Wednesday, March 27, 2013

HB 1496 Takes a Beating

Here are the minutes from a recent hearing of the House Committee on Land & Resource Management about HB 1496. You can see that no one, including the Chair of this Committee, Joe Deshotel, seems to take too kindly to poor Van's bill.

HB 1496   By Taylor, Van. Relating to governmental actions affecting private property rights in certain oil and gas wells. - Pending. 

The Chair recognizes Rep. Taylor to explain the Bill. Rep. Taylor explained that the Bill would affect the permitting of oil and gas wells. He discussed the specific criteria that exist and how the Bill would impact those existing provisions. He continued that if the city does not allow drilling when a permit has been granted that it would give a cause of action for taking. He shared that the foundation for the Bill is grounded in the long standing protection of private property in the United States. 

(6:52) The Chair asked for a scenario where private property would be under the municipal jurisdiction which prohibits drilling but able to get a permit from the Railroad Commission. Rep. Taylor shared that the Railroad Commission does not take into consideration municipal codes when granting permits. So a permit can be granted that is in contravention of a city’s ordinance. The Chair asked how that does not constitute a taking. Rep. Simpson asked if there have been instances where the Railroad Commission has granted a permit but the mineral rights owner was not able to drill based upon municipal ordinance. Rep. Taylor shared there have and that there would be witnesses testifying to those. Rep. Taylor shared that the Bill doesn’t require the allowance of drilling but just an accommodation that allows for some method of drilling to get to the private property. The Chair asked about the valuation process under the Bill. Rep. Taylor stated his Bill does not address valuation. The Chair asked if the permit must be issued before drilling is denied under the Bill. Rep. Taylor indicated it would. Rep. Springer asked how ETJ affects drilling. Rep. Taylor stated he would let the city’s witnesses testify to that. Rep. Springer asked if the Bill would cover activity that originates in the County but affects the property rights in the municipality. Rep. Taylor shared the Bill would give a cause of action to anyone who can’t access their property because of a municipal ordinance. 

Jimmy Bennett, At-Large-District 7 in Arlington, Texas testifying against the Bill. Mr. Bennett expressed his belief that the Bill would remove local control as it exists to regulate oil and gas drilling. Mr. Bennett clarified that Arlington is not against oil and gas drilling but the removal of local control. He explained that Arlington has already passed permitting rules that respect the property rights of mineral right owners and the community. 

The Chair stated that the Bill would only create a cause of action when a municipality blocked drilling. Mr. Bennett shared that was one way of looking at it but that the alternative was that by allowing the Railroad Commission to permit irrespective of local laws would be to remove the right to enact local laws under threat of legal action. Rep. Goldman asked if the witness was speaking on behalf of the City of Arlington. He shared he was. Rep. Springer asked about the drilling done on City property. Mr. Bennett said he would have to defer to other witnesses. Rep. Springer asked if there were instances where Arlington has denied the right to drill. Mr. Bennett shared that some options for drilling had been denied but that accommodations were provided to allow access to the minerals through other technology out of a desire to provide for public safety. 

Rep. Paddie asked about the effect of removing the need for the oil and gas industry to be encouraged to negotiate by the possibility of being precluded from drilling by city ordinance. Mr. Bennett shared that was a significant concern. 

Don Crowson, Fire Chief and Director, Emergency Management, City of Arlington testifying against the Bill. Mr. Crowson shared he believes the Bill threatens public safety and removes local control that provides for that safety. Rep. Springer asked how many well emergencies there were in Arlington in the last year. Mr. Crowson shared a release, their definition of an emergency, has occurred at least 20 times. Rep. Springer asked if there were injuries or fatalities. Mr. Crowson shared there were not in Arlington but there have been in North Texas. 

James Parajon, Community Development and Planning Director, City of Arlington testifying against the Bill. Mr. Parajon shared that the Bill would remove tools the municipality uses to insure safety and to protect property rights. By leaving permitting to the Railroad Commission alone there is no way for the city to address safety concerns. The city would also be limited in its ability to plan and protect its future through zoning. He pointed out that there are existing remedies that make this Bill unnecessary. The Chair asked what remedies exist. Mr. Parajon pointed to the existing process for permitting and creating ordinances and then the ability to sue for a taking if property was seized. Rep. Springer asked if there was a state law that allowed the city to take mineral rights. Mr. Parajon shared that he was not aware of one. Rep. Springer asked why the city should be able to deny access to mineral rights based on a 50 year plan. Mr. Barrett shared that a better example was that the Bill made allowances for distance requirements for permitting through the railroad commission as the City of Arlington does but their standards are different based on what they believe is needed to protect the safety of its citizens. Rep. Paddie asked if they had experienced difficulty reaching accommodations with property owners wishing to drill in the past. Mr. Bennett stated that they had not. 

Clayton Chandler, City Manager of Mansfield testifying against the Bill.  Mr. Chandler pointed to a unanimous resolution in opposition to the bill and a map showing the number of wells approved by the City of Mansfield (over 500) and current wells (approx. 200). Mr. Chandler pointed out that currently mineral rights owners, the oil and gas industry and municipalities are able to co-exist and beneficially negotiate agreements allowing drilling. 

Bill Lane, Public Safety Director, Senior Staff Attorney, City of Mansfield testifying against the Bill. Mr. Lane reiterated the opinion that the Bill would remove local control and create a cause of action where a remedy already exists for a legitimate taking under the constitution. Mr. Lane shared his opinion that safety was not addressed by the Bill, but noise. The Chair commented that he could not locate the safety section. Rep. Taylor pointed to the section in the existing statute he is seeking to amend covering the issue of safety. 

Steve Lindsey, Director of Government Affairs for Quicksilver Resources and City Council Rep. for City of Mansfield testifying against the Bill.  Mr. Lindsey clarified that the setback Rep. Taylor discussed was to protect against affecting other mineral rights and does not resemble a surface set back. Mr. Lindsey shared that the Bill is an ill fitting tool to address an infrequent issue of state versus local primacy. Mr. Lindsey pointed out the system as it is works and that the law shouldn’t be changed to accommodate the difficulties presented by one city, Flower Mound. 

Rep. Simpson asked if this wouldn’t just create a reverse condemnation. Mr. Lindsey agreed that it would. He shared that in 99% of instances agreements are reached. In the other 1% a takings action could be filed. 

Rita Beving for Public Citizen testifying against the Bill. Ms. Beving shared that cities were given authority to pass ordinances to provide for safety through statute long before the issue of permitting of this type arose. These regulations are necessary to protect all citizens and must be balanced against the property rights of mineral right holders. Ms. Beving referred to several resolutions passed by multiple cities against the Bill. Rep. Simpson shared he thinks the Bill requires compensation when drilling is not permitted but that if certain issues are addressed that drilling can precede. Ms. Beving spoke to the designated set backs and pointed out that HUD wouldn’t issue a loan on a home within a setback provide by the Railroad Commission. The Chair clarified that the Bill would mean no matter what accommodations were offered if drilling is not permitted there is an action for a taking. 

(8:30) Buddy Green for himself testifying against the Bill. Mr. Green is a retired oil and gas professional. Mr. Green shared that his fear is that the proximity of these operations will threaten the value of his and his property as well as its safety and their health. Mr. Green feels the Bill will lower the threshold for a government taking and will therefore encourage litigation. He also feels the Bill is legally and practically unnecessary. Mr. Green believes the Railroad Commission cannot adequately regulate the permitting process in the place of municipalities. Mr. Green believes a right of action to enforce a taking already exists. 

Bruce Hanson, Corinth City Councilman testifying against the Bill. Mr. Hanson stressed the importance of local control in the history of Texas law. He believes applying the Texas Private Property Act to cities, which they are currently exempted from, is a serious erosion of local control. He pointed out that this could lead to other interests seeking to acquire the same right this Bill would give to oil and gas companies.  Mr. Hanson shared that his city council went to great effort to protect property owners when mineral rights owners were seeking variances. 

Scott Houston, General Counsel Texas Municipal League testifying against the Bill. Mr. Houston characterized this as a 'pay or waive' law. The city could only prevent oil and gas interests from gaining variances by paying the amount the minerals are valued at. Rep. Springer asked how a property owner would seek redress if a municipality doesn’t allow exploitation of mineral rights to uphold their ordinances and won’t allow drilling. Mr. Houston explained the Constitutional claim for takings and the elements involved. Rep. Springer asked about municipalities that ban all drilling options. Mr. Hanson shared that such a situation would likely be open to a takings claim. Mr. Springer asked how this is handled under the ETJ. Mr. Hanson said most do not use the ETJ to protect against these types of permitting. 

Jean Levenick, Flower Mound testifying against the Bill. Ms. Levenick shared that the wider implication of the Bill is that it would undermine all regulations passed by municipalities to best protect their citizens.  Rep. Parker commended the distinction between local and state control pointed out by the witness. Rep. Herrero asked if the witness is a council member in Flower Mound. She responded that she is. 

Christa Lopez Reynolds, Attorney with the City of Ft. Worth testifying against the Bill. Ms. Reynolds commented on the erosive impact the Bill would have on the autonomy of cities and municipalities. She reiterated the impact on setbacks within municipalities. Ms. Reynolds explained that Ft. Worth has a process for appealing the set back provisions that reflect local sensibilities. Ms. Reynolds also commented on the difficulty in doing oil and gas valuations because of the rapid fluctuations in prices. 

Brian [sic] Meredith, Attorney with cities of South Lake, Mansfield, Euless, and other cities in North Texas testifying against the Bill. Mr. Meredith shared that the Bill would elevate the rights of a mineral owner above what the law allows to that of a surface property owner. He believes that the proper remedy is the existing right of reverse condemnation. He pointed to the difference in legal threshold under the Bill for mineral rights and the threshold for surface property. This would seek to make mineral rights owners a special class of property holders. 

Rick Trice, Assistant Director Planning and Development, City of Ft. Worth testifying against the Bill. Mr. Trice stated that the agreed with those who testified previously and reiterated the issues of eminent domain and loss of local control. He also pointed out the Bill addresses surface use criteria and not the criteria that should be applied to mineral rights. 

Robin Schneider, Texas Campaign for the Environment testifying against the Bill. Mr. Schneider commented on the variety of interests that oppose the Bill as evidence of its failings. 

Roy Morris on behalf of himself testifying in favor of the Bill. Mr. Morris commented that he hasn’t heard a mineral rights owner testify. Mr. Morris outlined his problems getting a permit from the City of Flower Mound. Rep. Simpson asked about the shape of the 160 acres Mr. Morris owns in Flower Mound on which he was not given a permit. Mr. Morris shared it was nearly square. Rep. Simpson asked if he could sue for inverse [reverse] condemnation. Mr. Morris shared that several legal actions had been brought with no result. Rep. Simpson asked about the exhaustion of due process. Mr. Morris shared they were not seeking appeal of the district court’s decision. Rep. Springer asked what the valuation of the mineral rights were. Mr. Morris shared it could be in excess of 100 million dollars. Rep. Goldman asked if all of his property were in the City of Flower Mound. He stated that it is. Rep. Simpson asked if he was aware of other instances of this happening in the state. Mr. Morris shared he couldn’t state for certain but that he believed it has occurred in South Lake and other North Texas cities. Rep. Goldman asked if there were any spot on his property where he could drill. He stated he could not. Rep. Springer asked if the surface was being developed. Mr. Morris shared that there is a hospital and an apartment complex but that much of the development died because of lack of funding from the drilling. 



  1. I’m glad this bill did not gain any tracking in committee. I think the bill’s author wanted to strip municipal control because of recent scientific evidence of drillings concerns. As reported in Businessweek, “Scientists have linked Oklahoma’s biggest recorded earthquake to the disposal of wastewater from oil production” (

  2. Thanks for the summary. Looks like it didn't make it out of the committee. And with all the opposition, it better not!!

    Rep. Springer asked what the valuation of the mineral rights were. Mr. Morris shared it could be in excess of 100 million dollars.

    So, he can't "develop" this land because of the lack of funding from the drilling? That's interesting since it seems that this may be the case across the Barnett Shale areas of North Texas...developers have purchased land based on leveraging the potential for mineral development.

    This is the "speculative" part of all of this. It's a gamble that won't work out.

    HB 1496