After a couple localities in New York decided to ban fracking via zoning, seemingly contrary to the state’s statute that preempts local control over oil and gas regulation, New York’s highest court surprisingly upheld the ban recently.  The court’s rationale was that if the legislature meant to preempt local control over the ability to ban the process, it should have expressly done so.   The relevant portion of the statute the court relied on stated:

The provisions of this article shall supersede all  local  laws  or ordinances  relating  to  the  regulation  of  the oil, gas and solution mining industries; but shall not supersede local government jurisdiction over local roads or the rights  of  local  governments  under  the  real property tax law. (Emphasis added) § 233-0303(2).

Apparently, the plain wording of the above statute, the foreseeable issues with having over 900 towns with potentially different rules on natural resource extraction, and the inherent issues involved with usurping constitutionally protective property rights, was not enough to persuade the New York court to the contrary.  In the end, with a statewide moratorium in place, it appears the court was looking for a way to uphold the ban while conveniently blaming the legislature for a “poorly” worded statute.

In Michigan, however, the matter is much clearer.  Specifically, the relevant portion of the Michigan statute addressing this issue is written as follows:

A county or township shall not regulate or control the drilling, completion, or operation of oil or gas wells or other wells drilled for oil or gas exploration purposes and shall not have jurisdiction with reference to the issuance of permits for the location, drilling, completion, operation, or abandonment of such wells. (Emphasis added) § 125.3205(2)

These two conjunctively connected clauses in the statute make clear that the legislature expressly prohibited counties and townships from regulating oil and gas development.  Some have claimed that by dividing these two clauses, one can extrapolate that the legislature meant to allow local jurisdictions the authority to ban the process, but just prohibit them from regulating certain aspects of the process if otherwise allowed.  While creative in its legal analysis, this argument does not comport with the historical application of Michigan’s law regarding oil and gas development.

Although the language above from the Zoning Enabling Act is quite clear in reference to the oil and gas industry, there is a subsequent section that deals with zoning in general.  In section 207, the legislature expressly bars a local unit of government from prohibiting a particular land use if certain criteria are met:

A zoning ordinance or zoning decision shall not have the effect of totally prohibiting the establishment of a land use within a local unit of government in the presence of a demonstrated need for that land use within either that local unit of government or the surrounding area within the state, unless a location within the local unit of government does not exist where the use may be appropriately located or the use is unlawful. § 125.3207

Some claim that this does not apply to oil and gas because those resources are sold nationwide. Thus, there is no “demonstrated need for the land use” either in that location or nearby.  Given that oil and natural gas are used in some form in every local unit of government, simply claiming that the resource can be obtained somewhere else seems to be an overly broad reading of the statute.  If that rationale were extended to its logical conclusion, there would always be somewhere else to obtain that which is provided by a specific land use; be it agricultural, residential, or industrial.

The real issue regarding the development of oil and gas comes down to the preemption doctrine. Preemption exists so as to have uniformity of certain laws throughout the state.  In fact, the Michigan Supreme Court addressed preemption regarding zoning in the 1989 case Addison Township v. Gout, which was reheard by the court in 1990.  The court was ultimately deciding whether a township had the authority to regulate land use with regard to certain aspects of the oil and gas industry.  In this case, the issue dealt with the regulation of the production process.  The court held that the township could in fact regulate the production process because it was not expressly prohibited by statute nor considered part of the stated jurisdiction of the Supervisor of Wells.  It did, however, distinguish the production process from the extraction of natural resources, as the former can be done in various locations, whereas the latter is limited by the fixed location of the natural resource.

Oil and gas are natural resources with fixed locations. A gas field cannot be moved to a more favorable site. Lest a local community act irresponsibly with an immovable state resource, the Legislature has given the Supervisor of Wells broad powers. Addison Twp. v. Gout, 432 Mich. 627 (1989)

Critics have argued that with the technological advancement in horizontal drilling, the distinction should no longer matter. But the fact remains that the resource itself is still in a fixed location.  The fact that an oil or gas play may be accessible from more than one unit of government loses sight of the fact that a landowner’s subsurface rights may not.

Furthermore, in making the distinction, the court was no doubt aware that the legislature made their overall policy intentions clear through Part 615 of the Natural Resources and Environmental Protection Act with regard to the extraction of oil and gas.

It is accordingly the declared policy of the state to protect the interests of its citizens and landowners from unwarranted waste of gas and oil and to foster the development of the industry along the most favorable conditions and with a view to the ultimate recovery of the maximum production of these natural products. MCL 324.61502

As the debate about fracking continues, various attempts are currently underway to convince local governments to attempt to ban fracking regardless of the law.  Hopefully those that may be persuaded in believing this legal advice will carefully read the 2010 Kyser v. Kasson Township Michigan Supreme Court opinion.  In this case, the court distinguishes oil and gas from other natural resources when ruling on the ability of counties and townships to regulate certain land uses.  The court, although specifically addressing mining issues, stated that the “The Legislature clearly intended for localities to regulate land uses, including the extraction of natural resources other than oil and gas.” (Emphasis added).

The acknowledgement by the Supreme Court of the exclusion of oil and gas extraction from so-called “local control” in Michigan is a clear a sign as any that the aforementioned arguments in support of localities banning fracking will be destined to fail in court.

Some local communities may have a difficult time accepting the preemption doctrine.  However, when one realizes that certain matters are more efficaciously handled at the state level, it does make sense.  In this case, the state employs engineers and geologists who have education and training in oil and gas issues. Would it be better to take power away from them and place it in the hands of elected officials who likely do not have the technical backgrounds necessary to understand the scientific nuances of resource development?

Moreover, without preemption, there could literally be different rules for each of Michigan’s 83 counties, 1,242 townships, 274 cities, and 259 villages.  In addition, landowners of subsurface rights are legally entitled to develop their resources.  Denying them this fundamental right is also contrary to the policy of this state to safely develop Michigan’s natural resources for the betterment of its citizens.