3/11/16 TXOGA Voice

A Message from Todd Staples…

As we learn more and more about anti-fossil fuels activists, it becomes painfully clear their plan is to over-exaggerate the inconveniences associated with providing reliable and affordable energy for everyday use (there are inconveniences with any industrial activity), and to minimize the overwhelming benefits.

To better build and equip our team, I am holding regional round tables with TXOGA members, potential members and industry leaders to share TXOGA’s 2016 action plan. These regional gatherings provide the opportunity to share our strategic vision and to remind local leaders of what is at stake – the energy security of our state and nation.

This week’s meeting was at the Dallas Petroleum Club. If your company would like to host a regional round table to further build upon our current outreach efforts, please contact TXOGA Director of Events Lisa Lucero at llucero@txoga.org or 512-617-8899.



ExxonMobil v. Lazy R Ranch—On Monday, March 7, members of the E&P Environmental Law Committee, Refinery Environmental Law Committee, Pipeline Committee, and E&P Law Committee participated on a conference call to discuss whether TXOGA should participate in the Texas Supreme Court case, ExxonMobil v. Lazy R Ranch, involving surface contamination, by filing an amicus curiae brief. The two issues presented to the Court are 1) the proper relief for permanent injury to real property and 2) the date of accrual of the claim and discovery rule under statute of limitations jurisprudence.

The committees decided to proceed with participation as an amicus curiae and to brief on both issues. TXOGA has engaged Evan Young and Carlos Romo, Baker Botts, to prepare and file the brief with comment and feedback from the committees during the process.

Southwest Royalties, Inc. v. Hegar—On Tuesday, March 8, the Texas Supreme Court heard oral arguments in Southwest Royalties, Inc. v. Hegar, a case with significant financial implications, regarding whether downhole equipment is subject to the “manufacturing” exemption for sales tax. (The relevant statute provides the sale of “tangible personal property [casing, tubing, pumps, etc.] used… in… the actual manufacturing, processing, or fabrication of tangible personal property [salable oil and gas from crude hydrocarbons]” is exempt). An opinion will be issued later this year, likely in the summer, but some interesting comments and questions from the oral argument are noteworthy.

The State made the case that “processing” necessarily falls under “the umbrella of manufacturing” and thus excludes mining activities. Southwest Royalties countered the State does allow processing, such as banana-ripening, as a stand-alone tax exempt activity; therefore, manufacturing is not necessarily a requirement of the exemption.

The Court had questions about when minerals become personal property: is it when the hydrocarbon enters the wellbore or when it breaks the surface? This is an element in the statute. The Court also had questions about whether the casing causes the phase changes that hydrocarbons undergo because the statute also requires the equipment to cause a physical change.

For your reference, when TXOGA was asked for comment on the case the following statement was issued:

“Whether a homeowner or a business owner, all Texans should be able to seek relief if they feel they’ve been unfairly and unlawfully taxed.  While we don’t comment on ongoing litigation, we do support all taxpayers’ right to seek fair treatment under the law.”


On March 7, TXOGA staff attended the House Energy Resources Committee public hearing focusing on Interim Charges 4 & 7:

Charge 4 – Study enforcement policies of the Railroad Commission of Texas. Consider the effectiveness of maximum fines as a deterrent of violation, the economic benefit of non- compliance, and greater accessibility to enforcement and complaint data for the public.

Charge 7 – Conduct legislative oversight and monitoring of the agencies and programs under the committee’s jurisdiction and the implementation of relevant legislation passed by the 84th Legislature.

The hearing opened with testimony from the three Railroad Commissioners. Chairman David Porter primarily discussed RRC funding, Commissioner Christi Craddick focused on the state of the industry and improvements at the agency, and Commissioner Ryan Sitton discussed his Texas Energy Survey. RRC Executive Director Kimberly Corley and other Commission staff also provided testimony. Legislators questioned the agency regarding public access to information and the well-plugging program.

The committee heard testimony from:

  • Legislative Budget Board staff regarding RRC funding;
  • Lone Star Chapter of the Sierra Club suggesting a more publicly accessible database, more inspections and higher fines;
  • Texas Land and Mineral Owners Association criticizing the industry for reclassifying wells and increased land holdings and recommended increasing bonds;
  • Texas Alliance of Energy Producers discussed a variety of issues including the industry, the agency and federal overreach;
  • Middle Pecos Groundwater Conservation District recommended that the RRC enter into memorandums of understanding with the groundwater conservation districts for enforcement relating to groundwater protection;
  • Roxanne Elder, a Hill Country landowner discussed environmental damage and polluting of water by industry and the need for landowner involvement at the RRC; and
  • Center for Integrated Seismicity Research and the University of Texas Bureau of Economic Geology updated the committee on seismic research in Texas.

On Tuesday, March 8, TXOGA staff attended the House Energy Resources Committee and the International Trade & Intergovernmental Affairs Committee hearing on the Joint Interim Charge to: Review how the Mexican energy transformation has bolstered or diminished the energy economy in Texas. Explore opportunities that would encourage binational exchange and commerce of oil, gas, and oilfield materials. Discuss how a competitive market across the border will affect supply, market price, reliability of Texas oil, gas and energy markets, pipeline build-out as well as other economic factors such as workforce and local economy sustainability.

The committee heard testimony from:

  • Bi-national Energy Committee & Bi-national Committee of the Eagle Ford Shale Consortium testified on the state of the oil & gas industry in Mexico, the impact of falling oil prices on Mexico and the need for more refining capacity.
  • University of Texas – Jackson School of Geoscience, Latin America & Caribbean Energy Program discussed the progress of energy reform in Mexico, the continued role of U.S. refining, and the need for infrastructure development in Mexico.
  • ICF International & Que Advisors recommended joint planning between Texas and Mexico in infrastructure development and environmental protection.
  • Howard Energy Mexico talked about the challenges of the oil and gas industry in Mexico including security concerns, corruption, and the price environment.


The Interagency Task Force on Economic Growth and Endangered Species met on Wednesday, March 9, 2016.

The agenda listed updates on “Species of Interest” and staff reported no new actions or activities relating to the: Dunes Sagebrush Lizard, Sprague’s Pipit, Freshwater Mussels and Spot-tailed Earless Lizard.

Staff reported that a determination on listing of the Louisiana Pine Snake is expected by the end of this fiscal year. Texas A&M University researchers are monitoring the Louisiana Pine Snake’s habitat in four east Texas counties and are developing a habitat model. The U.S. Fish & Wildlife Service has developed a draft Candidate Conservation Agreement and would like to move on it quickly.

Staff reported that U.S. Fish & Wildlife Service has recently indicated they do not plan to take action on the Monarch Butterfly until 2017. However, environmental groups are threatening a lawsuit if the Service does not provide a specific timeline. The Comptroller’s office will be issuing an Request For Proposal (RFP) in April or May to study the Monarch Butterfly species itself, rather than its habitat as is being conducted by the University of Texas at San Antonio. Further, the Comptroller is considering research on fire ants and the Monarch Butterfly. The Texas Soil and Water Conservation Board made a presentation on their program “Enhancing & Restoring Monarch Habitat in Texas”.

Applications to receive funding for habitat enhancement and restoration on plots of 1-30 acres will be available on May 2. In October 2015, Texas Parks and Wildlife released the “Texas Monarch Butterfly and Native Pollinator Conservation Plan” that includes seed mix programs and brush control.

The next regular meeting of the Task Force will be in March 2017.

Water Conservation Advisory Council

The Water Conservation Advisory Council met on March 7, 2016. Workgroups and staff have organized to begin drafting recommendations to the 85th Legislature regarding the Council’s statutory charges including:

  • Monitoring trends in water conservation implementation and new technologies for possible inclusion as best management practices;
  • Monitoring the effectiveness of the statewide water conservation public awareness program;
  • Developing and implementing a state water management resource library;
  • Developing and implementing a public recognition program for water conservation;
  • Monitoring the implementation of water conservation strategies by water users included in regional water plans;
  • Monitoring target and goal guidelines for water conservation to be considered by the TWDB and TCEQ; and
  • Evaluating the desirability of requiring certification of water conservation training facilities entities and programs that provide assistance to retail public utilities in developing water conservation plans.

Additionally, there was a presentation by the Comptroller’s Office on implementation of SB 1356, 84th Legislature, relating to the Memorial Day Weekend sales tax holiday for certain water-conserving products.

TXOGA Water Committee

The TXOGA Water Committee met via conference call on March 10, 2016. The committee heard updates on recent legislative hearings relating to water including the House Natural Resources Committee meetings on February 2 and February 9. Additionally, Steve Perry, Chair of the TXOGA Legislative Subcommittee on Water, updated the group on testimony at the March 7 House Energy Resources Committee hearing from the general manager of the Middle Pecos Groundwater Conservation District, who recommended the Railroad Commission enter into memorandums of understanding with the groundwater conservation districts for enforcement.

Chair Kerry Harpole shared a letter from Texas Water Development Board Member Kathleen Jackson expressing appreciation for the participation of TXOGA members in the data sharing initiative for brackish groundwater mapping.  The committee members discussed their positive experiences working with the Texas Water Development Board on the first phase of data sharing. The committee learned that the 2017 State Water Plan will be published in the Texas Register on March 18, 2016 with comments due on April 25, 2016.

The committee was reminded about the upcoming May 1 deadline for groundwater conservation districts to submit Desired Future Conditions to the Texas Water Development Board and discussed a TXOGA review process.


On March 9 and March 10, TXOGA participated in the first two of six scheduled focus groups to be held across the state to study more about the opinions of Texans and the oil and gas industry. The focus groups will provide valuable insight into thoughts and feelings about the industry from key demographics across the state. For more information about the focus groups please contact Kate at kate@txoga.org.

TXOGA also met with representatives from the Texas Natural Gas Foundation to discuss their efforts in creating educational curriculum for 6th – 10th graders and to continue to identify how TXOGA can help with the curriculum project. Remember, if you haven’t already, please Like TXOGA on Facebook and Follow TXOGA on Twitter and encourage your colleagues to do the same!


Ballots are being prepared and scheduled for distribution to the TXOGA PAC Board to determine which races TXOGA will be engaged in for the Primary run-off elections on Tuesday, May 24, 2016. Of specific interest is the run-off for the Texas Railroad Commission.

Primary Election Run-Off Voting Dates:
Early Voting: Monday, May 16, 2016 – Friday, May 20, 2016
Election Day: Tuesday, May 24, 2016

General Election:
Early Voting: Monday, October 24, 2016 – Friday, November 4, 2016
Election Day: Tuesday, November 8, 2016

It’s not too late to become a TXOGA PAC Board Member! For an annual contribution of $5,000, you can be a voting member of the TXOGA PAC Board. PAC Board members are engaged throughout the year with candidate information, election insight, election outcomes, candidate forums, and opportunities to help direct PAC efforts toward candidates seeking public office who understand the importance of the oil and natural gas industry to this state. The TXOGA PAC can only be successful with your continued dedication, involvement and financial contributions.

Your active participation is crucial as our PAC gears up for 2016 fundraising. Please contact Lisa Lucero at lisa@txogapac.org or click on the DONATE TODAY button below, to learn how you can become a member today!


In an effort to have a truly unified industry voice in Texas, TXOGA is working to recruit new members. If you know of industry counterparts that are not involved in the work of the Association or are former TXOGA members, please contact Neal Carlton at ncarlton@txoga.org. If your company would like to make changes to your representatives who serve on TXOGA committees, please email Neal. We can also send you a current breakdown of those from your company serving on committees, if desired.

Membership dues invoices were sent out in December. If not already processed, please pay your dues immediately and contact Neal with any questions.


If your company is not already maximizing savings by being a part of the industry’s largest workers’ compensation insurance program in Texas, please contact Jim Sierra at jsierra@txoga.org today to obtain easy information on the best way to access this program.


  • NEW – Tuesday, March 15, and Friday, March 18, the Texas Conservation Plan for the Dune Sagebrush Lizard Policy Committee will be holding conference calls for its Steering Committee and Policy Advisory Committee respectively. The Comptroller released the 2015 Annual Report of the DSL which can be found here.
  • Monday, March 21, 2016, at 11am—The Senate Select Committee on Property Tax Reform and Relief will meet. The hearing will be held at the following location: Texas Tech University – International Cultural Center, Auditorium located at 601 Indiana Ave, Lubbock, TX 79409. The Committee will hear invited, resource and public testimony on the following interim charges:
    • Study the property tax process, including the appraisal system, and recommend ways to promote transparency, simplicity, and accountability by all taxing entities.
    • Examine and develop options to further reduce the tax burden on property owners.
  • Tuesday, March 29 and Wednesday, March 30, 2016—The TXOGA Board of Directors will meet in Austin. If your company has a board seat, please encourage your board member to attend and RSVP at their earliest convenience. If you do not have a board seat, the March 29 dinner would be good to attend as TXOGA will honor both outgoing state Senator Troy Fraser and House Energy Resources Committee Chair, state Representative Drew Darby, for their service to Texas.
  • Tuesday, March 29, 2016—The Senate Committee on State Affairs will meet to take up and consider the following interim charge: Gather and review data on the compensation provided to private property owners for property purchased or taken by entities with eminent domain authority. Examine the variance, if any, between the offers and the fair market values of properties taken through eminent domain. Make recommendations to ensure property owners are fairly compensated at 9am in the Senate Chamber.
  • Tuesday, March 29, 2016—The Senate Committee on Transportation will meet to take up and consider the following interim charges:
    • Review State Highway Fund grants and loans to Regional Mobility Authorities (RMA) and make recommendations if additional oversight procedures are needed to ensure the RMA’s expenditures are a valid and accountable use of State Highway Funds.
    • Review current state and federal regulations, penalties and fines related to oversize and overweight vehicles and make recommendations to minimize impacts on the state’s roadways and bridges at 9am in E1.016.
  • Wednesday, March 30, 2016, at 9:30am–The Senate Finance Committee will meet in E1.036 to hear invited and public testimony on the following interim charges:
    • Study the benefits, including the dynamic effects, of continuing to phase out the franchise tax. Consider alternate approaches to funding the Property Tax Relief Fund.
    • Review the state’s current sales tax holiday structure and determine its economic benefit to the state. Evaluate and consider the merits of any potential expansion of the tax holiday either in the application of the sales tax exemption or the timing of the holiday.
  • Wednesday, March 30, 2016, at 1pm–The Senate Committee on Business and Commerce will meet in E1.016 to discuss the following business: Receive updates from the Public Utility Commission of Texas and the Electric Reliability Council of Texas.
  • Friday, April 1, 2016, at 9am–The Senate Committee on Natural Resources will meet in E1.012 to hear the following charges:
    • Interim Charge 3 – Economic Development: Evaluate the effectiveness and necessity of programs and resources currently used to support economic development in Texas. Make recommendations regarding continuation of effective strategies, modification of existing administrative or regulatory barriers, and the reduction or elimination of ineffective programs.
    • Interim Charge 4 – Expedited Permitting: Evaluate the permitting process in Texas and neighboring states and make recommendations for eliminating unnecessary barriers and expediting the process to ensure that the regulatory process is consistent and predictable.
    • Interim Charge 7 – Monitoring Charge: Monitor the implementation of legislation addressed by the Senate Committee on Natural Resources and Economic Development during the 84th Legislature, Regular Session, and make recommendations for any legislation needed to improve, enhance, and/or complete implementation. Specifically, monitor the following: 1) Legislation relating to Texas aerospace incentives; 2) Expedited permitting; and 3) Electric utility rate adjustments.
    • (The Committee will examine Parts 1 and 2 of Interim Charge 7 at the posted time and date, but will examine Part 3 separately at a later hearing.

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