3/4/16 TXOGA Voice

A Message from Todd Staples…

Cloudy skies and a U. S. Capitol under construction welcomed The Energy Council’s 2016 Federal Energy & Environmental Matters Conference.

Economic forecasts, federal updates and state based shared misery dominated the discussions. A common theme amongst state leaders and industry representatives is the onslaught of continued and expedited federal overreach.

One thing became even clearer: the analytical work of TXOGA members through our Association’s standing committees is a crucial defense. As anti-fossil fuel forces’ devious schemes continue to have an inordinate influence over federal, state and local polices and regulations, a unified industry must provide thoughtful and meaningful science based solutions to the challenges being discussed.

If you haven’t reviewed your company’s participation in the TXOGA committee structure, please contact Director of Membership Neal Carlton at ncarlton@txoga.org to ensure the work of our committees reflects your company’s priorities. earer: the analytical work of TXOGA members through our Association’s standing committees is a crucial defense. As anti-fossil fuel forces’ devious schemes continue to have an inordinate influence over federal, state and local polices and regulations, a unified industry must provide thoughtful and meaningful science based solutions to the challenges being discussed.


TXOGA REPORTS

LEGISLATIVE 

On February 29, TXOGA staff attended an Oversize and Overweight Stakeholders Workshop at TxDOT to learn about TxDOT’s process and responsibilities in determining oversized/overweight (OS/OW) truck fiscal notes as well as current studies and interim activities being conducted. TxDOT will hold individual industry meetings and additional workshops throughout the year. It is anticipated the next workshop will be in July.

The roundtable heard from researchers with the Center for Transportation Research discussing how they evaluate OS/OW truck issues. Specifically, different configurations of trucks, and calculation of bridge and pavement impacts.

TxDOT is not supporting or recommending changes to any OS/OW limits or truck configurations in current state law. TxDOT’s goal is to collect and analyze the best information from industry and stakeholders in order for TxDOT to be able to provide accurate impact analysis to the legislature for proposed legislation (next session) that may change OS/OW limits or truck configurations in current state law.

On March 1, Todd Staples and TXOGA staff met with Sunset Commission staff. The staff is preparing their recommendations and is seeking feedback from industry on different issues including the Railroad Commission name change, moving hearings to State Office of Administrative Hearings and changes to the Railroad Commission self-funding structure. We expect to see a staff report by April.

D.C. UPDATE

On March 3, while in Washington, D.C., to attend Energy Council’s Federal Energy and Environmental Matters Conference, Todd Staples met with API President and CEO, Jack Gerard, to discuss industry matters and what is being done at both the national and our state level to promote the industry. In addition, they discussed aspects of the TXOGA/API pilot project that is underway in Texas. TXOGA staff also met with API’s Office of General Counsel to discuss important matters in common and to seek advocacy alignment.

On March 3 and 4, Todd Staples and TXOGA staff attended Energy Council’s Federal Energy and Environmental Matters Conference. While in D.C., they hosted a dinner for Texas legislators and attended the conference’s many important presentation topics, including the keynote address by Dr. David Knapp, Chief Energy Economist for the Energy Intelligence Group on the “State of the Oil Market” and a panel presentation on “EPA’s Proposed Methane Rules”. On Saturday, House Energy Resources Committee Chairman Drew Darby will join a panel to discuss state and federal legislative responses to the Clean Power Plan.

Texas State Representative and Chair of the Texas House Energy Committee Drew Darby (R-San Angelo) addresses The Energy Council’s 2016 Federal Energy and Environmental Matters Conference. Darby now serves as Vice President of The Energy Council. A link to the agenda for the conference can be found here.

REGULATORY 

On March 4, TXOGA staff and members attended a meeting with the Office of Management and Budget (“OMB”) to provide further feedback on its review of the Bureau of Safety and Environmental Enforcement’s (“BSEE”)recently published rule on well control. Our feedback tracked our written comments submitted in July 2015 to focus on effective safety requirements, cost of compliance, and economic impact.  Our main message at the meeting was to encourage OMB to direct BSEE to revise the proposed rule and reopen the public comment period to address the many procedural, technical, and economic flaws in the current proposal.

The Texas Comptroller’s office has announced that the low-producing oil well credit is about to kick in because of low prices.  A similar credit for natural gas production has been in effect for over a year, but this will be the first time in history that the oil credit will turn on.  It will likely be 25% for the first month of effectiveness, and could rise to 50% in subsequent months.  Both the oil and gas credits are triggered by low prices.  However, as you know, administratively, the two taxes are different in operation.  Most gas tax is paid directly by producers, and each gas well is a separately tracked unit.  With oil, the lease is the basic unit of production and small producers often have their tax paid by the “first purchaser”, who may be affiliated more fundamentally with midstream or downstream operations.  The credit will undoubtedly have value to producers but could create first-purchaser administrative issues for that have not yet been fully thought out. Here is a link to the updated price. For reference, the oil credit is found in Tax Code, §202.058. The gas credit is in Tax Code, §201.059.

We seek a meeting of interested members to examine this issue and then a subsequent meeting with the Comptroller’s office on implementation.

Bob Adair with Phillips 66 and representing TXOGA is the Chairman of the Tax Relief for Pollution Control Property Advisory Committee at the Texas Commission on Environmental Quality. The Tax Relief for Pollution Control Property Advisory Committee was established by the Texas Legislature to provide recommendations to the TCEQ on matters relating to use determinations for pollution-control property/equipment and the implementation of Texas Tax Code (TTC) Section 11.31. The advisory committee is made up of members selected to represent the following groups: industry, appraisal districts, taxing units, environmental groups, and members who are not representatives of any of those groups but have substantial technical expertise in pollution control technology and environmental engineering. Click here for a link to the 2015 report released this week.

The Railroad Commission of Texas (Commission) has adopted amendments to 16 Texas Administrative Code (TAC) §3.86 (Statewide Rule 86), regarding Horizontal Drainhole Wells, as well as conforming amendments to other statewide rules (5, 31, 38, 40, 45, 51 and 52). Effective February 1, 2016, these amendments establish a procedure for designating certain fields as unconventional  fracture treated fields (“UFT Fields”).  Railroad Commission Notice to Operators can be found here.

COMMUNICATIONS & MEDIA

TXOGA continued promotion on social media of the 2015 tax rollout and op-ed and also encouraged voter participation in Tuesday’s primary election. If you haven’t already, please Like TXOGA on Facebook and Follow TXOGA on Twitter and encourage your companies to do the same!

TEXAS OIL AND GAS ASSOCIATION GOOD GOVERNMENT COMMITTEE (TXOGA PAC)

TXOGA PAC will host a fundraising luncheon for Chairman Todd Hunter, Representative for District 32 and chairman of the powerful Calendars Committee, on Wednesday, March 9, 2016 at TXOGA. Please RSVP to Lisa Lucero at lisa@txogapac.org if you are a PAC Member and/or a TXOGA Member with contribution for Representative Hunter. Luncheon will start at 11:45am and end at 1pm

Todd Staples and TXOGA staff hosted an election watch on Tuesday, March 1, 2016. Please find the election outcomes for the slate of candidates endorsed by the TXOGA PAC:

Statewide

Office     Candidate  Outcome   
Supreme Court Justice Eva Guzman Won
Supreme Court Justice Paul Green Won
State Senate
District Candidate Outcome
19 Sen. Carlos Uresti   (D-San Antonio) Won
26 Sen. Jose Menendez (D-San Antonio) Won
27 Sen. Eddie Lucio (D-Brownsville) Won
Texas House of Representatives
District Candidate Outcome
121 Speaker Joe Straus (R-San Antonio) Won
2 Rep. Dan Flynn (R-Van) Won
7 Jay Dean (R-Longview) Won
8 Rep. Byron Cook (R-Corsicana) Won
11 Rep. Travis Clardy (R-Nacogdoches) Won
12 Rep. Kyle Kacal (R-Bryan) Won
14 Rep. John Raney (R-College Station) Won
17 Rep. John Cyrier (R-Bastrop) Won
20 Rep. Marsha Farney (R-Georgetown) Lost
36 Rep. Sergio Munoz (D-Palmview) Won
37 Rep. Rene Oliveira (D-Brownsville) Won
47 Rep. Paul Workman (R-Austin) Won
58 Rep. Dewayne Burns (R-Cleburne) Won
59 Rep. J.D. Sheffield (R-Gatesville) Won
60 Kevin Downing (R-Granbury) Lost
65 Rep. Ron Simmons (R-Carrollton) Won
73 Rep. Doug Miller (R-New Braunfels) Run-off
81 Rep. Brooks Landgraf (R-Odessa) Won
84 Rep. John Frullo (R-Lubbock) Won
89 Rep. Jodie Laubenberg (R-Parker) Won
99 Rep. Charlie Geren (R-Fort Worth) Won
112 Rep. Angie Chen Button (R-Garland) Won
113 Rep. Cindy Burkett (R-Sunnyvale) Won
114 Rep. Jason Villalba (R-Dallas) Won
115 Bennett Ratliff (R-Coppell) Lost
127 Rep. Dan Huberty (R-Houston) Won
128 Rep. Wayne Smith (R-Baytown) Run-off
134 Rep. Sarah Davis (R-Houston) Won
137 Rep. Gene Wu (R-Houston) Won
150 Debbie Riddle (R-Spring) Lost

Texas Super Tuesday Breakdown – For a full report please see the candidate summary linked here.

2016 PRIMARY ELECTION Numbers

Turnout was heavy for both parties in Tuesday’s Texas Primary Elections fueled by the “Super Tuesday” Presidential elections, which were very much in play in Texas for Republicans and Democrats.

  • Republican Primary Turnout: 2,812,935, which is 19.75% of registered voters.
  • Democratic Primary Turnout: 1,409,641, which is 9.89% of registered voters.

Statewide Races

US President -Ted Cruz led the Republican Presidential Primary in Texas with 40.6% of the vote, followed by Donald Trump with 28.07% and Marco Rubio at 18.42%. Hillary Clinton carried the Democratic Primary with 65.18% to Bernie Sanders’ 33.18%.

Railroad Commission Races – There will be run-offs in both the Republican and Democratic Primaries for Railroad Commission.

  • The Republican Primary Run-off will be between Rosenberg Businessman/rancher Gary Gates and former State Representative Wayne Christian.
  • The Democratic Primary Run-off will be between retired school teacher Grady Yarbrough and Austin political consultant Cody Garrett.

Supreme Court Races – All three Republican incumbent Supreme Court Justices won their primary contests – Debra Lehrmann, Paul Green, and Eva Guzman.

Court of Criminal Appeals Races – There will be Republican Primary run-offs in two Court of Criminal Appeals races:

  • Place 2 between Harris County Criminal Court Judge Mary Lou Keel and Collin County District Judge Ray Wheless;
  • Place 5 between Dallas attorney Scott Walker and Williamson County assistant district attorney Brent Webster.

Incumbent Justice Michael Keasler won the Republican Primary in Place 6.

Texas Congressional Races

There are 25 Republicans and 11 Democrats in the Texas Congressional Delegation. All 36 members of the Delegation are up for re-election this year. 19 incumbents had Primary Election challengers – 14 Republicans and 5 Democrats. All incumbent members of the Texas delegation defeated their Primary Election challengers without a run-off. There will be Democratic and Republican Primary run-offs in the open Congressional District 15; a Republican Primary run-off in the open Congressional District 19; and a Republican Primary run-off in Congressional District 18 to determine who will oppose Congresswoman Sheila Jackson Lee.

2 Incumbent Members of Congress are Not Seeking Re-election:

  • Ruben Hinojosa (District 15)
  • Randy Neugebauer (District 19)

Texas Senate Races

The Senate currently has 20 Republicans and 11 Democrats. 15 incumbents are not up for re-election until 2018. 16 of the 31 Senate districts are up for election in 2016. Of those, two incumbents are not seeking re-election; nine incumbent Senate members have no major party opposition in the Primary or the General Election. Only three incumbents had Primary opponents, all were Democrats, and all defeated their Primary opponents. There will be Republican Primary run-offs in both of the open seats.

2 Incumbent Members of the Texas Senate are Not Seeking Re-election:

  • Kevin Eltife (District 1)
  • Troy Fraser (District 24)

Texas House Races

The Texas House has 99 Republicans and 49 Democrats – two Democrats have resigned and their seats are vacant – Representatives Ruth Jones McClendon (District 120) and Sylvester Turner (District 139). The Special Elections will be on May 7, 2016.

All 150 members of the Texas House are up for re-election in 2016. 13 incumbents did not seek re-election. 43 incumbents faced Primary Election challengers – 33 Republicans and 10 Democrats. 4 of those incumbents were defeated in the Republican Primary; and 3 incumbents will be in run-off elections on May 24, 2016. There will be run-offs in 7 of the open seats.

4 Incumbent House Members Were Defeated in the Primary

  • Stuart Spitzer (District 4)
  • Marsha Farney (District 20)
  • Molly White (District 55)
  • Debbie Riddle (District 150)

3 Incumbent House Members Will Be in a Run-off:

  • Ron Reynolds (District 27)
  • Doug Miller (District 73)
  • Wayne Smith (District 128)

13 Incumbent Members of the Texas House are Not Seeking Re-election:

  • Jimmie Don Aycock (District 54)
  • Myra Crownover (District 64)
  • Trey Martinez Fischer (District 116)
  • Allen Fletcher (District 130)
  • Patricia Harless (District 126)
  • Bryan Hughes (District 5)
  • Jim Keffer (District 60)
  • Susan King (District 71)
  • Marisa Marquez (District 77)
  • Elliott Naishtat (District 49)
  • John Otto (District 18)
  • David Simpson (District 7)
  • Scott Turner (District 33)

2 Incumbents Have Resigned (Special Elections Pending)

  • Representative Ruth Jones McClendon (District 120)
  • Representative Sylvester Turner (District 139)

MEMBERSHIP 

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.

TEXAS OIL & GAS ASSOCIATION WORKERS’ COMPENSATION SAFETY GROUP

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.

UPCOMING EVENTS

  • On Monday, March 7, 2016, at 1pm the House Energy Resources Committee will meet in E2.010. The committee will meet to hear testimony on the following charges:
    • Study enforcement policies of the Railroad Commission of Texas. Consider 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.
    • 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. In conducting oversight, the committee should:
      • consider any reforms to state agencies to make them more responsive to Texas taxpayers and citizens;
      • identify issues regarding the agency or its governance that may be appropriate to investigate, improve, remedy, or eliminate;
      • determine whether an agency is operating in a transparent and efficient manner;
      • identify opportunities to streamline programs and services while maintaining the mission of the agency and its programs;
      • monitor the impact of major energy legislation passed by the 84th Legislature including the implementation of regulated surface activity on oil and gas sites; and
      • review seismic research needs for the University of Texas Bureau of Economic Geology and any response to research findings by the Railroad Commission of Texas.
  • On Tuesday, March 8, 2016, at 9am the House Energy Resources Committee will meet in E1.030. The Committee will meet jointly with International Trade & Intergovernmental Affairs to hear invited testimony only on the following charge:
    • 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.
  • NEW : The Railroad Commission is scheduled to meet on Tuesday, March 8, 2016 at 9:30am in the William B. Travis Building, 1701 North Congress, Room 1-111, First Floor, Austin, Texas. Click here for a link to the agenda.
  • TXOGA PAC will host a fundraising luncheon for Representative Todd Hunter (R-Corpus Christi), Chair of the House Calendars Committee, on March 9. Please contact Lisa Lucero at lisa@txogapac.org if you are interested in participating in this important event. Attendees must be donors to TXOGA PAC and/or bring a donation directly to Rep. Hunter.
  • The Senate Select Committee on Property Tax Reform and Relief will meet on Monday, March 21, 2016, at 11am. 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.
  • TXOGA Board of Directors will meet in Austin on March 29 and 30. 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 Chair, state Representative Drew Darby, for their service to Texas.
  • On 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.
  • On 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.
  • The Senate Finance Committee will meet on March 30, 2016 at 9:30am 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.
  • The Senate Committee on Business and Commerce will meet on March 30, 2016at 1pm, in E1.016 to discuss the following business: Receive updates from the Public Utility Commission of Texas and the Electric Reliability Council of Texas.
  • NEW : The Senate Committee on Natural Resources will meet on Friday, April 1, 2016 at 9am 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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