The Texas legislative session has now ended. I followed 44 bills identified as potentially affecting the interests of mineral owners. Only two of those bills passed.
The bill that produced the most controversy was HB 40, introduced by Rep. Darby, chair of the House Energy Resources Committee. It restricts the ability of municipalities to regulate oil and gas operations within their jurisdictions. This bill and several other bills were introduced in response to the referendum passed by the City of Denton barring hydraulic fracturing. The bill allows cities to adopt ordinances related to oil and gas activity only if the ordinance regulates “aboveground activity … at or above the surface of the ground, including … fire and emergency response, traffic, lights, or noise, or imposing notice or reasonable setback requirements,” is “commercially reasonable,” and “does not effectively prohibit an oil and gas operation conducted by a reasonably prudent operator.” The bill defines “commercially reasonable” as:
a condition that would allow a reasonably prudent operator to fully, effectively, and economically exploit, develop, produce, process, and transport oil and gas, as determined based on the objective standard of a reasonably prudent operator and not on an individualized assessment of an actual operator’s capacity to act.