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Texas Lawmakers on RRC: Don't Fix What's Not Broke

Texas lawmakers on the Sunset Advisory Commission mostly turned a skeptical ear toward recommendations for changes at the Railroad Commission of Texas (RRC), the Lone Star State's oil and natural gas regulator.

During the first hearing in the RRC's current Sunset Review, held in Austin on Monday, it was apparent that the commission has a number of friends in the Texas House and Senate.

The review, among other things, has recommended a name change to the "Texas Energy Resources Commission," which has some support among lawmakers and others (see Daily GPIAug. 17May 2). More controversial recommendations to move contested hearings from the RRC to the State Office of Administrative Hearings (SOAH) and to move natural gas utility oversight to the Texas Public Utility Commission raised concerns, though.

Sunset Project Manager Amy Trost told lawmakers the RRC needs more transparency, greater focus on core functions and improvement in enforcement efforts.

Rep. Cindy Burkett (R-Sunnyvale) was the first among lawmakers to question the wisdom of moving contested hearings from the commission to SOAH. She expressed concern that SOAH staff might not have the necessary expertise to handle RRC's oil and natural gas cases. She also wondered whether SOAH would have the capacity to handle the additional caseload. "I'm concerned that they're not going to have that same expertise over at SOAH to handle these hearings."

Trost responded that RRC staffers with appropriate expertise would be available to participate in hearings at SOAH.

Burkett also asked whether there was a question of a lack of objectivity in hearings held at the RRC.

Sunset staffer Eric Beverly responded that holding contested case hearings at SOAH would be "closer to the standard" for other state agencies but added that "...you cannot prove bias [at the commission]. I'm not sure there's been bias of any kind...I have no idea whether commissioners or their staffs have talked with ALJs [administrative law judges] in between hearings. I don't know. There's no way for us to know...

"I know that anecdotally we've heard that it's perfectly clean from a lot of industry people. We've heard from those that are not industry people that they think it's biased...We take all that with a grain of salt...I cannot tell you that it isn't independent where it is right now."

Sen. Charles Schwertner (R-Georgetown) asked about a previous move of RRC contested hearings to SOAH. Trost acknowledged that they were held there in 2002 and 2003 before being moved back to the RRC. "But there's no indication that this didn't actually work well or that they were inefficient [at SOAH]," Trost said. RRC records on its own hearings division performance, such as time to close cases, etc., are too scant to evaluate, she said.

"We expect that the timeliness and the efficiency of hearings at SOAH to be at least as good as, if not better than, at the Railroad Commission. Again, the Railroad Commission hasn't been tracking any of that data, so there's no way to prove that...They do feel the hearings function works very well but, like I said, they have no data to back that up."

The RRC has a staff of about 740 and an annual budget of more than $86 million. Rep. Senfronia Thompson (D-Houston) asked, "Where is it broken?"

Trost said, "...[T]here's basically no performance data [on hearings]. They can't tell how long it takes for a case to work through their system...appearance of conflicts of interest. There's the appearance of conflicts of interest because the hearings are less independent...Previous Sunset reviews have recommended developing an ex parte policy and rule, but the agency has not done that. In fact, they developed a first-ever memorandum on ex parte communication back in 2014, but that memorandum does not apply to commissioners, ex parte communication between the commissioners and the hearings staff, so that's a concern."

Rep. Dan Flynn told the Sunset staffers that when he read through their report he thought, "Why are you so angry with the Railroad Commission? They've done a pretty good job, and I agree with Rep. Thompson...I'm flooded with complaints about [SOAH]. I hear it all the time. I don't ever hear any complaints about the Railroad Commission, and I live in a little town that has a few oil wells in it...

"Did you talk with any of the folks that work with the Railroad Commission? I'm talking about some of the associations where the thousands and millions of people that work in this industry. It seems like when I talk with them nobody really likes any of the suggestions...They feel like it's working pretty smooth."

One of the associations with an interest in the RRC is the Texas Oil and Gas Association (TXOGA). President Todd Staples testified at the Sunset hearing on Monday. The association is neutral on the proposed name change but thinks it should be dealt with separately from the Sunset process. TXOGA is clearly opposed to moving contested case hearings to SOAH.

"...[T]he Railroad Commission is constitutionally and statutorily charged with promoting conservation of mineral resources; protecting surface and groundwater resources and the environment; ensuring public safety in pipeline transportation; protecting correlative rights of mineral interest owners; preventing waste of natural resources; and assuring fair and equitable services and rates by Texas intrastate utilities and pipelines," Staples said. "The contested case process is one of the most essential functions for the Railroad Commission to be able to carry out these duties."

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