Posted by: Patricia Salkin | January 26, 2012

IL Appeals Court Holds City May Prohibit Through Zoning Drilling of Gas or Oil Wells Within City Limits

Plaintiff TriPower Resources, Inc. (hereinafter “TriPower”) filed a claim against the defendant City of Carlyle in Clinton County, IL (hereinafter “the City”), seeking a declaration of the City’s authority to regulate gas or oil wells within the City’s municipal limits in addition to compensation for an alleged unconstitutional taking of TriPower’s property rights.  The latter was not at issue on the instant appeal.  TriPower had leased mineral interests in a 67-acre parcel of land (hereinafter “the property”) from landowners in Clinton County, IL, and had obtained a permit to drill for oil on the property from the Illinois Department of Natural Resources (hereinafter “the Department”).  Soon after these transactions, the City annexed the property, triggering a zoning ordinance that automatically classified the property as “residential,” effectively placing an immediate prohibition on drilling the property’s oil well.  The lower court held in favor of the City, finding that it was statutorily authorized to prohibit this activity. 

On appeal, the Fifth District of Illinois’ Appellate Court considered the issue of the City’s authority, as a “non-home rule” unit of government, to prohibit TriPower from drilling for oil within City limits.  A “non-home rule” governmental unit is granted authority by statute, and is limited to “those powers specifically conveyed by the constitution or by statute.”  The City’s zoning code neither expressly prohibits the drilling or operation of gas/oil wells, nor includes such activities as “special” or “permitted” uses.  All other uses are “deemed prohibited,” thus, drilling and/or operating a gas or oil well within city limits is “precluded [from the list of permissible uses] by exclusion.”  

TriPower alleged that the City lacked the authority to prohibit the drilling of an oil well within its borders, and attempted to justify this argument using section 13 of the Illinois Oil and Gas Act (hereinafter “the Act”).  Section 13 of the Act authorizes the Department to issue drilling permits, but only upon receipt of official consent of the relevant municipality.  TriPower claimed the City has only the power to regulate (and consequently, lacks the power to prohibit) drilling under this section.  The Court, in analyzing the scope of the City’s statutory authority, examined the consent power of the City and its implications for Section 11-56-1 of the Illinois Municipal Code (hereinafter “the Code”), which states that local municipal governments “may grant permits to mine oil or gas.”  The Court quickly distinguished precedent offered by TriPower to support a restrictive interpretation of the City’s authority over drilling permits, emphasizing the City’s power to consent to such permits, a power expressly delegated to local governments by the text of the Act. 

TriPower then attempted to argue that “consent” only referred to the municipality’s determination of whether conditions or restrictions on the permitted activity had been satisfied, but the Court disposed of this argument, noting that the power to give consent “necessarily entails . . . the power to deny the same.”  The Court explained that the plain meaning of this statutory language allows municipalities to prevent the Department from issuing a permit for activities to occur within municipal limits.  

As a result, the Court affirmed the lower court’s decision in favor of the City, holding that a “non-home rule” governmental unit may prohibit the drilling or operation of gas or oil wells within its municipal limits. [The Court declined to consider TriPower’s entitlement to compensation or whether, the City may prohibit TriPower from drilling under the Department-issued permit, before annexing the property.] 

Tri-Power Resources, Inc. v. City of Carlyle, 2012 WL 34253 (Ill. App. 5 Dist., 01/06/2012) 

The opinion can be accessed at: http://www.state.il.us/court/opinions/appellatecourt/2012/5thdistrict/5110075.pdf


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