On Tuesday, March 11, 2015, the Texas Legislature’s 84th Session gained another bill directed at combating future local and municipal fracking bans. State Rep. Drew Darby (R-San Angelo), Chairman of the Texas House Energy Resources Committee, filed House Bill 40 (HB40), which seeks to amend Chapter 81 of the Texas Natural Resources Code and expressly preempts the authority of “a municipality or other political subdivision” to regulate an “oil and gas operation” and gives exclusive jurisdiction to regulate an “oil and gas operation” to the state of Texas, specifically the Railroad Commission.
Under the terms of HB40, a municipality or other political subdivision would not be able to “enforce an ordinance or other measure, or an amendment or revision of an existing ordinance or other measure, that bans, limits, or otherwise regulates an oil and gas operation within its boundaries or extraterritorial jurisdiction.” HB40 defines an “oil and gas operation” as “an activity associated with the exploration, development, production, processing, and transportation of oil and gas, including drilling, hydraulic fracture stimulation, completion, maintenance, reworking, recompletion, disposal, plugging and abandonment, secondary and tertiary recovery techniques, and remediation activities.”
The bill does dictate that municipalities and political subdivisions retain authority to “enact, amend, or enforce an ordinance or other measure that regulates only surface activity that is incident to an oil and gas operation, is commercially reasonable, does not effectively prohibit an oil and gas operation, and is not otherwise preempted by state or federal law.” The bill defines “commercially reasonable” as “a condition that permits a reasonably prudent operator to fully, effectively, and economically exploit, develop, produce, process, and transport oil and gas.”
Rep. Darby’s office has stated, though, that the bill is not retroactive and would not overturn the ban on hydraulic fracturing adopted by Denton last November. The issue of state preemption in the area of oil and gas regulation is the crux of the lawsuits filed against the city of Denton by the Texas General Land Office and Texas Oil and Gas Association last year in Travis County and Denton County, respectively. Although HB40 would not directly resolve those matters, its adoption would be the strongest signal yet from the Texas Legislature on the issue of local versus statewide regulation of the oil and gas industry.
In follow-up to the January 22, 2015, post regarding HB539 and HB540, both of which also address local/municipal hydraulic fracturing bans, HB539 has been referred to the House Energy Resources Committee, and HB540 has been referred to the House State Affairs Committee and is currently being scheduled for public hearings.
BakerHostetler will continue to monitor the progress of these three bills during the remainder of the Texas Legislature’s 84th Session.