On January 20, 2015 a U.S. District Judge overturned New Mexico’s ban on hydrocarbon extraction, which included a prohibition on hydraulic fracturing (“fracking”) in the state.  (SWEPI, LP v. Mora County et al., Case No. 1:14-cv-00035-JB-SCY, filed Jan. 19, 2015.) Mora County, a political subdivision of the State of New Mexico, enacted the ban through a local ordinance in April 2013.  It was the first such prohibition in the country.

Federal District Court Judge James O. Browning based his decision on federal preemption:  “Historically, a county cannot enact or supersede federal law. The Ordinance thus goes beyond Mora County’s historical lawmaking just to deprive corporations of their rights.”  (Id. at p. 157.)  The Mora County ban clashed with both state and federal law regulating the drilling of oil and gas.  Under the Constitution’s Supremacy Clause, any local or state law that conflicts with federal law is invalid.

Although there are no oil and gas wells in Mora County, this decision has implications that reach outside the county and the state of New Mexico.  Other cities, counties, and states should take heed of this decision when considering bans on drilling activities, such as fracking.  For example, in California, the Western States Petroleum Association (“WSPA”) sued the City of Compton in July 2014 after Compton enacted a city ordinance banning fracking.  WSPA challenged the ban on similar grounds to the SWEPI case, citing federal preemption, among other claims.  (Western States Petroleum Association v. City of Compton, et al., Case No. BC552272, Cal. Super. Ct., filed July 21, 2014, dismissed Nov. 18, 2014.)  On September 23, 2014, while the lawsuit was still ongoing, Compton withdrew the fracking ban.

The SWEPI decision is not conclusive on the issue of local fracking prohibitions, however.  It leaves room for less restrictive local regulation of oil and gas, and does not specify how restrictive the regulations may be.

By Mike Mills (michael.mills@stoel.com) and Shannon Morrissey.  Ms. Morrissey is a Law Clerk with Stoel Rives LLP and is not currently licensed to practice law in California.