It's a time of scrutiny in Austin for the Texas Railroad Commission. The oil, gas and mining regulator is now under review by the state’s Sunset Advisory Commission, which evaluates agencies’ performance.
The Sunset Commission can recommend changes, up to termination of the agency. These are only recommendations. The previous Sunset bills based on staff recommendations and public comment in 2011 and 2013 were voted down by state legislators.
Most agencies are reviewed every 12 years; this is the Railroad Commission’s third go-round in six years. Nonetheless, at the end of the 2015-16 session, the Legislature directed the Sunset Commission to do a full review. The preliminary Sunset Commission report, out in April, lays out issues and recommendations for resolution.
Public comment is meant to bring more. On Monday, at a public hearing regarding the Sunset staff’s report, at least 120 people spilled out of the hearing room into two overflow chambers at the Capitol, among them oil and gas operators, West Texas royalty owners, scientists, environmentalists and residents of neighborhoods with fracking, waste pits and uncapped wells.
The session lasted six hours. More than 80 people spoke, Dallas and Tarrant dwellers among them. Here is a sampling of what was said. In the two months before Sunset Commissioners vote to amend and finalize the report in early November, there’ll be barrels more. The debate will sharpen after the Legislature convenes in January.
1. "Let the people of Texas in on what this agency does."
The 125-year-old Texas Railroad Commission (RRC) has nothing to do with railroads and has not since 1984. It has everything to do with regulating Texas’ oil and natural gas industry, pipelines, natural gas utilities and coal and uranium surface mining. So it follows that changing the name was on people's minds. "Let the people of Texas in on what this agency does by having its name accurately reflect its mission," the Sunset staff recommends in its report. "Continue the agency and change its name to Texas Energy Resources Commission.”
Proof of how divisive the Railroad Commission has become can be seen in the public comments regarding its name. Most oil and gas producers who spoke stated they like the name as is. The activists and community members who commented on the name said, change it.
2. "Oil and gas is the blood and soul of the state.”
Sunset Commission member Sen. Dan Flynn stated the above during a debate over the need for changes, saying the oil and gas industry dislikes the recommendations. "Of 24 recommendations, I agree with 23,” said Railroad Commissioner Ryan Sitton. “On some, I agree with the issue, but not the solution.” Sunset staff and commissioners are not always in agreement. “Yes oil and gas is the blood and soul of the state, and that’s why we wrote recommendations,” responded Ken Levine, the Sunset Commission's executive director. “Where we spotted improvements were needed, we pointed that out. It’s not so great in the area of enforcements, and the systems are not there to show distinct improvement.”
3. The Railroad Commission is "the most respected agency of our kind in the nation."
Railroad Commissioner David Porter called the agency "one of the most important in the world, the most mature and most respected agency of our kind in the nation." But the agency's reputation is hardly as rosy as the comment implies.
Carol Birch is legal counsel for Public Citizen, a consumer advocacy group that submitted a comparison of oil and gas regulatory best practices in Texas and eight other states. “I’ve provided a large packet of states’ recent best practices," she said. "All do some things better than Texas. One example is better safeguards against conflicts of interest. There are numerous others.”
4. "Leases have gone more than two years without an inspection."
Many speakers pointed out statistics included in the Sunset Commission's report, such as the RRC’s total 151 oil and gas inspectors to cover the state’s 433,000 wells. "Two-thirds of leases have gone more than two years without an inspection, and leases can include thousands of wells." Public Citizen, in written comments, asked that the RRC “Establish minimum inspector-to-well ratios and assess an annual inspection fee. The commission lacks sufficient inspectors to inspect wells."
5. "We need better due process.”
The appearance of conflicts of interest came up often during the hearing, one prime example is the way the Railroad Commission hears contested energy permit cases. Administrative law judges in RRC’s
Hearings Division hear these cases. In 2016 so far, 392 of 571 permit cases were contested.
The Sunset report recommends that hearings of permits that are being contested should be moved to the State Office of Administrative Hearings to avoid undue influence or the perception of bias. Railroad Commissioners have opposed the move.
“[The RRC] reverse orders by their own administrative law judges without any supporting documents," said Sunset Commission member Sen. Juan “Chuy” Hinojosa. "The issue I get from the general public is a perception at least that hearings are not independent. … Judges grant summary judgments without explanation and commissioners will reverse the judge’s decision. We need better due process.”
It's hard to judge the effectiveness of the process. “There is no data from the Railroad Commission to show their [contested permit hearing] process is efficient, because the agency keeps so little data,” said Amy Trost, Sunset report project manager.
6. "Landowners are left in the dark."
Laura Buchanan, executive director of the Texas Land and Minerals Association, said the industry group supports the Sunset Commission's recommendation to make the agency more transparent.
"Online complaints need to be posted online, with tracking," she said. "Now, landowners are left in the dark on disposition of their complaints.”
7. "Fines have not gone up since I graduated high school in 1983."
A constant drumbeat among environmental and grassroots citizen groups asked for steeper penalties against oil and gas companies who violate rules. "As for enforcement, fines have not gone up since I graduated high school in 1983," said the Sierra Club conservation director Cyrus Reed. "Penalties for infractions were set at $10,000, $5,000. I hope you recommend increased penalty levels closer to those charged by the Texas Commission on Environmental Quality. “
8. Backlog of uncapped wells “sounds like more than it is."
The Sunset Committee's report said that the mechanism whereby operators fund plugging of wells abandoned in bankruptcy is inadequate. “The insufficient statutory bond requirements have left the RRC with less funding to plug wells and increased liability," the report read. "[The cost] has more than doubled since bond amounts were set in 1991."
The report said the backlog of abandoned wells has increased to 9,715 wells. “It sounds like more than it is," Railroad Commissioner Christi Craddock. "We have five we know are leaking.”
All three Railroad Commissioners agreed the large backlog of active wells needs attention. “It’s a good statistical analysis, I disagree how to fix it,” said Sitton.
9. "To my knowledge, only one leaking well has entered groundwater.”
Sunset Commission member Rep. Senfronia Thompson asked if the Railroad Commission notifies nearby communities if a well leak contains toxins. Craddick answered: “We work with the operator. ... If there’s water contamination, we would notify TCEQ to communicate with the community.
"To my knowledge, only one leaking well has entered ground water,” she added.
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Appearances made clear that residents who lived near many of these wells regard them as dangerous. In one stark example, a group of 13 mostly elderly African-American neighbors traveled to Austin to offer anecdotal claims about the health consequences from living near radioactive material from an unplugged well in the Fort Bend County subdivision of Chasewood. Each told of death and illness of either themselves, their families or neighbors from cancers. “One third of the community has been lost," said former resident Roy Griffin.
"It’s infuriating to know that the Railroad Commission knew of potential radioactive contamination from an abandoned well and didn’t inform the community," said Steve Brown, the former Democratic Party chairman of Fort Bend County and failed 2014 Railroad Commission candidate. "An abandoned well should trigger increased inspection.”
10. "One is 70 feet from my water well."
Four residents of the DeWitt County community of Nordheim, between San Antonio and Victoria, came to the podium to report on waste pits just outside the city limit from their town of 300. Resident Paul Bauman spoke first, followed by his family members, neighbors and Sister Elizabeth Riebschlaeger, who advocates for Gulf Coast and South Texas communities. “I live on 200 acres adjacent to solid [oilfield] waste disposal. There are two 25-acre pits that contaminate the air, the water in the land. One is 70 feet from my water well," Bauman said. "The land sits over the Gulf Coast aquifer within a quarter-mile. Oilfield waste is exempt, according to a 1988 regulation that has not been revised since. They are allowed to leak 1,200 gallons a day. A whole lot of chemicals have been put in (the pits) since 1988.”
He's referring to an EPA ruling in 1988 that changes the way oil waste is regulated. Before 1988 such waste was regarded as "hazardous waste, regulated under Subtitle C of the Resource Conservation and Recovery Act," according to the Getches-Wilkinson Center for Natural Resources, Energy, and the Environment at the University of Boulder. The site, a database of best practices for industry, notes that the designation redefined oil and gas exploration and production waste as "solid waste" with more permissive rules.