On January 30, 2013, the Ohio Supreme Court ruled that the Ohio Oil and Gas Commission "patently and unambiguously lacks" the statutory jurisdiction to hear an appeal from the issuance of a drilling permit by the Chief of the Ohio Division of Oil and Gas Resources Management.  Chesapeake Exploration, L.L.C. v. Oil & Gas Comm., Slip Opinion No. 2013-Ohio-224.

In 2004, Summitcrest Inc., entered into an oil and gas lease with Mason Dixon, who assigned the lease to Burlington Resources.  Chesapeake subsequently obtained a partial interest in the lease and, in March of 2012, successfully obtained a permit under R.C. § 1509.06 issued by the Chief of the Division to drill an oil and gas well.  Summitcrest appealed the Chief's issuance of the permit to the Commission.  The Chief, joined by Chesapeake, filed a motion to dismiss the appeal on the grounds that the issuance of permits to drill oil and gas wells "do not constitute an order that was appealable to the commission."

The Commission consists of a five member panel appointed by the Governor, and pursuant to R.C. § 1509.36, "[a]ny person affected" by an order of the Chief of the Division may appeal to the Commission for an order vacating or modifying the order.  However, R.C. § 1509.06(F) narrows the definition of "order," providing that the "issuance of a permit shall not be considered an order of the chief," and, as ultimately held by the Court, is not appealable to the Commission for lack of jurisdiction.  

On July 10, 2012, the Commission denied the motion to dismiss relying on the former R.C. § 1509.03(B) on the grounds that the "regulatory provisions directly addressing the jurisdiction of the Oil & Gas Commission did not specifically preclude an appeal of the Chief's issuance of a drilling permit to the Oil & Gas Commission."  Chesapeake responded by filing its July 19, 2012 action with the Supreme Court of Ohio seeking a writ of prohibition to vacate any action taken by the Commission as to the appeal. 

By a 5-2 majority, the Court held that while R.C. § 1509.36 "generally confers" jurisdiction to the Commission over appeals from orders of the Chief of the Division, R.C. § 1509.06(F) "manifestly divests the commission of appellate jurisdiction over the chief's decision to issue permits for oil and gas wells."  Accordingly, because the issuance of a permit for an oil and gas well does not constitute an appealable order of the Chief under R.C. § 1509.06(F), the Commission lacks jurisdiction under R.C. § 1509.36 to hear appeals as to the permitting decisions of the Chief.

To read the full text of the Slip Opinion, click here.