Issues and Major Legislation of the 85th Texas Legislative Session
SB 1 by Nelson, Zerwas
(General appropriations act for 2018-19)
Appropriates all-funds of $217 billion, including $107 billion of general revenue for the 2018-19 fiscal biennium.
Governor Abbott signed SB 1 on June 1 but included $120 million of line item vetoes.
A major point of contention between the House and Senate was that monies appropriated from the Rainy Day Fund were to be spent only on one time expenditures. Below is that list of appropriations totaling a little less than $1.0 billion from the Fund. (Note the $38.2 million for the RRC is for the plugging of orphaned wells.)
Appropriations from the Economic Stabilization (“rainy day”) Fund, in millions:
Facilities Commission: $ 108.4
Governor’s Office: 155.0
Historical Commission: 24.4
Library & Archives: 1.0
State Health Services: 1.4
Health & Human Services: 458.6
Texas Education Agency: 25.0
School for the Blind: 2.0
School for the Deaf: 14.6
Department of Criminal Justice: 42.0
Juvenile Justice: 12.1
Military Department: 16.3
Railroad Commission: 38.2
Total: $ 988.9
RRC Budget (2018-2019)
The budget for the RRC provides adequate funding for the Agency in carrying out its regulatory and inspection functions. Enough monies are available to elevate some salaries to compete with other State agencies and help with the hiring backlog. The Budget provides monies from the Rainy Day Fund to plug a backlog of orphaned wells. The 2018-19 budget provides operational stability by appropriating monies to the RRC from the Gas Utility Tax, currently collected by the RRC but turned back into General Revenue.
Operational Stability Funding:
In addition to amounts appropriated above, $19,825,000 in fiscal year 2018 and $19,825,000 in fiscal year 2019 in General Revenue is appropriated to the Railroad Commission from revenues generated by the Gas Utility Pipeline Tax, authorized in Utilities Code, Section 122.051. Notwithstanding limitations on appropriation transfers contained in the General Provisions of this Act, the Railroad Commission is authorized to transfer funding appropriated in this rider between strategy line items.
The 2018-19 budget as signed by Governor Abbott contains no increased taxes or fees to oil and gas operators and producers.
Railroad Commission Sunset
HB 1818 by Gonzales, Taylor
After three sunset reviews over four legislative sessions, legislation reauthorizing the Railroad Commission of Texas for 12 more years finally passed. House Bill 1818, authored by the Sunset Committee Chairman Larry Gonzales, was signed by the Governor on May 23rd. The bill was sponsored in the Senate by Senator Van Taylor, who also served as Vice-chair of the Sunset Committee.
Primary provisions in HB 1818 include a pathway for the Commission to develop and implement an alternative dispute resolution policy; the development and dissemination of a monitoring and enforcement strategic plan by the RRC’s Oil and Gas Division; and the establishment of pipeline regulatory fees. Additionally, an amendment regarding E-Verify was successfully added onto the bill in the House, which requires all contractors and subcontractors awarded a contract by the RRC to register and participate in the E-Verify program, ensuring workers are legally eligible for employment in the US.
The full text of HB 1818 is available online here.
At the onset of the legislative session, the Coalition for Critical Infrastructure (CCI) was formed in response to various landowners’ groups efforts to pass legislation aimed at creating more requirements and a greater burden on users of eminent domain. The CCI encompassed various business and industry groups, not just oil and gas interests, who joined together in an effort to find a reasonable solution to certain landowner grievances that also addressed the state’s growing need for infrastructure projects.
The CCI participated in constant negotiations with stakeholders and authors of legislation pertaining to eminent domain. Several bills were filed in both chambers. The primary pieces of legislation in the Senate included: SB 740, SB 741 and SB 742 by Sen. Kolkhorst; SB 626, SB 627 and SB 628 by Sen. Schwertner. Additionally, HB 2684, HB 3687, HB 2090, HB 2694, HB 2556 and HB 3170 were also filed in the House.
However, negotiations ceased following a letter issued by Texans for Property Rights, the group representing landowners, in which they expressed their disappointment and dissatisfaction with the Legislature’s leadership and CCI’s attempts to come to a consensus. No eminent domain legislation was passed as a result.
Texas Emissions Reduction Plan (TERP)
In the waning days of the Session, SB 26 by Estes was amended onto SB 1731 which now re-authorizes several portions of the Texas Emissions Reduction Plan (TERP) program that would have expired this year or by 2019 and creates and expands other parts of TERP that will be beneficial to Alliance members. It creates a light-duty vehicle purchase or lease incentive program focused on getting state fleets moved over to natural gas powered vehicles. Also, the bill expands the New Technology Implementation Grant program to specifically allow new emissions reduction technologies in the upstream and downstream sectors to qualify for grants – including technologies that capture waste heat from flares to generate on-lease electricity.
Repeal of County Energy Transportation Reinvestment Zones
SB 1305 by Nichols, Darby
Repeals the Transportation Infrastructure Fund, established by SB 1747 in the 83rd (2013) Legislative Session. Repeals the sections of Chapter 222 of the Transportation Code that authorize County Energy Transportation Reinvestment Zones (CETRZs).
CTERZ was created to help repair county roads in energy sector counties. The grant program monies are expended and the program is widely deemed to be unconstitutional. Therefore, the passage of SB 1305 ends the program.
Industry and county advocates worked to provide new funding to the counties for roads through HB 4231 by White and amended the legislation to provide that 2% of the severance taxes from oil and gas produced in a county would be put into a county fund for road/bridge maintenance. The bill died on the House floor and the amended version failed in the attempt to be added to the HB 4180 as it went through the Senate.
Prohibition of unauthorized drones
HB 1643 by Springer
Current law restricts that unauthorized and unmanned aircraft (drones) may not be flown over critical infrastructure – petroleum refineries, electric power generation facilities, chemical plants, water treatment and pumping facilities, natural gas compressor stations, natural gas storage, telecommunications, port facilities, above ground petroleum pipelines, steel making facilities. HB 1643 initially added feed yards for cattle but was amended to add oil and gas exploration and production operations including an oil and gas drilling site, a group of tanks to store crude oil, production facilities, oil and gas wellhead and any oil and gas site with and active flare. The act carries a criminal offense penalty.
Change of use of open space land
HB 3198 by Darby, Estes
(Open-space valuation for land with oil and gas development)
Establishes that the eligibility of land for appraisal as being devoted principally to agricultural use does not end because an oil and gas lessee begins conducting oil and gas operations over which the Railroad Commission of Texas has jurisdiction on the land as long as the portion of the land on which oil and gas operations are not being conducted otherwise continues to qualify.
At least a dozen additional bills were filed during the Session to address or modify the current law regarding the change of use of open space land exemptions. This was precipitated by certain county appraisal districts deeming oil and gas surface use as a method of eliminating the exemption. The landowner/operator would then be responsible for paying up to 5 years of lost tax value and 7% annual interest on that lost tax value. HB 3198 eliminates this problem for oil and gas operations