Legislation that would prevent Texas municipalities from enacting ordinances that interfere with oil/natural gas drilling activities is on its way to the state Senate after passing out of committee Thursday.

HB 40, which was passed by the House earlier this month (see Shale Daily, April 17), was approved by the Senate Natural Resources & Economic Development Committee without amendments. The bill affirms that the state -- through the Railroad Commission of Texas (RRC) -- has exclusive jurisdiction over oil and natural gas development. The bill does provide some provisions for municipalities to regulate above-ground drilling-related activities.

Late last month the Texas House Energy Resources Committee adopted an HB 40 substitute in a 10-1 vote. The substitute came out of talks with the Texas Municipal League (TML) and the Texas Oil & Gas Association (TXOGA). To get the support of both organizations, sponsor Rep. Drew Darby (R-San Angelo) pledged to keep amendments off HB 40 unless they were agreed to by both TML and TXOGA.

The bill is a response to a ban on hydraulic fracturing that was enacted by Barnett Shale town Denton, TX, last year (see Shale Daily, Nov. 5, 2014). As currently written, HB 40 would nullify Denton's ban on fracking.

The discussion during the Senate committee hearing was significantly shorter than the debate on the measure in House committee. While advocates of local control generally have said they prefer the substitute version of the bill to the original, they still oppose the measure.

James Mann, representing the Texas Pipeline Association and the Gas Processors Association, sought clarification from lawmakers that HB 40 does not cover pipelines, which he got.

Greg Mathews, representing Chevron USA Inc. and Chevron Pipeline Co., told lawmakers the companies support the bill as written. “We support it and we oppose any amendments to it,” he said.

Buddy Green, a resident of Spring, TX, which is north of Houston, said it was not sufficient to rely only on the RRC to regulate drilling activities. “I’m just a lowly property owner,” he said. “I’m here to tell you first hand that I have been affected by oil and gas operations...To rely solely on the state’s regulatory commission in this area is a big concern.”

Denton Mayor Chris Watts said, “This bill is a vast improvement from the original one, but we still have some concerns.” And Denton City Attorney Anita Burgess told lawmakers that the city would work with whatever legislation is ultimately adopted. However, she said she expects mineral development and surface development to experience conflicts in the future, and these likely will need to be addressed by the legislature.

Environmental groups with representatives testifying against the bill were Texas Campaign for the Environment, the Lone Star Chapter of the Sierra Club and Environment Texas. A few private citizens also testified against the bill, including Cathy McMullen, a leader of the Denton anti-fracking movement (see Shale Daily, April 10, 2014), who said the bill is “extremely flawed” and in need of several amendments.

The Texas Independent Producers and Royalty Owners Association (TIPRO) supports the bill.

"A growing patchwork effect of local ordinances creating inconsistent regulations across the state is the wrong path forward for Texas," said TIPRO President Ed Longanecker. "If left unchecked, this could have a chilling effect on investment, tax revenue, employment, and lead to additional legal challenges over private mineral rights, the dominant estate in Texas.

"If passed by the legislature, HB 40 will help to address a growing challenge from a regulatory standpoint in our state, particularly related to anti-oil and gas organizations spreading misinformation and fear about the industry in an attempt to influence local drilling ordinances."