Global fracking debate: Coming soon to town hall near you Upstate NY localities face fallout from Home Rule decision

Late last month, New York’s high court issued a ruling that put the debate over the merits and risks of shale gas development in the hands of local governments.  The much-anticipated ruling – a monumental victory for grassroots political action -- settled a long-standing question regarding the state’s jurisdictional control over the matter. Yet it raised many other questions about how local governments will respond.

There are towns for drilling and towns against drilling. But much of the fight over where and to what extent shale gas development – including high volume hydraulic fracturing -- will be a part of the New York landscape will play out in towns with no stated policy. Do communities that don’t want fracking need to actively pass a ban? Can communities that want fracking amend zoning laws to encourage it? What happens if they do neither?

These questions are predicated on a pending decision by Governor Andrew Cuomo on whether to allow fracking anywhere in the state. While the outcome of that remains anybody’s guess, we know from Cuomo’s past remarks that he favors a plan to begin issuing shale gas permits in towns with no local bans. These happen to be along the border with Pennsylvania, which also sit over the most viable parts of the Marcellus Shale. This dynamic becomes especially relevant to towns in this area – and there are many of them -- with no comprehensive plan and nothing on the books specific to fracking.

One of these places is Vestal, where dozens of residents against fracking attended a town board meeting this week to urge elected officials to pass a local ban.

The reaction by Town Supervisor John Schaffer, as reported by BinghamtonHomepage.com, was not especially concrete. "Our town code says you can't do it here to begin with, and I've told these people [anti-fracking activists] that over and over and over," Schaffer said. He then added: "We’re aware of the recent Court of Appeals decision regarding home rule. While the decision permits the town to enact legislation that would ban fracking, it does not require us to ban it. According to the town board, we will carefully monitor this issue and will act when and if there’s an incident for us to do so."

(In her blog The Marcellus Effect, Sue Heavenrich covers a similar controversty unfolding in Candor, NY.)

Some legal experts say that towns could – depending on wording and interpretation of local law -- grant variances to gas companies to site wells in areas otherwise zoned against industrial use, which is just what supporters of gas development are hoping for and what opponents dread. Attorney Helen Slottje represented Dryden and Middlefield in their Home Rule victory. In a recent appearance on Capitol Press Room, Slottje pointed out that while the Court of Appeals ruling would make it more difficult for operators to drill in zoned areas, it would still be possible, depending on how a given town reacted to the ruling.

“There are in most zoning codes various exceptions for different uses that could be construed by a court to be like gas drilling sufficient to allow gas drilling to proceed,” she said. “The safest thing for a town to do is to pass a zoning amendment or stand alone law that makes it clear that gas drilling is not permitted in their town.”

Industry lawyer Tom West also raised that possibility. He told host Susan Arbetter his clients would be “implementing a strategy to protect our investments,” but because the nature of the fight had been so tactical – like a chess game where each side was anticipating the other’s moves -- he was “not at liberty to discuss that strategy.”

All this sounds suggestive and inconclusive because it is, at least until the matter is fully deliberated and acted upon at a town board level.

Some activists are already beginning to push the matter. Sue Rapp, a member of Vestal Residents for Safe Energy (VeRSE), characterized Vestal Supervisor Schaffer’s comment that the town would take a wait-and-see approach as “garbled messages not on point ... When examined, his remarks convey nothing of substance on the issue of zoning regs/variances and gas drilling.”

The ambiguity can be maddening or inviting, depending on your stake in the debate, and it has provoked some thoughtful comments from readers on my recent post about fallout from the Court of Appeals decision.

In response to a comment by Mary Sweeney, who pondered whether existing zoning laws would preclude drilling with no stated bans, fracking critic and policy analyst Stan Scobie elaborated on the undisclosed plan that West mentioned on Arbetter’s show. According to Scobie, West is organizing a campaign with certain towns over Marcellus shale zones to create policy – zoning overlays – that would maximize development of the play by creating the legal architecture to override zoning laws. Scobie writes:

Governor Cuomo and the DEC some time ago raised a difficult issue, namely,  fracking would perhaps be OK in those towns who "wish" to be fracked,  but  how would we know which ones they are? To address this the pro-drillers have crafted a "zoning overlay" strategy.

This plan would have each town modify their Comprehensive Plan, if they have one, to be somewhat fracking friendly, and then develop and legislate zoning overlays. These would, if passed, clearly identify the towns and areas in towns where fracking was OK. There would be no "frack me" resolutions passed quietly and quickly at Town Board meetings with zero attendance as seemed to be the case a couple of years ago. 

Scobie’s full response can be viewed here in the comments section.

This week, I asked West in an email whether zoning laws already on the books – those that prohibit industrial operations in residential or other areas -- effectively serve as “bans” to oil and gas. And of if so, can drilling supporters work around them? West responded:

Whether oil and gas activities are considered an industrial use, will be a municipality by municipality determination...  Much of the clarification will come over time.

In other words, much of where drilling is allowed will come down to interpretation of local zoning laws, and that interpretation will be made on a town by town basis by local leaders and their lawyers.

In short, the fight over drilling in New York is far from over. It continues on the state level, where activists like Walter Hang are leading a campaign to pressure Cuomo to withdraw the controversial policy review that is essential for it to go forward. And, pending that outcome, it continues on a local level, where towns will have to either craft policy clarifying how and if their zoning laws apply to gas drilling, or face the prospect of court challenges and the consequences when push comes to shove with money, leases, and passions on the line.

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.

Home Rule adversaries welcome date with high court Ruling on towns’ role in fracking battle will be ‘definitive’

Jurisdictional rights of local governments – an issue known as Home Rule -- will have monumental influence on where and if shale gas wells will be drilled in New York. The outcome of that story now hinges on the final act of a conflict that began in 2011 after the towns of Dryden and Middlefield passed laws that prohibited gas drilling and the controversial practice of hydraulic fracturing, deemed incompatible with land use plans.

West

The decision last week by New York’s high court to hear a case challenging local bans on fracking is a clear and understandable victory for the industry.  It is also something of a plot twist after bans in both Middlefield and Dryden were unanimously upheld in separate trial courts, and then again in the state’s appellate division. Tom West, who represents industry, knew a chance to breathe new life into his case challenging the town bans in the state’s high court was, in his words, “a long shot.” In 2012, the Court of Appeals heard just 64 cases out of nearly 1,000 requests for permission to appeal, or 6.4 percent. But because of the importance of the case, he filed an appeal anyway. The court announced on August 29th that it would hear the case.

Slottje

With this in mind, you might expect that those who see Home Rule as a tool to discourage fracking in New York would be disappointed, maybe even crushed, by the possibility that clear-cut victories in lower courts could now be overturned in the Court of Appeals. But you would be wrong, at least if your source of information is Helen Slottje. Slottje is a principal attorney who represents the municipalities. It’s a role that positions her as an adversary to West in a case that brings a new level of visibility to both of their veteran careers. The Court of Appeals’ decision to hear the case gives the industry another chance. But, Slottje points out, it also gives Home Rule advocates a chance to remove any ambiguity that may have remained with lower court rulings. Without a definitive ruling from the high court, the door would remain open for other challenges and legal tacks in other districts.

“Lawyers might be interested in this dragging on. But it gets expensive and it’s a long process,” Slottje said. “There’s no quicker or easier way than having the course go to the Court of Appeals.”

On this point, West and Slottje have no differences.  “That’s a rare moment of agreement between us,” West said. “This will be definitive. However the Court of Appeals rules, that’s it. ”

Slottje and a colleague, attorney Deborah Goldberg of Earthjustice, have publically debated the case with West on various radio shows and at law clinics over the last year. I have participated in more than one of these events as a facilitator, and I’m now in the fortunate position of being invited to participate as a moderator in an upcoming clinic at the Albany Law School that will feature various legal points of reference on the future of drilling in New York State. The morning program promises a look at legal factors that will influence shale gas development, ranging from health impacts to property rights, with the afternoon session featuring the ground breaking Home Rule case as it advances to an even bigger stage. (I will moderate a panel in the morning program, and Capitol Pressroom host Susan Arbetter will moderate a debate between Goldberg and West in the afternoon session.)

The question at the core of the Home Rule case -- Norse Energy Corporation vs Town of Dryden et al. -- is whether the state’s Oil Gas and Solutions Mining law supersedes local laws when it comes to “regulation” of oil and gas operations. Lower courts have ruled in favor of the towns’ argument – based on precedent in similar cases involving jurisdiction over sand and gravel mines -- that banning something is different than regulating it. In other words, a local government can have a say of where and if gas wells are sited based on local land use plans, but not how they operate.

More than an abstract academic discussion, the outcome will influence the local landscapes for future generations. More than 150 municipalities have passed a ban or moratorium on gas drilling or fracking, according to FracTracker. It’s an area where the issues of fracking – with all its national and global ramifications – is brought tangibly down to the town board level. Whenever people – for or against fracking -- can see such a direct return on their civic engagement, it produces the kind of stories – stories with impact -- that journalistic sensibilities relish.

Both Slottje and West are cautious about reading much about the odds of winning or losing into the court’s decision to hear the case. There is no pattern in former rulings that suggests the Court of Appeals’ willingness to hear a given case predisposes it to overturning the decision of lower courts, with the record showing it upholds decisions with the approximate frequency that it overturns them.

“I think you can only read into this that it’s important for the court to clarify this,” West said.

The matter will be decided by the seven Court of Appeals judges, appointed by the governor to 14-year terms. (See their bios here.) The ruling is expected to come in the middle of next year, but the work has already begun. The schedule is yet to be announced, but if the case follows normal course of events, the petitioners, Norse Energy and Cooperstown Holstein Corp. (represented by West) have 10 days from the Aug. 29 announcement to file a preliminary statement of appeal, and 60 days after that to file briefs. Briefs from the towns of Dryden and Middlefield (represented by Slottje and Goldberg) are due 45 days after the industry’s briefs are filed. That means all the paperwork would have to be filed by the end of the year. Oral arguments would typically come five months later, or in May. Decisions are typically issued 40 days after oral arguments, which would be July.

The case could drag out longer, but that is unlikely, attorneys noted. The Court of Appeals, unlike other branches of government, has a reputation for sticking to schedules. There are other legal issues yet to be tested in courts, including the state’s (still undecided) administrative approach to regulate, permit, or ban shale gas wells while balancing public health and environmental concerns. By this time next year, however, the home rule case will be settled, even though fracking will undoubtedly remain a contentious political issue, with pending legislative and gubernatorial elections and an open door for legislative intervention

NY Appellate Court upholds Home Rule fracking ban Landmark case critically linked to Marcellus development

New York’s anti-fracking movement scored a critical victory today in a landmark case testing the right of local governments to ban fracking.

In a much-anticipated decision, the state’s Third Appellate Division upheld a ruling  giving local governments authority to ban the controversial practice of unconventional drilling and well-stimulation techniques – including high volume hydraulic fracturing -- to extract petroleum from bedrock.

Today’s ruling comes after the shale gas industry appeal of a February, 2012 decision by a lower court favoring the right of local governments to ban drilling. The appeal was based on an argument that legislation amending the Oil Gas and Solutions Minding Law gave the state, not local governments, exclusive jurisdiction over wells.

In today’s appellate court ruling, the three-judge panel unanimously agreed that the oil and gas law did not reflect legislative intent to “pre-empt a municipality’s power to enact a local zoning ordinance banning all activities related to the exploration for, and the production or storage of, natural gas and petroleum within its borders.”

This theme was reiterated emphatically throughout the 15-page ruling:

We find nothing in the language, statutory scheme or legislative history of the (Mining Law) statute indicating an intention to usurp the authority traditionally delegated to municipalities to establish permissible and prohibited uses of land within their jurisdictions. In the absence of a clear expression of legislative intent to preempt local control over land use, we decline to give the statute such a construction.

Industry attorney Tom West said his legal team will file for an appeal, but it is up to the discretion of the state’s high court whether to hear the case.

Home Rule bans are supported by activists who fear shale gas development, including the use of high volumes of undisclosed chemical solutions injected into the ground to fracture shale and release gas – poses unacceptable threats to environment and public health. Activists praised the court’s decision to uphold local bans, while using the victory to encourage broader opposition.

“The real solution to this problem is for the state to ban fracking, but until that happens, local governments have a responsibility to protect their citizens from the oil and gas industry,” Kelly Branigan said in a statement. Branigan is a founding member of Middlefield Neighbors and a member of New Yorkers Against Fracking. Residents of the towns of Middlefield and Dryden supported the bans, which were legally challenged by Anschutz Exploration and Norse Energy.

The Marcellus and Utica shalea, some of the largest gas reserves in the world, extend throughout Pennsylvania, New York, and Ohio. Today’s ruling could have a profound impact on the future of shale gas development in the Empire State. Unlike conventional gas development, which tends to be geographically limited, the footprints of shale gas resources cover large regions. Uncertainty over jurisdiction from one town to the next can be a critical disincentive for drillers. Absent a successful appeal, according to West, the prospects of large scale shale gas development in New York are dim.  “This sends a signal to the industry that New York is not stable,” he said. “You can invest millions of dollars to lease in New York and be at the mercy of a 3-2 town hall vote.”

Which is exactly why grass roots activist like it. Local control of the gas industry is a “David and Goliath battle,” said Branigan. “This decision shows that our democracy in New York State still works.”

Permitting for gas wells in New York has been on hold for five years, pending the outcome of a policy review by the state Department of Environmental Conservation accounting for environmental and health impacts. That review, called the Supplemental Generic Environmental Impact Statement (SGEIS) has no timetable for completion, Department of Health Commissioner Nirav Shah said yesterday.

The battle continues, and shale gas development is still a real possibility in certain parts of the state despite today’s ruling. There are municipalities that support gas development, including many in Southern Tier counties that are adjacent to productive gas fields in Pennsylvania. If shale gas development were to begin in New York, it would be here, according to a plan floated by Governor Mario Cuomo last year.  The incentive to develop these areas in Broome, Tioga and Delaware counties are strong, because the geology is promising, they are close to major pipelines, and there is relatively little opposition from local town boards.

“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

Home Rule cases advance in New York, Pennsylvania

In a post earlier this week, I discussed how upcoming national elections could influence prospects for federal regulations of shale gas development. In short, the chances of bringing the fracking industry under federal regulatory domain, iffy under Obama, would be non-existent under Romney.

Regardless, the industry is facing a legal offensive from the opposite direction – local zoning boards. This has been a notable week for industry appeals of rulings in New York and Pennsylvania that leave the fate of oil and gas drilling operations to municipal officials.

In New York, industry lawyer Tom West filed briefs on Monday appealing two separate lower court decisions upholding ordinances in the towns of Dryden and Middlefield to ban shale gas development. Both Dryden, in the Finger Lakes area, and Middlefield, in the Catskills, are places where support has grown for the anti-fracking movement. The crux of the appeal concerns whether the New York State Oil & Gas Solution Mining Law is similar in intention to the Mined Land Reclamation Law, which recognizes local municipalities’ rights to apply zoning ordinances for the mining industry. In separate decisions, the state’s lower courts ruled that the answer is yes. In the appeals, (which you can find here) attorney West argues for Norse Energy (representing industry) and for Cooperstown Holstein Corporation (representing landowners) that the intention of the two laws are different, and a preemption from state law that subjects mining to local control does not apply to drilling.

The lower court, citing precedent of the Mined Land Reclamation Law, determined that state’s regulatory authority applies only to how an operation is conducted, not where or if it is allowed. Therefore a ban by a municipality on the grounds of incompatible land use is permissible. The appeal argues that, unlike the mining law, the oil and gas law specifically pre-empts local law not only in regard to how operations are carried out, but where they are allowed. West said he expects the case will be scheduled in the court’s February session, with a decision six to eight weeks after the oral argument.

The degree to which local government has a right to control permitting decisions within its borders– known as Home Rule – is also playing out in a landmark case that has reached Pennsylvania’s high court. The crux of the case in the Keystone State involves the constitutionality of Act 13, a law supported by Governor Tom Corbett and passed by the Republican Controlled General Assembly early this year to reinforce the state’s exclusive authority over where and how shale gas is developed. Shale gas development in particular benefits from uniformity and predictability in policy to optimally build out infrastructure to tap reserves underlying large geographical areas over time. Act 13 was designed to support development by taking away uncertainty that comes with local municipalities enacting different and contrary decisions about land use.

The constitutionality of Act 13 was successfully challenged by a group of municipalities in Washington County. The Commonwealth Court ruled 4-3 in July that the state overstepped its authority by allowing drilling and related industrially intense activities in residential areas.

As reported by Timothy Puko of Tribe Live, about 130 people crowded into the courtroom in Pittsburg Wednesday to hear the arguments. (Note, the location in my original post was incorrect.) Many of them carried signs and banners that they had to leave at the door. At one point, the atmosphere became so boisterous that Chief Justice Ronald D. Castille threatened to evict spectators.

A panel of six (elected) judges – three Republicans and three Democrats -- heard the case. According to Puke’s report, several of the judges posed questions or made statements that appeared unsympathetic to the state’s case. While Puko explained that critical questioning is typical and not always an indication of how judges rule, some legal observers noted these questions seem to represent something more. According to Puko’s report:

Justice Max Baer told the state’s attorney, Matthew Haverstick , that his argument was “scary” to laymen, families and homeowners. Justice Seamus P. McCaffery of Philadelphia asked the attorney about “a private citizen’s right to have a quiet residential community.”

… Court experts were struck by how pointed the two justices’ statements sometimes were, going beyond typical questions.

“My reading of the (rule) is that Pennsylvania’s residential communities can now be turned into industrial communities where tractor-trailer traffic is running all along the streets,” McCaffery said at one point.

The justices are not inclined to make statements so far off from their eventual ruling that it would disappoint voters, said Duquesne University law professor Bruce Ledewitz.

“I don’t think they were just posing questions. I think they were posing deep-seated concerns,” he said. “It’s not just academic for them. They have to face the voters in the future.”

The Commonwealth ruling favoring Home Rule would stand if the verdict is tied. Judges gave no indication of when they would rule. In the meantime, policy governing the future of onshore drilling will for years remain very much a work in progress involving all three branches of government, locally and nationally. Regardless of how you feel about the risks and rewards of onshore drilling compared to developing other energy sources, the stakes offer yet anther reason to vote on Nov. 6.

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.

Status of Home Rule appeals uncertain as deadline nears Arguing against local control could put Republicans on spot

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 an awkward position as they ramp up their campaigns in election year 2012.

Hydraulic fracturing policy battle waged along local fronts New York, Pa. apply contrasting approaches to home rule

A Marcellus well drilled in Susquehanna County
PHOTO JAMES PITARRESI

For almost four years, officials in the legislative and executive branches of New York state government have been engaged in the conflict over shale gas development. Last week, the public focus turned to the judicial branch, with two high-profile rulings in test cases before the state Supreme Court. In both cases, New York's low court upheld local bans on shale gas development –first in Dryden then in Middlefield. As these landmark cases work their way through the appeals process, governor Andrew Cuomo’s staff will be attempting to finalize the SGIES, the policy document intended to provide guidelines for DEC officials to begin issuing permits for high volume hydraulic fracturing. Meanwhile, lawmakers will continue to consider (pending the SGEIS outcome) a host of options and proposals of their own offered over the years to regulate high volume hydraulic fracturing in the state.

While the shale gas controversy spreads across the three branches of state government, there are dozens of low profile but equally important developments shaping up in town halls, from Albany to Buffalo. The outcome of the local governing process will have a critical role in defining the impact on shale gas development in decades to come in the northern sections of the Marcellus and Utica shales, which extend under Appalachia and well into upstate New York. While not all towns are pursuing outright bans, they are raising sticky questions about who will pay to regulate gas development. These questions are at the heart of substantial resistance to drilling in a state that has become a national example of the influence of the anti-fracking movement.

Earlier this month, Yates County legislators unanimously agreed to request state funding for increased workloads of local public health officials expected with gas well oversight. As reported by The Chronicle Express, local health officials will be the primary point of contact for health and water-related complaints related to drilling activities. Their duties will also involve educating the public about drilling, and overseeing testing and mitigation measures necessary to protect local water resources. Legislators told reporter Gwen Chamberlain that they expected additional resolutions to fund other costs in the planning and transportation departments related to shale gas.

The complaints about unfunded mandates related to the state’s developing policy are not new, and Penn Yan officials are not the only ones raising them. Municipal officials from all over the state documented similar complaints in comments and testimony submitted on the latest draft of the SGEIS. A person that knows this all to well is Stuart Gruskin. Gruskin, who works as an environmental policy consultant, was assistant DEC Commissioner under governor David Paterson’s administration. In that role, he was largely in charge of the initial two years of the policy review that brought about the first draft of the SGEIS. In his view, the state is in a good position to address the issues of local government control and funding before the final guidelines are issued.  “If there was ever a time to dedicate the resources to address these issues it's now,” Gruskin wrote me in a recent email. “It would be a good launching point to start talking about alternatives to the state being responsible.” Ideally, funding and solutions to problems, would come from “collaboration among local governments, industry, and stakeholders -- without the risk of the funding getting high-jacked for other state purposes.” That, he concluded, “will take some creative thinking as well as agreement” and success is dependent on “a high level of collaboration.”

Collaboration of stakeholders with diverse and sometimes competing interests to regulate a process as controversial as high volume fracturing in New York would indeed be an achievement; but then, that’s how our government is supposed to work. Some towns are dead against it, and others are for it. On this level, leaving the matter in the hands of local officials makes sense. But there are issue, including waste disposal and water consumption, that reach beyond any given locality and even state lines. Fracking waste – including brine and large volumes of chemical solutions -- produced in New York state, for example, would become another state’s problem, as New York lacks treatment plants, injection wells and policy to dispose of it.

Meanwhile Pennsylvania, with a history and culture of mineral extraction antithetical to New York's, continues to follow a much different path regarding shale gas policy.  Earlier this month, both houses of the Pennsylvania legislature restricted municipal zoning authority on drilling operations. Under the new law, municipalities have no control over well citing or hours of operation, and only limited control over setbacks. Most oil and gas operations, including wells, pipelines, and waste pits will be permitted uses in all districts. In return, lawmakers have allowed an impact fee for each well, roughly equivalent to a 1 percent to 3 percent tax on natural gas extraction. True to governor Tom Corbett’s policy, this keeps Pennsylvania as one of the least restrictive states in which to drill.

New York and Pennsylvania straddle some of the largest gas reserves in the world. While the geology is similar, their political and policy approaches could not differ more. In the context of history, future generations will surely be able to measure one against the other in terms of successes and failures.

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.”

Goldberg

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.

West

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.

BREAKING NEWS: Small town wins big fracking case Home Rule decision allows ban of shale gas exploration

With a landmark decision issued today by the New York State Supreme Court, local governments suddenly gained a significant measure of control over the hydraulic fracturing debate.

While the New York state DEC continues it’s multi-year task to figure out how to permit shale gas wells, the court issued a summary judgment in the matter of Anschutz Exploration Corporation versus Town of Dryden. Dryden won, and one word explains why that ruling is a big headache for the industry and a huge victory for anti-fracking activists. Precedent.

Following the political disposition of the small town in the Finger Lakes Region, Dryden leaders passed an ordinance last August banning the controversial process – fracking -- to extract gas from shale by injecting high volumes of pressurized solution into the ground. The zoning ordinance was swiftly challenged by the oil and gas industry. The industry, specifically the West Law Firm representing Anschutz, argued that the state had the sole authority to regulate the industry as stated in the Oil, Gas and Solution Mining Law. To do this, the state must follow policy outlined in the Generic Environmental Impact Statement, which applies general guidelines to the approval of gas drilling within the state’s border, without taking into account many localized variables and the dispositions and circumstances of individual town governments.

This process is rooted in law last amended in 1981, long before high volume fracking made shale gas development feasible. In 2008, the state began updating its permitting guidelines to account for shale gas by drafting an amendment to the GIES --  a supplemental, or SGEIS. While Pennsylvania pushed ahead with shale gas development, New York stopped permitting until the new guideline could be finalized, a process mired in dissention and yet to be completed. The anti-fracking backlash grew – especially in the Catskills and Finger Lakes regions with a history of land preservation over mineral extraction; and the moratorium gave Dryden – one of the most active anti-fracking towns --  a chance to pass a zoning ordinance that was quickly challenged by Anschutz, which holds leases for mineral rights on more than 22,000 acres in the town.

Supreme Court Justice Phillip R. Rumsey in Tompkins County ruled today that the language of the original state law was too vague to expressly prohibit Dryden from making its own laws to control drilling, a concept known as home rule.  “There remains an absence from the OGSML [Oil, Gas and Solution Mining Law] of clear expression of legislative intent to preempt local zoning control over land use concerning oil and gas production." The ruling also noted that the OGSML was “last amended more than thirty years ago. Long before the potential use of hydrofracking to recover natural gas from the Marcellus Shale in New York could have been anticipated. “

Some of the richest parts of the Marcellus and Utica shales extend from Pennsylvania into southern and central New York, where the gas industry has not been uniformly welcomed by towns as it has in Pennsylvania. Given what’s at stake – the likelyhood that one ban could lead to another, and another -- the industry is likely to appeal the Dryden decision, or possibly pursue other legal options. One of those options is a "takings claim", which seeks compensation for landowners unable to capitalize on their mineral rights due to government restrictions.