In New York State, the tension between the state’s authority to grant drilling permits for high-volume hydrofracking without notifying affected communities and the communities’ right to ban unwanted industrial activity is shaping up as the key legal battle over the gas-rich Marcellus Shale.

At stake is whether the gas industry will get relatively free reign to drill statewide or be hemmed in by a patchwork of local ordinances that confine new gas wells to industrial zones.

On July 1, the state Department of Environmental Conservation issued a major portion of its revised draft Generic Environmental Impact Statement (GEIS) for high-volume hydrofracking. The agency plans to begin issuing permits to frack the Marcellus shortly after it finalizes the GEIS later this year or in 2012.

Meanwhile, towns all over upstate New York are busy passing local bans on drilling. They cite municipal home rule law that vests towns with the police power to enact laws to protect and enhance their visual and physical environment.

The city of Buffalo and at least 11 other New York towns have enacted fracking bans, and seven counties ban fracking on county land. Another 20 towns either have bans under formal consideration or have strong movements pushing for a ban or a moratorium on drilling.

The gas industry says they’re all wasting their time because the bans won’t hold up in court. It points to the law that gives the DEC exclusive authority to issue drilling permits. That law “supersedes all local laws related to regulation of oil and gas development except for local government jurisdiction over local roads and the right to collect real property taxes.”

At first, the DEC ignored the obvious legal conflict. In its first draft GEIS issued in 2009, it never addressed local bans. There weren’t many to address. But in its July 1 revised draft GEIS, the agency acknowledged home rule’s growing significance by requiring applicants for Marcellus drilling permits to “compare the proposed well pad location to local land use laws …” Any conflict “would trigger additional DEC review before a permit could be issued,” the agency said.

Asked whether he thought a local fracking ban would stand, DEC Commissioner Joe Martens has said, “The law is not perfectly clear….I think we’ll see some legal challenges along the way that will make that clearer.”

The DEC could hardly continue to ignore “home rule” issues after the state General Assembly passed a bill this year (A3245) that would have given the increasingly popular local bans more weight than the DEC’s authority to permit gas wells.

Its passage triggered alarms in the gas industry. “We have been warned that this bill may have a chance to make it through the Senate!” one pro-gas industry website declared in June. “This (S3427) is a dangerous bill.”

While the Senate never took up the bill before adjourning in June, anti-drilling advocates say reviving the home rule legislation is a top priority. Roger Downs, a lobbyist in Albany for the Sierra Club Atlantic Chapter, told a panel audience in Ithaca July 25 that the bill is likely to come up if and when the state legislature meets in special session later this year.

A new law allowing communities to opt out of gas drilling would continue a pattern the DEC has established since Gov. Andrew Cuomo appointed Martens as the agency’s commissioner shortly after his own  inauguration in January.

While the DEC under Martens has laid out a path to drilling the Marcellus in New York, it has also banned it sensitive areas, reversing stances the agency had taken before this year. And it has pledged to codify those positions in state law. For example, the DEC is now proposing to ban high-volume fracking:

– In the New York City and Syracuse watersheds. While the DEC has acknowledged the special sensitivity of those unfiltered water systems since April 2010, it had previously stopped short of a ban because it feared the legal repercussions of denying property owners in those watersheds the chance to cash in on gas royalties.

– On the surface of state-owned lands, including state forests. The DEC had been defending the industry’s right to drill in the forests despite lawsuits alleging conflicts with the legislative intent behind the establishment of those protected areas.

– Within 500 feet of the boundaries of primary aquifers.

Downs of the Sierra Club speculated that the DEC’s new stances may fit with Cuomo’s presidential aspirations. He noted that the governor was highly successful during his first legislative session, winning on-time approval of a state budget and signing a law permitting gay marriage in New York State. The rise of his approval rating above 70 percent has fueled talk of a Cuomo presidential run in 2016. Downs said that as a presidential hopeful, he will need to have shown national leadership on fracking, and pressing for a statewide ban would hurt his chances of appealing to moderates nationwide. He’s chosen more targeted bans instead.  Only time will tell if that strategy extends to the issue of home rule.

Sentiment in favor of a local ban or moratorium on fracking tends to be strongest in and around the Finger Lakes, especially in communities dependent on wineries or lakeside vacationers who want to prevent the noise, air pollution and heavy truck traffic that come with intense drilling. But most of the communities that have enacted bans fall outside the prime target area for Marcellus drilling, according to industry spokesman Scott Cline. The prime territory is just north of New York’s border with Pennsylvania around Binghamton, and most communities in that area aren’t keen on bans, Cline noted.

Speaking July 27 at Keuka College, which is near several communities that have passed drilling bans, Cline said, “It’s unlikely you’ll see Marcellus drilling in the Finger Lakes.” A possible exception to Cline’s generalization is the Cooperstown area near Lake Otsego, which has a tourism-dependent economy and does fall in prime Marcellus drilling territory. Four towns in Otsego County have already banned fracking and at least a half dozen others are considering that path. That means Otsego County is a likely flash point for the coming legal battle over the enforceability of local drilling bans. Those who argue pro and con are already forming battle lines.

Helen Slottje, an attorney in Ithaca, has been researching case law and developing legal strategies for fracking bans for at least two years. The team opposing bans includes Tom Shepstone, campaign manager for EnergyInDepth’s Northeast Marcellus Initiative. He called the bans “Potemkin Laws” in references to the fake villages meant to impress the Empress Catherine II in the 18th century Russia. Shepstone described the bans as “artificial constructs designed to fool others into thinking local officials have taken meaningful actions when, in fact, they’ve done nothing but create a temporary obstacle at great risk to the taxpayers who will have to pay the bill for their foolishness.” And Michael P. Joy, an energy attorney with Biltekoff & Joy in Amherst, N.Y., predicted that town drilling bans will prove to be “costly to manage and impossible to win.”

But Slottje points to a 1996 court decision that held that a municipality isn’t obligated to permit the exploitation of its natural resources if limiting that activity is a “reasonable use of its police powers to prevent damage to the rights of others…” Speaking as a panelist in Ithaca July 25, she said courts have shown  “incredible deference to local governments” in similar cases. That pattern of deference suggests that fracking opponents have reason to be optimistic about the bans’ chances in court challenges, she added. Slottje said her optimism does not extend to another hot-button legal issue dear to some anti-drilling activists: equal protection. They have suggested challenging the fracking bans in the New York City and Syracuse watersheds as a violation of the equal protection rights of citizens with private water wells who are left exposed to drilling. They shouldn’t get their hopes up, Slottje added.

Equal protection arguments are difficult to make stick in court, unless they are brought by an easily identifiable class of victims, such as a particular race or religious group. When the affected class is a good portion of the general population, the courts tend to defer to the state’s agenda if they have reasonable justification, she said. So while equal protection challenges are still likely, they face more of an uphill legal battle than home rule cases, Slottje concluded.

Joy of Biltekoff & Joy strongly disagrees that home rule will prevail over state authority. He stresses the provision in New York Environmental Conservation Law that states that the DEC’s rights to issue drilling permits “shall supersede all local laws and ordinances.”