States Show Their True Colors on Fracking – One Enacts a Ban, While Two Others Prohibit All Local Bans

Stoel Rives LLP

Three states have recently taken a stand for or against controversial bans on hydraulic fracturing. Oklahoma, Texas, and Maryland have all passed laws within the past month relating to hydraulic fracturing bans.


Last Friday, Oklahoma Governor Mary Fallin signed Senate Bill 809, which prohibits local governments from choosing whether to have oil and gas operations within their jurisdictions. Oklahoma’s law allows exceptions for “reasonable” restrictions for setbacks, noise, traffic issues and fencing. Governor Fallin said “A patchwork of regulations that vary across the state would be inconsistent with the goal of reasonable, easily understood regulations and could damage the state’s economy and environment.” Senate Bill 809 reaffirms that the Oklahoma Corporation Commission is the primary entity charged with establishing a unified regulatory framework for the energy industry. Chad Warmington, president of the Oklahoma Oil and Gas Association, said “This bill was a good compromise for all involved. It maintains the Corporation Commission’s role in regulating oil and gas activities, without limiting cities’ ability to protect their residents.” Senate Bill 809 passed with wide margins in both the House and the Senate.


A similar ban was signed into law by Texas’ Governor Greg Abbott. House Bill 40 puts control of oil and gas drilling firmly in the hands of the Texas Railroad Commission. The law prohibits cities from passing an ordinance that “bans, limits or otherwise regulates an oil and gas operation” while allowing cities to set “commercially reasonable” setbacks. Governor Abbot said House Bill 40 does a “profound job of protecting private property rights” and ensures that “regulations are even-handed and do not hamper job creation.” The bill was in response to the City of Denton’s fracking ban. “HB 40 is a fair bill that balances local control and property rights,” Todd Staples, president of the Texas Oil & Gas Association said. “With 40 percent of the Texas economy and 2 million jobs supported by the oil and natural gas industry, striking the right balance with carefully constructed policy has never been more important.”


On the other side of the debate is the State of Maryland, which recently passed Senate Bill 409. The bill places a moratorium on hydraulic fracturing for two and a half years, and requires the state to write standards to regulate the practice when the ban is lifted. Despite voicing support for hydraulic fracturing, Gov. Larry Hogan has allowed the bill to become law without his signature. Governor Hogan’s spokesman Matt Clark said the governor “continues to support the safe and responsible development of energy to meet the current and future needs of citizens and to promote job growth in Western Maryland.” The bill had strong support in the legislature despite a recent study that found that hydraulic fracturing in Maryland could generate more than 3,000 jobs and $5 million in new tax revenue each year.

Innovations in drilling and hydraulic fracturing have unlocked tremendous amounts of natural gas from underground shale formations that were previously uneconomical. A study found that hydraulic fracturing and horizontal drilling applied to shale oil formations saved consumers between $63 and $248 billion in 2013. Hydraulic fracturing has reshaped America’s energy future and brought significant benefits to the state economies in terms of jobs and tax revenues.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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