A federal district court recently ruled that a county ordinance banning hydraulic fracturing (fracking) and drilling violates both New Mexico state law and the U.S. Constitution. On January 19, 2015, the U.S. District Court for the District of New Mexico issued a 114-page opinion overturning a ban on fracking and drilling in Mora County, a rural area northeast of Santa Fe. After county voters passed the ordinance in 2013, SWEPI LP, a subsidiary of Royal Dutch Shell PLC, filed suit in 2014 challenging the legality of the measure.
Judge James Browning ruled, at the outset, that the ordinance violated the Supremacy Clause of the U.S. Constitution by attempting to discard protected rights of corporations. In this regard, the ordinance expressly provided that oil and gas companies “shall not have the rights of 'persons' afforded by the United States and New Mexico Constitutions,” including due process and First Amendment rights. “The Defendants' argument that corporations should not be granted constitutional rights, or that corporate rights should be subservient to people's rights, are arguments that are best made before the Supreme Court—the only court that can overrule Supreme Court precedent—rather than a district court,” Judge Browning held.
Judge Browning also found that the ordinance is “doubly invalidated” insofar as it violates rights guaranteed by the First Amendment. His decision held that the ordinance is substantially overly broad and could thus be invalidated on its face.
Several other localities throughout the country, notably, have similar “community bills of rights” that purport to restrict the rights of corporations.
Lastly, Judge Browning concluded that the ordinance conflicts with New Mexico state law and is invalid under principles of conflict preemption. “Moreover, the Ordinance's ban conflicts with state law by creating waste and not recognizing correlative property rights, which the [state] Oil and Gas Act prohibits," the judge ruled.
Judge Browning’s decision is the first major federal-court consideration of local drilling bans. If challenged, the 10th U.S. Circuit Court of Appeals will hear the appeal.
State courts in New York and Pennsylvania have affirmed some local-government control over oil and gas development, while courts in Colorado have rejected local prohibitions. The Ohio Supreme Court is still considering the issue.
Tyler L. Weidlich is with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC in New Orleans, Louisiana.