

! Generally, the Town Law and Highway Law set forth comprehensive rules for budgeting and funding for local road improvements, maintenance and repair
! Municipal burden to raise funds via general taxes

! Imposition of general fees for future road maintenance and improvement upon private parties based on use of public roads has been ruled invalid
! Albany Area Builders Assn v. Town of Guilderland, 74 N.Y.2d 372 (1989) attempt by Town to impose fees upon developers for road improvements found invalid as preempted by State regulation of these areas

Who Pays for Highway Repairs?

! Municipalities have power to seek damages for damage caused to public highways (but not general fees) ! Developers often recognize the need not only to undertake repairs at their cost but to upgrade existing roads to accommodate their construction traffic

Past Experience on Handling Road Repairs for Large Scale Construction Projects

Wind Park Development

! Issues
! Large numbers of oversize, overweight, over-width vehicles for turbine deliveries ! High volume gravel and concrete truck traffic ! Project footprint covered most or all of town and used many town roads ! Town roads lacked sufficient surfaces, widths and turning dimensions

! Solutions
! Road use agreements between developers and municipalities ! Use of expert engineering consultants to monitor road conditions and identify necessary repairs
! ! ! Consultants fees paid by developers Repairs paid by developers Security/bonding for repairs in event developer failed to perform

Road Preservation Program Goals

Goals:
! ! ! Avoid or minimize damage to local roads resulting from construction traffic Ensure municipality not burdened with costs of repairs to roads resulting from such use Ensure that users who may cause damage to local roads: ! Identify its haul routes ! Cooperate in assessing condition of such roads identified ! Undertake any upgrades to accommodate traffic and repairs as needed during construction ! No fees or taxes levied only security/bonding to ensure work can be completed if developer fails to do so

3 Basic Options for Road Preservation

1. Post roads, issue permits (where allowed), and obtain security for damage 2. Rely on voluntary Road Use Agreements (RUAs) 3. Adopt local road use and preservation laws

Posting Roads
Posting Roads:
! Must be done by local law, ordinance, order, or regulation of Town Board ! Restrictions much be reasonable and not arbitrary and capricious
Pros: Relies on authority granted by VTL 385(15)(b) (power to issue permits for overweight/oversize vehicles) and VTL 1660 (10), (11), (17), and (28) (power to establish truck routes and exclude trucks from designated highways). Cons: Time Consuming to monitor road use and enforce May be subject to challenge if restriction is not reasonably related to public safety or protection of roads or thresholds are arbitrary May exclude traffic that is not damaging May allow traffic that is damaging. Weight alone is not the problem; the problem is weight combined with frequency

Voluntary RUAs
Voluntary RUAs
! ! ! Contract entered into between municipality and developer in relation to a specific project Have been successfully used in connection with large construction projects such as wind farms and gas pipelines Primary mitigation measure for road impacts identified in SGEIS (Section 7.11.1.3) Pros: Provides a natural and cooperative framework to address road damage and repair Are not triggered by particular thresholds (weight or number of trucks) all developers traffic is covered Allows municipality to require developer to pay for all costs of implementing program: pre-use analysis, upgrades, post-use analysis, repairs, legal fees, etc. Cons: Subject to negotiation municipality may not get everything it wants or needs Not every developer whose traffic may damage roads will be willing to enter into an RUA

Whats in a good RUA?

! Freedom for Developer to choose haul routes and traffic volume ! Developer agreement to pay for towns consultants to oversee and implement agreement terms ! Developer to pay for agreed upon upgrades to haul route and for repairs as needed until project completion ! Reasonable and specific mitigation measures and means of evaluation of road for damage during and at completion of project ! Proper insurance to be provided ! Contact information for all parties to ensure good communication

Road Preservation Law

Road Use and Preservation Law

! ! May be adopted as local law or ordinance Must be reasonably related to public health, safety, or general welfare

Pros: Allows regulation of all traffic that can damage roads Can provide for significant penalties for violations

Cons: May be subject to legal challenges Must be carefully drafted

Road Preservation Supported by Engineering

Any road preservation program should be based on an engineering standard in order to predict anticipated damage and measure actual damage. Engineering standards provide for an objective approach to: ! Establish security/escrow amounts ! Discriminate between developers traffic and baseline traffic ! Discriminate between developers traffic and traffic of other heavy users ! Determine appropriate upgrades and repairs

Zoning
Can a municipality use zoning to ban gas drilling as a land use? ! 20 municipalities have adopted zoning bans prohibiting natural gas drilling ! 49 municipalities have adopted moratoria on natural gas drilling pending further study ! Some municipalities classified natural gas drilling as a heavy industrial use and prohibited it. DEC considers gas drilling to be a heavy industrial use ! Two zoning bans have been challenged in court

Zoning
(1) Anschutz Exploration Corp. v. Town of Dryden (Sup. Court Tompkins County) (September 2011) ! Anschutz is a driller of natural gas wells who holds oil and gas leases covering 22,200 acres in the Town. ! Anschutz has invested $4.7 million in acquiring leases and $400,000 in geological assessments and seismic evaluations. ! Town amended its Zoning Ordinance to clarify that the exploration and extraction of natural gas and petroleum in the Town was prohibited.

Zoning
(2) Cooperstown Holstein Corporation v. Town of Middlefield (Sup. Court Otsego County) (September 2011) ! Holstein owns and leases almost 400 acres of land in the Town to natural gas drilling companies. ! Town enacted a new zoning law which prohibited heavy industrial users (including oil and gas drilling) in the Town.

Zoning
Municipal Arguments:
(1) Municipalities have the legal authority to adopt zoning to regulate land uses (like gas drilling). (A) Article IX, Section 2 of the NYS Constitution provides broad home rule authority for municipalities to adopt local laws that: ! Relate to the property, affairs or government of the local government ! Are not inconsistent with the NYS Constitution and general State laws

Zoning
(B) Statute of Local Governments confers to municipalities the rights to: ! ! Adopt zoning regulations Comprehensively plan

(C) Zoning authority also found in Municipal Home Rule Law, Town Law, Village Law and General City Law

Zoning
(2) Plain language of the preemption statute: ! ECL 23-0303 expressly preempts all local laws relating to the regulation of the oil, gas and solution mining industry. ! Zoning regulations do not relate to the regulation of natural gas drilling. Zoning relates to local land use and is not expressly preempted.

Zoning
(3) Legislative history of the preemption statute: ! The legislative history does not indicate that the State Legislature intended to preempt local zoning powers. (4) Purpose of the preemption statute: ! ECL 23-0303 prevents a patch work of differing municipal regulations related to the operations of gas drilling. ! Zoning regulates land uses; it does not regulate the operation of gas drilling or frustrate the purpose of the preemption provision.

Zoning
(5) Municipalities expend significant resources developing comprehensive plans to guide land use development in their communities. Gas drilling may conflict with these plans. (6) Natural gas drilling has thrived and co-existed with zoning controls in other states (Texas, Colorado, etc.) Why not in New York? (7) Each municipality should decide for itself under its home rule powers whether natural gas drilling should be a permitted land use within its borders. NYSDEC and private companies should not make this decision for a municipality. (8) Courts have examined similar preemption language in the sand and gravel mining context and upheld a municipalitys right to ban mining through zoning powers.

Zoning
! Interpreting Almost Identical Preemption Statutes-(1) Mined Land Reclamation Law (1974-1991): This title shall supersede all other State and local laws relating to the extractive mining industry. ECL 23-2703 (2) Oil, Gas and Solution Mining Law (1972-present): This article shall supersede all other local laws or ordinances relating to the regulation of the oil, gas and solution mining industries. ECL 23-0303

Zoning
Frew Run Gravel Products, Inc. v. Town of Carroll, 71 N.Y.2d 126 (1987) ! A sand and gravel mine challenged the Towns zoning code which permitted mining only in certain areas of the Town. ! The Court of Appeals made 7 critical holdings: (1) The supersession of all local laws relating to the extractive mining industry was not intended to preempt the Towns zoning law establishing zoning districts where mining was permitted or prohibited.

Zoning
(2) Zoning laws relate not to the regulation of the mining industry but to the regulation of land uses generallyan entirely different subject matter. (3) By regulating land use a zoning ordinance inevitably exerts an incidental control over any of the particular uses or businesses which may be allowed in some districts but not others. (4) Local laws of general application which are aimed at legitimate concerns of a local government will not be preempted if their enforcement only incidentally infringes on a preempted field.

Zoning
(5) There is nothing in State law that was intended to preempt the Towns zoning law. (6) Allowing such an intent would drastically curtail the Towns Municipal Home Rule Law powers to adopt zoning laws in the best interest of the Town. (7) The purpose of the mining preemption was to prevent local governments from enacting laws that would conflict and frustrate the States encouragement of mining through standardized regulations. Zoning laws do not conflict with this purpose.

Zoning
Gernatt Asphalt Products, Inc. v. Town of Sardinia, 87 N.Y.2d 668 (1996). ! ! Sardinias zoning law prohibited mining anywhere in the Town. A mining company challenged the ban. The mining company argued that if land within the Town contained extractable minerals, State law obliges the Town to permit them to be mined somewhere in the Town. Court of Appeals made 2 critical holdings: (1) (2) the State law does not preempt the Town from adopting a zoning law that bans mining as a land use in the Town. a Town is not obliged to permit the exploitation of any and all natural resources within the Town as a permitted use if limiting the use is a reasonable exercise of its police powers to prevent damage to its citizens and to promote the interests of its community.

Zoning
Final Thoughts: ! Whether or not a municipality can adopt zoning bans (or moratoria) related to natural gas drilling is now in the hands of the courts. ! Lower court decisions could be issued by the first half of 2012. Appeals likely. Final appellate court decisions expected in late 2012 or 2013.

Other Municipal Laws

! NY Court of Appeals held: Local laws of general applicationwhich are aimed at legitimate concerns of a local governmentwill not be preempted if their enforcement only incidentally infringes on a preempted field. Frew Run
Gravel Products, Inc. v. Town of Carroll, 71 N.Y.2d 126 (1987).

! ECL preemption overrides all local laws relating to the regulation of gas drilling. It does not override other expressly granted State powers duly delegated to the municipality.

Other Municipal Laws

! State laws allow municipalities to adopt local laws on a variety of topics. These laws may incidentally infringe on gas drilling and may not be preempted. ! ! ! ! ! ! ! ! ! ! ! Wetlands Protection Laws (ECL Article 24, Title 5) Flood Plain Protection Laws (ECL Article 36) Solid Waste Management Laws (ECL Article 27) Air Pollution Laws (ECL 19-0709) Tree Preservation Laws (GML 96-b) Water Basin Laws (GML 99) Building Code Laws (Executive Law Article 18) Real Property Taxes (ECL 23-0303(2) & Real Property Tax Law) Road Protection Laws (VTL & ECL 23-0303(2)) Miscellaneous local laws

These local laws must apply equally to everybody in the Town. They cannot apply to gas drilling only.

Other Municipal Laws

Wetlands ! ECL 24-0501 each local government may adopt, amend, and upon filing of the appropriate freshwater wetlands map, implement a freshwater wetlands protection law or ordinance in accordance with this article to be applicable to all freshwater wetlands wholly or partially within its jurisdiction. ! Natural gas well sites and their access roads may impact wetlands. ! The Courts have upheld local wetlands laws as having only incidental effect on preempted mining operations. Patterson Materials Corp. v. Town of
Pawling, 264 A.D.2d 510 (2d Dept. 1999).

Other Municipal Laws

Flood Plains
! DECs SDGEIS: the SGEIS supports a finding that the [NYSDEC] not issue permits for high volume hydraulic fracturing operations of any well pad that is wholly or partially within a 100-year flood plain. ECL 36-0101 land use regulation is principally a matter of local concern; therefore local governments have the principal responsibility for enacting appropriate land use regulations that will meet federal standards and permit the sale of flood insurance in such communities. Municipalities adopt flood damage prevention local laws to regulate development in flood plains.

Other Municipal Laws

Solid Waste
! ECL 27-0711 nothing in this titleshall preclude the right of any governing body of atown to adopt local laws, ordinances or regulations [relating to solid waste] which are not inconsistent with this title or with any rule or regulation which shall be promulgated pursuant to this title. These ECL provisions allow municipalities to adopt local solid waste laws that are as stringent, if not more stringent, than State solid waste laws. Municipalities have adopted local solid waste laws regulating recycling, disposal of solid waste, land clearing waste, etc.

Other Municipal Laws

Air Pollution ! ECL 19-0709 nothing in this articleshall preclude the right of any governing body of atown to adopt local laws, ordinances or regulations [relating to air pollution] which are not inconsistent with this article or with any code, rule or regulation which shall be promulgated pursuant to this article These ECL provisions allow municipalities to enact local laws to control air pollution Municipalities have adopted local air pollution control laws regulating incinerators, brush burning, fuel burners, etc. Natural gas well sites may generate air emissions related to fugitive dust emissions on roads, etc.

Other Municipal Laws

Tree Preservation
! GML 96-b anytown is hereby empowered to provide for the protection and conservation of trees and related vegetation. Such legislative body may require appropriate conditions applicable to any activity involving the removal or destruction of trees or the substantial alteration of grade level around trees may include, where appropriate, requirements that the activity be done as specified in an approved landscape plan and that the removed trees be replaced by the planting of the same or alternate species of trees, and may provide, in connection therewith, required plantings for screening purposes. Such regulations, special conditions and restrictions, adopted in the exercise of the police power, shall be reasonable and appropriate to the purpose. The Courts have upheld local tree preservation laws as having only incidental effect on preempted mining operation. Seaboard Contracting & Material, Inc. v. Town of Smithtown, 147
A.D.2d 4 (2d Dept 1989).

Natural gas well sites and their access roads may clear forested areas.

Other Municipal Laws

Water Basins ! GML 99 the governing board of any town may by local law, ordinance or resolution regulate the construction, maintenance or use of open wells, cesspools, cisterns, recharging basins, catch basins or sumps and may require that such installations be suitably covered or surrounded with protective fencing. ! Natural gas well sites could use water impoundments.

Other Municipal Laws

Building Code
! Executive Law 381(2) every local government shall administer and enforce the uniform fire prevention and building code Many municipalities adopt local laws providing for the administration and enforcement of the State building code. State Building Code applies to industrial structures including oil and gas facilities. Town building inspectors may have to issue building permits for structures on gas drilling sites and conduct inspections.

Other Municipal Laws

Miscellaneous Local Laws
Legal Authority ! Town Law 130 the Town Boardmay enact, amend and repeal ordinances, rules, and regulations not inconsistent with law for the following purposes: (1) Building Code (2) Plumbing Code (3) Electric Code (4) Fire prevention (5) Dumping grounds (6) Use of streets and highway (7) Location and construction of driveways (8) Smoke, gas and wastes (9) Excavated lands (10) Unsafe buildings and collapsed structures

Other Municipal Laws

Other local laws could include: ! ! ! ! ! ! ! ! ! ! Steep slopes (Paterson Materials case) Timber harvesting (Paterson Materials case) Historic preservation (City of Buffalo v. National Fuel Corp., 1 Misc. 3d 857 (Buffalo City Court 2003)
*reversedgrounds unknown*

Stream protection Stormwater control Farm land protection Nuisance control (noise, light, air pollution, water pollution, etc.) Curb cuts Many different types of local laws are possible. Any local laws must be drafted properly by your Town Attorney to ensure that they dont run afoul of the preemption in ECL 23-0303(2)

Municipal Participation in NYSDEC Permitting Process for Natural Gas Wells

Municipal Considerations in NYSDECs SDGEIS
(subject to changes in SFGEIS)

DEC will limit simultaneous construction of well pads in a Town and wells in close proximity to each other. DEC will consider these measures in consultation with local governments to lessen cumulative community character impacts. DEC will notify local governments of each drilling permit application for high volume hydrofracturing. Well drillers must certify in their DEC permit application that the drilling is consistent with local land use and zoning laws including comprehensive plans. If not, additional DEC review is triggered. DEC created the Hydraulic Fracturing Advisory Panel to develop recommendations to avoid and mitigate impacts to local governments and communities. Municipalities should notify the Panel of potential concerns and issues.

Comments or questions?
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DISCLAIMER: This is an outline of issues and potential issues and is not intended as legal advice; this presentation is no substitute for legal advice and analysis from experienced counsel for your municipality.
Copyright 2012 Whiteman Osterman & Hanna LLP. All rights reserved.