When I last wrote about this case, I reported that the Texas Supreme Court had denied the petition for review of the Corpus Christi Court of Appeals’ decision affirming a $15 million arbitration award against Forest. On motion for rehearing, the Supreme Court granted the petition for review. The case is fully briefed, but no date for oral argument has yet been set. See my earlier posts on the case here and here.
The Dallas Morning News has published an excellent, in-depth investigative report — “Seismic Denial? Why Texas Won’t Admit Fracking Wastewater is Causing Earthquakes,” by Steve Thompson and Anna Kuchment — about the Texas Railroad Commission’s failure to recognize or address the relationship between salt water disposal wells and earthquakes in North Texas, and the industry’s influence on the process. Anyone who wants to know how the Railroad Commission really works should read this article. In an accompanying editorial, the News said:
Not only has the Texas Railroad Commission consistently denied man-made earthquakes in the face of compelling science, it also worked overtime to protect the oil and gas industry from accountability for its role in an earthquake swarm that rattled Azle and Reno [in North Texas] in late 2013 and early 2014.
The editorial remarks on the substantial campaign contributions received by commissioners, all of whom are elected, from exploration companies. The Commission is under sunset review (again) this session and must be re-authorized by the Legislature next year. The editorial continues:
The Sunset Advisory Commission will meet November 10 to vote on its recommendations to the Texas legislature for legislation to continue the Railroad Commission for another 12 years. Committee members have proposed modifications to several of the staff report, and also add several additional recommendations. The staff recommendations and proposed modifications submitted by Commission members can be viewed here. Decision Meeting Material_November Proposed changes/additions of interest to land and mineral owners include:
- Chairman Gonzales and Representative Flynn propose to eliminate recommendation that the Commission’s name be changed to a name that reflects the agency’s functions.
- From Representative Raymond:
I ran across this video from the Austin American Statesman – a reporter asking people what is the business of the Texas Railroad Commission. Not many voters know. Once again, the Sunset Commission has recommended that the Commission’s name be changed to something like the Texas Energy Commission. Sounds like a good idea. But strange things happen at the Legislature.
The RRC has three commissioners, each elected state-wide for terms of six years. There is an open seat this year, so voters will be electing a new commissioner. The Republican candidate is Wayne Christian, a former state lawmaker from East Texas. His campaign platform includes fighting for right to life, supporting gun rights and opposing illegal immigration. He represented District 9 in the Texas House until 2012, when he was defeated by Chris Paddie. Christian ran for RRC in 2014 and lost in a runoff to Ryan Sitton, currently on the RRC. Christian opposes changing the name of the RRC.
The democratic candidate is Grady Yarbrough.
From Texas Tribune:
A major metro paper endorses a third-party statewide candidate… The Houston Chronicle has endorsed Libertarian Mark Miller in the race to replace David Porter on the three-member Texas Railroad Commission.
“Our editorial board interviews scores of candidates for political office every election year, but seldom do we find ourselves wholeheartedly endorsing a nominee from the Libertarian Party,” the editorial board wrote Tuesday night. “Then again, seldom have we met a Libertarian candidate like Mark Miller.”
The EPA has issued a report evaluating the Texas Railroad Commission’s regulation of injection wells: EPAreviewRRC The report criticizes the RRC in three areas, discussed below.
Injection wells, permitted by the RRC, are used to dispose of oilfield waste – produced water, frac water, and other fluids. These liquid wastes are injected into underground reservoirs determined to have no useable groundwater or producible hydrocarbons. Called Class II injection wells, Texas has more than 56,000 such wells – a third of all Class II injection wells in the U.S.
Injection of waste underground is governed by the Safe Drinking Water Act passed by Congress in 1974. That act allows states to take responsibility for permitting and regulation of injection wells if the state’s program meets the requirements of the SDW Act and the EPA. Texas has been regulating injection wells under authority delegated by the EPA since 1982. As part of that delegation, the EPA evaluates Texas’ performance each year and issues an annual report with its findings.
By and large, the EPA report finds that the RRC’s regulation of injection wells meets or exceeds the requirements of the Act. But the RRC is criticized in three respects. Continue reading →
Public Citizen Texas, an environmental watchdog group, has issued its comments on the Sunset Commission’s report recommending changes at the Texas Railroad Commission. Its comments can be viewed here. The comments largely agree with the Sunset Commission’s recommendations, but in several areas recommend additional reforms. I think Public Citizen’s comments on lack of transparency are particularly appropriate:
There is an astounding lack of transparency at the RRC compared to other states. Many have searchable databases and statistics on their websites relating to inspections, complaints, and enforcement actions, by individual operator and in the aggregate. While the RRC is busy on social media putting out self-serving tweets, no useful statistics or information regarding these issues is readily available on their website. Examples of better practices:
The Sunset Commission has scheduled a public hearing August 22, 2016 to hear comments on its staff report on the Texas Railroad Commission. I have written previously about the staff report here, here and here.
Information about the scheduled hearing can be found here.
The staff’s report on the RRC can be viewed here, along with prior Sunset reports and comments already submitted by industry representatives and environmental and landowner groups on the current report.
The draft Sunset Commission report on the Texas Railroad Commission makes recommendations for legislative changes to the bonding requirements for oil and gas wells. Landowners should be familiar with how the RRC’s bonding system works, and how it could affect operations on their property.
Operators of oil and gas wells in Texas must have a permit to operate. In order to obtain that permit, the operator must provide financial security in the form of cash, a bond, or a letter of credit to provide financial assurance that it will plug any wells it operates. The amount of financial security required is set by statute and was last revised in 1991. Most operators comply with the bonding requirement by furnishing “blanket” bonds. The amount of the bond depends on the number of wells operated by the operator:
- Operators with 1-10 wells must have a $25,000 blanket bond.
- Operators with 11-99 wells must have a $50,000 blanket bond.
- Operators with 100 or more wells must have a $250,000 blanket bond.
The theory is that, if an operator becomes insolvent and is unable to plug its wells, the RRC can call on the bonding company to provide the money to plug the wells. But in reality, bonds provide only about 16% of the cost of plugging abandoned wells. In FY 2015, the RRC collected $4.288 million on bonds from 94 operators who abandoned 1,584 wells – an average of only $2,707 per well. In the same year, the RRC spent $11.722 million plugging 692 wells – an average of $17,012 per well. Continue reading →