The author reviews updates and developments to oil and gas law in New York

Holland, Nathaniel I.

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New York Oil and Gas Update

Texas A&M University School of Law

Texas Wesleyan Law Review Volume 19 Issue 2 Article 24 3-1-2013 New York Oil and Gas Update Nathaniel I. Holland Follow this and additional works at: https://scholarship.law.tamu.edu/txwes-lr Recommended Citation Nathaniel I. Holland, New York Oil and Gas Update, 19 Tex. Wesleyan L. Rev. 497 (2013). Available at: https://doi.org/10.37419/TWLR.V19.I2.22 This Article is brought to you for free and open access by Texas A&M Law Scholarship. It has been accepted for inclusion in Texas Wesleyan Law Review by an authorized editor of Texas A&M Law Scholarship. For more information, please contact aretteen@law.tamu.edu. NEW YORK OIL AND GAS UPDATEBy: Nathaniel I. Holland'TABLE OF CONTENTSI. ZONING CASES.......................................... 497II. LEGISLATION............................................ 498III. ADDITIONAL SIGNIFICANT CASES ........................ 499I. ZONING CASESThe town of Dryden (the "Town") amended its zoning ordinance onAugust 2, 2011, to ban all activities related to the exploration for, andproduction or storage of, natural gas and petroleum. In AnschutzExploration Corp. v. Town of Dryden, an oil and gas operator holdingleases covering more than one-third of the acreage in the Town soughtto invalidate the ordinance, claiming that the ordinance was pre-empted by the Oil, Gas and Solution Mining Law ("OGSML"), undersection 23-0303 of the New York Environmental Conservation Laws.'The Supreme Court of Tompkins County granted summary judgmentto the Town.4 Section 23-0303 provides that "[t]he provisions of thisarticle shall supersede all local laws or ordinances relating to the regu-lation of the oil, gas and solution mining industries; but shall not su-persede local government jurisdiction over local roads or the rights oflocal governments under the real property tax law."' The court held1. Attorney with Steptoe & Johnson PLLC; J.D. 2006, Cornell Law School; A.B.2002, Princeton University.2. Anschutz Exploration Corp. v. Town of Dryden, 940 N.Y.S.2d 458, 461 (Sup.Ct. 2012).3. Id. at 467.4. Id. at 474.5. N.Y. ENVTL. CONSERV. LAw § 23-0303 (Consol. 1992).497DOI: https://doi.org/10.37419/TWLR.V19.I2.22 1Holland: New York Oil and Gas UpdatePublished by Texas A&M Law Scholarship, 2022TEXAS WESLEYAN LAW REVIEWthat it was constrained by the prior decision of the New York Court ofAppeals in Frew Run Gravel Products, Inc. v. Town of Carroll, whichupheld a town ordinance banning surface mining operations despite asimilar provision in the Mined Land Reclamation Law.6 The courtheld that the cited provision did not expressly preempt local regula-tion of land use, but only regulations dealing with operations.' Thecourt also held that the town-wide ban on oil and gas operations waspermissible.'In Cooperstown Holstein Corp. v. Town of Middlefield, an oil andgas owner-lessor filed a lawsuit in the Supreme Court of OtsegoCounty to declare the town of Middlefield's zoning ordinance banningoil and gas operations invalid under the same provision cited in An-schutz. The court granted Defendant Township's motion for sum-mary judgment."o The court noted that "the OGSML supersessionclause preempts local regulation solely and exclusively as to themethod and manner of oil, gas and solution mining or drilling, butdoes not preempt local land use control." 1II. LEGISLATION2011 Session Laws of New York, chapter 501 amended the NewYork property law, adding section 329-a, which provides with regardto severed oil and gas interest in and under the Allegany State Park,that such interests that have not been "used" for twenty years prior tothe effective date of the Act shall extinguish and revert to the stateunless a statement of claim is filed within two years of the effectivedate of the Act.12 An interest is deemed "used" if:(a) oil and gas is produced; (b) operations are being conducted forinjection, withdrawal, storage or disposal of water, gas or other fluidsubstances; (c) rentals or royalties are being paid by the ownerthereof for the purpose of delaying or enjoying the use or exerciseof such rights; (d) any such use is being carried out on any tract withwhich such oil and gas interest is being unitized or pooled for pro-duction purposes; or (e) taxes are paid on such oil and gas interestby the owner thereof.16. Anschutz Exploration Corp., 940 N.Y.S.2d at 466 (citing Frew Run GravelProds., Inc. v. Town of Carroll, 518 N.E.2d 920 (N.Y. 1987)).7. Id. at 467.8. Id. at 471 (citing Gernatt Asphalt Prods., Inc. v. Town of Sardinia, 664 N.E.2d1226 (N.Y. 1996) and noting that "fiun Matter of Gernatt, the Court of Appeals re-jected the argument that if the land within a municipality contains extractable miner-als, then the municipality is required to permit them to be mined somewhere").9. Cooperstown Holstein Corp. v. Town of Middlefield, 943 N.Y.S.2d 722, 723-24(Sup. Ct. 2012).10. Id. at 729-30.11. Id. at 730.12. 2011 Sess. Laws ch. 501, §§ 1-2 (McKinney) (approved and effective Sept. 23,2011).13. Id.498 [Vol. 192Texas Wesleyan Law Review, Vol. 19 [2022], Iss. 2, Art. 24https://scholarship.law.tamu.edu/txwes-lr/vol19/iss2/24DOI: 10.37419/TWLR.V19.I2.22The notices of claim must recite the owner and address, a descriptionof the land, and a copy of the instrument creating the interest. 4 Thenotices must be filed in the Office of the Clerk of the County ofCattaraugus.'s2011 Session Laws of New York, chapter 568 amends the New Yorkparks, recreation and historic preservation law, adding section 13.31,which provides that no oil and gas operations may take place in theAllegany State Park without obtaining a surface access permit fromthe New York State Office of Parks Recreation and Historic Preserva-tion. 6 Such permits may limit the number of wells; shall precludestorage or disposal of liquid or solid wastes in the park; may limitaccess roads; may restrict seasonal access to minimize impacts on rec-reational uses; and shall require the permittee to pay funds sufficientto pay for monitoring of impacts." Additionally, the permits mustimpose insurance requirements, financial security requirements, andshall mandate corrective actions necessary to restore adverseimpacts.1 8III. ADDITIONAL SIGNIFICANT CASESIn Alexander v. Chesapeake Appalachia, LLC, the United StatesDistrict Court for the Northern District of New York stayed an actionby lessors to invalidate oil and gas leases, holding that a dispute overwhether force majeure applied to prevent termination was covered byan arbitration clause in the lease, pursuant to the Federal ArbitrationAct.' 9In Aukema v. Chesapeake Appalachia, LLC,2 0 the United StatesDistrict Court for the Northern District of New York dismissed a mo-tion to stay an action to invalidate leases without arbitration clauses,pending the arbitration in Alexander v. Chesapeake Appalachia,LLC,21 involving similar issues.2 2 The district court noted that theleases at issue contained different provisions and that none of theplaintiffs would be bound by the arbitration in Alexander.2 3 The dis-14. Id.15. Id.16. 2011 Sess. Laws ch. 568, § 1 (McKinney) (approved and effective Sept. 23,2011).17. Id. § 1(3)(a)-(d), (f).18. Id. § 1(3)(h)-(j).19. Alexander v. Chesapeake Appalachia, LLC, 839 F. Supp. 2d 544, 554-55(N.D.N.Y. 2012).20. Aukema v. Chesapeake Appalachia, LLC, 839 F. Supp. 2d 555, 561 (N.D.N.Y.2012).21. Alexander, 839 F. Supp. 2d at 554-55.22. Aukema, 839 F. Supp. 2d at 561.23. Id. at 560-61.4992013] NEW YORK3Holland: New York Oil and Gas UpdatePublished by Texas A&M Law Scholarship, 2022TEXAS WESLEYAN LAW REVIEWtrict court also found that the plaintiffs would be prejudiced as theywould be unable to release their mineral rights.2 4In Coalition for Responsible Growth & Resource Conservation v.United States Federal Energy Regulatory Commission, environmentalgroups challenged the issuance of a Certificate of Public Convenienceand Necessity by the Federal Energy Regulatory Commission("FERC") to the Central New York Oil and Gas Company for theMARC I Hub Line Project natural gas pipeline." Plaintiffs chal-lenged FERC's decision that an environmental impact statement("EIS") was not required under the National Environmental PolicyAct ("NEPA"). 26 The court held that it must consider: (1) whetherthe agency took a "hard look" at the possible effects of the proposedaction; and (2) if the agency had taken a "hard look," whether theagency's decision was arbitrary or capricious. 27 The Second Circuitaffirmed, reviewing FERC's environmental assessment and subse-quent finding of no significant impact and concluding that "FERCtook a 'hard look' at the possible effects of the Project and that itsdecision that an EIS was not required was not arbitrary or capri-cious."" The court specifically concluded that "FERC reasonablyconcluded that the impacts of [Marcelluis Shale] development are notsufficiently causally-related to the project to warrant a more in-depthanalysis" and that FERC took "concrete steps to address environmen-tal concerns" relating to incremental effects of the project on forestsand migratory birds.2 9In Weiden Lake Property Owners Association, Inc. v. Klansky, theSupreme Court of Sullivan County granted summary judgment infavor of a property owners' association in a declaratory judgment ac-tion against the landowner and operator, holding that deed covenantsrestricting property use to single family homes and restricting com-mercial uses barred oil and gas development under a lease.3 0 Thecourt also granted summary judgment in favor of the landowner onthe operator's cross-claims for rescission of the lease and fraud in theinducement, finding that the operator had notice of the protectivecovenants prior to taking the lease." The court additionally deniedthe operator's request to file an amended answer with additional24. Id. at 561.25. Coal. for Responsible Growth & Res. Conservation v. U.S. Fed. Energy Regu-latory Comm'n, No. 12-566-ag, 2012 WL 2097249, at *1 (2d Cir. June 12, 2012).26. Id. at *2; 42 U.S.C. §§ 4321-47 (2006).27. Coal. for Responsible Growth & Res. Conservation, 2012 WL 2097249, at *1(citing Nat'l Audubon Soc'y v. Hoffman, 132 F.3d 7, 14 (2d Cir. 1997)).28. Id. at *2.29. Id.30. Weiden Lake Prop. Owners Ass'n, Inc. v. Klansky, No. 3885/09, 2011 WL3631955, at *4 (N.Y. Sup. Ct. Aug. 18, 2011).31. Id. at *5.500 [Vol. 194Texas Wesleyan Law Review, Vol. 19 [2022], Iss. 2, Art. 24https://scholarship.law.tamu.edu/txwes-lr/vol19/iss2/24DOI: 10.37419/TWLR.V19.I2.222013] NEW YORK 501cross-claims for unjust enrichment and unilateral and mutual mistake,on the same grounds.3232. Id.5Holland: New York Oil and Gas UpdatePublished by Texas A&M Law Scholarship, 2022

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