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Ohio Supreme Court hears arguments in Munroe Falls drlling case

By Bob Downing Published: February 26, 2014

Who will control gas and oil drilling in Ohio?

That was the central question today when the Ohio Supreme Court heard arguments in a Summit County case that could have major ramifications for drilling across Ohio.

The arguments were short, and heavy questioning from the justices dominated the 49-minute hearing in the case that pits the city of Munroe Falls against Beck Energy Corp. of Ravenna.

Several justices appeared troubled that local communities have no say on drilling and no appeal is possible.

Justice William O’Neill asked whether Ohio’s regulatory scheme violates communities’ constitutional home rule protections, while Justice Paul Pfeifer said an inability for cities to challenge state-issued drilling permits gives the Ohio Department of Natural Resources god-like power.

A decision in the much-ballyhooed case is likely months away.

The key issue is whether zoning rules enacted by communities under home rule are superseded by Ohio law that gives the state exclusive rights to regulate gas and oil drilling.

State rules and local zoning could both apply to drilling in Ohio, said attorney Thomas R. Houlihan of Amer Cunningham who was representing Munroe Falls.

Cities have the right to impose zoning restrictions as they plan their communities, and that zoning should work with state drilling rules, he said.

In 2004, Ohio gave "sole and exclusive" authority to regulate drilling to the ODNR and that supersedes all local zoning regulations, said Ohio deputy solicitor Peter K. Glenn-Applegate, who represented the state of Ohio in supporting Beck Energy.

It’s no secret that pro- and anti-drilling forces see the Munroe Falls case as potentially precedent-setting and very important.

Supporting Beck Energy with "friends of the court" briefs were the state of Ohio, the powerful American Petroleum Institute, many of the oil-gas exploration companies working in eastern Ohio, the Ohio Oil and Gas Association, the Ohio Chamber of Commerce, the Ohio Contractors Association, the Canton Regional Chamber of Commerce, the International Union of Operating Engineers, the Ohio Aggregates Association, the Ohio Contractors Association and the Youmgstown-Warren Chamber of Commerce.

Supporting Munroe Falls were the cities of Broadview Heights, Euclid, North Royalton, Mansfield, Heath, the village of Amesville, the Mustard Seed Market and an array of local environmental and activist groups across Ohio plus small Ohio stores and individuals.

The legal fight has had a David vs. Goliath feeling, according to some observers.

Beck received permission from the ODNR to drill a well on private property in Munroe Falls in 2011. The city sued, saying the company illegally sidestepped local ordinances.

According to Houlihan, local zoning ordinances should operate in parallel with state law and allow the city to be certain that wells are located in appropriate areas.

Wells would be permitted in two industrially zoned areas in Munroe Falls but not in the medium-density residential area where Beck wants to drill, he said.

Local rules would not significantly hamper drilling operations, he said.

"If the state seeks to pre-empt local zoning, it can attempt to do so, but it must do so with express language," he said.

Houlihan said shared authority is in place in a number of other drilling states, including California, Oklahoma and Texas.

In New York, where fracking isn’t yet legal and many communities have instituted pre-emptive bans, and in Pennsylvania, where fracking is widespread, similar cases have been decided in favor of shared regulation, with municipalities overseeing such things as land use and aesthetics and the state overseeing safety and construction.

Ohio has a uniform regulatory approach by giving all authority over drilling to ODNR and avoiding localized rules, said Columbus-based attorney John K. Keller of Vorys Sater Seymour & Pease, who represented Beck Energy.

In its court filings, the company said that Ohio’s 2004 law was intended "to end the confusion, inefficiency and delays under the earlier patchwork of local ordinances, and to ensure that Ohio’s oil and gas resources are developed on a uniform statewide basis."

The case was triggered when Joseph Willingham of Munroe Falls leased his mineral rights off Munroe Falls Avenue to Beck Energy.

The company applied to the state for a permit to drill a vertical-only well on Willingham’s land. The state approved the permit with several conditions in February 2011.

Munroe Falls filed a lawsuit in Summit County Common Pleas Court to stop the drilling. It said that Beck Energy was violating its local zoning laws.

In May 2011, Judge Mary Margaret Rowlands found in favor of Munroe Falls. Beck Energy appealed the decision to the Ninth District Court of Appeals.

The appellate court found that Beck Energy had to comply with Munroe Falls’ ordinances governing local roadways but it held that other local laws — zoning ordinance and four drilling provisions — conflicted with the state statute.

Munroe Falls then appealed the case to the Ohio Supreme Court.

The case is not about hydraulic fracturing or fracking or drilling wells; it is about home rule, Munroe Falls Mayor Frank Larson said in an interview prior to the Supreme Court hearing.

"We’re just trying to enforce our zoning ordinances," he said. "It’s about home rule. Do we have the right to regulate oil and gas?"

Communities should have the right to have a say in where wells are drilled, Larson said.

Spills from the Beck site, he said, would pose a threat to drinking water in Munroe Falls and Cuyahoga Falls.

He said he was "not surprised, not surprised at all" at how the magnitude of the case has grown and the attention surrounding the case has grown. "It’s an issue with far-reaching ramifications," he said.

Munroe Falls is optimistic that the Supreme Court will "give us the right to reguate where things go in our community. That’s what we’re seeking," he said.

Shawn Bennett of Energy in Depth-Ohio, a pro-drilling trade group, said he was convinced by the arguments advanced by Keller and Glenn-Applegate and is confident that Beck will prevail.

"It’s clear that the ODNR as the sole authority over drilling in Ohio…will remain," he said.

A decision in the case will also likely end ballot initiatives by local communities to block drilling in eastern Ohio and provide more certainty for drillers, he said.

The Associated Press contributed to this report. Bob Downing can be reached at 330-996-3745 or bdowning@thebeaconjournal.com.

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