Energy industry, Texas sue Denton over fracking ban | Barnett Shale | Dallas Business, T…

Energy industry, Texas sue Denton over fracking ban | Barnett Shale | Dallas Business, T….


Less than 24 hours after Denton voters approved a ban on hydraulic fracturing, the Texas Oil and Gas Association and the state’s General Land Office filed lawsuits to stop the city’s effort to prohibit the controversial drilling method.

Both the association and the land office acted shortly after the courthouse doors opened in Denton and Austin, seeking to block implementation of an ordinance approved 59 percent to 41 percent Tuesday. The ban is set to take effect Dec. 2.

The industry association filed its lawsuit in Denton County, saying the ordinance exceeds the limited power of home-rule cities and intrudes on the authority of several state agencies, particularly the Texas Railroad Commission, which regulates the oil and gas industry.

“By imposing a complete ban on hydraulic fracturing on oil and gas leases within its city limits, the city of Denton undermines this comprehensive state system of regulating oil and gas development,” says the lawsuit, prepared by former Texas Supreme Court Chief Justice Tom Phillips. “The ordinance’s complete ban second-guesses and impedes this state regulatory framework.”

The lawsuit asks the Denton judge for an expedited hearing and seeks declaratory and injunctive relief from the ban on fracking, a technique that pumps water, sand and chemicals underground to shake gas loose from the shale.

Texas Land Commissioner Jerry Patterson, who had pledged that his agency would beat a path to the courthouse door if the ban was approved, filed suit in in Travis County, seeking to protect money flowing into the Permanent School Fund.

The land office said that it owns land and mineral rights in Denton County and that the ban would deprive it of any money it could make from those interests. Like the Texas Oil and Gas Association, the land office argues that the ban is unconstitutional. The agency is seeking a permanent injunction.

“I’m a little surprised at the numbers [of people voting for the ban] but not that it passed,” Patterson said. “I would be surprised if it is ever implemented. … It is, on its face, ridiculous.”

City officials had expected legal challenges. After it appeared that the ballot referendum would pass Tuesday night, Mayor Chris Watts issued a statement saying the city was prepared to defend it.

“The City Council is committed to defending the ordinance and will exercise the legal remedies that are available to us should the ordinance be challenged,” Watts said.

The city had no additional comment Wednesday. Spokeswoman Lindsey Baker said the city had not been officially served but was reviewing the association’s lawsuit.

‘Crossed the line’

The measure adopted by voters does not ban drilling, just hydraulic fracturing. The industry has argued, however, that it essentially does block all drilling because the technique is needed to operate profitably in the shale.

The lawsuits say the ban, by focusing on a “completion process,” triggers a legal doctrine that holds that a local law can’t displace a state or federal law in the same area. The Railroad Commission typically sets the parameters for drilling techniques.

“I think they have crossed the line by prohibiting a completion technique that the state has already thoroughly regulated,” Phillips, the former chief justice, said in an interview. “The state has assigned the entities it wants to regulate it, so it is unconstitutional.”

Phillips and Bill Kroger, who works with him at Baker and Botts, said the Texas Oil and Gas Association may seek a temporary injunction to block the ban’s implementation as the case makes its way through the courts.

Railroad Commission members agreed in statements released Wednesday. “I expect that real facts and common sense will ultimately prevail. The charges delegated to the Railroad Commission of Texas are to manage the safe and responsible production of our state’s natural resources,” Chairman Christi Craddick said.

Industry concerns

Cathy McMullen, leader of the Denton Drilling Awareness Group, which collected nearly 2,000 petition signatures to put the ban on the ballot, has said that the group had attorneys vet the ordinance and that it is “legally defensible and binding.”

She was not surprised the lawsuits were filed so quickly. “If the courts had been open last night, they would have sued before midnight,” she said. “They have to spank us. We’ve been bad kids.”

Terry Welch, a Richardson attorney who helped Flower Mound write its gas drilling ordinance, said the situation in Denton is “very unique” but thinks the ban can hold up in court. “This is cutting-edge. There is not a lot of Texas case law, but I think the city has a defensible position,” Welch said.

The industry and state officials are concerned that fracking bans may catch on. On Tuesday, two California counties approved bans while another rejected one. And in Ohio, one city approved a ban while three others were voted down.

“There’s no question that it’s a threat,” said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University. Activists opposed to oil and gas development who failed to beat back fracking at the state and federal levels “have largely turned their efforts to local communities.”

But Jim Bradbury, a Fort Worth environmental lawyer, said that while the Denton ordinance may face an “uphill battle,” the industry has “elevated and escalated” what is essentially a local issue.

How Denton permitted its wells and developed its ordinances created a unique situation.

“They want the residents of Denton to know, and the world to know, that we have the cards and we intend to play them,” Bradbury said. “They are saying, ‘We are not going to let the sun shine long on this at all.’ ”

This report includes material from Bloomberg News.


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