Texas Legislative Guide

After Denton voters approved the first hydraulic fracturing ban in Texas, state lawmakers made it a priority during the 84th legislative session to address the issue of state vs. local drilling ordinances.

Proponents called the Denton ban a last-ditch effort to address noise and toxic fumes that spew from wells just beyond their backyards, after loopholes and previous zoning decisions rendered changes to the city’s drilling ordinance unenforceable. Critics — including Republican state regulators and lawmakers — argue that state drilling regulations trump Denton’s. And because of current shale economics, they argue that the Denton measure amounts to a ban on all drilling — denying mineral owners their property rights.

The issue forces lawmakers to choose between two interests many Texans hold dear: petroleum and local control. Texas Republicans often blast federal efforts to regulate the oil and gas industry, but many call Denton’s effort to assert home rule different. “Local control’s great in a lot of respects, but I’m the expert on oil and gas,” Christi Craddick, the Railroad Commission’s chairwoman, said at a Texas Tribune event. “The city of Denton is not.”

In May, Gov. Greg Abbott signed legislation commonly referred to as the “Denton fracking bill.” Intended to clarify where local control ends and Texas law begins, the legislation pre-empts local efforts to regulate a wide variety of drilling-related activities. Because both the House and Senate approved the bill by a more than two-thirds margin, the law took effect immediately after the governor’s signature. And fracking has resumed in Denton.

Updated: June 12, 2015

As the 84th legislative session started, the Texas oil boom that helped fuel the state’s “miracle” economy was slowing, with the per-barrel price of West Texas Intermediate oil — the U.S. benchmark — falling below $50 in January, less than half of what it was in June.

Several major oil companies have sliced their budgets, and the Texas Railroad Commission began issuing fewer drilling permits in late 2014. The state’s economic outlook is less rosy than it was in the months before the session, though there was no sense of panic.

The state has learned plenty since the 1980s, when an oil crash unleashed a flood of red ink in government and delivered hard times to Texas communities. The state has since diversified its economy, and state officials stashed away money to cushion the blow of future financial troubles. And low oil prices bring some benefits: Manufacturers, motorists and others, for instance, are enjoying cheaper fuel. And those savings should spill into other parts of the economy. Some analysts, however, suggest those positives will be too small to ward off a Texas recession. Oil still makes up some 14 percent of the state’s economy, according to Bill Hammond, president of the Texas Association of Business.

During the legislative session, lawmakers focused on creating a wider market for the state’s oil. They approved a resolution — that Gov. Greg Abbott has signed — calling for the federal government to lift its 40-year-old ban on crude exports.

Disclosure: The Texas Association of Business is a corporate sponsor of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.

Updated: May 29, 2015

The U.S. Environmental Protection Agency’s proposed “Clean Power Plan” — aimed at combating climate change — would require Texas to slash carbon emissions from its power plants by as much as 195 billion pounds of carbon dioxide in the next 18 years. That 43 percent reduction is among the larger percentage of cuts required among states. The proposal allows states to draw up their own path to meet the goals.

The EPA suggests that Texas could meet its goal through a combination of actions: making coal plants more efficient, switching to cleaner-burning natural gas, adding more renewable resources and bolstering energy efficiency. Texas would have until 2016 to submit a plan to meet its carbon target.

Dueling analyses have come to opposite conclusions about how easily Texas could meet that goal, and how the plan might affect electric reliability and prices. Some electric utilities say they are ready to help the state carry out the plan, citing recent investments in natural gas and renewable power. Others — particularly those that rely heavily on coal — are less prepared.  

The state’s Republican leadership has loudly panned the proposal, which is set to become final in June 2015. Attorney General Ken Paxton announced in May that the state plans to sue the Obama administration over the rules, saying that they would threaten the state’s power grid and increase electric prices. But some, citing the state’s string of recent defeats in challenges to EPA rules, have suggested that Texas can’t bank on a court victory in this case.

Meanwhile, state regulators are examining how Texas might meet its carbon target. Bills that would direct them to adopt a plan died in the Legislature.

If Texas does not develop a plan to reduce carbon emissions, the EPA could do so instead. It is not clear what such a plan would look like. 

Updated: May 27, 2015

Texas is awash in cheap natural gas — a fuel that burns cleaner than oil. So why not use it to power the millions of vehicles that are contributing to air pollution struggles in some corners of the state?

Oil, of course, has a stronghold in the auto industry, compounding the long-standing barriers to the expansion of vehicles that run on natural gas. Those barriers include a lack of fueling stations across the U.S. and the relatively high up-front cost of natural gas vehicles. Experts have called it a chicken-and-egg problem: Folks have been reluctant to pay more for the vehicles because of the lack of fueling stations, and companies have hesitated to build those fueling stations due to the low demand for the vehicles.

But that mind-set appears to be shifting in Texas and elsewhere.

As of mid-March, Texas was home to 130 natural gas fueling stations, up from 104 in September of 2014, according to the Railroad Commission of Texas, which has been promoting the switch to natural gas. Those 77 public stations and 63 private ones serve about 7,200 vehicles.

The surge in Texas is due in part to changing economics and millions of dollars in state grants, including millions spent in recent years on Texas’ “Clean Transportation Triangle,” a growing network of natural gas fueling stations along highways that link San Antonio, Austin, Dallas, Fort Worth and Houston. The state has also invested in storage and compression infrastructure in counties that struggle to meet air regulations. The Texas Commission on Environmental Quality last year doled out more than $7 million in grants through a program made possible by legislation passed in 2013. 

Another factor driving the trend amounts to simple economics, experts say. The nation’s surge in natural gas production has made the fuel far cheaper than gasoline and diesel. Truckers, large companies and even public agencies across Texas are increasingly purchasing natural gas vehicles in hopes of saving on long-term costs and bolstering their green credentials. Large public transit systems in Dallas, Houston and San Antonio are among those that have invested in natural gas fleets. 

During the 84th legislative session, senators overwhelmingly backed legislation that would incentivize state agencies, counties and cities to purchase vehicles that run on natural gas and other fuels that burn more cleanly than gasoline. The measure was later attached to separate legislation in the House. But conference committee members couldn't reach an agreement on that bill, which died.

Updated: June 10, 2015