American Oil and Gas Reporter - July 2015 - 32

Texas Approves County, Road Funds
AUSTIN, TX.-Texas legislators spent
this past session working on transportation
issues, including approving measures distributing funds to counties from wells
passing under county roads and allocating
more money to the state highway fund,
the Texas Independent Producers & Royalty Owners Association reports.
The statehouse action came in response
to county calls for increased funding to
maintain roads damaged by oil and gas
activities. Late in the 2015 session, legislators approved HB 2521, authored by
Representative Garnet Coleman, D-Houston. TIPRO Director of Government Affairs Lindsey Miller says the association
quietly supported the bill as it worked on
other local issues, such as HB 40, the
state's new preemption legislation.
According to the state legislative website, the county road bill and its companion
bill, SB 591, introduced by Senator Carlos
Uresti, D-San Antonio, changes Texas
law regarding royalty and lease payments
from minerals under county-owned lands,
such as roads. The bills direct those funds
to be paid to the counties directly for
road and bridge maintenance and construction.
Miller adds the legislation creates a
county road oil and gas trust fund, independent from the state treasury. The fund
must distribute money to the counties
twice each fiscal year. She says those
funds can be deposited only in the county
road and bridge fund, and are limited to
road maintenance projects.
"An opinion by the attorney general,
issued in the 1960s or '70s, said the revenues from any development under county
roads had to go to the General Land
Office, as opposed to going to the county.
Prior to that opinion, all those proceeds
were given directly to the county," Miller
says.
Another major victory for the state's
transportation system came with passage
of SJR 5, sponsored by Senator Robert
Nichols, R-Jacksonville, and by Representative Joe Pickett, D-El Paso, in the
House, Miller says. "This was a big issue,
and Senator Nichols has been working
on this for years," she adds.
The constitutional amendment would
require $2.5 billion from sales tax revenues
on new and used vehicles, as well as
rental tax on vehicles, to be dedicated to
the state highway fund. A second $2.5
billion is dedicated to the highway fund,
with the restriction that the money could
only be used to construct, maintain or acquire rights-of-way for public roadways.

32 THE AMERICAN OIL & GAS REPORTER

"This is a funding issue," Miller describes. "There is $23 billion dedicated
to the Texas Department of Transportation
for the next two fiscal years, but with the
continued growth in our state, we have
to make sure that we maintain the infrastructure we have and continue to build
new infrastructure."
Texas Governor Greg Abbot has expressed his support of SJR 5. Because it
proposes to change the way the state
constitution allocates funds, Miller says
the resolution will need voter approval
on the Nov. 3 ballot.

Sunset Review
Ahead of the 85th regular legislative
session, Servando Esparza, TIPRO's manager of government affairs, says the association already is getting its recommendations in place before the 2017
sunset review of the Texas Railroad Commission. State law requires agencies to
undergo a formal review every 12 years,
but lawmakers failed to approve sunset
legislation for the RRC after its 2011
and 2013 reviews, instead opting for a
four-year continuation, he says.
"Some of those issues in the sunset
review will come up again in 2017. Many
of those issues involve the commission's
structure and how it works. The sunset
review is tasked to review whether it is
appropriate for some of those functions
to be housed there," Esparza says.
Likely review items include how the
RRC interacts with the Texas Commission
on Environmental Quality, Public Utility
Commission, and other state agencies,
he predicts.
"TIPRO will be looking at how the
commission goes through the sunset
process, study any issues that emerge,
and make recommendations on issues
that the association has concerns about,"
Esparza says. "When the Sunset Commission has its hearing, it will ask industry
officials to provide feedback. That will
be one of TIPRO's major projects during
the interim."
Miller points out that considering the
RRC has gone through two full sunset
reviews in the past four years, it should
be in a strong position to finally win legislative approval. Over the past few years,
she says it has received appropriations
necessary to upgrade its information technology systems and add full-time employees. "It should be in a better place
for the review itself, but nonetheless,
sunset never is an easy process. It requires
a lot of work and a lot of resources," she

adds.
One recommendation offered by
TIPRO in the previous sunset reviews
was keeping the RRC's spending cap in
place, mentions Miller. There have been
attempts to eliminate the cap in both previous reviews, and TIPRO has opposed
those moves through its Senate supporters.
She says the association expects the
spending cap issue will resurface in 2017.
"The sunset review process is set for
2017, so TIPRO has a year and a half before it actually starts," Miller says. "In
2016, we are going to see the RRC likely
respond to some of the seismic issues at
some point. Right now, it is holding
show-cause hearings for companies operating disposal wells and addressing the
Southern Methodist University study regarding seismic activity in the Azle area
in North Texas.
Governor's Vetoes
The Texas Alliance of Energy Producers reports Governor Abbott vetoed
several bills regarding the oil and gas industry.
HB 1633, introduced by Representative
Ramon Romero, D-Fort Worth, would
have amended the state's Natural Resources Code to require the Railroad
Commission to require drilling permit
applications to include an affirmation
stating whether a well would be within
50 yards of an easement held by the Department of Transportation, the state legislative website says.
In his veto message, Abbott pointed
out operators already were required to report their well locations to the state. The
problem HB 1633 sought to resolve was
that RRC and TxDOT didn't communicate
effectively. "Instead of requiring these
two state agencies to work more effectively
together, HB 1633 thrusts a new and unnecessary hurdle onto oil and gas producers
to solve the state's internal communications
challenges," Abbott stated.
The Texas Alliance says other rejected
measures include:
* HB 3291, sponsored by Representative Richard Raymond, would have
made the theft of oil or natural gas a
felony. Abbott said he supported the concept behind the bill, but its overly broad
language created several criminal penalties
for conduct that might have nothing to
do with theft of oil or gas. As an example,
he said the penalty for not having proper
RRC paperwork could be as much as 20
years in prison.
* HB 2466, introduced by Represen-



American Oil and Gas Reporter - July 2015

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