‘Local Control’ Is Killing Uber in Texas. Is Fracking Next?

“The truth is that Texas currently has a patchwork of regulations that are inconsistent, unpredictable and unnecessarily burdensome.” –Uber spokeswoman Sally Kay (April 9, 2015)

As lawmakers in Austin have been debating legislation to affirm the state’s role as the primary regulator of oil and gas production – including hydraulic fracturing (“fracking”) – greens have been howling that the legislature is trying to take awaylocal control.” But the same use of “local control” has already driven one non-energy company out of a major Texas city, not long after Governor Greg Abbott warned of far-reaching economic impacts from “unchecked overregulation by cities.”

Uber Booted from the Alamo

In December, the popular ride-sharing service Uber said that a newly proposed city ordinance in San Antonio would force them to leave the city. In a letter to the city council, Uber said the ordinance “significantly deviates from the standards set by every other Texas municipality,” adding that the law would impose “unnecessary requirements” that prevent them from operating. Taxi companies, who have struggled to compete with Uber across the country, lobbied the council to adopt the new local ordinance.

The city ultimately approved the new rules, and Uber left San Antonio.

Meanwhile, the state legislature has been considering a law to standardize ride-sharing regulations across Texas, on everything from permitting fees to insurance. Such a law would allow companies like Uber to operate in places like San Antonio, and also provide regulatory certainty to expand into additional Texas cities. An Uber spokeswoman told the Dallas Morning News that Texas currently has “a patchwork of regulations that are inconsistent, unpredictable and unnecessarily burdensome.” An Uber petition with over 100,000 signatures reads in part:

“Here in Texas, individual cities are trying to figure out the best way to welcome innovative businesses like Uber. This means that Uber must face a complicated patchwork of different regulations to operate across our state. In the past year, states like Virginia and Colorado have led the way in passing statewide rules for the ridesharing industry, and now it’s time for Texas to step up to the plate.”

Fracking and ‘Local Control’

A similar debate has been occurring with respect to oil and gas regulation in Texas, with environmental activists defending the same kind of “patchwork of different regulations” that drove Uber out of San Antonio.

Last November, greens scored a major win in Denton when the city voted to ban fracking. Activists have been defending that law, which effectively prohibits new drilling in the city, as precisely the type of “local control” that Texas needs to retain.

But a bill in the Texas legislature, authored by State Representative Drew Darby (R-San Angelo) and Senator Troy Fraser (R-Horseshoe Bay), would prevent cities from banning drilling, although it would — for the first time under state law — codify cities’ authority to regulate surface-related activities such as traffic, noise, and emergency response. The measure passed the House on Friday with an overwhelming margin, 122 to 18. Like Uber, the energy industry has argued that local control has become “an unwieldy regulatory scheme,” according to Texas Oil and Gas Association president Todd Staples. In addition to explicit drilling prohibitions, such as in Denton, TXOGA has warned against “a patchwork of regulations for our state’s most important industry that supports 40 percent of state’s economy.”

Green activists, meanwhile, have defended the patchwork system, using Denton and drilling ordinances in various cities as examples of why local control should be preserved.

Luke Metzger with Environment Texas – part of a national organization that wants to “ban fracking wherever we can” – referenced Dallas’ ordinance in a recent op-ed claiming “energy interests are threatening local control.” In a separate release bashing the legislation from Darby and Fraser to establish more uniform statewide rules, Metzger also defended the drilling ordinance in the North Texas city of Flower Mound.

Those local ordinances, however, have effectively driven the industry out. Earthworks celebrated the Dallas ordinance as a “de facto drilling ban” soon after it was enacted in 2013, and no wells were permitted in Flower Mound after its ordinance went into effect. In addition to its fracking ban, Denton also has a 1,200 foot setback, which environmentalists have said is a “de facto” fracking ban itself. Activists have pushed for extreme setbacks in cities across Texas as a way to ban drilling.

Shortly after taking office, Governor Greg Abbott warned against “local control” run amok in a highly publicized speech in front of the Texas Public Policy Foundation. Abbott noted that “Texas is being California-ized” as a result of city-imposed bans on everything from fracking to tree-cutting and plastic bags.

“We are forming a patchwork quilt of bans and rules and regulations that are eroding the Texas model,” Abbott added. “Unchecked overregulation by cities will turn the Texas miracle into the California nightmare.”

With Uber kicked out of San Antonio and the energy industry effectively prohibited from new operations in several other cities, the question is: what will be the next casualty from “local control” in Texas?

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