MAGNUM ENERGY v. BD. OF ADJUSTMENT FOR THE CITY OF NORMAN
2022 OK 26
| Okla. | 2022Background
- Norman Municipal Code §13-1502.1(a)(4) required oil/gas operators to carry a $2 million umbrella liability policy.
- Magnum Energy operated the Patty No. 1 well since 1989 and applied for a variance from that insurance requirement in Jan. 2018; the Board of Adjustment denied the variance.
- Magnum sued in Cleveland County, arguing the municipal insurance requirement conflicted with 52 O.S.Supp.2015 § 137.1; the district court granted summary judgment for Magnum and enjoined enforcement.
- The Court of Civil Appeals reversed; the Oklahoma Supreme Court granted certiorari to resolve whether §13-1502.1(a)(4) is precluded by §137.1.
- Central legal question: whether the 2015 statute §137.1 confines municipal authority over oil and gas to three enumerated areas and thereby preempts other local regulations like the insurance requirement.
- Holding: the Supreme Court concluded §13-1502.1(a)(4) conflicts with §137.1, is invalid and unenforceable; the COCA opinion was vacated and the trial-court judgment affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of municipal authority to regulate oil & gas | §137.1 confines local regulation to the three enumerated areas; Legislature curtailed municipal police power in 2015 | Cities retain general police power to protect health/safety and may regulate beyond §137.1 | Legislature limited municipal authority to the areas in §137.1; general police power no longer authorizes broader oil & gas regulation |
| Validity of Norman's $2M umbrella-insurance requirement | The requirement is not road use, traffic, noise/odors, setbacks/fencing, or floodplain regulation and is therefore preempted | Requirement is a valid exercise of municipal police power and a permit condition | The ordinance does not fall within §137.1 categories and conflicts with state law; it is invalid |
| Effect of Gant v. Oklahoma City (1931) recognizing municipal police power | Statutory change in 2015 supersedes Gant's broader municipal authority | Gant still recognizes municipal police power to regulate for safety and health | Gant's broad rule was effectively displaced by the repeal of §137 and adoption of §137.1; statute controls |
| Whether the insurance requirement functions as a permit fee within state/corporation-commission jurisdiction | (Magnum) It is not a permit fee and cannot be justified under 17 O.S. § 52 | (Board) Compliance is a permit condition necessary for local permitting | Court: the insurance requirement is not a permit fee and cannot be sustained under permit-fee jurisdiction; preempted |
Key Cases Cited
- Gant v. Oklahoma City, 6 P.2d 1065 (Okla. 1931) (historically recognized municipal police power to regulate oil and gas)
- Constant v. Brown, 114 P.2d 477 (Okla. 1941) (municipal ordinances conflicting with state statutes are void)
- State ex rel. Trimble v. City of Moore, 818 P.2d 889 (Okla. 1991) (conflict test: express or implied inconsistency between state law and municipal ordinance)
- Magnolia Pipe Line Co. v. Oklahoma Tax Commission, 167 P.2d 884 (Okla. 1946) (useful rule on interpreting legislative amendments and whether they change existing law)
- Yocum v. Greenbriar Nursing Home, 130 P.3d 213 (Okla. 2005) (statutory interpretation principles: ascertain and effectuate legislative intent)