As my colleague, Caroline Toole, reported recently here at the Monitor, Texas Governor Greg Abbott signed a law last week limiting the ability of municipalities to regulate fracking. In a related post, my colleague noted that the Texas law would put an end to local bans on fracking like the one adopted by the city of Denton, Texas. She further noted that “[i]t remains to be seen whether other state legislatures will follow Texas’ lead and resolve the issue outside of the courtroom.” Well, before the ink on Governor Abbott’s signature was even dry, we have word that Oklahoma is set to pass a similar law prohibiting cities and towns from banning drilling operations in the state.
As reported by Reuters, the bill would repeal a 1935 statute that gives municipalities broad rights to restrict oil and gas operations within their borders. Under the new bill, municipalities can enact “reasonable” restrictions on oil and gas operations such as traffic, odor, or noise regulations, but cannot effectively ban drilling or other operations. The bill passed with strong majorities in both houses and now awaits changes in the Senate. The May 20, 2015 Senate Conference Committee Report on the pending legislation is available here. The latest version of the bill provides:
A municipality, county or other political subdivision may enact reasonable ordinances, rules, and regulations concerning road use, traffic, noise, and odors incidental to oil and gas operations within its boundaries, provided such ordinances, rules, and regulations are not inconsistent with any regulation established by Title 52 of the Oklahoma Statutes or the Corporation Commission. A municipality, county or other political subdivision may also establish reasonable setbacks and fencing requirements for oil and gas well site locations as are reasonably necessary to protect the health, safety, and welfare of its citizens, but may not effectively prohibit or ban any oil and gas operations, including oil and gas exploration, drilling, fracture stimulation, completion, production, maintenance, plugging and abandonment, produced water disposal, secondary recovery operations, flow and gathering lines or pipeline infrastructure. All other regulation of oil and gas operations shall be subject to the exclusive jurisdiction of the Corporation Commission.
The bill defines “reasonable” to mean “a condition that would allow a reasonably prudent oil or gas operator to fully, effectively, and economically develop all affected oil and gas resources.”
Notably, the legislation expressly states that a local law that “substantially interferes” with oil and gas development “shall” constitute a “taking” under the Oklahoma Constitution:
Whenever a municipality, county or other political subdivision, other than the Corporation Commission, adopts or implements an ordinance, resolution, rule, regulation or other form of official policy concerning oil and gas operations that has the effect of: (1) substantially interfering with the use and enjoyment of the mineral estate, as defined in Section 802 of Title 52 of the Oklahoma Statutes, (2) imposing or enforcing a limitation that adversely impacts the use and development of minerals, or (3) prohibiting access to develop the mineral estate, thereby substantially increasing the costs of the oil and gas operations, or thereby substantially reducing the fair market value of the mineral estate, it shall be considered a taking pursuant to Article 2 of the Oklahoma Constitution and relevant statutes. The provisions of this section shall not apply to any ordinance, resolution, rule, regulation or other form of official policy adopted or implemented prior to December 31, 2014.