On Monday, May 18, 2015, Texas Governor Gregg Abbott signed House Bill 40 into law, prohibiting cities, towns, and local municipalities in Texas from enacting bans on fracing. The new law provides that "oil and gas operations [are] subject to the exclusive jurisdiction of [the] state" and preempts the authority of other political subdivisions to regulate oil and gas operations, except that a local municipality may enact, amend, or enforce ordinances and other measures that (i) regulate only activities related to oil and gas operations that occur aboveground, (ii) are commercially reasonable, (iii) do not effectively prohibit oil and gas operations conducted by reasonably prudent operators, and (iv) are not otherwise preempted by state or federal law. The bill passed by a large margin in the Texas House of Representatives in mid-April and was passed by the Texas Senate earlier in May by a margin of 24 in favor and only 7 against.
While House Bill 40 was introduced in March of this year in part as a response to the ban on hydraulic fracturing supported by 59 percent of the voters in Denton, Texas, last November, the new law also preempts local municipalities from enacting other regulations on oil and gas activities, including wastewater disposal wells. The new law does not overturn Denton's fracing ban, but it does severely limit the ability of the city of Denton to enforce its hydraulic fracturing ban.
Some state legislators, including Senator Troy Fraser, supported House Bill 40 because it helps protect an important industry in Texas's economy. Senator Fraser noted that "oil is a huge job driver for the state of Texas." Other supporters, including Governor Abbott, believe the new law protects private property rights, limits onerous regulations, and creates consistent regulations across the state, rather than patchwork regulations that vary across municipalities and regions.
Opponents of the new law argue that the local municipalities should be free to act to protect their citizens when state regulations are insufficient, and with this new law, they are no longer able to do that with respect to hydraulic fracturing and other underground oil and gas operations.
The role of cities and local municipalities in regulating fracing and other oil and gas activities is up for debate in other states across the country, including Ohio, Colorado, and Pennsylvania.
For more information on House Bill 40, please click here, here, here, and here. For more coverage on the Denton ban on fracing, please click here.
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