High court rules state-level oil-and-gas regulation not violation of city's home rule rights

Energy Associated Press

Certain local zoning laws can't be used to supersede Ohio's state-level system for regulating oil and gas drilling, a fiercely divided Ohio Supreme Court ruled Tuesday.

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In a 4-3 decision with three written dissents, the high court said that the home rule clause of Ohio's constitution doesn't allow a municipality to block drilling activities otherwise permitted by the state.

The decision came in a case brought by the Akron suburb of Munroe Falls against Beck Energy Corp. over a 2004 state law that gives Ohio sole and exclusive authority to regulate the location of wells. The lawsuit has been closely monitored by pro- and anti-drilling forces for its potential impact on local efforts to block hydraulic fracturing, or fracking.

Beck received a state-required permit from the Ohio Department of Natural Resources in 2011 to drill a traditional well on private property in Munroe Falls. The city sued, saying the company illegally sidestepped local ordinances by not involving local officials.

"The issue before us is not whether the law should generally allow municipalities to have concurrent regulatory authority, but whether (the law) and Home Rule Amendment do allow for the kind of double license at issue here. They do not," Justice Judith French wrote for the majority.

Chief Justice Maureen O'Connor and Justice Sharon Kennedy joined the majority. They determined that the ordinances invoked by Munroe Falls constituted an exercise of police power — not local self-government as protected by the home rule clause.

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"Here, the city's ordinances do not regulate the form and structure of local government," French wrote. "Instead, they prohibit — even criminalize — the act of drilling for oil and gas without a municipal permit."

Justice Terrence O'Donnell concurred in judgment only — writing separately to emphasize the limited scope of the decision.

In his view, O'Donnell wrote, "it remains to be decided whether the General Assembly intended to wholly supplant all local zoning ordinances limiting land uses to certain zoning districts" by putting the Natural Resources Department in charge of overseeing drilling activity.

Three justices — Paul Pfeifer, Judith Lanzinger and William O'Neill — dissented in the decision.

"Let's be clear here," wrote O'Neill. "The Ohio General Assembly has created a zookeeper to feed the elephant in the living room. What the drilling industry has bought and paid for in campaign contributions they shall receive. The oil and gas industry has gotten its way, and local control of drilling-location decisions has been unceremoniously taken away from the citizens of Ohio."

Lanzinger wrote that the high court has previously rejected the idea that a pre-emption clause in state law could divest a community of its constitutional right to home rule.

"I believe the local zoning ordinances can have a place beside the state's statutes regulating oil and gas activities," she wrote.

Pfeifer said the law establishing state oversight attempts to "bring order to Ohio's historically scattershot way of dealing with oil booms," but leaves "space for local control."

Attorneys for Beck have argued that Ohio's law was intended "to end the confusion, inefficiency and delays under the earlier patchwork of local ordinances, and to ensure that Ohio's oil and gas resources are developed on a uniform statewide basis."

They said the only area of Munroe Falls that's zoned for industrial development is the tiny corner of a small airport that was not conducive to oil and gas development.

In oral arguments last year, the city's attorney told the court the two levels of government can and should work together.

Lanzinger said the city's argument that its ordinances and the state law don't conflict "is not 'fanciful.' The ordinances reflect traditional zoning concerns, while the state statutes control technical aspects of the drilling of an oil and gas well."