Anti-Fracking Laws in New York Towns Upheld on Appeal

Anti-fracking laws passed in two New York towns were upheld by an appeals court, which rejected arguments by a dairy farm and a Norwegian energy company that the bans are superceded by state law.

An appellate panel of the New York State Supreme Court in Albany today ruled that drilling bans in the towns of Dryden and Middlefield don’t conflict with state regulations for the oil and natural-gas industry.

The state law seeks to protect the right of the general public, not just the owners of oil and gas properties, “a goal which is realized when individual municipalities can determine whether drilling activities are appropriate for their respective communities,” the court said.

The bans are aimed at stopping hydrofracturing, a process known as fracking that involves forcing millions of gallons of chemically treated water underground to break up rock and free trapped natural gas. The practice has sparked environmental concerns and lawsuits across the U.S.

“We stood up for what we knew was right,” Mary Ann Sumner, Dryden’s town supervisor, said in a statement. “The people who live here and know the town best should be the ones deciding how our land is used, not some executive in a corporate office park thousands of miles away.”

Parts of New York sit atop the gas-rich Marcellus Shale formation, and state officials have sought to balance prospects for the booming economic development seen in Ohio and Pennsylvania against environmentalists’ warnings that fracking may damage water supplies and make farmland unusable.

Dairy Farm

Attorneys for Norse Energy Corp. and the dairy farm, Cooperstown Holstein Corp., urged the appeals court in March to overturn lower-court rulings in favor of the two towns. Scott R. Kurkoski, an attorney with Levene Gouldin & Thompson LLP representing the dairy farm, said he plans to appeal the decision to the state’s highest court in Albany.

“The Appellate Division interpreted the oil and gas law by relying on a mining case decided by the Court of Appeals,” Kurkoski said in a statement. “The laws and the public policy behind each law are vastly different. The mining law specifically allows zoning but the oil and gas law does not.”

High Court

“New York will never have an effective energy policy if our courts equate the state’s interests in promoting the production of sand and gravel with the production of energy,” Kurkoski said. “It is clear that only the Court of Appeals can resolve this conflict.”

Thomas West, an attorney representing Norse Energy, didn’t immediately return an e-mail seeking comment on today’s ruling.

The dairy farm, which signed two oil and gas leases in 2007 with Elexco Land Services Inc. to explore and develop natural gas resources under the property, said in a September 2011 lawsuit that Middlefield, a town of about 2,000 people 50 miles (80 kilometers) west of Albany, had no authority to enact a ban because the activity is governed by state law.

Anschutz Exploration Corp., a Denver-based affiliate of billionaire Philip Anschutz’s closely held company, sued Dryden, a town of 14,000 people about 75 miles west of Middlefield, the same month.

Justice Phillip Rumsey in Cortland upheld Dryden’s ban on Feb. 21, 2012, and Justice Donald Cerio Jr. in Wampsville ruled days later that Middlefield’s was also legal. The cases were consolidated for appeal. Norse Energy, a Lysaker, Norway-based explorer whose U.S. unit filed for bankruptcy protection in December, replaced Anschutz Exploration in the Dryden appeal.

‘An Inspiration’

“Today’s victory stands as an inspiration for communities seeking to protect themselves from the consequences of the fracking-enabled oil and gas drilling rush,” Deborah Goldberg, an attorney with the nonprofit group Earthjustice who represented Dryden in the appeal, said in a statement. “Today’s ruling signals to local officials that they are indeed on solid legal ground.”

Just a week before the appeals court in Albany heard the arguments, Justice Robert B. Wiggins in Livingston County upheld a ban in Avon, a town and village of about 11,000 people about 19 miles southwest of Rochester.

The Marcellus Shale beneath parts of New York, Ohio, West Virginia, Pennsylvania, Maryland and Virginia has an estimated 400 trillion cubic feet of natural gas, one of the largest such formations in the world, according to trade groups that represent companies with natural gas-leases in New York state.

Fracking Bans

Fracking already is banned in more than 50 New York towns, while dozens more have moratoriums in place or are considering bans, according to Karen Edelstein, a geographic information-systems consultant in Ithaca.

U.S. District Judge Nicholas G. Garaufis in Brooklyn, New York, in September threw out a lawsuit by New York Attorney General Eric Schneiderman seeking a full environmental review of hydraulic fracturing. Garaufis granted a motion by the U.S. Environmental Protection Agency to dismiss the case, finding that the development plans are in the early stages and the threat of harm is speculative.

Schneiderman sued the Delaware River Basin Commission, the EPA and other federal agencies in May 2011 to force a fuller assessment of the environmental impact that gas development could have on the state’s water supply.

River Commission

The river commission, created in 1961, is a pact among New York, Delaware, New Jersey, Pennsylvania and the federal government that is responsible for water quality in the Delaware River Basin, which supplies drinking water to the four states.

Schneiderman said in the lawsuit that the commission’s proposed regulations would allow fracking at 15,000 to 18,000 gas wells without a full environmental review. If the regulations are issued, New York’s moratorium will be lifted.

New York said it has shown that fracking generates millions of gallons of wastewater contaminated with toxic metals and radioactive substances, and that companies using the process in Pennsylvania have violated the law 1,600 times, harming the state’s water.

The cases are Anschutz Exploration Corp. v. Dryden, 902/2011, New York Civil Supreme Court, Tompkins County (Ithaca); and Cooperstown Holstein Corp. v. Town of Middlefield, 1700930/2011, New York Civil Supreme Court, Otsego County (Cooperstown).

Before it's here, it's on the Bloomberg Terminal. LEARN MORE