Ohio city loses fight for control over oil and gas drilling

2/17/2015

ANDREW HARRIS

COLUMBUS (Bloomberg) -- An Ohio city lost a battle for control over oil and gas drilling permits within its borders with the Ohio Supreme Court saying the authority belongs to the state.

The ruling on Tuesday runs counter to decisions issued by New York’s top court last year and the highest Pennsylvania court in 2013 as local municipalities concerned over the effects of hydraulic fracturing seek to limit the practice.

More than 400 measures to prevent or control fracking have been passed by U.S. cities and counties according to Food & Water Watch, a Washington-based environmental advocacy group. The process, which involves the injection of water, chemicals and sand below ground to extract oil and gas from shale formations, has been criticized as environmentally dangerous, even as its use has driven U.S. natural gas production to new highs.

Munroe Falls, with a population of 5,012 about 35 mi southeast of Cleveland, had tried to block Beck Energy Corp. from developing an oil and gas well on land within city limits after the company received a permit from the Ohio Department of Natural Resources in 2011. The burg lost an earlier challenge in a lower court.

In a 4-3 ruling, the state’s top court rejected Munroe Falls’ assertion it was validly exercising its home rule, which lets communities enact local rules and regulations as long as they don’t conflict with general state law. The court found Munroe Falls’ ordinances amounted to an exercise of police power, not self-government, and conflicted with the state regulations first enacted in 2004.

Not for Judiciary

“The city presents a variety of policy reasons why local governments and the state should work together, with the state controlling the details of well construction and operations and the municipalities designating which land within their borders is available for those activities,” Justice Judith French wrote for the majority. “This is no doubt an interesting policy question, but it is one for our elected representatives in the General Assembly, not the judiciary.”

Munroe Falls’ laws required the company to pay an $800 application fee, post a $2,000 bond, wait one year, and hold a public hearing at least three weeks before drilling. Failure to comply would have resulted in a $1,000 fine, six months in jail, or both.

Beck Energy’s state permit was already subject to 67 conditions, according to the high court.

Follow Rules

“Beck Energy has always worked and operated under the rules,” passed by the state legislature, David Beck, a company vice president, said in a phone interview. State rules promote safe and efficient drilling, he said.

“Munroe Falls didn’t see it that way,” Beck said.

Founded by his father Raymond in 1978, Ravenna, Ohio-based Beck Energy has about 300 wells in 10 Ohio counties, he said.

Munroe Falls Mayor Frank Larson didn’t immediately respond to a telephone message seeking comment on the ruling.

Dissenting, Justice William O’Neill wrote that the state’s control over oil and gas development was bought and paid for by the energy industry to the detriment of the public.

“Under this ruling, a drilling permit could be granted in the exquisite residential neighborhoods of Upper Arlington, Shaker Heights or the Village of Indian Hill -- local zoning dating back to 1920 be damned,” O’Neill said.

New York’s cities and towns won the right to ban fracking within their borders with the state’s top court ruling such measures were a “reasonable exercise” of their zoning authority. A voter-enacted prohibition on fracking in Longmont, Colorado, was struck down by a state court in July.

Pennsylvania Ruling

In December 2013, the Pennsylvania Supreme Court struck down part of a law aimed at easing natural gas development there, saying some provisions limiting the power of municipalities to control drilling within their territories violated that state’s constitution.

Denton, a Texas city where commercial fracking was born, was sued in November by an industry group and a state agency seeking to overturn the prohibition.

The case is State ex rel. Morrison v. Beck Energy Corp., 2013-0465, Ohio Supreme Court (Columbus).

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