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Gas driller sues NY, town over local moratorium

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MARY ESCH, Associated Press

ALBANY, N.Y. (AP) — A natural gas drilling company is suing state regulators and a western New York town where it has operated for decades over a local moratorium that threatens to put the company out of business.

Papers were served this week in a lawsuit against the Livingston County town of Avon and the state Department of Environmental Conservation, said John Holko, owner of Lenape Resources, a small natural gas company based in Alexander, 35 miles southwest of Rochester. Holko is seeking at least $50 million in damages from the town, claiming its recent ban on gas drilling and storage has cost Lenape millions of dollars in lost business and unused mineral rights.

"I've drilled over 100 wells in this county," Holko said. "I have 100 miles of pipeline, compressor stations and a disposal well. I supply gas to farmers, industrial users and interstate commerce. Now, because three guys on a town board decide they don't want me here anymore, I'm out of business. There's something dramatically wrong with that."

Holko said the town's gas-drilling moratorium and similar ones passed by dozens of other upstate New York towns violate a 1981 law giving the state Department of Environmental Conservation sole authority to regulate oil and gas development. He's also suing DEC, saying it's required to take action against the local bans.

Local courts have upheld drilling bans in the towns of Middlefield and Dryden. Both cases are under appeal with arguments before the state Appellate Division expected in February. Lenape's suit is the first that also names DEC.

"This issue is before the courts and we will let that process progress," DEC spokeswoman Emily DeSantis said Thursday in response to a question about the Lenape lawsuit.

Avon Town Supervisor David LeFeber said Thursday that he could not comment on pending litigation.

DEC has had a moratorium on gas wells using horizontal drilling and high-volume hydraulic fracturing since it began an environmental impact review in 2008. The technology frees gas by injecting a well with millions of gallons of chemically treated water at high pressure to crack rock deep underground. Environmental groups say it could contaminate air and drinking water supplies or cause other harm, but drillers and DEC say state regulations and standard industry safeguards protect against harm from drilling and fracking.

A deadline for finalizing new regulations expired on Thursday, but DEC sought a 90-day extension to allow a health impact study to be completed. Revised regulations will be released for public comment within that 90-day period.

Lenape's wells, drilled in sandstone deposits, aren't subject to the state's moratorium because they're vertically drilled and use low-volume fracking rather than the newer technologies necessary for shale gas development.

Michael Joy, a Pittsburgh lawyer representing Lenape, said papers filed with the lawsuit demonstrate that Avon officials weren't acting to prevent a problem caused by gas drilling, but were bowing to political pressure from anti-drilling groups.

Local control over gas drilling has also been an issue in other states in the Marcellus Shale region, which includes southern New York, Pennsylvania, Ohio and West Virginia. The gas industry says local laws create a patchwork of regulation that thwarts development.

 

Copyright 2012 The Associated Press