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Texas’ Oversight of the Oil and Gas Industry Falls Behind Other States; Texas Railroad Commission Needs an Overhaul

Note: This release focuses on recommendations to overhaul the Texas Railroad Commission. To see a national version of this release, which focuses on the best regulatory practices of other oil and gas states, click here.

Aug. 17, 2016

Texas’ Oversight of the Oil and Gas Industry Falls Behind Other States; Texas Railroad Commission Needs an Overhaul

Best Practices for Oil and Gas Regulation in Colorado, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, West Virginia and Wyoming Outshine Texas

AUSTIN, Texas – Other oil and gas producing states outshine Texas when it comes to regulating the industry, a new Public Citizen study (PDF) shows. That’s why the Texas agency that oversees the industry should undergo significant changes in structure, transparency, funding, inspections and environmental protection.

The study looked at the best practices of eight states that produce oil and gas: Colorado, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, West Virginia and Wyoming. For the research, Public Citizen chose a cross-section of oil and gas states facing similar issues as Texas. The study examined regulatory practices ranging from ethics and transparency to fines and funding to inspections and environmental protections. The findings show that Texas lags behind. View a chart (PDF) comparing the eight states to Texas.

“Other oil and gas states have stronger mandates to protect public health and the environment. States that do better in regulating the industry require more frequent inspections and have fines large enough to deter violations,” said Carol Birch, legislative counsel for Public Citizen’s Texas office. “Other states also have stronger ethics protections − Oklahoma, for example, strictly limits campaign contributions from the oil and gas industry to prevent conflicts of interest. Compare that to Texas, whose commissioners take industry contributions all year long, even when not running for election.”

The study was done as the Sunset Advisory Commission, which reviews the policies and programs of more than 150 government agencies to identify and eliminate waste, duplication and inefficiency, launched its review of the Texas Railroad Commission (RRC), which is in charge of regulating Texas’ oil and gas industry.

“Compared to the states we studied, it is clear that the regulatory practices and agency structure of the RRC need a serious overhaul,” said Tom “Smitty” Smith, director of Public Citizen’s Texas office. “The RRC mission statement promises to serve Texas through protecting the public, the environment and natural resources. This study shows it has a long way to go before fulfilling that mission.”

In Texas, a “sunset review” is done by the commission every 12 years. The commission published a staff report on the RRC in April 2016 and is now seeking public feedback. Public Citizen will present its research at an Aug. 22 public hearing.

In large part, Public Citizen supports the recommendations of the Sunset Advisory Commission. However, because the RRC has failed in many important ways to protect the public and the environment, Public Citizen is proposing additional recommendations to create more effective, efficient and democratic management of the RRC, and to hold the agency accountable to its mission statement. Suggestions include:

  • Changing the structure of the agency. This could include appointing the commissioners instead of electing them, requiring certain qualifications to ensure balance and diversity, limiting campaign contributions, finding ways to address conflicts of interest when commissioners have industry ties and changing the name of the agency because it has not overseen Texas railroads for years.
  • Bringing transparency to the agency. This includes creating a searchable database of inspections, complaints and enforcement actions, including fines and penalties, against individual operators, on the RRC website – as many other states have done; fixing the nonexistent RRC performance measures; correcting misleading statistics on the RRC website; and reducing the amount of time, currently 12 years, before the next sunset review is conducted.
  • Increasing fees and funding. Compared to other states, the RRC has lower bonding requirements and lower permitting fees, which wrongly places the financial burden on the public when the industry is noncompliant. Additionally, penalties for noncompliance should be increased to deter violations.
  • Increasing inspections and enforcement. The RRC lacks sufficient inspectors to examine all the state’s wells even once a year. It should impose an annual inspection fee to help cover the cost of overseeing the industry. Additionally, the RRC should require inspections and surveillance procedures to be independent of information supplied by industry operators.
  • Greater environmental and public health protections. There is a striking difference between the RRC mission statement and what the agency does. To fix this, the RRC should create an environmental advocate position at the RRC and provide greater opportunities for public input and participation.

“Our study shows that the laws in Texas are far weaker than other oil and gas states in preventing pollution and corruption,” said Smith. “If Texas wants to catch up to states that have modern and robust oil and gas regulations, the Sunset Advisory Commission needs to adopt Public Citizen’s recommendations. The RRC should not be allowed to bend over backwards to benefit industry at the citizens’ expense. And for the sake of the environment and our residents, the RRC cannot coast along for another 12 years without review to see if needed reforms have been implemented.”

Texans can testify at the state Capitol on Aug. 22 during the sunset hearing.

Read Public Citizen’s key findings and recommendations (PDF). View a chart (PDF) comparing the eight states to Texas.