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Texas panel prods Railroad Commission for changes, including to its name

TheRailroad Commission of Texas is celebrating its 125th anniversary, but it hasmore important things to do than congratulate itself on a milestone, a statewatchdog agency said in its latest evaluation.

In particular,the Sunset Advisory Commission wants the Railroad Commission, or RRC, to narrowits focus and change its name to reflect this.

"Insteadof looking back to its storied past, the agency now needs to look forward tothe challenges of regulating energy resources in an environment of continuedurbanization, water concerns, and possible seismic activity," Texas'sunset commission wrote in the executive summary. "For the RailroadCommission to even be under Sunset review is a direct challenge to the commission'sstatus quo."

Thesunset panel was established by the state to evaluate the need for governmentagencies. While many agencies are reviewed every 12 years, the RRC has comeunder significant scrutiny in recent years, having been reviewed three timessince 2010.

TheSunset Advisory Commission did recommend putting the RRC back into a 12-yearreview rotation — which would have to be approved by the Legislature — but saidchanges should be made before that occurs. According to the reviewers, one keychange that needs to be made is to the Railroad Commission's name.

"Themost important change to provide transparency is to let the people of Texas inon what this agency does by having its name accurately reflect its mission,"the sunset commission said, noting that the RRC has not regulated railroads fordecades. "Recommendations in Issue 1 would continue the agency and changeits name to the Texas Energy Resources Commission, while fully addressing theconstitutional, federal delegation and cost concerns that have ensnared pastefforts to achieve this simple transparency improvement."

Thesunset commission also suggested that the Railroad Commission be required totransfer gas utility regulation to the state's Public Utility Commission andtransfer contested gas utility cases to the Office of Administrative Hearings "topromote efficiency, effectiveness, transparency and fairness."

"Boththe State Office of Administrative Hearings (SOAH) and the Public UtilityCommission of Texas (PUC) not only have clear expertise to perform the same orsimilar functions the Railroad Commission currently conducts, they specializein these functions. SOAH provides a neutral and independent forum to conductcontested hearings for nearly 60 agencies," the sunset commission said. "Althoughthe Railroad Commission has taken steps to restructure its in-house hearingsfunction, the fairness of its contested proceedings is clouded by ongoing exparte concerns and the commission's in-house judges' lack of independence, andthe commission fails to adequately track its hearings performance."

TheSunset Commission was also critical of the RRC's handling of oil and gasmonitoring and enforcement, saying improvements are needed to ensure public andenvironmental safety.

"Despitethe attention given to the Railroad Commission's oil and gas enforcementprogram in recent years, the agency continues to struggle to provide reliabledata to show the effectiveness of its efforts. Basic questions such as how manysevere violations occurred, what percentage of violations were repeatviolations, and how many operators with severe violations did not face legalenforcement last year remain unanswered," the sunset commission said. "Thecommission's emphasis on getting operators to take corrective action to comeinto compliance with its requirements certainly has merit, but falls short ofproviding incentive for operators to comply without first having to be told bythe commission's limited field staff."

Pipelinesafety is another issue the sunset panel took issue with, saying the RRC shouldhave the right to impose a permitting fee on pipelines and needs to step up itsenforcement activities.

"Neitherthe federal government nor the Railroad Commission enforces damage preventionrules for interstate pipelines. This regulatory gap limits Texas' ability tofully enforce damage prevention rules," it said. "Additionally, whilethe Railroad Commission has required pipeline operators to receive a permitfrom the agency to operate a pipeline for almost 100 years, it has never hadthe authority to have operators pay a permit fee to support this function."

RailroadCommissioner Ryan Sitton said he will closely examine the review.

"Ilook forward to working with members of the Sunset Commission and theLegislature to ensure that our agency is exceeding expectations and doing thekind of job everyone in Texas can be proud of," he said. "The Sunsetstaff report and our agency's response are the beginning of an importantprocess that I'm confident will make this agency more efficient and effective."