Residents of the City of Denton, Texas, will vote on a ballot initiative in November that aims to ban hydraulic fracturing within the city limits. If the initiative passes, Denton would become the first city in Texas to ban fracking. A ban would also likely spur a flurry of litigation by oil and gas developers and legislative action at the state level to overturn the ban.
Denton is a city of approximately 120,000 residents located about 40 miles north of Dallas. A bedroom community for people working in the Dallas-Fort Worth Metroplex, Denton sits on the edge of the gas-rich Barnett Shale, one of the country’s largest natural-gas reserves, and has over 270 natural-gas wells. This geology has made the Denton area popular for fracking in recent years.
The ballot initiative comes after a long battle between residents and drilling companies over natural-gas wells in Denton, with the city government struggling to address their competing interests. The city commissioned a task force in 2011 to consider potential fracking regulations. The city council later passed an ordinance in January 2013 that increased the required setback between a drilling site and homes, schools, parks, and hospitals from 1,000 feet to 1,200 feet. In October 2013, the city filed a lawsuit in state court against EagleRidge Energy, a Dallas-based drilling company, for drilling two wells without permission and drilling too close to a housing development. The city withdrew the lawsuit after the court refused to grant an injunction against EagleRidge. A group of Denton-area residents then filed a separate lawsuit against EagleRidge, claiming the operations were a public nuisance. Both the City of Denton and the residents later entered standstill agreements with EagleRidge. While the standstill agreements have expired, the city has imposed a general moratorium on fracking. In September 2014, shortly after the city extended the moratorium to January 20, 2015, a group of royalty owners sued the City of Denton over the moratorium. Meanwhile, the initiative to ban fracking wound up on the November ballot after the city council voted down a similar proposed ordinance in July 2014. Should Denton voters pass the ban, the law would go into effect on January 21, 2015.
There is considerable legal uncertainty surrounding the ballot initiative and efforts to regulate fracking in Texas generally. The energy industry is important to Texas’s economy, and state law calls for mineral resources to be “fully and effectively exploited.” But the Texas Railroad Commission has the authority to regulate the oil and gas industry and can pass regulations it deems necessary. The state has a long history of regulating the drilling industry, including well integrity, pipeline safety, and air and water impact. Meanwhile, local governments like Denton generally have the authority to regulate health and safety matters, and the state has allowed city governments to regulate mineral exploration and development. Thus, Texas cities have ordinances and permitting systems related to noise and well location. Denton’s proposed fracking may push the limits on its authority to regulate health and safety issues related to mineral exploration.
Some people blame the city of Denton for allowing real-estate developers to build too close to existing well permits. Texas law protects drilling permits, making it difficult to regulate fracking. State law also sets no requirements for how far wells must be from homes. Moreover, in many drilling areas around the state, different people may own the surface land and rights to the minerals beneath it. Mineral rights take priority over surface rights, and state law grandfathers in existing well permits.
Because Texas law favors mineral rights, if the ban passes, many observers predict numerous lawsuits against the city by mineral owners, drilling companies with well permits, and the state itself, seeking lost income. The Texas legislature may be the only governing body in the state that can regulate fracking. Tom Phillips, the former Chief Justice of the Texas Supreme Court, advised the Texas Oil and Gas Association over the proposed fracking ban. He says in the event of such litigation, courts will likely favor the energy industry by ruling either that the ban unconstitutionally supersedes state law or that it makes gas beneath the city too difficult to tap and amounts to a taking. Phillips told the Denton City Council during its July debate that only the state legislature has the authority to impose such a ban.
The fate of the ballot initiative is uncertain. There is a vocal grassroots movement within Denton to ban fracking. The anti-fracking groups who lobbied the city to pass an ordinance banning fracking were able to obtain more than three times the number of signatures required to have their initiative put on the November ballot. But Denton County is heavily Republican, and the Texas Republican Party is pro-fracking and opposes the measure. The Denton Chamber of Commerce is campaigning against the ban, citing the potential for lost revenue for the University of North Texas and Denton public schools. Pro-fracking groups cite the economic benefits of fracking. Denton sits on the edge of the Barnett Shale, which an economic study says accounts for $11.8 billion in business activity and tax receipts, and is responsible for more than 107,000 permanent jobs. But many Denton residents worry about quality of life issues from fracking. The Denton Drilling Awareness Group, which spearheaded the ballot initiative, has cited increased traffic, noise pollution, air pollution, groundwater contamination, and earthquakes during its anti-fracking campaign. Whatever happens on November 4th, the fight over fracking in Denton is likely far from over.