Paul Andrews, the mayor of Malton, North Yorkshire - the closest town to Third Energy's planned KM8 fracking site - claims that a written ministerial statement issued in May "fundamentally changes" guidance to local planning authorities.
He argued that the statement requires local planning authorities to have regard to a new definition of fracking - which is less broad than one in previous guidance - but the Government submits that it was only "a restatement of policy".
At a hearing in London today, Mr Justice Holgate found that Mr Andrews' proposed judicial review was "unarguable".
He ruled: "In my judgment, the policy statement in question simply refers to two definitions of fracking... which should be considered by planning authorities when drawing up their developing plans."
After the hearing, Mr Andrews, who raised over Â£24,000 to fund the legal action, said: "I'm obviously disappointed and I'm going to consider an appeal."
The statement - which was issued by Business Secretary Greg Clark and James Brokenshire, Secretary of State for Housing, Communities and Local Government - stated that planning authorities were expected "to recognise the fact that Parliament has set out in statute the relevant definitions" of, among other things, fracking.
Marc Willers QC, for Mr Andrews, said the statement represented "a material change in planning policy", which was unlawful as the Government had not carried out an assessment of its effect on the environment or consulted over its introduction.
He added that the written ministerial statement had "given rise to confusion and uncertainty" as it would leave planning authorities wondering "which [definition] to plump for".
Rupert Warren QC, representing the Secretaries of State, said Mr Andrews' challenge was "premised upon...a failure to acknowledge what is actually stated" and an "inaccurate understanding of what is [and is not] required" by the written ministerial statement.
He said the effect of the statement was "limited" and "merely sets out an expectation that [planning authorities] will 'recognise' that Parliament has provided statutory definitions".
Speaking outside court before the hearing, Mr Andrews said: "What we are saying is that there should be a full public debate before any more changes are made to ministerial fracking policy and we think it's about time we had one. It is long overdue."
He added: "I think the whole thing is very sinister. The government aren't listening to anybody. All they are interested in doing is pleasing their friends in big business."