Oilmen Balk at Texas Taxes for Fire Services

(CN) - Arlington, Texas, plans to cover its fire services by imposing an unconstitutional tax on natural gas well operators, two trade groups claim in court.

The Annual Fire Permit Assessment, which passed in Arlington on March 6, 2012, allegedly requires operators to pay $2,397 per well.

This is in addition to the $14,500 permit fee and the annual $2,000 re-inspection fee operators already pay for each well within Arlington, the Texas Oil & Gas Association and the Texas Independent Producers & Royalty Owners Association say.

These groups claim to represent Carrizo Oil & Gas, Chesapeake Energy, Quicksilver Resources, XTO Energy and other operators.

Arlington already "profits handsomely" from the gas industry while taking in money from lease bonus payments, royalties, revenues from fees, and business personal property and real property ad valorem taxes, according to the complaint in Tarrant County.

During the 2011 negotiations to amend the city's Gas Well Drilling Ordinance, "natural gas well operators made significant concessions on certain regulations and requirements it opposed - concessions that may not have been made had the city disclosed its intent to increase gas well permit fees," the complaint states.

The associations claim that within two months of adopting the amended ordinance, the city announced the proposed Annual Fire Permit Assessment.

Arlington Fire Chief Don Crowson deemed the assessment "necessary to fund a new natural gas well preparedness and response effort, including the hiring of eight (8) new employees, paying benefits, and funding training relating to a purposely vaguely described gas well emergency preparedness and response program," the associations say.

While serving a city that now contains 326 natural gas wells, the Arlington fire department has only received three documented calls for gas well emergencies over a five-year period, the associations claim.

The fire chief "points to operators of special events venues as an example of businesses 'that pose real Homeland Security and pubic safety risks in Arlington' and equates the drilling of natural gas wells with such special events," according to the complaint.

But the associations say the comparison of their activity to special events like Texas Rangers or Cowboys games "is grossly misplaced."

"Crowson also defends the Annual Fire Permit Assessment by stating that 'the Arlington Fire Department must be prepared 'all the time' for NG emergencies in all locations,'" the complaint states. "As with Crowson's attempt to distinguish gas well emergencies from other emergencies by calling them 'unpredictable,' one must wonder for what types of emergencies the fire department does not have to be prepared for 'all the time.' Any citizen of Arlington should hope that its fire department is prepared for all emergencies at all times. That is why the citizens of Arlington pay taxes."

Well operators already have to pay Arlington for any emergency services they may require, according to the complaint, citing the amended Gas Well Drilling Ordinance.

Though Arlington has declined free fire department training from gas industry members, it plans to charge gas well operators a greater fee than it requires of other businesses that deal with hazardous materials, the associations allege.

The Annual Fire Permit Assessment violates both the Texas and U.S. Constitutions and the Texas Local Government Code, according to the complaint. The plaintiffs seek declaratory relief. They are represented by Jeffrey King of Winstead P.C. in Fort Worth.

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