More on the history of New York’s fracking ban

I accepted a recent assignment for the Press & Sun-Bulletin – recounting how fracking was stopped in New York – with feelings of both eagerness and uneasiness.

Eagerness was due to having a chance to recap the history of a story I have been covering for seven years. The uneasiness stemmed from how I would do this in a newspaper-length article on a 48-hour deadline.

The results ran both in abbreviated and longer versions in the Press & Sun-Bulletin, Pressconnects, and this blog. The long version was 3,700 words -- about 10 times the length of a standard newspaper article. But it was still short considering the scope of the subject. By comparison, I needed more than 90,000 words to tell the story more comprehensively in my book, Under the Surface.

The key players that have shaped New York’ story from the onset number well into the hundreds, and I had space to reference perhaps a dozen in the newspaper piece. Not surprisingly, I have heard feedback from people that my story lacked some perspective. As one source put it, the story of the battle has become the battle for the story.

Two readers touched on particular events relating to a bill, signed by Gov. Paterson in 2008, that was the catalyst for events to follow. The bill would make spacing units for the large unconventional Marcellus gas wells conformable with existing state policy — a move that would effectively streamline the permitting process. Without it, shale gas development would get hung-up on an administrative process designed for the much smaller conventional wells.

The bill was the kind of wonkish-policy instrument that few lay people have the appetite for, and one that induces migraines to reporters writing for mainstream audiences. But it was also the sort of under-the-radar document that offers stakeholders who master it a strategic advantage in influencing important decisions. In this case, it was a necessary component for the gas industry to get things moving in New York. While this policy-making was different from the grass roots aspect of the movement that I report on, the bill ended up being a notable reference point and precursor to the anti-fracking movement.

Although the bill passed overwhelmingly, Assemblywoman Donna Lupardo and a small group of her colleagues voted against, she said, to “send a message to Paterson.” At the same time, she added, “local and statewide activists raised red flags about what this bill would do to speed up the process as well. That helped put the brakes on the whole matter.”

Paterson ordered a hold on permitting pending an environmental review when he signed the bill. But the bill had, for the record, a certain symbolic relevance. More importantly, it was a magnet for organizational involvement in state affairs that, by some accounts, was a forerunner of the anti-fracking movement.

Roger Downs, a program director with the Sierra Club, noted that several environmental organizations were among the first to recognize the significance of this spacing bill, and engage and challenge the DEC about what its impact would be.These groups included the Sierra Club Atlantic Chapter, Catskill Mountainkeeper, Riverkeeper, Delaware Riverkeeper Network, Natural Resources Defense Council, Catskill Center for Conservation and Development, The Wilderness Society and Catskill Citizens for Safe Energy, Damacus Citizens for Sustainability. (I’m sure I am leaving some out.)

Now, moving on to an altogether different thread of the story, Chip Northrup, the drilling-investor-turned-fractivist, offers another critical aspect of the story’s history: economics.

Northrup writes:

We can summarize why fracking was prohibited in New York with a simple construct – the cost/ benefit ratio – what the environmental risks and economic costs would be to the state and it citizens versus the benefits of shale gas industrialization. Initially, this ratio appeared to tilt very much in favor of fracking – at least in the popular press and in the corridors of power – because the gas industry had grossly overstated the benefits of shale gas development while categorically denying the risks and collateral damage associated with it.

You can read Northrup’s full post here.

I am currently finishing an updated version of Under the Surface, Fracking Fortunes and the Fate of the Marcellus Shale, to be published in paperback by for Cornell University Press next year. This will probably be close to 110,000 words. I would like to think, as the subtitle suggests, it covers a lot of ground and offers a pretty good idea of events that distinguish New York from Pennsylvania and the rest of the nation with the unfolding of the on-shore drilling boom. But there will always be more to report. In that spirit, I encourage readers to pass along any of their own stories or recollections.

How Fracking Got Stopped in New York

The following is an uncut version of an article I wrote the Press & Sun-Bulletin. The newspaper version, which ran on Dec. 21, 2014, was cut due to space constraints The full version is reprinted here with permisson of the paper.

One of many protests against fracking in Albany
Photo: James Pitarresi

In certain places in New York, Wednesday’s news of the state’s ban on fracking inspired public celebration.

When a manager at GreenStar Natural Foods Market in Ithaca announced the news over a loud speaker, people in the store began applauding, cheering, shouting and hugging. “People had worked for this for so long,” said Dawn Lodor, an assistant manager at the store, which helped organize opposition to shale gas development.

In pro-fracking camps, the news was met with bitterness and disbelief. Dan Fitzsimmons, head of the Joint Landowners Coalition of New York group, listened to the decision from Cuomo’s cabinet meeting in Albany streamed online to his farmhouse in Conklin. His reaction? “It was like a kick on the gut.” His phone started ringing after that with angry members of the coalition who, in Fitzsimmons words, “feel like they’ve been robbed.”

It was no surprise that the news was emotionally charged. But, for people on both sides of the issue, it was an abrupt endpoint of an epic policy fight that began nearly seven years ago.

New York’s shale gas story will be cast in history as one of false starts, near misses, empty promises, and a grass roots movement of the ages. From the beginning, some harbored great expectations for a shale gas boom in the Southern Tier. In the end it was a bust that never got off the ground.

I began learning the full implications of the shale gas story one day in early May, 2008, when several visitors came to the Binghamton Press & Sun-Bulletin newsroom. These sources included Fitzsimmons, long before he was president of the Joint Landowners Coalition of New York, and Tim Whitesell, Town of Binghamton Supervisor. At the time, few people knew what fracking was, and most associated “Marcellus” with a small town in Upstate New York.

Sitting with a group of editors in “the pit” a wall-less space in the corner of the news room with a sunken floor and a white board where editors jotted story ideas, our sources informed us that agents representing gas exploration companies  – “landmen” – were seeking mineral rights to the land in the towns of Conklin and Binghamton. The landmen tended to approach people with the largest tracts first. These were often farmers or descendents of farmers, and many of them were duly skeptical, but excited.  What was not to like about the notion of abundant energy that could be safely extracted from beneath the land with deals that could make people rich? That was what the landowners were told, at least, and that’s what they hoped for.

At that time, land leases for mineral rights were not unusual in parts of New York state, especially in places in western New York where operators, mostly small independent outfits, had drilled wells for generations. In places east of Owego, and the Finger Lakes region, these leases rarely lead to development and the leasing money was incidental – maybe $5 or $10 an acre. Now, we were told by Fitzsimmons, that landmen were offering hundreds of dollars per acre, with some reports of $1,000 or more. The Marcellus Shale – a rock formation long-known to hold an abundance of gas that was technologically inaccessible – was their target. (The Marcellus ran at an angle from Marcellus, New York, where it jutted above ground, all the way to West Virginia and parts of Ohio and Maryland, where it was more than a mile deep.)

Southern Tier residents were learning that the first successful wells in the Marcellus –featuring a combination of new techniques -- had spurned a burgeoning gas rush just across the border in Susquehanna County, Pennsylvania. Unlike the type of conventional drilling western New Yorkers were familiar with – clusters of vertical wells generally contained in a geographically limited area – this shale gas development involved drilling into rock that extended under entire states. Operations would encompass vast regions. It required unconventional technology. Well bores would be oriented horizontally along the vast mantel of Marcellus rock, and then the bores would be injected with pressurized solutions of unknown but effective chemicals to break the rock and free the gas. The scope, scale, and sums of money were seemingly unprecedented.

For the next six-plus years, the story would be told through several hundred articles in Gannett’s Upstate New York newspapers. It would play out one way in New York, and another way in Pennsylvania, with outcomes that reflect each state’s political attitudes and comfort levels with mineral extraction.

As the price of natural gas approached record highs in early 2008, the fervor over gas development spurred ever more aggressive efforts of landmen charged with securing acreage for drilling. They also fostered growing expectations among landowners seeking a deal of a lifetime. The bidding rose from hundreds of dollars per acre to thousands of dollars per acre, and in the newsroom, we heard complaints from landowners who had signed away their land rights without understanding the value of the mineral resources.

With this concern, early stories seized on the efforts of Chris Denton, an Elmira attorney, and members of the New York Farm Bureau, who became important advocates for landowners. They gave presentations to audiences packing school auditoriums and town halls in places where landmen were sent to secure acreage, which at the height of the leasing frenzy in 2008 included a large part of upstate New York.

Many Southern Tier owners saw the approach of the landmen as a Beverly-Hillbillies–moment. But at his presentations, Denton gave a sobering message: Beware of the industry lease. It’s “a complex-business transaction masquerading as a lottery ticket.” A standard lease was worded in a way that gave operators rights to minerals under their land, of course, but it also gave them rights to do whatever they needed above land to get at riches below.

The state’s permitting guidelines –designed for conventional drilling -- were outdated and insufficient to handle shale gas development. This made matters worse. Landowners had to take matters into their own hands by crafting land-use agreements to ensure environmental safeguards. Denton was the first of several attorneys who would begin advising landowners groups on leasing strategies.

MEGA DEAL

The story went from big to bigger on May 11, 2008 with news from Sanford, a town of 2,400 people on the eastern edge of Broome County. Dewey Decker, town Supervisor, headed a group of 300 farmers – controlling some 50,000 acres – who banded together to leverage bargaining power against companies. None of the landowners would sign a lease without a deal that was acceptable to all. With this technique, the Deposit group landed a deal with XTO Energy for $90 million. That figure would soon grow to $110 million with subsequent sign-ons.

The terms included $2,411 per acre for leasing rights for five years and the same amount for the three-year extension. In addition, if prospectors hit gas, the landowners would get 15 percent of the royalties. Without a single well drilled, many of the farmers, including Decker, made more in a single day than they would their entire lives. Mega deals were also being signed in Pennsylvania, and the media coined a new word for farmers like Decker: Shallionaires.

While the job prospects for rig workers in Pennsylvania remained mostly filled by itinerate crews from Texas and West Virginia, there was a surge of new business for lawyers and accountants. My reporting of the Deposit deal stated it this way: “Now, people who had problems paying property taxes suddenly will have ... more tax problems. Income taxes could immediately bite into a third or more of leasing revenues. ‘It's quite a change, and I hope people can handle it,’ Decker said. ‘The lawyers and accountants are going to make out quite well.’ ”

GREAT EXPECATIONS

News of the XTO deal fueled a gold rush mentality in the Southern Tier.

People began reasoning that, if XTO found resources under the land in the Town of Sanford with that kind of value, then other gas companies prospecting in nearby towns along the Pennsylvania Boarder also harbored riches. Lease offers reported in Broome County towns bordering Pennsylvania soared. In some areas along the Millennium Pipeline, where the market produced a premium for ready access to infrastructure, offers rose to $5,000 an acre or more.

XTO was a $13 billion company that would later be bought out by Exxon Mobil, and a far cry from the smaller independent operators that had done business in New York.  People were rightly filled with a sense that they were heading into unfamiliar territory with the Marcellus prospects, and they began crowding town halls and school auditoriums in their quest for information.

Many of the meetings were sponsored by town officials seeking answers from officials from the state Department of Environmental Conservation about how the impacts from shale gas development would be managed in New York. One such meeting, on July 16, 2008 in the municipal building of the town of Chenango, was crowded with farmers, suburbanites and officials from town, county and state governments. They were not necessarily against fracking, but they had plenty of questions. What about public safety concerns, roads, and waste disposal?

Linda Collart, regional supervisor with the Division of Mineral Resources, assured the crowd that there would be little or no impact; the agency had been managing gas development for generations. In her power point presentation, she showed a picture of what shale gas development would look like: A small valve poking from the ground with a lush meadow of wildflowers and grasses in the foreground an a bank of trees in the background. This was a reclaimed natural gas site, she said, and an example of the expected long-term impact from Marcellus development.

In what would become a defining moment in the local history of the shale play, a person from the back of the room stood up and asked her how local emergency responders could prepare for a spill, fire, or explosion when the industry did not fully disclose the complete chemical content and concentrations of fracking fluids.

“We don’t anticipate any significant emergencies,” Collart said. “These things are rare.”

Another person stood up and asked how regulators were preparing for an influx of drilling that would exceed any historical comparison.

Collart responded, “We have been doing fine so far … No problems!”

Collart stood by that line at several meetings, and the more she gave it, the more agitated and skeptical towns folks became.

A meeting in Greene was scheduled the day after I reported Collart’s responses at the Town of Chenango meeting. For this, Governor David Paterson’s office, responding to growing skepticism about the DEC’s ability to manage shale gas, sent Judith Enck, the governor’s top environmental advisor and Stuart Gruskin, executive deputy DEC commissioner.  As with earlier meetings, the questions reflected frustration from the crowd of more than 500 people who felt they were not getting straight answers, but Enck’s response was different than Collart’s.

“The DEC is going back and doing its homework,” she said. “I’m sure you will hold our feet to the fire and make sure it gets done.”

Later, Gruskin told me that the Greene meeting was a “fork in the road.” He explained: “If there was ever any doubt about the significance of all this, going to that meeting made it clear that it was going to be a really big issue in New York,” he said. “We had to make a decision as to how we were going to approach it.”

Within days of the Greene meeting, the state legislature approved a bill, pushed by gas companies and submitted by the DEC, that would make spacing units for the large Marcellus gas wells more uniform – a move that would effectively streamline the permitting process. Without it, shale gas development would get hung-up on an administrative process designed for the much smaller conventional wells. Paterson signed the industry-supported bill. But, with input from Enck and Gruskin, he also declared that permitting could not begin until the agency under took a comprehensive review of its impacts. The document, know as the Supplemental Generic Environmental Impact Statement (or SGEIS) was born.

At the time, even gas supporters didn’t seem to mind the time out, which they saw as a necessary step to make things move smoothly. “It’s a process in which we will be learning as we move forward,” said state Senator Tom Libous, sponsor of the spacing bill. “We have to make sure the environment is protected. I am pleased so far.” At the time, people expected the review to take a year or less, and shale gas would begin soon in New York.

Before the SGEIS could be finalized, it had to go through a public review process. This standard procedure for public policy would make the document a critical instrument for the anti-fracking movement to delay shale gas until people finally got the answers to the questions raised at public meetings. The more they found out, the more questions they had.

A MOVEMENT BEGINS

The second turning point of the story came with a bang, literally, on New Years Day, 2009 in Dimock, Pennsylvana. An explosion rocked the frozen ground in Norma Fiorentino’s front yard and concrete dust billowed over a gaping hole where her water well was housed. The blast destroyed the well that supplied her trailer on her 7-acre homestead. Though there were no casualties, the incident raised many questions and, eventually, led to state and federal investigations about the safety and viability of shale gas development in Susquehanna County. In months and years that followed, the Pennsylvania state Department of Environmental Protection found that methane was seeping from nearby gas wells drilled by Cabot Oil and Gas into water wells in the area where Norma lived. Cabot responded that methane comes from the ground and factors other than drilling can bring it into contact with water supplies. Cabot denied that its operations caused the problem, and at one point accused the DEP of fabricating the story.

The events in Dimock highlighted a battle over whether fracking was a good thing or a bad thing. At the heart of it was the issue of trust, and who could be believed – industry, government, or neither. The industry, at the time, was standing by a claim that fracking had not contaminated a single water well throughout its history. This motivated journalists, critics, and activists who sensed a bending of the facts and possibly a cover up.

After Norma’s well exploded, Walter Hang, head of an environmental research firm in Ithaca, began searching data bases from the DEC to see if he could find records ot similar incidents in New York State. He uncovered 270 files documenting wastewater spills, well contamination, explosions, methane migration and ecological damage related to gas production in the state since 1979. Those findings were the subject of an article in this paper on Nov. 8, 2009. Continuing his research in 2010, Hang uncovered documents that showed William T. Boria, a water resources specialist at the Chautauqua County Health Department, reported his agency had received more than 140 complaints related to water pollution or gas migration associated with nearby drilling operations. In a 2004 memo summarizing the issue, Boria stated: "Those complaints that were recorded are probably just a fraction of the actual problems that occurred." County health officials tabulated information on 53 of the cases from 1983 to 2008 on a spreadsheet, including one where a home was evacuated after the water well exploded.

The first draft of the SGEIS had been released on September 30, 2009, and by then the anti-fracking movement was becoming a powerful grass-roots phenomenon. The first public hearing on the state’s policy proposal to permit shale gas was held six weeks later at the Chenango Valley High School. It had more the feel of a pep rally than a public hearing.

Lines began forming outside an hour before the doors opened at 5:30 p.m. Some people wore costumes—one was a barrel of toxic waste; another, a gas company executive billionaire with money coming out of his hat. They held signs that read “Don’t Frack on Me” and “You Can’t Drink Gas or Money.”

Drilling supporters were also represented, most visibly by people who wore t-shirts that read “Pass Gas, It’s a Movement.”

Environmental conservation officers wearing ranger’s hats and bearing sidearms stood attentively at various entrances and milled about the lobby as more than 1,000 people filled the auditorium to capacity.

For the next three hours, speakers lined up for a turn at the microphone, where they offered impassioned praise or criticism of the drilling industry and its plans to set up shop in Broome County. The meeting in Broome County was one of four throughout the state, and each drew a large and impassioned response.

In the three-month period allotted for written responses, the agency received more than 14,000 formal comments, and it had to address them all before the plan
could become final. The anti-fracking movement won its first and major victory in stalling a decision on shale gas.

CLOSE CALLS

In the years that followed, those who favored shale gas pressed on in the face of even more delays. With the economy languishing for years following the stock market crash of 2008, landowners kindled hopes of making money with gas leases. In northern Pennsylvania and the Southern Tier of New York, tens of thousands of landowners began organizing into dozens of groups to lease their land. Many were organized through Denton and the Farm Bureau, and Binghamton lawyer Scott Kurkoski.

Continued delays and falling natural gas prices did little to deflate expectations. A  study commissioned by the Broome County government in late 2009 found full-scale Marcellus production could involve up to 4,000 wells, generate $14 billion in local spending, and support between 810 and 1,600 new jobs for a decade.

Although the report lacked an assessment of the social and environmental cost, Broome County government budged $5 million in revenues from the gas rush, before it had even signed a lease. Nathaalie Maxwell, budgeted director at the time cited “conservative” expectations for “a multi-billion industry that has set its sights on Broome County.”

At the time, there was still convincing evidence that major companies were interested in extracting gas from under Broome County. In June, 2009, a coalition headed by Dan Fitzsimmons and represented by Scott Kurkoski, announced a deal with Hess that would generate $66.5 million in lease payments and 20 percent royalties for 19,000 acres of land owned by about 700 people.  The deal failed to close, however, due to differences in how the lease would be structured to control land use. Hess eventually signed a deal with residents in Northern Pennsylvania instead.

FATAL BLOWS

After the Hess deal, political, economic, and social factors continued to erode the chances of shale gas development in New York.

The anti-fracking movement would become galvanized in the summer of 2010, with the premier of Josh Fox’s movie, Gasland, on HBO. Gasland, which was screened in Binghamton and Ithaca, featured a shot of Mike Markham, a resident living near shale gas development in Weld County Colorado, lighting his tap water on fire. The movie, which also featured Norma Fiorentino’s well and other scenes from Dimock, Pennsylvania, became a rallying point for the anti-fracking movement in New York.

The SGEIS was sent back to the drawing board, and when the Cuomo administration issued a revision on September 2010, it was again flooded with comments from well-organized and informed critics that led to another backlog.

In years that followed, New York’s anti-fracking movement blossomed into a celebrity cause, supported by performances, rallies, appearances and speeches by Natalie Merchant, Pete Segeer, Mark Ruffalo, Bobby Kennedy Jr., Yoko Ono, Sean Lennon, Josh Fox and others. A group of professionals added credibility to star power. Sandra Steingraber, a noted author, scholar, and ecologist, became a leading figure and motivational speaker. Tony Ingraffea, an engineering professor with vast industry experience, was also a leading influence in the movement and an organizer of Physicians Scientists & Engineers for Healthy Energy.

The fracking debate in New York would extend to both local and federal governments. In 2010, the federal Environmental Protection Agency was directed by Congress to use a portion of its allotted funding for a peer-reviewed study of the relationship between hydraulic fracturing and ground water. The effort -- championed by (now retired) Rep. Maurice Hinchey, at the time chair of the Appropriations Committee -- included a hearing at the Broome County Forum on September 13, 2010. That event drew about 1,500 people from throughout the region. Notably, the EPA hearing was headed by Judith Enck, who had left her job with the DEC to accept appointment as regional director of the EPA. The results of the study are yet to be released.

Yet the biggest defeat for the shale gas industry in New York, prior to Wednesday’s announcement by the Cuomo administration, did not come until late May of this year. That’s when the state’s high court upheld a decision that allowed local governments to control where and if fracking occurred. The concept, know as home rule, was a result of the court’s ruling to uphold fracking bans in the towns of Dryden and Middlefield. Prior to the decision, the state controlled where gas wells went. The Court of Appeals made clear that zoning and land-use restrictions apply, and towns could not proceed without recognizing fracking as an accepted use.  

The decision by the Cuomo administration to ban fracking statewide Wednesday caught everybody by surprise. Hours before it was announced, I was scheduled to cover a town board meeting in Windsor, where officials intended to discuss changes to land use plans to allow fracking. Windsor was one of many towns along the Pennsylvania border going through that process – which was deemed necessary before the state could issue permits. Now, much to the dismay of people like Dan Fitzsimmons, the issue of local control is moot.

Antifracking activists, who were geared up to fight a decision from the governor’s office that would permit fracking, also have to make some adjustments. Dawn Lodor, the manager at GreenStar said the store had commissioned a bus to take fractivists to a rally in Albany in January to protest fracking. They are still going, but now they plan to make it a public celebration.

Cuomo’s choice to ban fracking driven by science, politics

Tonight, I was scheduled to cover a town board meeting in Windsor, New York, where officials were going to review a plan to change their zoning to allow fracking. The process for a zoning change promised to be long and contentious, and was necessary in light of a recent court ruling putting the decision of whether and where to drill in the hands of local governments.

Things changed dramatically this afternoon, when Governor Andrew Cuomo announced that he would ban shale gas development statewide due to unacceptable health risks. Cuomo’s position, backed by a long-awaited report from the state Department of Health, is a departure from his earlier position that he would allow fracking where local governments favored it. Reporters, pundits and the public they serve are still getting their minds around Cuomo’s emphatic decision, which came after more than six years of policy review. While it puts the matter to rest, many questions remain: What are the legal consequences? Do industry lawyers and supporters, who have been beaten at every turn in their efforts to bring shale gas to New York, have another challenge in them? Or is this the end of the line?

Those answers will come soon, but apparently, from my conversations with sources and a press-release from the Joint Landowners Association of New York, not tonight. The news of the hour is that, after a six and a half-year journey, fracking is dead on arrival in New York. Along that line, I share my response to a request by Andrew Revkin, author of New York Times  Dot Earth, for a "what just happened" analysis. (Revkin’s compilation of reaction from many informed sources can be found here.)

Cuomo’s decision is consistent with his progressive politics that got him to where he is now. It's a bold move and I optimistically take it as sincere attempt to overcome the inertial forces of fossil fuel dependency. Success here could add considerably to his legacy. But he has much more to do. The fracking ban needs to be accompanied by practical reforms and initiatives in energy development & consumption. How much longer will New York City residents have to rely on Fuel Oil as their primary source of heat? What about coal burning plants? I have written about the answer to these questions by a group of scientists and professionals that have contributed to the credibility of the anti-fracking movement. I offer that post again here.)

So why did it take six and a half years? Science takes time. Establishing risks of high volume hydraulic fracturing and the new era of on shore drilling it has enabled is especially difficult because shale gas development is relatively new. The industry controls most of the information and has plenty of legal, scientific and political wherewithal to challenge any conclusions that don’t work in its favor.

Science is part of the calculus. But despite what Cuomo would like us to believe, scientists don’t make these kinds of decisions. The full equation is Science + politics = policy. Cuomo finally got tired of being hounded on the issue by his political base. The movement in New York against shale gas was relentless and it was focused on him. At one point, he told Susan Arbetter, host of Capitol Press Room, that it was the most effective political action campaign he had seen. (I will link to that interview as soon as I find it, but I wanted to get this post up right away.) Activists, both institutional and grass roots, promised to step up their efforts if Cuomo allowed even a single well.

The Home Rule decision by the state’s high court in June, and the depressed price of natural gas made a decision politically easier. Cuomo would have a hard time taking the perceived riches of fracking from landowners back when landmen were at their doors with big checks in hand. Nobody is currently seriously looking at shale gas exploration, much less development, in New York with gas prices as low as they are and the encumbrances of Home Rule.

New York has become a showcase for the anti-fracking movement, and Cuomo's decision today has raised the movement's stature nationally. But it’s also important to remember that Cuomo’s decision is the end-point of a process that started 6-plus years ago - before frack was a bad word. As recounted in my book, Under the Surface, the moratorium issued by Governor Patterson in July, 2008 had nothing to do with organized fractivists, who did not appear on the scene until after Josh Fox’s movie Gasland two years later. New York’s moratorium was the direct results of landowners posing reasonable questions in public hearings about how the state was prepared to govern shale gas development. Six and half years later, Cuomo’s actions have provided the answer: it wasn't then, and it isn't now.

New York’s high court upholds Home Rule bans ... Decision complicates natural gas prospects

It’s settled. There will be no fracking in New York communities such as Dryden and Middlefield – serene and scenic places that have passed rules that find shale gas development incompatible with local land use ordinances.

The three-year battle over jurisdictional control over the industry ended today when the New York Court of Appeals upheld lower court decisions that cedes control over where and if shale gas development can happen from state to local governments. That’s a landmark victory for Home Rule advocates, including residents of more than 170 upstate communities that have passed moratoriums or bans on the controversial process.

But the future of fracking in the Empire state remains more unsettled than ever. All of the communities with fracking bans happen to be outside areas with the strongest prospects for shale gas development. In Southern Tier counties bordering the booming gas fields in northern Pennsylvania, many local governments either support fracking, or have no enforceable policy to prevent it. For every place like Dryden, there is a place like Sanford, a rural community near the Pennsylvania border that sits over 50,0000 acres of the Marcellus Shale, for which XTO Energy – a subsidiary of Exxon Mobile – has paid farmers $110 million just for the chance to test.

Sanford has no land use restriction, and is governed by a town council eager to see  rigs and roughnecks role across the Pennsylvania border and clear pads in the meadows, fields and woodlots of Southern Tier farms. And according to some who have been engaged in the fight since it began with the leasing rush of 2008, the prospect of drilling in these places is more imminent following today’s court ruling.

The court decision in effect provides legal sanction to a plan proposed by Governor Andrew Cuomo in the summer of 2012 to begin issuing permits on a trial basis in areas where communities and industry favor development. As reported by Danny Hakim of the New York Times in June, 2012: “Cuomo’s administration is now trying to acknowledge the economic needs of the rural upstate area, while also honoring the opposition expressed in some communities, and limiting the ire of environmentalists, who worry that hydrofracking could contaminate groundwater and lead to other hazards.”

Walter Hang, a policy analyst who runs Toxic Targeting, an environmental data firm in Ithaca, said Cuomo’s plan from 2012, combined with today’s court ruling, moves New York state a step closer to fracking in these places. “Today’s decision serves up the Southern Tier on a silver platter to allow shale gas development to begin,” he said. “Sure, it prevents fracking in some areas. But it allows it in the five counties along the Southern Tier where it’s most likely to begin. It’s the classic double-edged sword.”

Cuomo’s plan in 2012 to begin fracking in certain localities but not others drew support for those pinning the promise of economic development on the drilling industry, and drew rallies and protests by anti-frackers, who characterized the fracking trials as “sacrifice zones.” Cuomo has been mostly silent on the issue since then.

Not everybody shares Hang’s outlook. Some anti-fracking activists expect that New York’s ruling will not only discourage shale gas development in New York but will also encourage other municipalities throughout the country to establish land use restrictions. (See comments of Mary Ann Sumner, the Dryden Supervisor who helped organize the ban.)  And Brad Gill, executive director of the Independent Oil and Gas Association of New York, called the court decision “one more nail in the coffin” for fracking in the state. Gill’s view, often echoed by other industry supporters, is that drill operators will be less likely to commit capital to area that lacks regulatory uniformity and predictability. There is truth to both of those views, but they overlook the fact that the industry, first and foremost, will follow the geology. Wildcaters, in particular, are likely to seek out niches in unexplored territories, like the Southern Tier of New York.

As with most policy calculations, science and law are fundamental factors, but politics will be the decider.  The Legislature could pass a bill clarifying ambiguous language over the state’s role in extraction operations on which the Home Rule case was built. It’s also possible that the Legislature could ban fracking altogether, although anti-fracking bills passed repeatedly in the Assembly over the years are yet to fly in the Senate.

For now the decision remains firmly in the hands of the governor, who can at anytime enact or withdraw the policy review of fracking, called the Supplemental Generic Environmental Impact Statement. The 1,000-plus page document is as complicated and bureaucratic as its name suggests,  and it's been on hold for years.  Don’t expect that to happen before election. Rocking the boat on this hypersensitive issue would certainly alienate the governor’s progressive base. But after election-day, he has plenty of politic wiggle room and, with today’s Court of Appeals ruling, a clearer view of the legal landscape.

Will Utica, Marcellus remain non-starters in Empire State? New theory holds geology, not politics, thwarts NY fracking

Cabot Oil & Gas Map showing thickness of Marcellus shale, one measure

of it's viability. Other factors include depth, organic content,

thermal maturity, and myriad political and market factors    

A collection of factors stalled the Pennsylvania shale gas rush at the New York state border, including grass roots opposition, a market glut, the threat of local bans and --  above all -- the state’s reluctance to complete permitting guidelines without more information about health impacts. That, at least, is the familiar version of the story recounted through the popular press. But a group of activists – some uniquely qualified – are building an argument that something more profound and fundamental is at work: A lack of gas.

“Simply put, we now know that the Marcellus is likely only marginally productive in a few townships by the border - and may not be economic there until after 2020,” said Chip Northrup. “The Utica may not be here at all - or in a few pockets.”

Next week, Northrup, a former oil and gas investor from Texas, will publically make this case along with a select group of anti-fracking activists, some with industry resumes. The event is scheduled for 7 p.m. at Cornell University’s Hollister Hall Auditorium. In addition to Northup, presenters will include Lou Allstadt, a retired senior vice president for Mobil Oil, Jerry Acton, a systems analyst for Lockheed Martin, and Brian Brock, a retired geologist. The event will be moderated by Tony Ingraffea, a Cornell engineering professor specializing in fracturing mechanics that are integral to shale gas production.

The argument isn’t really about whether there is gas under New York – geologists agree that multiple gas-bearing formations, conventional and otherwise, lie beneath upstate’s countryside from the Catskills to the Allegany region. It’s a question of whether the broad mantels of Devonian shale, which hold prospects of drilling, fracking, and infrastructure development on an unprecedented scale, are economically viable under current or future market conditions.

Interest in New York’s unconventional reserves peaked in 2008, when the price of natural gas was three to four times higher than it is now. Since then, production of Marcellus wells coming on line in Pennsylvania and West Virginia has soared, contributing to a price collapse that is not forecast to change anytime soon. While this is a contributing factor, Northrup argues that the much-hyped future for shale gas as an economic engine for New York was a bust from the start. The team of presenters next week at Cornell will base this outlook both on analysis of available geological records and the status of leasing and development trends by major oil and gas companies. So far, only one major, Exxon Mobil, holds significant leases in New York – 50,000 acres in Broome and Delaware counties, near the Pennsylvania border. Moreover, Northrup said, analysis of well data filed with the DEC shows a range of major companies including Chevron, Gulf and others, tested upstate reserves prior to the “the fury” of the gas rush unfolded in 2008. “They kicked the tires and left well before the moratorium was in place,” he said.

Since the moratorium preventing high volume hydraulic fracturing began in the summer of 2008, midsize companies have faired poorly in their shale gas quest in New York. Norse Energy, a Norwegian company, was planning to tap Marcellus reserves in Oneida and Chenango counties. But officials recently announced they will close operations that remain insolvent after the company’s failure to sell pipeline rights of way and gas leases on 130,000 acres to pay debts. Chesapeake Energy, meanwhile, is letting its leases in New York expire after losing a legal battle to extend them indefinitely (through a process called force majeure) while waiting out the resolution to the state’s moratorium. Prior to that, Talisman, a Canadian company that was a big player in New York’s Trenton Black River boom, began shifting it’s operations from conventional resources in New York to Pennsylvania’s shale gas.

Interest from major oil companies is one of multiple measures of shale gas prospects, and it is not always a defining one. As Russell Gold recently reported for the Wall Street Journal, majors have not typically thrived in the natural gas business, and Shell Oil is selling off some assets in Texas after suffering from a market glut that has held prices down to below $4 per thousand cubic feet for several years. The industry moves in cycles, however, along with prices and demand, and independents play an important if not critical role in exploring resources that might otherwise go undiscovered as business cycles ebb and flow. Gold explains:

Smaller producers have tended to be more successful in shale than major oil companies, in part because they can move more quickly to lease up acreage before land prices rise and are more nimble at experimenting with different well designs to maximize output and drive down unit costs.

In short, smaller independents commonly venture where majors don’t. There is a lower barrier of entry to leasing, exploring, and experimenting in unproven areas, and rewards of discovery are greater. So are the risks.

This is a concern for Allstadt, who has led the push for a precedent-setting municipal ban (now being tested before the state’s high court) on drilling in Cooperstown. He has told me he does not generally fear the work of major oil companies, but he is wary of wildcatters – independents with limited capital who live or die in the world of speculative ventures. “They (Independents) play on the fringes,” Allstadt said. “They are the ones most likely to screw things up.” (Drillers have already left a legacy in upstate New York. Regulators estimate there are 57,000 abandoned and orphan oil and gas wells statewide, many of them left by firms that went broke or walked away from them.  Of these, the state has listed 4,722 as a priority due to health and safety risks, but lacks funding to plug them.  More on that here.)

In addition to a market evaluation, Northup said the presenters at Cornell will offer geological data that shows underwhelming results for shale gas samples collected from wells drilled in the 1990s and the early part of this century targeting conventional formations – mostly the Trenton Black River. Operators had to drill through the Utica and Marcellus to get to the Trenton Black River, which provided a small boom of its own when natural gas prices began rising several decades ago. The Marcellus is generally thought to be too thin and too close to the surface to be effectively developed in western New York, where most of the Trenton wells are drilled. But some geologists have argued that the prime drilling fairway of the Utica shale, which is providing productive wet gas and oil wells in eastern Ohio, may overlap the Trenton fields in western New York. Northup argues the opposite. “If those had shown Utica potential, all the majors would be here - and they never were,” he said. Take into account these factors, plus limitations imposed by natural barriers, topography, and regional no-drilling zones the state has imposed for ecological reasons, the much-touted drilling fairway for shale gas extending into New York’s Southern Tier “looks more like a putting green,” Northrup quipped on a recent appearance on Liz Benjamin’s Capital Tonight.

Terry Engelder is a geologist from Penn State whose career has been defined by his knowledge of Devonian shale. In a series of calculations in 2008 and 2009, he estimated that the Marcellus contained enough recoverable gas – nearly 500 trillion cubic feet -- to last decades, and his very public encouragement to investors and the media served as a catalyst to the gas rush in Pennsylvania. Now, with prices a fraction of what they were, Engelder is cautious about assessing the economic breakeven point of New York’s shale reserves, which, he said, “need careful evaluation.” In an email this week, he responded to my requests to assess the validity of claims by Northrup’s team that New York’s reserves are too small and problematic to be worthwhile.

Now it may turn out that shale gas in New York will not work for less than, say, $5.00/MMcf, BUT the the state should thoroughly evaluate this possibility and not have a bunch of born-again anti-frackers shout the industry down before sensible geologists and engineers really understand what the possibilities are.  

His dismissal with the anti-fracking movement aside, Engelder’s cautionary theme is a contrast to brimming enthusiasm he expressed along with lawyers, elected officials, landowners, and landmen that reflected a sense of giddiness over prospects of the shale gas boom in 2008. Interest in New York peaked in the summer of 2008, after a coalition of landowners near the Pennsylvania border landed a deal with XTO Energy (later bought by Exxon Mobil) to open 50,000 acres for development for $110 million plus royalties. Although that acreage remains undeveloped due to the moratorium, Engelder’s estimates were supported by production figures as the shale gas rush took shape in Pennsylvania over the next few years. By early 2009 drilling proponents in Pennsylvania and New York began looking for political leverage to encourage government support of the industry. As the economy sunk into recession, the case for jobs seemed to be the hot button. Stakeholder-funded studies purported to show economic potential that, in retrospect, stretch the limits of good sense in some cases.  An enthusiastic Broome County legislature paid University of North Texas scholars for a study that concluded Broome County was “fortunately located in the epicenter of the play” and shale gas development would produce 4,000 wells that would bring $15 billion to the economy, create 16,000 jobs, generate $792 million is salaries and $85 million in tax revenue.  The study encouraged county officials – before a single well was drilled or land leased -- to budget $5 million of expected lease payments on county-owned land near the landfill. Five years later, the county is yet to collect a dime from its shale gas assets, whatever they may be.

Engelder’s predictions remain controversial. And while early production numbers in Pennsylvania have met and in some cases exceeded them, questions about production have given way to questions about sustainability. (Will Bunch, of the Philadelphia Daily news, explores unmet expectations in Pennsylvania’s gas rush here, and Kevin Begos, of the Associated Press, looks at the concern of pension fund managers over the long-term profitability of the industry here.)

Chris Denton, an attorney who represents landowner coalitions, has seen the rise and fall of gas prices and corresponding interest in shale gas leases in New York. He pointed out that geological assessments are unique, piecemeal, and often proprietary, so it’s hard to usefully extrapolate figures from conventional wells, many which are in western New York, to the parts of the Marcellus shale thought to have the greatest potential, which are more toward the east. “I don’t really pay much attention unless it’s hard data from wells,” said Denton, who added that there is no mystery to why shale gas has not taken off in New York while it’s flourishing just across the boarder in Pennsylvania. “We’ve spoken with a lot of interested parties, and as it stands, it’s really too easy for them to go someplace else. They tell us, ‘call us after the moratorium’s been lifted.’”

For every argument against shale gas, it’s easy to find a countervailing argument. Theories about the geology in New York bring a chicken-or-egg quality to the discussion. Denton says the geology has not been proven because of the moratorium. Northup says the lack of interest – based on available geological data -- makes it politically comfortable for Governor Andrew Cuomo to extend the moratorium indefinitely.

The argument for or against the geology aside, there are new signs that Northrup has correctly pegged the political atmosphere. In an interview earlier this week in the Syracuse Post Standard, DEC Commissioner Joe Martens told reporter David Figura the health review needed to complete the state’s permitting policy is “going to take some time… We really don’t feel that there is any great urgency. People really want to be satisfied that this can be done safely and that's what [Department of Health Commissioner] Dr. Shah is trying to get to the bottom of.”

Will the geology of New York support a full-scale gas development by major energy companies or even speculative exploration by wildcatters? For now, a number of influences – including markets, political pressures, and unproven geology -- have created a feedback loop that favors the status quo.

Small Town USA embodies big time fracking issues in NY Governments face challenges over free speech, land rights

The Town of Sanford, N.Y., population 2,400, sits in the Delaware River watershed in the foothills of the western Catskill region. If you want to get a close up look at the moral and legal complexity of the shale gas debate, Sanford and neighboring towns and villages to the west are a good place to start. The issues pitting neighbor against neighbor here extend beyond economics and environmentalism to broad ideological interpretations of freedom.

Conflict over what can be said or can’t be said at a town board meeting, and whether the state is interfering with landowners’ rights to extract assets from their properties embody monumental questions about Constitutional rights surfacing with the shale gas story. With New York’s moratorium on shale gas development pending an environmental review in its fifth year, these interwoven conflicts are heading to court for disentanglement.

The tension between rights to exploit resources versus rights to be protected against exploitation is a familiar theme in the extraction industry, and I will get to the latest develop on that in a minute. A fight over citizens’ rights to talk about these issues at a town meeting, on the other hand, is a unique wrinkle in the shale gas debate, at least in the town of Sanford, which is on the front line of the controversy.



As recounted in Under the Surface, Sanford is the place where Town Supervisor Dewey Decker organized landowners to form a group to collectively negotiate terms to lease land during the height of the shale gas boom in 2008. The coalition of several hundred landowners agreed to a deal with XTO Energy (now part of Exxon Mobile) to lease 50,000 acres for $110 million (plus 13.5 percent royalties). The terms made many farmers, including Decker, millionaires before a well was drilled. It also served as a wake up call to the rest of the state about the stakes being put into play with shale gas development.

Since then, Sanford has been in the middle of the controversy, owing partly to its position on the edge of the New York City watershed and partly due to the money on the table that reflects the value of natural gas deposits in both the Utica and Marcellus shales underlying the region. Activists from both local and regional anti-fracking groups have made the Town of Sanford and the broader Catskill region a strategic part of their efforts to ban high volume hydraulic fracturing and, consequently, shale gas development.

In September, members of the Sanford Town Board, apparently fed up with the fracking debate, passed a resolution banning further discussion of the matter during the public comment period at town meetings. Town officials with significant financial stakes in shale gas development, meanwhile, have not been silent. Acting in the capacity of Town Supervisor (rather than landowner), Decker sent a letter to Gov. Andrew Cuomo three days before the town ban urging the state to expedite the pending health and environmental review of shale gas development, and complaining that a delay was “only empowering opponents.” Prior to that, the board passed a resolution urging the state to move forward, and rejecting calls for the town to ban fracking.

The board surely has a right to take a position, but it has put itself in a vulnerable spot with its ban on speech at town meetings. True, open meetings law allow towns certain “reasonable restrictions” to manage public comment periods. But from a journalist’s view, it will set a frightening precedent if elected officials are allowed to single out certain topics for censor, especially if those topics deal with matters of overwhelming public interest, such as shale gas development. Moreover, it’s an egregious act of bad faith when the censor targets citizens following accepted protocol in an open forum designed for their input.

Not surprisingly, the Town of Sanford speech ban is being challenged. The Natural Resources Defense Council and Catskill Citizens for Safe Energy filed a suit earlier this month asking the U.S. Court of the Northern District of New York to rule that the resolution banning fracking speech at Sanford Town meetings is a constitutional infringement because it “unlawfully bars plaintiffs’ members from speaking at Town Board meetings about a matter of substantial public interest that has generated significant political activity.” The town has until March 14 to respond to the complaint. The timing from there depends on the town's response and court's schedule, said Kate Sinding, an attorney for the NRDC.

The lawsuit against the Town of Sanford is one of many that will be playing out as various stakeholders chart new legal ground related to shale gas development. On the other side of the fence, lawyers are working on a suit on behalf of landowners, like Dewey Decker, who claim government is taking away their rights to develop natural gas under their land. As reported by Gannett’s Jon Campbell today, Dan Fitzsimmons, president of the Joint Landowners Coalition of New York, said the group is looking for four people to serve as plaintiffs in a lawsuit against the Department of Environmental Conservation. The action will argue that the state’s hold on shale gas permitting, pending the outcome of a health review with no timeline, amounts to an illegal “taking” of property rights. “The lawsuit against the state will focus on claims where the failure to grant (high-volume hydrofracking) permits has deprived landowners of all economically viable uses of their real property or interfered with reasonable investment-backed expectations,” Fitzsimmons wrote to members.

The group is represented by Binghamton attorney Scott Kurkoski, who told Campbell “we’re now recognizing that the state has no intention of ever completing the SGEIS.” Kurkoski was referring to the Supplemental Generic Environmental Impact Statement, the document that includes both the health and environmental reviews necessary to proceed. (DEC Commissioner said the review will be completed within weeks, although he would not say when or whether the state will begin issuing permits.) Kurkoski’s clients collectively own sizable parts of New York’s southern Tier that cover lucrative swaths of both the Marcellus and Utica shales. It’s where the controversy continues after four and a half years, and it will continue to keep lawyers busy into the foreseeable future.

“Friends of court” hope to sway NY Home Rule case

Early next year, lawyers representing two municipalities, a drilling company, and a landowner will argue a case in the New York’s Appellate Division that will broadly influence shale gas development in the Empire State. The case is a collective appeal of two separate lower court decisions that upheld the authority of local governments to ban drilling over the state’s authority to permit it: Norse Energy v. the Town of Dryden and Cooperstown Holstein (a corporate landowner) v. the Town of Middlefield.

On the surface, it seems a simple matter. Do local zoning laws apply to state-regulated drilling? But as soon as you begin to break it down, it gets complicated. The question embodies critical Constitutional principles: The extent government can control private land use, and people’s rights to seek government protection from harm inflicted by another party. The issues are sticky because the answers have long been defined by ideological boundaries. Can parties who oppose the federal government’s involvement in regulating affairs of the state fairly support the state’s exclusive control of drilling in self-governing local jurisdictions, for example? How are individual rights best preserved while serving the greater public good?

In New York, as in most states, state officials permit petroleum wells through a generic process based on industry’s needs, without regard to the character, planning, and land-use preferences of local communities. Because, drilling -- a minor part of the New York’s large and diverse economy – has never progressed much beyond remote and comparatively limited areas, the state’s generic style of permitting has never been challenged...

Until now. The scale and logistics of shale gas development are entirely different from conventional drilling, and they are raising correspondingly monumental jurisdictional questions in towns sitting over some of the world’s most promising carbon reserves. If President Barack Obama and his challenger, Mitt Romney, are as keen on tapping domestic reserves as they appeared to be in their recent debate, your home town, and many others throughout the country that sit over black shale, may become a global petroleum producer, for better or worse.

The prospect of widespread and intensive unconventional drilling operations by outside companies has some local town boards fearing an assault on the characters of their communities, while the sums of money on the line and the promise of jobs and cheap energy have industry supporters fearing local bans that could interfere with full-scale development. And that’s why the Dryden and Middlefield cases have come to represent something much more than zoning issues affecting particular communities. (Details on the cases and links to decisions and appeals can be FOUND HERE).

To help the court weigh the case and the far reaching ramifications of its eventual decision, attorneys on both sides are sheduled to file briefs next week on behalf of at least 64 interested parties – (known in legal terms as amici curiae or “friends of the court”). The parties include more than 50 towns and villages within New York state, and a host of organizations representing planners, mayors, businesses, landowners, farmers, and industry. In general, the business groups and industry are against recognizing Home Rule authority over shale gas development. That’s because effective shale gas development, according to industry supporters, needs regulatory predictability and uniformity to control large contiguous land tracts in a way that encourages the most cost effective and complete placement and build-out of drilling rigs and infrastructure. This can run counter to planning goals of towns and villages making land use decisions based on local standards, political preferences, and community character.

West

Industry attorney Tom West said he expects “considerable amicus support for both sides” which should send “the right message to the Appellate Division that these cases are very important to the future of oil and gas development in New York State.” Attorney Deborah Goldberg, representing towns seeking to preserve the application of Home Rule to shale gas development, agreed that the number and range of parties listed in amici briefs “shows the significance the decision will have on a wide range of interests.” According to John Henry, an attorney who filed briefs on behalf of parties that support Home Rule, his clients are fighting for something that transcends the fracking debate: “They are not taking sides for or against fracking,” he said. “All they want to do is make sure that Home Rule prevails.”

Goldberg

It’s hard to discount partisan interest over the outcome of shale gas development from all parties filing briefs. The American Petroleum Institute, the Independent Oil & Gas Association, and parties advocating exclusive control of shale gas development through the state have interests and positions diametrically opposed to those of the City of Ithaca and other municipalities with large and active citizenry backing the anti-fracking movement.

West anticipates the case – before an intermediate appellate court -- will be heard in February, with a decision 6 to 8 weeks after the oral argument. But there is the possibility that the case may continue on after that. The loser can seek an appeal before New York’s highest court, the New York Court of Appeals.

Parties in support of lower court decision upholding Home Rule drilling bans:

Town of Ulysses
City of Ithaca
City of Oneonta
Town of Alfred
Town of Ancram
Town of Camillus
Town of Carlisle
Town of Caroline
Town of Catham
Town of Claverack
Town of Copake,
Town of Danby
Town of Dewitt
Town of Elbridge
Town of Enfield
Town of Geneva
Town of Gorham
Town of Highland
Town of Ithaca
Town of Jerusalem
Town of Kirkland
Town of Lansing
Town of Livingston
Town of Lumberland,
Town of Marcellus
Town of Meredith
Town of Middlesex
Town of Middletown
Town of Milo
Town of New Hartford
Town of Mendon
Town of Otisco
Town of Otsego
Town of Owasco
Town of Potsdam
Town of Rush
Town of Sennett
Town of Skaneateles
Town of Springfield
Town of Summit
Town of Tusten
Town of Wales
Town of Westmoreland
Town of Woodstock
Village of Cayuga Heights,
Village of Dundee
Village of Freeville
Village of Honeoye Falls
Village of Prospect
Village of Saugerties,
Village of Sharon Springs
Village of Trumansburg
The Associated Towns of New York State
The New York Conference of Mayors
The New York Planning Federation

Parties seeking to overturn lower court decision on Home Rule drilling ban

American Petroleum Institute
The Chamber of Commerce of the United States
The Independent Oil and Gas Association of New York
Business Council of New York State
Clean Growth Now
National Association of Royalty Owners
NARO NY
The Joint Landowners Coalition of New York
The New York Farm Bureau

Industry to appeal both Middlefield, Dryden drilling bans

The drilling industry is appealing two watershed cases that will decide whether local municipalities in New York state can ban drilling.

Industry supporters will challenge rulings issued last month by the state Supreme Court that upheld local drilling bans in both the Town of Dryden and the Town of Middlefield, Tom West, an attorney from the West Law Firm, said this morning. The firm issued a notice of appeal yesterday on behalf of Anschutz Exploration Corporation in the Dryden case. The West firm is also working with attorneys from Levene Gouldin & Thompson on an appeal of the Middlefield case, expected within days, West said. The notice to appeal both cases comes just days before the deadline.

On February 21, New York State Supreme Court justice Phillip R. Rumsey issued a summary judgment in the matter of Anschutz Exploration Corporation versus Town of Dryden that upheld the town’s ban on shale gas exploration. Following the ruling in late February, West told me the company was not enthusiastic about funding an appeal in New York state for several reasons, including the low price of gas, environmental resistance, regulatory uncertainty in New York, and the status of its lease hold. He did not rule out an appeal, either.

Days after the Dryden decision, 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 in March his firm was working 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.”

Ultimately, the outcome of the landmark case will decide whether the state or local jurisdictions have the final say on drilling. The fight by the industry to remove the bans speaks to the value of mineral resources under the towns. Prime sections of both the Marcellus and Utica shales – thought to be some of the largest natural gas reserves in the world -- extend from Pennsylvania well into upstate New York. The issue embodies the national controversy over the merit of the risks and damages of onshore drilling,

West said today that the law firms have found funding for the appeals, although he was not specific regarding the source. While notices to appeal the cases are being filed by the deadlines, the actual appeals will take longer to assemble and will come later this year, he said. The cases would likely be heard together in front of the appellate court this fall in Albany, he said.

Pro-drillers in NYC watershed demand $81 B for lost rights Resolution sets stage for next big battle over fracking ban

Drilling proponents are demanding $81 billion from New York state and New York City to compensate Delaware County residents for the loss of mineral rights.

The land in question harbors both the watershed that supplies New York City, and a prime section of the Marcellus and Utica shale drilling fairway, covering some of the largest natural gas reserves in the world. The state has included a ban on the controversial process of fracking in the part of the fairway running under the Delaware River watershed in the heart of New York’s Catskill Mountains, including parts of Delaware County.

The ban is spelled out in a policy document, called the SGEIS. In draft form for four years, the SGEIS is being develop as a guideline to oversee permitting of shale gas development in New York. The policy has drawn criticism from both drilling supporters, who see it as too restrictive, and opponents, who see it as too lax. Gov. Mario Cuomo said a final version is expected within months.

The latest version of the plan includes bans to protect sensitive fresh water supplies, including the watershed n the Catskills, from risks related of hyrdraulic fracturing, a controversial process that involves trucking, handling, mixing and injecting millions of gallons of chemical solution under high pressure into each well bore to stimulate gas production. In addition to the spent fracking fluid, the fracking produces waste from brine, heavy metals and naturally occurring radioisotopes that pour from the well bore.

The $81 billion demand for compensation for the loss of drilling rights in the Delaware watershed, stated in a resolution passed by the Delaware County last week, is yet another challenge to the soundness of New York’s policy and a likely prerequisite for a law suit. The resolution, drafted on Feb. 22 by Christa M. Schafer, clerk to the Board of Supervisors, states that drilling restrictions by the state and city would strip property rights from landowners in the towns of Colchester, Hancock, and Deposit within drilling buffer zones, and eliminate production from another 500,000 acres, or more than 80 percent of the county’s land base.

The issue of the legality of bans has just begun to hit the courts in other localities. Last month, two separate rulings in New York’s low court favored fracking opponents. On Feb. 24, state Supreme Court Justice Donald F. Cerio, Jr. ruled in favor of the Town of Middlefield’s ban on hydrofracking. The ban, issued by the Otsego County town in September, prompted a claim by Cooperstown Holstein Corp. that the ordinance denied rights of parties to reap economic benefits of a lease to develop mineral rights on 400 acres within the town. On Feb. 23, state Supreme Court justice Phillip R. Rumsey upheld the right of the Town of Dryden, in the Finger Lakes region, 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.

The Delaware County resolution sets the stage for another test over the rights of those who want to drill versus those who want to be protected from the impacts of drilling.

Click here to see a copy of the resolution

Chris Denton, an Elmira lease attorney, characterized the Delaware County resolution – and the implication it carries -- as a natural result of the anti-fracking movement. “Those who have opposed all oil and gas development are about to find that Newton's Third Law of Motion has an analogue in politics and the law -- For every action there is an equal and opposite reaction,” Denton said. “The constitutional issues are real, costly, and unresolved. With the current claim valued in the billions of dollars, there will be no shortage of quality legal counsel for the landowners and the towns in the pursuit of their claims.”

Deborah Goldberg, an attorney for the environmental group Earthjustice, said a law suit based on the loss of mineral rights, known as a takings claim, seemed like "a long shot" in this particular case. "It's hard to imagine what could justify damages of that amount," she added

Delaware County officials could not be reached late Friday. Check back for updates

BREAKING NEWS: Middlefield ruling favors anti-frackers Second State Supreme Court ruling upholds local ban

The anti-fracking movement won a second major legal battle today when the New York State Supreme Court ruled on rights and restrictions concerning shale gas development.

Acting Supreme Court Justice Donald F. Cerio, Jr. ruled in favor of the Town of Middlefield’s ban on hydrofracking,. The ban, issued by the Otsego County town in September, prompted a claim by Cooperstown Holstein Corp. that the ordinance denied rights of parties to reap economic benefits of a lease to develop mineral rights on 400 acres within the town. The plaintiff also argued that the state’s authority to permit wells supersedes a local municipality’s authority to ban it.

I link to the ruling is available here.

Cerio ruled that state law “does not serve to preempt a local municipality  … from enacting land use regulation within the confines of its geographical jurisdiction.” Additionally, “local municipalities are permitted to permit or prohibit oil, gas and solution mining or drilling in conformity with such constitutional and statutory authority.”

The ruling is likely to encourage restrictions in upstate New York communities with populations disinclined to accept risks associated with high volume hydraulic fracturing. The process, commonly known as fracking, extracts gas from rock by injecting pressurized chemical solutions into the ground. Resistance, based principally on concerns over water contamonation, has been especially strong in New York’s major cities, including New York City, Buffalo, Binghamton and Syracuse, as well as in rural communities in the Finger Lakes and Catskills.

On Tuesday Supreme Court justice Phillip R. Rumsey upheld the right of the Town of Dryden, in the Finger Lakes region, 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.

Both the the Middlefield and Dryden cases are among the first in New York to test the issue known as home rule, or the right of local governments to make their own decisions about regulating the drilling industry. As reported in a post earlier this week, lawyers involved with home rule cases told me that the Middlefield decision – decided by the state’s lower court -- would likely be appealed regardless of the outcome because of the high stakes. Oneonta and other places in upstate New York sit over massive shale mantels, including the Marcellus and the Utica, which are thought to hold some of the richest natural gas reserves in the world.