(Corrects quotation in first paragraph under ‘Prudent Operator’ subheading in story published June 3.)
June 3 (Bloomberg) -- New York’s cities and towns shouldn’t be able to block hydraulic fracturing within their borders because such prohibitions are trumped by state law, opponents of the bans told the state’s highest court.
Lawyers defending such measures enacted by the upstate towns of Dryden and Middlefield argued to the Court of Appeals in Albany today that local governments are within their rights to bar fracking, which uses chemically treated water to free gas trapped in rock.
If pro-fracking forces prevail, they will still face a six-year-old statewide moratorium instituted in 2008. Governor Andrew Cuomo, who inherited the ban, may decide by next year whether to lift it. If the court rules for the towns, the lifting of the state ban may instead leave a patchwork of municipalities across the nation’s third-largest state by population that allow or block the drilling method.
Fracking in states from North Dakota to Pennsylvania has helped push U.S. natural gas production to new highs in each of the past seven years, according to the U.S. Energy Information Administration, while the practice has come under increasing scrutiny from environmental advocates.
Parts of New York sit above the Marcellus Shale, a rock formation that the Energy Information Administration estimates may hold enough natural gas to meet U.S. consumption for almost six years.
The state barred fracking in 2008 while studying the environmental effects of the process, which is allowed in more than 30 states. Since then, more than 75 New York towns have banned fracking, while more than 40 have passed resolutions stating they support it or are open to it, according to Karen Edelstein, an Ithaca consultant affiliated with FracTracker Alliance, which analyzes the effects of oil and gas drilling.
Other jurisdictions are also adopting similar laws, with Beverly Hills last month becoming the first municipality in California to prohibit fracking. The industry also has sued the Colorado cities of Fort Collins, Lafayette and Longmont over bans.
Scott Kurkoski, an attorney representing a dairy farm in the town of Middlefield that sued the township to overturn a ban passed in August 2011, told the court today that the state’s Oil, Gas and Solution Mining Law prevents local governments from enacting zoning ordinances that ban fracking. The dairy farm signed leases in 2007 to explore and develop natural-gas resources under the property.
“What we know is that there right now are 70 municipalities in the state of New York who have banned oil and gas drilling,” Kurkoski said. “Are we going to let 932 towns decide the energy policy of New York state?”
In September 2011, Anschutz Exploration Corp., an affiliate of billionaire Philip Anschutz’s closely held company, sued Dryden over its ban after buying about 22,000 acres of gas leases there. Norse Energy, a Lysaker, Norway-based explorer whose U.S. unit filed for bankruptcy in December, replaced Anschutz Exploration in the Dryden appeal.
Separate state judges dismissed the lawsuits challenging the bans in February 2012. Those rulings were affirmed by an intermediate appellate court in Albany in May 2013. A judge in Livingston County in April dismissed another lawsuit seeking to overturn a ban in Avon, a town of about 7,000 people south of Rochester.
While state law prohibits municipalities from passing laws or ordinances related to oil, gas and mining regulations, the zoning restrictions enacted in Dryden and Middletown don’t qualify as attempts to regulate the industry and aren’t preempted, the appellate court said in the May 2013 ruling.
Attorneys for the towns contended today they have the right to enact zoning laws as long as they don’t impede on state regulations.
“It has to be a local law relating to the regulation of an industry,” John J. Henry, a lawyer representing the town of Middlefield, told the judges. “This court has consistently held that zoning law is not a law relating to the industry, whether it’s mining, whether it’s alcohol.”
Deborah Goldberg, an attorney for the nonprofit group EarthJustice representing Dryden, said the state legislature can take away municipalities’ rights to specific zoning laws, yet usually leaves protections in place when it does so.
“It doesn’t leave the municipalities entirely at the mercy of the industry,” Goldberg said.
Thomas West, an attorney for Norse Energy, said the industry may decide to turn its back on the state if local bans are allowed.
“No prudent operator is going to a town even if they allow it if they’re going to be subject to a 3-2 local vote that could change,” West said. “It has a very chilling effect because it’s very hard for operators to justify spending hundreds of millions of dollars to come in and not have regulatory certainty.”
Cuomo, a 56-year-old Democrat, is trying to balance the prospect of the type of economic development seen in Ohio and Pennsylvania against claims by environmental groups that drilling will contaminate drinking water.
Cuomo took office in 2011. The following year he put Health Commissioner Nirav Shah in charge of studying how drilling may affect residents’ well-being. The governor had said he would base his determination on Shah’s conclusions. Shah resigned last month to take a job with the Kaiser Foundation Health Plan in southern California.
The review would continue under acting Health Commissioner Howard Zucker, Bill Schwarz, a department spokesman, said in an e-mailed statement in April when Shah’s departure became public.
Joe Martens, head of the state’s Environmental Conservation Department, told state lawmakers in January that he won’t issue fracking regulations until at least April 2015, signaling that Cuomo probably won’t make a decision before he faces re-election in November.
Rich Azzopardi, a Cuomo spokesman, didn’t respond to a request seeking comment on the state’s review.
The court is expected to take at least four to six weeks to rule.
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).
To contact the reporters on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at