February 20, 2015
By Angela Neville, Texas Lawyer

A group of Texas lawmakers are working hard to discourage cities from restricting oil and gas drilling or hydraulic fracturing, commonly known as fracking. This legislative initiative comes not long after the city of Denton passed a fracking ban in November 2014.

On Feb. 18, Rep. Phil King, R-Weatherford, referred House Bill 539 to the Texas House Energy Resources Committee, according to the Texas Legislature Online website. The bill relates to the procedural requirements for the adoption of municipal regulation, limitation or prohibition on the production, storage or transportation of oil or natural gas. Originally filed on Dec. 17, 2014, HB 539 was co-sponsored by Rep. Charlie Geren, R-Fort Worth; Rep. Chris Paddie, R-Marshall; Rep. Ryan Guillen, D-Rio Grande City; and Rep. Tracy King, D-Batesville.

Phil King did not immediately return a call seeking comment.

The bill states that municipalities “may not adopt an oil or gas measure unless the municipality complies with the requirements of this chapter.” The requirements include that “a municipality must submit any request for the preparation of a fiscal note and an equalized education funding impact statement for an oil and gas measure required under this chapter in writing and addressed to the director of the Legislative Budget Board,” according to the bill.

The municipality must state “the probable cost to the state that will result from the measure,” including a number of costs spelled out in the bill such as “the loss of tax revenue from all sources,” “the loss of royalty income” and “the loss of revenue from fees, licenses, penalties or other charges.”

In addition, Phil King, Guillen, Tracy King and Anthony “Tony” Dale, R-Cedar Park, sponsored another piece of legislation, HB 540, which was filed on Dec. 17, 2014, and was referred to the State Affairs Committee on Feb. 19. The bill states: “Before ordering an election as required by charter, a municipality shall submit a measure proposed by petition to enact a new ordinance or repeal an existing ordinance to the attorney general.”

Bennett Sandlin, executive director of the Texas Mutual League, said, “Neither bill is the right approach. Texas cities do not want to get into a knife fight with the oil and gas industry. No Texas city has totally banned oil and gas activities.”

There are approximately 1,200 cities in Texas, and about 350 of those cities are home rule municipalities, according to Sandlin. The majority of these home rule cities allow their citizens to launch initiatives.

“In Denton, a group of citizens reacted against one rogue oil and gas operator who claimed he was exempt from the set-back rules that govern the distance of oil and gas operations in relation to personal residences,” Sandlin said.

In November 2014, the Texas Oil & Gas Association (TXOGA), represented by Baker Botts, filed its petition against the city of Denton in a state court in Denton County; and the Texas General Land Office, represented by Kemp Smith, also filed a similar petition in state court in Travis County.

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