Municipal authority & fracking

municipal authority

Our cities have a very strong say in what can happen. (Karen Moss, New Tech Engineering, Texas)

“To continue the (fracking) ban on Prospect Energy would invite a lawsuit our city would have little chance of winning.” (Gerry Horak, Fort Collins City Council, Colorado)

Can you regulate fracking locally?

Several cities, towns, and municipalities have, over the past few years, attempted to take fracking matters into their own hands. While some municipalities have succeeded to control oil & gas operations at the local level, others have failed. A spate of lawsuits in New York (2012) and Colorado (ongoing) received only patchy coverage by national news, despite the fact that the decisions that stem from these lawsuits will largely clarify (or even change) who has the ultimate authority in deciding where fracking can and can’t occur.  Regulatory debates have focused predominantly on the state vs. federal tug-of-war while brushing over state-local government tension. We’ve seen dramatic changes in regulatory oversight of the oil & gas industry over the past few years — how do local governments assert themselves in the mix?

Different states, differing degrees of local government authority

Every level of government has attempted to lay claim over the fracking regulatory climate. In 2012, dozens of municipalities in the Marcellus Shale region banned fracking within their borders, and their decisions were upheld in New York’s Court of Appeals. Pennsylvania’s state government officials, on the other hand, passed two bills in 2011 that deny municipalities the authority to regulate the oil & gas industry altogether. Longmont, a city in Colorado, had to pay $65,000 in legal fees to defend itself in two lawsuits with the state after the city tried to ban energy development within its city limits. But although the rules in your state will vary considerably from a neighboring state, two general threads hold throughout:

city hall 1. State’s existing oil & gas law > authority of municipality Municipalities, to an extent, can exercise control over drilling companies. Their tools include: land use ordinances, zoning laws, or creating their own Operator’s Agreement rules and permitting process. However, state oil & gas laws always precede and have ultimate authority over municipal ordinances on gas well operations. This authority is typically clarified  on a case-by-case basis, in lawsuits between property owners, local officials, and/or companies. For example, if a municipality passes a resolution to ban fracking, the law is usually tried in court (with a company or individual usually appealing to state oil & gas laws to reverse the decision), and then the state authorities decide whether or not the municipality’s authority is upheld. Judges will base their decisions on both:

A) the history of previous court decisions within the state and

B) state oil & gas legislation.

Plainly, the state decides the extent of authority a municipality may exercise. But occasionally, where gaps are revealed in state regulation acts or where the state regulatory authorities prove inadequate or unsophisticated in ensuring that regulations are adhered to by companies, local commissions take over. Local governments can legislate what the state doesn’t cover- rules on access roads and pipeline location, water quality testing, bonding local roads against heavy drilling equipment damage – whatever regulatory gaps happen to exist. If a fracking proposal is at odds with local land use practices or codes, municipalities can also advise state governments who may then require more information from a company applying for a permit.

2. The “home rule”

In many (but not all) states, the “home rule” empowers local counties or cities to determine their community character through control over land use decisions. Limitations on the rule vary, but the “home rule” has allowed some states to set up their own system of ordinances without intervention by state authorities. The rule is loosely used and specifications vary across state constitutional provisions, but a list comparing each state’s version of the rule is available here. Middlefield, a town in New York, appealed to the rule in 2012 when it was sued by Cooperstown Holstein Corporation. The company alleged that the town couldn’t ban fracking, as it would violate the state’s authority – specifically the Oil, Gas & Solution Mining Law. The appeals court ruled in favor of Middlefield, which in turn implies that any local municipality in New York is now granted authority to prohibit natural gas drilling within their boundaries.

Although the NY Environmental Conservation Law states that municipalities cannot adopt local laws or ordinances “relating to the regulation” of the oil, gas and solution mining (hydrofracking) industries, solid legal authority developed in analogous cases involving mining affirms that municipalities may continue to regulate land use and other matters involving public health, safety and welfare that fall outside of the State’s regulatory program. (Catskill Mountainkeeper)

Things turned out differently for Ohio. When the city of Monroe Falls ordered a gas operation to be halted until it complied with all local ordinances, the state’s District Court of Appeals reversed the local trial court’s decision and declared that the state’s drilling statutes take precedence over the “home rule”, especially in all future matters where local and state ordinances may conflict. This case (Jack Morrison Jr. vs. Beck Energy Corp), unlike New York’s, confirmed the exclusive authority of Ohio’s Department of Natural Resources to regulate oil & gas production across the entire state.

oil well coloradoHighlighted conflicts: fracking and city bans

In many states, oil & gas regulations are usually determined and enforced by the state’s department of natural resources, or some equivalent. However, Colorado’s regulations are decided upon by the COGCC or the Colorado Oil and Gas Conservation Council. Voting seats in the COGCC were, until 2008, dominated by figures in the industry until both the commission and oil & gas regulations across the state were both reconstituted. Nevertheless, cities suddenly receiving an in-flow of drilling applications and worried about the capacity of state regulators to monitor fracking have attempted to pass moratoriums in the meantime. Two cities who banned fracking and were then compelled to overturn the bans were Longmont and Fort Collins, between November 2012 and May 2013. Longmont faced two expensive lawsuits, the other being an effort on the part of the COGCC to invalidate an ordinance to impose strict regulations on oil & gas within Longmont’s city limits. Fort Collins received lawsuit threats from both Prospect Energy and Governor Hickenlooper and quickly reversed the ban just a few weeks ago:

It’s the state’s obligation to sue any city that does so (bans fracking) because the state has the sole domain over regulating oil and gas extraction. (Coloradoan)

Contrast this with a statement describing the New York State Court of Appeals decision:

The municipalities’ decision to prohibit hydrofracking is an explicit example of an individual municipality acting to determine the best course of action necessary to protect the community with regard to drilling activities. (Lexology)

Empowering local governments or city councils to regulate fracking recognizes that these authorities may have a better understanding of the conditions, possibilities, risks, and constituent concerns unique to each area. However, in regions where municipalities DO have some authority to regulate drilling, companies will have to navigate each locality’s specific rules – made more difficult if they have operations that span multiple counties. Because the entire state of New York has a blanket moratorium on hydrofracking, over 150 individual municipalities have freely passed bans as well. If more citizens understand the specific degree of autonomy their local governments have in regulating oil & gas drilling operations, they will be better equipped to appeal to the right authorities on fracking issues in their communities.

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