Texas Land Ownership

By Alexandra Noll*

Texas law creates a unique land ownership structure. Under Texas law, there are two different sets of rights that govern the use of land. The first is the “surface estate,” which allows for the owner to have dominion over the property, and the second is the “mineral estate,” which allows the owner to exploit, develop, and produce any minerals under the surface of the property. [1] Texas law holds that the mineral estate is dominant, meaning that whoever owns the mineral estate “has the right to freely use the surface estate to the extent reasonably necessary for the exploration, development, and production of the oil and gas under the property” even if the surface estate and mineral estate are owned by different people. [2] The owner of the mineral rights can also lease them to another individual or company. Because of this, it is challenging to know whether state or local government should deal with the regulations, especially as the decision is based entirely on ownership of mineral rights. This led to a heated battle between the state of Texas and the city of Denton, beginning in 2014.

The Controversy in Denton

In 2014, the Denton Drilling Awareness Group (DAG) petitioned to get an ordinance banning fracking on the local ballot through its Frack Free Denton project. [3] The group’s Board of Directors is comprised of Denton residents, concerned about the presence of fracking in Denton’s residential areas. [4] Only one of them, Adam Briggle, a professor at the University of North Texas, has a background in science and technology. [5] Citing the dangers of fracking, which “impact the City’s environment, infrastructure, and related public health, welfare, and safety matters” the Denton Drilling Awareness Group pointed to specific problems of groundwater contamination, noise and air pollution, and waste disposal that they feared would negatively impact Denton as a whole. [6] However, Denton did not start with an outright ban. Briggle explained to National Public Radio that a previous ordinance attempting to limit drilling within residential areas had failed, and over a dozen wells existed within the city limits of Denton. [7]

The controversy in Denton originally arose when an oil company began re-drilling old wells. [8] When the wells were originally drilled, there were no housing developments near them. [9] However, between the initial drill and the re-drilling initiative, new housing developments were built. Denton attempted to stop the drilling with a restraining order, but the court struck down the order because the company was grandfathered in due to old permits issued by the fire department before the city’s oil and gas division emerged. [10]

Following the announcement of the ordinance, the oil and gas industry poured money into campaigns attempting to sway voters against the proposition. The pro-fracking group Denton Taxpayers for a Strong Economy raised $231,063 and spent $185,758, vastly outspending the anti-fracking group, Pass the Ban, which raised $50,970 and spent $8,457. [11] Three energy companies each donated $75,000, which comprised 97.4% of all pro-fracking contributions. [12] It quickly became clear that the battle over fracking in Denton was not merely a battle amongst individual Denton residents, but between Denton residents and the powerful oil and gas lobby.

Initial Response to the Denton Ordinance

In November 2014, 59% of Denton citizens voted to pass the ban on fracking, becoming the first city in the state to ban fracking outright within the city limits. [13] After the ban passed, the Texas Oil and Gas Association (TxOGA) and the Texas General Land Office both filed lawsuits against it, challenging the ban’s validity. [14] The TxOGA asserted that because the Texas legislature has traditionally given the power to regulate the oil and gas industry to the states, and “because of that assumption of power by the state, no city has the right to totally ban hydraulic fracturing within the city limits.” [15] TxOGA sought a temporary injunction to stop the bill from taking effect while the court evaluated the case.

The second lawsuit was slightly different. The General Land Office claimed that because they owned land and mineral rights in Denton County, the ban would deprive them of profits from those interests. Instead of the temporary injunction, the Land Office sought a permanent injunction. [16] The Land Commissioner, Jerry Patterson, claimed that disabling the Land Office from reaping these profits would harm the amount of money going to the Permanent School Fund, which provides income to public schools in Texas. [17]

Legislative Response to the Denton Ordinance

In response to these lawsuits, and in fear that the Denton fracking ban would set a precedent for other municipalities, the Texas Legislature took action. On March 10th, 2015, several state representatives introduced House Bill 40, which stated, “a municipality or other political subdivision may not enact or enforce 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.” [18] The rationale behind the bill was that leaving oil and gas regulations up to localities would fracture industry regulations and jeopardize prosperity and efficiency. [19] The law also included a test for allowing cities to regulate drilling, but that the limitations imposed by the city must be “economically reasonable” and “can’t hinder the work of a prudent operator.” [20] Governor Greg Abbott signed the bill into law in April 2015. Abbott called the bill, “incredibly important,” and said that the bill did a “profound job of protecting private property rights.” [21]

The End of the Denton Controversy

Shortly after House Bill 40 took effect, the Denton City Council voted to repeal the ban, citing the “overall interest of Denton taxpayers.” [22] In light of House Bill 40, TxOGA and the General Land Office had been amended their lawsuits to reflect the fact that Denton was now openly in violation of state law. [23] Due to House Bill 40, Denton had declined to enforce the ban. [24] Almost immediately, an energy company resumed fracking at eight wells in Denton on June 1st, and planned to expand to at least eight more by the end of 2015. [25]

The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

*Alexandra Noll is a Junior Editor on MJEAL. She can be reached at alexnoll@umich.edu.

[1] Oil & Gas Exploration and Surface Ownership, Tex. R.R. Comm’n., (September 9, 2015), http://www.rrc.state.tx.us/about-us/resource-center/faqs/oil-gas-exploration-and-surface-ownership/.

[2] Id.

[3] Alex Dropkin, What a Ban on Fracking in Denton Could Mean For the Rest of Texas, Nat’l Public Radio, April 8, 2014, https://stateimpact.npr.org/texas/2014/04/08/what-a-fracking-ban-in-denton-could-mean-for-texas/.

[4] The Board, FrackFreeDenton.com, http://frackfreedenton.com/the-board/ (last visited November 18, 2016).

[5] Id.

[6] Alex Dropkin, What a Ban on Fracking in Denton Could Mean For the Rest of Texas, Nat’l Public Radio, April 8, 2014, https://stateimpact.npr.org/texas/2014/04/08/what-a-fracking-ban-in-denton-could-mean-for-texas/.

[7] Id.

[8] Id.

[9] Id.

[10] Joe Fisher, Pro-Fracking Camp Outspending Opponents in Denton, TX, NGI’s Shale Daily, October 8, 2014, http://www.naturalgasintel.com/articles/99980-pro-fracking-camp-outspending-opponents-in-denton-tx.

[11] Id.

[12] Id.

[13] Mose Buchele, Denton Voted To Ban Fracking. So Now What?, National Public Radio, November 6, 2014, https://stateimpact.npr.org/texas/2014/11/06/denton-voted-to-ban-fracking-so-now-what/.

[14] Id.

[15] Id.

[16] Max Baker, Energy Industry, Texas Sue Denton over Fracking Ban, The Star-Telegram, November 5, 2014, http://www.star-telegram.com/news/business/barnett-shale/article3907829.html.

[17] Id.

[18] 3 Tex. Nat. Res. Code ch. 81 § 0523, (2015) http://www.legis.state.tx.us/tlodocs/84R/billtext/pdf/HB00040F.pdf#navpanes=0

[19] Melanie Kemp Okon & Susan E. Hannagan, House Bill 40: Impact on Municipal Regulation of Oil & Gas Operations, Dallas Bar Association, February 22, 2016, http://www.dallasbar.org/book-page/house-bill-40-impact-municipal-regulation-oil-gas-operations

[20] 3 Tex. Nat. Res. Code ch. 81 § 0523, (2015) http://www.legis.state.tx.us/tlodocs/84R/billtext/pdf/HB00040F.pdf#navpanes=0

[21] Jim Malewitz, Curbing Local Control, Abbott Signs Denton Fracking Bill, The Texas Tribune, May 18, 2015, https://www.texastribune.org/2015/05/18/abbott-signs-denton-fracking-bill/.

[22] Max Baker, Denton City Council Repeals Fracking Ban, The Star-Telegram, June 16, 2015, http://www.star-telegram.com/news/business/barnett-shale/article24627469.html.

[23] Id.

[24] Jim Malewitz, With HB 40 Signed, Denton Fracking Resumes, The Texas Tribune, May 22, 2015, https://www.texastribune.org/2015/05/22/despite-ban-fracking-resume-denton/.

[25] Id.







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