The oil and gas industry has long been one of the most important drivers of the Texan economy, and the state's regulatory framework is notoriously sensitive to its needs. In many cases, Texas State Legislature bills live or die by the lobbying efforts of well-placed representatives of various oil and gas firms. The story of Texas SB873 underscores this trend and offers guidance for future legislative efforts to regulate the energy exploration business in Texas and elsewhere. 
What is Texas SB873?
Texas SB873 was introduced in the Texas State Legislature during the first quarter of 2013. The bill had a relatively simple agenda: It aimed to remove a permitting exemption that oil and gas exploration firms had enjoyed for longer than a decade. Specifically, SB873 required all oil and gas firms to obtain "drilling and exploration" permits for the construction of groundwater wells that were to be used to supply water for hydraulic fracturing activities.
Major Provisions of the Bill
SB873 had three major provisions. Section One amended Section 36.117 of the Texas Water Code to outlaw local water districts' permitting exemptions for so-called "fracking wells." This was accomplished through the use of two subsections that eliminated permitting exemptions for wells drilled for the following purposes:
- "the performance of a hydraulic fracturing treatment on an oil or gas well"
- "other activities related to the production of oil or gas from a completed oil or gas well"
Section Two of SB873 stipulated that the act would not be retroactive, and Section Three specified that it would pass into law on September 1, 2013.
Potential Impacts and Implications
SB873 had obvious and far-reaching implications for the oil and gas industry. As such, it was vehemently opposed by many energy exploration firms as well as the American Association of Professional Landmen and other organizations that lobby on behalf of the industry.
Among other issues, the bill aimed to lengthen the time frames associated with drilling new groundwater wells for hydraulic fracturing operations. While the permitting process may not have imposed a significant financial cost on exploration firms, it's also possible that it would have added to the substantial logistical hurdles that drilling operations face. It may also have added to firms' labor and oversight costs.
On the other hand, the bill would have enabled farmers and residential property owners to track and monitor the pre-drilling activities of energy firms in their area. It may also have protected the water supplies on which the state's dryland farmers and ranchers depend.
Legislative History and Outcome
SB873 was first introduced in late March of 2013. After several readings and docket changes, the bill was amended on May 2, 2013. The amendment was issued in response to persistent complaints from industry-friendly lawmakers and allowed for an expedited permitting process in many cases. It also established a 60-day cap on the pre-approval waiting period for drillers.
Although the amendment addressed many lawmakers' concerns, the bill was still seen as too onerous and unpredictable. Accordingly, it was "left pending" in its committee during the third week of May. This essentially killed the bill and ensured that similar legislation would not be considered until 2015.
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