ARLINGTON -- Two natural gas well trade organizations filed suit Monday in a District Court in Tarrant County to prevent Arlington from implementing what they deem an unnecessary and discriminatory new tax on gas wells.
Last month, the City Council unanimously approved a $2,397 annual fee per well to pay for more firefighters, training and equipment, which Fire Chief Don Crowson said the city needs to prevent and better respond to gas well emergencies. The fee, the first of its kind in the Barnett Shale, is expected to generate an estimated $800,000 for the Fire Department's gas well emergency preparedness and response program.
The Texas Oil & Gas Association and the Texas Independent Producers and Royalty Owners Association argue that the city, which has more than 300 gas wells, is trying to unfairly "expand its revenues by taxing a single industry."
"It's seven times higher than any other permit fee they charge to a particular business," said Justin Furnace, president of the royalty owners association. "We're really left with no alternative but to seek relief from the court."
The associations call the Fire Department's gas well program, which will add a layer of inspections at well sites, unnecessary given the industry's safety record in the Barnett Shale. The suit says that while the Fire Department responds to tens of thousands of service calls annually, the city has had only three natural gas well incidents in six years and that those releases were handled by the companies, not firefighters.
The city has also repeatedly turned down well operators' offers of free training, Furnace said.
"The industry has a terrific record when it comes to public safety in the city of Arlington," Furnace said, adding that companies have their own emergency responders available around the clock. "To the extent that extra training is needed, we stand ready as an industry to provide that training free of charge to the city."
Advanced training
Crowson defended his program Monday, saying first responders need training in an urban environment that is more advanced than the cursory gas well site awareness classes being offered by the industry. Though the fee has not been implemented, the Fire Department has hired a gas well safety and security inspector and a captain to oversee the preparedness and response program.
Dozens of firefighters are also expected to undergo industry-specific training in Houston this summer to learn how to protect the community during gas well fires or other incidents, he said.
"At the end of the day it's my team that is responsible for public safety. The only way we can do that is to properly equip and train our team to do those things that keep the public safe," Crowson said. "Awareness-level training does not come anywhere close to matching our need to deal with an emergency. We need to know more than just what elements are on a pad site."
The Fire Department also plans to use the fee to pay for six additional firefighter positions and to train and equip 42 current firefighters to create two gas well emergency response teams.
The council approved the program despite opposition from Chesapeake Energy, XTO Energy and Quicksilver Resources. Representatives from those companies told the council that they were concerned that the Fire Department's program could lead to "potentially unsafe measures, unreasonable costs and additional burdens that may prohibit the industry from quickly and safely managing any unforeseen or unplanned critical incident."
Crowson said that the program was reviewed by the city's legal department and two outside legal teams and that they determined that the city has jurisdiction to implement to an industry-specific fee for additional public safety expenses.
Unattractive for drilling
The associations say the new fee will make Arlington unattractive to natural gas operators and could cost the community jobs and mineral rights revenue, Furnace said.
"My hope is they understand that tens of thousands of jobs are created up there through the oil and gas industry. It affects thousands of mineral owners anytime one of these fees are assessed this way," he said.
The lawsuit says that Arlington has one of the highest gas well permit fees in North Texas and that the city collected more than $1.7 million in fees from natural gas well operators in 2011. The city also collected more than $105 million in bonuses and royalty payments for gas well leases on public lands, according to court documents.
While the Fire Department plans to charge drillers nearly $2,400 per well to cover public safety risks, it charges other businesses that store, haul or handle hazardous materials no more than $350 in permit fees per year.
"There is simply no justification, no reasonable basis, for singling out natural gas well operators among similarly situated businesses when it comes to the potential dangers and hazards they pose to public health and safety," the suit says.
Susan Schrock, 817-709-7578
Twitter: @susanschrock
