Can My Business Challenge a City Ordinance?

One of the precarious balancing acts business owners are familiar with is where a business fills a need for goods and services while avoiding negative blowback from the community. Federal and state regulations tend to focus on larger issues, such as fair trade and the environment, but sometimes local governments tack on regulations and taxes of their own.

The Denton dilemma, for example

Denton, Texas is a good example of a city whose citizens took it upon themselves to restrict certain oil and gas activities, beyond state and federal regulations already in place. The majority of voters in Denton, organized in large part by Frack Free Denton, voted in favor of banning new fracking operations within the city limits beginning December 2, 2014.

According to articles from both sides of the fracking fence, here and here, the new law is on hold – in part because the Texas Oil and Gas Association quickly sued the city after 59 percent of Denton's voters approved the ban. Then there's the other lawsuit filed post-haste by the Texas General Land Office against Denton asking the court to rule that the city over-stepped its bounds.

Too many cooks can spoil the broth

Just as too many cooks can spoil the broth and too many generals ruin the army, too many government entities policing the same business activities can create an overly hostile marketplace. The results can be disastrous – overlapping jurisdictions, conflicting laws, unduly burdensome compliance regulations and more – to the point that businesses either pack their bags and move elsewhere or simply close up shop.

This might sound like a win-win for the anti-fracking crowd in Denton, but what about the companies who just moved to town? What about the people who will lose their jobs? What would happen if more Texas cities pass similar laws and additional jobs and tax revenues disappear? Ultimately, what are the consequences for State of Texas if the Denton law stands?

Our forefathers thought of that

Not to get too technical here, but the basis of the lawsuits challenging the Denton law is found in the Supremacy Clause of the U.S. Constitution and similar principles in the Texas Constitution. The Supremacy Clause gives us the preemption doctrine, which says when state law and federal law conflict, federal law trumps state law.

Likewise, when city law and state law conflict, state law trumps city law. Of course, there are exceptions, such as when the larger government has conceded regulation of certain activities to the smaller government, or when they exercise concurrent jurisdiction.

So the answer is yes, a business can challenge a city ordinance

If your city has a law restricting business activities that conflicts with state or federal law, you may be able to successfully challenge the law. It's also important to note there are other reasons a regulation can be found unconstitutional.

As with any constitutional challenge, your business will need to have legal standing – that is, it must stand to be negatively impacted by the law. You must also be prepared to demonstrate exactly how the law conflicts with pre-existing state or federal law.

Call Peterson Law Group for a complete analysis

Contact a Bryan-College Station, Texas business law attorney to discuss your business's legal issues and explore your options. Our skilled attorneys explain how the law applies to your situation and help you minimize risk. Call Peterson Law Group today for an appointment at 979-703-7014 or fill out our online contact form.