The Ohio Supreme Court, in State ex rel. Morrison v. Beck Energy Corp., Slip Opinion No. 2015-Ohio-485, issued the first state high court decision to consider and reject the proposition that local anti-fracking zoning regulations can be used to trump a state’s oil and gas law favoring exploration and production.

Facts & Decision

Briefly, the dispute in Beck arose when an energy drilling company challenged a “stop-work” order issued pursuant to an Ohio locality’s anti-fracking zoning regulations. The Ohio Supreme Court framed the issue as follows: “The question here is whether [the locality’s] ordinance represents a valid exercise of home rule power.” The Beck majority ruled that it was not, reasoning that the anti-fracking zoning rule at the heart of the controversy represented an improper exercise of “police power,” rather than a permissible exercise of “local self-government.”

The Ohio Supreme Court stated that Ohio’s Constitution unequivocally vested the Ohio legislature with the power to enact laws governing the “regulation of methods of mining, weighing and marketing coal oil, gas and all other minerals.” In view of this, the Beck majority held that the Home Rule Amendment to the Ohio Constitution “does not allow a municipality to discriminate against, unfairly impede, or obstruct oil and gas activities and production operations” permitted by state law.

Takeaway

Beck is significant in that it represents the first state supreme court decision to consider and reject the proposition that local anti-fracking zoning regulations can be used to trump a state’s oil and gas law favoring exploration and production. The only other state high courts that have considered this same question – the Pennsylvania Supreme Court and the New York Court of Appeals – rejected this view and sustained anti-fracking zoning rules enacted by localities.

The Beck minority issued several spirited dissents. A common element running through these opinions is the notion that, while Ohio’s oil and gas law expressly preempts local rules concerning the actual operation of oil and gas activities, it makes no reference whatsoever to zoning ordinances. In view of that, and given that zoning regulation is such an integral part of municipal home rule, the dissenters concluded that while local zoning rules could be preempted, Ohio’s oil and gas law should not be read that way “without a clear expression of that intent.”

Interestingly, the notion that state law superseding local rules “relating to regulation” of the oil and gas industry does not include “zoning ordinances” was the precise rationale the New York Court of Appeals employed in 2014 to sustain anti-fracking zoning rules enacted by certain New York municipalities.

How other courts around the country will resolve this issue remains to be seen. Wilson Elser’s Hydrofracking team will continue to monitor and report on future cases concerning this important question.