Wednesday, February 22, 2012

Fracking ban tests Constitutional rights from the ground up Lawyers reflect on Dryden ruling, pending Middlefield case

The New York State Supreme Court’s decision Tuesday on the Dryden Home Rule case favoring opponents of hydraulic fracturing sets the stage for critical legal battles to come.

The decision by 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by Anschutz Exploration Corporation, which argued that state permitting laws regulating oil, gas and mineral extraction superseded local ordinances. (New York's Supreme Court is at low court in the state's judicial sytem.) 

How important is this? Attorneys with stakes on both sides of the fracking fight in New York state told me that the decision is the first block on which a body of case law will be assembled. That’s relevant because the Rumsey ruling will be a consideration in subsequent rulings. But it also leaves room for additional interpretation and arguments that may come with an appeal, or with counter suits.

Elmira attorney Chris Denton, who represents landowners seeking mineral leases, explained that the ruling involved “issues of first impression.” In this regard, lower court arguments “tend, on both sides, to need more time to develop and flesh out.  There is little or no time for vetting. On the appellate level, more parties will weigh-in and more points of view will be discussed. The issues in this case have statewide and national significance and will therefore generate many articles and panel discussions prior to the filing of appellate briefs.”

Deborah Goldberg, attorney for the environmental advocacy organization, Earthjustice, agreed with Denton’s assessment that this was the first of multiple cases testing the home rule issue, but she also sees it as a milestone. “As the first decision on the issue, it’s definitely helpful” to parties arguing that municipalities have the right to control land use within their borders. This argument leaves regulation of the technical aspects of drilling to the state, but not land-use decisions. “Towns see this as a matter of local aesthetics. They want to protect their rights for a community to determine its own character, rather than having a company decide that.”

Industry attorneys have the options of appealing the case, or filing a suit against the town for impeding the rights of town residents to develop their mineral resources. This type of litigation, known as a “takings” suit, was filed in September by Cooperstown Holstein Corp. against Otsego County’s Town of Middlefield, after the town passed a drilling ban similar to Dryden’s. According to the suit, the plaintiff leased nearly 400 acres to a gas drilling company, and the ban would prohibit the parties from reaping the economic benefits of that lease. Drilling opponents argue that the rights of property owners and gas companies to profit from gas lease arrangements are not unlimited.

The outcome of the Middlefield case, which is pending, will serve as another critical test that could also apply to New York state’s permitting policy, now under final revision and review in the form of a document called the SGEIS, that would ban drilling anywhere within the New York City and Syracuse watersheds, and other sensitive places.

Tom West, the attorney for Anschutz, said today he thought the Rumsey ruling should be contested on principal. He added that he was unsure whether Anschutz would appeal the decision, however, because the industry is becoming discouraged by regulatory road blocks in New York, and its leases are nearing expiration in Dryden. Regardless, West fully expects the outcome of the pending Middlefield case to be appealed by the losing side because of the stakes involved. "They will list every reason they can for this to go to the Court of Appeals," he said. "This needs to work its way through the system."

This legal fight is relevant to anybody living over the vast footprint of the gas-rich Marcellus and Utica shales, extending north from Pennsylvania into upstate New York, and west into Ohio. The Dryden ruling, Denton said, “will galvanize the landowners who want to develop their natural resources.” Goldberg, likewise, sees a growing number of elected officials taking up the fight representing towns in upstate New York where hydraulic fracking is seen as a dangerous intruder.

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