Texas’ oil and natural gas regulators need proper funding
By Todd Staples
March 27, 2017
Texas lawmakers are reviewing the Railroad Commission of Texas (RRC), the state agency that regulates the oil and natural gas industry, as part of the sunset review process. Lawmakers would do well to not only reauthorize the RRC but to also properly fund this indispensable agency so it has the people and technology necessary to maintain robust oversight of the oil and natural gas industry through science-based regulation.
Performed on a 12-year cycle, sunset review is an effort to “shine a light” on state government’s work to ensure agencies remain effective and relevant. It’s an opportunity to thoughtfully consider day-to-day operations and to look for opportunities to improve an agency.
The RRC is every bit as relevant and necessary today as it was when it was created more than 125 years ago. In fact, as oil and natural gas activity has ballooned in Texas, a fully functioning, properly funded commission may be more important than ever.
Times have changed since the oil and natural gas era was born in Texas. Today’s oil and natural gas industry has evolved since those early discoveries, with operators deploying innovation and technologies that are on par with NASA. In fact, some oil and natural gas technologies have been developed with NASA. Many of those technologies were on display during the first-ever Texas Energy Day at the Capitol, when Texans from across the state visited Austin to tell lawmakers why oil and natural gas matters to them.
Texas Energy Day was an opportunity to showcase how the RRC has adapted alongside modern oil and natural gas operations. In fact, Texas’ approach to energy regulation has become the national and global standard bearer because the state’s regulations protect the environment and promote responsible production of our state’s natural resources — reinforcing that we do not live in an “either/or world” where we must choose between energy and the environment. We can produce more energy, grow our economy and continue to improve the environment while reducing our dependence on other countries for our energy needs.
Observers the world over look to Texas to see what the state is doing to try to emulate that success.
Of note, a Washington Post editorial about hydraulic fracturing regulations concluded that, “Regulations should do things such as require solid well casings, prohibit injecting water too close to the water table, demand that drillers account for nearby wells and force operators to take care in handling chemicals and wastewater.”
These recommendations are smart and reasonable, and in every case, Texas requires all those things and more.
Texas law requires wells to be constructed with layers of concrete and steel pipe to protect groundwater. In recent years, the oil and natural gas industry fully supported the RRC’s new rules that further strengthened well integrity regulations. Texas maintains regulations specific to handling wastewater as well as regulations for waste disposal. Regulations for disposal wells protect groundwater through stringent construction standards, depth requirements, rules about proximity between wells and monitoring requirements for pressure, rates and well integrity.
As it should, Texas has robust, comprehensive regulations in place for all aspects of oil and natural gas activity from drilling and production to pipelines and refining.
The agency must be properly funded to keep pace with growth and technology. It needs more staff, more field inspectors and technology upgrades to execute its work with greater transparency and efficiency. Likewise, the Legislature should prioritize proper funding for the Texas Commission on Environmental Quality (TCEQ), which also plays an important role in regulating the oil and natural gas industry.
Lawmakers have an opportunity to allocate additional funding to the RRC using existing state revenue raised from the oil and natural gas industry. In fiscal 2016 alone, the industry paid $9.4 billion in state and local taxes and state royalties — an average of $26 million a day. Since 2007, the industry has paid $108 billion in state and local property taxes and state royalties — enough to cover the current annual state budgets for the University of Texas at Austin and Texas A&M University, combined, for well over 100 years. That’s on top of millions of dollars in fees the industry pays annually directly to the commission.
We are urging lawmakers to reauthorize the commission and to provide funds the RRC and TCEQ need to robustly and efficiently regulate the Texas oil and natural gas industry which is securing our economy, our environment and our future.