In the summer of 2012, the town of Avon, New York passed Local Law T-A-5-2012 entitled “Moratorium on and Prohibition of Gas and Petroleum Exploration and Extraction Activities Underground Storage of Natural Gas and Disposal of Natural Gas or Petroleum Extraction Exploration and Production Wastes.” The one-year moratorium on natural gas extraction and underground storage began in in June 2012 and includes a “grandfather clause” for existing wells. Lenape Resources, Inc. (“Lenape”) who operates 16 to 20 wells in the Avon area on about 5,000 acres, filed a lawsuit seeking to overturn the moratorium by asserting that the local law was preempted by state law, invalid, unreasonable, arbitrary, oppressive, and unconstitutional. Lenape requested an injunction to stop enforcement of the law and sought actual and compensatory damages of no less than $50 million.
On March 15, 2013, Judge Robert B. Wiggins of the State of New York, Supreme Court, County of Livingston, entered an order dismissing Lenape’s 10-count lawsuit. See Decision and Order/Judgment.
The Court determined that New York state court precedents have established that local bans based on zoning laws do not amount to attempts to regulate the oil and gas industry and therefore are not preempted by the state’s Oil, Gas and Solution Mining Law. This ruling follows recent decisions in other New York counties upholding a town’s home rule power to limit hydraulic fracturing. The moratoriums on fracking in the towns of Dryden and Middlefield are being appealed, with arguments scheduled for March 22, 2013.
This post was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.
