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The Ohio Supreme Court held that City of Munroe Falls’ ordinances requiring drillers to get a conditional zoning certificate, pay a deposit for a performance bond, hold a public hearing and a wait a year before drilling were preempted by State law regulating drilling. Justice French wrote the lead opinion joined by Justices O’Connor and Kennedy.  Justice O’Donnell wrote a concurring opinion (concurring in judgment only) and Justice Kennedy also concurred with the concurring opinion.   Justice Lanzinger dissented, joined by Justices Pfeifer and O’Neill.  Justices Pfeifer and O’Neill also wrote their own dissenting opinions.  The upshot is that while the Munroe Falls ordinances were found in conflict with State law, it is an open question whether a zoning ordinance is necessarily in conflict with State oil and gas laws.  The Munroe Falls ordinances included both zoning and drilling ordinances which required the same permit, so both had to be held in conflict, according to the concurrence.  See State ex rel. Morrison v. Beck Energy Corp., Slip Opinion No. 2015-Ohio-485

See Court News Ohio opinion summary.

Lead Opinion

The lead opinion notes that Ohio Revised Code 1509.02 explicitly grants sole and exclusive authority to the Ohio Department of Natural Resources to regulate the permitting, location, and spacing of oil and gas wells and production operations within Ohio.  Home Rule power can not be exercised in a way that conflicts with the general laws. Ohio Constitution Article XVIII, Section 3.  The City asserted that ORC Chapter 1509 was not a general law because it did not apply to all parts of the state.  Only the eastern part of the state has economically viable quantities of oil and gas.  That argument was rejected because the statute applies to all municipalities in the same fashion, although the law may have a disparate impact on certain geographic locations.

The lead opinion found the Munroe Falls ordinances conflict with the State licensing scheme because they restrict an activity that the State law permits.  The City argued that the ordinances did not conflict with State law because the ordinances address zoning issues, while the State law addresses safety and correlative rights.  This argument was rejected because the ordinances and the State law regulate the same subject matter – oil and gas drilling.  Moreover, the Court noted that ORC 1509.02 explicitly gives the State exclusive authority over  permitting, location, spacing, and production operations, reserving to local governments, “… extensive regulatory control given to municipalities over a wide range of infrastructure—from alleys to aqueducts, see R.C. 723.01 and 4513.34—it explicitly prohibits them from exercising those powers in a way that “discriminates against, unfairly impedes, or obstructs” the activities and operations covered by R.C. 1509.02.”

The City raised policy arguments that municipalities and the State should work together to regulate drilling.  The lead opinion said that these policy considerations are a matter for the legislature.  The General Assembly wrote ORC Chapter 1509 to restrict regulation of this area to the State.  In other words, if municipalities and/or the people of Ohio believe cities should regulate permitting, location, spacing of drilling and production operations, they will need to work for change in the legislation.

Concurring Opinion

A concurring opinion by Justice O’Donnell notes that the Munroe Falls ordinances in question include both a zoning ordinance and ordinances dealing with permits for oil and gas.  The permit ordinance directly conflicts with State permitting law.  The zoning ordinance fails too because it contains the same restrictions as the permit ordinance.  But it remains to be decided whether the General Assembly intended to supplant zoning laws.   Spacing and location of wells (regulated under State law) have technical meanings relating to efficient production of oil and gas and correlative rights, and thus do not encompass zoning issues such as compatibility with a neighborhood.  In addition to Home Rule authority, zoning authority also arises by statute, ORC 713.07, another reason why municipalities may have power to enact zoning regulations that apply to drilling.

Dissenting Opinion

Justice Lanzinger felt it was not clear that the Munroe Falls ordinances conflict with State law.  A preemption statement in a state law alone is not enough to show that an ordinance conflicts with the general law. ORC 1509.02 does not specifically prohibit local zoning regulation.



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