New Mexico Federal Court Addresses Preemption and Constitutionality of Local Fracking Ban

One critical topic that continues to arise in the fracking arena is the hotly discussed issue of preemption and attempts to regulate or outright ban fracking at the local level.  In fact, in just the last few months, this charged issue has come up in New York and Colorado and as expected, there were more preemption suits to come.  Next up: New Mexico, where the fight over local regulation of fracking continued, but this time, at the federal level.  Indeed, most recently, a federal court in New Mexico struck down a local fracking ordinance in SWEPI, LP v. Mora County, New Mexico et al., on the basis of not only preemption, but also on constitutional grounds.

In April 2013, Mora County voted to adopt the “Mora County Water Rights and Local Self-Government Ordinance,” which effectively banned corporations from engaging in fracking activities in the county.  SWEPI, LP filed suit against the County, alleging various state and federal claims including violations of the Supremacy Clause, Due Process, Equal Protection, First Amendment, and preemption.  Notably, SWEPI argued that the ordinance “contravene[d] over two hundred years of Supreme Court precedent squarely establishing that corporations have protected constitutional rights.” Id. at 15.

After addressing preliminary issues such as standing and ripeness, the Court found that the ban violated the Supremacy Clause by conflicting with federal law and violated First Amendment rights by chilling protected activities since the law entirely stripped corporations of their First Amendment rights if they violated or sought to violate the ordinance.  The Court found, however, that the ordinance did not violate Due Process or Equal Protection rights since there was a rational, legitimate county interest for enacting the ordinance.  Further, the Court found that the County lacked the authority to enforce zoning laws on New Mexico state lands and therefore, could not enforce the ordinance.  Lastly, although the Court found that state law did not preempt the entire field of oil and gas production since there is concurrent jurisdiction between state and local laws, the Court did find that the ordinance conflicted with New Mexico state law by banning fracking activities that New Mexico state law permits.  The Court explained that the fact that state law heavily regulated oil and gas production was proof that state law permitted such activities.  Consequently, the Court found that a complete ban on fracking would be “antagonistic” to state law.  Finally, since the invalid provisions of the ordinance could not be severed from the remaining law, the Court found that the entire ordinance was invalid.

Although this decision may have limited impact beyond New Mexico given the broad and far-reaching scope of the ordinance and the Court’s reliance on state law, it is a strong message to local governments that they may face significant challenges if they try to enact similarly expansive fracking bans.