Ohio Court Finds State Law Preempts Local Oil & Gas Ordinances

Across the country more local governments are attempting to pass their own ordinances regulating or even prohibiting natural gas drilling in their jurisdictions.  Under home rule principals, the typical rule of thumb is that local ordinances are preempted if the state has a comprehensive regulatory scheme for that area.  However, various state courts have reached different conclusions as to whether local ordinances are banned by a comprehensive state regulatory scheme.  Now, an Ohio court has weighed in on this issue.

New York

Recently, in New York, two state courts upheld bans on natural gas drilling.  In one case, the town of Dryden amended its zoning ordinance to “ban all activities related to the exploration for, and production or storage of, natural gas and petroleum."  The ordinance was challenged by company owning thousands of acres of leases in the area. 

The Court said the ordinance was not preempted by state law governing oil & gas drilling.  The Court said the purpose of the state law is to “regulate any development or production of such resources which may occur in a manner that prevents waste, permits greater ultimate recovery of oil and gas, and protects the correlative rights of all persons."  See, Anschutz Exploration Corp. v. Town of Dryden

Pennsylvania

The Pennsylvania Supreme Court found a local ordinance governing drilling preempted while, in a separate case, upheld an ordinance governing where drilling could take place. The Supreme Court found a municipal ordinance that regulated the permitting of drilling as well as site restoration requirement preempted by the state Oil & Gas Act. See, Range Resources Appalachia, LLC v. Salem Tp., 600. Pa. 231, 964 A.2d 869, 876-77 (2009 The Court held the Act preempts all local regulation of gas well operations.

However, the Court upheld a ordinance which designated where natural gas drilling could take place. See, Huntley & Huntley, Inc. v. Borough Council of Borough of Oakmont, 600 Pa. 207, 964 A.2d 855, 866 (2009).  The Court said such an ordinance serves a different purpose that the state Oil & Gas Act.

Ohio

Now, an Ohio Court has reviewed the extent of preemption of natural gas drilling.  In State ex rel. Morrison v. Beck Energy Corp., Ninth Dist. Case No. 25953, 2013-Ohio-356, the Ninth Appellate District reversed a decision of the Summit County Court of Common Pleas and held that local ordinances of the City of Munroe Falls regarding oil and gas drilling were preempted by the comprehensive state regulatory scheme granting authority to regulate oil and gas drilling to the Ohio Department of Natural Resources (ODNR). As a result, the City was barred from enforcing its oil and gas drilling ordinances against Beck Energy.

In its “home rule” analysis, the Appellate Court found that the City’s permit, zoning and rights-of-way ordinances were exercises of the City’s police power, but also that Ohio Revised Code Chapter 1509 was a general law and provided a comprehensive regulatory scheme for oil and gas well operations in this state. The Appellate Court found that the City’s oil and gas drilling and zoning ordinances were in direct conflict with Ohio Rev. Code Chapter 1509 and thus preempted.

The Appellate Court said the City could enforce its ordinances regarding construction of rights-of-way, as long as it did not enforce them in a discriminatory manner against oil and gas well drilling.

The Court did not opine as to whether a local ordinance banning fracking would be preempted.  Similar ordinances were upheld in New York despite state drilling regulations. In this instance,the Munroe Falls zoning ordinance could be viewed simply as a permit to drill which was more clearly preempted by the state's oil & gas drilling regulations. 

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