January 30, 2015

Natural Gas Drilling and Its Effect on Property Values: A Municipal Perspective

For years, natural gas drilling was an industrial activity that was commonplace in many parts of rural Texas; however, with the advent of natural gas drilling in the Barnett Shale in the Dallas-Fort Worth region of North Texas, gas wells and associated facilities have steadily encroached on both urban and suburban areas, often leading to vocal demands by residents that local government protect them from the sometimes hazardous effects of natural gas drilling. Indeed, in the last several years, serious concerns have been raised by residents that gas drilling is unsafe, with benzene and carbon disulfide being poured into the air, cancer clusters appearing in residential subdivisions located nearby gas well pad sites, and unhealthy air quality resulting from such drilling. These concerns have been compounded by fears that the State of Texas is doing little or nothing to address these issues, citing a lack of manpower to monitor thousands of well sites around the state. Cities around the state have recently completed or are in the process of reviewing existing natural gas drilling regulations, including Dallas, Fort Worth, Denton, Flower Mound, Southlake, and Arlington. Further, at the November 4, 2014, election, the residents of Denton overwhelmingly adopted a ban on hydraulic fracturing in the city. On the morning of November 5, two lawsuits were filed against the city, even though the tracking ban will not become effective until early December. The purpose of this article is to provide a brief overview of federal and Texas takings law and, in light of such, discuss how municipalities can use property valuation as a means of supporting municipal drilling regulations, specifically focusing on the experience of Flower Mound, Texas, and its determination of drilling setbacks.

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