The Struggle for Local Control over Energy Development

Communities across the United States are coming into conflict with their state governments over where and how energy projects may be built. The issue has drawn attention in energy-rich states like Texas, where a half decade ago the state government introduced a law that prevented towns from limiting fracking within their jurisdiction. Conversely, last year in Colorado cities and towns gained power to regulate local energy development after a number of previous efforts to assert local authority had failed.

The challenge isn’t confined to fossil fuels. On the renewable energy front, communities have opposed wind, solar and other projects that residents say could bring their own set of environmental problems.

Hannah Wiseman, Dean for Environmental Programs at the Florida State University College of Law, discusses energy development turf wars and the often conflicting priorities of states and the cities and towns within their borders. She also discusses strategies that may help strike a balance between local health and environmental concerns and the larger economic and climate benefits that the development of new energy projects can bring.

Full Transcript

Andy Stone: Welcome to the Energy Policy Now podcast from the Kleinman Center for Energy Policy at the University of Pennsylvania. I’m Andy Stone.

Communities across the United States are coming into conflict with their state governments over where and how energy projects may be built. The issue has drawn attention in energy-rich states like Texas, where a half-decade ago, the state government introduced a law that prevented towns from limiting fracking within their jurisdiction. Conversely, last year in Colorado, cities and towns gained power to regulate local energy development after a number of previous efforts to assert local authority had failed. The challenge isn’t confined to fossil fuels. On the renewable energy front, communities have opposed wind, solar, and other projects that residents say could bring their own set of environmental problems.

Today’s podcast takes a look at these energy development turf wars and at the often conflicting priorities of states and the cities and towns within their borders. We’ll also look at some new thinking that may help strike a balance between local health and environmental concerns and the larger economic and climate benefits that the development of new energy projects can bring.

My guest is Hannah Wiseman, Professor and Associate Dean for Environmental Programs at the Florida State University College of Law. Her work focuses on the role that regulation plays in balancing energy development and environmental quality. Hannah, welcome to the podcast.

Hannah Wiseman: Thanks for having me, Andy.

Stone: And I have to say thank you for doing this from home. We normally have these podcasts recorded from a studio here in Philadelphia. Because of social distancing, everything is being closed down, and I’m actually recording this out of my own basement. So I hope it all goes well today.

Wiseman: Yes, this is an exciting experiment.

Stone: Let’s jump onto today’s topic. When did you become interested in the tension, and I’d say the mismatch in priorities, between communities and states over energy development?

Wiseman: I lived and worked in Texas, beginning in 2007, and at this time, oil and gas and wind energy were booming in the state. Oil and gas — it was a new boom in Texas because of a recently-developed, new hydraulic fracturing or fracking technique, and wind energy was also just taking off in that state.

As these booms converged, there were clearly conflicts among individual property owners, communities, and energy companies. So the case Coastal Oil v. Garza was decided by the Texas Supreme Court in 2008. That case said that a fracking company could extract minerals from a family and not pay them for those minerals, so essentially steal the minerals by fracking into them. And under existing Texas law, that was okay. That, of course, created a conflict between individual property owners and the state law. And at the same time, the Texas legislature was mandating the construction of massive transmission lines that would run from wind-rich areas in West Texas to large population centers. Communities were surprisingly supportive of both of these types of energy developments, but you started to see cracks in that support as the booms became bigger. And the conflicts grew to the extent that at a point, the city of Denton went so far as to ban hydraulic fracturing altogether, which was somewhat unprecedented in Texas, which had sort of been, you know, “support all energy forms no matter what.” So it was interesting to see those conflicts get stronger as energy development boomed in such a big way in that state.

Stone: Now why do the priorities of local communities and state governments often diverge when it comes to developing new energy projects?

Wiseman: Energy is an intensely local endeavor. The physical infrastructure of an oil and gas well, or a wind or solar farm has to be located in a town or a city or a county. And because of that physical presence of energy at the local level, local governments tend to experience the bulk of the negative externality — those impacts that extend beyond the energy project site and that are not paid for by industry. Local governments experience the noise, the dust, the blinking lights, the diesel air pollution during construction, the busy roads due to construction vehicles traveling to and from the energy project sites.

So the local governments get all of those negative externalities. They do get some of the benefits — some local employment payments to property owners in the form of royalties are very important, but more of the positive benefits of the energy development extend to the state level. So states get massive benefits from both oil and gas and renewable energy development in the form of tax dollars, booming employment, and other economic metrics. And they don’t get as many of those negative externalities. So states see benefits. Local communities — not so much. They have more of a mixed response to this development.

Stone: So benefits accrue to everyone, but the externalities are really felt locally?

Wiseman: That’s right.

Stone: So the extent to which a town may be able to regulate energy projects really varies based on the type of energy resources that we’re talking about. So communities may have much less say in whether a new gas pipeline project gets built than an equivalent oil pipeline. Why is that?

Wiseman: That’s correct. The striking contrast in pipelines is an interesting one. The concern is largely local, “not in my back yard,” or Nimbyist sentiment which could involve a community holding out against a pipeline that would run among several states. And that one community, or several communities that opposed the pipeline could block the whole project. That’s a concern.

It’s more of a concern, though, in the natural gas context than oil. For oil, there are lots of other transportation opportunities. If the pipeline were to be blocked, an oil company in the very old times, could use a horse and wagon, but also they can use barges, rail cars pulled by a train, trucks. Oil companies have lots of options, so Congress didn’t view the local hold-out problem as a very important one for the oil pipelines. But Congress did view local Nimbyism as a problem in the natural gas context because pipelines are one of the only economical ways to transport that resource. Congress preempted nearly all state and local control over interstate natural gas pipelines for that reason.

Stone: So what happens when we’re talking about an oil and gas well? What’s the standard there?

Wiseman: Oil and gas wells — it’s more mixed, but the general recent trend has been for states to preempt local control over most aspects of oil and gas development. Now this is interesting because states have not tended to preempt local control over renewable energy quite as much. Now, some states are moving in that direction. They’re trying to centralize the siting processes, but in general, more local control over oil and gas has been preempted than in the renewable context.

Stone: What are the legal and regulatory tools that communities generally use to regulate development within their borders?

Wiseman: So when they are not preempted from doing so, zoning is one of the most common tools that communities use. Zoning involves identifying different areas within a town or a city or a county. They’re called “districts,” and within each of those districts, certain types of land uses and structures are allowed or prohibited. And this is what local governments have done since the 1920s and ’30s. States passed these enabling acts that allowed them to zone and to say that it will have a residential district, without a conflicting industrial development, for example.

Energy development is just one form of industrial development. So many local governments have zoning codes that apply to oil and gas and renewable development. Now, in some cases, states are even preempting local governments’ ability to zone for oil and gas development. They’re trying to say, “You as a community are not allowed to say which parts of the town or city oil and gas wells can go in or not.” But in general, that’s the most common technique.

Then, some communities have also dealt more informally with energy developers through negotiation tactics, asking for donations to local police and fire departments. They have very limited taxing abilities, but it’s the zoning that’s most common.

And then one other quick one is the direct regulation of these industries beyond just where may you locate within a town. A direct regulation in the form of an oil and gas ordinance that will say things like, “You may not pollute the groundwater,” or “You must have environmental liability insurance.” Those types of direct local regulations are increasingly common.

Stone: And those are getting by?

Wiseman: To some extent, but in places like Texas, Oklahoma, Ohio, Louisiana, they’re not. So this is where there has been growing preemption. Where the local governments are still allowed to enact those direct ordinances, that’s one of the most common approaches.

Stone: What specifically drives a state to preempt local control? What’s the motivation there?

Wiseman: Well, deriving from the state’s strong economic interest in encouraging oil and gas and renewable energy development is the concern that local control through zoning, direct regulation, or other tools will block a beneficial industry that is bringing those dollars into the state. So the concern is even if local governments aren’t banning oil and gas development, or wind or solar, states assume that a patchwork of different regulations, different zoning regulations, different oil and gas ordinances that place varied standards on pollution or whatnot, that might dampen development and discourage developers, because as they move from one town to the next, they’ll have to deal with these conflicting regulations.

States are also notoriously just suspicious of local governments, often assuming that they’re incompetent and corrupt and simply not good at regulating. And sometimes it’s just a matter of pure politics. Industries that can spend dollars and strong political capital lobbying a state’s re-amped local control will do so, because that’s much easier than having to attend every single city council meeting and get the regulation you want as an oil and gas company or a renewable company.

Stone: I just wanted to bring up a different aspect here for just a moment. This isn’t always the case, where we have local communities that are in opposition or wary of energy development in their neighborhoods. I’m thinking, for example, of coal communities, right?

Wiseman: Right.

Stone: Coal communities have been relatively receptive. Their economies have been very dependent upon coal mining. So it’s a different situation there, right?

Wiseman: It is a little bit of a different situation. And certainly many communities have also been supportive of hydraulic fracturing and renewable energy development — again, because they do experience a lot of economic benefits. Even if they experience strongly negative environmental externalities, they might think it’s worth it for the dollars. But despite community support in a lot of cases, states get worried the minute they see even one or two communities start dissenting from that overall support.

So in Texas, right? — in general communities have been very supportive of fracking. When just one city, Denton, passed through a voter initiative, a ban, the Texas legislature got worried, thinking, “What if this expands to more communities?” Even a few communities could mess up this consistent welcoming of the industry.

Stone: Over the past decade, we’ve seen a number of cases where communities have tried to place limits on oil and gas development, set-back rules, such as in Denton, Texas, which you just spoke about. Now, it’s interesting what happened last year in Colorado, where communities’ power was actually reaffirmed. What happened in Colorado?

Wiseman: So Senate Bill 19-181, enacted in 2019 and promptly signed by the governor — it was all politics. It was a change in politics. Colorado has long been at the front lines of the conflict between residential development and oil and gas wells. But in recent years, even more so because people are flocking to the state from places like California, seeking the good life and mountain vistas. They don’t want oil and gas wells in their back yards or in their children’s schoolyards, yet this is what they’re experiencing. So there has been a long push, for more than 5 or 8 years now, of a long push in Colorado for more local control. And the extent of local control was quite unclear. The former governor, Governor Hickenlooper, was a Democrat but had some connections to the oil and gas industry. So he was sort of viewed as, “Let’s take a middle ground. Let’s try to find a compromise between state control and local control.” That compromise didn’t really happen. There was just a lot of fighting. And what changed recently was the politics. So the election of a new Democratic governor without ties to the oil and gas industry and a strongly Democratic legislature gave a long-standing push and finally had the chance for this bill that gave extensive local control to pass, and the legislature promptly enacted it.

Stone: That’s interesting, and I guess it’s that change in the governor that we’re getting at here. But in November of 2018, there was Proposition 112 in Colorado that would have given communities to power to determine set-back for wells. That was turned down in a vote.

Wiseman: That’s right.

Stone: And then again, less than six months later, you get this SB 181 that you just spoke about that actually went through.

Wiseman: That’s correct. There had been multiple attempts to amend the Colorado constitution, both in favor of local control, and against it. And most of them have failed. The voters just couldn’t come to a consensus on the issue, but apparently the governor was sort of that centralizing force that finally created some sort of clearer outcome.

Stone: Okay, so the issue here seems to be how do we reconcile the priorities of the states with the priorities of localities? And you’ve proposed some solutions that may help all parties find common ground and achieve their goals. And taxes are one possible solution. How would these work?

Wiseman: I think one way to find this compromise between the state and local interests is to have a state-designed and state-administered tax, somewhat similar to Pennsylvania’s unconventional gas well impact fee. So the state would set the amount of the tax, but then local governments would have the opportunity to implement that. So there would still be state uniformity, which is largely what states are concerned about. There would still be some municipal control. And the municipalities could choose to implement this tax, and similar to Pennsylvania, their revenues would be distributed in part back to communities.

Now I think if you really want to address the local impacts, more of the revenue might need to go back to communities than it does in Pennsylvania, and communities might need more flexibility in determining where those revenues go. So Pennsylvania has a pretty long list of the types of problems that tax revenues can address when municipalities use those revenues from impact fees to address road damage, housing shortages caused by lots of workers coming into town. But I think local governments might need even more flexibility in terms of spending those revenues.

But that tax again — just having the money available to pay for those localized negative externalities might cause a lot more communities to not welcome the development, necessarily, but to be the less sort of uniformly opposed and seeking of bans, to the extent that there are communities that have so strongly opposed this development.

Stone: So I think you’re referring here to Act 13, is that right? — which is a tax and energy bill for the state?

Wiseman: That’s correct. That created the unconventional impact fee.

Stone: Now, it’s interesting. So that money goes to the state. The state then redistributes that tax money back to the communities so that they can pay to repair roads from increased truck traffic and whatever other types of damages that you might have. But let me ask you this. So that’s kind of a payment for future damages, but how might taxes incentivize energy development companies to avoid the damages in the first place, which is really, I think, what the communities are looking out for?

Wiseman: Yes, and that’s the challenge. You have to calibrate the tax at a point where it won’t just be viewed as a cost of doing business, and where it will adequately deter behavior, right? You’re going to set it at that sweet spot where industry says, “It’s better for our profits if we avoid this impact at all, rather than paying the tax.” So you would need to change the design of a tax to make that happen, right?

So in the case of the unconventional gas well impact fee, industry pays it, no matter what. It could be that taxes need to be designed such that industry would be better incentivized to avoid the damages. I don’t know, maybe the tax would be increasingly high, if industry had caused negative impacts in the past, at other sites, for example. And in some cases, you’re just not going to be able to design the tax well enough to ensure that the oil and gas industry will avoid creating an imbalance to begin with, in which case you need other opportunities for some local input, including for example maybe a requirement that renewable energy or oil and gas companies — because both of those types of energy have substantial local impacts — they have to negotiate with the community for some sort of mitigation agreement in which they say, “We will avoid these types of damages.” That’s especially important for damages that they can’t reverse, such as killing off endangered or threatened species or polluting an aquifer, which is very hard to clean up.

Stone: Are there barriers to those types of fees or penalties, because it sounds like it would be something that communities might have tried to implement in the past?

Wiseman: Well, in many cases, communities are substantially preempted from levying any sort of tax. They can get away more with calling something a “fee,” but then there’s all this litigation about whether, in fact, the fee is a tax — similar to the arguments you heard at the state level in Pennsylvania. Also, that was a fear, in fact.

So communities are somewhat constrained in their ability to just charge industry a certain amount of money for damages. They’re also constrained in their ability to negotiate with industry for mitigation, for preventing the harms to begin with, because when local governments are preempted from regulating the industry, industry has very little incentive to sit down at the table and negotiate, right? If they know that most of the regulation is coming from the state level, why bother to negotiate with the locals?

Stone: Well, it’s interesting that you bring that up because you proposed as a complement to local taxation, in some of the writing that you’ve done, you’ve proposed this local negotiation where the communities negotiate with the energy companies for better outcomes. What leverage do the communities have in negotiating with these companies?

Wiseman: Again, I think it really depends on the extent to which the communities have the ability to threaten to regulate. So in places like Texas and Oklahoma and Ohio, where there’s relatively broad preemption of local control, it’s hard for a community with a straight face to say, “Hey, industry, if you don’t negotiate with us, we’re going to slap some really heavy regulations on you.” And so the only incentive of industry to negotiate in that case is just the goodwill of the community. And to be fair, a lot of oil and gas companies do have this vision of a social license to operate. They’ll negotiate even without the threat of regulation. Some won’t.

So I think it’s important in some cases to maybe even require this negotiation, especially if you’re preempting most other local control over something like oil and gas development — maybe at least require a minimum amount of good faith negotiation between the community and the energy developer.

Stone: Now environmental justice is an issue with many, many communities as well, and it seems clear that we’re talking about communities’ right to limit polluting industries, which poor and minority communities have had to endure more often than others. What role might the tools we’ve been talking about play for these communities?

Wiseman: These tools are extremely important from an environmental justice perspective, because if states are preempting local regulation, as they have done increasingly in the oil and gas context, that limits communities’ ability to address their concerns about the pollution, about sonic impact and other impacts on the community. So tools like a tax that they can choose to implement, especially if that tax were able to deter that industry behavior — that would be extremely important. The negotiation is also very important.

At the same time, though, you would need to empower these communities to more effectively participate in negotiations with industry. Because one of the challenges with environment justice that has been long recognized is that people who are working three jobs and don’t have a lot of income don’t have necessarily adequate time or resources to effectively participate, even when processes like negotiation are offered.

So you would need to augment that negotiation with resources to support the community and its ability to effectively negotiate, in order to address these really important environmental justice concerns.

Stone: What might those resources be?

Wiseman: In some cases, you can provide an ombudsman, someone at the state level who is hired simply to work with communities and teach them the basic science they might need to effectively determine what are dangerous risks, for example, from oil and gas development — or even just pay them, provide them with money for computers, copy machines, whatever physical resources are needed for the community to get the information they need so that when they go to the negotiating table, they are prepared.

Stone: We’ve been talking thus far primarily about fossil fuel development in communities. But I want to point out, and I think you actually already have, that this isn’t limited to that type of resource at all. Renewable energy — wind and solar — are also a concern locally. So Nimbyism has generally been much more effective in limiting new renewable energy projects than oil and gas projects. And why is that?

Wiseman: Part of the reason locals’ “not in my back yard” sentiment has meant that wind projects are banned or substantially delayed for years is that there simply has not been as much preemption of local control over renewable energy projects. So local governments can get away with just banning large-scale wind development altogether, for example.

Now, some of that is starting to change. Some states are saying, “Well, wait a minute. We need renewable energy. We’ve also got to limit local control, just as we have in the oil and gas context.” But yes, generally speaking, there is more and continued local control, especially in the zoning context, over renewable energy resources.

Stone: In New York State, for example, Governor Andrew Cuomo has proposed rules to streamline permitting of renewable energy projects to help the state meet its clean energy targets. Are we going to see more of these efforts, and are they a good thing?

Wiseman: Yes, we will see more of these efforts, and they are important. Now, there are problems, too, because the streamlining efforts are a bit similar to the preemption we’ve been talking about in the oil and gas context. So when states say we’re going to “streamline” the process for approving renewable energy, communities say, “Wait a minute. There are a lot of impacts of renewable energy that we’re worried about. There are blinking lights on top of wind turbines. There are shadows from the moving blades. There are bird deaths. We want to be able to address these impacts.” And the more streamlining that occurs, communities are worried that those impacts will be sort of swept under the rug.

So I think that there will be more streamlining, because a lot of states, like New York, Washington State, and New Mexico and others are implementing very aggressive clean energy goals for reasons of climate change and other air pollution concerns. And along with those clean energy goals, they’re saying, “The way we get this clean energy is by permitting renewable energy projects more quickly, streamlining the process.”

Although I think that streamlining is important, because I agree that rapid renewable energy development is very important for climate and other reasons — streamlining needs to strike this important balance in recognizing the local effects and making sure that they are acknowledged and addressed to some extent.

Stone: In some of the writing that you’ve done in the past, you seem to be a little bit less critical of limits on local control over renewable energy projects than fossil fuel projects. Why is that?

Wiseman: Yes, this is an interesting balancing act, right? Some people would argue if we’re talking about federalism and the level of local authority, we should just consistently say local governments should or should not have power. I think, though, that there is some nuance there that’s needed — because yes, local communities need some say over what is happening in their community, and they need to be able to address the impacts. In some cases, though, I do think there is more justification for limiting that control, just enough such that the community has a say but is not able to block the development. And I think renewable energy is one of those areas, in part because climate change is increasing the urgency. We have major wildfires in California during some seasons. We’ve seen this globally, the wildfires — the increased severity of storms. The impacts on climate change are increasingly apparent. Renewable energy is one of the keys to addressing climate change. Even for those who are skeptical of climate change and the extent to which it will impact the United States, just the particulate matter and other conventional air pollution from fossil fuels, energy generation causes thousands of premature deaths in the United States each year. I think that alone could justify the rapid transition to renewable energy. It is starting to happen now.

And also, to some extent, a limitation on local governments’ ability to ban that development altogether. Again, though, what I try to emphasize in my work is we can’t just railroad these projects through. We need local buy-in, and we need local communities to address the very real externalities and negative externalities of renewable energy development.

Stone: Tell me more. What are those very real externalities of renewable energy?

Wiseman: Yes, I think people often think, “Oh, green energy is great. No problem. It’s clean. It’s green. Everyone should love it.” Well, in fact it is industrial development, and although it does not release air pollution or carbon emissions or much water pollution when it operates, it does have important impacts, especially locally.

I mentioned the blinking lights on top of wind turbines. Those are necessary to warn aircraft of a tall wind turbine. There are a lot of other aesthetic impacts. Many wind farms need to be built at high locations, in relatively elevated areas, because that’s where there’s more wind. So you can see wind farms from long distances in some cases. And for some communities, their local mountaintop is their most treasured landscape.

Wind turbines can also be noisy. Solar panels and wind farms take up a lot of land. They’re quite land-intensive, so they can cover massive amounts of acreage. There have been concerns about displacement of farmland and forest by solar photovoltaic panels. So again, although renewable energy has fewer overall environmental impacts, I think we need to remember those aesthetic and noise-based concerns, as well as the impacts on land and associated habitat and wildlife.

Stone: Let me ask you a final question here. Where do you think the next frontier of this battle between local and state priorities is going to take place, and with what resources?

Wiseman: Oh, that’s interesting. I mean, the battle extends so broadly beyond the energy context. It’s happening right now in terms of gun control and all sorts of issues. But in the energy context, I think that the focus of the battle is going to move even more intensely towards solar in particular, because wind energy development has been expanding a lot in the past decade. Solar is a more recent boom — massive development of solar energy.

So I think there are going to be growing battles between communities and states in the area of solar. Beyond that, name any political issue, and you will see a state and local battle — be it a plastic bag ban by a local government or a ban on foam cups at restaurants. This is an endless area of conflict.

Stone: Regarding solar specifically, are we talking about limitations, say, for rooftop solar installations or community solar installations? What specifically do you think the conflict will be there?

Wiseman: I think the conflict will be primarily for the centralized, large solar installations — the really big solar farms that will expand as states aggressively pursue their clean energy goals, which in some cases are saying, “We need a hundred percent clean energy by 2030 or 2050.” If we’re moving that quickly toward renewables, especially in the West and Southwest, there are going to be massive developments of new, very large solar farms.

The real tough solar battle has already been raging for quite some time, and that has been resolved largely in favor of no local bans. So many, many states have already prohibited communities from banning rooftop solar. I think the new solar battle is largely for these big, centralized installations.

Stone: Hannah, thank you very much for talking.

Wiseman: Thank you, Andy. I appreciate it.

Stone: Today’s guest has been Hannah Wiseman, Associate Dean for Environmental Programs at the Florida State University College of Law. Listen to more Energy Policy Now podcasts on iTunes and Stitcher, or by visiting the Kleinman Center for Energy Policy’s website. Our address is kleinmanenergy.upenn.edu. Thanks for listening to Energy Policy Now, and have a great day.