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Texas Falls Short in Regulating Oil/NatGas Industry, Watchdog Group Says

In advance of a public hearing on Railroad Commission of Texas (RRC) practices and operations scheduled for Monday, watchdog group Public Citizen has rolled out its wish list of reforms it would like to see at the oil/natural gas regulator.

"Other oil and gas states have stronger mandates to protect public health and the environment," said Carol Birch, legislative counsel for Public Citizen's Texas office. "States that do better in regulating the industry require more frequent inspections and have fines large enough to deter violations.

"Other states also have stronger ethics protections. Oklahoma, for example, strictly limits campaign contributions from the oil and gas industry to prevent conflicts of interest. Compare that to Texas, whose commissioners take industry contributions all year long, even when not running for election."

Birch's assertions are based on a recent study of regulatory practices in other states conducted by Public Citizen. The group said RRC "should undergo significant changes in structure, transparency, funding, inspections and environmental protection."

The study looked at the best practices of eight states besides Texas that produce oil and gas: Colorado, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, West Virginia and Wyoming. Public Citizen said it chose a cross-section of oil and gas states facing similar issues as Texas. The study examined regulatory practices ranging from ethics and transparency to fines and funding to inspections and environmental protections.

"Compared to the states we studied, it is clear that the regulatory practices and agency structure of the RRC need a serious overhaul," said Tom Smith, director of Public Citizen's Texas office. "The RRC mission statement promises to serve Texas through protecting the public, the environment and natural resources. This study shows it has a long way to go before fulfilling that mission."

RRC is again undergoing a state Sunset Advisory Commission review. Such reviews are normally conducted every 12 years and are intended to reconfirm the usefulness of state agencies and consider recommendations for changes.

As with past RRC Sunset reviews, the most prominent recommendation for reform this time around is a name change for the agency to something that would more accurately reflect its involvement in oil/natural gas and non-involvement in railroads. Another half-dozen recommendations by the Sunset Advisory Commission staff are to be considered as well (see Daily GPIMay 2).

In large part, Public Citizen said it supports the staff recommendations. "However, because the RRC has failed in many important ways to protect the public and the environment, Public Citizen is proposing additional recommendations to create more effective, efficient and democratic management of the RRC, and to hold the agency accountable to its mission statement," it said.

Public Citizen recommends that the RRC structure be changed, with the possibility of appointing the three commissioners instead of electing them. Public Citizen also recommends "...limiting campaign contributions, finding ways to address conflicts of interest when commissioners have industry ties and changing the name of the agency because it has not overseen Texas railroads for years."

The group also is calling for greater transparency at the agency. "This includes creating a searchable database of inspections, complaints and enforcement actions, including fines and penalties, against individual operators, on the RRC website -- as many other states have done; fixing the nonexistent RRC performance measures; correcting misleading statistics on the RRC website; and reducing the amount of time, currently 12 years, before the next Sunset Review is conducted," Public Citizen said.

Additionally, compared to other states, RRC has lower bonding requirements and lower permitting fees levied on operators, which "wrongly" places the financial burden on the public when the industry is noncompliant, Public Citizen said. Penalties for noncompliance should be increased to deter violations, it added.

"The RRC lacks sufficient inspectors to examine all the states wells even once a year. It should impose an annual inspection fee to help cover the cost of overseeing the industry. Additionally, the RRC should require inspections and surveillance procedures to be independent of information supplied by industry operators.

"There is a striking difference between the RRC mission statement and what the agency does. To fix this, the RRC should create an environmental advocate position at the RRC and provide greater opportunities for public input and participation."

While Public Citizen is calling for greater accountability to the public, the RRC itself is in the process of instituting reforms to lighten the regulatory burden on industry. Commissioner Christi Craddick earlier this month outlined a number of changes she said would relieve operators of undue burdens during the ongoing depressed commodity price environment (see Daily GPIAug. 10). The attitude of industry accommodation is not likely to sit well with Public Citizen.

"The RRC should not be allowed to bend over backwards to benefit industry at the citizens' expense," Smith said Wednesday. "And for the sake of the environment and our residents, the RRC cannot coast along for another 12 years without review to see if needed reforms have been implemented."

The Sunset Advisory Commission public hearing, which is to be live streamed over the internet, is open to the public and scheduled for 9:00 a.m. CDT Monday in Austin.

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