On February 17, 2015, in a split 4-3 decision, the Ohio Supreme Court affirmed the sole and exclusive authority of the Ohio Department of Natural Resources (ODNR) to regulate oil and gas production in Ohio. This ruling is critical to Ohio businesses because, according to an American Chemistry Council report, shale gas alone will provide Ohio with $1.6 billion in industry revenue during the investment stage and another $7.5 billion during production. This revenue will trickle down to the benefit of businesses outside the shale industryand consumers of natural gas who will save an estimated $30 million in avoided interstate pipeline transportation costs and another $9.2 million due to the price-reducing impact Ohio’s natural gas supply has on the U.S. market.
The thrust of the ruling is that, under the law, local governments do not have the right to regulate the industry. In State of Ohio ex rel. Jack Morrison, Jr. v. Beck Energy Corp., the Court concluded that five city ordinances aimed at regulating oil and gas operations could not be enforced because they were not a valid exercise of the municipality’s “home rule” powers. While the decision leaves room for the Ohio Supreme Court to revisit the issue in the future, for now it gives oil and gas producers a green light for hydraulic fracturing development, even if local ordinances stand in the way.