Office of House Bill AnalysisS.B. 310
By: Harris
Energy Resources


The Railroad Commission of Texas (commission), created under constitutional
authority by the legislature in 1891, protects the state's natural
resources, the environment, and public safety through regulation of the oil
and natural gas industry, pipeline transporters, natural gas utilities,
rail safety initiatives, and surface mining operations.  The commission is
subject to the Texas Sunset Act and will be abolished on September 1, 2001,
unless continued by the legislature.  The Sunset Advisory Commission
determined that current state law does not effectively ensure the financial
assurance of oil and gas operators, potentially leaving the state liable
for pollution and abandoned wells.  The Sunset Advisory Commission's
recommendations would increase the cap for the oil-field cleanup fund,
authorizing the commission to set higher fees to fund environmental
well-plugging and remediation efforts.  The commission would be able to
create a voluntary cleanup program, thereby releasing nonresponsible
parties from future liability.   Other Sunset Advisory Commission
recommendations would enhance pipeline safety regulation by focusing
oversight on pipeline integrity, conserve natural resources through
mandatory unitization, and provide assistance to low-income gas utility
customers.  Senate Bill 310 continues the commission until September 1,


It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Railroad Commission of Texas in
SECTION 2 (Art. 6447n, VTCS), SECTION 3 (Section 81.0531, Natural Resources
Code), SECTION 11 (Sections 91.1041 and 91.1042, Natural Resources Code),
SECTION 15 (Sections 91.1131 and 91.1132, Natural Resources Code), SECTION
19  (Section 113.082, Natural Resources Code), SECTION 21 (Section 113.087,
Natural Resources Code), SECTION 37 (Section 116.016, Natural Resources
Code), SECTION 38 (Section 116.032, Natural Resources Code), SECTION 44
(Sections 118.001-118.003, Natural Resources Code), and SECTION 46 (Section
121.206, Utilities Code) of this bill. 


Senate Bill 310 provides for the continuation of the Railroad Commission of
Texas (commission) until September 1, 2013, and sets forth standard Sunset
Advisory Commission recommendations regarding the development of an equal
employment policy, conflicts of interest, the maintaining of written
complaints, policy implementation by the commission, public testimony, and
the state employee incentive program. The bill authorizes the commission to
adopt rules necessary to implement provisions regarding methods of making
payments to the commission (Art. 6447n, V.T.C.S.).. 

S.B. 310 amends the Natural Resources Code to require the commission,
through the legislative appropriations request process, to establish
specific performance goals for the oil-field cleanup fund (fund), including
goals for well plugging and site remediation.  The bill raises the cap on
the fund from $10 million to $20  million with a $10 million, rather than
$6 million, floor and provides for fee increases for drilling permits and
well plugging extensions, modifies the composition of the fund, and creates
a fee for filing an organizational report and for requesting a density
exception or spacing review (Secs. 85.2021, 91.111, and 91.142).  The bill
increases from $50 to $150 the fee for application for exception to
commission rule and requires two-thirds of the proceeds from this fee,
including any penalties collected in connection with the  fee, to be
deposited to the fund (Sec.  81.0521).  The bill provides that an oil-field
cleanup regulatory fee is imposed on crude petroleum produced in this state
in the amount of five-eights, rather than five-sixteenths of one cent on
each barrel of 42 standard gallons (Sec. 81.116).  The bill requires the
commission to maintain detailed expenditure reports for the fund and to
make such reports available to the public (Sec. 91.112).  The bill
authorizes the commission by rule to establish reasonable fees for each
category of license and removes the license fee cap (Sec. 116.032).  The
bill authorizes the commission to apply for, register, secure, hold, and
protect a patent, copyright, trademark, or other evidence of protection or
exclusivity issued for an idea, publication, or other original innovation
fixed in a tangible medium (Sec. 113.243). 

The bill increases from $100 to $1,000 the amount the commission may permit
a  person with good compliance history to pay in lieu of filing a bond and
removes the option of giving a first lien on property associated with oil
and gas production in lieu of bonding.  The bill increases the annual fee
that a person may file in lieu of a bond from three percent to 12.5 percent
of the bond that otherwise would be required until September 1, 2004.
After that date, bonding is the only option for well permittees (Secs.
91.103, 91.104, and 91.107).  The bill authorizes the commission by rule to
increase individual and blanket bond amounts for bay and offshore wells
(Secs. 91.1041 and 91.1042). 

The bill requires the commission by rule to establish a voluntary cleanup
program, which releases a nonresponsible party from liability upon
certified cleanup of a contaminated site, and provides for the application
and fee process (Sec. 91.1132).  The bill requires the commission by rule
to establish  risk assessment as a guide to remediation efforts.   The bill
requires the commission to develop by rule specified systems, including a
system to periodically test high-risk wells (Sec. 91.1131). 

The bill deletes provisions regarding the liquified petroleum gas division
of the commission (LPG division) and requires the commission to administer
and enforce the laws of this state and the rules and standards of the
commission relating to liquified petroleum gas (LPG) (Secs. 113.011,
113.098, 113.099, 113.161, and 113.233).  The bill requires the commission
by rule to establish fees for the licensing of each category of LPG
activity (Sec. 113.082).  The bill sets forth limitations on the
commission's rulemaking authority for restricting advertising or
competitive bidding in relation to compressed natural gas (Sec. 116.016).
The bill modifies and sets forth provisions relating to the application,
renewal procedures, examination, and seminar requirements for the licensing
of LPG and compressed natural gas activities (Secs. 113.093, 116.033, and
116.034).  The bill authorizes the commission to waive any prerequisite to
obtaining a license or registration under certain circumstances and sets
forth provisions relating to provisional licensing or registration of LPG
and compressed natural gas activities (Secs. 113.096, 116.0345, and
116.0346).  The bill requires the commission to revoke, suspend, or refuse
to renew the license or registration, or to reprimand the licensee or
registrant, if the commission finds that the licensee or registrant has
violated or failed to comply with or is violating  or failing to comply
with provisions relating to LPG or compressed natural gas or a rule adopted
under such provisions.  The bill authorizes the commission to place on
probation a person whose license or registration is suspended.  If a
license or registration suspension is probated, the bill authorizes the
commission to require the person to report regularly to the commission on
matters that are the basis of the probation, to limit practice to the areas
prescribed by the commission, or to continue or review professional
education until the person attains a degree of skill satisfactory to the
commission in those areas that are the basis of the probation (Secs.
113.163 and 116.037). 

S.B. 310 amends the Natural Resources and Utilities codes to require the
commission by rule to adopt guidelines to be used in determining the amount
of a penalty for a violation of provisions regarding oil and gas, including
pipeline safety violations (Sec. 81.0531, Natural Resources Code, and Sec.
121.206, Utilities Code).  The bill authorizes the commission by rule to
require certain pipeline operators to file for commission approval a
pipeline assessment or testing plan.  The bill sets forth provisions
regarding pipelines for which a plan may be required, the type of
information required in such a plan, approval of the plan, and the
consequences of the plan's approval (Secs. 118.001-118.005,  Natural
Resources Code). 

S.B. 310 amends the Government Code to require the utility division of the
State Office of Administrative Hearings (utility division) to conduct
contested case hearings and to authorize the utility division to make
final decisions and issue findings of fact, conclusions of law, and other
necessary orders in other proceedings on behalf of the commission (Sec.
2003.0491, Government Code). 

S.B. 310 amends the Utilities Code to set forth provisions regarding the
extension of a commission ordered suspension of the operation of a schedule
for each day the actual hearing on the merits of the case exceeds 15 days
(Sec. 104.107, Utilities Code). 

The bill repeals provisions relating to Texas experimental research and
recovery activity, the LPG division, the alternative fuels research and
education fund, and the required adoption of rules by the commission and
agreements with other states (SECTION 48).  

September 1, 2001.