In a case of importance to property owners and drillers alike, the Franklin County Court of Common Pleas held that an application submitted by a drilling company requesting the mandatory pooling of property it did not own – here land owned by the City of North Royalton – cannot be approved without evidence that safety or other intangible concerns of affected property owners were considered.
The Court – in Simmers v. City of North Royalton, Case No. 15CV-42 (8/27/15) – upheld an Ohio Oil & Gas Commission order that the Chief of the Ohio Division of Oil & Gas Resources Management reconsider his approval of a mandatory pooling application.
The Chief approved the mandatory pooling application at issue after considering only the economics underlying the pooling application, not the City’s safety concerns about drilling, which he did not believe were to be considered in the process. The Commission not only overturned the Chief’s order, but it also remanded the matter to the Technical Advisory Council on Oil & Gas (“TAC”) for further consideration of the City’s concerns. The Chief administratively appealed the Commission’s action to the Franklin County Court of Common Pleas.
In addressing the Commission’s action, the Court noted that R.C. 1509.27 requires – as a statutory predicate to issuance of a mandatory pooling order – a showing that the applicant initially attempted to negotiate a lease for the property at issue “on a just and equitable basis.”
Such a consideration must include concerns expressed by “unwilling participants” –the City in this case – holding that:
[I]t would be illogical to narrowly construe the law and force landowners into a mandatory pool … while completely ignoring legitimate safety or other intangible concerns important to any sensible property owner.
While its ruling is applicable to all affected property owners, the Court noted that the safety
concerns expressed by North Royalton must be given particular weight in light of the fact that as a
municipality it is vested with “very broad authority to speak for its citizens on matters of
health, safety, and welfare.”
The Court did hold for the Chief on one issue: It held that the Commission order could not remand
the matter to TAC. After noting that TAC adds “a breadth of expertise” to such issues and
ordinarily has been utilized by the Chief in consideration of mandatory pooling applications, the
Court held that TAC is merely “an advisory board impaneled at the Chief’s discretion” and not
authorized to issue orders. Thus, the Chief is free to use TAC “as he sees fit” in his
reconsideration of the application.