Testing the waters

The fracas about fracking continues. Hydraulic  fracturing (fracking) involves shooting 4-6 million gallons of water, sand, and chemicals into the earth to break up stone and rock so that oil and natural gas can be released. The practice has grown substantially in the last decade, and today there are over 7,000 dumping sites in Texas which have waste water from fracking operations.

Fracking concerns range from criticisms about water usage to concerns the process contributes to increased risks of earthquakes. While scientists and policymakers continue to study fracking, there are some who think that greater legislative oversight (government supervision over certain types of activities) is necessary.

This week the Texas Senate Natural Resources Committee examined whether groundwater districts could regulate the water sources used to supply fracking operations.   Senate Bill 873 by Sen. Glenn Hegar (R-Katy) lets local authorities require oil and gas companies obtain permits for the water they use.  The bill would not, however, mandate that all water districts be required to do so, thus allowing home rule (local regulatory codes) to govern the process.  Under current Texas law there is an exemption (legal loophole to avoid regulation) for “drilling and exploration” by oil and gas companies. Some lawmakers think that’s not fair because the law regarding water permits was written over a decade ago before fracking became big.  Supporters argue farmers are required to obtain water permits why shouldn’t oil and gas companies?   Opponents argue it will hinder drilling operations.

It’s not been a good week for concerns about regulatory enforcement of oil and gas sites which fall underneath the Texas Railroad Commission.  That agency was criticized for its failure to comply with requests by the Texas Environmental Enforcement Task Force for documents related to the disposal of fluids from an oil and gas site.  Indeed, the Task Force had to get a search warrant (order issued by a judge that authorizes officers to conduct a search of a specific location) to get the information it needed.  Looks like the Commission may be in hot water.

And speaking of someone who doesn’t have to force the issue and who seems to be testing the waters, some political pundits are wondering whether U.S. Senator Ted Cruz may be already queuing up for bigger offices. The freshman lawmaker (his first term of office started January 3, 2013 as specified in the U.S. Constitution) plans to be a guest speaker at the Silver Elephant Dinner to be held next month in South Carolina.  Past high profile speakers reads like a “Who’s Who” of Republican presidential aspirants including Ronald Reagan, Newt Gingrich, and John McCain.

Wonder if the water’s warm.

Baby you can drive my car

Texas roads aren’t just known for their excessive speeds, they also seem to be a favorable testing ground for experimental automobiles because of our regulatory framework (the rules and regulations which govern the enforcement of our laws).   Last week Google tested a prototype car which needs no driver—although the manufacturer required that there be a person sitting in the driver side while someone else sat in the passenger seat.  This first ever vehicle—which navigates itself—operates in much the same way that airplanes behave when the instruments are set for automatic pilot.

The company brought the car out here from California and did a test drive from New Mexico to Texas and around Austin as part of Texas’ Department of Transportation Forum held to highlight transportation solutions for the future.  There’s still some question about whether the vehicle was “street legal” because neither Austin, nor the state have laws that regulate “self-driving” technology. Three states, California, Nevada and Florida all have laws in place to address such technological innovations, giving new meaning to “who’s in the driver’s seat.”

And if you need oil and gas to run those vehicles, Texas promises to be the place that can help with that too.  A recent survey of the oil and gas boom in Texas highlighted that the Lone Star state is responsible for over half of the rigs in the U.S. and more than 1 in 5 rigs in the world is operating out of Texas.

Who would have expected that in the early 1990s as the industry stalled and the Texas economy stagnated? Indeed back then, many political scientists and economists spoke of Joseph Schumpeter’s theory of “creative destruction”—the process of change that occurs within economic structures where old and outdated economic forces are destroyed and new ones are created.  While Schumpeter was a conservative largely critical of government intervention during the Great Depression and World War II, his economic principles—when old industries die they are replaced by newly emerging ones—became  vogue during the dotcom boom and bust in the early 2000s.

In Texas, the rise of information technology (IT) as the oil and gas industry struggled was critical for maintaining Texas’ fiscal health.  Now that the oil and gas industry seems to be undergoing a resurgence, it is now IT which may be in need of entrepreneurial re-vamping.   ”Fracking” (hydraulic fracturing) is the controversial technique which creates fractures in rock formations by injecting fluid into cracks to force them to open into larger fissures allowing oil and gas to flow out of the formation so it can be extracted. It has increasingly been used around Texas to take advantage of additional gas reserves that have not been fully tapped. Its economic impact is being touted as a way forward in economically difficult times and that it reduces our dependence on foreign oil.

Wonder how long before the self-driving car learns how to fill up at the gas station?

Geography Demography

The rugged individualistic subculture of Texas and our beliefs in personal liberty, property rights, self-reliance, and free competition means that sometimes those values clash.   Texas’ population growth also means more legal battles pitting landowner property rights against business growth as the state’s population expands and development brings competing values into conflict.

Witness the most recent tug-of-war between a northeast Texas farmer, Julia Trigg Crawford, and a Canadian pipeline company (TransCanda) seeking to run a pipeline run through Crawford’s property.  The dispute illustrates the tension between economic development and eminent domain-the legal principle that federal, state, county, or local government authorities have the power to take private property for public use after paying just compensation (the fair market value decided by legal proceedings) to the property owner.   Air, water, and land rights are subject to eminent domain.

Crawford’s case is just one of several in recent months where corporations and public entities are laying claim to private property because of expanding economic capacity or natural resource rights.  The boom in hydraulic-fracturing and wind-power which both require pipelines or transmission lines across rural regions has also contributed to more disputes.

Hydraulic-fracturing or “fracking” is the process of injecting a mixture of sand and water into underground cracks to force more oil and gas to flow into a reservoir where it can be extracted.  Increasingly there are concerns about the environmental impact and safety of such procedures, but fracking has increased both oil and gas production and revenues.   The Eagle Ford Shale area (San Antonio) boasts revenue of $25 billion last year alone, and the creation of 50,000 jobs, while the Barnett Shale (Ft. Worth) brought in $65 billion in 2011 and has created over 100,000 jobs.

While recent eminent domain cases have tended to favor the government, not all cases have been adverse to property owners—an East Texas farmer successfully contested a company’s right to build a carbon-dioxide pipeline across his land.

And not all the disputes are about pipelines.  Recent cases include a wide array of issues.

1) The City of Austin taking over a downtown attorney’s property for use as a parking garage and chilling station

2) A Houston conflict about stopping a 21-story luxury tower from being built in a residential neighborhood

3) The City of Beaumont’s right to demolish a neglected building

4) A property owner trying to keep the public off her beachfront property that had eroded all the way up to the front of her house

5) Questions about whether landowners own the groundwater beneath their land

Where does it go from here?

For Crawford and TransCanda that’s up to a pending court decision out of the Sixth Court of Appeals for the state of Texas. No matter what, an appeal is most likely to ensue.

For us, that depends on the geography and demography of Texas.  After all, land use issues ultimately are the result of competition over natural resources and the changing nature and needs of the people who need those resources. Last legislative session, Senate Bill 18 strengthened requirements for businesses wanting to use eminent domain powers.   Guess that means it’s all up to we the people.