Lenape Resources Inc., an oil and natural gas producer based in New York, has filed a lawsuit against a town in Livingston County for enacting a local drilling ban, and against the state Department of Environmental Conservation (DEC) for failing to rein in the town over the ban.
The company is reportedly seeking at least $50 million in damages from the Town of Avon on the grounds that its ban has cost the company millions in lost business.
“We’ve done our legal homework,” Lenape President John Holko told NGI’s Shale Daily on Friday. “There is definitely precedent that the only control the town has is on roads and taxes. We think they’re wrong, but we’ve also said that if we’re wrong and you can take away my rights, then you have to pay me for them. You can’t just take them away.
“We’ve combined a whole bunch of different complaints and said that if you’re going to give the town the right to take away my mineral rights, or my ability to drill new wells, then write me a check for $50 million.”
The Avon Town Board passed a one-year moratorium, essentially banning all oil and natural gas activities, on June 28. One week later Lenape, which is the only company now drilling in the area, shuttered its wells and pipelines in Avon, which resulted in halting royalty payments and free natural gas for landowners (see Shale Daily, July 11).
The company says Avon’s ban violates a 1981 state statute known as the Environmental Conservation Law. Last summer Lenape had threatened to sue the DEC if the agency didn’t advise Avon and two other municipalities in Livingston County — the towns of Caledonia and York — that they lack the authority to enact local drilling bans (see Shale Daily, Aug. 2).
“We are still reviewing what’s going on in Calendonia,” Holko said. “Lenape believes there is something odd going on at these towns. We’ve been here for 30 years. There has to be some strange reason why they want to stop oil and gas development when for 30 years it’s been fine. We’re looking to see if there is some undue influence from outside and how that is impacting our rights.”
The York Town Board rejected a proposed one-year moratorium on high-volume hydraulic fracturing (HVHF) on Sept. 27 (see Shale Daily, Oct. 10).
Lenape’s 16 vertical wells in Avon are said to be less than 2,000 feet deep and were hydraulically fractured with small stimulation treatments, a process that is legal in New York. According to Lenape, none of the wells used HVHF.
The DEC filed for a 90-day extension to finalize rules governing HVHF at the state level on Thursday to give state Department of Health Nirav Shah more time to complete a health impact analysis of the practice (see Shale Daily, Nov. 29). The DEC also released 90 pages of proposed rules and said a 30-day public comment period on the issue would begin Dec. 12 and end at 5 p.m. EST on Jan. 11 (see related story).
“This issue is before the courts and we will let that process progress,” DEC spokeswoman Emily DeSantis told NGI’s Shale Daily on Friday.
Livingston County is just north and west of Steuben County, which is one of five counties that in June were floated by the Cuomo administration as possible localities that could be open to HVHF, provided the DEC grants regulatory approval (see Shale Daily, June 14). Meanwhile, local governments across the state have been choosing sides in the fracking debate (see Shale Daily, June 6; June 4; May 22).
The Town of Middlefield in Otsego County and the Town of Dryden in Tompkins County have also enacted local ordinances that ban fracking. In separate rulings earlier this year, county judges upheld those ordinances (see Shale Daily, Feb. 29; Feb. 23). Both cases are nearing appeals (see Shale Daily, Oct. 5).
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