(c) 2013, Bloomberg News.

(c) 2013, Bloomberg News.

New York's highest court agreed Thursday to decide whether towns and cities have the power to pass anti- fracking laws.

The Court of Appeals in Albany said it will hear arguments in lawsuits seeking to block drilling bans passed by the upstate towns of Dryden and Middlefield aimed at stopping the practice of hydrofracturing.

The process, known as fracking, involves forcing millions of gallons of chemically treated water underground to break up rock and free trapped natural gas, and has sparked environmental concerns and lawsuits across the U.S. An intermediate-level appellate court in Albany in May affirmed lower-court rulings upholding the bans.

"We are hopeful that the Court of Appeals will protect the rights of landowners and allow New York to realize the environmental and economic benefits of natural gas while allowing our nation to maintain its course towards energy independence," Scott Kurkoski, an attorney for a Middlefield dairy farm owner who sued to block that town's ban, said in a statement.

Parts of New York sit atop the gas-rich Marcellus Shale formation, and state officials have sought to balance prospects for the booming economic development seen in Ohio and Pennsylvania against environmentalists' warnings that fracking may damage water supplies and make farmland unusable.

Fracking already is banned in more than 50 New York towns, while dozens more have moratoriums in place or are considering bans, according to Karen Edelstein, a geographic information- systems consultant in Ithaca.

New York banned fracking in July 2008 so it could draw up new regulations for the drilling process. In February, Gov. Andrew Cuomo abandoned the rule-making process and said he'd make his determination based on the conclusions of state Health Commissioner Nirav Shah who has been studying fracking's effect on health. At the time, Shah said he would be done within weeks. The study, though, has dragged on for months as he's visited state regulators in Texas, Illinois and California.

The Middlefield dairy farm, which signed two oil and gas leases in 2007 with Elexco Land Services Inc. to explore and develop natural gas resources under the property, said in a September 2011 lawsuit that Middlefield, a town of about 2,000 people 50 miles west of Albany, had no authority to enact a ban because the activity is governed by state law.

Anschutz Exploration Corp., a Denver-based affiliate of billionaire Philip Anschutz's closely held company, sued Dryden, a town of 14,000 people about 75 miles west of Middlefield, the same month.

A judge in Cortland upheld Dryden's ban in February 2012 and a judge in Wampsville ruled days later that Middlefield's was also legal. The cases were consolidated for appeal. Norse Energy, a Lysaker, Norway-based explorer whose U.S. unit filed for bankruptcy protection in December, replaced Anschutz Exploration in the Dryden appeal.

Just a week before the appeals court in Albany heard the arguments, Justice Robert B. Wiggins in Livingston County upheld a ban in Avon, a town and village of about 11,000 people 19 miles southwest of Rochester.

A federal judge in Brooklyn in September threw out a lawsuit by New York Attorney General Eric Schneiderman seeking a full environmental review of hydraulic fracturing. The judge granted a motion by the U.S. Environmental Protection Agency to dismiss the case, finding that the development plans are in the early stages and the threat of harm is speculative.

Schneiderman sued the Delaware River Basin Commission, the EPA and other federal agencies in May 2011 to force a fuller assessment of the environmental impact that gas development could have on the state's water supply.

The river commission, created in 1961, is a pact among New York, Delaware, New Jersey, Pennsylvania and the federal government that is responsible for water quality in the Delaware River Basin, which supplies drinking water to the four states.

Schneiderman said in the lawsuit that the commission's proposed regulations would allow fracking at 15,000 to 18,000 gas wells without a full environmental review. If the regulations are issued, New York's moratorium will be lifted.

--With assistance from Christie Smythe and Freeman Klopott.

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