On May 19, 2015, Gov. Greg Abbott signed into law a compromise bill addressing how state and local governments will share regulatory powers over urban drilling in Texas. The new legislation is the result of a statewide controversy created by the fracking ban enacted by the City of Denton last fall that put local and state government regulatory powers in conflict with respect to oil and gas operations. The new law states that oil and gas operations in Texas are “subject to the exclusive jurisdiction of the state” and the authority of a municipality or other political organization in the state is “expressly preempted.” Under the new law, local governments may not enact or enforce a measure that “bans, limits, or otherwise regulates” oil and gas operations.
However, municipalities are authorized to regulate “aboveground activity” related to oil and gas operations if “commercially reasonable.” Under the new law, local rules applying to oil and gas operations must pass a four-part test. Local rules (1) cannot apply to subsurface activity; (2) must be “commercially reasonable”; (3) must not effectively prohibit such operations; and (4) must not be pre-empted by another state or federal regulation. An ordinance would be considered commercially reasonable if in effect for five years with oil and gas operations continuing during that period. Municipal regulations addressing fire and emergency response, traffic, lights, noise, notice, or reasonable setback requirements are specifically authorized.
More than two-thirds of both houses approved the new law, which took effect immediately, but others are concerned about possible regulatory voids. The Environmental Defense Fund estimates approximately 80 areas where local rules govern oil and gas operations that no state agency addresses. County and groundwater conservation districts have voiced concern that the new law abrogates their authority, since local rule-making authority now appears limited to cities.
Read the whole story in Urban Drilling in Texas: New Law and New Rules.