Texas lawmaker seeks to protect urban drilling

AUSTIN – Across the state, drilling rigs are falling idle as plummeting crude prices knock a swaggering industry into uncertainty.

But at the Capitol, lawmakers are pressing a showdown on a signature issue of petroleum’s hydraulic fracturing era: Home rule. Disturbed by noise, pollution and even earthquakes, can cities say no to oil and gas companies?

If Rep. Phil King has his way, refusal will become much more difficult. Under a pair of bills he filed this week, cities seeking to ban fracking would need to gain approval from the state attorney general, pay the state to study the financial impact and reimburse the state for any lost tax revenue.

Retrenchment in the oil business “makes it more important,” said King, a Republican who lives west of Fort Worth and sits on the House Energy Resources Committee. “If it’s getting more difficult to hit that break-even point on an oil and gas well, you certainly don’t want other impediments. And fracking bans are a significant impediment.”

For Texans, hydraulic fracturing has produced a boom of half a decade, lifting the economy above the long aftermath of a national recession. Investors, job seekers and owners of mineral rights have all reaped rewards.

As the environmental and aesthetic costs have intruded on urban areas, residents have campaigned with some success to place local limits on fracking, which uses injections of water, sand and chemicals to dislodge hydrocarbons from the earth. Across the country, cities and even entire states have banned the process. New York, which has significant natural gas reserves upstate, took that step this week.

In Texas, several cities around the Dallas-Fort Worth Metroplex have established “setbacks” to keep rigs away from homes, schools and churches. Petitions for similar ordinances have circulated in College Station and the West Texas town of Alpine. Presidio, on the border near Big Bend Ranch State Park, plans to discuss a fracking ordinance tonight at a meeting of the City Council.

But no place in the state has taken a bolder stance than Denton, a North Texas college town that enacted a complete ban on fracking through a voter referendum in November. Within a day, the city faced lawsuits from the state’s main oil and gas trade association and from the state itself, through its General Land Office, which manages state properties including mineral rights. National environmental groups, including the Natural Resources Defense Council, have offered support to the city, which has $4 million set aside in a fund for legal defense.

Private owners of mineral rights in Denton have threatened to sue on the same grounds cited by the state land office: They say the ban illegally confiscates their right to develop their subterranean minerals. In interviews and campaign materials before the election, they warned that the litigation could bankrupt the city. So far, Denton has not received notice of any such lawsuits, said a city spokeswoman, Lindsey Baker.

But the other issue at stake in the battle of Denton, the one central to the trade association lawsuit, may actually carry greater significance for the state. Under the legal concept of home rule, cities have broad powers to protect their residents’ health, safety, welfare and morals. Under state law, though, much of the power to regulate the oil and gas industry falls to the Texas Railroad Commission.

The commission, overseen by three elected officials who derive much of their campaign financing from the oil industry, has traditionally worked to clear a path for companies seeking to develop the state’s petroleum resources. Last week, Railroad Commission Chairman Christi Craddick, who has emphasized the commission’s right to issue drilling permits statewide, directed the staff to “explore the potential need for an emphasis on inspections in highly populated, urban areas throughout Texas.”

“We have heard the concerns expressed by those living in urban areas where drilling is occurring,” she said in a statement. “As the industry evolves, the Commission will continue to provide all Texans the oversight necessary to maintain a safe, clean environment in which to live and raise their families.”

For residents of cities unsatisfied with the commission’s efforts, the bills circulating here this week would significantly narrow the options for placing limits on drilling. As written, one of the bills would apply to any ordinance adopted by voter referendum. The state attorney general would first have to rule that the proposed ordinance does not conflict with state law.

The other bill, the one requiring a financial analysis and reimbursement of state tax revenue, would apply to any measure “to regulate, limit or prohibit the production, storage or transportation of oil or gas.”

“These are clear policy issues,” Rep. King said. “The Legislature just needs to deal with it before we have cities across the state fighting with friends.”