Bill considers splitting up energy oversight duties in Texas

Increased drilling in the Eagle Ford and elsewhere in the state has brought new scrutiny to the Railroad Commission. Photo: Courtesy Photo / HC

The Texas Railroad Commission got a last-minute reprieve from the Legislature over the holiday weekend, but it wasn’t pretty.

After the Legislature failed for the second session in a row to approve an overhaul of the agency, which regulates oil and gas drilling in the state, the Railroad Commission was added to a catch-all reauthorization bill sent to the governor’s desk.

It will extend the Railroad Commission until Sept. 1, 2017.

But the bill also authorizes an extended review by the Sunset Advisory Commission, including an assessment of state agencies that could take over the Railroad Commission’s duties, along with finding ways to increase public oversight.

It requires the Railroad Commission to pay any costs associated with the review, as well.

The four-year window provides some certainty for the industry, said Deb Hastings, executive vice president for the Texas Oil & Gas Association.

“We were hoping we could get the full 10 or 12 years,” she said. That is generally granted after an agency has passed Sunset review.

The Railroad Commission has made a number of changes on its own since the process began more than two years ago, culminating Friday with its approval of sweeping changes to the rules related to well construction.

Hastings said the requirement that the Sunset Advisory Commission consider whether any existing state agencies could take over the Railroad Commission’s duties came as a surprise.

Ensuring that agencies don’t duplicate efforts is worthwhile, but she said the industry prefers most regulatory processes be handled by one agency.

“We’re important to the economy of the state, and predictability is important to us,” she said. “I think it’s very important for it not to be piecemealed across state agencies, because we may lose predictability and consistency.”

Whether the powerful Railroad Commission will actually be broken up remains to be seen.

“There are a number of other agencies that could do what the Railroad Commission does, and perhaps do it better,” said Tom “Smitty” Smith, director of Public Citizen Texas.

He suggested the Public Utility Commission, the General Land Office and the Texas Commission on Environmental Quality as among the agencies that could take on the Railroad Commission’s role in regulating oil and gas drilling and production, coal and uranium mining, pipeline safety and other duties.

Most states split the environmental and other regulatory duties among several agencies, Smith said.

But Scott Anderson, a senior policy advisor to the Environmental Defense Fund’s Texas office, said actually doing away with the Railroad Commission is probably a long shot.

“There’s obviously a fair amount of controversy about this, or the Railroad Commission Sunset bill would not have failed two times in a row,” he said. “But be that as it may, I do expect the Railroad Commission to be reauthorized eventually, with most if not all of its jurisdiction intact.”

State agencies routinely are reviewed by the Sunset commission, which suggests whether the agency is still needed and, if so, what changes may be recommended.

It’s not uncommon for an agency not to finish the process in one session. A dozen other agencies were included in this year’s safety-net bill.

But veteran lobbyists said they couldn’t remember another agency that had failed to complete the process in two sessions.

Rep. Dennis Bonnen, R-Angleton, chairman of the 12-member Sunset Advisory Commission and author of the House version of the Railroad Commission Sunset bill, was openly critical of the three Railroad Commissioners after the bill died in the House Energy Resources Committee, accusing them of lobbying against the ethics provisions.

He declined until Sunday to add the agency to a bill setting a new schedule for Sunset review.

The Railroad Commission has drawn more attention over the past two years as shale drilling accelerated across the state, with environmentalists and community activists worried that inadequate oversight will put residents and drinking water at risk.

Industry also worried that inadequate funding and antiquated technology meant the commission couldn’t respond quickly to permitting requests and other needs.

The Sunset commission’s recommendations ranged from the seemingly safe — changing the name to the Texas Energy Resources Commission — to a slate of ethics reforms intended to insulate the elected commissioners from members of the industry whom the commissioners are called to regulate.

Recommended changes would limit when, and from whom, they could collect campaign contributions and require them to resign before running for another office.

The three commissioners protested the proposed changes, saying they wanted to be treated like other non-judicial officeholders.

The provision that Railroad Commissioners resign before running for another office was included in an ethics bill approved late in the session. It will become law unless vetoed by Gov. Rick Perry.

A spokeswoman for the Railroad Commission did not return a telephone call from the Chronicle.

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