Town wins fracking ban lawsuit. Possible company claim for “lost future profits” is mind-boggling

“Nowhere in the legislative history (of the state oil and gas law) is there any suggestion that the legislature intended…to preempt local zoning authority.” —Judge Rumsey

No 423 Posted by fw, February 28, 2012

The citizens of Dryden [pop. 14,000], New York are no doubt delighted with a judge’s decision to uphold the legality of their local ordinance that bans fracking. Round 1 to Dryden. But the fight isn’t over yet. Find out what legal and compensation challenges remain in this brief report by Treehugger.com. A possible claim for “future compensation” boggles the mind –

New York Towns Can Ban Fracking Even If State Doesn’t, Judge Rules, Mat McDermott, February 22, 2012

In an undeniable victory for opponents of hydraulic fracturing, Tompkins County, New York judge Philip Rumsey has ruled that the town of Dryden’s ban on fracking is legal.

Dryden is one of about 20 towns in New York which have banned fracking within their limits, as the state government deliberates on how to proceed with the increasingly controversial natural gas extraction technique.

Judge Rumsey said, “Nowhere in the legislative history (of the state oil and gas law) is there any suggestion that the legislature intended…to encourage the maximum ultimate recovery of oil and gas…or to preempt local zoning authority.”

The suit that brought Dryden’s ban into court was initiated by Anschutz Exploration Corporation, which has leases on over 22,000 acres of land in the town, investing $5.1 million in drilling operations.

Which brings us to the part of all this worth commenting on and not just reporting –

New York Times reports that a lawyer representing Anschutz says the company may appeal the ruling or initiate a claim against the town for the money it has invested in securing leases and “could claim the lost value of its assets, including any profits it would have derived from exploiting the mineral rights under the land. [New York Judge Rules Town Can Ban Gas Hydrofracking]

I can see the logic and justice in compensating Anschutz for money already invested prior to the ban taking place. However, compensation for future profits just boggles my mind. Compensating a company for money it might have made by engaging in a now banned activity? It’d be like compensating slave ship owners for lost revenue after slavery was banned.

MY COMMENT – What about Canadian provincial law? Is there any legislation that would preempt local zoning authority? If not, then presumably communities could pass local ordinances to protect their natural resources. Moreover, is it not the duty of all levels of government to protect our natural resources?

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