American Oil and Gas Reporter - October 2017 - 106

TAEP Issues Update

Alliance Affirms RRC Reauthorization
By Roy Maynard
Special Correspondent
AUSTIN, TX.-Bill Stevens was on
his way to deliver a truckload of water
and supplies to hurricane-ravaged Beaumont, Tx., when he paused long enough
to discuss the 85th Texas Legislature. As
the chief lobbyist for the Texas Alliance
of Energy Producers, Stevens admitted
that he preferred to be heading into a disaster than away from one
The legislative session was a success,
he says, because it staved off the biggest
threat to the Texas oil and gas industry:
Failure to reauthorize and fund the Texas
Railroad Commission. With that and other
matters from the 2017 Texas Legislature
now in the rearview mirror, the Alliance
can turn its attention to other challenges
at its Board of Directors Meeting, scheduled for Nov. 8 in Fort Worth.
"We had three goals going into the
regular session," Stevens details. "The
first was to avoid any major setbacks to
the industry. And no harm came to the
industry-no new regulatory constraints,
no loss of incentives, nothing like that."
The Alliance's second goal was to see
the legislature-after three failed attempts-
reauthorize the RRC, a process made
necessary by Texas' sunset laws, which
require state agencies to justify their existence every 12 years. In 2011, lawmakers
were unable to agree on some RRC Sunset
Commission recommendations, so they
only reauthorized the commission for
two years. Legislators punted again in
the same way in 2013 and 2015.
The result has been uncertainty in the
industry, assesses Alliance Executive Vice
President John Tintera.
"If there is one thing I hear unanimously from oil and gas producers, it's
that they want stability," Tintera relates.
"That allows them to plan for the future.
That's really what they were looking for
out of this session."
According to Stevens, his efforts focused on keeping the reauthorization bill
simple and straightforward. "We wanted
a clean RRC sunset bill," he says. "I am
very happy to say that's what we got."
RRC Funding
The Alliance's third main goal dealt
with RRC funding, Stevens indicates.
"We need an adequately funded regulatory agency that can do its job," Stevens
emphasizes. "We all want the rules and
the regulations to be enforced, and en-

forced appropriately."
But the RRC has been funded largely
by fees paid by oil and gas producers, he
notes, a source that has proven less than
stable.
"When the downturn in oil prices came
and prices broke, the RRC was receiving
less money as permits dropped," Stevens
recounts. "For 2016, it ran in the red about
21 percent on a monthly basis. By February
2017, it was in the red about 23 percent.
So we wanted to get away from that model
and get the RRC some more money."
Industry experts saw a potential crisis
in the making, he characterizes. "The
agency had been hemorrhaging money-
and people," he describes. "It started with
about 815 employees, and was down to
675. It was not able to rehire."
Because tight budgets prevented the
RRC from raising staff salaries, some of
the commission's best people were leaving
for the private sector, Stevens recalls. That
could have spelled delays in the permitting
process, he notes, but lawmakers staved
that off with additional funding. HB 1,
the state's $217 billion budget, included
$87 million for the RRC, and approved
820 full-time employees for the agency.
That is going to help the agency
achieve its mission, predicts RRC Chairman Christi Craddick. "I appreciate the
legislature recognizing the challenges we
were facing," Craddick acknowledges.
"Being fee-based is great when oil is
$100 a barrel, but it has been a challenge
lately. When the industry isn't drilling,
fees are down. We quit buying trucks,
we stopped hiring people. It affects the
industry and the entire state of Texas if
we are not out there doing our jobs and
making sure everything is safe."
Craddick asked for an additional $25
million, and received $23 million. In a
fiscally conservative state such as Texas,
that's a big win, she reflects.
"We appreciate that and we are going
to start hiring again," Craddick reports.
"We have had roughly 60 pipeline inspectors, and about 80-90 oil and gas inspectors. Based on this budgeting cycle,
we will add some to pipelines first."
The legislature also has allocated more
money toward capping abandoned and
orphaned wells, Stevens notes, citing an
additional $38 million authorized for that
fund.
Other Bills
As she considers other successful legislation in the 85th Legislature, Craddick

106 THE AMERICAN OIL & GAS REPORTER

points to a few items significant to the
RRC, though she acknowledges their importance fell far short of the scale of
reauthorization. "We asked the legislature
to help us on some smaller issues," she
says.
She cites HB 2588, which will allow
the RRC to run criminal background
checks on its workers. "As an employer,
you want to be sure you are doing the
background checks on your employees,
especially when they are out at other
people's well sites," Craddick relates.
Another bill, SB 1422, grants the
agency power to protect and regulate its
own intellectual property. "People were
using our logo, and that's something we
want to stop," she says. "This bill will allow us to enforce that."
A third bill, HB 3726, allows the
agency to require examinations and continuing education for those who work
with liquefied petroleum gas. "We want
to make sure we are still doing the licensing
on LPG, particularly after (Texas experienced) a couple of accidents," she states.
Among the other bills pertinent to the
industry that Tintera mentions is SB 1871,
which makes the theft of crude oil a
felony offense. "Oil field theft is very serious," he emphasizes. "We have to keep
up with the times as our industry grows."
Special Session
By the time Hurricane Harvey made
landfall on the Texas Gulf Coast on Aug.
25, the 85th Legislative session was over,
as was a 30-day special session. None of
the 20 items on Governor Greg Abbott's
subjects for the special session related
directly to the oil and gas industry, the
Alliance notes.
"From the perspective of the independent oil and gas operator, we see the
85th as a success," Tintera assesses.
He also offers praise for Craddick's
leadership at the RRC.
"We are proud of her and the entire
agency," he affirms. "Particularly with
the challenges the Gulf Coast is facing,
the agency is doing a great job."
For her part, Craddick indicates she
now can focus on agency's mission-not
its existence.
"Everyone likes certainty, and it's a
certainty now that we will be around for
another 12 years, doing our job," she reflects. "I like to call the RRC the state's
most important agency, and that's not
really an overstatement. A lot of people
rely on us."
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American Oil and Gas Reporter - October 2017

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