Monday, April 7, 2014

A Fracking Ban Will Not Sink the City

So far, the main argument against a fracking ban – one that I have heard from nearly everyone in city leadership – is not that it is the wrong thing to do. Many of our elected officials agree that fracking is an overall economic loser for our city and is inherently incompatible with our community. Some have even said they really would like to ban fracking…if only we could! You see, that’s their argument: not that we shouldn’t ban fracking, but that we can’t.
 
Here’s the argument: The city does not have the authority to ban fracking. If we pass a ban, the industry and the state will sue the city. The lawsuit will cost millions of dollars, because Denton will almost certainly lose. This could entail financial ruin and higher taxes. As Dr. Jean Schaake said at a recent Mayoral debate, “a ban will sink the city. This is something to take to Austin and the Railroad Commission,” she continued, “not to City Hall.” In sum: sadly (they will say), the issue of legal jurisdiction trumps the well-grounded ethical objection to fracking.
 
This argument is similar to the way the moderate white clergy reacted to Dr. Martin Luther King Jr. They said his goal was noble, but his means were untimely and misdirected. Dr. King’s Letter from a Birmingham Jail was a reply to those who say “I agree with you in the goal you seek, but I cannot agree with your methods of direct action.”
 
For a long time, I was the moderate voice against a fracking ban, and I respect those in positions of leadership who are making the moderate argument today – indeed I support some of their campaigns for election. Temperance, after all, is a virtue, and their position is a serious one that deserves deep and careful reflection.
 
The problem is that citizens may hear this argument from so many leaders and, rather than reflect on it, automatically assume it is the truth. They may confuse authority for wisdom. People are especially likely to make this snap judgment, because the argument concludes in a costly legal battle, which naturally evokes fear. People hear this and dismiss the ban as some ill-begotten idealism that will bankrupt the city. In this way, even though no one intends this, the moderate argument becomes entangled with a logical fallacy, namely, appeal to fear.
 
I want to brush away the cobwebs of fear that lie atop the moderate argument and cloud our efforts to see it clearly. To do this, I’ll make two kinds of remarks. First, I set some things in perspective. Second, I show why the ban is actually quite reasonable and enforceable.
 
Some Perspective
 
What, really, are we afraid of? I will grant that should the ban pass it will likely face legal challenge. But the mere fact of a lawsuit should not cause us to shudder. When an issue is of vital importance, it is nearly impossible for it to not to end up in court. The courts are forges where we test the mettle of competing claims to justice. Some cases like Brown v. Board of Education come to form part of our collective moral backbone. We can and often do take a different attitude toward lawsuits: not fear, but conviction and even celebration.
 
The City of Denton regularly finds itself in lawsuits. One case in point: the city has been in litigation ever since it passed an ordinance restricting certain aspects of the payday lending business (a year ago). There are strong parallels here: natural gas extraction and short-term lending both threaten citizen well-being, both ordinances prohibit certain aspects of the business that are most harmful (hydraulic fracturing in one case and predatory lending practices in the other), and both ordinances are justified by the jurisdictional authority of municipalities to protect citizen health, safety, and welfare.
 
Recall also that if this, or any other lawsuit, becomes too unwieldy, the city can withdraw or negotiate. There is never an uncontrollable slide into unmanageable legal costs – that’s just a scare tactic.
 
In short, the mere fact of litigation cannot be the problem – this is the daily bread of city politics.
 
Some Legal Defenses of the Ban
 
No, it must be that we are almost certain to lose the lawsuit. That’s the real problem. But is that true?
 
This is the most frustrating thing about the moderate argument – the supposed fact of a near certain loss is bandied about as an article of faith. I have never seen this premise actually accompanied with a reasoned argument grounded in statutory or case law and addressed specifically at the legal merits of the proposed ordinance to ban fracking (the petition). Those who espouse it usually just wave one hand at the colossal bogey man of the oil and gas business and the other hand at the supposed frailty of municipal authority.
 
I’ve even watched this drift into outright lies as was the case at one Planning and Zoning Commission meeting where a Commissioner asked a city lawyer if there had ever been a case where a city actually defeated the oil and gas industry in a lawsuit. The lawyer’s response, after much dithering, was basically ‘no.’ But that is just patently not true – cities have defeated the industry in Texas and around the country dozens if not hundreds of times (see below). The moderate argument holds that there is no legal precedent in this case, which makes it too risky. But there is a long track record of municipalities defeating the oil and gas industry.
 
Consider the legal status of home rule municipalities like Denton. One part of the moderate argument is that home rule just doesn’t give cities as much power as we would like. But listen to this from the Texas Municipal League:
 
“…home rule cities have the inherent authority to do just about anything that qualifies as a ‘public purpose’ and is not contrary to the constitution or laws of the state.”
 
That is pretty sweeping legal authority. You can find other strong claims about home rule powers in the Texas Local Government Code, which, for example, grants home-rule municipalities the power to regulate the location of industrial activities and to “define and prohibit any nuisance within the limits of the municipality and within 5,000 feet outside the limits” and the power to “enforce all ordinances necessary to prevent and summarily abate and remove a nuisance” (Sec. 211.003 and Sec. 217.042). 
 
Now consider the legal status of the oil and gas business and how it challenges home rule authority. There are two main issues here. First, the predominance of the mineral estate that supposedly necessitates permitting this incompatible industrial land use in residential areas. If a city refuses to allow access to minerals, then (the argument goes) they will lose a regulatory takings lawsuit. Second, the fact that state agencies like the Railroad Commission have jurisdiction over oil and gas supposedly trumps local rules. If a city bans fracking, then (the argument goes) they will lose a preemption lawsuit. Put these two together and you get the conclusion of the moderate argument that this industry enjoys certain special rights and is managed according to the state’s concern with developing minerals rather than the city’s concern with protecting community integrity and citizen well-being. But how serious are these legal challenges? Let’s consider each in turn briefly.
 
Regulatory Takings
 
One good resource for this is a law article by Terry Welch, “Municipal Regulation of Natural Gas Drilling in Texas.” Though he notes there is an ongoing tension in the law between the industry’s interests to develop minerals and cities’ interest in protecting public health and safety, he chronicles several cases where cities have defeated the industry, including cases of outright prohibition. Courts have a long record of deferring to the judgment of local government and the citizens they represent.
 
Another great resource is a law article by Timothy Riley, “Wrangling with Urban Wildcatters.” I’ll just give you the punch line in two parts. First, “municipalities have many sticks in their regulatory bundle to successfully defend a prudently enacted oil and gas ordinance against both partial and categorical takings claims.” Second, and here’s the kicker, “Texas common law generally favors municipal authority to regulate oil and gas activities…. every direct challenge to a city’s police powers has been soundly defeated(p. 372).
 
In the 1980s, the Fort Worth Court of Appeals ruled that “any deprivation resulting from a lawful ordinance enforced pursuant to the legitimate policing authority of a municipality does not constitute a loss of property without due process under the law” (p. 371). A year later, the same court found the “City’s ordinance was not preempted by state statute, nor was it in conflict with state law, and thus posed no due process or equal protection violation of the Fourteenth Amendment. Moreover, the court stated that the reasonableness of a municipal ordinance is presumed and considered controlling by courts ‘unless the unreasonableness of the ordinance is fairly free from doubt’” (p. 371).
 
Now, look at some of the fracking that is going on just 250 feet away from homes in Denton, remember the dozens of health complaints from nearby residents, and recall that that situation will happen again and again as the city grows despite years of attempts to regulate it at the local level. I don’t see how one could say a ban in such a situation is clearly unreasonable.
 
To be reasonable, local oil and gas ordinances must not arbitrarily discriminate against the industry. The proposed ban does not do that – it treats the industry like any other business and, just like payday lending, it prohibits certain business operations for reasons of health and safety. I guess one could argue that banning hydraulic fracturing is analogous to 'allowing' payday lenders to operate...just without computers, electricity, and internet. But using computers in a workplace is not a public health threat on anywhere near the level that using carcinogenic chemicals is. In the payday lending case, protecting citizens does not require turning off their lights and computers. That would be arbitrary and discriminatory. But in the case of fracking, protecting citizens does require prohibiting the use of the chemicals and the associated process. The measure taken is reasonable and proportionate to the threat at hand.
 
Of course, underneath all of this is the fundamental legal right to private property. But even foundational rights like this, or the right to free speech, are qualified. This is a point that Eagleridge even makes on their website (my emphasis added): “The basic principle of this country and the Constitution is freedom and the unalienable right to enjoy the use of personal and real property. Certainly not at the expense or detriment to others, but the right still remains.”
 
Say that someone owns a pond and they have the right to catch the fish in it, because it’s their property. But they use dynamite to get the fish. This creates loud noises that disturb the neighbors and it also creates chemical runoff that pollutes neighbors’ property. The legal (and ethical) response is to say that person can get the fish, but they can’t use dynamite. His enjoyment of his private property can’t prevent you from enjoying your property. If there is no other reasonable alternative to dynamite, then that property remains inaccessible for the time being. The appropriate response is to push for safer technologies, not to lower the bar on public health and safety regulations in order to accommodate existing technologies.
 
Hydraulic fracturing is like fishing with dynamite. The ban is a recognition that we don’t yet have a reasonable and technologically available way to access the minerals – really what it is saying is that we have never had such an alternative – we have just been trying to pretend that hydraulic fracturing fits that bill.
 
Preemption
 
The moderates contend that only the state has the authority to regulate oil and gas drilling. But they cannot really mean that, because it is so obviously false. On the Barnett Shale alone, there are dozens of municipal ordinances that constitute regulation of the industry by local governments.
 
So what they must mean is that there are certain limits to the city’s jurisdiction over the oil and gas industry. That’s true enough, but by itself it’s a trivial statement. The question is whether this ban as formulated on the petition exceeds those limits. On that question, I have yet to hear anyone in city leadership offer their opinion.
 
Denton’s leadership holds a very conservative view about the limits of municipal authority over the oil and gas business. They did not adopt several of the provisions found in Flower Mound’s ordinance out of fear of a preemption lawsuit. Yet in recent years Flower Mound has faced five lawsuits from the industry, and they have won four with the fifth still pending. Grand Prairie also won in a recent court challenge.
 
More broadly on the issue of preemption, there is a long history of courts upholding municipal regulations on industries that are largely regulated at the state level. The basic rationale is that the purpose of municipal regulations is different from state regulations. It was on this basis that the New York appellate Court upheld the Town of Dryden’s ban on fracking. That ordinance doesn’t really regulate the industry; rather it just establishes permissible and prohibited land uses, which is something that has long been held to be a proper function of local government.
 
In Texas, there is no doctrine of implied preemption under state law (meaning that just because the state enacts legislation does not imply that a city is powerless to address the issue). Furthermore, for any municipal regulation to be preempted by state law, the State Legislature must do so “with unmistakable clarity.” There is nothing in the state rules about fracking that specifically preempts the city from adopting the ordinance as proposed.
 
Just because the state of Texas seeks to foster and promote mineral development does not mean that Texas cities have to capitulate to their interests. The city also has legitimate and legally recognized interests in protecting community integrity and citizen health, safety, and welfare. The proposed ban on hydraulic fracturing is a reasonable exercise of the powers of local government.

5 comments:

  1. The lawsuits would come from large landowners not the gas companies! The only "damages" the gas company could claim would be lease acquisition & permitting costs & some of that could be recouped by declaring force majeure. That pales in comparison to the lost revenue an outright fracking ban would have on a large landowner like the Rayzor family.

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    1. Ben - I don't doubt they will be involved too - but it is still a takings case, then. And how can you say that it won't be the gas companies when in other states with lawsuits on bans (CO and NY) the opposition is led by the gas companies...?

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    2. Because most of the big companies aren't here, don't want to be here & are smart enough to act in a responsible manner when they do drill a well! Ever wonder why Aruba is involved in so many of these lawsuits?

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  2. A thoughtful and informative presentation Adam. Thanks for your efforts to keep a fire going on this critical issue. The gas and oil industry have deep pockets and know that more times than not this allows them to wear down their opponents.

    Let's hope there is sufficient public will to prevent that here.

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