Florida House of Representatives passes bill to strengthen hydraulic fracturing requirements

Earlier this week, the Florida House of Representatives passed a bill targeted at hydraulic fracturing. The bill, H.B. 1205, would heighten the regulatory requirements on fracking. The bill passed easily with a sizeable majority voting in favor of the bill. 82 members of the House of Representatives voted in favor of passing the bill and 34 members voted against enacting the bill.

Under H.B. 1205, operators would be required to obtain a fracking permit before engaging in fracking operations. Moreover, operators would be required to declare that they intend to use hydraulic fracturing before beginning any drilling operations. In comparison, the current rules only require operators to receive a general drilling permit. The current rules also permit operators to wait until drilling operations have commenced to notify the Florida Department of Environmental Protection (FDEP) that they intend to use hydraulic fracturing.

In addition, H.B. 1205 provides for a stricter permit approval process and additional disclosure requirements. The new bill authorizes the FDEP to examine the history of parties applying for fracking permits. In fact, H.B. 1205 would permit the FDEP to base its decision on an applicant’s actions in other states. The current regulatory scheme does not permit the FDEP to use an applicant’s out-of-state conduct as a basis for approval or denial of a fracking permit. H.B. 1205 would also increase the fines for violations and the bond minimums. Furthermore, H.B. 1205 mandates that companies disclose any chemicals injected into the ground.

The new bill requires the FDEP to conduct a study on hydraulic fracturing. Specifically, the FDEP’s study must address the potential connection between hydraulic fracturing and groundwater and whether recycled water can be used during fracking operations. Additionally, the study must examine the disposal process for fluids.

Thus far, the bill has received mixed reviews. Some observers have championed the bill as a method of preventing violations. Opponents of the bill have argued that the bill should be replaced with a ban against hydraulic fracturing. Other commentators have suggested that H.B. 1205 prioritizes business interests over public health.

Read H.B. 1205.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.

Opposition to federal fracking rules grows

Earlier this year, the Department of Interior’s Bureau of Land Management (BLM) released its final version of rules governing hydraulic fracturing on federal land. As discussed in a previous post, these rules will not only impose heightened requirements on drilling operations but also increase the reporting duties for drilling operators. Shortly after the BLM released its proposal, the Independent Petroleum Association of America (IPAA) and Western Energy Alliance (WEA) sued the BLM in Wyoming to challenge the proposed rules. The IPAA and WEA argued that the BLM’s rules are unnecessary because states adequately regulate hydraulic fracturing. The IPAA and WEA have also alleged that the BLM’s final rules are unsubstantiated.

A second lawsuit was later filed by Wyoming against the BLM. In its petition for review of the BLM’s fracking rules, Wyoming stated that the BLM exceeded its authority and its fracking rules would hamper state regulation of hydraulic fracturing. Specifically, Wyoming has argued that the BLM’s authority under the Mineral Leasing Act and the Federal and Policy and Management Act do not authorize the agency to enact the hydraulic fracturing rules. According to Wyoming, the BLM’s rules also conflict with the Safe Water Drinking Act, which grants states the exclusive right to regulate underground injections. North Dakota later joined Wyoming’s petition for review. North Dakota has stated that it is one of the largest oil and gas producers in the United States and the BLM’s rules inhibit the state’s ability to regulate hydraulic fracturing in the state.

The opposition to the United States Bureau of Land Management’s (BLM) rules for hydraulic fracturing is growing. Colorado has also joined the lawsuit challenging the BLM’s new rules for hydraulic fracturing. Cynthia Coffman, the Attorney General for Colorado, describes the BLM’s rules as an encroachment on an area that has historically been regulated by states. Coffman further noted that Colorado has sufficient regulations governing hydraulic fracturing. In addition, Coffman stated that although hydraulic fracturing should be regulated, the BLM lacked the authority to enact the rules.

Read the amended petition for review.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.

Colorado Supreme Court refuses to authorize Lone Pine orders in fracking cases

On Monday, April 20th, 2015, the Colorado Supreme Court issued its opinion in Antero Resources v. Strudley, a case closely watched by many in the oil and gas industry. The Supreme Court was confronted with the issue of whether the Colorado Rules of Civil Procedure permit a trial court to issue a Lone Pine order—that is, a modified case management order requiring a plaintiff to submit prima facie evidence in support of the lawsuit before permitting full discovery. Lone Pine orders are used primarily in complex cases to ferret out meritless claims and ensure that litigation progresses expeditiously.

Strudley involved tort claims asserted by the Strudley family against Antero Resources and others involved in drilling operations near the plaintiffs’ home. After the parties exchanged their initial disclosures, the defendants requested that the trial court issue a modified case management order stating that the plaintiffs must provide prima facie evidence supporting their claims before full discovery would be allowed. The plaintiffs argued that they were entitled to discovery before the court ruled on the merits of their claims. The trial court agreed with the defendants and issued a Lone Pine order. Because the plaintiff produced insufficient information, the court dismissed the plaintiffs’ claims.

The plaintiffs appealed to the Colorado Court of Appeals. The Court of Appeals reversed the trial court, reasoning that Colorado law did not recognize Lone Pine orders. The Court of Appeals concluded that the discretion afforded district courts under Federal Rule of Civil Procedure (FRCP) 16 is greater than the discretion given under Colorado Rule of Civil Procedure (CRCP) 16. Trial courts issuing Lone Pine order generally rely on FRCP 16 as authority for issuing the order. The Court of Appeals also held that Colorado case law disfavored requiring a plaintiff to provide evidence in support of a claim before discovery.

The Colorado Supreme Court affirmed the Court of Appeals, reasoning that Lone Pine orders are prohibited under Colorado law. The Supreme Court agreed with the Court of Appeals that FRCP 16 granted trial courts more discretion than CRCP 16. In fact, the Supreme Court concluded that FRCP 16 explicitly authorized trial courts to issue Lone Pine orders. The Supreme Court noted that although there are similarities between FRCP 16 and CRCP 16, Colorado did not adopt the language in FRCP 16 that empowered district courts to reduce potential burdens on defendants in complex litigation. However, the Supreme Court noted that CRCP 16 permits district courts to manage discovery in a manner that ensures litigation moves expeditiously. In addition, the Supreme Court concluded that based on its review of other jurisdictions, this lawsuit was not the type of complex lawsuit that warrants a Lone Pine order.

Justice Boatright dissented, arguing that the trial court was merely using its discretionary authority under CRCP 16 when it issued the Lone Pine order. Justice Boatright also contended that the precedent the majority relied on was inapposite because those cases dealt with an earlier version of CRCP 16. According to Justice Boatright, the majority opinion will unduly constrain a trial court’s ability to manage its docket.

Read the opinion.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.

State bill prohibiting local fracking bans one step closer to enactment

After Denton, Texas adopted a ban against hydraulic fracturing, many commentators predicted that the anti-fracking measure would be short-lived. While the lawsuits challenging the local fracking ban are still in the early stages, the Texas Legislature is quickly taking steps to block local fracking bans. On Friday, the Texas House of Representatives passed H.B. 40—one of several bills recently proposed to address anti-fracking measures similar to Denton’s fracking ban.

Under H.B. 40, localities are expressly preempted from adopting legislation concerning oil and gas operations. Localities would, however, have the authority to adopt ordinances that regulate “surface activity that is incident to an oil and gas operation, is commercially reasonable, does not effectively prohibit an oil and gas operation, and is not otherwise preempted by state or federal law.” The bill was proposed by Representative Drew Darby.

H.B. 40 was criticized by some members of the House of Representatives. Approximately ten amendments to the bill were proposed, but they were all rejected. If accepted, the amendments would have ensured that localities retained the authority to regulate some aspects of oil and gas operations. One of the proposed amendments would have created a grandfather clause that local ordinances that have been enacted for at least ten years are not preempted. Now, H.B. 40 advances to the Texas Senate.

Read H.B. 40.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.

Canada's Northwest territories propose new hydraulic fracturing filing regulations for on shore wells

The Northwest Territories (NWT) in Canada's north have released for public comment proposed Hydraulic Fracturing Filing Regulations under the NWT's Oil and Gas Operations Act. If brought into force, the proposed Regulations will require an operator who wants to hydraulically fracture a well to submit to the Ministry of Industry, Tourism and Investment, among other things:
  • a Risk Assessment which identifies the threats and hazards from the proposed hydraulic fracturing operation to safety and the environment and the mitigative measures to manage those threats and hazards;
  • an Environmental Protection Plan prepared in accordance with the Environmental Protection Plan Guidelines and which demonstrates, among other things, that "green completion techniques" will be used to ensure that 90% of the flow back gas and oil vapour is recovered and that 95% of any gas or oil vapour not recovered is incinerated; 
  • surface and ground water information;
  • a description of how suspected seismic events will be monitored and reported; and 
  • a list of the chemicals in the hydraulic fracture fluid and their concentration.
An applicant also must indicate to the Ministry if they are willing to publically disclose certain information in their application, including the chemicals to be used. If they are not willing, they have to explain the reasons for that decision. At this point, it is unclear if the Ministry will agree that the chemical composition of fracturing fluids must not be publicly disclosed if it is confidential business information.

This post was written by Alan Harvie (alan.harvie@nortonrosefulbright.com or +1 403.267.9411) from Norton Rose Fulbright's energy practice group.

Canada's Yukon government paves the way for hydraulic fracturing

The Yukon government has accepted all 21 recommendations made by a Select Committee of the Legislative Assembly Regarding the Rights and Benefits of Hydraulic Fracturing. The Select Committee held public hearings and accepted submissions to help the Yukon Government develop a policy approach to hydraulic fracturing in the Yukon.

The Select Committee's recommendations largely addressed the need to gather more information about fracking and its impact in the Yukon. For instance, it recommended that research be conducted regarding fluid and gas leakage from hydraulic fracturing operations specific to the unique permafrost conditions in the Yukon. It also recommended more baseline data on seismic activity be collected given that parts of the Yukon are seismically active.

The Yukon Government has announced that it is open to shale gas development opportunities in the Yukon but only in the Liard Basin at this time and only if such development has the support of affected First Nations. The Laird Basin borders British Columbia and the B.C. side of the play is considered a world class shale gas deposit containing 176 trillion cubic meters of natural gas.

The Laird Basin is only about 1.3% of the Yukon's land mass, and for now hydraulic fracturing is not being considered in the Peel or Beaufort-Mackenzie Basins, both of which are thought to have high potential for shale oil and gas reserves.

This post was written by Alan Harvie (alan.harvie@nortonrosefulbright.com or +1 403.267.9411) from Norton Rose Fulbright's energy practice group.

Legislative Activity Update - Three Pennsylvania Bills

The following bills were introduced in the Pennsylvania General Assembly:

PA Senate Bill 415 - Natural Gas Severance Tax
Sponsor: Arthur L. Haywood III (Democrat – Philadelphia and part of Montgomery County)
Overview: Extensive severance tax bill, with rate of “8% of the gross value of units severed at the wellhead during a reporting period.”

Repeals sunset provision of Oil & Gas Act that would have terminated the impact fee upon passage of a severance tax, allowing imposition of both an impact fee and severance tax.
Current Status: Referred to Senate Committee on Environmental Resources and Energy on April 6, 2015.

PA House Bill 855 - Amendments to Gas & Hazardous Liquids Pipelines Act
Sponsor:Robert W. Godshall (Republican – Part of Montgomery County [outside Philadelphia])
Overview:Transfers authority over pipeline safety inspections from Public Utility Commission to Department of Environmental Protection (“DEP”).

Specifies civil penalty of up to $1,000 per day for violations of Act by pipeline operator.

Directs DEP to submit a certification to United States Department of Transportation (“USDOT”) to authorize the DEP to enforce federal pipeline safety laws regarding intrastate pipelines within Pennsylvania.

Directs DEP to make an agreement with USDOT to authorize DEP to enforce federal pipeline safety laws regarding interstate pipelines within Pennsylvania.
Current Status:Referred to House Committee on Consumer Affairs on April 14, 2015.

The following already-introduced bill was acted upon by the Pennsylvania General Assembly:

PA House Bill 33 - Amendments to Municipalities Planning Code
Sponsor:Glenn Grell (Republican – part of Cumberland County [outside Harrisburg])
Overview:Amends Municipalities Planning Code (“MPC”) to allow governing body to appoint up to three residents of the municipality to serve as alternate members of the Planning Commission.

Alternate members of Planning Commission appointed pursuant to this bill may participate fully in event of absence or recusal of any absent member.
Current Status:Approved unanimously by the House Appropriations Committee on March 30, 2015.

Passed unanimously by the House of Representatives on March 30, 2015.

Referred to Senate Committee on Local Government on April 8, 2015.

New York Court of Appeals refuses to extend drilling rights

The United States Court of Appeals for the Second Circuit (Second Circuit) certified a question to the New York Court of Appeals (Court of Appeals) that could have provided an avenue by which an energy company could have maintained its right to drill in New York. Specifically, the company argued that New York’s decision to halt the issuance of drilling permits during its review of the environmental impact of fracking triggered a force majeure clause in a lease that extended the term of the lease.

The energy company had several oil and gas leases with landowners in Tioga County. The leases contained habendum clauses that would have extended the leases as long as the company used the land for the production of oil and gas. When New York implemented its moratorium on hydraulic fracturing, the company had not yet engaged in oil and gas production on the leased land and the landowners had not received any royalties. The landowners sued in New York federal court, arguing that the leases had expired. The energy company and landowners filed competing motions for summary judgment. The energy company argued that the leases were extended because the force majeure clause was triggered by New York’s moratorium on hydraulic fracturing, and the landowners claimed that the leases were expired.

The district court granted summary judgment in favor of the landowners, reasoning that the leases had expired. The energy company appealed to the Second Circuit. Because of the importance and novelty of the case to state law, the Second Circuit certified two questions to the Court of Appeals: 1) whether New York’s moratorium constituted a force majeure event and 2) whether the leases were extended.

The Court of Appeals answered the second question and refrained from answering the first question. Specifically, the court concluded that the force majeure clause did not affect the term of the habendum clauses and therefore failed to extend the leases. The court based its conclusion on the fact that the habendum clause did not refer to the force majeure clause. Moreover, according to the court, the force majeure clause only applied to the termination of the lease rather than the expiration of the lease.

Read the opinion.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.

Germany approves bill restricting hydraulic fracturing

Hydraulic fracturing operations in the United States have increased dramatically over the past decade. Indeed, hydraulic fracturing is also growing in other countries. Germany, however, appears to be taking a different approach. Recently, Germany’s cabinet approved a draft of a bill that would restrict hydraulic fracturing operations in the country.

Fracking in Germany will be subject to a number of restrictions. For example, hydraulic fracturing is barred in nature parks and water bore areas. Moreover, companies cannot engage in fracking operations above 3,000 meters unless the drilling is for research purposes and an expert panel concludes that the drilling will not cause any harm. Companies engaging in fracking for scientific purposes must also obtain a number of licenses. Hydraulic fracturing for commercial purposes is permitted under the draft law if the expert panel approves it.

The new bill has been the subject of criticism from several politicians, environmental groups, and unions. Some observers have argued that hydraulic fracturing should be further limited depending on the area in which fracking is operated. Like many environmental groups in the United States, some groups in Germany have argued that hydraulic fracturing will result in damage to the environment and pollution. That said, Germany’s federal environment minister has stated that a ban on fracking would contravene the principle tenets of the German constitution.

Some members of the German government have stated that they may reconsider their current position on fracking if future evidence suggests that environmental concerns are reduced. It is estimated that hydraulic fracturing operating in Germany could produce enough gas to satisfy the county’s gas demands for fourteen years. The current draft bill will now proceed to the upper house of parliament for review.

Read the law.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group

Quarterly Legislative Action Update: Marcellus and Utica Shale Region

Our Norton Rose Fulbright Pittsburgh-Southpointe practice tracks legislative activity that we believe may impact oil and gas development within the Marcellus and Utica shale regions (Pennsylvania, West Virginia and Ohio).  This Quarterly Update contains all of the relevant legislative activity occurring in Pennsylvania, West Virginia, and Ohio during the first quarter of 2015.

The next issue of the Quarterly Update will be published in early July 2015 and will contain all of the legislative activity occurring through the second quarter of 2015, highlighting changes occurring during that quarter.  New legislative activity occurring after publication of this Update will be posted to Norton Rose Fulbright’s Hydraulic Fracking Blog as soon as it is available.

Federal court in Pennsylvania grants summary judgment in favor of exploration and production company on claims of strict liability, nuisance, and negligence

On March 25, 2015, the United States District Court for the Middle District of Pennsylvania entered summary judgment in favor of an exploration and production company on claims of strict liability, nuisance, and negligence, by a Tioga County landowner related to drilling activity near his property.  Chief Magistrate Judge Carlson found that the uncontroverted evidence offered by the E&P company demonstrated that “defendants are entitled to summary judgment in their favor on the merits.”  The case is Kamuck v. Shell Energy Holdings GP, LLC, No. 4:11-CV-1425, 2015 U.S. Dist. LEXIS 37538 (M.D. Pa. Mar. 25, 2015).

A crucial factor in the Court’s decision was that the plaintiff failed to produce any evidence to support many of the factual allegations made in his complaint. 

For example, [plaintiff] has never identified the time, date, location, or extent [of] any toxic chemical release that he alleges took place on any part of the [plaintiff’s] Property or adjoining properties.  Neither has [plaintiff] identified any toxic substances that were allegedly released on his property.  [Plaintiff] has also failed to produce any evidence identifying specific environmental contamination, fire, explosion or any other hydro-carbon production mishap that affected his well-being or property.  Nor has he presented any competent proof supporting his nuisance claims relating to vehicle traffic and the alleged spraying of toxic chemicals on the roadway adjoining his land.

Turning to the merits of the individual causes of action, the Court first addressed plaintiff’s strict liability claim.  The Court accepted the E&P company’s uncontroverted “evidence and argument that support [its] position that natural gas drilling activities, including hydraulic fracturing, do not constitute abnormally dangerous activities under Pennsylvania law giving rise to strict liability.”  The Court noted that its decision “is in line with precedent in this field within Pennsylvania,” “with legal authority in other jurisdictions,” and “follows the prior precedent of this Court.”

With respect to plaintiff’s private nuisance claim, the Court found that the lack of evidence compelled entry of summary judgment.  Plaintiff “presented nothing to support this private nuisance claim beyond his subjective upset at the volume of road traffic he has experienced periodically outside his home on a public thoroughfare.”  Under Pennsylvania law, “mere roadside noise and dust do not constitute private nuisance.” 

Finally, the Court addressed plaintiff’s failure to support his negligence claim.  “[D]ue to [plaintiff’s] inaction, and a complete failure of competent proof, we are unable to identify any duty breached by the defendants; any causal relationship between that duty and injuries to the plaintiff; and any ascertainable damages resulting from that injury” and, consequently, “this claim also now fails as a matter of law.”

In addition to finding the E&P company was entitled to summary judgment on the merits, the Court also found that plaintiff’s failure to prosecute his case and to obey court orders with respect to discovery obligations offered an independently adequate ground upon which to dismiss the case.  Despite plaintiff’s pro se status, “courts have directly spoken to the type of willful avoidance of litigation responsibilities which has marked [plaintiff’s] approach to this lawsuit over the past two years, condemning the practice of avoiding depositions and generally ‘playing possum’ when instructed to fulfill their litigation responsibilities.”  “The plaintiff cannot refuse to address the merits of his claims, and then assert the untested merits of these claims as grounds for denying a motion to sanction him.”

Read the Court’s complete opinion.

This post was written by Jeremy Mercer (jeremy.mercer@nortonrosefulbright.com or 724 416 0440) and Michael Gaetani (michael.gaetani@nortonrosefulbright.com or 724 416 0429) from Norton Rose Fulbright's Energy Practice Group.

New Brunswick announces commission to study hydraulic fracturing

The Canadian province of New Brunswick has appointed a three person Commission to study if the moratorium on hydraulic fracturing should be lifted. In December 2014 the provincial government introduced amendments to the Oil and Gas Act that placed a moratorium on all types of hydraulic fracturing in New Brunswick following wide-spread public protests. The moratorium will not be lifted unless:
  • a social license is in place;
  • there is clear and credible information about the impacts of hydraulic fracturing on public health, the environment and water, allowing the government to develop a country-leading regulatory regime with sufficient enforcement capabilities;
  • a plan is in place that mitigates the impacts on public infrastructure and that addresses issues such as waste water disposal;
  • a process is in place to respect the duty of the provincial government to consult with First Nations; and
  • a mechanism is in place to ensure that benefits are maximized for New Brunswickers, including the development of a proper royalty structure. 
The Commission, consisting of a former Chief Justice and two academics, is to report back to the provincial government with its key findings within one year.

New Brunswick is believed to have approximately 80 TCF of in place gas in the Frederick Brook formation.

This post was written by Alan Harvie (alan.harvie@nortonrosefulbright.com or +1 403.267.9411) from Norton Rose Fulbright's energy practice group.

Study concludes that fracking does not increase methane levels in drinking water

Over the past couple of years, the number of studies related to the alleged environmental impact from hydraulic fracturing have increased dramatically. In fact, some of these studies have contradicted each other. That said, lately, multiple studies have concluded that hydraulic fracturing does not have the detrimental impact on the environment that several environmental groups have alleged. The latest study to examine hydraulic fracturing has concluded that fracking does not cause methane contamination of drinking water in Pennsylvania.

The study concluded that the methane present in drinking water did not result from hydraulic fracturing operations in the area. This latest report studied over 11,300 drinking water wells in Pennsylvania. This study was led by Donald Siegel, a hydrogeologist at Syracuse University. Siegel noted that in rare instances poorly constructed wells permit the transfer of methane to drinking water; however, he stressed that this was the result of poor construction, not hydraulic fracturing in general.

Siegel’s study casts doubt upon two earlier studies that suggested that there was a connection between the methane content in drinking water and hydraulic fracturing. Notably, one of these studies only examined 60 wells and the other 141 wells. According to Siegel, these prior studies erred by selecting wells known to have structural problems. In fact, the prior studies acknowledged that the primary culprit for methane contamination is poorly constructed wells.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.

Texas house committee on energy resources approves bill to preempt local fracking bans

Denton, Texas garnered national attention when it enacted a local measure banning hydraulic fracturing within the city limits. At the time, many spectators suggested that the measure would be short-lived because of legal challenges in the court system and potential legislation from the Texas Legislature. Soon after the enactment of the ban, several members of the Texas Legislature proposed bills aimed at restricting the ability of local governments to enact anti-fracking bills similar to the measure adopted by the city of Denton. One of those bills—H.B. 40—took one step closer to being passed this week.

On Monday, the Texas House Committee on Energy Resources (Committee) approved H.B. 40. Of the twelve members on the Committee, one member abstained (Representative Gene Wu) and one member dissented (Representative Rafael Anchia). Now that H.B. 40 has been approved by the Committee, the Texas Legislature will vote on whether to pass the bill.

Under H.B. 40, local measures purporting to regulate hydraulic fracturing would be expressly preempted if the local measures are “already impliedly preempted by state law.” H.B. 40 explicitly forbids localities from enacting legislation banning hydraulic fracturing. H.B. 40 would, however, permit a locality to enact legislation that “regulates only surface activity that is incident to an oil and gas operation.” To fall within the range of permissible local legislation, the local measure must be commercially reasonable and not otherwise preempted by state or federal law. In addition, the local measure must “not effectively prohibit an oil and gas operation.” H.B. 40 is sponsored by Representative Drew Darby.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group.