State ex rel. Morrison v. Beck Energy Corp.

Decision Date17 February 2015
Docket NumberNo. 2013–0465.,2013–0465.
Citation143 Ohio St.3d 271,37 N.E.3d 128,2015 Ohio 485
Parties The STATE ex rel. MORRISON, Law Dir.; The City of Munroe Falls, Appellant, v. BECK ENERGY CORPORATION et al., Appellees.
CourtOhio Supreme Court

Amer Cunningham Co., L.P.A., Jack Morrison Jr., Thomas M. Saxer, and Thomas R. Houlihan, Akron, for appellant.

Vorys, Sater, Seymour & Pease, L.L.P., and John K. Keller, Columbus, for appellees.

Richard C. Sahli, Gahanna; and EarthJustice and Deborah Goldberg, urging reversal for amici curiae, health professionals Peggy Ann Berry, Samuel Kocoshis, Deborah Cowden, Katie Huffling, Angela Novy, Conleth Crotser, Bill Lonneman, Janalee Stock, Sue Papp, Rosemary Valedes Chaudry, Elaine McSweeney, Jonalea Neider, and Physicians, Scientists, and Engineers for Healthy Energy.

Natural Resources Defense Council, Meleah Geertsma, Katherine Sinding, and Peter Precario, urging reversal for amici curiae cities of Broadview Heights, Euclid, Mansfield, and North Royalton, and village of Amesville.

Morrison & Bindley and David C. Morrison, Heath, urging reversal for amicus curiae city of Heath.

William W. Ellis, Jr. Ohio Environmental Law Center and Trent A. Dougherty, urging reversal for amici curiae Ohio local businesses Athens Electric, Cherry Orchards, Design Council, Donkey Coffee, Enviroscapes Landscaping Design, Fox Natural Builders, The Going Green Store, Green Edge Organic Gardens, Haulin' Hoof, Herbal Sage, High Bottom Farm, Hyacinth Bean Florist, Laurel Valley Creamery, Mustard Seed Market, Shew's Orchard, Snowville Creamery, Sticky Pete's Maple Syrup, Sunpower, Inc., Village Bakery, Wide Angle Ranch, Zan Small Business Solutions, L.L.C., Kenneth Messinger–Rapport, Attorney L.L.C., Patricia Walker, attorney at law, retired business owners Donald Baker and Pam Miller (Gramercy Gallery), Louie Chodkiewz–Real Estate Broker, and Shirley Sinn–Oil & Gas Consulting.

Ice Miller, L.L.P., and Patrick A. Devine, Columbus, urging affirmance for amicus curiae Ohio Contractors Association.

Michael DeWine, Attorney General, Eric E. Murphy, State Solicitor, and Peter K. Glenn–Applegate, Deputy State Solicitor, urging affirmance for amicus curiae state of Ohio.

Kincaid, Taylor & Geyer, William J. Taylor, and Scott D. Eickelberger, Zanesville, urging affirmance for amicus curiae Ohio Oil and Gas Association.

Chorpenning, Good & Pandora Co., L.P.A., and Brian E. Chorpenning, Columbus, urging affirmance for amici curiae Artex Oil Company, Eclipse Resources I, L.P., EnerVest Operating, L.L.C., Hess Ohio Developments, L.L.C., Hilcorp Energy Company, Paloma Resources, L.L.C., Sierra Resources, L.L.C., and American Energy Partners L.P.

Brady, Coyle & Schmidt, Ltd., Brian P. Barger, Columbus, and Amanda L. Coyle, urging affirmance for amici curiae Ohio Aggregates Association, Ohio Ready Mixed Concrete Association, and Flexible Pavements of Ohio.

Benjamin Norris ; Sidley Austin, L.L.P., Roger R. Martella Jr., Joseph R. Guerra, Samuel B. Boxerman, and Lowell J. Schiller ; Porter, Wright, Morris & Arthur, L.L.P., and Kathleen M. Trafford, Columbus; Linda Woggon; and Wuliger, Fadel & Beyer and Timothy R. Fadel, Cleveland, urging affirmance for amici curiae American Petroleum Institute, Ohio Chamber of Commerce, Canton Regional Chamber of Commerce, Youngstown/Warren Regional Chamber, and International Union of Operating Engineers, Local 18.

FRENCH, J.

{¶ 1} R.C. Chapter 1509 regulates oil and gas wells and production operations in Ohio. While it preserves certain powers for local governments, it gives state government "sole and exclusive authority" to regulate the permitting, location, and spacing of oil and gas wells and production operations within the state. R.C. 1509.02. In this case, we decide whether the Home Rule Amendment to the Ohio Constitution grants to the city of Munroe Falls the power to enforce its own permitting scheme atop the state system. We hold that it does not.

Background

{¶ 2} In 2011, appellee, Beck Energy Corporation, obtained a permit from a division of the Ohio Department of Natural Resources ("ODNR") for the purpose of drilling an oil and gas well on property within the corporate limits of appellant, the city of Munroe Falls. This appeal arises from the city's attempt to stop Beck Energy from drilling based on its own municipal ordinances.

R.C. Chapter 1509

{¶ 3} Beck Energy obtained its state permit through R.C. Chapter 1509. In 2004, the General Assembly amended that chapter to provide "uniform statewide regulation" of oil and gas production within Ohio and to repeal "all provisions of law that granted or alluded to the authority of local governments to adopt concurrent requirements with the state." Legislative Service Commission Bill Analysis, Sub.H.B. No. 278 (2004); R.C. 1509.02, Sub.H.B. No. 278, 150 Ohio Laws, Part III, 4157.

{¶ 4} In its current form, R.C. 1509.02 centralizes regulatory authority in state government, entrusting a division of ODNR with "sole and exclusive authority to regulate the permitting, location, and spacing of oil and gas wells and production operations" within Ohio (excepting certain activities regulated by federal laws). R.C. 1509.02 preserves the regulatory powers granted to local governments by R.C. 723.01 and 4513.34. R.C. 723.01 grants municipal corporations "special power" to control public highways, streets, avenues, alleys, sidewalks, public grounds, bridges, aqueducts, and viaducts. R.C. 4513.34 grants local authorities the power to grant permits to operate certain heavy vehicles on highways within their jurisdiction. But R.C. 1509.02 expressly prohibits a local government from exercising those powers "in a manner that discriminates against, unfairly impedes, or obstructs oil and gas activities and operations regulated under [R.C. Chapter 1509]."

{¶ 5} A state permit is essential for any person seeking to drill a new well, drill an existing well deeper, reopen a well, convert a well to any use other than its original purpose, or plug back a well to a source of supply different from the existing pool. R.C. 1509.05. An applicant may obtain a permit through the procedures outlined in R.C. 1509.06, and the division chief must promulgate standards for obtaining a permit, including standards that address the safety of well drilling and operation, protection of the public and private water supply, fencing and screening of surface facilities, waste containment and disposal, construction of access roads, and noise mitigation. R.C. 1509.03(A) ; see also Ohio Adm.Code Chapter 1501:9–1. The regulations also establish well spacing and setback requirements based on the depth of the well and the well's proximity to other wells and private dwellings. See Ohio Adm.Code 1501:9–1–04(C), and 1501:9–1–05.

{¶ 6} In this case, Beck Energy's state permit contained a total of 67 conditions. The first 38 related to the site's designation as a "Municipal Wellhead Protection Area" and addressed issues including site preparation, pit construction, and waste disposal. The remaining 29 conditions governed "Urbanized Areas" and included site-specific restrictions relating to issues such as tree trimming, erosion control, noise mitigation, and parking. See R.C. 1509.01(Y) (defining "urbanized area"). To obtain a permit to drill a new well in an urbanized area, an applicant must provide a sworn statement that it has provided notice to the owner of each parcel of real property located within 500 feet of the surface location of the well, as well as to the "executive authority of the municipal corporation" in which the well is to be located. R.C. 1509.06(A)(9).

The Ordinances

{¶ 7} Soon after Beck Energy began drilling, the city issued a stop-work order and filed a complaint seeking injunctive relief in the Summit County Court of Common Pleas. The complaint alleged that Beck Energy was violating multiple provisions of the Munroe Falls Codified Ordinances. This appeal concerns five of those ordinances, which the city passed between 1980 and 1995.

{¶ 8} The first is a general zoning ordinance in Chapter 1163 that prohibits any construction or excavation without a "zoning certificate" issued by the zoning inspector. Munroe Falls Codified Ordinances 1163.02(a). To obtain the zoning certificate, the applicant must obtain various approvals from the planning commission, the city council, the zoning inspector, and when a variance is being requested, the board of zoning appeals. Munroe Falls Codified Ordinances 1163.02(a)(1) through (4). For example, an applicant seeking approval of a conditional use must obtain a "conditional zoning certificate" by following the procedures in section 1163.04, which include notice and a public hearing. Munroe Falls Codified Ordinances 1163.02(a)(3); see also section 1163.04. The conditional zoning certificate includes any "conditions, stipulations, and safeguards that have been approved by the Planning Commission and Council." Munroe Falls Codified Ordinances 1163.02(a)(3).

{¶ 9} The remaining four ordinances are in Chapter 1329, which specifically relates to oil and gas drilling. Munroe Falls Codified Ordinances 1329.03 prohibits any person from drilling a well for oil, gas, or other hydrocarbons "until such time as such persons have wholly complied with all provisions of this chapter and a conditional zoning certificate has been granted by Council to such person for a period of one year." Munroe Falls Codified Ordinances 1329.04 and 1329.06 require an applicant to pay a fee of $800 and deposit $2,000 for a performance bond at the time of filing. Finally, Munroe Falls Codified Ordinances 1329.05 requires a public hearing at least three weeks prior to drilling and requires the permit applicant to schedule the hearing and notify all property owners and residents within 1,000 feet of the well head.

{¶ 10} A person who violates any of the ordinances in Chapter 1329 of the Munroe Falls Codified Ordinances is guilty of a first-degree misdemeanor and "shall be...

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