A fracking operation in southwestern Pennsylvania
A fracking operation in southwestern Pennsylvania ()

The Texas Legislature has responded to the Denton fracking ban by passing a law that would give the state pre-emptive authority to regulate oil and gas operations while allowing local governments to regulate above-ground activity—within limits.

House Bill 40, by Rep. Drew Darby, R-San Angelo, headed to Gov. Greg Abbott on May 6 after both the House and Senate passed the bill. Abbott hadn’t yet taken action on HB 40 as of presstime.

A voter-approved ordinance in the city of Denton that imposed regulations that effectively banned hydraulic fracturing likely wouldn’t pass muster under HB 40. The city faces two lawsuits over the ordinance.

“Many in the industry felt it was unreasonable,” said oil and gas lawyer Rick Burleson. “It was an illegal taking—you might say an unconstitutional taking of their property rights.”

Burleson guessed that if HB 40 becomes law, the city of Denton could repeal its fracking ban entirely, or amend the ordinance to make it comply with HB 40. The city could also go to trial and ask a court to determine how its ordinance stacks up against HB 40, he said.

The bill is “all about urban drilling,” and might have the greatest impact in cities around the Barnett Shale, Burleson said.

“I think that it’s going to provide more certainty and consistent behavior by operators,” said Burleson, managing partner in Burleson in Houston. “We think it’s a very good bill.”

A local regulation would pass muster if it met the test in HB 40, he noted. But it would take litigation to resolve that question.

The bill allows local regulations that target above-ground activity such as lights, noise and traffic. The regulations must be commercially reasonable, and they cannot prohibit an oil and gas operation or conflict with a state or federal law.

Supporters vs. Opponents

During the legislative process, supporters and opponents of HB 40 disagreed about whether the bill would increase or decrease litigation; how the proposal would balance mineral estate owners’ property rights against the public’s health and safety; and whether it was better for the state or local governments to regulate certain oil and gas activities.

According to a bill analysis by the House Research Organization, supporters said that HB 40 would ensure consistent and fair rules across Texas rather than a “patchwork approach to regulation in different parts of the state.”

HB 40 would create a four-prong test that would reduce litigation because it would be clear whether a state law pre-empted a local law, said supporters. They said the bill would make sure the mineral estate owners did not lose their property rights.

The bill analysis said that opponents claimed that HB 40 was overbroad and would prohibit “even basic ordinances intended to ensure public safety and public health.”

Among other things, they said that the bill would affect local laws requiring operators to: bury pipelines to protect city infrastructure; use thumper trucks—not explosives—to conduct seismic surveys; and employ certain pipeline construction techniques that would prevent damage to roads.

Local residents acutely feel the effects of oil and gas operations, and their local government better understands the impact on the community, said opponents. They claimed that the bill would remove power from the average person and put it into the hands of oil and gas interest groups, according to the analysis.

The bill would favor the oil and gas industry over legitimate public heath concerns, they claimed.