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Dairy Company Sues New York Town Over Drilling Ban

A dairy company with an oil and gas lease has filed a lawsuit against the Town of Middlefield, NY, accusing the municipality of overstepping its authority by enacting a ban on oil and gas operations.

Scott Kurkoski, an attorney with the Binghamton, NY, firm Levene Gouldin & Thompson LLP, told NGI's Shale Daily the lawsuit was filed Thursday on behalf of Cooperstown Holstein Corp. (CHC) and its owner, Jennifer Huntington, in the Supreme Court for Otsego County. He said a court date has not been set.

"What makes this case a little bit different is that we have someone who is already under lease," Kurkoski said Friday. Although he did not identify the oil and gas company involved with the CHC lease or any details about the property for the proposed drilling, Kurkoski said it was in an area "where they are predominantly doing conventional drilling, but the town's zoning law has banned it. So now the rights that [Huntington] was going to be able to realize under the lease have now been lost."

According to Town of Middlefield documents, the town board repealed the municipality's zoning ordinance and replaced it with a zoning law on June 14. The new zoning law outlaws oil and gas drilling operations and many forms of heavy industry.

The five members of the town council could not be reached for comment Friday. A memo from the law firm Bond, Schoeneck & King PLLC, which is assisting the town, predicted that it was "highly likely [that the town's] zoning authority is unimpaired. The case law also suggests that localities can exercise some control over land use impacts of gas drilling operations in ways that are more sophisticated than by merely prohibiting or permitting the use. Under properly crafted local laws, municipalities can establish special use permit requirements."

Kurkoski disagreed. "Under [New York's] environmental conservation law, it says towns and local municipalities are now allowed to regulate oil and gas," Kurkoski said. "But here the Town of Middlefield has decided they want to regulate oil and gas by banning it from its town. This action is really to get a court to decide that the town should not be banning oil and gas, that any regulations having to do with oil and gas have to come from the state and the DEP [Department of Environmental Protection]."

Kurkoski said the civil complaint did not include any mention of a de facto taking of oil and gas rights. "It's a declaratory judgment action to have a court declare town law is preempted by state law," he said.

Earlier this month the DEC issued the final draft of its supplemental generic environmental impact statement (SGEIS) on hydraulic fracturing (fracking), including additional documents addressing economic and community impacts (see Shale Daily, Sept. 8). The DEC said tens of thousands of new jobs could be created in the Empire State if the shale industry is allowed to develop. The agency is accepting public comments on the SGEIS through Dec. 12.

A recent poll of New York voters also suggests that a majority favor shale gas development (see Shale Daily, Aug. 15).

Kurkoski said he also represents the nonprofit group Joint Landowner Coalition of New York, which he said now has more than 800,000 acres. "We've been pretty active these days," he said.

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