State ex rel. Morrison v. Beck Energy Corp.
143 Ohio St.3d 271, 37 N.E.3d 128 (2015)
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Rule of Law:
Under the Ohio Constitution's Home Rule Amendment, a municipal ordinance that creates a local permitting and licensing scheme for oil and gas drilling is preempted when it conflicts with a state statute that grants the state government sole and exclusive authority to regulate such activities.
Facts:
- In 2004, the Ohio General Assembly amended R.C. Chapter 1509 to grant the Ohio Department of Natural Resources (ODNR) 'sole and exclusive authority' for the statewide regulation of oil and gas production.
- The city of Munroe Falls had several ordinances, passed between 1980 and 1995, that required anyone seeking to drill for oil or gas to obtain a local zoning certificate and a conditional use permit.
- These municipal ordinances also required applicants to pay an $800 fee, post a $2,000 performance bond, and hold a public hearing before drilling.
- In 2011, Beck Energy Corporation obtained a permit from ODNR, which contained 67 specific conditions, to drill an oil and gas well on property within the city of Munroe Falls.
- After securing the state permit, Beck Energy began drilling operations at the site.
- The city of Munroe Falls issued a stop-work order against Beck Energy, alleging the company was violating city ordinances by drilling without having obtained the required local permits.
Procedural Posture:
- The city of Munroe Falls filed a complaint in the Summit County Court of Common Pleas (the trial court) seeking an injunction against Beck Energy Corporation.
- The trial court granted a permanent injunction in favor of Munroe Falls, prohibiting Beck Energy from drilling until it complied with the city's ordinances.
- Beck Energy, as appellant, appealed the trial court's decision to the Ninth District Court of Appeals.
- The Court of Appeals reversed the trial court's judgment, holding that the state law preempted the city's ordinances.
- The city of Munroe Falls, as appellant, appealed to the Supreme Court of Ohio, which accepted jurisdiction to hear the case.
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Issue:
Does the Home Rule Amendment to the Ohio Constitution permit a municipality to enforce local zoning and permitting ordinances against an oil and gas drilling operation that has already received a valid permit from the state, where a state statute grants the Ohio Department of Natural Resources 'sole and exclusive authority' over such operations?
Opinions:
Majority - French, J.
No. The Home Rule Amendment does not permit a municipality to enforce local ordinances that conflict with the state's comprehensive regulatory scheme for oil and gas drilling. Applying the three-part home-rule conflict test, the court found the city's ordinances are an exercise of police power and R.C. 1509.02 is a general law. The ordinances conflict with the state statute in two ways: first, they create a classic licensing conflict by prohibiting an activity (drilling) that a state permit explicitly allows. Second, the statute's plain language giving ODNR 'sole and exclusive authority' demonstrates the General Assembly’s clear intent to preempt local governments from creating a parallel regulatory system for oil and gas operations.
Concurring - O'Donnell, J.
Yes, but only in this specific instance. This concurrence agrees that the five specific Munroe Falls ordinances are preempted because they create a duplicative municipal permitting scheme that directly conflicts with the state's exclusive authority. However, the holding is narrow and does not resolve whether traditional zoning ordinances—which might limit drilling to certain districts without imposing a separate permitting process—would also conflict with the state statute. The opinion suggests that the terms 'location' and 'spacing' in the state statute have technical meanings related to maximizing resource extraction and may not be intended to supplant all local land-use zoning authority.
Dissenting - Pfeifer, J.
Yes. The state statute leaves room for municipalities to employ zoning regulations that do not conflict with the statute. This dissent, joining Justice Lanzinger's, argues that a 'big picture' approach incorporating local input is the best way to encourage responsible development of natural resources.
Dissenting - Lanzinger, J.
Yes. The municipal ordinances and the state statute can coexist because they regulate different things: the ordinances address traditional local zoning concerns like land use and community welfare, while the state statute controls the technical aspects of drilling. A state's mere declaration of intent to preempt a field is insufficient to create a conflict under the Home Rule Amendment; an actual conflict must exist. The state statute lacks the explicit language prohibiting local zoning that is found in other state laws, and courts should seek to harmonize state and local regulations rather than assume preemption.
Dissenting - O'Neill, J.
Yes. This dissent joins Justice Lanzinger's and argues that the majority's decision strips local control from citizens and hands it to the oil and gas industry. It warns that under this ruling, drilling permits could be granted in any residential neighborhood, regardless of long-standing local zoning laws.
Analysis:
This decision significantly curtailed the home-rule power of Ohio municipalities in the context of oil and gas drilling, establishing the supremacy of the state's comprehensive regulatory scheme. The court's holding solidifies that when the state legislature grants an agency 'sole and exclusive authority' over a specific, licensed activity, it preempts local laws that create a duplicative or conflicting permitting process. While the ruling is a clear victory for statewide uniform regulation, the concurring opinion deliberately leaves open the possibility that traditional, non-permitting zoning ordinances could survive a future preemption challenge, setting the stage for further litigation on the precise limits of municipal land-use authority.
