Case Name: ADDISON TOWNSHIP v. GOUT (ON REHEARING)
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1990-09-11
Citations: 435 Mich. 809
Docket Number: Docket No. 83379
Parties: ADDISON TOWNSHIP v GOUT (ON REHEARING)
Judges: Riley, C.J., and Cavanagh, Boyle, Archer, and Griffin, JJ., concurred with Brickley, J.
Reporter: Michigan Reports
Volume: 435
Pages: 809–822

Head Matter:
ADDISON TOWNSHIP v GOUT (ON REHEARING)
Docket No. 83379.
Argued January 9, 1990
(Calendar No. 4).
Decided September 11, 1990.
Addison Township contracted in 1973 with Michigan Consolidated Gas Company to permit the construction of a natural gas processing plant within the township to be used exclusively to process gas produced in the Leonard Field. In 1984, Michigan Consolidated sold its interest to Peter Gout, doing business as Lakeville Gas Associates. After Gout attempted to construct a pipeline to obtain gas for processing from outside the Leonard Field, the township brought an action in the Oakland Circuit Court against Gout, Lakeville Gas Associates, and the Department of Natural Resources, alleging that construction of the pipeline and the plan to process gas from outside the Leonard Gas Field violated its zoning ordinance and a special use permit that had originally been issued to the Michigan Consolidated Gas Company. The court, David F. Breck, J., dismissed the case, finding that jurisdiction relative to wells is vested exclusively in the Supervisor of Wells and that that type of zoning could not be accomplished by contract. The Court of Appeals, Cynar, P.J., and Beasley and K. B. Glaser, JJ., in an opinion per curiam, affirmed, but remanded on other grounds (Docket No. 98299). The Supreme Court, in lieu of granting leave to appeal, reversed the decision of the Court of Appeals. 432 Mich 627 (1989). On rehearing, the decision was vacated. 433 Mich 1201 (1989). The township appeals.
In an opinion by Justice Brickley, joined by Chief Justice Riley and Justices Cavanagh, Boyle, Archer, and Griffin, the Supreme Court held:
The exclusive jurisdiction of the Supervisor of Wells applies only to oil and gas wells and does not extend to all aspects of the production process.
1. The Township Rural Zoning Act, MCL 125.271; MSA 5.2963(1), is an enabling statute giving broad authority to municipalities to regulate land use with one limitation: the Supervisor of Wells has exclusive jurisdiction to regulate and control the drilling, completion, and operation of oil or gas wells. The statute is clear and unambiguous and must be applied as written. Implicit in the preclusion of township zoning relative to wells is that without the language, zoning jurisdiction would extend to such activity and in fact does so in other municipal zoning enabling acts. There is no implication by the Legislature to preempt all local regulation of the oil and gas industry.
References
Am Jur 2d, Gas and Oil §§ 146,149.
See the Index to Annotations under Gas and Oil.
2. The purposes of the separate regulatory acts do not conflict, nor do they suggest that uniformity is necessary to effectuate these distinct legislative goals. The duty of the Supervisor of Wells to prevent waste as set forth in the oil, gas, and minerals act, clearly differentiates between the supervisor’s role at each phase of the production of natural resources.
Justice Levin, concurring in part, agreed that the defendants’ argument, to the extent based on permit requirements for the transportation and processing of oil and gas, should be rejected since the permits were not issued by the Supervisor of Wells, but rather were acquired from the Department of Natural Resources and the Michigan Public Service Commission for a limited purpose. Further, the Director of the dnr, who acts as the Supervisor of Wells, has not sought to exercise authority under the oil, gas, and minerals act. Whether or not processing plants and pipelines fall within the exclusive jurisdiction of the Supervisor of Wells, processing plants and pipelines may, if the supervisor chooses to exercise authority in particular circumstances, be within his nonexclusive but primary jurisdiction under the oil, gas, and minerals act.
There is no need to construe the Township Rural Zoning Act as a limitation on the authority of the Supervisor of Wells under the oil, gas, and minerals act, such construction being unnecessary for decision. Nor is there a need to opine that the Legislature did not intend to vest the Supervisor of Wells, through the oil, gas, and minerals act, with regulatory control over the entire oil and gas industry. Nor does it follow that because there is no limitation in the County Rural Zoning Enabling Act or the city or village zoning act comparable to the limitation in the Township Rural Zoning Act that zoning jurisdiction under the county and city or village zoning acts is not limited by the authority of the Supervisor of Wells under the oil, gas, and minerals act, and that zoning jurisdiction under the county and city or village zoning acts extends to such activity and in fact does so in the other municipal zoning enabling acts.
Reversed and remanded.
171 Mich App 122; 429 NW2d 612 (1988) reversed.
Gas and Oil — Supervisor op Wells — Exclusive Jurisdiction.
The exclusive jurisdiction of the Supervisor of Wells applies only to oil and gas wells and does not extend to all aspects of the production process (MCL 125.271; MSA 5.2963[1]).
Robert L. Bunting and L. Nicholas Treinen for the plaintiff.
DeMarco & Sage, P.C. (by John A. DeMarco), for defendants Gout and Lakeville Gas Associates.
Frank J. Kelley, Attorney General, Louis J. Caruso, Solicitor General, Thomas J. Emery, James E. Riley, and Roland Hwang, Assistant Attorneys General, for defendant Michigan Department of Natural Resources.
Amici Curiae:
Mika, Meyers, Beckett & Jones (by Michael C. Haines and John M. De Vries) for Michigan Oil and Gas Association.
Bauckham, Reed, Sparks, Rolfe & Thomsen, P.C. (by John H. Bauckham and Carol L.J. Hustoles), for Michigan Townships Association.

Opinion:
ON REHEARING
Brickley, J.
Addison Township and Michigan Consolidated Gas Company entered into a contract in 1973 which allowed Michigan Consolidated to construct a natural gas processing plant within the township. The plant was intended to be used exclusively for gas produced from Leonard Field. In 1984, Michigan Consolidated sold its interest in the plant to defendant Gout, doing business as Lakeville Gas Associates.
The township subsequently filed this lawsuit as a result of defendant's attempt to construct a pipeline for the purpose of processing gas from outside Leonard Field. Defendant complied with state and federal regulations, obtaining all the permits necessary to construct the pipeline. The complaint asserts, inter alia, that defendant's actions violated its zoning ordinance and special use permit.
Plaintiff's complaint was dismissed on the grounds that the Supervisor of Wells had exclusive jurisdiction and that this type of zoning could not be accomplished by contract. The Court of Appeals affirmed these findings, but remanded the case on other grounds. 171 Mich App 122; 429 NW2d 612 (1988). Plaintiff appealed in this Court, and, in lieu of granting leave to appeal, we reversed the decision of the Court of Appeals in an opinion per curiam. 432 Mich 627; 443 NW2d 139 (1989). Defendant filed a motion for rehearing, and we subsequently vacated our opinion and granted leave to appeal. 433 Mich 1201; 444 NW2d 528 (1989).
The issue before us is one of statutory construction, specifically, whether or not processing plants and pipelines fall within the exclusive jurisdiction of the Supervisor of Wells pursuant to MCL 125.271; MSA 5.2963d). _
After entertaining oral argument, and given further consideration, we are convinced that the rule set forth in our earlier opinion is the correct result.
The Township Rural Zoning Act (trza) is an enabling statute which gives authority to a municipality to regulate land use. The statute is a broad grant of authority with one limitation: the Supervisor of Wells has exclusive jurisdiction to regulate and control the drilling, completion, and operation of "oil or gas wells." The statute is clear and unambiguous and accordingly must be applied as written. We hold that the exclusive jurisdiction of the Supervisor of Wells applies only to oil and gas wells and does not extend to all aspects of the production process. The legislative intent is clear from the language of the statute, and drawing distinctions on such matters is clearly a legislative and not a judicial function.
We find unconvincing the defendant's arguments that the Legislature intended to vest in the Supervisor of Wells, through the oil, gas and minerals act (ogma), regulatory control over the entire oil and gas industry. First we note that the brief filed on behalf of the Department of Natural Resources concedes that this legislative scheme does not evidence any intent for the Supervisor of Wells to have absolute regulatory power over all phases of the industry. Second, the Legislature specifically referred to the ogma and only "jurisdiction relative to wells" when it enacted the trza. Finally, defendant's argument is unpersuasive because the regulation of wells is only excluded as to townships. There is no limitation in the city or village zoning act. This enabling act is substantially the same as the trza, granting to the individual municipality the authority to regulate land use and structures consistent with the needs of its citizenry regarding energy and other natural resources generally and without limitation. Implicit in the preclusion of township zoning "relative to wells" is that without the language zoning jurisdiction would extend to such activity and in fact does so in the other municipal zoning enabling act.
Defendant relies on the principles enumerated in People v Llewellyn, 401 Mich 314; 257 NW2d 902 (1977), to support its claim of intent by the state to occupy the entire regulatory field.
A municipality is precluded from enacting an ordinance if 1) the ordinance is in direct conflict with the state statutory scheme, or 2) if the state statutory scheme pre-empts the ordinance by occu pying the field of regulation which the municipality seeks to enter, to the exclusion of the ordinance, even where there is no direct conflict between the two schemes of regulation. [Id. at 322.]
Because there is no express intent to preempt local regulation, except as to the zoning of wells, we must determine if the Legislature has by implication preempted all local regulation of the oil and gas industry. We hold that no such intent is evidenced in the legislative scheme. To ascertain legislative intent we look to the purposes of the statutes. The purposes of the separate regulatory acts do not conflict, nor do they suggest that uniformity is necessary to effectuate these distinct legislative goals. The duty of the Supervisor of Wells to prevent waste as set forth in the ogma clearly differentiates between the supervisor's role at each phase of the production of natural resources. We find this action by the Legislature to denote an apparent distinction when the term "wells" was used in the trza.
The defendant's expansive view of the preemptive language in the trza to include all aspects of the production process is also not supported by the claim that uniformity is necessary because of permit requirements before transporting and processing oil and gas. The permits defendant received were not issued by the Supervisor of Wells, but rather were acquired from the dnr and Michigan Public Service Commission pursuant to other regulatory authority. Further, they were issued for only a limited purpose. We find defendant's assertion that merely because it was required to obtain permits that have a limited purpose it should be allowed to bypass municipal regulation lacking in authority and merit. Only in very rare instances will a permit issued for one purpose obviate local zoning laws.
For these reasons and those initially set forth in our opinion, we reverse the ruling of the Court of Appeals. The case is remanded to the Oakland Circuit Court for further proceedings consistent with this opinion. We again instruct the trial court that on remand it "shall reconsider its determination that this case involved impermissible 'contract zoning.' If the circuit court adheres to that determination, it shall provide findings of fact and conclusions of law in support of that determination." 432 Mich 637.
Riley, C.J., and Cavanagh, Boyle, Archer, and Griffin, JJ., concurred with Brickley, J.
The township board of an organized township in this state may provide by zoning ordinance for the regulation of land development and the establishment of districts in the portions of the township outside the limits of cities and villages which regulate the use of land and structures; to meet the needs of the state's citizens for food, fiber, energy, and other natural resources, places of residence, recreation, industry, trade, service, and other uses of land; to insure that use of the land shall be situated in appropriate locations and relationships; to limit the inappropriate overcrowding of land and congestion of population, transportation systems, and other public facilities; to facilitate adequate and efficient provision for transportation systems, sewage disposal, water, energy, education, recreation, and other public service and facility requirements; and to promote public health, safety, and welfare. . A township board shall not regulate or control the drilling, completion, or operation of oil or gas wells, or other wells drilled for oil or gas exploration purposes and shall not have jurisdiction with reference to the issuance of permits for the location, drilling, completion, operation, or abandonment of those wells. The jurisdiction relative to wells shall be vested exclusively in the supervisor of wells of this state, as provided in Act No. 61 of the Public Acts of 1939, being sections 319.1 to 319.27 of the Michigan Compiled Laws. [MCL 125.271; MSA 5.2963(1). Emphasis added.]
MCL 319.1 et seq.; MSA 13.139(1) et seq.
MCL 125.581; MSA 5.2931.
In making the determination that the state has thus preempted the field of regulation which the city seeks to enter in this case, we look to certain guidelines.
First, where the state law expressly provides that the state's authority to regulate in a specified area of the law is to be exclusive, there is no doubt that municipal regulation is preempted.
Second, pre-emption of a field of regulation may be implied upon an examination of legislative history.
Third, the pervasiveness of the state regulatory scheme may support a finding of pre-emption. . . .
Fourth, the nature of the regulated subject matter may demand exclusive state regulation to achieve the uniformity necessary to serve the state's purpose or interest. [Llewellyn, supra at 322-324. Citations omitted.]
The purpose of the trza is to "provide for the establishment in townships of zoning districts within which the proper use of land and natural resources may be encouraged or regulated by ordinance," while the purpose of the ogma is to prevent "unwarranted waste of gas and oil and foster the development of the industry along the most favorable conditions and with a view to the ultimate recovery of the maximum production of these natural products."
We appreciate the burdens the industry may face should a township prohibit land use for a processing facility. However, we cannot invade an exercise of legislative discretion. Further, the Legislature has adopted protective measures which limit a township's authority to totally prohibit land use upon a showing of demonstrated need. See, e.g., MCL 125.227a; MSA 5.2961(27a).