The hydraulic fracturing ban approved by the city of Denton on November 4 comes into effect today, but is already being contested by the industry in Denton’s courts. The Texas Oil and Gas Association (TXOGA) filed a lawsuit calling the ban invalid and unenforceable just hours after the ban was approved. Now, Denton’s attorneys have filed a legal brief calling fracing a “public nuisance,” reports the Texas Tribune.
“Those activities have caused conditions that are subversive of public order and constitute an obstruction of public rights of the community as a whole,” said the brief, which was filed Monday. “Such conditions include, but are not limited to, noise, increased heavy truck traffic, liquid spills, vibrations and other offensive results.”
TXOGA is asking Denton County district court to declare the ban invalid, saying it infringes on the state’s right to regulate drilling, and mineral owners’ right to develop their resources. Texas law says that the state intends its mineral resources to be “fully and effectively exploited,” but courts have said the power is not absolute.
Denton Backing the Voters
In its response, Denton said TXOGA did not identify specific state regulations that make the ban unconstitutional. “The suit is premised on the [Railroad Commission of Texas] completely occupying the field of regulation,” said Jim Bradbury, a Fort Worth-based lawyer who focuses on environmental and energy issues. “Denton is rightly seeking to have them identify the actual regulations that supposedly occupy the field.”
The Railroad Commission has jurisdiction over all oil and gas wells in the state, with authority to adopt “all necessary rules for governing and regulating persons and their operations.” Local governments have the right to impose reasonable health and safety restrictions, and the Legislature has granted most Texas cities, including Denton, the power to “regulate exploration and development of mineral interests.”
“While home-rule cities like Denton may certainly regulate some aspects of exploration and drilling, [TXOGA] does not believe that they may enact ordinances that outlaw conduct, like hydraulic fracturing, that has been approved and regulated by state agencies,” Tom Phillips, a former chief justice of the Texas Supreme Court, and one of TXOGA’s legal representatives in the case, said.
While the ban only prohibits fracing, opponents of the measure say it amounts to an outright drilling ban. Banning fracing would make extracting the resources around Denton too costly to be economically viable, according to the Texas Tribune.
TXOGA is not the only group to place a legal suit against Denton since the passing of the frac ban. The Texas General Land Office also filed a lawsuit in Travis County, saying the ban threatens the state’s royalty interests. On Monday, Denton’s attorneys asked to move that suit to Denton County, arguing it’s a “mandatory venue” for a case concerning property interests there.
Three private law firms are helping the city defend the ban. Denton officials say they can tap a $4 million “risk fund” for such matters.
Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.