BILL ANALYSIS |
C.S.H.B. 40 |
By: Darby |
Energy Resources |
Committee Report (Substituted) |
BACKGROUND AND PURPOSE
Interested parties note that oil and gas activity has coexisted with Texas cities for more than a century. The parties further note that stringent state oil and gas regulations protect the environment and allow the oil and gas industry to grow jobs and anchor the Texas economy. However, the parties contend that recently adopted municipal regulations create a patchwork of inconsistent regulation that undermines the safe and efficient production of oil and gas. C.S.H.B. 40 seeks to ensure consistent statewide regulation of the oil and gas industry.
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CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
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RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
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ANALYSIS
C.S.H.B. 40 sets out findings relating to the impact and effectiveness of state law and policy on the development of oil and gas resources to confirm the state’s authority with respect to the regulation of oil and gas activities within the state. The bill amends the Natural Resources Code to subject an oil and gas operation to the exclusive jurisdiction of the state. The bill prohibits a municipality or other political subdivision from enacting or enforcing an ordinance or other measure, or an amendment or revision of an ordinance or other measure, that bans, limits, or otherwise regulates an oil and gas operation within the boundaries or extraterritorial jurisdiction of the municipality or political subdivision. The bill expressly preempts the authority of a municipality or other political subdivision to regulate an oil and gas operation but authorizes a municipality to enact, amend, or enforce an ordinance or other measure that regulates only aboveground activity related to an oil and gas operation that occurs at or above the surface of the ground, including a regulation governing fire and emergency response, traffic, lights, or noise, or imposing notice or reasonable setback requirements; that is commercially reasonable; that does not effectively prohibit an oil and gas operation conducted by a reasonably prudent operator; and that is not otherwise preempted by state or federal law. The bill establishes that an ordinance or other measure is considered prima facie to be commercially reasonable if the ordinance or other measure has been in effect for at least five years and has allowed the oil and gas operations at issue to continue during that period.
C.S.H.B. 40 defines "commercially reasonable" as a condition that would allow a reasonably prudent operator to fully, effectively, and economically exploit, develop, produce, process, and transport oil and gas, as determined based on the objective standard of a reasonably prudent operator and not on an individualized assessment of an actual operator's capacity to act. The bill defines "oil and gas operation" as an activity associated with the exploration, development, production, processing, and transportation of oil and gas, including drilling, hydraulic fracture stimulation, completion, maintenance, reworking, recompletion, disposal, plugging and abandonment, secondary and tertiary recovery, and remediation activities.
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EFFECTIVE DATE
On passage, or, if the bill does not receive the necessary vote, September 1, 2015.
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COMPARISON OF ORIGINAL AND SUBSTITUTE
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