March 2, 2015
By W. Drew Burnham, Senior Associate
A conflict between Louisiana’s state and parish governments is escalating in south Louisiana. St. Tammany Parish is concerned that the aquifer that supplies the Parish’s water could be damaged by a plan to drill through and conduct hydraulic fracturing (“fracking”) operations deep beneath the aquifer.[1] Thus, St. Tammany sued James Welsh on June 16, 2014, in his capacity as Commissioner of Conservation (“the Commissioner” or “the State”) seeking, in part, (1) a declaratory judgment that the zoning ordinances of St. Tammany Parish “be given primary consideration” by the Commissioner in evaluating permit applications and (2) a declaratory judgment that “St. Tammany Parish has the authority to ban the practice of hydraulic fracturing.”[2]
The State claims that St. Tammany is preempted from interfering with oil and gas regulations because of the express and extensive authority granted to the Commissioner under state law.[3] On October 27, 2014, Judge William Morvant of the 19th Judicial District Court in Baton Rouge denied the state’s request to dismiss the case, thus postponing the resolution of the issue of whether parish governments may prevent oil and gas development through zoning ordinances and whether the Parish may ban fracking altogether.[4]
St. Tammany’s attempts to prevent oil and gas development in its communities via local ordinance are not unique.[5] Colorado and New Mexico have both dealt with local challenges to their state governments’ authority to direct oil and gas drilling without local roadblocks.[6] These efforts have been met with mixed results.[7] Louisiana’s law, however, creates an extensive regulatory framework with powers vested exclusively in the Commissioner, if not vested in other state departments, to regulate the development of oil and gas, suggesting that St. Tammany’s suit may be preempted from reaching its end goal.[8]
I. Should St. Tammany’s Local Regulations be given “Primary Consideration” by the Commissioner?
St. Tammany seeks a declaratory judgment from the court requiring the Commissioner to give zoning ordinances of the parish “primary consideration” when permitting proposed drilling operations. However, the State claims that such a claim runs afoul of St. Tammany’s powers under general state law.[9] The interaction of St. Tammany’s claim with the constitutional structure of the state gives rise to three questions to answer before discussing whether St. Tammany can zone away drilling operations. First, what does St. Tammany mean by asking for “primary consideration”? Second, what are St. Tammany’s zoning powers and from where are they derived? Third, how do state and local laws interact?
St. Tammany seeks a judgment mandating that the Commissioner give “primary consideration” to local zoning ordinances in his deliberations on permitting.[10] It is not entirely clear what “primary consideration” would mean if St. Tammany’s requested declaratory judgment is granted, but after the Commissioner created the controversial unit, St. Tammany filed its supplemental petition seeking a declaration that the order was invalid as inconsistent with area zoning.[11] Thus, the “primary consideration” sought would require the Commissioner to follow local zoning ordinances, not merely evaluate the effects of his actions upon the local master plan. The countervailing argument is that St. Tammany’s attempt to preempt the Commissioner from executing his powers under state law with zoning ordinances is simply an attempt to turn the law on its head.[12]
St. Tammany argues that it has the power to zone and that any nonconforming use on its zoned land is illegal.[13] As a local government subdivision of the state, St. Tammany has the power to “(1) adopt regulations for land use, zoning, and historic preservation . . . and (4) adopt standards for use, construction, demolition, and modification of areas and structures,” and it also has the power to enforce those that are adopted.[14] Under Louisiana Revised Statutes section 33:109.1, state agencies and departments shall consider adopted master plans of parish or municipal planning commissions before undertaking activities that affect the “elements of the master plan.” Accordingly, St. Tammany asserts that the area unitized by the Office of Conservation is not zoned “Industrial 3 or 4,” a zoning which would allow oil and gas activities as a potential conditional use, and thus, any drilling activity is illegal.[15]
St. Tammany’s right to enact zoning ordinances is subject to the restrictions of state law. This is because St. Tammany is a post-1974 home rule government because it was incorporated after the adoption of the 1974 Louisiana Constitution.[16] Post-1974 home rule state subdivisions are subject to general state law, whether adopted prior to the issuance of the charter or after, as well as the Louisiana Constitution and the terms of their own charters.[17]
Local law that conflicts with state law may be “preempted” and thus are null and void.[18] There are two general types of preemption that could prevent St. Tammany from regulating oil and gas development: express and implied.[19] Express preemption exists when the state unambiguously expresses its desire to prevent local lawmaking on the subject matter.[20] Alternatively, implied preemption exists in Louisiana when the legislative intent to preempt dual authority is clear through “the pervasiveness of the state regulatory scheme, the need for state uniformity, and the danger of conflict between the enforcement of local laws and the administration of the state program.”[21]
With those distinctions in mind, consider the following language from Louisiana Revised Statutes section 30:28(F):
The issuance of the permit by the commissioner of conservation shall be sufficient authorization to the holder of the permit to enter upon the property covered by the permit and to drill in search of minerals thereon. No other agency or political subdivision of the state shall have the authority, and they are hereby expressly forbidden, to prohibit or in any way interfere with the drilling of a well or test well in search of minerals by the holder of such a permit.[22]
The language above seems to expressly forbid the local government from interfering with those executing the permits granted them by the Commissioner.[23] However, regardless of whether there is express preemption,[24] precedent on the subject indicates that it was the “clear and manifest purpose of the legislature” to reserve the regulation of the whole field of oil and gas development for the Office of Conservation, implicitly preempting all other regulation.[25]
In Energy Management Corp. v. City of Shreveport, the United States Court of Appeals for the Fifth Circuit was asked whether “the City of Shreveport has the authority to prevent oil and gas drilling within 1,000 feet of Cross Lake under its grant from the state of plenary power to protect its water supply.”[26] Shreveport adopted a city ordinance that prevented drilling operations within 1,000 feet of Cross Lake, the city’s main water supply, under its express powers from the state legislature to make any necessary regulations to protect Shreveport’s water supply.[27] The question was whether Shreveport was preempted from attempting to protect its water supply from permitted drilling.
The Fifth Circuit concluded that Shreveport was impliedly preempted.[28] This was because Louisiana’s regulatory scheme for oil and gas development through the Office of Conservation is “clearly pervasive addressing every phase of the oil and gas exploration process from exploration and prospecting to cleanup of abandoned oilfield waste sites.”[29] The Fifth Circuit did not find express preemption in that case, possibly because the plaintiff had not yet received a permit so that Louisiana Revised Statutes section 30:28(F) would not apply.[30] Nevertheless, the court did find that “every phase” of the oil and gas exploration process was withheld from additional local regulation because the legislative intent to do so was clear.[31]
In Vanguard Environmental v. Terrebonne Parish Consolidated Government, Vanguard Environmental was issued a permit from the Office of Conservation for a saltwater injection waste disposal facility in Terrebonne Parish.[32] However, before work could begin on the site, Terrebonne sent a letter to Vanguard stating that the location of the injection facility must conform with a parish ordinance requiring such facilities be set back one mile from any residential or business structure.[33] The First Circuit was faced with a decision as to whether Terrebonne Parish may create its own regulations as to waste disposal facilities or whether the whole field was preempted by the Commissioner’s power under Louisiana Revised Statutes section 30:4(I)(7). The court held that the entire field of waste disposal was preempted from local regulation given the extensive regulatory powers granted to the Commissioner under Title 30: “The express terms of our pertinent statutory law and the regulations adopted pursuant thereto are pervasive and clearly manifest a legislative intention to preempt the field in its entirety.”[34] Although it did not directly deal with oil and gas wells, this case emphasizes that the Commissioner’s pervasive authority under Title 30 to regulate every aspect of oil and gas operations precludes interference with that regulation by local government.[35]
Energy Management, as a federal appellate decision, is only persuasive authority for Louisiana state courts. Similarly, the Vanguard decision addressed the powers of the Commissioner regarding disposal wells and may be distinguishable from St. Tammany’s case. Louisiana courts facing the St. Tammany suit may be persuaded by recent cases from Colorado and New Mexico which faced similar questions as those in Energy Management and Vanguard but whose courts reached differing results.
Over this past year’s election season, Colorado was immersed in an intense debate over state-wide referendums that would allow local governments to, independently from the state, regulate oil and gas operations around their communities.[36] In 2012, Longmont, Colorado, adopted a complete ban on fracking.[37] Similarly in 2013, Fort Collins passed five-year moratoriums upon fracking.[38] In 2014, the district court judges hearing the suits on the ban and moratorium held them preempted as direct conflicts with the operations of Colorado’s regulatory scheme.[39] However, the courts’ holdings maintained that all local regulation of oil and gas development in Colorado was not necessarily preempted.[40] The only regulations preempted were the regulations that may significantly frustrate operations of the state regulator or impair the regulatory scheme.[41]
Similarly, Mora County, New Mexico, passed a “community rights ordinance,” which bans corporations from producing oil and gas or engaging in activities to prepare for or further such activities.[42] The United States District Court for the District of New Mexico struck down the prohibition, holding that such an ordinance impermissibly conflicts with state law because an outright ban on oil and gas extraction is irreconcilable with state law that permits such activities.[43] However, like the decisions in Colorado, the court held that state law did not preempt the entire field of oil and gas regulation.[44]
These results, finding that comprehensive regulatory structures of the state will prevent local regulation, are similar to the conclusions found in Energy Management and Vanguard. However, Colorado and New Mexico cite conflict preemption, not general field preemption, as the courts interpreting Louisiana law seem to do, leaving the door open for some local regulation in the area. In regard to permitted oil and gas wells, Louisiana’s law states that “[n]o other agency or political subdivision of the state shall have the authority, and they are hereby expressly forbidden, to prohibit or in any way interfere with the drilling of a well or test well in search of minerals by the holder of such a permit.”[45] Colorado and New Mexico do not have such strong and direct language pointed squarely at local government. Accordingly, Louisiana courts are likely to find an even stronger legislative intent to preempt any local regulation in the area of oil and gas. As a post-1974 home rule entity subject to statewide law, its own charter, and the Louisiana Constitution,[46] St. Tammany is likely preempted both expressly and through Louisiana’s comprehensive regulatory system from using zoning to prevent activities pursuant to a lawfully issued drilling permit from the Commissioner.
II. Does St. Tammany Parish have the Power to Ban Fracking?
St. Tammany also seeks a declaration from the court that it has the power to enact a ban on fracking in the Parish.[47] Since no such ban has yet been adopted, St. Tammany’s question may not be justiciable, and the constitutionality of such a ban remain undetermined.[48] The Louisiana Supreme Court has consistently held that the courts of Louisiana are prohibited from issuing advisory opinions.[49] Advisory opinions are decisions of a court that do not relate to “an existing, actual, and substantial dispute” but relate to matters “merely hypothetical or abstract.”[50] “A court must refuse to entertain an action for a declaration of rights if the issue presented is academic, theoretical, or based on a contingency which may or may not arise.”[51] Drawing the line between a sufficiently ripe and adversarial issue is profoundly difficult and any precise test is unlikely to fit each case.[52] However, given that there has been no ban adopted, this request from St. Tammany appears to clearly be for an advisory opinion more appropriate for the attorney general than a district court.
If St. Tammany’s hypothetical fracking ban is justiciable, St. Tammany still faces the challenge that such an action is preempted by the powers granted to the Commissioner under the same analysis as illustrated in Part I. Local bans on fracking that were adopted by local governments in Colorado and in New Mexico were struck down because the courts found implied preemption in their states’ oil and gas regulatory systems, even though those systems were not as direct as Louisiana’s regulatory laws in their attempts to preempt local interference with the development of oil and gas.[53] When the viability of a local fracking or drilling ban is tested, Louisiana’s answer appears to be inevitable: preempted.
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[1] Petition for Declaratory and Injunctive Relief at 7–8, St. Tammany Parish Government v. Welsh, No. 631370 (19th J.D.C. La. June 16, 2014) (hereinafter Petition), archived at https://perma.cc/8JXQ-T9XM?type=pdf . See also Robert Rhoden, Fracking Fight – St. Tammany Parish Council To Consider Allocating Another $50,000 To Legal Effort, NOLA.com (Jan. 29, 2015, 12:08 PM), http://www.nola.com/crime/index.ssf/2015/01/fracking_fight_-_st_tammany_pa.html, archived at http://perma.cc/3EZ6-BRFZ; Robert Rhoden, State Office of Conservation Grants Drilling Permit For Helis Oil’s Project Near Mandeville, NOLA.com (Dec. 19, 2014, 4:35 PM), http://www.nola.com/politics/index.ssf/2014/12/state_office_of_conservation_g.html, archived at http://perma.cc/8ZLS-FKXJ (hereinafter Rhoden-Permit); Petition, supra, at 1–2.
[2] Petition, supra note 1, at 7–8. St. Tammany also sought an injunction to stop the Commissioner from issuing orders establishing drilling units in the Parish until all current laws are complied with and allegedly needed regulations adopted by the Office of Conservation. Id. However, that question does not relate directly to the powers of local government to regulate oil and gas development and thus is not within the scope of this post.
[3] Memorandum in Support of Conservation’s Amended Exceptions to the Plaintiff’s Petition for Declaratory and Injunctive Relief at 6, St. Tammany Parish Gov. v. Welsh, No. 631370 (19th J.D.C. La. Oct. 28, 2014) (hereinafter Second Memo of State), archived at https://perma.cc/8AFW-K65E?type=pdf.
[4] Robert Rhoden, St. Tammany Parish Can Proceed With Fracking Lawsuit, Judge Rules, NOLA.com (Oct. 27, 2014, 11:51 AM), http://www.nola.com/crime/baton-rouge/index.ssf/2014/10/st_tammany_fracking_case_heard.html, archived at http://perma.cc/46NC-M9MF. Judge Morvant also did not grant the request of the Parish to declare the state’s unitization of a 960-acre area invalid. Id.
[5] Alex Ritchie, Creatures of Circumstance: Conflicts Over Local Government Regulation of Oil and Gas, 60 Rocky Mtn. Min. L. Inst. 11-1, 5 (2014).
[6] See infra Part I.
[7] Ritchie, supra note 5, at 55–65.
[8] La. Rev. Stat. Ann. § 30:1 (2007).
[9] See Second Memo of State, supra note 3.
[10] Petition, supra note 1, at 7–8.
[11] Judge Morvant did not grant the sought after invalidation of the drilling unit after the hearing over the suit’s dismissal on Oct. 27, 2014. See also Rhoden, supra note 4.
[12] See Second Memo of State, supra note 3, at 6. The State also points out that St. Tammany’s zoning ordinances are only entitled to “consideration” under section 33:109.1 and that the necessary consideration was given by the Commissioner in establishing the unit. Id. at 5–6.
[13] First Supplemental Petition for Declaratory and Injunctive Relief at 2–3, St. Tammany Parish Gov. v. Welsh, No. 631370 (19th J.D.C. La. Oct. 28, 2014) (hereinafter Supplemental Petition), archived at http://perma.cc/T98Y-2X97.
[14] La. Const. art. 6, § 17; La. Rev. Stat. Ann. § 33:4776 (2009).
[15] Supplemental Petition, supra note 13, at 2.
[16] St. Tammany Parish Home Rule Charter § 1-01 (Oct. 3, 1998), available at http://www.stpgov.org/residents/civics-lesson/31-parish-council/145-home-rule-charter, archived at http://perma.cc/P5TJ-3CNC.
[17] City of New Orleans v. Board of Comm’rs, 640 So. 2d 237, 247 (La. 1994). Pre-1974 home rule municipalities and parishes are only inhibited by the Louisiana Constitution and their own charters. Id.
[18] See Hildebrand v. City of New Orleans, 549 So. 2d 1218, 1227 (La. 1989).
[19] See Palermo Land. Co., Inc. v. Planning Comm’n of Calcasieu Parish, 561 So. 2d 482, 497 (La. 1990).
[20] See Ritchie, supra note 5, at 28–29.
[21] Palermo, 561 So. 2d at 497.
[22] La. Rev. Stat. Ann. §30:28(F) (Supp. 2015) (emphasis added).
[23] See generally Op. Atty. Gen., No. 88-418 (La. 1988); Op. Atty. Gen., No. 82-1021 (La. 1982); Op. Atty. Gen., No. 62-12 (La. 1962).
[24] Now that Helis Oil & Gas has been issued its permit from the Commissioner, La. R.S. 30:28(F) would seem to expressly forbid interference by local government in the matter. See Rhoden-Permit, supra note 1.
[25] See Ritchie, supra note 5, at 70
[26] 397 F.3d 297, 302–05 (5th Cir. 2005).
[27] Id. at 299–300. The ordinance also set up an additional regulatory scheme for permitted drilling in areas 1,000-5,000 feet from the Lake. Id.
[28] Id. at 305.
[29] Id. at 303.
[30] Id. at 300 (“[Energy Management Corporation] did not obtain a permit from the [Office of Conservation] to drill on a location within 1,000 feet of Cross Lake.”). See also Ritchie, supra note 5, at 71.
[31] See Ritchie, supra note 5, at 71. See also Energy Mgmt. Corp., 397 F.3d at 303; Energy Mgmt. Corp. v. City of Shreveport, 467 F.3d 471, 478–79 (5th Cir. 2006).
[32] 2012-1998, 2013 WL 4426508, at *1 (La. Ct. App. 2013).
[33] Id. The Terrebonne Parish ordinances also outlined a required process for applying for and receiving permits for waste disposal facilities from Terrebonne in addition to permits from the Office of Conservation. Id. at *5.
[34] Id. at *6.
[35] See generally Desormeaux Enter., Inc. v. Village of Mermentau, 568 So. 2d 213 (La. Ct. App. 1990) (holding that any local regulation relating to disposal wells was preempted by the regulatory system adopted by the legislature).
[36] Id. at 10–11. Other referendums proposed would have enhanced setbacks from oil and gas wells from buildings, made the State and local governments trustees of the environment, and attempted to take away right and powers of many businesses. Id. Other amendments were proposed to withhold state oil and gas revenue from communities banning drilling and required fiscal impact notes for all initiatives. Mark Jaffe, Hickenlooper Compromise Keeps Oil and Gas Measures off Colorado Ballot, The Denver Post (Aug. 4, 2014, 10:01 AM), http://www.denverpost.com/business/ci_26272493/hickenlooper-tries-broker-last-minute-deal-oil-gas-colorado, archived at http://perma.cc/3G8K-D655.
[37] Colorado City Appealing Ruling Against Fracking Ban, Ins. Journal (Aug. 28, 2014), http://www.insurancejournal.com/news/west/2014/08/28/338948.htm, archived at http://perma.cc/EYZ2-VFXB. This was after Longmont City Council adopted new oil and gas ordinance that would impose permitting conditions on drillers, prohibit use of state permits in residential zoning districts, and other restrictive measures. Ritchie, supra note 5, at 8.
[38] Ritchie, supra note 5, at 9.
[39] The courts held that there was preemption because Colorado state law permitting the practice was opposed by the local ordinance preventing such practices. Id. at 67. The state dismissed its challenge to the Longmont ordinance subsequent to the compromise introduce by Governor Hickenlooper. Jaffe, supra note 36. The ruling overturning the Longmont fracking ban is currently on appeal. Ins. Journal, supra note 37.
[40] See Ritchie, supra note 5, at 52–55, 66–70.
[41] Id.
[42] Id. at 14.
[43] Memorandum Opinion and Order at 2–3, 181–86, SWEPI LP v. Mora Cnty., No. 1:14-cv-00035 (D.N.M. Jan. 19, 2014), available at http://www.culturalenergy.org/images/SWEPI-Complaint.pdf, archived at http://perma.cc/XJC2-SMRZ.
[44] Id. at 171–78.
[45] La. Rev. Stat. Ann. § 30:28(F) (Supp. 2015).
[46] City of New Orleans v. Board of Comm’rs, 640 So. 2d 237, 247 (La. 1994).
[47] Supplemental Petition, supra note 13, at 3.
[48] Second Memo of State, supra note 3, at 8.
[49] La. Fed’n of Teachers v. State, 94 So. 3d 760, 763 (La. 2012).
[50] Id.
[51] Id.
[52] Prator v. Caddo Parish, 888 So. 2d 812, 816 (La. 2004).
[53] See supra Part I.