Gas Wells Could Run into Lawsuits: Cities May Face Fights If 1,000-Foot Setbacks Aren’t Reduced

By Jay Parsons, The Dallas Morning News

Oct. 22–Legal experts and energy officials said several area cities could face lawsuits if they don’t reduce 1,000-foot rules separating homes from gas wells.

Most area cities set the distance between 300 feet and 600 feet. But Flower Mound, Trophy Club, Roanoke, Colleyville and Copper Canyon all require 1,000-foot setbacks. Grapevine is considering a similar ordinance.

Drillers can apply for exemptions to drill closer to homes, but a rejection might spiral governments into costly legal battles.

That hasn’t happened yet, but some experts said lawsuits are likely as the number of available drilling sites winnows for the booming gas industry.

Supporters of the 1,000-foot rule say it provides a buffer for noise as well as safety in the rare event of an accident.

But energy officials say a 1,000-foot buffer prevents mineral owners from capitalizing on valuable natural gas pockets. They could conceivably file a takings claim — and demand that a court force a municipality to pay for the value of the untapped minerals.

If you leave somebody with no ability to produce the minerals, then people won’t have a choice,” said Larry Dale of Dallas-based Dale Resources, which specializes in urban drilling. “That’s a risky stance for the cities to take because the damages could be enormous.”

Martin Garza, an energy lawyer who represents several major drilling firms, said several cities backed off after considering large setbacks and other restrictive rules.

That happened in Fort Worth, where a task force briefly discussed a 1,000-foot setback before settling at 600 feet with exemptions as low as 300 feet.

“If the mineral owner can’t get his minerals, that value is reduced to zero,” Mr. Garza said. “If I said you can’t put up a restaurant, maybe you can still build a house or a golf course. If I take your mineral rights, you can’t get to them. There’s no other option.”

Flower Mound could be the first target. The southern Denton County town is known among the industry for having the area’s most restrictive drilling ordinances — a bragging point for some in the town.

“What the oil industry is saying [is] all that matters is we get what’s underneath the ground,” said Marsha Gavitt, director of a Flower Mound advocacy group opposing looser drilling laws. “Anybody seeking to benefit, especially rich and powerful, they’re always going to [threaten lawsuits], and it’s a bully tactic.”

Mineral rights are investments, she said. “The key word is investment,” she said. “You take a personal risk. It’s not up to people not in business with you to make that investment pay off.”

Flower Mound Town Manager Harlan Jefferson said, “It’d be difficult to speculate on legalities at this point.”

The town allows for exemptions for as little as 500 feet, but typically only if the only home within 1,000 feet belongs to the mineral owner. The other area cities allow for similar variances.

Trophy Club is the only city among the group to allow waivers if the driller proves the 1,000-foot setback can’t be met.

“I think we will see a series of lawsuits filed by owners of mineral estates challenging a 1,000-foot limitation on the basis that it’s too much and not reasonable,” said Martin Camp, who teaches land use law at Southern Methodist University. “It will happen when the people who own the mineral interests realize the easy-to-drill sites are gone.”

The combined number of gas wells in Denton and Tarrant counties has grown 500 percent in the last five years, according to state data. Drillers have increasingly targeted urban areas as gas prices have risen.

Some experts said the outcome of a legal challenge depends on how much drilling technology improves. Modern, horizontal drilling techniques allow companies to recover minerals more than a mile away from a well site.

But in densely populated areas, companies could struggle to find an approved drilling spot even in that range.

A Flower Mound task force consisting primarily of pro-drilling interests discussed dropping the setback to 500 feet, but stuck with 1,000 feet because of resistance from town leaders. The task force did proposed loosening some other restrictions and making it easier for drillers to get exemptions.

Town Council members blasted the group for loosening restrictions instead of tightening them. They tabled the recommendations this summer and haven’t returned to the topic.

“They’re denying me my right to develop my minerals,” said Don Hanvey, whose plans to drill in his western Flower Mound neighborhood were blocked by town ordinances. “I’d be very upset if I can’t develop my minerals because I don’t think they could win in court.”

Mr. Hanvey said he does not plan to sue Flower Mound but expects a larger company will.

Colleyville passed a 1,000-foot rule earlier this year. The city has no gas wells and likely couldn’t fit many — if any — inside its 12 square miles under those rules.

“We felt 1,000 feet is reasonable to protect adjoining property owners’ concerns of noise and environmental issues,” City Manager Bill Lindley said. “If over time we see cause to go below 1,000, we’ll take that under consideration.”

In Grapevine, the council sent back a staff proposal for a 1,000-foot buffer for further study. A second vote hasn’t been scheduled, Assistant City Manager Tommy Hardy said.

“It’s a very delicate tightrope they’re trying to walk,” Mr. Garza said. “The value of drilling for 20 years is too much. The cities have come to that realization * they can’t afford the lawsuit or write the check for a takings claim.”

E-mail jparsons@dallasnews.com

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Copyright (c) 2006, The Dallas Morning News

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