Ohio Supreme Court Rules That Municipalities Cannot Block Drilling Activities Permitted By the State

On February 17, 2015, the Ohio Supreme Court ruled that R.C.§1509.02 gives the Ohio Department of Natural Resources (ODNR) “sole and exclusive authority” to regulate the location and permitting of oil and gas wells and that the Home Rule Amendment to the Ohio Constitution, Article XVIII, Section 3, does not grant to the City of Munroe Falls the power to enforce a conflicting permitting scheme for oil and gas production operations within its municipal boundaries.

The dispute between the City and Beck Energy started when Beck Energy obtained a state-issued permit to drill for oil and gas on a parcel located within the City of Munroe Falls. When the City sought to enforce its local ordinances, Beck Energy took the position that it did not have to comply with local ordinances because it already had obtained a state-issued permit. The City filed a complaint seeking injunctive relief from the trial court. The trial court agreed with the City and issued a permanent injunction prohibiting Beck Energy from engaging in drilling operations until it complied with local ordinances. On appeal, the appellate court reversed and held that the City’s ordinances were in conflict with state law.

In affirming the appellate court’s ruling, the Ohio Supreme Court held that the local ordinances conflicted with state law because they sought to prohibit what R.C.§1509.02 allows (oil and gas production within the municipal boundaries of the City). In addition, the language of R.C.§1509.02 itself gives ODNR “sole and exclusive authority to regulate the permitting, location, and spacing of oil and gas wells and production operations within Ohio” reserving to the state, to the exclusion of local governments, the right to regulate these activities. The Court ruled that the Home Rule Amendment does not allow a municipality to “discriminate against, unfairly impede, or obstruct oil and gas activities and production operations that the state has permitted under R.C. 1509". Because the city ordinances at issue did just that, the Court held that the ordinances conflicted with state law and were unenforceable.

For more Information see our recent frESH Blog post.

Please contact your Squire Patton Boggs lawyer or one of the individuals listed in this publication for additional information.