Alex Mills
By Alex Mills
The 84th session of the Texas Legislature is history. All of the 150 members of the House and 31 members of the Senate have gone home. But before they departed, they enacted one piece of legislation that will go down in history: HB 40, which clarifies that the state of Texas is primarily responsible for regulating the oil and gas industry. It passed the House with 86 percent (125-20) voting for the bill and it sailed through the Senate with a 77 percent (24-7) favorable vote.
HB 40 became known as the “Denton fracing bill,” because the city of Denton voted to ban hydraulic fracturing (HF) in 2014. It made news throughout the nation. The news media took interest in the fact that this medium size (124,000 population) city in the heart of the prolific natural gas field of the Barnett Shale would vote to in effect ban any future drilling within the city.
A lot was made of the fact that Denton was home to two large universities – the University of North Texas with some 34,000 students and Texas Woman’s University with about 15,000 students – and the large turnout from the student bodies and the low turnout from the year-round residents led to the 14,932 votes (59 percent) for the ban.
Denton is a perfect example of why cities should not be involved in the regulation of the oil and gas industry. Denton has made several bad decisions that came into play.
For example, Denton’s city council originally gave permitting authority for oil and gas drilling to the fire department. The fire department would grant drilling permits that had no expiration dates, which made the permits good forever.
The fire department knows very little about oil and gas regulatory practices. They know a lot about fighting fires. On the other hand, the Texas Railroad Commission has been regulating oil and gas for more than 100 years. It has more than 700 professionals who are experienced in regulating oil and gas.
At the same time, the fire department was issuing permits, Denton’s planning commission granted permits to build homes and other structures inside the traditional 300-feet setback provision. Some homes were built closer than 200 feet from pads that had been already permitted but not yet drilled.
When those wells were drilled, homeowners got mad because of the noise, dust, lights and truck traffic around the clock.
The city council, being good politicians, took the wrath of the city out upon the oil and gas companies. It passed stricter ordinances that included increased penalties and fines and even a moratorium on issuing permits.
Environmental activist groups smelled blood in the water and seized the opportunity to obtain enough signatures to get the ban of HF on the ballot in November.
The rest, as they say, is history.
State lawmakers quickly saw that they could not allow every city in Texas develop their own oil and gas regulations for drilling and production. The complexity of trying to stay in compliance with hundreds of different regulations would be a deterrent to future development.
In the end, the debate was not about banning HF, but it was about which government entity (cities or the state) would be the most effective regulator of oil and gas.
Alex Mills is President of the Texas Alliance of Energy Producers. The opinions expressed are solely of the author.
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