ABSTRACT
The unconventional oil and gas boom in the US triggered regulatory responses from state and local governments. In Texas, municipal governments aimed to manage conflicts between industry interests and citizen health, safety, and welfare demands. These efforts failed in the City of Denton when residents voted in November 2014 to ban hydraulic fracturing, a worst-case scenario for the oil and gas industry. In response, the industry lobbied the state government to remove municipal regulatory authority over oil and gas activities. In addition to negating the electoral outcome in Denton, the state statute passed in May 2015, House Bill 40 (HB40), obligates local governments to conform to “commercially reasonable” parameters as defined by “prudent operators.” Drawing on original research in the City of Denton and data collected from Texas municipalities, this chapter analyzes the origins of HB40 and the legal bases for “commercially reasonable” and “prudent operator” provisions. The chapter shows how the ambiguity of the provisions exposes municipal governments to industry lawsuit threats and nominally relocates some urban zoning authority to the state government. These characteristics make HB40 an undesirable statutory instrument from the perspective of municipal administration and local resident control over land uses.
