Fractured Communities: Hydraulic Fracturing and the Law in New York State

Article excerpt

The regulation of hydraulic fracturing has been debated on many fronts and that debate will now be heard before New York's highest court in the Dryden (1) and Middlefield (2) cases. The New York Court of Appeals will have to decide whether or not municipalities have the authority to ban hydraulic fracturing within their borders. The answer to this question will undoubtedly affect a multitude of stakeholders. Municipal legislators, homeowners, environmental advocates, and industry representatives will all be eagerly awaiting the answer to a question that has been looming in New York: Will hydraulic fracturing, specifically high-volume horizontal hydraulic fracturing, be permitted in the state? All aspects of hydraulic fracturing, from the process to the environmental impacts, have been fruitfully discussed and vigorously debated. Now the focus is on the small communities in New York's southern tier that sit above shale gas, and their power to regulate an activity of statewide importance. Some communities welcome hydraulic fracturing while others have passed local laws banning the activity completely. In an effort to discuss the potential impacts of permitting or banning hydraulic fracturing on New York's towns and landowners, the Albany Law Review sponsored a symposium entitled "Fractured Communities: Hydraulic Fracturing and the Law in New York State" in September 2013. This issue contains articles on topics that were presented, discussed, and debated at the symposium.

The first article is written by Roderick M. Hills, Jr., the William T. Comfort, III Professor of Law at New York University School of Law and author of the amicus brief filed in the Appellate Division, Third Department on behalf of ten law professors in the Dryden and Middlefield cases. (3) Professor Hills examines whether a presumption against state preemption is the law in New York by analyzing the home rule powers granted to municipalities in the New York Constitution. He suggests that the language in Article IX, section (3)(c) of the New York Constitution, requiring that home rule powers of municipalities be "liberally construed," creates a qualified presumption against state law preemption of local laws. Professor Hills also contends that the ambiguity of the preemption clause of the Oil, Gas, and Solution Mining Law should be read in favor of preserving local power. Lastly, Professor Hills suggests that although the presumption against preemption can be rebutted as where local laws impose external costs on non-residents or disrupt settled and investment-backed expectations of local residents, in the case of hydraulic fracturing, the presumption against preemption actually preserves the expectations of local property owners.

In the next article, Elisabeth N. Radow examines the interaction between gas leases, residential mortgages, and the secondary mortgage market. (4) Radow suggests that the mere signing of a gas lease can affect the value of a person's home and the multiple rights associated with homeownership. Furthermore, the cumulative effect of high-volume hydraulic fracturing on residences, Radow contends, will pose a potential threat to the nation's $6.7 trillion secondary mortgage market. This article provides a novel analysis to the potential negative effects that gas leases can have on homeowners sitting above the Marcellus Shale. Specifically, Radow delves into possible water contamination, structural damage to homes, and the ability of gas companies to sell and assign the gas lease without homeowner consent. In an attempt to temper some of these negative consequences associated with gas leases, Radow proposes a few solutions. These solutions include: requiring the Federal Housing Finance Agency, as a condition to transitioning the secondary mortgage market to private companies, to create underwriting guidelines which fully address the risks of high-volume hydraulic fracturing; requiring property appraisers that value properties in shale regions to understand the lifecycle of natural gas extraction; creating a national registry of all gas leases that encumber residential property; and reallocating risk to industry. …