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Archive for the ‘Railroad Commission’ Category

Ask most people what they think the Texas Railroad Commission (RRC) is in charge of and most people will reply that it is railroads. Most people would also be surprised to discover that it is in fact, the wrong answer.  The RRC actually oversees the oil, gas and coal production within the state.  Ending this source of confusion by changing the name to something more appropriate seems like a no-brainer. This session, HB 237 attempts once again to change the name – to the Texas Energy Resources Commission, a name more in line with the actual work the commission does. HB 1818 offers a few of the reforms the RRC needs, but does not go nearly far enough.

Email your Texas State Representative to ask that he or she support amendments to HB 1818 that will offer real reform at the Railroad Commission.

Name vs. Mission

The Railroad Commission is 125 years old, making it the oldest regulatory agency in the state. When the commission was formed in 1891 its main job was to regulate the rail industry.  Once the Texas Oil Boom started the commission’s responsibilities were expanded to include regulating oil and gas. Over the years, as oil and gas became more dominant and railroads became less, most of the non-energy functions like the railroads were eliminated.  By 2005, when the RRC lost the last of any responsibility to regulate the railroads, its name became truly obsolete

Archaic Bond Limits and Unplugged Wells

One of the RRC biggest responsibilities is to cover the cost of plugging abandoned wells.  The way the RRC attempts to do this is by requiring companies to buy either individual or blanket bonds as insurance to cover the cost of plugging an abandoned well before they can drill. The cost of plugging a well is about $5-17 per foot for an average well. Unfortunately the bond cost has been stuck at the 1991 figure of $2 per foot. Bond funds usually cover only about 15% of the total cost to plug a well.  So in the end, the commission is only collecting a fraction of what is needed.  Last year the commission collected on average about $2,707 per well but spent about $17, 012.  That is an enormous discrepancy and therefore many of the wells remain unplugged. By the end of 2016, the total number of abandoned wells in Texas passed 10,050.

The environmental impact of unplugged wells is far reaching.  In Texas there are estimates that put over 50,000 improperly or not plugged wells.  These wells are often drilled over 1 mile deep and, if left unplugged there is the potential for salt water (4 times saltier than the sea) which is often full of heavy metals and radioactivity materials to flow up and seep into the surrounding land and into the fresh water aquifers.  Abandoned or improperly maintained wells retain their potential to kill the land and crops around them and taint the water supply for years. To properly close a well, hundreds of feet of cement must to be poured into the well at various levels.  SB 1803 would increase bonding requirements to ensure that unused wells are plugged.

Without a new statute that allows the commission to set realistic bonds based on the actual cost of plugging a well, this problem with continue to grow.  In addition, the oil and gas industry is in a slump right now with oil prices low and production down, which of course means that the revenues it generates is down and since the RRC gets most of their funding from fees, it will definitely make it even more difficult to do their job.

Enforcing Regulations with Meaningful Fines

Weak fines do not provide a strong enough deterrent to keep companies committing the same infraction over and over again. This can be clearly seen in the fact that over the past five years a mere 114 operators, representing only 3 percent of all the wells in Texas, have been responsible for over 22 percent of all the pollution related violations. If the RCC would increase its penalty for infractions that were set in 1983, from $10,000 a day to a relative current value of $25,000 a day, it would do much to discourage companies from repeatedly violating regulations.  SB 567 would bolster inspection enforcement and would increase revenue by increasing fines.

Insufficient Inspectors and Incomplete Inspections

The RRC is also in charge of inspecting all currently active and inactive wells within the state. This is a rather arduous task, considering that there are hundreds of thousands of well. The Texas inspector to well ratio is 2,340 active wells per inspector, one of the worst in the country.  In contrast, Alaska, a state that is also heavily petroleum based, has an inspector to well ratio of 370 to one! Due to insufficient numbers of inspectors, the Texas Sunset Commission reported that in 2015 only about 30% of all wells and only about 42% of active wells can be were inspected. They found that in 2015 more than two thirds of leases had not been inspected for at least two years and each lease can have thousands of wells on it. SB 569 would take the first step in fixing this, requiring the RRC to submit review of its policies on reporting and enforcement in a study by this September 2017. But, in the end, the of only surefire way to reverse this shortcoming is that the RRC must drastically increase the number of inspectors. To help offset the cost of hiring so many additional inspectors, an annual inspection fee should be instituted.

Outdated System Denies Public Needed Knowledge

The Railroad Commission desperately needs to modernize itself when it comes to public access to important information about oil and gas wells. As far back as 2011 the Legislature gave the RRC $16 million to help update their systems and make information easier to access, but, as of today, the RRC still does not have a comprehensive and easily searchable database for the public to look up complaints, violations, or penalties levied against oil and gas companies. Without an adequate system, it is very difficult for Texans to learn information about potential dangers to both their lives and their livelihood. This can impact everyone from a community trying to discover if the wells that operate outside their town are complying with regulations, or for the family moving to a new home who might want to see whether the well that operates just outside of their new property has repeatedly leaked dangerous pollutants. Inspections, complaints, violations, and enforcement actions should be accessible on a public website and searchable by operator, drilling company and or by the well, all year around. While HB 1818 includes nothing about this incredibly necessary function, HB 247 would greatly improve transparency.

Lax Limits Contribute to Corrupt Contributions

Another problem the RRC deals with, is the monetary influence that a company or individual can have on a commissioner who is seeking office.  While the RRC Commissioners were originally appointed by the Texas Governor, this was changed so that each of the three would be elected through public elections. And while greater accountability to the public is an improvement, it does come with its own set of potential issues that the current structure of the RRC fails to take into consideration. According to our own research here at Public Citizen, between 75-90% of all contributions for RRC Commissioner elections come from the very entities that the RRC is supposed to regulate, and much of it comes during non-election periods. In addition, Texas is one of the only states in the country that does not prohibit potential candidates with conflict of interests from running for Commissioner.

To address this situation, HB 464 would ban contributions during non-election years and prevent commissioners from taking any contributions from entities with contested case hearings pending before the RRC. Rules should also be added that officially require candidates to disclose any potential conflict of interests and only allow them to run if they can clearly demonstrate that they have resolved any conflicts.

All of these proposed changes to the way the RRC functions are crucial to make the agency operate in the interest of all Texans. Email your Texas State Representative to ask that he or she support amendments to HB 1818 that will offer real reform at the Railroad Commission.

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rrc-who-are-we

UPDATE: By 10 am this morning, the Sunset Commission had already voted on the recommendations they were going to adopt for the report to the legislature. 

All the STAFF good enforcement recommendations were adopted, and the recommendation (proposed by the Public Member on the Commisson, Allen West) on induced seismicity was adopted.

The name change recommendation was dropped as we heard it would be, as were the transfer of contested cases to the State Office of Administrative Hearings (SOAH).  The new issue proposed by Rep. Raymond, calling for bonding for cleaning up abandoned wells at the last hearing fell by the wayside. Raymond did not even bring up his proposals.

The things we do support on enforcement will be in the bill when it’s introduced during the 85th Legislative session, but we expect that it may be a fight to keep them in.

Thursday, November 10th, the Texas Sunset Commission will meet to vote on recommendations to the 85th Legislature regarding the future of the Texas Railroad Commission.  Three times the Legislature has failed to pass a bill reauthorizing and making changes to this agency. 

We are asking that you contact the Sunset Commissioners and tell them to support staff recommendations plus Raymond and West’s new issues as outlined below.  For Sunset Commissioners’ contact information, click here. or contact your state rep and state senator to urge the Sunset Commission to support these recommendations. Find out who represents you here.

A coalition of environmental groups, including Public Citizen, have been following the Sunset review of the Railroad Commission and they are in agreement about supporting staff recommendations and new issues raised by Texas Sunset Commission Members – Representatives Dan Flynn,  Richard Peña Raymond, and public member LTC (Ret.) Allen B. West – to increase transparency, improve safeguards and protect the public.  It is time for more than a name change on failed agency! 

For a full version of the recommendations click here.

Issue 1 – Continue the Railroad Commission of Texas for 12 Years with a Name That Reflects the Agency’s Important Functions. (Page 11)

Change in Statute

Rec. 1.1 (Page 17) Change the name of the Railroad Commission of Texas to the Texas Energy Resources Commission and continue the agency for 12 years.

We support this change. On the eve of another election where most voters had no idea what the Railroad Commission does, and where industry supplied some 70 percent of the funding to those running, changing the name is a needed first step. We also believe that the Commission should only be continued for 6 years.

Issue 2 – Contested Hearings and Gas Utility Oversight Are Not Core Commission Functions and Should Be Transferred to Other Agencies to Promote Efficiency, Effectiveness, Transparency, and Fairness. (Page 19)

Representative Raymond Proposed Modification

Under this modification to Recommendations 2.1, 2.2, and 2.3, the Commission would contract with the State Office of Administrative Hearings (SOAH) to conduct the Commission’s hearings for contested permit and enforcement cases and Gas Utility Oversight would be transferred to the Public Utility Commission (PUC), with potential to contest the rates at SOAH. In conducting hearings, the PUC and SOAH would consider the Commission’s applicable substantive rules and policies.

We are in full support of Issue 2 and the transfer of these functions from RRC to SOAH and PUC, but do agree that the applicable rules and policies related to these issues should be considered in that transfer, as recommended by Representative Raymond.

Issue 3 – Oil and Gas Monitoring and Enforcement Need Improvements to Effectively Ensure Public Safety and Environmental Protection.

Rep. Flynn Modification: Also direct the agency to provide oil and gas production information on its website in a format that is easier for royalty owners to use and understand.

We Support these Sunset Staff recommendations on Enforcement, as well as Rep. Flynn’s proposed modification.

Issue 4 – Insufficient and Inequitable Statutory Bonding Requirements Contribute to the Large Backlog of Abandoned Wells. (Page 43)

We support this change to assure that oil and gas wells pay their fair share in upfront bonding costs.

Issue 5 – Improved Oversight of Texas’ Pipeline Infrastructure Would Help Further Ensure Public Safety. (Page 51)

We support these proposed statutory and appropriations modifications.

Issue 6 – The Railroad Commission’s Contracting Procedures Are Improving, but Continued Attention Is Needed. (Page 55)

We support these proposed management actions.

Issue 7 – The Railroad Commission’s Statute Does Not Reflect Standard Elements of Sunset Reviews. (Page 59)

We support these proposed changes.

Proposed New Issues

Vice Chair Taylor Proposed New Issue 1

Direct the Railroad Commission to study, develop, and implement ways to clean up and revive old oil fields for secondary and tertiary recovery using either the unitization method or other legal means which the Commission may develop or recommend. As part of this recommendation, the Railroad Commission shall consult with the Bureau of Economic Geology. (Management action — nonstatutory)

We have not taken a position on this recommendation.

Colonel West Proposed New Issue 2

Direct the Railroad Commission to incorporate findings from the TexNet Seismic Monitoring Program at UT’s Bureau of Economic Geology as they become available into its oil and gas disposal well rules or guidance, as applicable. The rules should seek to prevent any induced seismicity caused by disposal wells. (Management action — nonstatutory)

We are in full support. Utilizing the information that is being collected to develop more protective rules and procedures makes sense.

Representative Raymond Proposed New Issue 3

Amend RRC’s statute to require the agency to publish comprehensive oil and gas enforcement data (complaints, inspections, violations, enforcement actions taken, and penalties levied/collected) online, in a publicly accessible, searchable, trackable format. Make data available by operator and on a well-by-well basis and by bulk download.

We are in full support of this recommendation. We would note this could also be accomplished as a management action by direction of the Director to publish this information on-line.

Representative Raymond Proposed New Issue 4

Management recommendation to direct RRC to: review all relevant rules on spill reporting and response, and make changes to increase environmental protection and cleanup during flooding, such as specifying time frames for responding to spills; clarify its rules, so that both oil and gas spills and other spills like brine, produced water, or fracking fluid are also reported, tracked, and cleaned up; and report these spills and the results of any cleanup effort in an accessible way, either directly on its website or by sharing the information with TCEQ as part of its joint work on spills. (Management action — nonstatutory)

We are in full support. This is considerable confusion about reporting and clean-up requirements, particularly in the event of floods.

Representative Raymond Proposed New Issue 5

Amend Chapter 26 of the Texas Water Code to require operators that treat “domestic wastewater” or “mobile drinking water treatment system wastewater” at oil and gas well drill sites to obtain a permit from TCEQ instead of RRC.

We are in support. TCEQ is the appropriate agency to assure water is cleaned up to the appropriate level.

Representative Raymond Proposed New Issue 6

Improve inspection, regulation, and reporting of injection wells by: either removing the specific permit fee amount in Chapter 27, allowing the Commission to set a more reasonable amount, or raising it to $1,000 (Change in statute); requiring RRC to require monthly reporting of liquid injection in all disposal wells and make the information publicly accessible (Change in statute); and directing RRC to conduct a comprehensive review of its rules and programs regarding oil and gas disposal wells, and consider changes related to casing and cementing, aquifer exemptions, notice and public participation, seismic activity, and wastewater reporting and tracking. (Management action — nonstatutory)

We are in support of both the management and statutory changes. Permit fees for disposal wells are too low and the rules should be reexamined to assure proper notice, and proper safeguards.

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Sunset Commission Logo

Monday, August 22, 2016
House Appropriations Committee Room
Room E1.030, Capitol Extension
1400 Congress Avenue
Starting at 9:00 a.m.

This is not the Railroad Commission’s first rodeo.  It was punted in the 2011, 2013 and 2015 legislative sessions with a temporary re-authorization because the legislature failed to agree and pass a bill that would reauthorize the agency for another 12 years.  So once again this dysfunctional agency is in front of the Sunset Commissioners who must make recommendations about how the RRC should continue (and in case you were wondering – NO – the Railroad Commission does not regulate railroads.  Pipelines, oil and gas wells, and mines are among the things it oversees/rubber stamps.  And it does have some enforcement duties that don’t amount to much  So this is an agency that could use some serious changes, but unless the Texas legislature via the Sunset Commissioners know that the public is paying attention to what they do, they could just re-authorize the RRC for another 12 years with no significant changes.  This is where you come in.  Below is a description of the Sunset Advisory Commission and their process.  You can see the agenda for the August 22nd hearing here.

If you plan to testify, you will need to fill out a witness card upon your arrival at the Capitol in Room E1.030. We will have our internal sessions and refreshments in reserved rooms at the Capitol.  Parking is available in the Capitol Visitors Garage accessible on 12th or 13th Streets between Trinity and San Jacinto on the east side of the Capitol., please fill in the sheet here, so we can plan to accommodate everyone and for you to get information about the rooms we have reserved.  If you cannot come in person, there are other options (see below)

The Sunset Advisory Commission is an agency of the Texas Legislature that makes recommendations to the Legislature on whether to continue various state agencies.

The Commission was created in 1977 under the auspices of the Texas Sunset Act (now codified as Chapter 325 of the Texas Government Code).

The Commission consists of twelve members, ten of whom are legislators and the remaining two are members of the general public (see the current Commissioners below). The leader of each chamber of the Legislature (the Speaker of the Texas House of Representatives and the Lieutenant Governor of Texas, who presides over the Texas Senate) each appoint five legislators and one public member to serve on the Commission. The chair and vice-chair rotate annually between the two chambers. The Commission appoints a director, who hires staff to carry out agency duties.  (A list of the members is located at the bottom of this post)

Under the Act, every state agency (excluding universities, courts, and agencies mandated under the Texas Constitution) has a specific date on which it will automatically be abolished, unless the Legislature passes specific legislation continuing the agency’s existence. This issue came into play during the 2009 Legislative session, when the session adjourned without the Legislature providing for the continued existence of several agencies, thus requiring the Governor to call a special session.

Prior to the scheduled cessation date of an agency, the agency’s functions are scheduled for review by the Commission. Each agency provides to the Commission a Self-Evaluation Report; the Commission staff prepares its recommendations (coordinating with other state oversight agencies, such as the State Auditor’s Office and the Legislative Budget Board) and takes public comments. A final public hearing is held prior to the Commission making its final recommendations to the Legislature. The final recommendation can be any of the following:

  • Continue the agency as is
  • Continue the agency with modifications (including moving functions from the agency to other agencies, moving functions from other agencies into it, and most commonly, making improvements to the effectiveness and efficiency of an agency’s functions.)
  • Merge the agency with another agency
  • Disband the agency and either transfer its functions to other agencies, or abolish them altogether

If the Commission recommends continuation of the agency, it must provide draft legislation to continue the Agency and to make other recommendations. Generally, the legislation will allow the agency to continue for an additional 12 years (six biennial sessions), but may be shortened in order to equalize the number and size of agencies to be reviewed each biennium. Should an agency be abolished, the Act provides for a one-year wind-down period so the agency may conclude its operations. The Legislature must pass specific legislation to continue an agency’s existence and to define its roles and responsibilities, and has complete freedom to amend or reject the Commission’s recommendations (either to continue or abolish the agency).

The Sunset Process:

The Commission generally considers each agency under review during two public meetings.  About a month after release of a Sunset staff report, the Commission discusses the report’s recommendations and takes testimony from the public.   Any person is welcome to attend the public hearing and provide feedback on the staff recommendations or other issues relating to the agency.  For the Railroad Commission this hearing is August 22, 2016 at the capital.  Please note, however, testimony about individual cases or appeals is generally not allowed. The Sunset Commission cannot override an agency’s decisions.

At least a month after the public hearing, the Sunset Commission meets again to vote on its recommendations to the full Legislature about an agency. No additional public testimony is taken at this second meeting.  The Railroad Commission’s second meeting is scheduled for November 10th.  At this point the commissioners will issue their recommendations for any changes at the agency that will be considered in the reauthorizing legislation that needs to pass during the 85th legislative session, should the bill fail the agency is abolished but may continue business for up to one year.  Should no reauthorizing legislation pass, there is an omnibus bill that will allow an agency to undergo the sunset process during the next interim session, but the Railroad Commission’s reauthorizing process was already delayed last session.

Public participation is the cornerstone of the Sunset process.  It is how Sunset staff gains the broad perspective needed to conduct its review of state agencies and programs.  It is how the Sunset Commission receives feedback about the Sunset staff review and hears new ideas and issues beyond what staff has presented.  Ultimately, it is how the public itself can be assured of a say on fundamental matters affecting state agencies.

The public may participate in the Sunset process at this point by:

Giving feedback directly to the Sunset Commission.

After the Sunset staff report has been issued, the Sunset Commission conducts a public hearing to receive feedback on the staff’s work.  Interested persons may provide feedback in writing or by testifying at the hearing.  Because of the public nature of the proceeding, feedback received at this stage is public and will generally be placed on the Sunset Commission’s website for the public to see.  To be most effective, this feedback should be short and to the point and clearly indicate support, opposition, or changes to recommendations.  One may also present any new issues or solutions that were not raised in the Sunset staff report.  Sunset staff compiles this feedback to help the Sunset Commission make decisions about an agency.

If you cannot attend but want to submit written testimony, you can use the Public Input Form and watch a live stream of the hearing. or you can go to Public Citizen’s Action form with pre-written testimony.  Once you take action here  you will both automatically receive an email about the hearing and will be directed to the page to sign up to attend the hearing

If the reason you cannot attend is because they happened to schedule this hearing on the same day school starts in your area, be sure to mention this in your written testimony.

Sunset Commission Members

The Commission has five Senators, five Representatives, and two members of the public, appointed by the Lieutenant Governor and the Speaker of the House.  The position of chair rotates between the House and the Senate every two years.

Senate Members House Members
Van Taylor
Vice Chair
2015 to 2019
Plano
Larry Gonzales
Chair
2013 to 2017
Round Rock
Juan “Chuy” Hinojosa

2013 to 2017
McAllen

Cindy Burkett

2013 to 2017
Sunnyvale

Robert Nichols

2015 to 2017
Jacksonville

Dan Flynn

2015 to 2019
Van

Charles Schwertner

2013 to 2017
Georgetown

Richard Peña Raymond

2013 to 2017
Laredo

Kirk Watson

2015 to 2019
Austin

Senfronia Thompson

2015 to 2019
Houston

LTC (Ret.) Allen B. West
Public Member
2015 to 2017
William Meadows
Public Member
2015 to 2017

 

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