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Texas Needs More Than One Commissioner, Says Regulator

The replacement of the three-member Railroad Commission of Texas (RRC) with a one-member Texas Oil and Gas Commission -- as approved by state Senate lawmakers and now being considered in the House -- would politicize regulation of the industry, according to RRC Commissioner David Porter.

Although under the legislation passed by the Senate (see Daily GPI, April 6) Porter would be the last RRC commissioner standing, so to speak, at least until a replacement is appointed/elected, he's not in favor of the one-commissioner model.

"...[W]hen you look at how diverse the oil and gas industry is in the state of Texas, you've got major oil companies, you've got small independents, you've got royalty owners, you've got surface owners, you've got the rural and the urban question. You've got all these different interests out there...Three people are going to represent that much better than one person," he told NGI.

"And you've got checks and balances with three people. If you've got one commissioner that's setting all the regulations for arguably what is the most important industry for the economy of the state of Texas, that is a tremendous amount of power to put in one person's hands. You could get a commissioner that was strictly in bed with big oil, or you could get a commissioner that was a radical environmentalist. I think with having three divergent viewpoints there it gives us a lot more stable regulatory base and framework for our industry."

The one-commissioner agency would be more political because his or her department heads would eventually turn into political appointees, Porter said, and the agency's inspectors would have politics on their minds when they are making regulatory decisions.

Because the legislation being considered would abolish the RRC and create a new agency, it could open up the state to further oversight by the Environmental Protection Agency (EPA), a federal agency with which Texas has famously sparred on a number of fronts.

EPA delegated control of the state's underground injection control program to the RRC in 1982, Porter noted. If the program is transferred to a new state agency, the new agency cannot administer the program without the approval of the EPA.

"If the [Railroad] Commission is abolished, that gives the EPA another bite at deciding whether they want to approve the delegation to the new agency," Porter said. "Considering the state of things between the state of Texas and the EPA right now, I don't know that that's a risk that's worth taking."

If Texas were to be denied the right to oversee regulation of injection wells -- including those used by the natural gas industry -- it "has the potential to be very disastrous for the [state's energy] industry," Porter said. "If you don't have a place to put the water, it basically over time will shut down production."

In creating the one-commissioner agency, the proposed legislation would also send contested oil and gas industry cases to the State Office of Administrative Hearings (SOAH). Porter said this would end up costing the state more money.

"It has been stated that RRC [hearing] examiners would be transferred to SOAH so that there would be no net cost to the state; however, RRC examiners serve dual roles and would need to be replaced," Porter said in a position paper he wrote opposing RRC changes.

"...[W]e have the technical expertise within the agency with our hearing examiners to handle very complex, complicated oil and gas-type cases and the natural gas regulatory cases," Porter told NGI. "We have petroleum engineers and geologists on staff at the Railroad Commission...You don't have that expertise quite developed at SOAH."

RRC examiners moved to SOAH would either be sitting around waiting for oil and gas cases to come their way or would be assigned to other cases, potentially making them unavailable for oil and gas matters to come, Porter said.

The legislation to create the Texas Oil and Gas Commission approved by the Senate was slated to be heard in the House Energy Resources Committee Wednesday afternoon.

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