CHAPTER 6 THE SPECTRUM OF CHOICES: FORMULATION AND IMPLEMENTATION OF REGULATORY LAND USE DECISIONS AFFECTING MINERAL DEVELOPMENT

• Jurisdiction: United States

Mineral Development and Land Use
(May 1995)
CHAPTER 6
THE SPECTRUM OF CHOICES: FORMULATION AND IMPLEMENTATION OF REGULATORY LAND USE DECISIONS AFFECTING MINERAL DEVELOPMENT
W. Perry Pearce
Meridian Oil, Inc.
Santa Fe, New Mexico

I. INTRODUCTION

Although the mining and oil and gas industries are long time participants in American business enterprise, the impact of these industries on local communities continues to be a matter of concern to those communities and a source of concern to the companies involved in resource projects. There have been, and perhaps always will be, conflicts between the various interest owners and the other members of the communities in which resource projects are located.¹

This paper will discuss some of those conflicts and will provide some instances of ways in which resource regulatory agencies, usually found at state government levels, have been allowing the more localized governmental entities, whether counties or municipalities, to participate in the regulatory process. The paper will also address some of the instances in which attempts by local government entities to influence resource management decisions and

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operations have been rejected because of state agency regulatory programs.

The spectrum of choices which have been made by state regulatory agencies and local government entities have ranged from situations in which the state regulatory agency has assumed exclusive jurisdiction for resource operations to the more intricate and complex situations in which local government entities have been allowed to exercise more control over the resource development process and have been active participants with state government agencies in the regulatory process.

II. HISTORICAL MODELS OF RESOURCE PROJECT REGULATION

A. Historical Routes of Resource Development

Historically, resource development and production was within the exclusive control of the landowner whose lands were involved in the development project. Early English law which was the principal antecedent of early American jurisprudence provided that the owner of the land controlled resources under his surface estate to the center of the earth.² Most early mineral development whether coal mining, hard rock mining, or oil well development occurred in areas which were rural in nature and occurred in times when the mineral owner was likely to have been aided in the development of his resource project by other local citizens. Both the landowner and the affected citizens hoped and expected to be benefited by the development and use of the resources.³ This economic climate resulted in a system of "laissez-faire" non-regulation. Lack of a definite

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regulation system resulted in problems and benefits which are at least vaguely recalled by most of us from various history courses.⁴ The benefits being generally characterized by rapid development and economic activity with the cost of this rapid expansion not uncommonly being characterized by negative societal and environmental impacts.⁵

There are current reminders of this period of development in communities throughout the west in which it is possible to find that cities, towns, and villages have grown up around or right on the edge of significant resource development activity. For instance, most of us are familiar with the occurrence of pump jacks and well heads located within city lots and most of us have read cases of subsidence occurring in local communities because of underground mining.⁶ Although this is not a discussion of economic conflicts, certainly the development of resources in many areas fostered the development of these local communities and the communities intentionally located themselves within the vicinity of resource development projects.

B. Early Regulatory Constraints

After the initial burst of economic activity and once local cities and towns had established themselves, it was a natural progression for local communities to attempt to regulate resource development to avoid some of the more wasteful and dangerous consequences of development. However, the states as the primary taxing authority sought to establish regulatory jurisdiction to assure the efficient

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use and development of the resources. In the oil and gas industry for instance, in the early 1930's states began to assert regulatory authority by adopting statutory schemes of regulation.⁷ These statutory programs generally established regulatory agencies and granted those agencies authority to regulate oil and gas development to avoid unnecessary waste and in order to protect various interest owners from competing operations which might threaten to deprive mineral interest owners of their mineral resources.⁸

Once these statutory agencies were established, they began the process of reviewing resource development operations and began to adopt and implement rules to govern the operation of these projects. It was not uncommon for these early rules to provide certain restriction on oil and gas well placement if residences, schools, or churches were in place prior to any well development.⁹ These rules might provide for a prohibition against drilling a well closer than one hundred, two hundred, three hundred or five hundred feet from a residence, church, or school in an effort to protect those pre-existing structures and their habitants from unnecessary danger.

In addition to these prohibitions against the drilling of oil and gas wells within a particular area, the regulatory agencies also developed extensive programs regulating the density and production of oil and gas wells in order to avoid the waste of the resource. Although the state programs attempted to provide some protection for health and safety concerns, their primary focus was on the prevention of waste and protection of correlative rights

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because they were generally charged with the management of the development of the resource itself.

Not surprisingly, as local communities began to prosper and mature and as other economic resources became more fully developed, the ability of resource projects to automatically gain local governmental approval was diminished.

C. Early Local Government Regulation

In the 1930's a series of cases involving oil and gas activities are reported particularly focused in Oklahoma as a result of some local ordinances adopted by various municipalities attempting to control oil and gas operations.¹⁰ In Gant v. Oklahoma City oil and gas operators sought an injunction to prevent the city from requiring a bond prior to allowing the operator to drill within the city limits.¹¹ The court found that although Oklahoma statutes had granted general jurisdiction over oil and gas operations to the Oklahoma Corporation Commissions, it was not the intent of that statutory grant to prevent the city from operating to protect the health and safety of its citizens. This dichotomy of health and safety concerns versus resource development regulatory concerns has, since Gant and other cases¹² , become a common theme in judicial analysis of conflicts between state and local regulatory enactments.

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In the area of the regulation of mining activities when local entities have adopted regulations, those regulations have tended to be prohibitions of mining operations.¹³ This regulatory prohibition stems from the larger impact that mining operations tend to have than those ordinarily found as a result of oil and gas development and production. Whether these local ordinances prohibiting mining activities have been supported by the courts has turned on a number of factors.¹⁴

Among the factors commonly cited by courts in resolving these conflicts are the stage of development of the land in question and the surrounding area,¹⁵ the impacts which could be expected to surrounding lands as a result of the resource project,¹⁶ the feasibility of developing the resource without access to the land in question,¹⁷ and the length of disturbance which could be expected to surrounding lands as a result of the project,¹⁸ and the economic loss which would be caused to the mineral developer if access were not allowed.¹⁹

There are also several cases in which local governmental entities, either cities or counties, attempted to imposed restrictions upon mining operations rather than prohibiting those operations. Generally these mining restriction cases attempted to regulate the use of blasting in mining operations either by restricting the miners ability to use blasting within a set distance of existing

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structures or requiring the miner to install and use certain safety and protective equipment.²⁰ The results of judicial review of these local ordinances are mixed with the different courts analysis turning on health and safety concerns. The outcome of these cases seems to hinge upon the evidentiary materials made available to the court.²¹

III. INDIVIDUAL STATE STATUTORY AND REGULATORY PROGRAMS

A. State Statutory Provisions

The conflicts described above between state statutory and regulatory programs and local municipalities, both cities and counties, has continued to be evident. One of the ways that this conflict is evidenced in state statute is by a review of state statutes authorizing regulatory programs for oil, gas, and mining activity compared with state statutes granting authorities to local governmental agencies. As we will see, although most of the state statutory mandates are similar in their grants of authority to both agencies and local governments, the statutes very seldom will provide a distinct grant of authority which would exclude either regulatory agencies or local governments from affecting resource development activities.

One typical example of a jurisdiction in which this lack of definitive statutory grant of authority is evident is in the grant by the Utah legislature of authority to the Utah Board of Oil, Gas and Mining²² and its grant in...