TX Cities About to Lose Right to Ban Hydrofracturing

Per the Dallas Morning News (amongst other myriad news outlets), it appears that a measure to ban hydrofracturing bans is only a matter of time and ceremony, as Texas Governor Greg Abbott is expected to sign off on the bill that has been paraded through the State Capitol and easily passed both legislative houses. The subject has been one of much contention and has come to a head in recent months, as Denton, Texas residents had voted to authorize a hydrofracturing/”fracking” ban within municipal limits. The article points out that this legislation would also put a kibosh on ordinances addressing underground activity, such as wastewater disposal wells.

Without getting too political, it is certainly interesting to watch a state whose citizenry and politicians largely oppose the federal style of government and would profess states’ rights (or a small-c confederacy) bend over backward to bend their true political beliefs to accommodate the oil industry, but that is for political scientists and pundits to dissect and debate. The move has been made to protect the oil and gas industry in the state, clearly; but, it also preserves the exploration and mineral rights of those interest owners who believe that they have the right to harvest those resources.

It is no surprise, then, that the standard upon which potential and enacted municipal ordinances will be measured under this forthcoming law is not only one of reasonability, but “commercial reasonab[ility’.” This gives courts immense discretion in determining whether or not a town’s ordinance impinges on oil and gas industry activities. One would imagine that barring a devastatingly damning congruence of facts, that Texas courts will be hesitant to impose great burdens onto the industry.

Tangentially, it is interesting that a more liberal and federal-leaning state such as New York has used the process of cramming a ban on high-volume hydrofracturing down the throats of all state citizens, yet Texas, which is arguably diametric on many political issues, is about to use the same process to cram its own version of a ban, which itself bans any fracking bans. The juxtaposition is certainly interesting.

Expect much litigation in this space, with courts being highly reluctant to bring the hammer against the industry at large. I dare say that any decisions against the oil and gas companies and/or operators will be disclaimed as to that particular entity too, unless either 1) the transgression is severe enough to warrant industry-wide change, or 2) altering the action or behavior that caused the transgression would not be financially or logistically onerous.

In Banning Hydrofracturing Outright, New York Misses an Opportunity.

This is an opinion piece I published on LinkedIn on December 17, 2014, and I think it’ll be a good first post:

Earlier today, New York Governor Andrew Cuomo announced – as many in the industry suspected – that New York would be banning hydrofracturing activities, or “fracking,” going forward. An indefinite moratorium on such activities had already been in place pending a study about potential health effects of this oil and gas extraction process, but the results suggested that unknown potentially deleterious health effects should outweigh any fracking in any capacity whatsoever throughout the entirety of the state.

I accept that we are likely not fully aware of possible consequences of hydrofracturing, and that a certain degree of caution should be exercised; however, a fear of the unknown should not permanently and absolutely stifle all oil and gas activities throughout New York. To illustrate, most of us have been using cell phones for the past decade or so – in recent years, studies have been published that demonstrate that waves emitted by the devices most of us keep on our person or hold up to our head have the potential to cause cell mutation and may increase a person’s risk for cancer. Given this information, I am not aware of any family, friends or network connections whom have decided to stop using phones.

I have herein attached a scholarly article from 2013 discussing the juxtaposition on how oil and gas activity in Pennsylvania – and the lack thereof in New York in light of Cuomo’s ban/moratorium – has provided significant economic benefit for the former, and could have done so for the latter. For a state that seems to be hemorrhaging jobs yearly, it seems a bit presumptuous to just ban everything outright without considering methodologies for safe implementation.

I anticipate that there will now be suits filed in NY courts rooted in the 5th Amendment’s Takings Clause, arguing a sort of inverse taking, by preventing a citizen from selling resources located on his or her property. This may ultimately result in people being paid significant money by the state to not extract the resources, resulting in state taxpayer funds being funneled into resource owner bank accounts, and not money from the companies that would be creating jobs. 

So, in one corner we have a job-creating resource extraction regime that, while not a perfect process, can be done in certain areas and ways that would mitigate most, if not all, potential side-effects. And in the other corner we have a total ban, resulting in no job growth, and the potential for the state to pay citizens money for the value of resources on their land which will NOT be extracted. The choice to me seems clear. I believe enactment of a limited oil and gas program in the state – alongside continued monitoring and studying – would be a great compromise that would allow economic benefit for citizens and small businesses, as well as ensuring that resource extraction is done safely and responsibly.