Status of Home Rule appeals uncertain in fracking test cases

Appeals of two high-profile cases that will influence the future of shale gas development in New York State remain uncertain.

Lawyers working on an appeal challenging a fracking ban by the Town of Middlefield board face a costly legal battle with uncertain sources of funding, according to several lawyers close to the case. Likewise, a gas company facing a similar ban in Dryden remains unenthusiastic about financing an appeal. Both are test cases in the “home rule” issue that will determine the extent in which state law supersedes local law in controlling the gas industry operations within municipal borders.

On February 24, acting Supreme Court Justice Donald F. Cerio, Jr. ruled in favor of the Town of Middlefield’s ban on hydrofracking. The decision was in response to a claim by Jennifer Huntington, a dairy farmer and president of Cooperstown Holstein Corporation, that the ordinance denied her rights to reap economic benefits of a lease to develop mineral rights on 400 acres. Scott Kurkoski, of Levene Gouldin & Thompson, said today his firm is continuing to work on Huntington’s appeal, with the expectation that a coalition representing pro-drilling landowners will chip in to help cover legal expenses. “It’s expensive, and so far Susan Huntington has taken it on by herself,” he said. “I expect landowners will step up.”

In a separate ruling issued days before the Middlefield decision, Supreme Court justice Phillip R. Rumsey upheld the Town of Dryden’s right to ban mineral extraction activities. The case stemmed from a complaint filed by Anschutz Exploration Corporation, which argued that state permitting laws regulating oil, gas and mineral extraction superseded local ordinances. Tom West, an attorney for Anschutz, told me he did not expect the company to pursue an appeal, which would be expensive. Leaseholds were nearing expiration in the town, and the low price of natural gas and regulatory uncertainty in New York were other disincentives.

The uncertainty of the two cases counters early expectations that the industry and drilling proponents would instantly and aggressively pursue appeals. Meanwhile, victories by fracking opponents in Middlefield and Dryden are likely encouragement other towns to enact fracking bans.

"For the last year or so, the gas industry has been threatening (towns),'you're going to lose in court, so don't even waste your money'," Town of Middlefield attorney David Clinton told Reuters news last month. "So (the rulings) certainly embolden other towns." Today, Clinton told me he expected the matter would ultimately be decided by the legislature.

New York State lawmakers have already passed temporary fracking moratoriums, but they have been largely symbolic because the DEC is not permitting shale gas wells until policy has been established with a pending environmental review, called the Supplemental Generic Environmental Impact Statement (SGEIS). While pro and anti-fracking activists have been focused on influencing the outcome of that review, they will begin shifting their efforts to elected officials with the release of that document, expected within months.

Supporting legislation against home rule would require arguing for more state control at the expense of local autonomy. That could put Republicans and conservatives— traditional supporters of the industry -- in a difficult position as they ramp up their campaigns in election year 2012.

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