The rights of local municipalities to regulate or ban drilling activity within their jurisdictions has been a hot topic over the last few years in several states, especially Pennsylvania, Texas and Colorado. Shale development has been intense in all three states, but their reactions to urban drilling regulation have differed markedly.
In Colorado, voters threatened to force a ballot initiative to ban hydraulic fracturing in the state. In response, the governor cobbled together a compromise that included the appointment of a task force to examine the impact of drilling on urban environments and make recommendations. That task force, the Colorado Oil and Gas Task Force, issued nine recommendations in February of this year. They make for interesting reading.
The Colorado Oil and Gas Conservation Commission has been conducting hearings across the state on two of the Task Force recommendations, both of which would require the COGCC to implement regulations. Both of the recommendations would increase municipalities’ participation in the permitting process for wells within their jurisdictions. Recommendation #17 would require companies planning “Large Scale Oil and Gas Facilities” to consult with local governments to try to reach agreement on the siting of those facilities and to engage in mediation if the parties are unable to reach agreement. Recommendation #20 would require companies to provide local governments a five-year plan for their drilling and development within their jurisdictions, to allow the municipalities to include those plans in the municipalities’ own long-range plans.
Compare Colorado’s efforts to the Texas legislature’s response when Denton, Texas voted to ban hydraulic fracturing within its boundaries. The Legislature passed House Bill 40. That bill not only barred municipalities from banning fracking, it also significantly limited the authority of cities to regulate drilling within their jurisdictions.
With the exception of Denton, exploration companies and municipalities have managed to get along with each other in Texas, and urban drilling has become a common occurrence in cities like Fort Worth. Fort Worth worked with the industry to craft regulations on siting, noise, safety, emissions, light, traffic, and pipelines that all stakeholders were willing to live with and that have become a model for other cities to follow. But with House Bill 40, all of that work is called into question. Instead of engaging with municipalities to find solutions, in my view the legislature bowed to the interests of industry and gave them a tool with which to threaten cities if operators felt that cities’ regulations were too heavy-handed.
It remains to be seen whether the industry and municipalities will make peace in Colorado. But I think it is inevitable that House Bill 40 will result in expensive litigation between cities and industry in Texas.