Local government roles in oil and gas regulation: Part 2

Michigan communities are considering their role in regulating oil and gas development. State legislation limits this authority.

Despite lower oil prices, there is a lot of current attention being paid to oil and gas development in Michigan. Concerns about hydraulic fracturing (fracking) technology and proximity of drilling operations to residential areas are causing local officials in some areas of the state to consider their role in regulating this industry.

Part 1 of this series outlines the Michigan laws that restrict local government authority to regulate oil and gas development.

Even with these limitations, some local governments are enacting regulations. A Michigan Bar Journal article examines potential roles, especially related to large-scale hydraulic fracturing.

Examples of local regulations enacted in the past few years include:

  • In January 2015, Cannon Township, Kent County amended their “unwholesome substances” ordinance to include crude oil and other substances associated with oil and gas development, and amended the zoning ordinance to place restrictions on outdoor lighting and construction of accessory buildings at drilling sites.
  • Shelby Township, Macomb County, enacted a six-month moratorium on oil and gas development in September 2014 in order to investigate and review local regulatory options. Several other jurisdictions have passed similar short-term moratoriums.
  • Edwards Township, Ogemaw County, considered a franchise agreement requirement for use of roads in the township for many activities related to oil and gas development. Companies engaging in those activities would be required to submit a plan and receive a permit.

None of these local regulatory approaches have been challenged in court. If challenged, it will be up to the courts to decide which ordinances are within the local jurisdiction’s authority and which are preempted by state statues.

Two laws (SB 1026 and SB 1076) were introduced in the Michigan Senate during 2014 that give more local control by outlining best practices for oil companies working in more densely-populated areas, and allowing townships with a population of 70,000 or greater to regulate oil and gas development through zoning. Both measures were defeated. HB 4237, introduced recently in the 2015 session, would repeal the portion of Zoning Enabling Act that prohibits zoning regulation of oil and gas drilling in townships and counties.

Just as with other land use issues, determining local regulatory approaches (if any) should follow careful planning. Master plans should consider potential areas where oil and gas development is likely, the mix of permitted uses in those areas, proximity to sensitive natural resources and available transportation options. A well-written plan also gives jurisdictions a valuable tool when working with the industry and state regulators to support both landowner and community interests in oil and gas development.

Enacting local regulations that brush up against legislative restrictions on local control may expose the jurisdiction to risk of legal action, so communities should proceed cautiously. Local officials should always consult a municipal attorney highly experienced in municipal and land use law before considering zoning and other approaches for oil and gas development regulation. For more information about oil and gas development in Michigan, see the Michigan State University Extension Oil and Gas page.

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