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New York AG Seeks Dismissal of Frack Delay Lawsuit

New York Attorney General Eric Schneiderman has filed a motion to dismiss a lawsuit filed against Gov. Andrew Cuomo and two state officials over the ongoing regulatory delay for considering high-volume hydraulic fracturing (HVHF) in the Empire State.

Last December, a lawsuit was filed in Albany County Supreme Court against Cuomo, Department of Environmental Conservation (DEC) Commissioner Joseph Martens and Department of Health (DOH) Commissioner Nirav Shah (see Shale Daily, Nov. 25, 2013).

The plaintiffs in the case are Mark Wallach -- a bankruptcy court-appointed trustee representing Norse Energy Corp. USA, a subsidiary of Norway's Norse Energy Corp. ASA -- and James Lobdell, a private investor in Norse's parent company who lost more than $20,000. They are seeking an Article 78 proceeding, a provision of state law that can be used to challenge the actions of an administrative agency in court.

Norse Energy Corp. USA and Norse Energy Holdings Inc. entered Chapter 7 bankruptcy last October (see Shale Daily, Oct. 18, 2013). Norse holds oil and gas leases for about 130,000 net acres in the state's portion of the Marcellus and Utica shales. The lawsuit was filed to motivate the DEC to release a supplemental generic environmental impact statement (SGEIS) on HVHF and give value to the leases as part of Norse's bankruptcy (see Shale Daily, July 31, 2013).

Schneiderman filed a motion to dismiss the case on Feb. 21, arguing that Wallach and Lobdell have no standing in the case and that they have no legal right to mandamus relief (Wallach et al. v. New York DEC et al., No. 6770-1). He also said the plaintiffs are barred by the applicable statute of limitations for relief and failed to state a cause of action, and Wallach was exceeding his limited capacity as trustee by seeking noncompensatory relief unrelated to the bankruptcy case.

But on Wednesday, Thomas West, an attorney for The West Firm pllc in Albany, NY, called Schneiderman's request "a legally unsupported smokescreen," and urged the court to deny the motion for dismissal.

"At all costs, the respondents are desperately trying to avoid judicial review of their egregious delay and refusal to bring the SEQRA [State Environmental Quality Review Act] process to a conclusion.

"They have, thus, put forth arguments before this court, which, if accepted, would make them the sole arbiters of the reasonableness of their own conduct and allow them to persist in their continuing delay and unlawful conduct ad infinitum."

Cuomo, DEC and DOH are also being sued in the state's Supreme Court over the ongoing regulatory delay by the Joint Landowners Coalition of New York Inc. and other landowners (see Shale Daily, Feb. 18).

Documents from U.S. Bankruptcy Court for the Western District of New York show Wallach, of the Buffalo, NY-based firm Penney, Maier & Wallach, was appointed trustee in Norse's bankruptcy case (No. 12-13685-CLB) on Oct. 10, 2013.

In September 2012, Martens asked Shah to conduct a health impact analysis of HVHF before the DEC completed a SGEIS (see Shale Daily, Sept. 24, 2012). The SGEIS was ordered in July 2008 by then-Gov. David Paterson, effectively placing a moratorium on drilling horizontal wells in New York.

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