The recently completed 86th legislative session was mostly good news for the Texas oil and gas industry. A state budget was crafted with no new taxes assessed on the industry. Several important bills passed involving produced water and lawful pipeline-construction protests; while our state regulators received adequate budget funding allowing them to keep pace with the expanding industry activity. However, other issues remain unresolved. Two top concerns, infrastructure funding improvements and eminent domain reform, did not get over the goal line. Because both topics represent an intersection between the oil and gas industry and the general public, we will likely see them again until solutions are found. Let’s look at a few specific legislative topics and actions as compiled by Bill Stevens, the Chief Lobbyist for the Texas Alliance of Energy Producers:
Sound oilfield water policy was emphasized during the legislative debate, related to both the use and disposal of oil and gas produced water. Last year, the industry produced more than 8 billion barrels of water associated with production. Key bills that passed include HB 3246 by Rep. Darby which clarified the ownership of liquid waste associated with oilfield drilling and is possessed for the purpose of treating the fluid for a beneficial use. HB 2771 by Rep. Lozano transfers the jurisdiction of permitting the discharge of oil and gas waste from the RRC to TCEQ. The TCEQ is instructed to request NPDES delegation from EPA by 2021. Not all water policy bills survived. One example is HB 2545 by Rep. Guillen that would have provided a franchise tax credit for the desalination of seawater, brackish groundwater and oil and gas produced water treated to standard for a beneficial use. The bill passed the House but stalled in the Senate Finance Committee in the last days of the session. Incentives for recycling and reuse of oil field produced water will, however, likely remain in the spotlight as legislators conduct interim studies of water issues.
No one will ever confuse a geologist with a plumber. But both are critical skills that require significant study and experience, and also directly impact the public’s safety and quality of life. The two professions were treated very differently during the session, with the HB 1311 by Rep. Thompson and SB 609 by Sen. Watson preserving the Texas Board of Professional Geoscientists, after initial recommendations for their abolishment, as they underwent the Sunset Review process. The continuation of the Texas State Board of Plumbing Examiners, responsible for licensing plumbers and enforcing plumbing law, was lost in the legislative maelstrom and the plumbers board was not renewed. Let’s note that the geologists benefited from expert testimony during legislative committee hearings that put the key facts in front of the decision-makers. That type of focused advocacy was apparently successful.
FUNDING OF ENERGY SECTOR COUNTY ROADS
Solidifying a source of funding for the maintenance and repair of damaged county roads in energy sectors was a subject of much debate. While long term funding was not passed, $250 million was budgeted for the County Transportation Infrastructure Fund at TxDOT. Distribution of grants will be governed under HB 4280 by Rep. Morrison.
Preserving a workable eminent domain law in Texas, which would balance the public good versus private property rights, was a subject of much debate this session. Comprehensive eminent domain legislation failed to pass this session, as in previous sessions. Despite diligent, good-faith negotiations with landowners that began in January, stakeholders were unable to reach a final agreement on the bill. Concerns included the perceived expansion of potentially costly litigation, such as the recovery of attorney’s fees and indefinite delays of vitally needed infrastructure projects.
Preventing damage to energy infrastructure was the focus of HB 3557 by Rep. Paddie/Sen. Birdwell. The bill raises the criminal penalty from a misdemeanor to a Class 3 felony for damaging, interfering or impacting energy infrastructure while trespassing in protest.
One of the best ways to combat federal overreach is to have a strong and properly funded State Regulator. The RRC in its Legislative Appropriations Request asked for no more money than in the prior budget cycle. The RRC will receive a total of $254.7 million across the ‘20-’21 biennium which will allow for an additional 22 pipeline inspectors and the purchase of new field vehicles. It also will include $28 million for IT for the transition from the outdated mainframe system and $39 million for the plugging of old, orphaned wells. The budget includes no increases in fees or taxes.
Reports state that more than 7,541 bills and resolutions were filed during the 86th session, with 1,383 passing, which means that approximately 80% of all the proposed legislation failed. This confirms an oft-repeated anecdote, that the legislative process is much better at killing bills than passing bills. Some observers might also say that is part of the good news story of the Texas 86th Legislature.
About the author: John Tintera, Executive Vice President of the Texas Alliance of Energy Producers, is a regulatory expert and licensed geologist (Texas #325) with a thorough knowledge of virtually all facets of upstream oil and gas exploration, production and transportation, including conventional and unconventional reservoirs. As a former Executive Director and 22-year veteran of the Railroad Commission of Texas (considered the premier oilfield regulator in the nation), Tintera oversaw the entire regulatory process, including drilling permits, compliance inspections, oil spill response, pollution remediation and pipeline transportation.