Fracking bans prove costly
Residents of Denton, a town in north Texas, just voted to ban hydraulic fracturing — also known as “fracking” — within city limits.
Denton voters probably didn’t anticipate the resulting avalanche of lawsuits against their City Council. Within hours of the ban’s approval, the Texas Oil and Gas Association and the state’s General Land Office sued Denton. The Texas Railroad Commission will likely be filing suit soon as well.
This ban is likely illegal. Passing it will cost Denton dearly. Other towns and cities considering a fracking ban of their own should pay close attention.
Fracking involves injecting a mixture of water, sand, and a small amount of chemicals at high pressures into deep wells to break up underground rock formations and release oil and gas for extraction.
Bans on this practice violate the constitutional rights of land owners. The Fifth Amendment prohibits government from taking away private property for a public cause “without just compensation.” And in 1992, the Supreme Court ruled that the “takings” clause also requires government to compensate owners if regulations destroy the economic value of their property.
Denton — which sits on the gas-rich Barnett Shale — has plenty of residents who rely on selling their mineral rights for income. Voters have effectively robbed them of their property. Those rights are worthless if potential buyers are denied use of the one technology that allows them to extract and sell the energy buried under the land.
The city has no plans to compensate mineral rights owners for their loss. Thus, Denton’s fracking ban is clearly unconstitutional.
The resulting legal challenges will be extremely costly for local taxpayers. Longmont, Colorado, has racked up more than $61,000 in legal fees defending its 2012 fracking ban. Dryden, New York has spent nearly $40,000 protecting a ban it passed in 2011.
Denton’s fracking ban will also deal a huge blow to the local economy. Research from the Perryman Group estimates it will cost the city $250 million in economic activity and 2,000 jobs.
That dip will in turn squeeze tax revenues and jeopardize valuable public programs. The state government is going to lose out on royalty interests from Denton territories, which are a key source of financing for the state’s endowment for public education. Students all across the state are going to bear the costs of Denton’s bad policy.
Denton’s ban — like most fracking restrictions — stems from environmental and health concerns about the practice. These concerns have been thoroughly researched and found almost entirely baseless. Indeed, as an oil and gas CEO, I still get questions about fracking contaminating water supplies and causing faucet water to light on fire. There are zero scientific studies supporting such claims.
Meanwhile, cities can forgo straight-up bans for more targeted legislation tackling specific fracking problems like drilling noise and increased car traffic. Consider Colorado, where activists and energy developers worked together to create rules requiring drilling to take place no less than 2,000 feet from occupied buildings.
Denton could have done the same. Some local fracking operations were indeed abusing a regulatory loophole to drill as close as 250 feet from people’s homes. That’s obviously a disruptive practice. It’s not acceptable. Denton voters would have been wholly justified in passing a careful, targeted law that clamped down on close-proximity fracking while still allowing the area to benefit from the economic bounty of energy extraction.
But Denton voters took more extreme action. And now they’re paying for it. Other cities should learn from their mistake.
Chris Faulkner is CEO of Breitling Energy Corp. and author of “The Fracking Truth.”