A pair of Delaware County property owners have raised a constitutional challenge to New York state’s ban on hydraulic fracturing, that, if successful, would have statewide and national import.
In 2011, geologists Thomas and Madison Woodward purchased 164 acres of land near Sidney for its rich natural gas reserves. Like other states, New York property law allows landowners to sell the surface rights to their property while still retaining their underground mineral rights. The Woodwards exercised that option, and now own only the mineral rights after selling the surface.
The property was an ideal location for hydraulic fracturing — the technique by which pressurized liquid is used to fracture bedrock to allow natural gas to flow more easily and be extracted. The Woodwards watched the regulations on hydraulic fracturing tighten from a moratorium to a statutory ban enacted by the state Legislature.
Represented pro bono by the Pacific Legal Foundation, a national property rights and economic liberty public interest law firm with 18 victories at the United States Supreme Court, the Woodwards have brought a Fifth Amendment challenge to New York’s natural gas regulations in the case of Woodward v. Lefton in the United States District Court for the Northern District of New York.
The Fifth Amendment provides that “private property” shall not “be taken for public use without just compensation.” Although the Fifth Amendment originally applied only to the federal government, the Supreme Court determined that these property protections are also fundamental liberties of American citizens protected against the actions of state and local governments under the 14th Amendment, which provides that no state “shall deprive any person of life, liberty, or property without due process of law.”
Although the Takings Clause of the Fifth Amendment is best-known in the context of eminent domain — the process by which a government appropriates private property for a public purpose — a long line of Supreme Court jurisprudence has held that these protections also apply to “regulatory takings,” which are circumstances in which the government has so heavily regulated private property that the practical effect is as if the government has actually taken the property from its owner by depriving them of its use, even though the private citizen is still the legal owner of the property.
Under what is known as the “police power” under the 10th Amendment, state governments have the authority to enact laws that are rationally-related to promoting the public health, safety, and welfare, which includes the power to regulate land use, as decided in Euclid v. Ambler Realty Co., the famous Supreme Court case upholding the constitutionality of zoning laws. However, as Justice Oliver Wendell Holmes noted in 1922 in one of the most famous cases of regulatory takings, Pennsylvania Coal Company v. Mahon, “The general rule is that, while property may be regulated to a certain extent, if regulation goes too far, it will be recognized as a taking.”
The Supreme Court noted in later cases that determining whether a regulation “goes too far” has “proved to be a problem of considerable difficulty.” In the landmark case of Penn Central Transportation Company v. City of New York, the Supreme Court set forth three factors for determining whether a land use regulation restricts property use to such an extent that it constitutes a taking requiring the government to pay just compensation: (1) “The economic impact on the claimant,” (2) “the extent to which the regulation has interfered with distinct investment-backed expectations,” and (3) “the character of the governmental action.”
When it comes to the economic impact a regulation imposes on a property owner, the Supreme Court recognized in Lucas v. South Carolina Coastal Council that a Fifth Amendment regulatory taking occurs when a restriction is so severe that the “regulation denies all economically beneficial or productive use of land,” in which case, the government must pay the landowner just compensation for the regulation to stand.
The challengers in Woodward v. Lefton argue that New York’s fracking ban is a regulation that renders their mineral rights economically worthless. If the challengers succeed in making such a showing, under the constitutional test from Lucas v. South Carolina Coastal Council, the government must then demonstrate that the restriction is “inherent in the title itself, in the restrictions that background principles of the State’s law of property and nuisance already placed upon land ownership.” That means a land use restriction is allowed to completely deprive a property’s economic value only if another private property owner would be able to stop the same kind of use in a private nuisance lawsuit.
The issues in Woodward v. Lefton will likely center on whether there is any other economically viable use of the challengers’ mineral rights in light of New York’s restrictions, and whether the environmental debate over hydraulic fracturing would be sufficient to allow a private lawsuit to accomplish the same result as New York’s statewide policy.
Even when regulations aim at public welfare, the Constitution does not allow placing the entire burden on individual property owners. As Justice Oliver Wendell Holmes recognized a century ago, “a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.”