The state Supreme Court's Appellate Division, Fourth Department, located in Rochester, upheld an earlier decision by a trial court judge that the Painted Post Village Board had not conducted the state-required environmental review properly for the water sales operation.

PAINTED POST | A court ruling has again halted Painted Post’s bulk water sales operation.

The state Supreme Court’s Appellate Division, Fourth Department, located in Rochester, upheld an earlier decision by a trial court judge that the Painted Post Village Board had not conducted the state-required environmental review properly for the water sales operation.

The appeals court ruled that the village was wrong in classifying the sale of up to one million gallons per day of municipal water for use in Pennsylvania gas drilling operations as the sale of surplus property, thus avoiding an in-depth review of the environmental impact of the water sales.

The appeals court also ruled that the village had improperly separated the reviews for the water sale agreement and the lease agreement for the railroad water filling station built for the operation.

The court also rejected an argument that the water sales were allowable because the withdrawals had been approved by the Susquehanna River Basin Commission.

The village signed a five-year agreement to ship water on the Wellsboro & Corning Railroad to Tioga County, Pa., for use by Shell subsidiary SWEPI LP for natural gas drilling. The village built a filling station on the site of an old foundry, land which it now owns.

A lawsuit was filed shortly after the operation began in 2012 by environmental groups Sierra Club, People for a Healthy Environment and Coalition to Protect New York, along with a group of local residents. They were concerned about the long-term effect of withdrawing fresh water from the Corning aquifer to be shipped out of state for drilling, as well as train traffic in the village.

The case has been tied up in the state Supreme Court system ever since. New York’s highest court, the Court of Appeals, recently ruled that the petitioners had legal standing, and sent the case back to the Appellate Division, Fourth Department to make a decision on the issues.

“We are pleased that they ruled on the issues, as we hoped they would,” said Hammondsport attorney Rachel Treichler, who represented the environmental groups.

The village and Shell/SWEPI LP now have several options, said Painted Post trustee Rick Thorne.

They can try to appeal the ruling back up to the Court of Appeals, which is very selective about the cases it hears. Or village officials can do the state environmental review process over again, and work out new agreements for the bulk water sales and the lease on the filling station.

In the meantime, an injunction prevents the village from selling water.

“The attorneys for the village and Shell are considering what to do, and it’ll probably be a couple of months before they make a decision,” Thorne said.

The village is permitted to withdraw much more water than residents use now because it was once needed for the former foundry where the railroad water filling station is located. Under the now-voided agreement, the village could sell up to one million gallons of water per day, worth up to $4 million annually.

Village officials said proceeds from the water sales would be used to repair the village’s aging water system.