SWN Production Company, LLC v. City of Weirton and City of Weirton Board of Zoning Appeals
SWN Production Company, LLC, a Texas-based natural gas developer, is appealing a West Virginia circuit court decision upholding local zoning laws’ ability to limit the location of oil and gas activities. The appeal’s outcome may greatly affect the ability of local governments to control oil and gas activities in their communities.
Some Background:
In June 2021, SWN, also known as Southwest Energy, filed an application with the City of Weirton for a conditional use permit to locate a well pad on a 300-acre site that was zoned to allow for oil and gas extraction, and which required a 250-foot setback for schools, churches, and residences. In response to SWN’s application, the Weirton Zoning Board of Appeals rezoned the site to require a 2,500 setback and disallowed oil and gas extraction as a permitted land use under the city’s “Unified Development Ordinance.” SWN submitted its application prior to the new ordinance taking effect, but, on October 1, the zoning board denied SWN’s permit application because the proposed well pad would increase traffic and put stress on the surrounding infrastructure.
On October 18, SWN applied for a permit with the West Virginia Department of Environmental Protection (DEP) to drill on the site. The DEP granted the permit in February 2022.
SWN ultimately filed suit against the city and zoning board challenging their authority to deny the permit, whether under the old or new “Unified Development Ordinance.” SWN’s lawsuit included many legal issues, but the most important was SWN’s contention that the state laws which granted the DEP authority to allow or deny permits “preempted” local zoning regulations’ ability to regulate oil and gas activity within city limits.
What’s preemption? Basically, preemption means that when the laws of one governmental authority conflict with the laws of another governmental authority, then the laws of whichever is the higher authority prevails. For example, if state laws conflict with federal laws, then federal law prevails. In the Weirton scenario, SWN argued that state laws take precedence over local laws, meaning that the DEP’s authority and decision to grant SWN a permit preempts the city’s zoning laws.
In August 2022, the judge overseeing the case in Brooke County, WV, ruled that the state laws governing oil and gas activities did not preempt zoning ordinances. The judge’s decision stated:
oil and gas companies are permitted to operate in our state; that the operation of such companies, and the permitting of such companies to operate, is to be largely, if not completely regulated by the state DEP; and that local municipalities, although not permitted to completely ban the lawful operation of oil and gas companies within their city limits, are permitted to pass reasonable and rational zoning ordinances/regulations to allow said companies to operate therein while protecting the health, welfare and safety of its citizens.
SWN then appealed the judge’s ruling to the West Virginia Intermediate Court of Appeals, arguing that the circuit court judge got the preemption question wrong.
The Appeal:
In West Virginia, the Land Use Planning Act grants authority to municipalities to adopt zoning laws, and that zoning ordinances must promote the “general public welfare, health, safety, comfort, and morals.” Zoning ordinances must also, among other things, promote orderly development within city limits, designate land uses, establish standards for land use, and seek to regulate traffic flow to lessen congestion. Importantly, the Land Use Planning Act, explicitly prohibits zoning rules that regulate natural resource development outside of municipalities or urban areas, but the law does not place that same restriction on natural resource development inside municipalities or urban areas. “Municipalities” are cities and incorporated areas, and under the Land Use Planning Act, “urban” means land within the jurisdiction of a municipal planning commission, such as a Weirton’s planning commission.
However, as it did before the circuit court, SWN argues that two state laws preempt all local zoning laws in West Virginia. Those laws are the Oil and Gas Act and the Horizontal Well Control Act. Specifically, SWN relies on language from the Horizontal Well Control Act that states:
“the [DEP] secretary has sole and exclusive authority to regulate the permitting, location, spacing, drilling, fracturing, stimulation, well completion activities, operation, any and all other drilling and production processes, plugging and reclamation of oil and gas wells and production operations within the state.”
According to SWN, this language about the DEP secretary’s “sole and exclusive authority” to regulate permitting and “location” of oil and gas operations preempts all local zoning regulations.
The City of Weirton countered SWN’s arguments in three ways:
While the Land Use Planning Act explicitly says that zoning regulations cannot limit natural resource development outside of municipalities or urban areas, the law does not impose that same restriction on zoning laws that regulate natural resource development within municipalities. Therefore, municipalities can regulate oil and gas activities through zoning ordinances.
Two, for a state law to preempt a local law in West Virginia, one of two conditions must be met. One, the state law must contain explicit language that says the state law preempts local laws, OR, two, the state legislature must have clearly intended for the state law to preempt local laws. The city argued that there is no explicit language in the Oil and Gas Act or the Horizontal Well Control Act that says local zoning ordinances are preempted. For instance, the language cited by SWN in the Horizontal Well Control Act that gives the DEP secretary sole and exclusive authority over permitting and well location says nothing about preemption of local zoning ordinances. As for the state legislature clearly intending for the Oil and Gas Act or the Horizontal Well Control Act to preempt local zoning ordinances, the city argued that SWN provided no evidence at all that the state legislature had intentions of preemption.
The city argued that there is no conflict between regulating oil and gas activities through zoning laws and the state’s regulation of permits through the Oil and Gas Act and the Horizontal Well Control Act. That is, local zoning ordinances and the state laws regulate two very different types of activity. Zoning laws are concerned with orderly land use and development within municipalities, but the Oil and Gas Act and the Horizontal Well Control Act are concerned with state-level environmental regulation of oil and gas activities (for example, whether gas development complies with state environmental regulations). According to the city, because zoning ordinances and the state law serve two very different purposes there is no conflict or preemption issue for a court to resolve.
Under West Virginia law, if the state allows an activity, zoning ordinances cannot ban that activity. However, zoning ordinances can regulate that activity, and the city cites many instances where that is the case. For example, the state grants liquor licenses and zoning laws cannot revoke liquor licenses. But, local zoning laws can regulate where liquor is sold, just as a city can determine other types of land use (e.g., commercial use, residential use, mixed used).
The city also pointed to cases regarding fracking activity where zoning laws crossed the line into a ban and that Weirton’s zoning did no such thing. For instance, in 2011, Morgantown enacted a total ban on fracking within one mile of the city limits, considering fracking an environmental hazard. When an oil and gas company challenged that ban, the court in Northeast Natural Energy, LLC v. The City of Morgantown, ruled that the city could not ban an activity (fracking) allowed by the state. The city also could not use its zoning power to regulate fracking based on environmental concerns because the state regulated whether industry is in compliance with environmental regulations. Similarly, when Fayette County, WV enacted a county-wide ban on fracking wastewater disposal because of concerns over water contamination, the court in EQT v. Wender held that the county could not ban an allowed activity. Also, the ban was invalid because it was concerned with environmental contamination, which the state DEP regulates.
The City of Weirton argued that its use of zoning is very different from the Morgantown and Fayette County examples because the city (1) did not ban fracking, and (2) the city did not deny SWN’s permit based on environmental issues that the state DEP already regulates. Instead, the city denied the permit based on traditional zoning issues of traffic regulation, whether the noise and light produced by gas activity would negatively affect surrounding businesses and residents, and whether gas activity was compatible with the city’s overall economic development plan.
What’s Next:
The Intermediate Court of Appeals heard arguments on September 19, 2023 and will issue its decision in the next months or early next year. The court might uphold the circuit court’s decision and reject SWN’s claim that the state laws preempt all local zoning laws. The court might also modify the circuit court’s decision by stating more precisely how zoning ordinances can regulate oil and gas activities withing city limits. Or the court might accept SWN’s arguments and declare that all zoning laws are preempted. If that were the case, as SWN admitted, as long as the DEP issued a permit and the center of a well pad was 625 feet from an occupied building, then fracking well pads would be allowed in all neighborhoods. Lastly, as the Biden administration just announced the location of hydrogen hubs in West Virginia, such as in Follansbee, whether cities can use zoning regulate that type of industrial activity will surely be a future legal issue in West Virginia and other states.
References:
The briefs submitted by SWN (petitioner) and the City of Weirton (respondent) are available at:
http://www.courtswv.gov/intermediate-court/Calendar/2023/Dockets/09-19-23ad.html
Written by Daniel Weimer, Fair Shake Legal Intern
