A narrowly divided Ohio Supreme Court ruled that local drilling and zoning ordinances could not ban an energy company from hydraulic fracturing, or “fracking,” within city limits since they conflict with the state law regulating oil and gas well drilling. The Court, in State ex rel. Morrison v. Beck Energy Corp., held that local communities cannot exercise home rule powers to regulate oil and gas activities where the local regulations conflict with state law. While the Court’s 4-3 ruling is viewed as a victory for state control over oil and gas activities, the decision leaves open the prospect of future challenges to fracking by local governments that are perhaps more narrowly tailored.
Beck Energy, in 2011, obtained a state permit to drill an oil and gas well on property within Munroe Falls. Once drilling began, the city moved a Summit County Court to permanently enjoin the work alleging that the company violated several local ordinances. These ordinances require, among other things, a zoning certificate for excavation, a waiting period, a fee and a bond deposit, and a public hearing. The trial court granted the city’s request and enjoined Beck from drilling until the local requirements were met. On appeal, the Ninth District reversed the trial court, and the city appealed to the Ohio Supreme Court.
Justice Judith L. French, writing for the lead majority opinion, wrote that municipal home rule does not allow a locality “to discriminate against, unfairly impede, or obstruct oil and gas activities and operation that the state has permitted under” R.C. 1509, the 2004 law that vested regulation of “all aspects,” including permitting, of oil and gas drilling in the Ohio Department of Natural Resources (“ODNR”). R.C. 1509 gives “sole and exclusive authority” to the state to regulate the permitting, location, and spacing of oil and gas wells and their operations in Ohio.
Noting that Ohio’s Home Rule Amendment gives municipalities the power of local self-government as long as their ordinances do not conflict with general state laws, Justice French determined that the Munroe Falls ordinances conflict in two ways with the state’s exclusive regulatory authority over oil and gas production under R.C. 1509. First, the local laws ban state licensed oil and gas operations within city limits, while the statute allows these operations. Thus, the city’s ordinances and statute regulate the same activity, oil and gas drilling. Further, the ordinances make the state permit “meaningless” unless Beck Energy also follows the city’s permitting requirements. According to Justice French, the situation created a “classic licensing conflict” under Home Rule precedent. Second, R.C. 1509 “explicitly reserves for the state, to the exclusion of local governments, the right to regulate ‘all aspects’ of the location, drilling, and operation of oil and gas wells, including “‘permitting relating to those activities.’”
In a concurrence that likely foreshadows future municipal challenges to state-permitted drilling, Justice Terrence O’Donnell wrote that although R.C. 1509 preempts parallel local permitting and ordinances that regulate the technical aspects of oil and gas drilling, he noted that Munroe Falls’ challenge did not address the question of whether R.C. 1509 conflicts with local land use ordinances that address the “traditional concerns of zoning laws, such as ensuring compatibility with local neighborhoods, preserving property values, or effectuating a municipality’s long-term plan for development, by limiting oil and gas wells to certain zoning districts . . .” Therefore, Justice O’Donnell considered the Court’s ruling silent on the issue of whether the legislature intended to entirely supplant all local zoning ordinances that limit land use to certain zoning districts without regulating the details of oil and gas drilling expressly addressed by R.C. 1509.
This view was more forcefully asserted in a dissent by Justice Judith Lanzinger who wrote that R.C. 1509 “itself does not set forth any requirements that conflict with the city’s zoning ordinances,” and does not “purport to take away authority from municipalities in enacting their own police, sanitary, and other similar regulations in this area.” Accordingly, Justice Lanzinger proposed returning the case to the Appellate Court for a determination whether the Munroe Falls ordinances simply supplement the state regulations of oil and gas drilling in Ohio, rather than conflict with it.
Munroe Falls v. Beck is a significant victory for oil and gas producers and clearly indicates that a majority of the Court will strike down attempts to enact wholesale “fracking bans” passed by municipalities across Ohio. However, municipalities intent on pursuing fracking restrictions in the wake of Beck may attempt to craft more narrow ordinances that are predicated on zoning and land use restrictions, rather than broad based requirements that will be seen by the Court as an attempt to usurp the State’s uniform regulations regarding licensing and permitting requirements.
This has been prepared for informational purposes only. It does not contain legal advice or legal opinion and should not be relied upon for individual situations. Nothing herein creates an attorney-client relationship between the Reader and Reminger. The information in this document is subject to change and the Reader should not rely on the statements in this document without first consulting legal counsel.
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