Examining the 'home rule' application and state versus local control of hydraulic fracturing

Luke Cantrell, Baker, Donelson, Bearman, Caldwell & Berkowitz PC, Memphis, Tenn.

The debate over hydraulic fracturing and whether to allow or prohibit the practice continues to be one of the most frequently discussed topics in the oil and gas industry. Over the last few years, municipalities have made attempts to prevent the practice on a local level at an increased rate. Regardless of whether a municipality places a ban or moratorium on the practice, whether through legislation or ballot initiative, the home rule issue is ultimately decided by the state legislature or in the court system.

What is the home rule?

While many debates over hydraulic fracturing continue throughout the oil and gas industry, ultimately the issue has to be addressed under the home rule, or preemption, whether the rule is ever expressly discussed or not. The home rule is defined as "a state legislative provision or action allocating a measure of autonomy to a local government, conditional on its acceptance of certain terms." Black's Law Dictionary 750 (8th ed. 2004).

Further simplified, the home rule is what gives a local municipality the ability to make decisions on matters of local importance, or to self-govern. In this case, the home rule is applied to determine whether local governments within the state have the right to self-regulate hydraulic fracturing (fracking).

The home rule is built on the idea that municipalities often have problems that are better dealt with on a local level, and often are unique to the area, so they are better handled at that level than attempting to apply a statewide, blanket solution that does not take into consideration the unique needs and obstacles faced in different municipalities. Today, 44 states have some form of home rule.

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State approaches to fracking under the home rule

Approximately half of the states in the United States either have some form of statewide ban on hydraulic fracturing or have cities located within the state that have attempted to ban or have banned the practice. Many of the local bans, such as the ones in Los Angeles, Calif.; Boulder, Colo.; and Washington, DC, have little practical impact because of the lack of oil and gas development in the area.

A handful of states and the cities within their borders, however, have been a lot more visible in deciding the issue of state or local control of fracking. The following sections discuss how the issue of regulation has been or is being approached in six of those states: Colorado, Ohio, Pennsylvania, New York, West Virginia, and Texas.

Colorado

Colorado has been a hotbed of activity in the fracking debate. The city of Longmont got the ball rolling when it implemented legislation in 2012 banning hydraulic fracturing within the city limits. The Colorado Oil and Gas Conservation Commission (COGCC) and Colorado Oil and Gas Association (COGA) filed suit, arguing that the authority to regulate oil and gas production, and thereby fracking, was vested solely in the Colorado Oil and Gas Conservation Commission by the state legislature. They further argued that Longmont's ban compromised consistency statewide and interfered with private mineral rights owners' ability to develop.

The court ruled that the Colorado Oil and Gas Conservation Act preempted the provision in a city charter that banned fracking. In its opinion, the court explained that the city "does not have the authority to prohibit what the state authorizes and permits." The court's ruling will likely have little lasting impact, however, as the case still has to make it through the appeals process. Four similar cases are pending in other districts in Colorado, and ballot initiatives relating to the regulation of fracking have been approved by the Colorado Supreme Court for consideration in the November elections.

During the November 2013 elections, four Colorado cities took an alternate approach to attempting a ban on fracking. The cities of Lafayette, Boulder, Fort Collins, and Broomfield passed ballot initiatives that seek to limit fracking, and in some case oil and gas development altogether, within their city limits. The most drastic of the ballot initiatives, passed in Lafayette, virtually eliminates oil and gas development entirely.

To date, the Lafayette and Fort Collins bans have been overruled as improper regulation of the oil and gas industry, which is properly overseen by the state. The ban in Boulder has not been challenged, and may not be, because there are no active wells or oil and gas development ongoing in the city. The Broomfield ban, which created a five-year moratorium on fracking after long legal battles over a vote recount, is limited in effect because the only active company in the area has an agreement with the city allowing it to finish the 21 wells it has planned.

Despite these local battles, Colorado is scheduled to lead the way in the November 2014 elections and allow a state vote on whether to implement certain zoning restrictions and allow more local regulation of the oil and gas industry. Although this vote will not definitively end the ongoing dispute over state or local control of fracking and oil and gas development due to probable legal challenges from the side which is unsuccessful, having a strong indication of the citizens' position on the issue should go a long way to bringing the current debate to an end.

Ohio

In Ohio, the Department of Natural Resources has sole authority to regulate development of oil and gas wells. Similar to the Longmont, Colo. decision, the Ninth District Court of Appeals in Ohio found a city's ordinances unconstitutional because the ordinances "are in direct conflict with the state statutes...." The Ohio Supreme Court heard oral arguments in February to determine who would control oil and gas drilling in Ohio. The court, however, has yet to issue a ruling.

Ballot initiatives that include bans on fracking activities have also been proposed by citizens of three cities in Ohio. The citizens of Youngstown, Ohio have rejected a fracking ban three separate times. That initiative was met with resistance from a local workers' union that feared a negative impact on jobs if the ban was passed.

An overwhelming 75% of the citizens of Bowling Green, Ohio opposed a similar initiative. The Oberlin ban passed, but the ban, like the one in Boulder, Colo., is mostly symbolic because no oil and gas development is planned in the area.

Ohio had a statewide moratorium in place until late 2012. The moratorium was put in place in response to an earthquake that some have attributed to fracking near the epicenter of the quake. As minor earthquakes have increased in the region, the moratorium has not been renewed, but the Ohio Department of Natural Resources has developed more stringent rules to regulate drilling and fracking, which include requiring seismic monitoring when operating within three miles of fault lines or areas where earthquakes have previously occurred.

Pennsylvania

Finding differently than the Colorado and Ohio courts, the Supreme Court of the Commonwealth of Pennsylvania affirmed local government's regulation of fracking. In finding unconstitutional critical provisions of Act 13 - a 2012 law that, in part, governs oil and gas drilling, the court focused less on the Home Rule, or preemption, and more heavily on the court's obligation to uphold the constitutional rights of its citizens, which include the "right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment."

Statewide, Pennsylvania is mired in debate over proposed fracking moratoria. Localized moratoria, such as the Delaware River Basin Moratorium, are already in place in the state. In September 2013, State Senator Jim Ferlo introduced the Natural Gas Drilling Moratorium Act, a bill that would place a statewide moratorium on issuing new permits for hydraulic fracturing. The debate over the moratorium continues in the lead-up to the November 2014 elections.

New York

The New York Court of Appeals, the state's highest court, also held that fracking can be regulated by local governments, but it addressed the preemption issue head-on. The court found that the state's Oil, Gas and Solution Mining Law (OGSML) did not expressly preempt a municipality's ability to enforce land-use restriction, such as zoning ordinances. More than 170 municipalities currently have legislation in place to ban or limit hydraulic fracturing.

On the statewide level, New York has been under a fracking moratorium since 2008 and passed an extension to 2017 earlier this year. Regardless of the ongoing legal challenges for and against fracking, the state has chosen to limit a statewide resolution until a later date.

West Virginia

In West Virginia, the city of Morgantown passed an ordinance that prohibited hydraulic fracturing and horizontal drilling in the city and within one mile of the city limits. However, the county circuit court judge overturned the ordinance, finding that fracking and the regulation of oil and gas development was solely delegated to the West Virginia Department of Environmental Regulation.

The court recognized that the city relied on the Home Rule, "characteriz[ing] fracking as a nuisance." However, the court held that there is no exception established by the West Virginia Department of Environmental Regulation, "whose all-inclusive purpose is to regulate the mining of gas and oil." The court went on to explain that "[t]he provisions [of state legislation] clearly indicate that this area of law is exclusively in the hands of the WVDEP. No exception is carved out for any locality or municipality. In fact, throughout the regulation it is explicit that all authority lies solely within the hands of the Director."

West Virginia took the issue out of local officials' hands altogether and reached a middle ground, as opposed to a moratorium or continuing with limited regulation, when it passed increased regulations on fracking. In late 2012, West Virginia passed the Horizontal Well Act, which includes additional fees for new well permits, increases oversight on well applications, and incorporates provisions that limit locations for new wells near water sources or homes.

Texas

Texas has also joined the list of states with cities discussing fracking bans. After citizens gathered nearly 2,000 signatures on a petition, the Denton City Council voted against a proposal to ban fracking within the city limits. Citizens will instead be able to vote on the issue on the November election ballot. If Denton voters pass the ban, the city will be the first in Texas to expressly ban fracking. A ban could have far-reaching implications due to the city's location and activity in the oil and gas industry.

While many of the proposed bans in other states are more show than substance, the oil and gas industry plays a large role in Denton. The practice is instrumental in the development of gas wells in the area. Similar to other states, a ban by voters would not end the argument. If the ban passes, it would almost certainly result in a legal challenge involving the city's power to regulate the oil and gas industry versus mineral owners' rights and their ability to exercise those rights.

Conclusion

Although the various courts in each state have reached different outcomes, they are uniform in affirming state preemption where legislation is in place that expressly preempts local government from regulating fracking. On the other hand, in states where the legislation falls short of express preemption or is more recent, reactionary legislation, the courts seem to be more open to considering local regulation of fracking.

Until states reach a final resolution on the fracking debate, an increasing number have taken the middle-ground approach of waiting until a greater body of information on fracking has been developed through implementation of fracking moratoria. As uncertainty on the regulation of fracking continues and oversight increases, the issue may ultimately be taken out of the judiciary's hands, either by the legislature or voters.

About the author

Luke Cantrell is an attorney in the Memphis office of Baker, Donelson, Bearman, Caldwell & Berkowitz PC. He has an undergraduate degree in mechanical engineering from Mississippi State University and completed law school at the University of Mississippi. Prior to his legal career, Cantrell worked as a completions engineer for Baker Hughes in Lafayette, La., and Kilgore, Texas.

Fracking and local laws

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