From the Texas Tribune: Lawmakers Push Back on Railroad Commission Overhaul Proposals

This is from August, but it foreshadows a series of battles that will pick up this coming legislative session when the Texas Legislature considers the proposals made to it by the Texas Sunset Commission. Along with 25 or so other agencies, the Texas Railroad Commission is being evaluated. The various stakeholders involved with the agency are locking horns already.

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One legislator said he believed the entire review was unnecessary, and the criticism mean-spirited.

"When I went through this report, I thought to myself, 'Why are you so angry at the Railroad Commission?'" Rep. Dan Flynn told Sunset commission staff.

“Oil and gas industry is the heart and soul of the state of Texas, the Canton Republican added, "And for us to go and attack an agency that’s done a pretty good job, it just doesn’t make sense to me.”

Though no lawmaker completely echoed Flynn, his spirited defense of the Railroad Commission underscored the difficulty of implementing change at the hulking agency in Texas, the nation's oil and gas king.

Sunset Commission staffers said they did not intend to be mean.

“We are not angry with the Railroad Commission,” said Ken Levine, executive director of the Sunset Commission. “We think in a lot of ways, they do a really good job. And when we spotted things where they weren’t, we brought it forward.”

From the Texas Tribune: Oil or Gas Well? The Distinction Costs State Millions

The Railroad Commission is reclassifying wells in the state of Texas, and helping the oil and gas industry save lot's of money. But it's at the expense of the state budget. This gives you an idea of whose interests are actually served by the commission.

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A major slowdown in oil drilling may not be the only phenomenon cutting into state revenue in coming years. Efforts by producers to have some of their oil wells reclassified as natural gas wells may cost the state hundreds of millions of dollars in tax collections and refunds — and renew scrutiny of Texas’ largest tax incentive for natural gas drilling.

The Texas Railroad Commission, the state’s drilling regulator, reclassified nearly 850 oil wells as natural gas wells during the 2015 budget year. That’s more than triple the number from the previous year and nearly six times the reclassifications in 2013.
The trend means more operators can claim a generous tax credit for natural gas wells, and the growth in reclassifications is drawing the interest of state Comptroller Glenn Hegar and other budget watchers.

“If such reclassifications were expanded, it could adversely affect revenues as a result of refunds and reduced natural gas tax collections,” Hegar wrote this month in his certified revenue estimate.

Operators commonly free up oil and gas from the same well. But Texas law defines wells as either oil or gas — not both. It’s up to the Railroad Commission to sort out where each one falls. The commission’s initial decision, however, isn’t etched in stone. Operators can fill out a one-page request that a well be reclassified, based on how much gas is coming out of the ground.

In 2013, the commission reclassified 145 wells from oil to gas. The number ballooned to 844 in the 2015 fiscal year, according to Railroad Commission data.
Gas-to-oil switches also surged during that period, but on a much smaller scale —from 68 to 239.

The bureaucratic reshuffling might sound unimportant, but it matters plenty for state coffers and helps determine who qualifies for a tax credit covering “high-cost natural gas drilling” that has drawn scrutiny in recent years.

From the Texas Tribune: Analysis: When "We" Doesn't Include You

Here's a look at the close relationships that can develop between regulatory agencies and the industries they seek to regulate.

In this case it is the Texas Railroad Commission and the oil and gas industry.

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What happens when an elected official says “we” is that we think they’re talking about us — the people who elected them. Sometimes, that’s right. In fact, it’s right most of the time.

Not at the Texas Railroad Commission. It’s a three-person state commission elected by Texas voters and seemingly owned and operated by the oil and gas industry it regulates. Go hear one of their speeches at an industry conference sometime and listen for this: Do they call it “your industry” when talking to oil and gas people, or do they call it “our industry.” A recent sampling suggests the latter.

The latest chapter in the remarkably consistent history of the Railroad Commission is about a letter from Chairman David Porter to the Federal Communications Commission.

The FCC is suffering from a case of regulatory constipation, as reported by The Texas Tribune’s Jim Malewitz, that is blocking some oil and gas companies from getting their hands on some wireless frequencies that would help them monitor their pipelines.

The companies want the FCC to free the frequencies, which are licensed to an unrelated outfit that has encountered bankruptcy and other legal challenges. One of them wrote a letter and got Porter to put it on Railroad Commission of Texas letterhead and sign it himself. This is all documented in emails, which are surely the greatest thing ever invented for lawyers and others who want to piece a story together after the fact.

Porter’s chief of staff, Caleb Troxclair, traded messages last month with Justin Stegall, a Houston intermediary for Enbridge, one of the companies hoping to get its hands on those wireless frequencies. The company’s Washington, D.C., lawyers drafted a letter that he forwarded to Porter’s office with some suggestions about adding some language of their own.

Troxclair wrote back a couple of days later, saying Porter had agreed to send it. Two days later, he sent along a version on state letterhead that was added to the FCC’s files by the lawyers in Washington.
None of this cost taxpayers much money. There was a little staff time involved, but it’s not like anyone on the state payroll had to write his or her own letter or anything.

Texas counties bear costs of illegal dumping of oil and gas waste - the state seems unconcerned

The oil and gas boom has imposed environmental costs on counties in the state. The existing regulatory environment is not strong enough to environmental rules, and there seem to be some confusion about the jurisdiction of counties, and that of the Railroad Commission. It seems that counties want to take a more aggressive stance towards polluters than the state.

Story in StateImpact Texas