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Sunset Review Suggests Changes, New Name at Railroad Commission

The Texas Railroad Commission should beef up its oversight of oil and gas drilling, pipeline safety and abandoned wells and change its name to reflect what it actually does, the latest sunset review recommends.

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Editor's note: This story has been updated with additional comment. 

The Texas Railroad Commission should beef up its oversight of oil and gas drilling, pipeline safety and abandoned wells. And it should no longer regulate natural gas utilities — or keep calling itself the Railroad Commission, since it doesn’t deal with trains. 

Those were among the recommendations published Friday by the Sunset Advisory Commission, the state legislative body that periodically reviews agencies.

Those suggestions should stoke a highly politicized debate about the future of the 125-year old agency — once among the country’s most powerful — that currently oversees petroleum production, natural gas utilities, pipeline safety and several types of mining. 

“The agency and its place in history should be a source of pride for the commission and its hardworking staff and for the regulated oil and gas industry,” the report said. “But instead of looking back to its storied past, the agency now needs to look forward to the challenges of regulating energy resources in an environment of continued urbanization, water concerns, and possible seismic activity.”

Among the advisory body’s findings:

  • The agency’s “outdated name misleads the public and continues to impede the agency’s efforts to be more transparent,” and renaming it the “Texas Energy Resources Commission” would more aptly describe what the agency does.
  • The agency struggles to provide reliable data showing that it’s properly policing oil and gas drillers and “what information is available suggests that the commission’s actions have little deterrent effect.” The panel called for several changes to improve enforcement and monitoring.
  • The agency fails to track its performance in natural gas utility ratemaking, and that process is “clouded” by concerns that its in-house judges lack independence. Lawmakers should transfer oversight to the state Public Utility Commission, which has more resources and expertise in ratemaking matters.
  • “Insufficient” bonding requirements have left the agency with less funding to plug abandoned wells, the cost of which has doubled since 1990. The panel recommended overhauling bonding requirements, making them more closely correspond to risks.
  • “Neither the federal government nor the Railroad Commission enforces damage prevention rules for interstate pipelines,” and the Legislature should give the agency authority to do so. 

Ramona Nye, a spokeswoman, said Friday afternoon that the Railroad Commission was still sifting through the report “and will be preparing a formal response.”

Commissioner Ryan Sitton said the report “has some constructive recommendations.”

“The Sunset staff report and our agency's response are the beginning of an important process that I'm confident will make this agency more efficient and effective,” he said in a statement.

Some who have criticized the agency’s environmental and safety efforts suggested that the report’s findings bolstered their arguments.

"Once again the Sunset staff have found that oil and gas companies are being treated with kid gloves by the Railroad Commission," Luke Metzger, director of Environment Texas, said in a statement. "Too many oil and gas companies routinely violate the law with few if any consequences from state regulators."

The agency underwent the sunset process during the previous two legislative sessions, but it escaped a major overhaul each time when its three commissioners objected to reviewers’ proposals.

In 2013, lawmakers rejected a wide range of Sunset Commission recommendations, including changing the commission’s name, shortening the period in which commissioners can fundraise, barring commissioners from accepting contributions from parties with business before the commission, expanding its recusal policy and requiring commissioners to resign before running for another office. 

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Authors of the latest sunset report suggested that they were determined to make their recommendations stick — so they could stop probing the agency’s performance so often.

“Such frequent review is hard on agency staff who have their own important jobs to do in addition to attending to the needs of the Sunset review,” the report said. “It also heightens interest in having a positive review and a “clean” Sunset bill that will finally pass the Legislature.”

One industry group on Friday was already pushing back against the latest report.

The Texas Alliance of Energy Producers said it had “operational and funding concerns” about several of the recommendations.

“We are hesitant, especially in these difficult times for the oil field, to weaken the state regulator and re-assign duties to other less experienced entities,” the group said in a statement. "We also have serious concerns about raising the cost of doing business in the state by increasing overhead through new bonding requirements.”

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Energy Environment Politics State government Texas Legislature Texas Public Utility Commission Texas Railroad Commission