Mineral owners in Oklahoma recently received some good news. As you may recall, this past year a number of Oklahoma cities and towns were seeking to enact local ordinances allowing them to regulate oil and gas operations in their city limits. Several cities, including both Norman and Stillwater, did pass ordinances attempting to regulate the oil and gas operations within its limits.
This past spring, at approximately the same time, the Oklahoma legislature also passed Senate Bill 809, that was codified in Title 52, Section 137.1 of the Oklahoma Statutes (137.1), dealing with the regulatory authority of local municipalities in dealing with oil and gas issues. As you might imagine, questions were raised as to how the newly passed Senate Bill would interact with the newly passed city ordinances.
Three Oklahoma legislators each submitted questions to the Oklahoma Attorney General requesting guidance on the interaction of the SB 809 and the local ordinances. Attorney General Opinion 2015-12 was issued on November 30, 2015 answering these questions and the answers were favorable for mineral owners.
Section 137.1 provides, in relevant part, that political subdivisions of the State of Oklahoma may (1) “enact reasonable ordinances, rules and regulations concerning road use, traffic, notice and odors incidental to oil and gas operations within (their) boundaries” so long as such ordinances, rules and regulations are not inconsistent with the regulations established under Title 52 or the Oklahoma Corporation Commission and (2) “establish reasonable setbacks and fencing requirements for oil and gas well site locations as are reasonably necessary to protect the health, safety and welfare of (their) citizens but may not effectively prohibit or ban any oil and gas operations.” Section 137.1 also provides, in relevant part, that “all other regulations of oil and gas operations shall be subject to the exclusive jurisdiction of the Corporation commission.”
The highlights of the AG’s Opinion are that (1) the power of political subdivisions to regulate oil and gas activity is limited to those areas enumerated in 137.1, specifically (a) enacting reasonable ordinances, rules, or regulations concerning road use, traffic, noise , and odors incidental to oil and gas operations and, (b) establishing setbacks and fencing requirements for oil and gas well site locations as are reasonable necessary to protect the health, safety, and welfare of their citizens, but that do not effectively prohibit or ban any oil and gas operations. Setbacks or fencing requirements for oil and gas well site locations that would effectively prohibit certain types of oil and gas drilling within city limits would be invalid.
In addition to these limitations, 137.1 requires regulations of oil and gas activity by political subdivisions to be reasonable. To meet this standard, the local regulation must bear a substantial relation to public health, safety, morals or general welfare of the community.
This opinion bodes well for the oil and gas industry and mineral owners. I anticipate that the matter is not totally settled but at least a good first step has been taken. Oklahoma mineral owners owe a big thank you to Terry Stowers for all his hard work in not only the passage of SB 809 but also his efforts with the legal briefing on the questions presented to the Oklahoma AG’s office. It is tireless efforts like Terry’s that protects our mineral interests.
I always try to close with a quote that lightens the mood somewhat. In that regard, I point to one of my favorite cowboys, Will Rogers, who once said, “Live in such a way that you would not be ashamed to sell your parrot to the town gossip.” That’s good advice to carry into the New Year. I wish you and yours a Merry Christmas and a Happy New Year.