City repeal of gas drilling permits held to be a Lucas taking

A Texas court has ruled that a city ordinance prohibiting all drilling of gas wells in the city took the property of a company that had leased land for gas drilling purposes and been given permits in the past to do so. The company claimed that the denial of new permits to drill and the ordinance permanently prohibiting drilling rendered their lease without any value. The court agreed since the lease was limited to a use that was now illegal. No finding was made on whether gas drilling was a private or public nuisance that would justify prohibiting the activity without compensation — despite the fact that the citywide ban effectively declared drilling to be harmful to the public. City of Dallas v. Trinity E. Energy, LLC, 2022 WL 3030995 (Tex. Ct. App. 2022). Because the court determined that the permit denials and the prohibition on drilling rendered the lease without any economic value, the precedent in Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), applied and the complete denial of economically beneficial use was a per se taking. There was perhaps no argument that the court would accept that drilling in the city was a public nuisance, yet no reason was given for the passage of the drilling ban, at least in the court opinion.

See also: Takings