Co-author Isreal Miller

Local taxing authorities frequently look to out-of-towners to bear what the locals consider the outsiders’ fair share of the burdens of increased oil and gas activity. The counties are often small and rural. (See the Dimmit County road tax).You can’t blame them, but  Reeves County (county seat: Pecos, 2010 pop. 13,783), Loving (county seat: Mentone, 2010 pop. 1,340), and Ward (county seat: Monahans, 2010 pop. 10,658) have been reminded by the big guys and gals in Austin that these efforts are not likely to succeed. It didn’t work for Huey Long and it isn’t working well now.

The Texas Supreme Court issued four opinions addressing the taxation of compressors used to deliver natural gas into pipelines: All four were consolidated for briefing with another case, EXLP Leasing, LLC v. Galveston Central Appraisal District. EXLP v. Galveston addressed most, if not all, of the issues raised in each of the four cases at hand. Specifically, the court upheld Texas Tax Code § 23.1241(b), which values the compressors based on the lease revenue they generated during the previous tax year divided by twelve. EXLP v. Galveston also determined that the taxable situs for the compressors was the county in which EXLP Leasing maintained a business address and storage yard (Washington County) and not in the various counties in which the equipment might otherwise be physically located or leased (e.g., Galveston County).
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In Frederick v. Allegheny Township Zoning Hearing Board, et al, the Pennsylvania Commonwealth Court affirmed a local zoning ordinance allowing oil and gas operations in all zoning districts in the Township as long as they satisfied enumerated standards that were designed to protect the public health, safety and welfare of the citizenry.

Facts and Findings

CNX received a permit to drill a well. The ordinance imposes a 1,000 foot setback and prescribes notice requirements and operational limitations. Citizens owning neighboring tracts complained that the well was not compatible with agricultural and residential use, complaining about noise from pad site preparation and drilling activities.

The objectors did not challenge the Zoning Board’s fact findings. That was either a tactical mistake or a lost cause. One can’t tell from the opinion. The court noted these findings, among others:

  • This is an area that has historically had gas production. There are 242 conventional gas wells in the Township, some of which employ hydraulic fracturing.
  • One farm already has three gas wells plainly visible to persons driving by the property.
  • Nothing will be visible to the neighbors after the well has been drilled and completed.
  • The Zoning Board rejected as not credible the testimony of several experts sponsored by the objectors.


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John Maynard Keynes is no favorite of fiscal conservatives (There is more to like from Friedrich Hayek), but Mr. Keynes did have it right when he said, “The avoidance of taxes is the only intellectual pursuit that carries any reward”.

In two separate Texas suits, oil and gas producers are attempting to live out Mr.

The Dallas Gas Drilling Task Force has issued recommendations for regulation of hydraulic fracturing.  The task force focused on zoning requirements, permitting requirements, air quality issues, and water-related issues.  A few highlights:

  • Locations will be more difficult to find. Wells must be 1,000 feet from residences, churches, schools and other community buildings.  Setbacks of 500