Magnum Energy, Inc. v. Bd. of Adjustment for the City of Norman

510 P.3d 818

MAGNUM ENERGY, INC., Plaintiff/Appellee,

v.BOARD OF ADJUSTMENT FOR the CITY OF NORMAN, Oklahoma, Defendant/Appellant.

No. 117,912

Supreme Court of Oklahoma.

FILED MARCH 22, 2022

Gregory L. Mahaffey and Zachary J. Foster, Mahaffey & Gore, P.C., Oklahoma City, Oklahoma, for Plaintiff/Appellee.

Rickey J. Knighton II and Elisabethe E. Muckala, Norman, Oklahoma, for Defendant/Appellant.

ROWE, J.:

I. BACKGROUND

¶1 Section 13-1502.1(a)(4) of the Norman Municipal Code requires oil and gas operators to maintain an umbrella insurance policy with at least two million dollars in coverage. Plaintiff, Magnum Energy Inc. ("Magnum"), has operated the Patty No. 1 Well in Norman, Oklahoma, since September 1989. On January 2, 2018, Magnum filed an application for a variance with Defendant, Board of Adjustment for the City of Norman ("Board"), requesting a waiver of the umbrella insurance requirement contained in § 13-1502.1(a)(4). On January 24, 2018, Board denied Magnum's application for a variance.

¶2 Magnum appealed Board's order to the District Court of Cleveland County on February 2, 2018. In its appeal, Magnum claimed, among other things, that § 13-1502.1(a)(4) conflicted with 52 O.S.Supp.2015 § 137.1, which places limits on the authority of localities to regulate oil and gas operations. On January 10, 2019, Magnum filed a Motion for Summary Judgment seeking to have § 13-1502.1(a)(4) declared void and unenforceable on grounds that it conflicted with state law. On March 19, 2019, the District Court granted Magnum's Motion for Summary Judgment, finding that § 13-1502.1(a)(4) conflicts with 52 O.S.Supp.2015 § 137.1 and enjoining its enforcement against Magnum.

¶3 Board filed its Petition in Error on April 18, 2019. The matter was assigned to the Court of Civil Appeals, Division I ("COCA"). On June 24, 2020, COCA issued an unpublished opinion reversing the District Court's order granting Magnum's Motion for Summary Judgment. COCA determined that § 13-1502.1(a)(4) of the Norman Municipal Code was enacted pursuant to the City's general police power, the ordinance is not precluded by 52 O.S.Supp.2015 § 137.1 and is enforceable.

¶4 On June 24, 2020, Magnum filed its Petition for Certiorari, alleging that COCA decided a question of substance not yet determined by this Court and did so in a manner not in accord with prior applicable decisions of this Court. On December 14, 2020, we granted certiorari. Magnum contends on appeal that the enactment of § 137.1 in 2015 curtailed the authority of localities to regulate oil and gas operations under the scope of their general police power and that § 13-1502.1(a)(4) is precluded by § 137.1.

II. STANDARD OF REVIEW

¶5 We review a trial court's order granting summary judgment de novo. Tiger v. Verdigris Valley Elec. Coop. , 2016 OK 74, ¶ 13, 410 P.3d 1007, 1011. Likewise, legal questions involving statutory interpretation are subject to de novo review. Cole v. Josey , 2019 OK 39, ¶ 3, 457 P.3d 1007, 1009. De novo review involves a plenary, independent, and non-deferential examination of the issues presented. Benedetti v. Cimarex Energy Co. , 2018 OK 21, ¶ 5, 415 P.3d 43, 45.

III. DISCUSSION

¶6 Magnum's position on certiorari is that the umbrella insurance requirement in § 13-1502.1(a)(4) of the Norman Municipal Code conflicts with 52 O.S.Supp.2015 § 137.1. "The general rule is that a municipal ordinance or portion thereof which is in conflict with state statutes is void." Constant v. Brown , 1941 OK 205, ¶ 8, 189 Okla. 147, 114 P.2d 477, 478. "A conflict exists between a state enactment and a municipal charter or ordinance when both contain either express or implied provisions that are inconsistent or irreconcilable with one another." State ex rel. Trimble v. City of Moore , 1991 OK 97, ¶ 29, 818 P.2d 889, 898. A municipal ordinance may, however, supersede a state statute if the ordinance affects a subject that is purely of municipal concern. Vinson v. Medley , 1987 OK 41, ¶ 5, 737 P.2d 932, 936. It does not appear to be Board's position that the subject matter of § 13-1502.1(a)(4) is purely of municipal concern.

¶7 Whether the umbrella insurance requirement of § 13-1502.1(a)(4) exceeds the scope of the authority reserved for municipalities to regulate oil and gas production under § 137.1 presents two questions: (1) what is the scope of municipal authority to regulate the production of oil and gas, and (2) whether § 13-1502.1(a)(4) falls within the scope of that authority.

¶8 Both of these questions necessarily involve statutory interpretation. When interpreting a statute, we keep the following principles in mind:

The goal of any inquiry into the meaning of a statutory enactment is to ascertain and give effect to the intent of the legislature. The law-making body is presumed to have expressed its intent in a statute's language and to have intended what the text expresses. If a statute is plain and unambiguous, it will not be subjected to judicial construction, but will receive the effect its language dictates. Only where the intent cannot be ascertained from a statute's text, as when ambiguity or conflict (with other statutes) is shown to exist, may rules of statutory construction be employed.

Yocum v. Greenbriar Nursing Home , 2005 OK 27, ¶ 9, 130 P.3d 213, 219 (internal citations omitted).

¶9 As to the first issue, Magnum contends that a municipality's authority to regulate oil and gas production is confined to the parameters set out in § 137.1.¹ Section 137.1 grants municipalities authority to regulate oil and gas production in three areas, to wit:

A municipality, county or other political subdivision may enact reasonable ordinances, rules and regulations concerning road use, traffic, noise and odors incidental to oil and gas operations within its boundaries, provided such ordinances, rules and regulations are not inconsistent with any regulation established by Title 52 of the Oklahoma Statutes or the Corporation Commission.

52 O.S.Supp.2015 § 137.1. Second, a municipality has the ability to:

[E]stablish reasonable setbacks and fencing requirements for oil and gas well site locations as are reasonably necessary to protect the health, safety and welfare of its citizens but may not effectively prohibit or ban any oil and gas operations, including oil and gas exploration, drilling, fracture stimulation, completion, production, maintenance, plugging and abandonment, produced water disposal, secondary recovery operations, flow and gathering lines or pipeline infrastructure.

Id . Finally, a municipality may:

[E]nact reasonable ordinances, rules and regulations concerning development of areas within its boundaries which have been or may be delineated as a one-hundred-year floodplain but only to the minimum extent necessary to maintain National Flood Insurance Program eligibility.

Id . Except for these three areas, § 137.1 states, "All other regulations of oil and gas operations shall be subject to the exclusive jurisdiction of the Corporation Commission."

¶10 In addition to the express language of § 137.1, Magnum points to the changes between § 137.1 and its predecessor, § 137, as further evidence of the Legislature's intent to limit the scope of municipal authority to regulate oil and gas. Prior to the adoption of § 137.1 in 2015, municipal authority to regulate oil and gas was governed, at least in part, by 52 O.S.2011 § 137, which stated:

Nothing in this act is intended to limit or restrict the rights of cities and towns governmental corporate powers to prevent oil or gas drilling therein nor under its police powers to provide its own rules and regulations with reference to well-spacing units or drilling or production which they may have at this time under the general laws of the State of Oklahoma.

Magnum acknowledges that under the former statutory scheme, municipal authority to regulate oil and gas was much more expansive and likely would have encompassed regulations like the umbrella insurance requirement in § 13-1502.1(a)(4). At the same time, Magnum contends that the stark changes between § 137 and § 137.1 evince a clear intent on behalf of the Legislature to shift primary exclusive jurisdiction over the regulation of oil and gas from local governments to the Corporation Commission.

¶11 Magnum also claims that we have previously decided this issue via an unpublished order in another matter, Oklahoma Oil & Gas Ass'n v. Kingfisher Cty. Comm'rs , No. 117,303 (OKLA. SUP. CT. Dec. 17, 2018), reh'g denied , (OKLA. SUP. CT. Jan. 22, 2019). In that case, the Oklahoma Oil & Gas Association sought to enjoin the Kingfisher County Commissioners from imposing a ban on the transportation of wastewater through temporary lines crossing county road easements. The Oklahoma Oil & Gas Association alleged that the ban exceeded the scope of authority afforded to the county commissioners under § 137.1. We found that the Commissioners' ban on temporary wastewater lines was not authorized by § 137.1 because it did not fall within any of the three areas preserved for municipal regulation.²

¶12 Board argues that § 137.1 does not comprise the full scope of municipal authority to regulate oil and gas production. Specifically, Board contends that municipalities maintain a general police power to provide for the safety and wellbeing of their inhabitants, and pursuant to that authority, municipalities may impose regulations on oil and gas production that go beyond the categories enumerated in § 137.1. In support of its position, Board cites to a number of our prior decisions recognizing this municipal police power, most notably Gant v. Oklahoma City , 1931 OK 241, 150 Okla. 86, 6 P.2d 1065. In Gant , we addressed a challenge to a similar insurance requirement imposed by an Oklahoma City municipal ordinance. Id . ¶ 12, 6 P.2d at 1068-69. We upheld the ordinance as a legitimate exercise of the city's police power:

An examination of the cases cited under proposition 1 does not disclose that there is anything in them that would

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