Oil, gas case heading to Ohio top court will spotlight local control

September 20, 2013 at 12:10a.m.

Youngstown

The state’s highest court will soon hear a case that for the first time challenges a controversial law Ohio legislators passed in 2004 giving the Ohio Department of Natural Resources sole authority to permit and regulate oil and gas drilling.

The pre-emptive state law — passed with House Bill 278 — almost entirely limits both local government’s authority and ability to restrict oil and gas drilling. Only within the last three years have opponents stepped up their attack on the law as drilling has increased dramatically in the state with the arrival of horizontal hydraulic fracturing, or fracking.

Those who back ODNR’s pre-emptive authority, including the industry itself, business groups and many others, say sole authority and centralized regulation is crucial to the steady development of the state’s oil and gas resources and the economic benefits that are generated by such activity.

The case originated at the trial-court level in 2011 in Summit County after the city of Munroe Falls filed a complaint against Ravenna-based Beck Energy. In its initial complaint, Munroe Falls alleged that after the company had started to drill on private property there, it failed to file for local drilling permits and did not comply with zoning and right-of-way ordinances.

As the case has slowly plowed its way through the state’s court system, those on both sides of the fracking debate have paid close attention.

Officials from Munroe Falls did not returns calls made Thursday seeking comment for this story.

On a local level in places such as Youngstown, Broadview Heights, Mansfield, Athens, Bowling Green, Kent and Brunswick, where bans on oil and gas drilling or other aspects of the industry have been considered, the case has become a rallying cry against what opponents deem to be a license for oil and gas companies to operate independently of local control.

Opponents of ODNR’s regulatory reach believe the 2004 law directly violates Ohio’s constitution under its “home-rule” provision, which extends to municipalities a limited “authority to exercise all powers of local self-government.”

“Historically, communities have some say over what happens with their towns,” said Kari Matsko, of the People’s Oil & Gas Collaborative, in a statement issued earlier this month after the group helped five cities across the state file a friend-of-the-court brief in the case. “The unfettered access given to oil and gas companies after 2004 in Ohio are coming at a very real cost — not just the environmental concerns — but presumptions that they need not abide by zoning as do all other businesses in the state present many risks.”

When the trial court ruled in favor of Munroe Falls, Beck Energy appealed to the 9th District Court of Appeals, which said the city’s drilling ordinances conflict with state law and overturned the lower court’s ruling.

Munroe Falls appealed, and the case is now taking aim at ODNR’s ability to regulate without local intervention.

“There’s been various home-rule issues of all kind in the state’s history — that’s not unusual,” said Alan Wenger, chairman of the oil and gas law group at Harrington, Hoppe & Mitchell in Youngstown. “But this case is the first of its kind to deal with H.B. 278. That’s never been directly reviewed by the Ohio Supreme Court.”

Briefs are due in the case this fall, and the high court is expected to hear the case sometime next year. For the time being, a slew of unusual parties have come forward to stake their claim in the case and show support for their position. Among those opposing ODNR’s authority, for instance, are businesses such as Herbal Sage, High Bottom Farm and Hyacinth Bean Florist, all of which have filed a friend-of-the-court brief.

On the other side is the American Petroleum Institute and the Ohio Chamber of Commerce, among others.

Wenger said it is unlikely that the Supreme Court will deviate from the appellate court’s ruling, saying there is plenty of precedent supporting pre-emptive law and centralized regulation in other sectors that deal with energy utilities, for example.

“Trustees, city councils and mayors do an awful lot of good things,” said Thomas Stewart, executive vice president of the Ohio Oil and Gas Association. “But they have no expertise in regulating a diverse and complex industry. The question here is, do you really want a township trustee to have regulatory authority over a 9,000-foot well?”