The Supreme Court ruled this week that the states Oil and Gas Commission does not have authority to hear appeals of decisions by the Ohio Division of Oil and Gas Resources Management that approve permits to drill oil and gas wells.

The Supreme Court ruled this week that the states Oil and Gas Commission does not have authority to hear appeals of decisions by the Ohio Division of Oil and Gas Resources Management that approve permits to drill oil and gas wells.

The Supreme Court of Ohio ruled today that the state’s Oil & Gas Commission acted without jurisdiction when it heard and decided a 2012 appeal of a drilling permit that had been issued by the chief of the Ohio Division of Oil and Gas Resources Management.

Based on its finding that the commission patently and unambiguously lacks jurisdiction over such appeals, the court issued a writ of prohibition barring the commission from taking any further action in the case, and vacated the commission’s actions in the appeal.

The case involved a permit issued by the division in March 2012 that authorized Chesapeake Exploration LLC to drill an oil and gas well on a parcel of land for which Chesapeake had obtained an interest in a mineral rights lease from the property owner, Summitcrest Inc.  Summitcrest filed an appeal seeking review by the Oil and Gas Commission of the division’s issuance of the permit. The division filed a motion asking the commissioners to dismiss the appeal on the basis that the division’s decisions to issue permits to drill oil and gas wells are not orders appealable to the commission. Chesapeake subsequently intervened in the case and joined the division’s motion to dismiss. 

On July 10, 2012, a three-member quorum of the commission voted to deny the motion to dismiss. The other two commissioners recused (declined to participate).  On July 19, 2012, Chesapeake filed an original action in the Supreme Court seeking a writ of prohibition to prevent the commissioners from exercising further jurisdiction in the Summitcrest appeal and to vacate any actions taken by them.  On July 23, before the Supreme Court had taken any action in the prohibition case, the commission heard Summitcrest’s appeal.  On August 8, the commission decided the merits of the appeal by affirming the issuance of the drilling permit to Chesapeake. 

The commission then entered a motion in the Supreme Court asking the court to dismiss Chesapeake’s prohibition action as moot (that is, as no longer having any practical effect on the underlying legal challenge to Chesapeake’s permit).  The commissioners argued that their affirmance of the permit on appeal had allowed Chesapeake to go forward with drilling, which was the same outcome that would result if the court continued to consider Chesapeake’s complaint and ultimately granted the requested writ of prohibition. The court denied the motion to dismiss, and reviewed legal arguments submitted by the parties on the question of the commission’s jurisdiction.

In today’s per curiam (authored collectively by the court) decision, a 5-2 majority found that although one section of R.C. Chapter 1509 gives the Oil and Gas Commission general authority to hear appeals of all “orders” of the chief of the Division of Oil and Gas Resource Management, a different section of the same statute specifically states that “the issuance of a permit shall not be considered an order of the chief.”

The court wrote: “Although R.C. 1509.36 generally confers appellate jurisdiction in the Oil and Gas Commission over appeals from orders of the chief of the Division of Oil and Gas Resources Management by persons adversely affected, R.C. 1509.06(F) manifestly divests the commission of appellate jurisdiction over the chief’s decisions to issue permits for oil and gas wells. ... (B)y the plain language of these provisions, the chief’s issuance of a permit for an oil and gas well does not constitute an order of the chief and cannot be appealed to the commission.”

The majority rejected the commissioners’ contention that, prior to an amendment to R.C. 1509.03(B) that took effect in September 2012, the former language of that statute was ambiguous regarding the commission’s jurisdiction to hear appeals of the issuance of permits. With regard to that argument, the court wrote: “(F)ormer R.C. 1509.03(B) neither expanded the Oil and Gas Commission’s appellate jurisdiction under R.C. 1509.36 nor defined which orders of the chief of the Division of Oil and Gas Resources Management are appealable.  At most, former R.C. 1509.03(B) merely provided that decisions of the chief that are considered to be orders should comply with R.C. Chapter 119.  ... Moreover, insofar as former R.C. 1509.03(B) could be found to conflict with R.C. 1509.06(F), the amendment to R.C. 1509.06(F) specifying that the issuance of a permit is not an order, which is the later enactment, prevails.” 

The majority opinion was joined by Chief Justice Maureen O’Connor and Justices Terrence O’Donnell, Sharon L. Kennedy, Judith L. French and William M. O’Neill.

Justices Paul E. Pfeifer and Judith Ann Lanzinger entered separate dissenting opinions.

Justice Pfeifer wrote, ““R.C. 1509.36 provides, ‘any person adversely affected by an order by the chief of the division of oil and gas resources management may appeal to the oil and gas commission for an order vacating or modifying the order.’ ...  Former R.C. 1509.03(B) provided that an order by the division that issues a permit is an adjudication order. These statutes, when read in pari materia, gave the commission jurisdiction over Summitcrest’s appeal.  The 2012 amendment to R.C. 1509.03(B)—‘Division (B)(1) of this section does not apply to a permit issued under section 1509.06 of the Revised Code’—clears up any ambiguity regarding the interplay of R.C. 1509.03(B) and R.C. 1509.06. ... But until that amendment, the commission did not unambiguously lack jurisdiction over appeals of the chief of the division’s granting of permits.  Accordingly, I dissent.”

Justice Lanzinger wrote: “The amendment to R.C. 1509.03(B)(1) specifying that division (B)(1) ‘does not apply to a permit issued under section 1509.06 of the Revised Code,’ ... did not become effective until September 10, 2012.  The previous month, on August 8, the commission had decided the merits of the appeal by affirming the issuance of the drilling permit to Chesapeake and no party had appealed the commission’s August 8 order. Because I do not believe that the commission patently and unambiguously lacked jurisdiction at the time that it acted, I respectfully dissent from the order granting the writ of prohibition.”

Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion, but only for noteworthy cases. Opinion summaries are not to be considered as official headnotes or syllabi of court opinions. The full text of this and other court opinions are available online.

2012-1207. Chesapeake Exploration, L.L.C. v. Oil & Gas Comm., Slip Opinion No. 2013-Ohio-224.
In Prohibition.  Writ granted.
O’Connor, C.J., and O’Donnell, Kennedy, French, and O’Neill, JJ., concur.
Pfeifer and Lanzinger, JJ., dissent.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2013/2013-Ohio-224.pdf

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