Morgantown Loses in Court

Aug. 12. 2011 3:13PM No. 6285 P. 2
IN THE CIRCUIT COURT OF MONONGALIA COUNTY, WEST VIRGINIA
DivisroN No, 1
NORTHEAST NATURAL ENERGY, LLC,
and ENROUT PROPERTIES, LLC,
West Virginia Limited Liability Companies,
Plaintiffs,
v. CIVIL ACTION NO. 11-C-411
(Judge Susan B. Tucker)
THE CITY OF MORGANTOWN,
WEST VIRGINIA, a Municipal
Corporation,
Defendant.
ORDER
INTRODUCTION
This lawsuit challenges the adoption by Morgantown City Council of a ban of
hydraulic fracturing of Marcelhis Shale within the City of Morgantown [hereinafter the
City] and including the areas one mile outside of the Morgantown corporate limits.' The
Plaintiffs, Northeast Natural Energy, LLC, and Ern-out Properties, LLC, [hereinafter
Northeast, and Enrout, respectively] claim that the City violated their Constitutional
rights by adopting a regulation in derogation of West Virginia's State laws which
regulate natural gas extraction.
The Plaintiffs contend that the regulations promulgated by the West Virginia
Department of Environmental Protection [hereinafter WVDEPJ via W.VA, CODE § 22-1-
1, et seq. (1994), preempt the City's Ordinance and thus preclude its enforcement.
Morgantown, W.Va., Ordinance 721.01, et seq. (June 21, 2011).
The City contends that it has the authority to enact, and enforce, the Ordinance
pursuant to the rights given to the City by the "Home Rule" provisions, W.VA. CODE § 8-
12-2 (1969), characterizing the hydraulic fracturing process as a nuisance.
PROCEDURAL FEESTORY
This matter came before the Court by way of Northeast filing a Motion for
Temporary Restraining Order on June 23,2011. Enrout filed a Motion to Intervene. The
hearing on both Motions was heard before the Honorable Chief Judge Russell M.
Clawges, Jr., on June 24, 2011. Enrout was permitted to join as a Plaintiff. Judge
Clawges ruled that, ". . . there is no need for a temporary restraining order, because,
based on all the pleadings and representations here today, they're not going to reach the
finking stage of this operation until two months from now," 2
Thereafter the case was assigned pursuant to regular rotation to the undersigned
Judge.
On July 20, 2011, this Court held a Status/Scheduling hearing to establish time
frames within which this matter would be litigated. The final hearing on the injunction
was scheduled for August 17th through the 19th, 2011. Thereafter, by mutual agreement,
the parties requested to submit briefs regarding the issue of preemption for the Court's
consideration and decision in advance of the final hearing.
FINDINGS OF FACT
Enrout is the owner of property in the Morgantown Industrial Park, located west
of the Monongahela River, outside the corporate limits of the City. Northeast entered
2 TRO Beg. Tr_ 64:11-14, June 24, 2011.

Aug. 12. 2011 3:13Pv1 No. 6285 P. 4
into lease agreements with Enrout for the right to drill, develop and extract natural gas
from the Marcellus Shale3 located under the surface of the pmperty, 4
Subsequent to the signing of the lease agreements. Northeast applied to the
WVDEP for permits for wells to be used in the drilling process. In March 2011 the
WVDEP found Northeast to be in compliance with its requirements and issued permits to
create two (2) wells on the Morgantown Industrial park site, neither of which are located
within the corporate limits of the City.
Sometime in May 2011, after the permits had been issued by WVDEP, the
Morgantown Utility Board, [hereinafter MUB], questioned certain aspects of the permits
as to wells' impact on the Monongahela River, specifically as to spill containment, spill
prevention, well integrity, waste disposal, and fraeking fluid containment. See John Aff.
110, July 7, 2011. Subsequently, Northeast agreed to comply with MU13's requests for
additional applicable safeguards, and Northeast's WVDEP permits were modified to
include the requested safeguards, See Id, Ill.
On June 7, 2011, the City began the process of enacting an Ordinance completely
prohibiting "[d]rilling a well for the putpose of extracting or storing oil or gas using
horizontal drilling with fracturing or fracking methods within the limits of the City of
3 Marcellus Shale is a sedimentary rock formation deposited in the Appalachian Mountains. This shale
contains significant amounts of natural gas. See William M. Kappel and Daniel I. Soeder, U.S. Department
of' the Interior, US_ Geological Survey, Water Resources and Natural Gas Production _from the Marcellus
Shale, Fact Sheet 2009-3032 (May 2009) (available at

1. pclf>).

4 This Court acknowledges that the issue of cracking or hydraulic fracturing, "which has been practiced by
the oil and gas industry for many years_ The process of creating these artificial fractures is known as
hydraulic fracturing or 'fracIdng.' Horizontal drilling in conjunction with fracking has opened up the
avenues for extracting natural gas from tight shale formations such as Marcellus Shale." Randy M. Awciish,
Wolverine Gold Rush? A Prime, On The Utiea/Collhigwood Shar.e and Gas Lease Issues, 38 Mich. Real
Prop_ Rev_ 64, 66 (Summer 2011).

Aug. 12. 2011 3:14PM
Morgantown or within one mile of the corporate limits of the City of Morgantown." See
Morgantown, W.Va., Ordinance 721.01, et seq. (June 21, 2011).
DISCUSSION
nrnmary Judgment
When ruling on a motion for summary judgment pursuant to Rule 56(c) of the
West Virginia Rules of Procedure, the Court must determine whether there is a "genuine
issue as to any material fact" and if the moving party is entitled to a judgment as a matter
of law." The standard for granting summary judgment is well established and the law was
reiterated in Syllabus Point 1 ofAndrick v. Thum ofBuckhannon, 187 W.Va. 706, 421
S.E.2c1247 (1992):
"A motion for summary judgment should be granted only
when it is clear that there is no genuine issue of fact to he
tried and inquiry concerning the facts is not desirable to
clarify the application of the law." Syl. Pt. 3, Aetna Casualty
& Surely Co. v. Federal Insurance Co. of New York, 148
W.Va. 160, 133 S.E.2d 770 (1963).
In determining whether there is no genuine issue as to any material fact, which
must be found before the moving party is entitled to summary judgment as a matter of
Jaw, the Court should consider the pleadings, depositions, and admissions of file, together
with the affidavits, if any. ." W.Va. Civ, P. 56(c), lithe motion "is documented with
such clarity as to leave no room for controversy, the non-moving party must take the
initiative and by affirmative evidence demonstrate that a genuine issue of fact exists."
Williams v. Precision Coil, inc_, 194 W.Va. 52 at 58, 459 S.E.2d 329 at 335 (1995).

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Aug. 12. 2011 3:14PM No. 6285 P. 6
This Circuit Court must determine only if there is a genuine issue of material fact
that should be determined at trial. The circuit court is not to weigh the evidence and
determine the truth of the matters asserted. Anderson v. Liberty Lobby, Inc., 447 U.S. 242,
206 S. Ct. 2505, 91 L.Ed.2d 202 (1986); Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755
(1994); and Williams, 194 W.Va. at 52, 459 S.E.2d at 336. Consequently, all permissible
inferences that can be drawn from the underlying facts must always be considered in the
light most favorable to the party opposing the motion, Matsushita Elec. Indus. Co., Ltd v.
Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348.89 L.Ed.2d 538 (1986); Williams, 194
W.Va. at 52, 459 S.E.2d at 336; Painter, 192 W.Va. at 192, 451 S.E.2d at 758; Ma,s'inier v
WEBCO Co., 164 W.Va. 241,262 S.E.2d 433 (1980); Andrick, 187 W.Va. at 708, 421
S.E.2d at 249.
Perhaps the most succinct summary of the Court's focus when ruling upon a
motion for summary judgment is set forth in Williams', 194 'W.Va. at 61, 459 S.E.2d at
338:
"The essence of the inquiry the court must make is 'whether the evidence
presents a sufficient disagreement to require submission to a jury or
whether it is so one-sided that one party must prevail as a matter of law."
Anderson, 477 U.S. at 251-252, 106 S. Ct. at 2512, 91 L,Ed.2d at 214.
Preemption
The issue presented to this Court is whether the City of Morgantown had the
authority to enact an Ordinance banning fracking within the municipal limits and one mile
outside the municipal limits.
As previously stated, the Plaintiffs contend that the regulations promulgated by the
WVDEP preempt the City's Ordinance and thus preclude its enforcement.
Aug. 12. 2011 3:14PM No, 6285 E 7
The Legislative purpose of the WVDEP is clearly set forth in Chapter 22, which
declares, "[Ole state has the primary responsibility for protecting the environment; other
governmental entities, public and private organizations and our citizens have the primary
responsibility of supporting the state in its role as protector of the environment." W.VA.
CODE § 22-1-1(a)(2) (1994). Additionally, the purpose of the WVDEP is to "consolidate
environmental regulatory programs in a single state agency, while also providing a
comprehensive program for the conservation, protection, exploration, development,
enjoyment and use of the natural resources of the state of West Virginia," W,VA, CODE §
22-1-1(b)(2)-(3) (1994), The Director of the WVDEP is required to maintain an office of
oil and gas which under the supervision of the Director is charged with the duty of
administering and enforcing the provisions of W.VA. CODE §§ 22-6 through 22-10, et seq.
(1994), also referenced as the West Virginia OH and Gas Act. The regulatory scheme
further indicates that it is within the sole discretion of the WVDEP to perform all duties as
related to the exploration, development, production, storage and recovery of this State's
oil and gas. W.VA. CODE § 22-6-2 (c)(12) (1994). Thus the legislation sets forth a
comprehensive regulatory scheme with no exception carved out for a municipal
corporation to act in conjunction with the WVDEP pursuant to the Home rule provision.
In fact, as set forth in the Legislative statement of policy and purpose governmental
entities are required to supplement and complement the efforts of the State by
coordinating their programs with those of the State. See W.VA. CODE § 22-1-1(h)(4)
(1994).
The doctrine of preemption is applicable law when the State has assumed control
of a particular subject of regulation, and a local government has enacted an ordinance in

Aug. 12. 2011 3:14PM No. 6285 P. 8
the same field. See 62 C.J.S. Municipal Corporations § 141 (2011). When a state law fully
occupies a particular area of legislation, indicated by the State's comprehensive regulatory
scheme, no local ordinances will be permitted to contravene it. 5
The City contends that pursuant to a 1936 amendment to the West Virginia
Constitution, adding § 39(a) to Art. 6, "Home Rule for Municipalities," the City was given
the full right of self-government in both local and municipal matters.
To begin the Court's analysis to determine if the State regulatory scheme preempts
the City's Ordinance, the Court must start with some basic propositions, the first being
that municipal corporations, such as the City, are creatures of the State. See Alderson v.
City ofHuntington, 132 W.Va. 421, 52 S.E.2d 243 (1949). Secondly, a municipal
corporation only has the powers "granted to it by the legislature, and any such power it
possesses must be expressly granted or necessarily or fairly implied or essential and
indispensable." Syllabus Point 2, Slate ex rel. Charleston v. Hutchinson, 154 W.Va, 585,
176 S.E.2d 691 (1970)., Syllabus Point 1, City of Fairmont v. Investors Syndicate of
America, Inc., 172 W,Va, 431, 307 S.E.2d 467 (1983). Municipal corporation powers are
so narrowly proscribed that the West Virginia Supreme Court has held that "[if any
reasonable doubt exists as to whether a municipal corporation has a power, the power
must be denied." See Id.
Our Supreme Court has further stated that "where both the State and a municipality
enact legislation on the same subject matter, it is generally held that if there are
Sec American Tower COTP. v. Common Colowil of City ofBealey, 210 W_Va. 345, 557 S.E.2d 752
(2001); City of Clinton v. Sheridan, 530 N.W.2d 690 (Iowa 1995); City ofindianapolis v. Fields, 506
N.E.2d 1128 (hnd. Ct. App. 4th Dist. 1957).
Aug. 12. 2011 3:14PM No. 6285 P. 9
inconsistencies, the municipal ordinance must yield," Davidson v. Shoney's Big Boy
Restaurant, el al., 181 W.Va. 65 at 68, 380 S,E.2d 232 at 235 (1989).
The City asserts that under the doctrine of the Home rule provision it has the right
to regulate nuisances and likens fiacking to the nuisance complained of in Sharon Steel
Corp. v. City ofFairmont, et al., 175 W.Va. 479, 334 S.E.2d 616 (1985). The City
contends that via the Home rule provision, it is granted broad authority to protect its
citizens, in this case, from the nuisance perceived to be created by the fracking process.
This argument is unpersuasive, however. The applicable state statute in the Sharon Steel
case carved out an explicit exception permitting the city of Fairmont to legislate the
permanent disposal of hazardous wastes identified as a nuisance. The City characterizes
fracking as a nuisance which can be regulated under the Home rule provision. However,
there is no exception carved out by the WVDEP, whose all inclusive purpose is to regulate
the mining of gas and oil
It is clear that the City has an interest in the control of its land within its municipal
borders. Yet, in light of the State's interest in oil and gas development and operations
throughout the State, and the all inclusive authority given to the WVDEP to regulate these
operations, it is necessary for this Court to examine the City's ban against the State's
regulatory scheme to determine if the City's Ordinance encroaches upon the State's all
encompassing authority regarding the production and development of oil and gas
resources.
In W.VA. CODE § 22-6, et seq. (1994), the Legislature explicitly set forth a
comprehensive framework for the application for oil well permits. The applicant is
required to specifically set forth the type of well, the location, the depth, the purpose of the

Aug. 12. 2011 3:14PM No, 6285 P. 10
well, fees associated with the well, etc. See W.VA. CODE § 22-6-6(c) (1994). The Director
is given the sole discretion to authorize or deny the issuance of said permit on the basis of
numerous factors, such as substantial violations of a previously issued permit by the
applicant. See W.VA. CODE § 22-6-6(h) & § 22-6-11 (1994), The regulations further state
the specific requirements for notice to property owners, the procedure for filing
comments, the process for setting hearings upon objections to such drilling, as well as the
procedures for an appeal process. See W.VA. CODE §§ 22-6-9 through 22-6-17 (1994).
The provisions clearly indicate that this area of law is exclusively in the hands of the
WVDEP. No exception is carved out for any locality or municipality. In fact, throughout
the regulation it is explicit that all authority lies solely within the hands of the Director,
CONCLUSION
Based upon this analysis, this Court concludes that the State's interest in oil arid
gas development and production throughout the State as set forth in the W,VA. CODE § 22-

1. et seq.(1994)., provides for the exclusive control of this area of law to be within the

hands of the WVDEP. These regulations do not provide any exception or latitude to
permit the City of Morgantown to impose a complete ban on fracIdng or to regulate oil
and gas development and production,
This Court is mindful that the environmental issues regarding the fracking process
are foremost in the public's concern. However, it is also apparent to this Court that the
environmental issues are being addressed by our State government, as indicated by
Governor Tomblin's July 5th, 2011 Executive Order to the Director of the WVDEP,

The onorable Judge Susan ill Mcker
Aug. 12. 2011 3:15PM No. 6285 P. 11
requesting that the WVDEP take the necessary steps to protect our safety and our
environment.°
The legal issue in this case is very narrow, and does not permit consideration of
any environmental concerns. Based upon the law as it is, this Court GRANTS the
Motions for Summary Judgment filed by the Plaintiffs, concluding that no genuine issue
of material fact exists.
It is hereby ORDERED by this Court that the Motions for Summary Judgment
filed by the Plaintiffs are GRANTED. Accordingly, this Court concludes that the
Ordinance passed by the City of Morgantown, is preempted by State legislation, and is
invalid!
The Circuit Clerk is hereby ordered to send copies of this Order to all counsel of
record.
It is so ORDERED this 12th day of August, 2011.
6 The Court also notes that on July 1,2011, the Legislature enacted the Marcellas Gas and Manufacturing
Development Act, W.VA. COLIE § 5B-21-1-1, et seq. (2011), furthering this Court's belief that this issue is of
extreme importance to the State government.
7 Based upon the Court's ruling herein, no further hearing is necessary.
10

Let me sum up this opinion as follows: Environmental protections will be left up to the inept WVDEP and the politicians bought and paid for by big gas.

If the Howe's site is that bad, should it not qualify as a "Super Fund Site" eligible for cleanup.

Associated Press
Industry applauds ruling on city gas drilling ban
By VICKI SMITH , 08.15.11, 04:07 PM EDT

MORGANTOWN, W.Va. -- A court ruling that invalidates Morgantown's ban on Marcellus shale gas drilling gives West Virginia's oil and gas producers the certainty they need to keep expanding operations, an industry leader said Monday.

"We all along believed the city of Morgantown and some other communities in the state don't have the right to pre-empt the regulatory powers of the Department of Environmental Protection," said Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association.

"It would be very, very difficult for the DEP to do any oversight with the potential of 100 different sets of rules to comply with," he said.

On Friday, Monongalia County Circuit Court Judge Susan Tucker delivered a victory to Charleston-based Northeast Natural Energy in its legal battle with the city of Morgantown.

Northeast is drilling wells above the Monongahela River about a mile from a city drinking water intake. Citing concern over its water supply and the lack of tough state regulations, the City Council passed an ordinance in June to ban deep horizontal drilling and hydraulic fracturing within city limits and up to a mile beyond.

Northeast called it an illegal power grab, but the city claimed home-rule provisions gave it the power to protect its citizens and its environment.

I’ve always thought that the enactment of a zoning ordinance would stand a much better chance of success. I know the procedure is cumbersome and it would be painful, but I think it is the only way local authorities can weigh in on this.

The Commission hired an expert, Ben Price, to report to the county regarding fracking. He was clear that zoning won't work because it only tells "where" one can develop. The problem is that it is difficult to single out a single procedure, particularly fracking when the gov is salivating over the $$$ associated with it. Then when we see respected business men selling their rights for hundreds of thousands of dollars, it is certainly tempting to forego our concerns for the procedure.

It’s true that a zoning ordinance would not ban fracking. I would ban fracking if I were king. But maybe we should take the action that has the best shot of being upheld on appeal.

County commissions have only those powers granted to them by the legislature. It’s hard to find authority granted county commissions to impose an outright ban on fracking. We’ve discussed this before, and ideas have been floated, but we’ve got to admit that most are a stretch.

But there’s no question that county commissions can zone. Here we could create a zoning ordinance that is designed to protect the scenic beauty of the County. The huge wells could be restricted to areas out of the public view where the blight on the scenery could be mitigated. Perhaps drilling could be restricted in areas where truck traffic would unduly damage road access. These goals could be justified economially by the fact that the huge wells will inflict massive damage on our tourist industry and our land values. Zoning has traditionally protected economic interests. The protection of economic interests is seen as more important by some than protection of the environment.

Maybe we should accept that we simply can’t impose an outright ban and try what might be workable. I am the first to acknowledge that the procedures for putting zoning in effect will be a massive headache. The tea party crowd will pack the meetings. The gas people will drag their toadies in. Commissioners shouldn’t do it if they are in love with the idea of re-election. But if we want to do something that really has a chance of standing up, zoning may be the way to go.

Morgantown City Council Looks At Court Decision
MetroNews Talkline
Morgantown, Monongalia County

Members of Morgantown's City Council are still deciding what to do now that a Monongalia County Circuit Judge has overturned the City's ban on fracking during natural gas drilling in the Marcellus shale within and near city limits.

No final decision on a course of action came Tuesday night when members of Morgantown's Council met behind closed doors for several hours.

Morgantown City Councilmember Bill Byrne says he thinks the fracking ban, which was approved earlier this year, was the right the move. He says they had to do something.

"Everybody agrees that the regulations that are out there with respect to the fracking in the Marcellus shale formation are wholly inadequate, especially with respect to sighting," Byrne said in defense of the ban.

"There's no consideration of where these things are in relation to dense populations, the residential areas."

Last week, Monongalia County Circuit Judge Susan Tucker tossed out the ban, saying a West Virginia municipality does not have the authority to preempt a state agency that is carrying out its responsibility.

The state Department of Environmental Protection had already approved permits for two drilling projects from Northeast Natural Energy, the company that sued after the ban was enacted.

Byrne argues, though, that, without action from the Legislature, cities have the responsibility to protect residents. He says the fracking could pose risks for Morgantown's water supply.

"Until the Legislature does something about that and really speaks to those issues in a substantive way, the only protection for communities right now are these local governments," Byrne said on Wednesday's MetroNews Talkline.

"We're standing there with our fingers in the dyke, trying to encourage the Legislature to really dig into this thing and get comprehensive rules in place so that we can be assured that the state is protecting our communities."

Fracking is a process that uses water and a small amount of chemicals, deep underground, to release the natural gas.

Last week, Monongalia County Circuit Judge Susan Tucker tossed out the ban, saying a West Virginia municipality does not have the authority to preempt a state agency that is carrying out its responsibility.

So how is it possible for a County Commission to do what a municipality can't do?