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Producers, Others: Tweak, Don't Change Texas Regulator

Judging from testimony at a Texas House Energy Resources Committee hearing Wednesday evening, numerous producing and midstream interests in the state want to keep the Railroad Commission of Texas (RRC) much the same as it is instead of replacing the three-member body with a new one-commissioner entity, as has been approved by the Senate in SB 655 (see Daily GPI, April 14; April 6).

However, a proposed name change to Texas Oil and Gas Commission was largely favored.

RRC Chair Elizabeth A. Jones was among the first of about two-dozen to comment on the committee's substitute legislation to SB 655. Committee Chair Rep. Jim Keffer's (R-Eastland) legislation would retain the RRC but change its name and make other adjustments.

"If you truly had one railroad commissioner, this would be an energy czar," Jones said. "You can't compare [the RRC] to an agency that's run by a single commissioner."

However, Apache Corp.'s Obie O'Brien, vice president of government affairs, testified against the substitute, saying Apache preferred a one-member commission. "I don't know of any business that's effective with three CEOs...three different answers to the same question," O'Brien said.

But that view seemed to be in the minority among producers and midstream companies as numerous representatives of these interests testified or entered an opinion in favor of the three-commissioner model. Among them was David Jackson, a lawyer who represented Range Production Co. during a recent RRC investigation of alleged contamination of water wells in the Barnett Shale by the company, a charge that Range was cleared of at the RRC last month (see Daily GPI, March 23).

SB 655's provision to move contested case hearings from the RRC to the State Office of Administrative Hearings (SOAH) was generally opposed by oil and gas patch interests, whose representatives said the RRC has the necessary experience and technical expertise to handle cases in house as they couldn't be handled at SOAH. However, natural gas utility interests generally favored moving their rate cases over to SOAH, where they would join electric utility cases.

Jackson cited "inherent checks and balances" in the three-commissioner model and said hearings should remain at the RRC rather than being transferred to SOAH.

"My point is that the Range case is a real world example of why these hearings should be heard at the Railroad Commission, why they should be heard by Railroad Commission examiners..." Jackson said. "Had this hearing been handed to SOAH, we wouldn't have a decision, we wouldn't have factual findings...In short, the hearing process at the commission works, and the Range case is an excellent example on why it should not be changed."

Phil Gamble, another attorney, who represented the Gas Processors Association, said the group "enthusiastically supports" the substitute legislation that would keep three commissioners.

James Mann, vice chair of the Texas Pipeline Association, noted that previous recommendations from the state's sunset panel on the RRC have called for changes similar to those currently being debated. "What we need is regulatory stability," he said. "The committee substitute [legislation] does that. We keep the three-commissioner structure, which is incredibly important to us. There's nothing more transparent than having three commissioners up on a bench having to explain every decision they make...There's nothing more transparent than open meetings."

Consumer interests, represented at the hearing by Public Citizen Inc.'s Andy Wilson, would be better represented with a three-member commission, Wilson said. He said he liked a provision of the substitute legislation that would require commissioners to resign before running for another public office. Wilson said a cap should be placed on campaign contributions commissioners or prospective commissioners could receive.

"We don't want a citizen to leave a contested case hearing and think that the dollars were more important than their own plight," he said. However, House committee members were cool to the idea.

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