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Texas Local Control Bills Rankle Muni League

Bills recently introduced in the Texas legislature intended to thwart local municipality interference with oil and gas drilling have raised the ire of the Texas Municipal League (TML), but an industry trade association said the proposed changes would strengthen the relationship between the state and cities in oil/gas regulation.

HB 40 and HB 2855 were introduced by state Rep. Drew Darby (R-San Angelo) in response to municipal governments' efforts to prevent drilling within their boundaries. A bill similar to HB 40 (SB 1165) was introduced in the Senate by Sen. Troy Fraser (R-Horseshoe Bay).

HB 40 and its Senate companion would expressly preempt municipality/subdivision regulation of oil and gas operations except for enforcement of ordinances or other measures regulating surface activity "that is incident to an oil and gas operation..." HB 2855 would give the Railroad Commission of Texas (RRC) "exclusive jurisdiction" to determine whether a local ordinance prohibits or has the effect of prohibiting oil/gas operations under RRC jurisdiction.

Last year, voters in Denton, TX, chose overwhelmingly to ban hydraulic fracturing (fracking) in their town (see Shale Daily, Dec. 5, 2014). Similar efforts are under way elsewhere in the state. Darby's legislation to amend the state's Natural Resources Code is just the latest legislative effort to stop the anti-drilling/fracking trend (see Shale Daily, Dec. 18, 2014).

In some other states, the oil and gas law explicitly states that it is the last word on regulation of such matters and preempts measures enacted by local jurisdictions, University of Texas at Austin law professor David Spence told NGI's Shale Daily. "You don't really see anything like that in the Texas oil and gas law," he said. "You don't see that kind of strong, explicitly preemptive language in the law in the way it's drafted now, which is probably why, given the Denton ban, you're starting to see bills in the legislature to make it clear that the state oil and gas law preempts local bans."

TML blasted the bills, saying they would exempt the oil and gas industry from most local rules that protect health, safety and property rights.

"We always feared the industry would not be satisfied with legislation that just prohibits fracking bans like the one in Denton," said said TML Executive Director Bennett Sandlin. "And now it's clear they have gotten greedy and see an opportunity to pursue a scorched earth strategy to wipe out everything in their path."

Many Texas cities have adopted setback requirements to create a buffer zone between drilling rigs and homes, schools, parks and hospitals. Sandlin said TML surveyed city ordinances in the Barnett Shale area in North Texas last year and found that 67 cities require buffer zones ranging from 300 feet to 1,500 feet between a well and residences. "If city setback ordinances are nullified, homeowners can be robbed of their property values overnight without any compensation or recourse," Sandlin said. "It amounts to a government-sanctioned taking of their property rights."

The Texas Oil & Gas Association (TXOGA) responded right away to the TML criticism, calling it "patently false."

"...[T]he legislation specifically asserts that cities can enact commercially-reasonable ordinances related to surface activity that is incident to oil and gas operations," TXOGA said. "Examples would include noise, traffic, lights and siting provisions. HB 40 and SB 1165 also affirm the state's role to regulate oil and gas activities like drilling, fracking and production with comprehensive regulations that are protecting Texans and the environment."

TXOGA said the "...legislation strikes the right balance by recognizing the right of cities to enforce reasonable restrictions on surface activities during oil and gas operations, and the responsibilities and expertise of state agencies for oil and gas regulation."

Sandlin said, however, that adoption of the legislation would turn back the clock in a number of Texas municipalities that have adopted ordinances intended to corral drilling activities.

"The proposed bills not only retroactively reverse the results of a city election and interfere with pending litigation in the city of Denton, but they also preempt local ordinances in numerous cities across the state like those in the cities of Fort Worth, Arlington, Grand Prairie and College Station," he said.

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