Oil and Gas

NY top court considers local bans on fracking


New York's highest court will hear arguments Tuesday on whether municipalities can use local zoning laws to ban, within their borders, shale gas development that uses hydraulic fracturing.

The seven-member Court of Appeals was scheduled to hear arguments in two cases where a midlevel appellate court unanimously concluded last year that state mining law doesn't trump the authority of local governments to control land use. A decision is expected in late summer.

The challenges have been closely watched by an industry hoping to drill in New York's piece of the Marcellus Shale formation and by environmentalists who fear drilling could threaten water supplies and public health. The industry argues that allowing local bans will create a patchwork of regulation that will prevent effective extraction of gas resources. Most of the local bans, however, are outside the region where shale gas is most abundant: along the Pennsylvania border.

Getty Images

Even if the bans are overturned, the industry and landowners eager to reap the rewards of gas drilling still face a statewide moratorium in effect since July 2008, when the Department of Environmental Conservation launched an environmental impact review of shale gas development.

Gov. Andrew Cuomo has said he won't decide whether to lift the ban until a health impact review launched in 2012 is completed. There's no timetable for completion of that review, and DEC Commissioner Joe Martens told a Senate panel in January he doesn't expect any drilling before at least April 2015.

Hydraulic fracturing, or fracking, frees gas from deep rock deposits by injecting wells with chemical-laced water at high pressure. It has helped boost U.S. oil and gas production to the highest level in more than a quarter-century, with thousands of wells in more than 30 states.

More than 75 New York towns have banned fracking; more than 40 others have passed resolutions saying they're open to drilling.

The cases being argued before the Court of Appeals involve bans in the small towns of Dryden and Middlefield in rural central New York. The Dryden ban is being challenged by a trustee for Norse Energy, an Oslo, Norway-based company that went bankrupt after amassing thousands of leases on New York land it was never able to develop. The Middlefield ban is being challenged by Cooperstown Holstein, a dairy farm that had leased land for drilling.

Read MoreWall Street, Big Oil and your pain at the gas pump