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GG 1
Combine the Railroad Commission and the Public Utility Commission into the Texas Energy and Communications Commission

Summary

Texas energy, utility and environmental management is uncoordinated, duplicative and inefficient. To reduce the cost of state government and increase efficiency, both the Texas Railroad Commission (RRC) and the Texas Public Utility Commission should be eliminated and reorganized into a new Texas Energy and Communications Commission, headed by three elected officials. RRC programs not related to oil and gas production or regulation should be transferred to or merged with similar programs at the Texas Commission on Environmental Quality (formerly known as the Texas Natural Resource Conservation Commission), the General Land Office, the Texas Department of Transportation, the Texas Department of Licensing and Regulation, the State Energy Conservation Office and the Bureau of Economic Geology at the University of Texas at Austin.

Background

The Texas Legislature created the RRC in 1891 to regulate “railroads, terminals, wharves, and express companies.”[1] Today, RRC’s major mission is the regulation of the oil and gas industry. Because the Legislature created the agency under discretionary authority granted to it by the Texas Constitution, the commission’s functions and organization can be changed by statute, without the need for a constitutional amendment.

Over the years, the Legislature has altered the RRC’s responsibilities considerably (Exhibit 1). During the past two decades, its duties have diminished.[2] In 1980, the federal Staggers Rail Act ended RRC authority for the economic regulation of railroads in Texas. In 1995, the deregulation of trucking mandated by the 1994 Federal Trucking Industry Regulatory Reform Act, as well as state legislative action, ended the RRC’s responsibilities for motor carrier regulation, which were transferred to the Texas Department of Transportation (TxDOT).[3]

Despite the reductions in the RRC’s responsibilities, it still regulates a wide variety of activities, with authority over the oil and gas industry; pipeline and rail safety; intrastate gas utility rates; the safety of the liquefied petroleum gas (LPG) industry; surface mining for coal, iron ore and uranium; the reclamation of mined land; and alternative fuel research and education.

RRC’s three commissioners are elected statewide to staggered six-year terms; the commissioners themselves elect the chair. The agency is organized into five regulatory divisions: Oil and Gas, Gas Services (responsible for pipeline and LPG safety and natural gas utilities), Surface Mining, Rail Safety and Alternative Fuels Research and Education Department (AFRED). RRC also contains five administrative divisions, including Intergovernmental Affairs, Public Information, Finance and Administration, General Counsel and Internal Audit.

Exhibit 1
Changes in Texas Railroad Commission
Regulatory Responsibilities

Regulatory Responsibility Year Added
Pipelines 1917
Oil and gas production and transportation 1919, 1934
Natural gas utilities 1920
Buses and motor carriers 1927*
Trucking 1929*
Surface mining and reclamation 1975
Liquefied petroleum gas 1979
Pipeline safety 1983
Rail safety 1985
Alternative fuel education and research 1991
Aggregate quarry and pit safety 1991
*Responsibility removed in 1995.
Source: Texas Railroad Commission.

For fiscal 2002, the agency’s estimated expenditures were $58 million, including $29.9 million in general revenue, $20.2 million in general revenue dedicated funds ($2.1 million from the Alternative Fuels Research Account and $18.1 million from the Oil Field Cleanup Account), $5.3 million in federal funds and $2.4 million in other funds.[4]

RRC employed an estimated 795 full-time equivalent employees (FTEs) in fiscal 2002. The majority, 69 percent, of the agency’s FTEs worked on oil and gas oversight activities. This total includes both “direct” employees working on specific programs and “indirect” employees who provide agencywide administrative services such as audit, budget, human resources and legal counsel. Pipeline and natural gas utility regulation accounted for 12 percent of the FTEs; LPG services accounted for 8 percent; surface mining employees for 8 percent; and the remaining 3 percent were dedicated to rail safety.[5]

Nearly two-thirds of all RRC employees are located at the agency’s Austin headquarters, with the remainder in 16 field offices around the state. Nine district offices perform oil- and gas-related activities, two are surface mining offices and two are alternative fuels field offices.[6]

Trans Texas Corridor Project

In February 2002, the Governor’s Office and TxDOT announced a proposal to build 4,000 miles of 1,000- to 1,200-foot wide transportation corridors throughout the state. These corridors would provide for three lanes of vehicle traffic, two lanes of truck traffic, several freight and passenger rail lines and substantial utility rights of way in each direction.[7]

Of the five utilities contemplated by the project for placement in the rights of way—petroleum, natural gas, electricity, telecommunications and water—all but water are regulated by either the RRC or the Public Utility Commission (PUC).

Other states’ regulatory structures

Other states that produce oil and gas have considerably different regulatory structures.

Oklahoma’s Corporation Commission, for instance, oversees oil and gas regulation; electric, gas, water, telephone and cotton gin utilities; certain transportation regulatory authority; and a petroleum storage tank program. The three-member commission comprises officials elected statewide to serve staggered six-year terms.[8]

Louisiana combines much of its oil and gas regulation in a Department of Natural Resources (DNR). DNR is one of 20 major departments, the heads of which make up the governor’s cabinet. [9] The governor appoints the five DNR members.

California takes a similar approach. The California Resources Agency’s Department of Conservation is responsible for oil and gas activities. The resources secretary, a cabinet official appointed by the governor, oversees 27 departments, commissions, boards and conservancies.[10]

Previous consolidation efforts

Although the RRC once had exclusive jurisdiction over many regulatory functions, over the years, both state and federal legislation overlapped RRC jurisdictions with those of other agencies. Officeholders and political candidates often have called for abolishing the RRC, reorganizing the commission or some of its programs, or consolidating it with other agencies, usually the PUC.

The transfer of trucking industry oversight to TxDOT followed a Texas Performance Review recommendation and subsequent legislation.[11] Several state policymakers have recommended RRC’s abolition or consolidation. In 1999, an RRC commissioner supported the idea of a merger of PUC and RRC.[12] Unsuccessful legislation in 1997 and 1999 also called for a merger.[13] And a gubernatorial candidate in the 2002 general election suggested replacing both RRC and PUC with a Public Service Commission headed by three statewide elected commissioners.[14]

Oil and gas

RRC regulates the exploration and production (E&P) of oil and gas in Texas and issues permits associated with these activities, the only state agency to do so. RRC responsibilities include preventing waste, fostering conservation and protecting correlative rights for oil and gas resources. RRC also has specific jurisdiction to regulate the disposal of oil and gas waste to prevent or abate pollution. The Oil and Gas Division has about 430 employees in Austin and nine district offices throughout the state. District employees conduct field inspections and oversee well plugging and oil spill response activity.[15]

RRC regulates 234,400 active oil and gas wells, receives production reports from operators on 60,500 oil leases and 53,000 gas wells and regulates more than 53,000 oil field injection and disposals.[16] RRC registers and licenses nearly 8,000 oil and gas-related organizations.[17] Increasingly, the RRC receives oil and gas reports through the Internet; paper filings have been nearly eliminated. The agency plans to move all permitting activities to a two-way, Internet-based system. The Electronic Compliance and Approval Process (ECAP), funded in partnership with the U. S. Department of Energy and the oil and gas industry, will allow an electronic system for both regulatory permitting and oil and gas data reporting. The agency is moving old databases into new, consolidated databases.

The largest task for the agency is plugging abandoned wells and cleaning up oil and gas sites abandoned by operators. Since 1984, RRC plugged over 15,000 abandoned wells and has a backlog of 17,000 more. Legislation passed in 2001 will allow RRC to increase well plugging fees and assessments that will increase overall agency revenues for the 2002-03 biennium.[18] RRC spent an estimated $19.8 million in fiscal 2002; nearly 122 employees were involved in this work in 2002.[19]

Overlapping and parallel responsibilities

Natural gas utilities. RRC approves the rates charged by natural gas utilities in unincorporated areas of Texas, and has appellate authority over municipally approved rates. RRC collects and audits natural gas utility tax revenues, although the Comptroller of Public Accounts (Comptroller) collects and audits most other tax revenues. RRC oversees 8,000 active tariffs for natural gas distribution and 205 investor-owned utilities.[20] RRC spent an estimated $1.8 million administering the program with 31 direct and indirect FTEs in fiscal 2002.

The PUC was created in 1975 to regulate electric and telephone utilities in Texas. The PUC’s traditional role of rate reviews and rulemaking is changing to oversight of deregulated industries, consumer protection and the cultivation of competition. The governor appoints three PUC commissioners, subject to Senate confirmation, for six-year, staggered terms. The governor designates the chair of the commission.

Utility companies often must work with both RRC and PUC. For instance, the state’s largest electric utility holding companies, Texas Utilities of Dallas and Houston Industries, the parent company of Houston Lighting and Power, also own natural gas utilities and telecommunications companies.[21]

Pipeline safety. RRC oversees the state’s pipeline safety program, overseeing 150,000 miles of intrastate natural gas distribution lines, hazardous liquid and natural gas transmission lines. RRC’s Pipeline Safety Section has 46 employees; 28 are inspectors who conduct about 2,500 annual inspections from offices in Austin, Houston, Garland, Corpus Christi, Midland, Amarillo and Kilgore.[22]

PUC has overlapping jurisdiction with RRC over pipelines through its natural gas utility regulatory authority.

Office of Public Utility Counsel. The Office of Public Utility Counsel (OPUC) was created in 1983 as an independent agency to represent Texas residential and small business telephone and electric utility consumers before the PUC, the Federal Energy Regulatory Commission and the Federal Communications Commission.[23] Two-thirds of OPUC’s funding is designated for electric utility proceedings; one-third is designated for telephone proceedings. In fiscal 2002, OPUC had a budget of $1.7 million and employed 20 FTEs—19 direct and 1 indirect. Eleven FTEs are assigned to electric proceedings, 8 to telephone proceedings.[24] OPUC receives its funding from the Public Utility Gross Receipts Tax on utility bills and the System Benefit Trust Fund. It shares an office building with the PUC in Austin.

RRC does not have an office specifically to represent consumers. However, one of RRC’s general counsel’s duties is to ensure that consumers have adequate natural gas supplies at competitive prices. Analysis of pipeline rate structures, and the safety of the pipelines themselves, are integral to the cost of gas and the adequacy of supply.

Pollution control and remediation. The Texas Commission on Environmental Quality (TCEQ), until recently known as the Texas Natural Resource Conservation Commission (TNRCC), is the state’s primary environmental agency. TCEQ has about 3,000 employees in its Austin headquarters and 16 regional offices. TCEQ’s fiscal 2003 appropriations totaled $395.5 million, 82 percent of which come from program fees. Federal funds provide an additional 10 percent of the agency’s funding, with state general revenue, earned federal funds and other sources providing the remainder.[25]

TCEQ and RRC share several responsibilities. Generally, TCEQ is responsible for monitoring all environmental discharges and emissions except those specifically related to oil and gas E&P activities. These activities are the sole responsibility of the RRC. The Texas Water Quality Act of 1967 divided jurisdiction over prevention and abatement of water pollution between TCEQ’s predecessor agency and the RRC, with the RRC having jurisdiction over oil and gas wastes.

Other split jurisdictions have evolved over the years. In general, TCEQ administers all environmental oversight except in the oilfield, which is the domain of the RRC’s authority. For example:

  • Water pollution and discharges. TCEQ regulates all discharges into the state’s waterways and RRC regulates water discharges from activities related to oil and gas exploration, development and production. The federal Environmental Protection Agency (EPA) has delegated to TCEQ its National Pollution Discharge Elimination System enforcement authority, allowing TCEQ to administer Texas’ system without EPA oversight. RRC does not have this delegated authority and must seek EPA approval for regulating E&P-related pollution.
  • Hazardous waste. TCEQ administers the federal Resource Conservation and Recovery Act Subtitle C hazardous waste program for all hazardous wastes except those generated from oil and gas E&P activities, which is the domain of RRC. TCEQ and RRC have clarified some jurisdictional conflict over oilfield wastes generated from E&P activities through a memorandum of understanding.
  • Wetlands permits. TCEQ and RRC jurisdiction is similarly divided for U.S. Corps of Engineers permits to fill wetlands.
  • Injection waste disposal wells. Jurisdiction over injection wells is split between the two agencies, with RRC having EPA delegation to administer its part of the program.[26]
  • Oil spills. TCEQ’s jurisdiction covers almost all inland oil spills and all hazardous substance spills in Texas; RRC’s responsibility is for inland oil spills from E&P activities.
  • Pollution remediation. TCEQ has authority to clean up polluted areas. RRC’s well plugging and oilfield site cleanup authority is similar to that of TCEQ.

TCEQ sets surface water quality standards in Texas. It also regulates air emissions, including air emissions from oil field activities, providing precedent for TCEQ jurisdiction over some E&P activities. Since TCEQ has extensive responsibilities for similar programs, federal delegation over some programs, and funding, expertise, staffing and a statewide presence, it could take on all E&P pollution prevention activities from the RRC.

Environmental permitting and remediation. RRC has jurisdiction over coal, lignite, iron ore and uranium mining and the reclamation or restoration of mined lands. The agency oversees 17 lignite mines and the reclamation of mines abandoned before 1975 from two agency field locations in Tyler and Floresville. Funding for abandoned coalmine reclamation comes mainly from the federal government. The state spent $2.7 million in federal funds for this purpose in fiscal 2002. The agency’s surface mining and reclamation division has 54 employees.[27]

TCEQ has broad general authority for almost all environmental permitting and remediation, and has field offices for this purpose in Tyler and San Antonio.

Coastal oil spills. RRC has jurisdiction over coastal oil spills from E&P facilities of 240 barrels or less. RRC does not have dedicated staff or funding to clean up oil spills. Instead, RRC oil and gas inspectors respond to oil spills as part of their wide range of responsibilities.

The General Land Office (GLO) is the state’s primary agency with jurisdiction over oil spills in or near coastal waters. GLO already responds to all spills in or near bodies of water. In practice, since it is difficult to gauge the size of a spill, and as lead agency for oil spills in or near coastal areas, GLO responds to oil spills regardless of their size or source.[28]

GLO has the personnel, necessary equipment, processes and adequate funding to handle all oil spills in Texas coastal waters. In fiscal 2002, the GLO was appropriated $9.5 million and 105 employees for this purpose.[29]

Propane safety and licensing. RRC regulates the safety of propane or liquefied petroleum gas (LPG), compressed natural gas (CNG) and liquefied natural gas (LNG). RRC also certifies individuals who work with LPG or CNG. The LP-Gas section at the RRC has 34 employees, 15 of whom are inspectors located throughout the state. They conduct about 20,000 inspections and investigate about 20 accidents annually.[30]

The Texas Department of Licensing and Regulation (TDLR) is the primary state regulatory agency, with oversight over 20 diverse types of businesses, industries, trades and occupations. These include water well drillers and pump installers, property tax consultants and transportation service providers. The agency issues licenses and certifications, administers exams, conducts inspections and sets standards and rules for the respective trades and occupations.[31]

The 1997 Legislature transferred occupational certification and licensing programs to TDLR when it transferred the water well drillers and pump installers programs from TNRCC to TDLR.[32]

The LPG, CNG and LNG safety program at the RRC harmonizes well with TCEQ’s mission of regulating potentially hazardous substances and protecting the environment and the general public. The licensing of LPG, CNG and LNG handlers is within the mission of TDLR.

Aggregate quarry and pit safety. RRC is responsible for aggregate quarry and pit safety to protect the public from open pits. RRC dedicates one FTE to certifying that active and inactive pits have safety barriers if located within 200 feet of public roads. The agency spends about $50,000 annually on this responsibility.[33]

TxDOT is the state transportation agency, with more than $4.5 billion in funding in fiscal 2002, and more than 15,000 FTEs located throughout the state in 25 district offices. TxDOT plans, designs, builds and maintains public roads and rights-of-way in the state highway system. It also is responsible for traffic safety, including the removal of hazards such as pits and quarries along state roads.[34]

In 2001, the Sunset Advisory Commission staff recommended moving this small program to TxDOT, and received RRC’s agreement. The staff report noted that many of the pits and quarries under RRC jurisdiction are, in fact, dug under contract to provide TxDOT or counties with sand and gravel for road construction.[35] The Sunset Commission itself, however, did not approve this staff recommendation.[36] As Sunset staff noted in their report, the single FTE allocated for this program would need from 35 to 40 years to inspect and certify all existing pits and quarries.[37]

Rail safety. RRC is responsible for Texas rail safety in conjunction with the Federal Railroad Administration. RRC conducts inspections of rail equipment, railroad operations, hazardous material handling, signal operation, railroad track maintenance and grade crossing safety education. The RRC’s rail safety program enforces state and federal safety standards, but has an increasing emphasis on highway/railroad grade crossing safety regulation and education. The Rail Safety Division has a staff of 14, located in six field locations, and funding of about $1.3 million.[38]

TxDOT’s Traffic Operations Division has a Railroad Section responsible for railroad crossings on state highways. It provides rail safety services and acts as liaison to the Federal Highway Administration, the Federal Railroad Administration, local governments and railroad companies.[39]

Alternative fuels research. RRC, through the Alternative Fuel Research and Education Department (AFRED) is responsible for researching and educating the public about propane and other environmentally beneficial fuels. RRC provides consumer rebates for propane conversions and provides technical training and information to increase public awareness of the fuel. AFRED’s 26 direct and indirect FTEs are funded primarily through a fee on odorized propane, which generates about $2 million a year in state revenues.[40] Funding for the program is restricted by law to the promotion of propane rather than all alternative fuels.

The Bureau of Economic Geology (BEG) at the University of Texas at Austin is the state’s geographical survey agency and conducts research on Texas’ geology and natural resources. BEG specializes in extensive earth science research, particularly oil and gas research. BEG has state-of-the-art equipment, resources and expertise to conduct research that is made available to state agencies, the industry and the public.[41] In fiscal 2002, BEG was appropriated nearly $2 million.[42] Although BEG is funded for only 26 FTEs, it has a world-renowned research staff of 60 scientists, most of whom also receive funds from non-general revenue sources. The BEG claims that it receives $6.50 from federal sources, grants and funding from the oil and gas industry for every $1 it receives from state sources.[43]

Alternative fuels education. The State Energy Conservation Office (SECO) at the Comptroller’s office administers several energy efficiency and renewable energy programs, including an alternative fuels program.[44] The AFRED program has contracted with SECO to produce its educational material.

Recommendations

A. The Texas Railroad Commission (RRC) and the Public Utility Commission (PUC) should be eliminated and reorganized into a new Texas Energy and Communications Commission (TECC), effective January 1, 2005.

TECC should be governed by three officials elected statewide to serve staggered, six-year terms. Funding for all programs should follow each responsibility. Employee positions not transferred should be eliminated. All existing PUC programs should continue to be administered by TECC, in addition to the following RRC programs:

1. Oil and Gas exploration and production permitting. Because the RRC processes have been streamlined and moved to an electronic system, and because the RRC is in the same building as the PUC, and the two agencies share a library, RRC’s and PUC’s regulatory duties could be efficiently consolidated, resulting in minimal disruption and significant savings for the state. RRC is estimated to have 136 direct oil and gas-related FTEs working in permitting, compliance, the Electronic Compliance and Approval Process (ECAP) and managing electronic databases. Another 65 FTEs provide indirect support. One hundred direct and 34 indirect FTEs should be transferred to the TECC. Thirty-six direct and 31 indirect positions should be eliminated.

2. Gas Utility Compliance. If the new TECC retains the natural gas utility tax collection and audit responsibilities, the agency should provide the Comptroller of Public Accounts (Comptroller) with a quarterly accounting. Ten RRC direct FTEs in the gas utility compliance section should be transferred to the TECC. Ten direct and 11 indirect RRC FTE positions in gas utility compliance should be eliminated. RRC staff in its Gas Services Division’s Regulatory Analysis and Policy Section and the Audit Section should also merge with the PUC.

3. Pipeline Safety. Forty-six direct RRC FTEs should be transferred to TECC. One indirect FTE position should be eliminated.

4. General Counsel’s Division. The RRC has a staff of 57 in the General Counsel’s Division, eight of whom would join the existing 26 FTEs in PUC’s legal division to form a gas utility section in TECC. Two additional general counsel positions should be transferred to the Office of Public Utility Counsel (OPUC). Forty-seven general counsel positions should be eliminated. All general counsel employees are counted among the indirect FTEs throughout the agencies and are not assigned to specific programs.

5. Office of Public Utility Counsel. Two RRC general counsel FTEs should be transferred to the OPUC to assist with gas utility and pipeline safety. OPUC should be renamed Office of Public Counsel (OPC) to reflect its expanded jurisdiction.

B. Remaining RRC programs and employees should be redistributed to other agencies, effective January 1, 2005.

Funding for these programs should follow each responsibility and employee transfers to other agencies should be made accordingly. Employee positions not transferred should be eliminated.

1. Surface Mining and Reclamation to the Texas Commission on Environmental Quality (TCEQ). Twenty-seven direct full-time equivalent RRC employees (FTEs) should be transferred to TCEQ. Twenty-seven direct and 10 indirect FTE positions should be eliminated.

2. Pollution Prevention and Enforcement to TCEQ. One hundred sixty-five direct FTEs should be transferred to TCEQ. Forty-four direct and 26 indirect FTE positions should be eliminated.

3. Well Plugging and Site Cleanup to TCEQ. Eighty-four direct RRC FTEs should be transferred to TCEQ. Thirty-eight indirect FTE positions should be eliminated.

4. LPG, CNG, and LNG safety programs to TCEQ. Fifteen direct RRC FTEs should be transferred to TCEQ. Sixteen direct and 1 indirect RRC FTE position should be eliminated.

5. LPG/CNG/LPG safety licensing programs to the Texas Department of Licensing and Regulation (TDLR). One direct RRC FTE should be transferred to TDLR. Two direct RRC FTE positions should be eliminated. No indirect RRC FTEs are currently assigned to this program.

6. Alternative Fuels Research and Education Department (AFRED) research to the Bureau of Economic Geology (BEG) at the University of Texas at Austin. Two direct RRC FTEs should be transferred to BEG. Three direct and three indirect RRC FTE positions should be eliminated.

7. AFRED education to the State Energy Conservation Office (SECO). SECO could administer the education component of the AFRED program with a focus on propane. SECO would also be responsible for conducting the consumer rebate program for propane conversions. Three direct FTEs would be transferred to SECO for the alternative fuel research program. Alternatively, AFRED statutory authority could be expanded to allow promotion of other fuels using the AFRED fees at both BEG and SECO. Ten direct and seven indirect FTEs should be eliminated.

8. Rail Safety to the Texas Department of Transportation (TxDOT). Fourteen direct RRC FTEs should be transferred to TxDOT. Nine indirect FTE positions should be eliminated.

9. Aggregate Pit and Quarry Safety to TxDOT. One direct FTE position should be transferred to TxDOT. No indirect RRC FTEs are currently assigned to this program.

10. Oil Spill Response to the General Land Office (GLO). Five direct RRC FTE positions should be eliminated. No indirect RRC FTEs are currently assigned to this program. The GLO would receive the oil spill and response program in coastal waters from the RRC. No FTEs would be transferred since the GLO already has adequate personnel and funding and already responds to all coastal oil spills.

C. State law should be amended to abolish the offices of Railroad Commissioner and Public Utility Commissioner effective January 1, 2005. In their place, state law should be amended to establish the office of Energy and Communications Commissioner, effective January 1, 2005.

Because these recommendations consolidate and move redundant programs to other state agencies, the current statutory responsibility of railroad commissioners and public utility commissioners would change substantially. The Texas Constitution specifies how railroad commissioners should be elected once the office is created by statute. Therefore, amending state law to abolish the office would neither violate the constitution nor require a constitutional amendment. The law should provide for three Energy and Communications Commissioners, to be elected statewide to staggered, six-year terms. The first election of commissioners should occur in November 2004. The commissioners should designate one commissioner to preside.

D. RRC capital information technology (IT) appropriations budgeted prior to its merger into the newly-created TECC should be reduced to reflect these recommendations.

These reductions should be made in personal computer hardware, software, maintenance, repair and technical support functional areas in amounts proportional to the proposed FTE reductions. Appropriations specifically intended for the oil and gas permitting and the natural gas utility compliance computer systems should not be reduced.

Overall impact to PUC. The PUC and the RRC would be merged into a new agency, the Texas Energy and Communications Commission (TECC), with the responsibility to oversee oil and gas exploration and production and natural gas pipeline safety along with electric, gas and telecommunications utilities. Joining the estimated 230 existing PUC FTEs would be 100 direct and 34 indirect RRC employees for oil and gas permitting activities. Ten direct RRC employees would transfer for gas utility compliance, and 46 direct RRC employees would transfer to monitor pipeline safety, for a total of 156 direct and 34 indirect employees. Forty-six direct and 43 indirect RRC positions should be eliminated from oil and gas permitting, utility compliance and pipeline safety programs.

The proposed name for the new agency would use the acronym TECC. Another TECC, the Texas Energy Coordination Council, was eliminated by the 77th Legislature effective September 1, 2002. The council coordinated energy research in a public-private partnership funded by proceeds from both the oil overcharge fund and the U.S. Department of Energy.[45] No duties of the council are contemplated for the new commission. Assuming these recommendations are enacted in full, more than two years would have passed between the elimination of the old TECC and the creation of the new one. This should be enough time to distinguish between the two.

Overall impact to TCEQ. Joining TCEQ’s existing 3,040 FTEs would be 291 direct RRC FTEs from the following programs: 27 direct FTEs from surface mining, 165 from pollution prevention, 84 from well plugging and 15 from LPG, CNG and LNG safety. A total of 87 direct and 75 indirect RRC FTE positions from these programs should be eliminated. TCEQ has its own pollution prevention program along with an underground injection well program. Overlapping responsibilities from these responsibilities should provide efficiencies and a streamlined workload.

Overall impact to TxDOT. TxDOT should receive 14 direct FTEs for the rail safety and one direct FTE for the pit safety programs. Nine indirect FTE positions in the RRC rail safety program should be eliminated. The transfer of this program to TxDOT would change the program’s funding source from general revenue to the dedicated highway fund.

Overall impact to BEG and SECO. Two and three direct FTEs would be transferred to BEG and SECO, respectively, for the alternative fuel research and education program. BEG would receive the research portion of the program with SECO receiving the education and consumer rebate program for propane conversions. A total of 13 direct and 10 indirect RRC positions for these programs should be eliminated.

Overall impact to OPUC. Two RRC general counsel FTEs should be transferred to the OPUC to assist with gas utility and pipeline safety. OPUC should be renamed Office of Public Counsel (OPC) to reflect its expanded jurisdiction.

Exhibit 2
Summary of Impact on State Agencies

RRC Program Transfer To Agency RRC Employees Transferred RRC Employees Not Transferred Savings to General Revenue From Salaries Of Employees Not Transferred (Inc. Benefits) Loss to Other Funds (Fund 006, Inc. Benefits)
Direct Indirect Direct Indirect
Oil and Gas permitting, compliance and ECAP New TECC 100 34 36 31 $3,884,230  
Gas Utility Compliance New TECC 10 0 10 11 $1,217,445  
Pipeline Safety New TECC 46 0 0 1 $57,974  
Subtotal 156 34 46 43 $5,159,649  
Surface Mining and Reclamation TCEQ 27 0 27 10 $2,145,022  
Pollution Prevention and Enforcement TCEQ 165 0 44 26 $4,058,151  
Well Plugging and Site Cleanup TCEQ 84 0 0 38 $2,202,996  
LPG/CNG/LNG Safety TCEQ 15 0 16 1 $985,551  
Subtotal 291 0 87 75 $9,391,720  
LPG/CNG/LNG Safety TDLR 1 0 2 0 $115,947  
Subtotal 1 0 2 0 $115,947  
AFRED (research) BEG 2 0 3 3 $347,841  
Subtotal 2 0 3 3 $347,841  
AFRED (education) SECO 3 0 10 7 $985,551  
Subtotal 3 0 10 7 $985,551  
Rail Safety TxDOT 14 0 0 9 $1,333,392 ($811,630)
Pit Safety TxDOT 1 0 0 0 $57,974 ($57,974)
Subtotal 15 0 0 9 $1,391,366 ($869,604)
Oil Spill Response GLO 0 0 5 0 $289,868  
Subtotal 0 0 5 0 $289,868  
RRC Commissioners Lost to Merger       3 $354,888  
Total   468 34 153 140 $18,036,830 ($869,604)
Source: Texas Comptroller of Public Accounts

Fiscal Impact

Total savings to general revenue reflect the salaries and benefits of reduced full time equivalent employees (FTEs). Savings were calculated at an average FTE salary of $57,974, which includes benefits of 28.28 percent of salary. An exception would be the three RRC commissioners, whose $92,217 annual salaries are statutory. Direct and indirect FTE distributions are derived from information submitted by RRC to the Legislative Budget Board in the agency’s 2004-2005 Legislative Appropriation Request, the RRC’s self-evaluation report, submitted to the Sunset Advisory Commission in 1999, and RRC’s Agency Strategic Plan for fiscal 2003-2007.

Some programs, such as those in the Alternative Fuels Research and Education Department (AFRED), receive a portion of their funding from dedicated accounts in general revenue. The amount distributed to the appropriate program cannot be estimated without additional data. The same is true for RRC programs receiving federal funding. It is also not known if the RRC uses dedicated or federal funds to pay all or a portion of employee salaries, or uses the money directly on programs that, under this proposal, would follow the program to another agency.

Therefore, some of the savings identified for general revenue may in fact be savings to these dedicated general revenue accounts. For general revenue certification, however, the effect is the same.

This estimate assumes that these recommendations will require four months to implement, beginning September 1, 2004 and ending January 1, 2005. There will be no savings in fiscal 2004. Savings in fiscal 2005 will be two-thirds of savings in subsequent years. To realize such savings, salary appropriations should be reduced by $9,421,000 in fiscal 2005. In fiscal 2006 and thereafter, salary appropriations should be reduced by $14,061,000.

In fiscal 2005, appropriations for the Texas Employees Retirement System (ERS) should be reduced by $565,000, or 6 percent of the salary amount for retirement and $1,378,000, or 14.63 percent for health insurance. Appropriations for the Comptroller of Public Accounts (Comptroller) should be reduced by $721,000, or 7.65 percent of the salary amount for FICA.

In fiscal 2006 and thereafter, salary appropriations to the TECC should be reduced by $14,061,000. Appropriations for ERS should be reduced by $844,000, or 6 percent of the salary amount for retirement and $2,057,000, or 14.63 percent for health insurance. Appropriations for the Comptroller should be reduced by $1,076,000, or 7.65 percent of the salary amount for FICA.

Distribution of 28.28% benefits

Fiscal Year Salary 6% Retirement 14.63% Health Insurance 7.65% FICA
2004 $0 $0 $0 $0
2005 $9,420,546 $565,233 $1,378,226 $720,672
2006 $14,060,516 $843,631 $2,057,053 $1,075,629
2007 $14,060,516 $843,631 $2,057,053 $1,075,629
2008 $14,060,516 $843,631 $2,057,053 $1,075,629

Appropriations to the RRC for capital information resource technology acquisition funded by general revenue also should be reduced in proportion to the reduction in personnel and the need for desktop computing. In fiscal 2005, that amount should be $372,000. For subsequent years, that amount should be $555,000. Funding for major systems serving the general public, such as the Electronic Compliance and Approval Process (ECAP), should not be reduced and are not included in this estimate.

Fiscal Year Savings to General Revenue Savings/(Cost) to Fund 006 (Highway Fund) Change in FTEs
2004 $0 $0 0
2005 $12,456,000 ($583,000) -293
2006 $18,592,000 ($870,000) -293
2007 $18,592,000 ($870,000) -293
2008 $18,592,000 ($870,000) -293


Endnotes

[1]Texas Railroad Commission, Self-Evaluation Report Submitted to the Sunset Advisory Commission (Austin, Texas, June 1999), p. 24.

[2]Texas Railroad Commission, Self-Evaluation Report Submitted to the Sunset Advisory Commission (Austin, Texas, June 1999), pp. 24-37; and Texas Railroad Commission, “Commission History,” http://www.rrc.state.tx.us/history/hist.html. (Last visited October 19, 2002).

[3]Tex. S.B. 3, 74th Leg., R. S. (1995).

[4]Texas Railroad Commission, Legislative Appropriations Request, 2004-05 (Austin, Texas), II.A, p. 3.

[5]Texas Railroad Commission, Agency Strategic Plan for the Fiscal Years 2003-2007 (Austin, Texas), p. 6.

[6]Texas Railroad Commission, Agency Strategic Plan for the Fiscal Years 2003-2007, pp. 9-10.

[7]Texas Department of Transportation, “Crossroads of the Americas,” Austin, Texas, June 2002, http://www.txdot.state.tx.us/ttc/ttc_home.htm. (Last visited September 26, 2002.)

[8]Oklahoma Corporation Commission, “Organization,” http://www.occ.state.ok.us/aboutfrm.htm. (Last visited October 19, 2002).

[9]Louisiana Department of Natural Resources, “Mission Statement,” http://www.dnr.state.la.us/mission.ssi. (Last visited August 31, 2002.)

[10]Count made from California Resources Agency Web site, http://resources.ca.gov/. (Last visited October 19, 2002).

[11]Tex. S.B. 3, 74th Leg., R. S. (1995).

[12]“Bill Would Merge PUC, Railroad Commission,” Austin American-Statesman (January 9, 1999).

[13]Tex. S.B. 1768, 75th Leg., R. S. (1997); and Texas H.B. 603, 76th Leg., R. S. (1999).

[14]“Sanchez bucks history with call for agency merger,” Austin American-Statesman, (March 3, 2002).

[15]Texas Railroad Commission, “About the Oil and Gas Division,” http://www.rrc.state.tx.us/divisions/og/aog.html. (Last visited October 19, 2002).

[16]Texas Railroad Commission, Agency Strategic Plan for the Fiscal Years 2003-2007, p. 32.

[17]Sunset Advisory Commission, Staff Report: Railroad Commission (Austin, Texas, 2000), p. 62.

[18]Tex. S.B. 310, 77th Leg., R. S. (2001).

[19]Texas Railroad Commission, Legislative Appropriations Request, 2004-05, III.B. p. 7.

[20]Texas Railroad Commission: Legislative Appropriations Request, 2004-05, III.B, p. 18.

[21]Texas Utilities Inc., “TXU in America,” http://www.txu.com/us/about/ (last visited October 19, 2002); and Houston Chronicle.com, “Houston Industries, in Transition, Holds Line on Dividends,” http://www.chron.com/cgibin/auth/story.mpl/content/chronicle/business/chron100/98/dividends.2-0.html. (Last visited October 19, 2002).

[22]Texas Railroad Commission, “Gas Services Division: Pipeline Safety Section,” http://www.rrc.state.tx.us/divisions/gs/pls/abgspls.html. (Last visited August 31, 2002).

[23]Texas Office of Public Utility Counsel, Agency Strategic Plan for the Fiscal Years 2003-2007 (Austin, Texas), p. 4.

[24]Texas Office of Public Utility Counsel, Legislative Appropriations Request, 2004-05 (Austin, Texas), III.B, pp. 1-5; and Texas Office of Public Utility Counsel, Agency Strategic Plan for the Fiscal Years 2003-2007, p. 6.

[25]Texas Commission on Environmental Quality, “About TCEQ,” http://www.tceq.state.tx.us. (Last visited September 13, 2002).

[26]Texas Railroad Commission, Self-Evaluation Report Submitted to the Sunset Advisory Commission, Jun. 1999, p. 111.

[27] Sunset Advisory Commission, Staff Report: Railroad Commission, p. 69.

[28]Legislative Budget Board, Staff Performance Report (Austin, Texas, January 1997), pp. 212-214.

[29]Tex. S.B.1, 77th Leg., R. S., art. VI-11 (2001).

[30]Texas Railroad Commission, “Gas Services Division: About the Liquefied Petroleum Gas Section,” http://www.rrc.state.tx.us/divisions/gs/lpg/abgslpg.html. (Last visited October 19, 2002).

[31]Texas Department of Licensing and Regulation, “Welcome to the Texas Department of Licensing and Regulation,” http://www.license.state.tx.us/. (Last visited October 19, 2002).

[32]Tex. S.B. 1955, 75th Leg., R. S. (1997).

[33]Texas Sunset Advisory Commission, Staff Report: Railroad Commission, p. 70.

[34]Texas Department of Transportation, “Traffic Operations Division,” http://www.txdot.state.tx.us/insdtdot/orgchart/trf/trf.htm (last visited October 19, 2002); and Texas Department of Transportation, TxDOT Operating Budget 2002 (Austin, Texas, 2002), p. 14.

[35]Texas Sunset Advisory Commission, Staff Report: Railroad Commission, (Austin, Texas, 2000), p. 44.

[36]Texas Sunset Commission, Decisions: Railroad Commission (Austin, Texas, January 2001), pp. 20-21.

[37]Sunset Advisory Commission, Staff Report: Railroad Commission, pp. 41-45.

[38]Texas Railroad Commission, “Overview of the Rail Division,” http://www.rrc.state.tx.us/divisions/rail/ovrview1.htm (last visited October 19, 2002); and Texas Railroad Commission, Legislative Appropriations Request, 2004-05, III.B, p. 13.

[39]Texas Department of Transportation, “Traffic Operations Division: Railroad/Highway Grade Crossings,” http://www.TxDOT.state.tx.us/insdtdot/orgchart/trf/rrsect.htm (last visited August 31, 2002).

[40]Texas Railroad Commission, Legislative Appropriations Request, 2004-05, p. III. B. 20.

[41]University of Texas at Austin, Bureau of Economic Geology, “Research Programs,” http://www.beg.utexas.edu/mainweb/resprog01.htm. (Last visited October 19, 2002).

[42]Tex. S.B.1, 77th Leg., R. S., art. III-75 and 76 (2001).

[43]The University of Texas, Legislative Appropriations Request, 2002-03 (Austin, Texas), pp. 41-42.

[44]Texas Comptroller of Public Accounts, State Energy Conservation Office, “Alternative Fuels Program,” http://www.seco.cpa.state.tx.us/alt.html. (Last visited October 19, 2002).

[45]Texas Energy Coordination Council, “Home Page,” http://tecc.ces.utexas.edu/. (Last visited November 18, 2002.)