Opinion:Magnum Energy, Inc. v. Board of Adjustment for the City of Norman, 2022 OK 26 
Subject matter:Oil & Gas Law; Municipal Law
Date Decided:March 22, 2022
Trial Court:District Court of Cleveland County; Judge Virgin
Route to this Court:Appeal from order granting summary judgment; assigned to Court of Civil Appeals Division I; Petition for Certiorari granted. 
Facts:Norman Municipal Code requires oil and gas operators to maintain an umbrella insurance policy with at least two million dollars in coverage. Magnum Energy 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 Board of Adjustment for the City of Norman, requesting a waiver of the umbrella insurance requirement. The Board denied Magnum’s application for a variance, and Magnum appealed the Board’s order to the District Court of Cleveland County. In its appeal to the District Court, 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. Magnum moved for summary judgment, which the District Court granted, finding that § 13-1502.1(a)(4) conflicts with 52 O.S.Supp.2015 § 137.1 and enjoining its enforcement against Magnum.Board appealed and, the matter was assigned to the Court of Civil Appeals, Division I. COCA, in an unpublished opinion, reversed and concluded that the umbrella policy ordinance of the Norman Municipal Code was enacted pursuant to the City’s general police power, the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. The Oklahoma Supreme Court granted Magnum’s Petition for Certiorari on December 4, 2020.
Standard of Review:De Novo (review of summary judgment order and interpretation of statute). 
Analysis:“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, 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. 

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.

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.

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.

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.”

Prior to 2015, a review of § 137 and our extant jurisprudence would have made clear that municipalities maintained broad authority to regulate oil and gas production pursuant to their police power. The 2015 amendment to § 137.1 fundamentally altered the nature of the concurrent jurisdiction shared by municipalities and the Corporation Commission. This restructuring included removing a municipality’s police power to regulate oil and gas. Thus, based on the foregoing, we find that municipal authority to regulate oil and gas is limited in scope to those areas reserved in § 137.1 and elsewhere in statute.

The umbrella insurance requirement in § 13-1502.1(a)(4) does not fall within any of the categories reserved for municipal regulation under § 137.1. Section 13-1502.1(a)(4) does not qualify as an ordinance concerning road use, traffic, noise and odors incidental to oil and gas operation. Section 13-1502.1(a)(4) also does not constitute a setback or fencing requirement for oil and gas well sites, nor does it concern the development of areas delineated as a one-hundred-year floodplain. The only other source of municipal authority referenced by either party is 17 O.S. § 52(B), which states, “The Corporation Commission and incorporated cities and towns shall have exclusive jurisdiction over permit fees for the drilling and operation of oil and gas wells.” While satisfying the umbrella insurance requirement in § 13-1502.1(a)(4) is necessary to obtain a permit in Norman, it cannot be fairly characterized as a permit fee. Based on the foregoing, we find that § 13-1502.1(a)(4) of the Norman Municipal Code is irreconcilable with state law.

Outcome:District Court Order Awarding Summary Judgment to Magnum Affirmed; Court of Civil Appeals Opinion Vacated. 
Vote:All Justices Concur. Opinion by Rowe, J., with no separate writings. 
Other: Court cites to an Attorney General Opinion, 2015 OK AG 12, addressing the issue (presumably as persuasive or informative of the issue); and a previous unpublished order of the Court (cited by Magnum) addressing whether the Kingfisher County Commissioners’ a ban on the transportation of wastewater through temporary lines crossing county road easements violated § 137.1. Case No. 117,303 (Dec. 17, 2018).  The Court notes that in that order “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,” and provides the text of the analysis from the order in footnote 2 of this opinion.