Bill

HB 40

84(R) - 2015
House Energy Resources
House Energy Resources
Energy & Environment
Intergovernmental Affairs
Municipalities
Natural Resources
State Affairs

Companion Bill

SB 1165

Vote Recommendation

Yes
  • Positive
  • Positive
  • Neutral
  • Positive
  • Positive

Author(s)

Drew Darby

Co-Author(s)

James Keffer
Phil King
Rene Oliveira
Senfronia Thompson

Bill Caption

Relating to the express preemption of regulation of oil and gas operations and the exclusive jurisdiction of those operations by the state.

Fiscal Notes

Depending upon the number of political subdivisions that could be affected by a ban on oil and gas regulation, there could be an indeterminate fiscal impact to the state.

Bill Analysis

HB 40, if passed, would amend the Natural Resources Code (Chapter 81) by granting express preemption of regulation of the oil and gas industry to the state of Texas. The preemption, which would be re-iterated in HB 40, has a number of components.

More specifically, the ability of municipalities, or other political subdivisions to claim the authority to regulate oil or natural gas operations (defined below) is limited unless certain criteria are met. Municipalities and other political units may enact regulations only if they affect surface activity which is incidental to an oil and gas operation, is commercially reasonable, does not effectively prohibit oil and gas operations, and does not otherwise come into conflict with state or federal law.

(Oil and gas operations are defined in this bill as any activity associated with the exploration, development, production, processing, or transportation of oil and gas. A list of specific activities is also mentioned under section 2.)

The bill closes with an affirmation that regulation of oil and gas operations is in fact subject to the exclusive jurisdiction of the state of Texas. 

Vote Recommendation Notes

HB 40 is a very reasonable bill which re-affirms the proper relationship between the various levels of government in Texas. In fact, HB 40 essentially clarifies an area of the legal regime which is effectively settled given that the state in general, and the Railroad Commission in particular, does in fact already have exclusive control in this area.

It is worth noting that HB 40, though primarily intended to re-assert the rights of the state, is not entirely one-sided. Municipal devices such as ordinances are still permitted, and incidental restrictions on oil and gas operations, such as light and sound abatement, are likely to remain. The inclusion of the term ‚Äúcommercially reasonable‚ÄĚ in the bill accentuates this fact as it is a technical term used in other regulatory regimes and implies that local concerns are not to be absolutely ignored.

Aside from re-affirming the current regulatory regime, HB 40 is a good bill in that it protects the rights of property owners. If state preemption were ignored or diminished, local property owners could potentially be denied access to utilizing their mineral holdings as they see fit. As such, on the grounds of maintaining a proper role of government, maintaining property rights, promoting the liberty of property owners, and respecting free markets, we strongly support HB 40.

Organizations Supporting

Texas Alliance of Energy Producers
Texas Oil and Gas Association
Texas Public Policy Foundation