PPROA Pipeline

PIPELINE the newsletter of Panhandle Producers & Royalty Owners Association • Vol. XCI • No. 6 Q & A on House Bill 40 - Darby/Fraser What does the Texas Constitution say about natural resources and local regulations?   The Texas Constitution says that preserving and developing natural resources is a public right and duty. The Texas Supreme Court has determined clear legislative intent to protect and encourage the development of Texas natural resources. Also, the Texas Constitution says that a city’s ordinances can’t be inconsistent with the state constitution or the general laws enacted by the state legislature. Historically, what has been the state’s role in regulating oil and natural gas industry?  For more than 100 years, the Legislature - and its delegated agencies of the Railroad Commission and the Texas Commission on Environmental Quality - have enacted and imposed stringent state oil and gas and environmental regulations that simultaneously (1) allow development of the state’s natural resources (2) protect the environment and (3) allow for the oil and gas industry to grow jobs and anchor the Texas economy. What role have cities played with regard to oil and natural gas regulation?  The role of cities has also been important, as they have sought the orderly development of their jurisdictions by regulating surface activity related to oil and gas operations, such as reasonable setbacks and limitations on traffic, light or noise. Cities maintain this authority under HB 40. Why does Texas need House Bill 40?      Recently, municipal regulations have begun to erode state’s preeminent role in regulation oil and gas development. Outright bans on completion techniques, onerous setbacks designed to prohibit drilling, and duplicative regulation have created a patchwork of inconsistent regulation that undermines safe and efficient production of oil and natural gas. Many say that these types of ordinances will ultimately, after many years in court, be found either unconstitutional or subject to substantial taking claims, but the Legislature cannot wait or ignore the direction of the Constitution. The regulatory authority for the cities and the state need to be reaffirmed by the legislature to resolve any ambiguity in what cities can do to regulate oil and gas activity without harming the priorities of the state or the taking of private property. In the absence of HB 40, a patchwork of oil and gas regulation is likely, an outcome that would not serve the public interest and further hamstring the mainstay of the Texas economy. What exactly does House Bill 40 do?   HB 40 affirms that regulation of oil and gas operations like fracking and production is under the exclusive jurisdiction of the state. HB 40 establishes municipalities and political subdivisions may continue to exercise their authority over aboveground activity related to oil and gas operations, provided that it is commercially reasonable and does not effectively prohibit an oil and gas operation. HB40 cont’d on p.4 Q&A on HB 40 ............................................ 1 From the Wellhead ..................................... 2 From the EVP ............................................. 3 Markets ....................................................... 4 Legislative wrap-up ..................................... 6 Casenote..................................................... 8 86th Convention ........................................ 10 Cowgirls & cocktails .................................. 11 Guest column - No news is good news .... 12 Locations .................................................. 14 Permits ..................................................... 15 Monthly stats ............................................ 16