County files motion to dismiss CIZ suit

By: 
Mikaela Koski
Thursday, May 17, 2018

The county has responded to the lawsuit filed by the Beartooth Front Coalition regarding the invalidation of a citizen initiated zone petition with a motion to dismiss.

The motion was filed in early May by County Attorney Nancy Rohde and Bethany Gross of the Budd-Falen law firm on behalf of the county, commissioners, and Clerk & Recorder Heidi Stadel in 22nd Judicial District Court.

It argues that the county does not have jurisdiction to regulate oil and gas activities. Due to this lack of authority, the petition and zone it proposes would be invalid, regardless of the meaning of “affected real property owner.”

Created in 1953 by the Montana Oil and Gas Conservation Act, the Montana Board of Oil and Gas Conservation (BOGC) is organized in Title 82 of Montana Code. The BOGC is involved with various aspects of oil and gas activities in the state, including permitting, requiring that measures be taken to prevent contamination of surrounding lands caused by drilling and production, and educating the public concerning the oil and gas exploration and production industry.

“The Montana Oil and Gas Conservation Act, combined with BOGC’s pervasive rules and regulations, manifest the state’s interest in the efficient and responsible development of oil and gas resources throughout the State of Montana,” according to the county’s motion.

The court document argues that “in Montana, the BOGC has exclusive jurisdiction to regulate oil and gas activities and any attempt to undermine the BOGC’s jurisdiction is preempted by state law.”

The motion details two types of preemption that can occur. “Field preemption” occurs when the state has created such comprehensive state regulation that it can be inferred that the legislature “intended to ‘occupy the field’ and leave no room for supplementary local regulation.”

The second type of preemption, “conflict preemption,” takes place when local regulations do not comply with state law or serve as an obstacle to legislative purposes and objectives.

The County’s attorneys argue the “Plaintiff Petition and associated proposed regulations materially impede the application of state law, namely, the Montana Oil and Gas Conservation Act and the regulations promulgated thereunder. Although counties have general authority to enact zoning ordinances, a local governing body cannot validly enact a zoning ordinance that infringes upon or interferes with state law.”

The motion details specific “proposed regulations” included in a packet submitted to the county by the petitioners in 2015 including the petition and supporting documents.

It is argued that the public hearing and permits included in the “proposed regulations” would duplicate and possibly undermine the different state permitting processes and goals.

According to the county’s attorneys, the state legislature intended for the BOGC to have exclusive jurisdiction of oil and gas activities.

“If the Legislature intended to grant counties and municipalities the power to regulate oil and gas activities, it could have and should have plainly said so,” the motion states.

BEARTOOTH FRONT’S RESPONSE

Ten days after the county’s motion to dismiss, the Beartooth Front Coalition filed a response arguing the motion is premature.

David K. Wilson Jr., the Coalition’s attorney, argues that while the lawsuit is in response to the county’s interpretation of affected real property owners that led to the invalid petition, “in the motion, the Defendants raise a new issue that they never previously raised with the Plaintiffs or the public during the three-year petition gathering process leading up to this lawsuit: that Stillwater County may not, in any event, impose any land use regulations that address impacts from oil and gas development.”

The response details how the “proposed regulations” described in the motion were not literally proposed regulations, but rather were included in advocacy material for the landowners within the proposed district and “can best be described as a wish list of what petitioners would want any rules or regulations to cover.”

The word “proposed” is emphasized in the response.

“The first response to this argument is that it is premature – the ‘event’ that Defendants’ fear – implementation of zoning regulations – has not occurred, nor is it known if it will occur as Defendants predict,” the Coalition’s attorney argues.

The zoning district creation process is detailed. Following a valid petition, a public hearing is to be held and if the zone is approved and a board created, then any regulations would be discussed and implemented if seen fit by the board.

The Beartooth Front’s petition was deemed invalid, so none of the subsequent steps have taken place.

The Coalition’s response also argues that the state has not preempted local oil and gas regulations through the BOGC.

After detailing how there is only one specific area in which the BOGC expressly has preemption over local regulation, the response notes that, “If the legislature had intended to occupy the field of oil and gas regulation at the state level, it would have applied exclusive jurisdiction to all MBOGC powers, rather than selectively applying it to the limited area of class II injection wells.”

Additionally, it points to a BOGC permit that requires all applicants list any local permits or authorizations that apply. If such regulations were not allowed, such a question would not be included on the application.

The response lists zones in Gallatin County that also “include comprehensive regulation of oil and gas development” as well as instances in other states during which local regulations on oil and gas were allowed to exist alongside state regulations.

For the zone to avoid preemption, the response says “Stillwater County would simply have to take care to avoid imposing standards, if or when it establishes regulations, that conflict with class II injection wells or which otherwise frustrate the purpose of any MBOGC standard.”

THE COUNTY’S ATTORNEYS

The attorneys aiding the county with the lawsuit are from the Budd-Falen Law Offices out of Cheyenne, Wyo.

According to the retainer letter agreement, the primary lawyers working on the case are two senior level attorneys, Karen Budd-Falen and Brandon Jensen, as well as one second level attorney, Bethany Gross. Senior level attorneys are to be billed $250 per hour, and second level attorneys are billed $200 per hour.

A travel fee of $175 per hour will be assessed if necessary. If the case were to go to trial or hearing, the county would have to pay $10,000. Any unused retainer or client funds would be refunded at the end of the lawsuit.

Charles Sangmeister and Bill Hand, both members of the Beartooth Front Coalition, voiced concern that the county’s attorney fees were so high. They also highlighted the fact that the county is utilizing an out of state law firm.

Rohde explained that the attorney fees the county is paying are typical – there was only about $60 difference between the different firms the county considered. At this point, she expects the entire lawsuit to cost the county about $10,000 by the time it has been resolved.

Rohde also noted that the county did consider both instate and out of state firms to represent them in the lawsuit. Budd-Falen was chosen based on merits, as well as to avoid any conflicts.

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