Supreme Court Justice: Ohio Regulator is God. Court hears potentially earth-shaking fracking case: City of Munroe Falls v Beck Energy Corporation

High court hears potentially earth-shaking fracking case by Jim Phillips, February 26, 2014, athensnews
A case that promises to have major repercussions on the shale-drilling industry in Ohio was heard by the Ohio Supreme Court Wednesday. The case, which pits the city of Munroe Falls against the Beck Energy Corporation, has drawn in a number of Athens County businesses and one county village as “friends of the court” on the side of Munroe Falls. The case addresses the following issue, according to a preview on the Ohio Supreme Court’s website: “Are local zoning and drilling ordinances in conflict with the state oil-and-gas drilling law?”

In June, the Ohio Supreme Court announced it would accept jurisdiction to hear the case. The legal dispute arose after Beck got a state permit in early 2011 to drill on private land off a city street in Munroe Falls, a small Akron suburb. Munroe Falls officials said Beck was violating city ordinances that required the company to obtain a city drilling permit, zoning certificate and right-of-way construction permits, pay an application fee, and post a performance bond. The company refused to apply for the city permits, claiming its permit from the Ohio Department of Natural Resources meant it didn’t need approval from the city.

When Beck started drilling, the city issued a stop-work order and sued the company. In 2012, a Summit County Common Pleas judge ruled in the city’s favor, citing the Ohio Constitution’s guarantee of “home rule” to local communities. Even though Ohio has a uniform statewide system for permitting oil and gas wells, the local court found, state law does not mean that drilling companies, once they have “permit in hand” from the state, don’t have to obey any local regulations.

Beck appealed, and in February, the 9th District Court of Appeals overturned most of the lower court’s ruling. The appeals court concluded that the case’s essential legal issue is whether Munroe Falls’ local laws conflict with the state law that puts ODNR in charge of oil-and-gas regulation. If they do, the court said, state law trumps local law. Munroe Falls then took the case to the state Supreme Court.

In a merit brief, Munroe Falls argues that the Ohio Supreme Court has already recognized the right of local communities to use zoning to limit where strip-mining can take place, and suggests that this precedent can apply to drilling as well. Beck’s brief contends that the language in the “home rule” section of the state Constitution clearly bans any local zoning laws that conflict with statewide laws of general application. In the case of Munroe Falls, the company insists, “the city’s zoning ordinance must give way to the state’s exclusive authority to regulate oil and gas operations.”

During Wednesday’s oral arguments, streamed live on the Supreme Court’s website, Justice Paul E. Pfeiffer noted that the case deals with a very weighty and strongly contested issue. “There are huge, and valid, and competing interests here, and there’s a lot of money floating around,” Pfeiffer observed.

When John Keller, attorney for Beck, pointed out that a majority of landowners affected by the drilling project in Munroe Falls approved it, Pfeiffer responded, “If there’s enough money involved, the property owners are going to agree to about anything.”

Peter Glenn-Applegate, attorney for the state of Ohio (on Beck’s side in the case), suggested that the legal issue raised by the case is the narrow one of whether a city can require a local permit for an activity the state has already authorized.

Pfeiffer, however, suggested that in narrowing the question this way, the state and Beck want the court “to sidestep the important issue” of whether local zoning laws have any appropriate place in controlling an activity such as oil-and-gas drilling that the state already regulates.

Asked by Pfeiffer whether the Ohio Attorney General takes the position that “local zoning has no place in the regulation of oil-and-gas drilling in the state,” Glenn-Applegate confirmed that this is, in fact, the state’s view. He also suggested that local regulations may not be needed, because the requirements for an ODNR drilling permit are fairly demanding. “It’s not a simple permit that’s easy to get,” he maintained. He said the Munroe Falls ordinances that relate to drilling refer to “all sorts of things that are already in (state oil-and-gas permitting law),” putting them in conflict with state law.

Attorney Thomas Houlihan, for Munroe Falls, told the court that while some have suggested a legal remedy for the city in seeking a mandamus court order, realistically this option is a non-starter legally. “There is no real mandamus remedy here,” he insisted. He also cited a recent Ohio Supreme Court ruling on a case that pitted the city of Cleveland against the Public Utilities Commission of Ohio, over the right to locally regulate tow trucks. In that decision, he said, the court’s ruling suggested that “there may be areas (connected to tow truck operation) that the PUCO has not regulated,” where it would be valid for a city to step in with its own laws.

Analogizing to the Munroe Falls case, Houlihan noted that the city’s laws could require that the drilling company give advance notice before drilling commences at a site inside the city – and that state law does not say anything about such notice. Therefore, a local advance-notice law “would not be in conflict with anything” in state law, he said. “I would urge the court not to pre-empt the entire field” of local zoning and regulation, he added. “You just don’t want to be foreclosed from the process,” Justice Judith L. French noted. [Emphasis added]

Case No. 2013-0465 State ex rel. City of Munroe Falls, et al. v. Beck Energy Corporation, et al.
Are Local Zoning and Drilling Ordinances in Conflict with the State Oil and Gas Drilling Law?

Do state laws concerning oil and gas drilling (R.C. Chapter 1509) deprive municipalities of their local home-rule authority under the Ohio Constitution to enact and enforce zoning laws?

Do municipal ordinances requiring that an oil and gas driller with a state permit submit information to a local government to protect the residents’ interests conflict with the state’s oil and gas drilling law?

2014 02 26 Monroe falls v Beck Energy video Judge Pfeifer To be God. The Director of Natural Resources is God in this case.

While it’s too hard to tell how they will rule-the majority of Supreme Court Justices held the energy company and the state of Ohio’s feet to fire under questioning today as it relates to Ohio’s ‘Act 13’ Case.

With regard to dismay that citizens can not object to or appeal permits – Ohio Supreme Court Justice Paul Pfeifer pointedly asked Beck Energy’s attorney, John Keller:

Pfeifer: “But in terms of courts. There is no access to courts period. Right?”

Keller: “Because the General Assembly decided in 2004 to give the state the sole and exclusive authority…”

Pfeifer: “To be God in this case, right?”

Keller: “Pardon?”

Pfeifer: “To be God. The Director of Natural Resources is God in this case.”

Ohio Communities & Businesses Stand with Munroe Falls on Importance of Local Control in Face of Fracking by People’s Oil & Gas Collaborative- Ohio (POGCO), February 23, 2014, Ohio Gas

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