Earlier this summer, Fayette County, West Virginia, learned what many other local governments have already come to know: local bans on state and federally-regulated oil and gas activity are, in most cases and jurisdictions, unenforceable. At issue was an ordinance passed by the Fayette County Commission on January 12, 2016, in which it prohibited, county-wide, (a) the storage of wastewater in UIC wells and (b) the temporary storage, handling, treatment, or processing of wastewater unless at a site operating under a “conventional” well under a permit issued pursuant to W. Va. Code 22-6-6. Because “unconventional” (i.e., horizontal) wells are permitted under W. Va. Code 22-6A-7 and require temporary wastewater storage and handling, the Fayette County Ordinance had the further consequence of acting as a de facto ban on “unconventional” oil and gas operations within the county.
On January 13, 2016, one day after the ordinance was passed, EQT Production Co. (“EQT”) sued to enjoin and invalidate it. And, by virtue of an opinion order issued by United States District Court for the Southern District of West Virginia on June 10, 2016, EQT won.
Although the Court’s 45 page order exhaustively addresses a number of issues, the reason for EQT’s victory can be distilled to two (relatively) simple and long-standing concepts: Dillon’s Rule and preemption. Dillon’s Rule refers to the doctrine articulated by the Iowa jurist, John Forrest Dillon, that provides that municipalities have only those powers which are expressly delegated to them by the state. Preemption refers to several different doctrines by which the acts of one sovereign can be displaced by another. Although preemption often is discussed in the context of federal law displacing state law under the Supremacy Clause of the Constitution, it can just as easily arise in the context of state law displacing municipal law.
Taken together, Dillon’s Rule and the doctrine of preemption lead to the conclusion made by the Court: “Where an activity is sanctioned by the state, a local governmental entity cannot legislate independently to prohibit or impede that activity.” EQT Prod. Corp. v. Wender et al., No. 2:16-cv-00290, at *26 (S.D.W. Va. June 10, 2016). Here, the activity prohibited by Fayette County was regulated, and in fact expressly permitted, by the West Virginia Department of Environmental Protection under State and Federal law. Fayette County’s reliance on its police powers and appeals to public safety were not enough to save its ordinance and, for those reasons, EQT won.
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