Sunset panel passes on Railroad Commission name change

This spring, the staff of a legislative body that periodically reviews state agencies recommended a variety of major reforms to the entity that’s supposed to regulate the oil and gas industry in the state.

Among the proposals: Changing the name of the Railroad Commission of Texas to the “Texas Energy Resources Commission” so the public would have a better idea of what the 125-year-old agency actually does.

On Thursday, the Texas Sunset Advisory Commission — consisting of 10 state lawmakers and two members of the public — snubbed that and several other recommendations opposed by the oil and gas industry that were meant to enhance agency efficiency and environmental oversight. 

The Sunset Commission also declined to approve included transferring gas utility regulation to the Public Utility Commission and amending statutory bonding requirements to help curb a huge backlog of abandoned oil wells across the state. It also rejected a recommendation that would have required the Railroad Commission to develop rules for issuing expedited penalties for minor violations — a proposal industry groups said was unnecessary because the current process is already sufficient to ensure safety and compliance.

Almost all of the Railroad Commission reforms that the Sunset panel approved Thursday had the blessing of the oil and gas industry. They included enhanced requirements for reporting oil and gas production and violations, and authorizing the Railroad Commission to enforce damage prevention requirements for interstate pipelines.

The panel also recommended the creation of a pipeline permit fee that would help the agency plug a $1.8 million budget shortfall in its pipeline safety program — the result of a slowdown in drilling activity amid low oil prices (The Railroad Commission is funded largely through oilfield activity fees, which have dwindled.)

Echoing industry concerns, several Republican Sunset members said Thursday that the money generated by any new fee should be spent only on the pipeline safety program. They also inquired about possibly reducing or capping the fee once the budget shortfall is plugged. Other members expressed concern about how much it would cost the Railroad Commission to require producers to file production reports electronically — another staff recommendation approved Thursday.

The Sunset panel actually opted to strengthen the recommendation, approving a modification from Rep. Dan Flynn to post that production information online “in a format that is easier for royalty owners to use and understand.” The Canton Republican described it Thursday as an “opportunity for more transparency.” Rep. Larry Gonzales, the Round Rock Republican who chairs the Sunset Commission, said lawmakers would probably have to give the agency more money to complete the job.

Several Sunset members expressed opposition to the staff report and recommendations at a hearing this summer. 

Two recommendations that the panel approved Thursday would require the Railroad Commission to “develop a definition of repeat violations” and report them on its website and also implement a policy to encourage alternative procedures for rule-making and dispute resolution.

Industry groups like the Texas Oil and Gas Association argued that current processes in both areas are sufficient as is.

The Sunset Commission also approved a last-minute recommendation Thursday from one of its public members, retired Army Col. Allen B. West, requiring the commission to incorporate findings of an ongoing seismic monitoring program into its regulation of disposal wells in an effort to prevent earthquakes. 

Whether the Legislature will sign off on the recommendations next year remains to be seen. State lawmakers have twice now failed to pass a bill reforming the Railroad Commission amid objections from the agency's three commissioners. That has required Sunset staff to review the agency repeatedly since 2010. The current review is its third. 

Read more of the Tribune's energy coverage:

• State lawmakers in August took input on a host of recommendations to reshape and rename the Texas Railroad Commission, a powerful agency that oversees a host of oil and gas activities but not railroads.
• The Texas Railroad Commission should beef up its oversight of oil and gas drilling, pipeline safety and abandoned wells and change its name to reflect what it actually does, the latest sunset review recommends.
• Former state Rep. Wayne Christian, a Republican, notched an easy victory Tuesday in the race for Texas railroad commissioner.