WEST BAY EXPLORATION CO V CITY OF FARMINGTON HILLS
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STATE OF MICHIGAN
COURT OF APPEALS
WEST BAY EXPLORATION CO.,
UNPUBLISHED
June 19, 2001
Plaintiff-Appellant,
v
No. 217590
Oakland Circuit Court
LC No. 97-002706-AA
CITY OF FARMINGTON HILLS and
FARMINGTON HILLS CITY COUNCIL,
Defendants-Appellees.
WEST BAY EXPLORATION CO.,
Plaintiff-Appellant,
v
No. 217611
Oakland Circuit Court
LC No. 97-002707-AS
CITY OF FARMINTON HILLS and
FARMINGTON HILLS CITY COUNCIL,
Defendants-Appellees.
Before: Bandstra, C.J., and Griffin and Collins, JJ.
PER CURIAM.
In these consolidated appeals, plaintiff West Bay Exploration Co. appeals by leave
granted an order of the circuit court which denied review, on the ground that the matter was not
ripe for review, of defendant Farmington Hills City Council’s resolution denying plaintiff’s
application for an oil well drilling permit under a city ordinance. We reverse and remand for
further proceedings.
Drilling for gas or oil in defendant city is prohibited without a permit. Defendant has a
natural resources ordinance governing the issuance of such permits. On June 16, 1997, plaintiff
applied for a permit to drill an oil and gas well near highway I-275. However, following local
opposition to proposed drilling expressed at public hearings, defendant city council unanimously
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adopted a resolution on December 15, 1997, denying the application. The principal reason stated
for denying the permit was a public health and safety concern about hydrogen sulfide releases
which were likely to accompany the drilling of a well. The resolution further stated that plaintiff
may “resubmit” its application.
On December 30, 1997, plaintiff filed a claim of appeal with the Oakland Circuit Court,
appealing defendant’s resolution denying its application for a permit. At the same time, plaintiff
also filed a complaint seeking a writ of superintending control, in which plaintiff alleged that it
had followed all local and state requirements and that defendant’s denial of its application was
not supported by evidence and constituted an abuse of discretion. The two actions were
consolidated by order of the trial court and on January 28, 1999, without addressing the merits of
plaintiff’s challenge to the city’s decision, the circuit court issued an opinion and order
dismissing and remanding the case on the basis that the December 15, 1997, resolution was not a
“final” decision of the city council and thus the case was not “ripe” for review. In so holding, the
trial court specifically noted that “The Resolution indicates on page 4 that the application may be
resubmitted with additional information.” The trial court, citing two provisions in the city
ordinance pertaining to issuance of a drilling permit which direct the city to protect the public
health, safety, and welfare, found that the city had reasonable cause to require that additional
information be submitted “to allay those fears.” The circuit court remanded the matter for
“further action.” Plaintiff now appeals.1
On appeal, plaintiff maintains that defendants’ December 15, 1997, resolution denying its
application for an oil and gas well drilling permit was a final decision ripe for judicial review,
and the trial court therefore erred in denying review. We agree.
This Court reviews a determination that a matter is ripe for review de novo, as it is a
question of law. Kinzli v City of Santa Cruz, 818 F2d 1449 (CA 9, 1987), amended on other
grounds, 830 F2d 968 (1987). Cf. Phinney v Perlmutter, 222 Mich App 513, 521; 564 NW2d
532 (1997). Cities have the power to establish the terms and conditions for granting licenses.
MCL 91.2. A city’s decision to grant or deny a permit for an oil or gas drilling license is purely
an administrative decision. City of North Muskegon v Miller, 249 Mich 52, 62-63; 227 NW 743
(1929). Defendant city was authorized to make this judicial, or quasi-judicial, determination by
1
Plaintiff filed both a claim of appeal as well as an application for leave to appeal with this Court
in light of its uncertainty regarding whether the action filed in the circuit court was reviewable by
way of appeal or by way of superintending control. Because the trial court consolidated the cases
and did not address that issue in its decision, plaintiff sought review by this Court through both
available avenues. This Court dismissed plaintiff’s claim of appeal, West Bay Exploration Co v
City of Farmington Hills, unpublished order of the Court of Appeals, issued April 20, 1999
(Docket No. 217610), and then granted plaintiff’s delayed application for leave to appeal. West
Bay Exploration Co v City of Farmington Hills, unpublished order of the Court of Appeals,
issued May 17, 1999 (Docket No. 217590). On January 4, 2001, this Court consolidated the two
cases. West Bay Exploration Co v City of Farmington Hills, unpublished order of the Court of
Appeals, issued January 4, 2001 (Docket Nos. 217590, 217611). We need not currently address
the appropriate appellate pathway because the question is not determinative of the correctness of
the lower court’s decision and thus of the issues before this Court.
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the Farmington Hills Code, Sec 16.5-20. Const 1963, Art VI, § 28 authorizes judicial review of
defendants’ decision, if it is final:
All final decisions, findings, rulings and orders of any administrative
officer or agency existing under the constitution or by law, which are judicial or
quasi-judicial and affect private rights or licenses, shall be subject to direct review
by the courts as provided by law. This review shall include, as a minimum, the
determination whether such final decision, findings, rulings and orders are
authorized by law; and, in cases in which a hearing is required, whether the same
are supported by competent, material and substantial evidence on the whole
record. Findings of fact in workmen’s compensation proceedings shall be
conclusive in the absence of fraud unless otherwise provided by law.
Both parties agree that Electro-Tech, Inc v H F Campbell Co, 433 Mich 57; 445 NW2d
61 (1989), is relevant to the present case. In Electro-Tech, our Supreme Court adopted the ruling
in Williamson Co Regional Planning Comm v Hamilton Bank of Johnson City, 473 US 172; 105
S Ct 3108; 87 L Ed 2d 126 (1985), that in an action under 42 USC 1983 for damages resulting
from an unconstitutional regulatory taking, a decision of an administrative body must be “final”
before it is judicially reviewable. The finality requirement “ ‘is concerned with whether the
initial decisionmaker has arrived at a definitive position on the issue that inflicts an actual,
concrete injury.’” Electro-Tech, supra at 81, quoting Williamson, supra at 192-193 (emphasis in
original). Applying this requirement to the facts before it, in which the plaintiff alleged that the
City of Westland had taken his property without just compensation when it imposed numerous
conditions on his development, the Electro-Tech Court found that the plaintiff’s claim was not
ripe under circumstances because
In light of the circumstances surrounding the “conditional approval” of
Electro-Tech’s site plan, we are persuaded that the plaintiff had not yet completed
the available procedures which might have enabled it to build according to the
plans it had originally submitted for approval.
At the June 11, 1979, city council meeting, the council had imposed, in
addition to the dedication requirement, four conditions for obtaining final siteplan approval and a subsequent building permit. Electro-Tech admits that none of
the four additional conditions were objectionable, and, although it proceeded to
remedy the deficiencies, it failed to submit a final site plan (either to the council
or to the building department) reflecting at least those changes.
The record further indicates that although all of the city departments
participate in the decision-making process, the ultimate decision regarding
building requests lies with the building department. As stated previously, the
building department is responsible for examining the final site and building plans
(as well as the final report from the engineering department) and, if everything is
approved, for ultimately issuing the building permit.
These facts, in our view, support the conclusion that the process for
obtaining the city’s permission to build had not yet been completed. The fact that
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the council’s approval was “conditional” indicates that the entire matter had not
yet been finally resolved and Electro-Tech would have to submit an amended site
plan before it could begin building. As indicated in Williamson, until all five of
the council’s objections, including the four “valid” conditions, are addressed and
finally resolved (either by compliance or by refusal to comply), it is impossible to
accurately determine the extent to which the plaintiff’s land retained any
reasonable beneficial use or the extent to which the plaintiff’s expectation interest
had been destroyed. [Id. at 83-85.]
See also Paragon Properties Co v City of Novi, 452 Mich 568, 576-580; 550 NW2d 772 (1996);2
Lake Angelo Associates v White Lake Twp, 198 Mich App 65, 68-72; 498 NW2d 1 (1993).
Although Electro-Tech and the above-cited cases address the finality requirement in the
unique context of claims raising constitutional challenges, i.e., “taking” cases, we conclude that
the finality requirement, as defined by the Williamson Court, is equally applicable to the present
circumstances where the “final” decision of defendant city council is, by constitutional mandate,
subject to direct review by the courts. 1963 Const, Art VI, § 28. The basic rationale of the
doctrine of ripeness which underlies the Williamson finality requirement, expressed in a similar
but more generalized fashion, is “to prevent the courts, through avoidance of premature
adjudication, from entangling themselves in abstract disagreements over administrative policies,
and also to protect the agencies from judicial interference until an administrative decision has
been formalized and its effects felt in a concrete way by challenging parties.” 2 Am Jur 2d,
Administrative Law, § 485. Thus, in the present case, we review defendants’ resolution to
determine whether it reflects “a definitive position on the issue that inflicts an actual, concrete
injury.” Williamson, supra at 192-193.
The December 15, 1997, resolution denying plaintiff’s application for a drilling permit
states in pertinent part as follows:
2
In Paragon, the plaintiff sought rezoning of property from a single-family residential to mobile
home district and the defendant city council rejected its request. The plaintiff filed suit claiming
that the zoning ordinance as applied to plaintiff’s property effected an unconstitutional taking.
Id. at 572. The Paragon Court examined whether the city council’s denial of the plaintiff’s
request to rezone its property was a final decision appealable to the circuit court. Citing the
Williamson finality requirement, the Paragon Court distinguished the facts before it from
Electro-Tech, supra, because, although the rejection was not conditional, the plaintiff had not
shown that the decision inflicted an actual, concrete injury. The plaintiff may have been eligible
for alternate relief from the provisions of the ordinance because the zoning appeal board had the
administrative authority to grant a variance where the zoning ordinance created a hardship.
Therefore, the rejection of the plaintiff’s rezoning request was not a final decision because it did
not inflict an injury where the plaintiff could also seek a variance from the zoning appeal board.
Id. at 578-583.
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NOW, THEREFORE, BE IT RESOLVED:
1. The application of West Bay for the oil and gas well drilling at the site
in question be denied for the following reasons: [nine grounds for denial cited]
***
2. The application may be resubmitted by West Bay, its successors or
assigns at their pleasure. However, this Council believes, at a minimum, the
following information would be necessary to determine whether the risk to the
public health and safety may be minimized to a point that a permit may be
granted:
a. A thorough comprehensive atmospheric dispersion model
demonstrating the turbulent mixing of gases emerging from an accident or
intentional release of hydrogen sulfide . . .
b. A thorough and comprehensive analysis of the techniques to be
employed for hydrogen sulfide containment . . .
c. A thorough and comprehensive analysis of the safety of the pipeline
proposed to transport the product to Plymouth Township. . . .
3. In conjunction with any renewed application for this site, or any site
within the City which is proposed for oil and gas exploration, this Council would
benefit from the submission of a Hydrocarbon Development Plan. . . . [Emphasis
added.]
This resolution reflects a unanimous decision by defendant city council to deny plaintiff’s
application because the city council did not believe plaintiff supplied sufficient information
addressing concerns related to the release of hydrogen sulfide. Without addressing the merits of
that decision, which would be premature given the procedural posture of the case, we conclude
that the resolution unequivocally denied plaintiff’s application and constituted a “final order”
under any meaningful definition of that phrase. The resolution states at paragraph 1, immediately
following the statement “be it resolved,” that the application is “denied.” The fact that defendant
provided for resubmission of the application with suggestions on other relevant information does
not make the decision any less final; there is no language in paragraph 1 of the resolution that
made denial of the permit conditional, indicated that the matter had been taken under advisement,
or showed that the pending application remained before the city council for further deliberation.
The resolution merely provided guidelines in the event of reapplication. We therefore conclude
that defendant city council arrived at a definitive position on the merits of the pending
application within the meaning of Williamson, supra.
Moreover, defendant does not argue that the decision did not inflict an actual injury and
has suggested no alternate path for plaintiff to use its oil and gas lease. Oil, gas, and leasehold
interests such as those held by plaintiff in the instant case are viable property interests with a
value derived from the ability to produce the oil and gas. Denial of permits to drill for and
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produce oil and gas consequently cause actual and concrete injury to the holder of such interests,
so much so that such denials have been held to be unconstitutional takings of property. See
Miller Bros v Dep’t of Natural Resources, 203 Mich App 674, 680; 513 NW2d 217 (1994). In
the present case, plaintiff thus suffered an actual and concrete injury as a result of the definitive
denial of the permit by the city. Williamson, supra.
In sum, we conclude that the December 15, 1997, resolution denying plaintiff’s
application for a drilling permit constituted a final decision of the city council which was ripe for
review by the circuit court. The circuit court therefore erred in denying review under the
circumstances.
Reversed and remanded to the circuit court for proceedings consistent with this opinion.
We do not retain jurisdiction.
/s/ Richard A. Bandstra
/s/ Richard Allen Griffin
/s/ Jeffrey G. Collins
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