State ex rel. Morrison v. Beck Energy Corp.State ex rel. Morrison v. Beck Energy Corp.
Lead Opinion
{¶ 1} R.C. Chapter 1509 regulates oil and gas wells and production operations in Ohio. While it preserves certain powers for local governments, it gives state government “sole and exclusive authority” to regulate the permitting, location, and spacing of oil and gas wells and production operations within the state.
Background
{¶ 2} In 2011, appellee, Beck Energy Corporation, obtained a permit from a division of the Ohio Department of Natural Resources (“ODNR”) for the purpose of drilling an oil and gas well on property within the corporate limits of appellant, the city of Munroe Falls. This appeal arises from the city’s attempt to stop Beck Energy from drilling based on its own municipal ordinances.
R.C. Chapter 1509
{¶ 3} Beck Energy obtained its state permit through R.C. Chapter 1509. In 2004, the General Assembly amended that chapter to provide “uniform statewide regulation” of oil and gas production within Ohio and to repeal “all provisions of law that granted or alluded to the authority of local governments to adopt concurrent requirements with the state.” Legislative Service Commission Bill Analysis, Sub.H.B. No. 278 (2004);
{¶ 4} In its current form,
{¶ 5} A state permit is essential for any person seeking to drill a new well, drill an existing well deeper, reopen a well, convert a well to any use other than its original purpose, or plug back a well to a source of supply different from the existing pool.
{¶ 6} In this case, Beck Energy’s state permit contained a total of 67 conditions. The first 38 related to the site’s designation as a “Municipal Wellhead Protection Area” and addressed issues including site preparation, pit construction, and waste disposal. The remaining 29 conditions governed “Urbanized Areas” and included site-specific restrictions relating to issues such as tree trimming, erosion control, noise mitigation, and parking. See
The Ordinances
{¶ 7} Soon after Beck Energy began drilling, the city issued a stop-work order and filed a complaint seeking injunctive relief in the Summit County Court of Common Pleas. The complaint alleged that Beck Energy was violating multiple provisions of the Munroe Falls Codified Ordinances. This appeal concerns five of those ordinances, which the city passed between 1980 and 1995.
{¶ 8} The first is a general zoning ordinance in Chapter 1163 that prohibits any construction or excavation without a “zoning certificate” issued by the zoning inspector. Munroe Falls Codified Ordinances 1163.02(a). To obtain the zoning certificate, the applicant must obtain various approvals from the planning commission, the city council, the zoning inspector, and when a variance is being requested, the board of zoning appeals. Munroe Falls Codified Ordinances 1163.02(a)(1) through (4). For example, an applicant seeking approval of a conditional use must obtain a “conditional zoning certificate” by following the
{¶ 9} The remaining four ordinances are in Chapter 1329, which specifically relates to oil and gas drilling. Munroe Falls Codified Ordinances 1329.03 prohibits any person from drilling a well for oil, gas, or other hydrocarbons “until such time as such persons have wholly complied with all provisions of this chapter and a conditional zoning certificate has been granted by Council to such person for a period of one year.” Munroe Falls Codified Ordinances 1329.04 and 1329.06 require an applicant to pay a fee of $800 and deposit $2,000 for a performance bond at the time of filing. Finally, Munroe Falls Codified Ordinances 1329.05 requires a public hearing at least three weeks prior to drilling and requires the permit applicant to schedule the hearing and notify all property owners and residents within 1,000 feet of the well head.
{¶ 10} A person who violates any of the ordinances in Chapter 1329 of the Munroe Falls Codified Ordinances is guilty of a first-degree misdemeanor and “shall be imprisoned for a period not to exceed six months, or fined not more than one thousand dollars ($1,000), or both.” Munroe Falls Codified Ordinances 1329.99. Each day of a violation constitutes a separate offense. Id.
The Injunction
{¶ 11} In opposing the city’s request for injunctive relief, Beck Energy argued that the city’s ordinances conflicted with the statewide regulatory scheme in R.C. Chapter 1509. The trial court disagreed and granted the city’s request for a permanent injunction prohibiting Beck Energy from drilling until it complies with all local ordinances.
{¶ 12} The court of appeals reversed, holding that
{¶ 13} We accepted jurisdiction over the city’s appeal.
Analysis
{¶ 14} The question here is whether the city’s ordinances represent a valid exercise of its home-rule power. Under the Home Rule Amendment to the Ohio Constitution, “[mjunicipalities shall have authority to exercise all powers of local self-government and to adopt and enforce within their limits such local police,
{¶ 15} The Home Rule Amendment does not, however, allow municipalities to exercise their police powers in a manner that “conflicts] with general laws.” Article XVIII, Section 3; see also State ex rel. Mill Creek Metro. Park Dist. Bd. of Commrs. v. Tablack,
{¶ 16} Under this three-step analysis, we conclude that the city’s ordinances must yield to
The Ordinances Constitute an Exercise of the Police Power
{¶ 17} The city does not dispute that its ordinances constitute an exercise of police power rather than local self-government. Our precedent is clear on this point. “[A]ny municipal ordinance, which prohibits the doing of something without a municipal license to do it, is a police regulation” within the meaning of the Home Rule Amendment. Auxter v. Toledo,
{¶ 18} Here, the city’s ordinances do not regulate the form and structure of local government. Instead, they prohibit — even criminalize — the act of drilling for oil and gas without a municipal permit. Therefore, we agree that the ordinances represent an exercise of police power rather than local self-government. Now, we must turn to the question of whether
{¶ 19} A statute qualifies as a general law if it satisfies four conditions. It must (1) be part of a statewide and comprehensive legislative enactment, (2) apply to all parts of the state alike and operate uniformly throughout the state, (3) set forth police, sanitary, or similar regulations, rather than purport only to grant or limit legislative power of a municipal corporation to prescribe those regulations, and (4) prescribe a rule of conduct upon citizens generally. Menden-
{¶ 20} The city disputes only the second of these conditions, arguing that
{¶ 21} Even if we were to accept the city’s factual premise that drilling for oil and gas cannot occur in Ohio’s western counties, this does not prevent
{¶22} The city’s argument is similar to the one we rejected in Clermont. There, we considered a statute that regulated hazardous-waste facilities and prohibited any political subdivisions from imposing additional regulations. Id. at 44, 49-50. While recognizing that such facilities might not be environmentally feasible in “some areas of the state,” we concluded that the law operated uniformly throughout the state because its terms applied to all political subdivisions equally and did not create any classifications or exemptions favoring some over others. Id. at 50.
{¶ 23} We reach the same conclusion here. Whether or not every acre of Ohio constitutes viable drilling land,
The Ordinances Conflict with
{¶ 24} Having found that the ordinances constitute an exercise of police power and that the statute is a general law, we must determine whether the ordinances and the statute conflict. A conflict exists if “the ordinance permits or licenses that which the statute forbids and prohibits, and vice versa.” Struthers v. Sokol,
{¶ 25} The city’s ordinances conflict with
{¶ 26} This is a classic licensing conflict under our home-rule precedent. We have consistently held that a municipal-licensing ordinance conflicts with a state-licensing scheme if the “local ordinance restricts an activity which a state license permits.” Ohio Assn. of Private Detective Agencies, Inc. v. N. Olmsted,
{¶ 27} In Auxter, for instance, the plaintiff obtained a state license to sell beer and wine, but the city ordinance prohibited such sales without a municipal license. Recognizing a conflict, we determined that “the ordinance forbids and prohibits what the statute permits and licenses,” because “[e]ven though plaintiff has a
{¶ 28} Beneath this weight of authority, the city argues that there is no conflict, because the statute and the ordinances “regulate two different things.” It explains: the ordinances address “traditional concerns of zoning,” whereas
{¶ 29} The city’s ordinances create a second type of conflict with R.C.„ 1509.02. “In determining whether a conflict does exist, a court refers to the language of the statute to determine whether the General Assembly intended to preempt local regulation on the subject.” Westlake v. Mascot Petroleum Co., 61 Ohio
{¶ 30}
{¶ 31} In Clermont,
{¶ 32} Our recent decision in Cleveland v. State,
{¶ 33} The city presents a variety of policy reasons why local governments and the state should work together, with the state controlling the details of well construction and operations and the municipalities designating which land within their borders is available for those activities. This is no doubt an interesting policy question, but it is one for our elected representatives in the General Assembly, not the judiciary. The issue before us is not whether the law should generally allow municipalities to have concurrent regulatory authority, but wheth
Conclusion
{¶ 34} Article II, Section 36 vests the General Assembly with the power to pass laws providing for the “regulation of methods of mining, weighing, measuring and marketing coal, oil, gas and all other minerals.” (Emphasis added.) With the comprehensive regulatory scheme in R.C. Chapter 1509, the General Assembly has done exactly that. We hold that the Home Rule Amendment to the
{¶ 35} Accordingly, we affirm the judgment of the court of appeals.
Judgment affirmed.
Concurrence Opinion
separately concurring in judgment only.
{¶ 36}
{¶ 37} Munroe Falls also regulates the placement of oil and gas wells through its zoning code as a conditional use in an 1-1 (industrial) district, requiring a conditional use certificate before construction or excavation can commence. Munroe Falls Codified Ordinances 1133.03(c). However, in the case of oil and gas wells, the conditional use certificate specified by the zoning code is, in fact, the
{¶ 38} I write separately to emphasize the limited scope of our decision; “our holding is limited to the five municipal ordinances at issue in this case.” Lead opinion at ¶ 33. This appeal does not present the question whether
{¶ 39} Thus, in my view, it remains to be decided whether the General Assembly intended to wholly supplant all local zoning ordinances limiting land uses to certain zoning districts without regulating the details of oil and gas drilling expressly addressed by R.C. Chapter 1509.
{¶ 40} Because municipal zoning is an exercise of police power, Hudson v. Albrecht, Inc.,
{¶ 41} Importantly, a municipality’s authority to enact zoning ordinances does not flow solely from the Ohio Constitution.
in the interest of the promotion of the public health, safety, convenience, comfort, prosperity, or general welfare, may regulate and restrict the location of buildings and other structures and of premises to be used for trade, industry, residence, or other specified uses, and for such purposes may divide the municipal corporation into districts of such number, shape, and area as are best suited to carry out the purposes of this section.
{¶ 42} We are obliged to accord “a strong presumption * * * in favor of the validity of [a zoning] ordinance.” Albrecht at 71. In addition,
{¶ 43}
The purposes of statutes and administrative orders fixing the location of oil and gas wells with respect to surface property lines and other wells are to protect the rights of land or mineral owners by preventing net drainage between tracts, to prevent economic waste resulting from the draining of unnecessary wells and to prevent physical waste which may be caused by crowded drilling operations.
1 Summers, The Law of Oil & Gas, Section 5.1, at 268 (3d Ed.2004). The “spacing and location of wells * * * maximize the efficient production of oil and gas,” id., Section 1.8, at 7, and protect correlative rights. See Bernstein v. Bush,
{¶ 44} The terms “location” and “spacing” thus relate to the placement of wells on a tract in relation to the resource pool and to each other. Scientific expertise regarding the physical characteristics of oil and gas reserves is required to
{¶ 45} Courts of last resort in other jurisdictions have declined to view preemptive language in oil and gas statutes that preclude all local regulation of oil and gas drilling as irreconcilable with local zoning laws. In Wallach v. Dryden,
{¶ 46} In enacting R.C. Chapter 1509, the General Assembly sought to preempt the inconsistent patchwork of local health and safety regulations governing the technical aspects of drilling that had been permitted by the former version of the statute. See generally Newbury Twp. Bd. of Trustees v. Lomak Petroleum (Ohio), Inc.,
{¶ 47} Nothing in R.C. Chapter 1509 expressly addresses zoning or requires ODNR to regulate the location of oil and gas wells to ensure compatibility with local land use, preserve property values, effectuate a municipality’s long-term plan for development, or uphold any of the other traditional goals of zoning. It has not addressed those matters and instead permits ODNR to deny an oil and gas well permit if “there is a substantial risk that the operation will result in violations of this chapter or rules adopted under it that will present an imminent danger to public health or safety or damage to the environment.”
{¶ 48} Accordingly, whether a municipality has authority to enact zoning ordinances that affect oil and gas wells within its territory is a question yet to be decided, and for that reason, I concur in the resolution of this case.
Dissenting Opinion
dissenting.
{¶ 49} The oil booms keep coming in Ohio. With booms come creative and desperate methods of staking a claim. In the 1890s, Ohio became the site of some of the world’s first offshore drilling, as oil derricks were constructed in the middle of Grand Lake St. Mary’s. Oeters & Gulick, Images of America: Miami and Erie Canal 79 (2014). It’s said that during the boom in the villages of Bremen and New Straitsville in the early 1900s, “[w]ells were often so close together that a person could jump from one derrick floor to another.” Spencer, A Journey Through Two Early Ohio Oil Booms: The Northwest Ohio and the Bremen-New Straitsville Booms, Oil-Industry History (Dec. 2008), abstracted at http://www.petroleumhistory.Org/journal/vol_9.html# spencer. In the 1960s in Morrow County, “wells [could] be seen in farm fields and backyards, around cemeteries and even on home-plate of what was a schoolyard baseball diamond in the village of Edison.” Oil Wells Bloom in Morrow County, 1 in Every I Good, Sandusky Register (Feb. 3,1964) 5.
{¶ 50} It appears that the General Assembly has attempted to bring order to Ohio’s historically scattershot way of dealing with oil booms. I would find that
{¶ 51} Accordingly, I join Justice Lanzinger’s dissent.
Dissenting Opinion
dissenting.
{¶ 52} Because it is not clear to me that the Munroe Falls zoning ordinances actually conflict with a general state statute, I respectfully dissent. I believe that local zoning ordinances can have a place beside the state’s statutes regulating oil and gas activities.
{¶ 53} The lead opinion restricts home-rule power using language from
Nothing in this section affects the authority granted to the director of transportation and local authorities in section 723.01 or 4513.34 of the Revised Code, provided that the authority granted under those sections shall not be exercised in a manner that discriminates against, unfairly impedes, or obstructs oil and gas activities and operations regulated under this chapter.
{¶ 54} But
{¶ 55} Article II, Section 36 of the Ohio Constitution vests the General Assembly with the power to pass laws providing for the “regulation of methods of mining, weighing, measuring and marketing coal, oil, gas and all other minerals.” (Emphasis added.)
{¶ 56} But the broad language of a preemption clause is not sufficient to create a conflict. We have never held that a preemption statement alone is sufficient to divest municipalities of their constitutional right to home rule. To the contrary, a declaration by the General Assembly of its intent to preempt a field of legislation
{¶ 57} While important in determining whether a statute is a general law, a preemption statement alone has no relevance to the existence or nonexistence of any conflict between local and state regulations.
{¶ 58} An examination of R.C. Chapter 1509 and regulations governing the drilling of oil and gas wells reveals that there is no explicit reference to local zoning. “In order for such a conflict [between state laws and local ordinances] to arise, the state statute must positively permit what the ordinance prohibits, or vice versa, regardless of the extent of state regulation concerning the same object.” Cincinnati v. Hoffman,
{¶ 59} A recent case is illustrative. We recently severed part of
{¶ 60} The General Assembly knows how to specifically prohibit the enforcement of local zoning ordinances as part of a statewide and comprehensive legislative scheme. See, e.g.,
Municipalities may supplement general law with nonconflicting zoning ordinances
{¶ 61} The city’s argument that there is no conflict because its ordinances and R.C. Chapter 1509 regulate different things is not “fanciful.” Lead opinion at ¶ 28. The ordinances reflect traditional zoning concerns, while the state statutes control technical aspects of the drilling of an oil and gas well. Local zoning exists to address such concerns as traffic control, traffic volume, property values, enhancement of municipal revenue, costs of municipal improvement, land use, nuisance abatement, and the general welfare and development of the community as a whole. Willott v. Beachwood,
{¶ 62} Several cases are cited for the proposition that zoning regulations may not prohibit state licensing. But two of the cases sidestepped any discussion of zoning. See Auxter v. Toledo,
{¶ 63} In Westlake v. Mascot Petroleum Co., Inc.,
{¶ 64} What I believe must be recognized is that the state and the local authority have differing interests in this important matter. The purpose of comprehensive local zoning is the exercise of local police power to promote the health, safety, and general welfare of the public. Negin v. Mentor Bd. of Bldg. & Zoning Appeals,
{¶ 65} The five ordinances of Munroe Falls were struck down by the court of appeals as though the city were attempting to impose its own requirements on the oil and gas drilling industry. The court of appeals looked at the ordinances as supplanting rather than as supplementing state regulation. No court has yet examined whether these city ordinances can stand separate and apart as zoning regulations that supplement the state regulatory scheme. I would return this case to the appellate court to do so.
{¶ 66} This case illustrates again the tension between local and state authorities and the exercise of the powers granted to each by the Constitution. At the very least, there should be recognition of the distinct concerns of each legislative level and increased intergovernmental negotiations at the earliest opportunity.
Other states have harmonized state and local regulation
{¶ 67} Other jurisdictions have determined that local zoning is distinct from state regulation of the oil and gas industry and have decided that local and state governments can work together. For example, the Colorado Supreme Court rejected an oil and gas developer’s request for a judgment declaring that the Colorado Oil and Gas Conservation Act preempted a county’s land-use regulations pertaining to oil and gas activities. La Plata Cty. Bd. of Commrs. v. Bowen/Edwards Assoc., Inc.,
While the governmental interests involved in oil and gas development and in land-use control at times may overlap, the core interests in these legitimate governmental functions are quite distinct. The state’s interest in oil and gas development is centered primarily on the efficient production and utilization of the natural resources in the state. A county’s interest in land-use control, in contrast, is one of orderly development and use of landin a manner consistent with local demographic and environmental concerns. Given the rather distinct nature of these interests, we reasonably may expect that any legislative intent to prohibit a county from exercising its land-use authority over those areas of the county in which oil development or operations are taking place or are contemplated would be clearly and unequivocally stated. We, however, find no such clear and unequivocal statement of legislative intent in the Oil and Gas Conservation Act.
Id. at 1057. In rejecting the notion that the state and local regulations were impliedly in conflict, the court stated:
The state’s interest in oil and gas activities is not so patently dominant over a county’s interest in land-use control, nor are the respective interests of both the state and the county so irreconcilably in conflict, as to eliminate by necessary implication any prospect for a harmonious application of both regulatory schemes.
Id. at 1058.
{¶ 68} In a companion case, the Colorado Supreme Court determined that state law did preempt a city’s home-rule authority to ban all oil and gas development and production within its borders. Voss v. Lundvall Bros., Inc.,
If a home-rule city, instead of imposing a total ban on all drilling within the city, enacts land-use regulations applicable to various aspects of oil and gas development and operations within the city, and if such regulations do not frustrate and can be harmonized with the development and production of oil and gas in a manner consistent with the stated goals of the Oil and Gas Conservation Act, the city’s regulations should be given effect.
Id. at 1068-1069.
{¶ 69} The Pennsylvania Supreme Court found the reasoning in La Plata persuasive in deciding a similar issue. Huntley & Huntley, Inc. v. Oakmont Borough Council,
{¶ 70} Most recently, the New York Court of Appeals was asked to determine whether towns may ban or limit oil and gas production within their boundaries under their home-rule authority by adopting local zoning laws. Wallach v. Dryden,
{¶ 71} As in Ohio, municipal home-rule authority in New York arises from the state’s Constitution. Under the New York Constitution, Article IX, Section 2(c)(ii), “every local government shall have power to adopt and amend local laws not inconsistent with the provisions of this constitution or any general law * * * except to the extent that the legislature shall restrict the adoption of such a local law.” The adoption of zoning ordinances is viewed as one of the core powers of local governance. Id. at 743. The appellants had acquired oil and gas leases in municipalities that banned such activity and claimed that local zoning was preempted by the OGSML, which states:
The provisions of this article shall supersede all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law.
N.Y.Envtl.Conserv.Law 23-0303(2); see id. at 744.
{¶ 72} The New York Court of Appeals rejected the notion that the preemption clause should be read broadly to preempt local zoning ordinances. It stated that the preemption clause was “most naturally read as preempting only local laws that purport to regulate the actual operations of oil and gas activities, not zoning ordinances that restrict or prohibit certain land uses within town boundaries.” (Emphasis added.) Id. at 746. The court also noted that unlike the OGSML’s preemption clause, other statutes had clearly preempted home-rule zoning power while taking into account local considerations that otherwise would have been protected by traditional municipal zoning powers. Id. at 748. It held that because there was no inconsistency between the preservation of local zoning authority and the OGSML’s policies of preventing waste and promoting recovery of oil and gas, local zoning would not be preempted without a clear expression of that intent.
{¶ 73} In states like Oklahoma, municipalities are authorized by statute to establish zones for the drilling of oil and gas wells. See Vinson v. Medley,
{¶ 74} I contend that Ohio, too, should make an effort to harmonize the laws of the state and local municipalities to avoid preemption, if possible. See N. Ohio Patrolmen’s Benevolent Assn. v. Parma,
Conclusion
{¶ 75} There is no need for the state to act as the thousand-pound gorilla, gobbling up exclusive authority over the oil and gas industry, leaving not even a banana peel of home rule for municipalities. I would reverse the judgment of the court of appeals and remand to that court for further proceedings.
Dissenting Opinion
dissenting.
{¶ 76} I join Justice Lanzinger’s well-written dissent. Let’s be clear here. 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 it 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. Under this ruling, a drilling permit could be granted in the exquisite residential, neighborhoods of Upper Arlington, Shaker Heights, or the village of Indian Hill — local zoning dating back to 1920 be damned.