-: Good morning.
This meeting of the Railroad Commission of Texas
will come to order to consider matters
which have been duly posted with the Secretary of State,
for March 20th, 2018, the Spring Solstice.
The Commission will consider the items on the agenda
as posted on the agenda.
Under our public participation policy,
anyone desiring to offer public testimony on any items
that are not noticed on today's agenda
will need to fill out a testimony form
found in the back of the room,
and submit it to Commission Secretary Kathy Way.
Reminder, please turn off your cellphones.
Item number one.
Good morning.
-: Good morning, Commissioners.
For the record, my name is Amy Bruce, and I am representing
the Market Oversight section
of the Oversight and Safety Division.
Before you today is Gas Utilities Docket
Number 10663, the application
of Texas Gas Service Company, for the test year 2016,
annual interim rate adjustment for the unincorporated
portion of the North Texas Service Area.
This docket is the sixth interim rate adjustment
the company has filed for the North Texas Service Area
environ, since the final order was issued
in Gas Utilities Docket number 10094.
This adjustment represents an incremental increase
of $610,854
of which $56,899
may be collected from environ's customers.
I recommend approval of the interim rate adjustment
as revised, and I'm available to answer any questions.
Christi: Thank you, Amy.
Are there any questions?
-: No. -: I move we approve
the examiner's recommendation.
Is there a second?
-: Second. -: Second, Commissioner Sitton.
All in favor, say aye.
-: Aye. -: Aye.
Motion passed, this item is approved.
-: Thanks. -: Thank you.
Item number two.
-: Good morning, Commissioners.
For the record, my name is Sarah Montoya-Foglesong.
I'm also representing the Market Oversight Section
of the Oversight and Safety Division.
Before you today is Gas Utilities Docket
Number 10666, the application of Texas Gas Service
for the test year 2016, annual interim rate adjustment,
for the unincorporated portion
of the Gulf Coast Service Area.
This is the first interim rate adjustment
the company has filed for the environs at the Gulf Coast
Service Area, since the final order was issued
in Gas Utilities Docket number 10488.
This adjustment represents an incremental increase
of $464,756,
of which $11,555
is allocated to the environ's customers.
I recommend approval of the interim rate adjustment
as revised, and I'm happy to answer any questions
you may have.
-: Thank you, Sarah.
Are there any questions?
I move we approve the examiner's recommendation.
Is there a second? -: Second.
-: Second, Commissioner Christian.
All in favor, say aye.
-: Aye. -: Aye.
Motion passed.
-: Thank you. -: This item is approved.
Thank you.
Item number three.
-: Good morning, Chairman and Commissioners.
For the record, my name is Christina Poole,
and I'm also with the Oversight and Safety Division.
The item before you today is Gas Utilities Docket
Number 10668, the application of West Texas Gas Incorporated
for the test year 2016, annual interim rate adjustment,
for its unincorporated Texas Service Area.
This docket is the fourth interim rate adjustment
since the company's last rate case,
GUD number 10235.
The adjustment represents an incremental increase
of $44,547, affecting two customer classes
at the company's unincorporated Texas Service Area.
Staff recommends approval
of the interim rate adjustment, as revised.
I'm available to answer questions.
Christi: Thank you, Christina.
Are there any questions? -: Nope.
Christi: I move we approve the examiner's recommendation.
Is there a second?
-: Second. -: Second, Commissioner Sitton.
All in favor, say aye.
-: Aye. -: Aye.
Motion is approved.
Good morning, Dana. -: Good morning.
Good morning, Chairman and Commissioners.
For the record, my name is Dana Lewis,
Administrative Law Judge with the Hearings Division.
Item number four is a statement of intent,
filed by Texas Gas Service Company,
to increase rates in environs
of the Rio Grande Service Area.
Staff intervened, and the parties engaged
in discovery and negotiations.
A unanimous settlement agreement was reached,
that resolved all issues.
The settlement includes a revenue increase
of $500,882, which consists
of $253,516
increase in the overall base rate, and a pipeline integrity
testing rider, recovering an average
of $247,367 annually.
TGS' revenue calculations do incorporate
the reduction to the corporate tax rate
passed in the Tax Cuts and Jobs Act of 2017.
The party has timely filed exceptions.
No replies were filed.
After review and consideration of the party's exceptions,
the examiners issued non-substantive corrections
to certain pages of the proposal for decision,
and updated the final order with language conforming
to the Commission's accounting order
that was issued at the last conference.
The examiners recommend the Commission approve
the terms of the settlement agreement
as reflected in the final order.
I'm available for questions.
-: Thank you.
Are there any questions?
I move we approve the examiner's recommendation.
Is there a second? -: Second.
-: Second, Commissioner Christian.
All in favor, say aye.
-: Aye. -: Aye.
Motion passed, this item is approved.
Thank you.
Last time up, Marcy.
-: It is.
Good morning, Chairman and Commissioners.
Marcy Spraggins, an ALJ with the Hearings Division.
Luminant Mining Company LLC requested releases
of reclamation obligations on an aggregate
1,313.1 acres within permit number 46C,
the Oak Hill Mine.
Requests included Phase I and Phase II,
and Phase II and III release for various acreages
that are within 13 parcels of land.
After notice no comments or requests for hearing were filed.
Parties are Luminant and the staff.
The acreage recommended for release
is located in the D1, D2, and D3 areas,
in the western-central portion of the permit area.
Post-mine land uses approved for the acreage
include forestry, fish and wildlife habitat,
developed water resources, industrial-commercial,
and pasture land.
After field inspection, staff reviewed the areas
requested for Phase I release,
are recommended for approval except for parcel three,
containing a structure that has been modified
without approval, and has now been withdrawn.
Parcels one, two, and 10, are recommended
for Phase I release for backfilling,
regrading, and drainage control.
Staff inspection confirms Phase II's successful revegetation
as required by the permit, for areas of pasture land,
fish and wildlife habitat, and forestry.
Concerns regarding parcel nine that drains to a pond,
that shows rising concentrations of manganese,
and parcel 11 that drained to a pond
with rising TDS concentrations,
have resulted in these being withdrawn
from Phase II release, and III release.
For Phase II, records of successful
revegetation were filed for the areas mentioned before.
Drainage from the areas requested for Phase II release,
is routed to approved sediment control structures,
with records of compliant discharges,
except for a few exceedances for temporary sediment ponds
that occurred prior to October, 2003.
Stream monitoring data for disturbed downstream
monitoring stations, indicates that average annual pH values
and average as well as flow-weighted average
TDS concentrations, were within the stream segment standards
for segment 0505 of the Sabine River.
Parcels four through eight have also been withdrawn
from Phase III release, based on issues
related to low pH at a USGS monitoring station,
and because of inconsistent flow data.
Parcels withdrawn are recommended
for denial without prejudice, so that Luminant
may refile for release.
Based on the evidence received, and the recommendations
by staff and Luminant's withdrawal
of certain of the requests, I recommend
approval of the proposed order.
Staff calculated an eligible bond reduction amount
for the parcels recommended for approval
of Phase I release, and/or Phase II release,
of $4,595,242.85.
No changes to the bond instrument are requested
at this time.
And I'll be glad to answer your questions.
Christi: Thank you, Marcy.
Are there any questions?
-: Nope. -: I move we approve
the examiner's recommendation.
Is there a second?
-: Second. -: Second, Commissioner Sitton.
All in favor, say aye.
-: Aye. -: Aye.
Motion passed, this item is approved.
Number six. -: Commissioners, with your
permission, I'll wait until the end of item eight,
to bring the orders up. -: Yes, ma'am.
-: Items six and seven are for Texas Municipal Power Agency.
TMPA submitted replacement bonds for its two permits,
permit number 26D and 38D,
for the Gibbons Creek Lignite Mines, in Grimes County.
Both mines are in reclamation.
Permit number 26D is currently bonded
with a collateral bond and letter of credit,
or LOC, issued by Wells Fargo Bank National Association,
in the amount of $11.1 million.
TMPA requests acceptance of a replacement collateral bond
with LOC, also issued by Wells Fargo,
in the amount of $11 million.
The calculated reclamation cost estimate
is $10,584,672.
The replacement instrument will provide
for a reduced amount that will still remain
sufficient for reclamation of the permit area,
of permit number 26D.
Permit number 38D is currently bonded
with a self bond, in the amount
of $7.45 million, and a collateral bond
with letter of credit by Wells Fargo,
in the amount of $10.85 million.
TMPA requests acceptance of a replacement self bond
in the amount of $8.9 million,
and a replacement collateral bond with LOC,
issued by Wells Fargo, in the amount of $9.6 million.
Together, the two proffered bonds will provide
for increased total bonding, that will be sufficient
to cover the costs of reclamation of permit 38D,
which are $17,934,635.
The bonds and LOCs are in proper form and format,
and amount, and the letters of credit
are irrevocable during their terms.
For the self bond, TMPA has demonstrated
that it has an A rating for its most recent bond issuance,
and that it meets the requirement that the total
self bond amount does not exceed 25%
of TMPA's tangible net worth.
Two ordering paragraphs are included in the proposed orders
that require that replacement bonds be filed
by January 9th, 2019,
approximately 90 days prior to the expiration date
of the collateral, which is April 9th, 2019,
to ensure that the bonds are replaced in a timely manner,
so that forfeiture proceedings would not be required.
In addition, replacement bonds must be docketed
with the Hearings Division at least 30 days prior
to the expiration date, to ensure that such proceedings,
if necessary, are begun in accordance with regulations.
I recommend that the Commission accept the replacement bonds
for both of these permits, and the LOCs.
I'm available to answer your questions.
Christi: Thank you.
Are there any questions?
-: Nope. -: I'll make a motion
on item number six, which is permit number 26D, first.
I move we approve the examiner's recommendation.
Is there a second? -: Second.
-: Second, Commissioner Christian.
All in favor, say aye.
-: Aye. -: Aye.
Motion passes, that item is approved.
And on item number seven, which is permit number 38D,
I move we approve the examiner's recommendation.
Is there a second?
-: Second. -: Second, Commissioner Sitton.
All those in favor, say aye.
-: Aye. -: Aye.
Motion passes, that item is approved.
Number eight.
-: Commissioners, item eight is an application
by Luminant Mining Company LLC,
for release of Phases II and III reclamation obligations,
for 312 acres within the Monticello Thermo Mine.
The Commission approved Phase I release
of reclamation liability for the acreage,
requested by previous Commission orders.
Staff of the Surface Mining and Reclamation Division
filed its technical analysis and field inspection report,
by a letter dated July 22nd, 2016,
determining that there were remaining deficiencies
in the application.
Luminant supplemented the application,
and staff filed its addendum number one
to the TA, that recommended approval.
After notice, one comment letter was filed,
but no hearing was requested.
The only parties are Luminant and staff.
The post-mining land uses for the two parcels
comprising 312.2 acres, consist of 150.5 acres
of pasture land, 138.1 acres of fish and wildlife habitat,
and 23.6 acres of developed water resources.
Phase II revegetation requirements have been met
in accordance with the reclamation plan,
productivity and ground cover data for pasture land,
and ground cover and stem count data
for fish and wildlife habitat,
meet or exceed applicable standards.
Luminant has also successfully completed all mining
and reclamation activities for the 312.2 acres
requested for Phase III release.
Requirements for completion of the ERP have been met.
Surface water and groundwater within and adjacent
to the areas requested for release
have been protected in accordance with regulations.
Luminant provided data from sedimentation ponds
to show that the water quality permit requirements
are being met, and that suspended solids and stream flow
have been limited.
Data from long-term surface water monitoring stations
show that the stream segment criteria
established by TCEQ, are met.
The observed changes and overburdened wells
follow the trends expected from the approved
probable hydrologic consequences determination,
that is contained in the permit.
Water quality and quantity
in the overburdened groundwater systems
adjacent to the proposed release area
have not been materially impacted.
Staff found that results from sampling have been consistent
with the PHC and the cumulative hydrologic impact assessment
conducted by staff, that includes the permit area.
Staff analysis also indicated reasonable conformity
with pre-mine data.
I recommend approval of the proposed order,
including an eligible bond reduction amount
of $239,020.32.
I'll be glad to answer your questions.
Christi: Thank you, Marcy.
Are there any questions?
-: Nope. -: No.
-: I move we approve the examiner's recommendation.
Is there a second? -: Second.
-: Second, Commissioner Christian.
All in favor, say aye.
-: Aye. -: Aye.
Motion passes, that item is approved.
Thank you, Marcy,
for your service to us. -: Thank you.
-: You've done a great job, and I always like your pictures,
by the way. -: Thanks very much.
Marcy: I appreciate having been here.
Christi: Good luck, I hope you enjoy retirement.
Don't be a stranger.
-: I will, for sure. -: Good.
-: Thank you.
-: Item number nine.
Good morning.
-: Good morning, Chairman, Commissioners.
For the record, Kristi Reeve,
Administrative Law Judge, Hearings Division.
I'll be presenting items number nine through 13,
all of which are P-5 motions for rehearing.
Item number nine.
On January 23rd, 2018, the Commission entered
a default order denying renewal
of Caskids Operating Company's form P-5 Organization Report.
Caskids filed a timely motion for rehearing,
which states the operator is actively working
to achieve compliance, and that four wells
currently remain noncompliant.
Staff opposes the motion.
Staff's response states that four wells are noncompliant.
For one well, the operator has failed to perform
its annual H-5 test.
For two wells, the operator's test to demonstrate
the well bore is not a potential harm,
has resulted in failure.
And on the last well, the operator
has failed to perform an H-15 test.
I've been informed that two of the wells
have now been plugged, but W-3's are pending,
and the wells will not be considered plugged
until they're filed and approved,
and that two wells are awaiting plugging.
It is recommended that the motion be denied.
The motion will be overruled by operation of law
on May 3rd, 2018.
I'm available for questions.
-: Kristi, do we expect them to get it done by May 3rd?
We have one more conference.
Kristi: I think so.
Yes, ma'am.
-: If we pass this and they aren't done, can we do that?
Kristi: Yes, ma'am, we certainly can.
-: Let's give them an opportunity.
Okay? -: Okay.
Kristi: Alright, we'll pass number nine.
-: Thank you.
Kristi: Alright, and everything else I have
for y'all is good news.
-: We like good news. -: I know.
Randall told me I should always end on good news,
so this works within that. -: That's right.
-: Alright, so item number 10.
On January 23rd, 2018, the Commission entered
a default order denying renewal of L&B Oil and Gas
Equipment, LLC's form P-5 Organization Report.
Subsequently, L&B resolved the inactive well issues,
and is now in compliance.
It is recommended the motion be granted,
and the underlying docket be dismissed as moot.
I'm available for questions.
Christi: Thank you.
Are there any questions?
-: Nope. -: No.
-: I move we approve the examiner's recommendation.
Is there a second? -: Second.
-: Second, Commissioner Sitton.
All in favor, say aye.
-: Aye. -: Aye.
Motion passed, this item is approved.
Number 11.
-: Item number 11, on January 23rd, 2018,
the Commission entered a default order denying renewal
of Mokan Capital LLC's form P-5 Organization Report.
Subsequently, Mokan resolved the inactive well issues,
and is now in compliance.
It is recommended the motion be granted,
and the underlying docket be dismissed as moot.
I'm available for questions.
-: Any questions? -: Nope.
-: Alright, I move we approve the examiner's recommendation.
Is there a second? -: Second.
-: Second, Commissioner Christian.
All in favor, say aye.
-: Aye. -: Aye.
Motion passes, that item is approved.
Number 12.
-: On January 23rd, 2018, the Commission entered
a default order denying renewal of Patno
Oil and Gas Company's Form P-5 Organization Report.
Subsequently, Patno resolved the inactive well issues
and is now in compliance.
It is recommended that the motion be granted,
and the underlying docket be dismissed as moot.
I'm available for questions.
Christi: Thank you.
Any questions? -: Nope.
-: I move we approve the examiner's recommendation.
Is there a second? -: Second.
-: Okay.
Whose turn was it?
(laughing) Okay.
Second, Commissioner Sitton.
All in favor, say aye.
-: Aye. -: Aye.
Motion passes, that item is approved.
-: Alright, item number 13.
On January 23rd, 2018, the Commission entered
a default order denying renewal
of Rubac Technical Services' Form P-5 Organization Report.
Subsequently, Rubac resolved the inactive well issues
and is now in compliance.
It is recommended that the motion be granted
and the underlying docket be dismissed as moot.
I'm available for questions.
-: Thank you.
I move we approve the examiner's recommendation.
Is there a second? -: Second.
-: Second, Commissioner Christian.
All those in favor, say aye.
-: Aye. -: Aye.
Motion passes, that item is approved.
Kristi: Great, thank y'all very much.
-: Thank you very much.
We like good news.
Items 14 through 57,
there are 44 items on the consent agenda.
I'm gonna move we approve items 14 through 57.
Is there a second? -: Second.
-: Second by, I'm sorry, did we have one?
Man: Yeah, staff previously requested
we pass number 38.
-: I'm sorry, I didn't have that.
Okay.
Alright, let me, will you
withdraw your second? -: Withdraw, yup.
-: Okay.
So I'm gonna move we approve items 14 through 57,
but pass number 38.
Is there a second?
-: Second. -: Second, Commissioner Sitton.
All those in favor say aye.
-: Aye. -: Aye.
Motion passes, those items are approved.
Rule 15, inactive wells, numbers 58 through 80.
So we've got a couple in compliance, right?
Number 80's in compliance.
Is that correct?
Alright.
And I'd like to pass number 61.
So there are 21 of those.
Thank you, my math's slow today.
I'm gonna move we approve items,
these items, which we're excepting items 61 and 80,
which is 21, yup.
Is there a second? -: Second.
-: Second by Commissioner Christian.
All those in favor say aye.
-: Aye. -: Aye.
Motion passes, those items are approved.
Agreed enforcement orders, items 81 through 295,
there are 215.
I'm gonna move that we approve items 81 through 295.
Is there a second?
Ryan: Second.
-: Second by Commissioner Sitton.
All those in favor say aye.
-: Aye. -: Aye.
Motion passes, those items are approved.
That concludes the hearings section.
Thank you.
I'll take up administrative matters.
296 and 297.
Good morning, Wei.
-: Good morning, Chairman, Commissioners.
For the record, I'm Wei Wang, Interim Executive Director.
And we have started updating
our business continuity plan, which is also known
as a coop plan.
And Phase I is to update our procedures
for the Austin headquarters.
And Phase II is to include our district office.
I'd also like to take the opportunity to introduce
our new Safety Officer, Erica Guiterrez.
She came to us from SORM,
the State Offices of Risk Management.
She'll be leading that project.
And also, you may remember, the plan
was put together in 2014, so we're also engaging
the contractor we used at the time,
to help us with the process.
So that concludes my report for today.
I'm available for questions.
Thank you.
-: Any questions? -: No.
-: Welcome.
Okay, thank you.
Item 298, Alex.
-: Okay, good morning, Chairman, Commissioners.
For the record, my name is Alex Schoch,
General Counsel, the Railroad Commission of Texas.
We've got nothing to report for 298 this morning.
Natalie Dubiel and Hailey Cochrane
have the next three items. -: Okay.
-: Good morning, Chairman and Commissioners.
For the record, my name is Natalie Dubiel,
with the Office of General Counsel.
Item number 299 is an order nunc pro tunc,
in Gas Utilities Docket number 10695,
regulatory accounting related to Federal Income Tax changes.
On February 27th, 2018, the Commission signed
a Gas Utilities Accounting Order,
in GUD number 10695,
ordering gas utilities in the State of Texas
to account for the reduction in the federal corporate
income tax rate, due to the Tax and Cuts Job Act of 2017.
Ordering paragraph number eight of that order
contains a clerical error.
The reference to Texas Utilities Code section 102.003b
should be to Texas Utilities Code
section 104.003b.
The order nunc pro tunc corrects this reference,
and staff recommends the Commission adopt the order.
I'm available to answer any questions.
Christi: Thank you.
Are there any questions?
-: No. -: I move we approve
the staff's recommendation
Is there a second?
-: Second. -: Second, Commissioner Sitton.
All in favor, say aye.
-: Aye. -: Aye.
Motion passed, this item is approved.
-: Thanks, Natalie. -: Thank you.
I also have item 300.
Item number 300 on the agenda
pertains to Commissioner approval of certain contracts
pursuant to the Commission's delegation of authority,
in section 2261.254 of the Texas Government Code.
The Commission's internal delegation of authority
requires Commissioner approval of contracts
and associated amendments
greater than or equal to $500,000.
Section 2261.254 of the Texas Government Code
requires approval of contracts and associated amendments
greater than one million dollars.
At issue today are two amendments,
to well plugging master agreements that result
from statewide well plugging solicitations.
These amendments increase the not-to-exceed ceiling
of the original master agreement with that vendor.
Additionally at issue today is one solicitation
for future well plugging services.
Approval of these items today will ensure
agency operations remain on schedule,
and the necessary approvals will be in place
pursuant to the Commission's delegation of authority
and State law.
A summary of these agreements and solicitation,
including contract and solicitation number and amount,
were included in your notebooks.
Staff asks the Commission approve these agreements
and solicitation, pursuant to the Commission's delegation
of authority, and State law.
I'm available to answer any questions.
Christi: Thank you.
Are there any questions?
Ryan: Nope.
-: I move we approve the staff's recommendation.
Is there a second? -: Second.
-: Second, Commissioner Christian.
All in favor, say aye.
-: Aye. -: Aye.
Motion passes, that item is approved.
Thank you.
Morning.
How are you?
-: Oh, good.
Good morning, Chairman, Commissioners.
Hailey Cochrane with the Office of General Counsel.
Item number 301 is staff's recommendation
to publish proposed amendments
to 16 Texas Administrative Code, section 3.70.
The amendments are necessary to implement
the Commission Sunset Bill, House Bill 1818,
which requires that the Commission impose fees
to fund its Pipeline Safety Program.
The proposed amendments create two main types of fees:
an annual fee to pipeline permit holders,
and a $500 processing fee for new permit applications
and permit renewals.
The amount of the annual fee would depend
on the permitted mileage, and whether the pipeline
falls into group A or group B.
Group A pipelines are those subjects,
subject to title 49 of the Code
of Federal Regulations, parts 192 and 195.
Because these pipelines paid higher inspection costs
to the Commission, they would be charged $20
per mile of pipe.
Group B pipelines are required to comply
with Commission rules, but are not subject
to 49 CFR parts 192 and 195.
These pipelines would be charged $10 per mile of pipe.
Under the proposed amendments, the Commission
would calculate this year's annual fee
based on the mileage assigned to an operator
as of June 29th of 2018.
This year's annual fee would be due to the Commission
on August 31st.
And all subsequent years, an operator's annual fee
would be based on mileage assigned to the operator
as of December 31st,
and the annual fee would be due on April 1st.
The proposed amendments include additional changes,
such as requiring electronic filing of permits,
decreasing the time for Commission review
of permit applications,
and detailing procedures for pipeline transfers.
Staff requests the Commission's approval
to publish the proposed amendments
in the Texas Register for a 30-day comment period.
If approved today, the proposal
should appear in the April 6th issue of the Register.
The proposal and an online comment form
would also be made available on the Commission's website.
May I answer any questions?
Christi: Thank you.
Are there any questions?
-: I have a question.
Hailey, when you started off your presentation,
you talked about that this,
well in fact, the proposed amendments are necessary
to implement provisions of the House Bill 1818,
which requires the Commission to create fees,
da, da, da, da, da.
I wanna be careful about our language here,
because we actually write, in our proposed rule amendment,
on page one, that Natural Resources Code,
which authorizes and requires the Commission
to establish pipeline safety and regulatory fees.
I'm not sure that's accurate.
I wanna be careful about our language here.
I believe that the House Sunset Bill,
the amendment to Bill 1818, which amended
the Natural Resources Code, says
that the Railroad Commission may establish
pipeline safety and regulatory fees.
Am I correct in that?
Hailey: Yes, sir, that's correct.
-: Okay, so then I think we should not say
that it's required, because it's not.
It's an option that we can take.
Further on to that, Commissioners,
I have a couple of reservations about the structure
of this fee.
In general, we have shown,
Commission has had a hard time assessing the market,
in some cases.
And part of the Sunset Bill
was that the effects of these fees,
we would need to assess the effects of these fees
on operators of all sizes.
And we currently have, the way this thing is structured,
that any gathering systems that leave a lease
are charged a $10 annual mileage fee,
and there are some gathering systems in the State of Texas
today, that operate at a loss.
And I'm very concerned that by this kind,
even though we have two separate categories of fees,
that there are pockets of operation
that we need to be very careful
about applying new fees to.
And once again, given our struggles
to assess the market in some of our rate-making cases,
I'm really uncomfortable with this fee structure
that has kind of blanketed all gathering systems
across the state.
So I'm inclined to slow,
to take a step back on this.
There are some other issues with this,
with this rule, this proposed change,
the way it's written.
For example, on page two,
we require an operator to utilize our POP system,
which currently isn't working.
I understand that we--
Christi: When did it quit working?
-: What?
-: Does the POP system work?
-: It currently works.
They're making additional changes
to be able to handle the new requirements,
and those are gonna be in place, my understanding,
before the rule goes into effect.
-: Well said.
And my concern is, we should make sure those are working
before we take the steps on the rule.
I think it was Dao, in one of the comments,
said that hey, we're gonna put a rule out that requires
something that we couldn't actually do today.
So that gives me some pause.
On page three, if an operator needs to update
its number of permitted miles, the operator must submit
a permit amendment no later than May 15th, 2018.
This rule will go into effect after that date.
So there's just a number of things about this
that I have pause with, the biggest one being,
I'm not comfortable with assessing a new fee
that could potentially push some of these gathering systems
that are already operating at a loss,
to have them face more losses.
So that said, I'm gonna,
based on the way this thing sits today,
I'm inclined to vote against this.
-: You have a comment? -: Yes.
My understanding is, and correct me if I'm wrong,
this is opening up for public comment.
Is that correct? -: Yes sir.
-: So we are not approving the long-term rules
as written, we're just,
and I'm all for public comment and comment by the folks.
I appreciate the things you brought up, but I would think
that's why we're having comment,
to correct those type of things, if they're identified.
And later we'll vote on whether to accept it permanently,
I believe.
Is that true? -: That's the process, yes.
-: Okay.
Yeah, while I respect your change on this,
I see no reason of not moving forward with comments
so we will consider,
and I respect what happens
when we come back and get the final version.
-: You're right, we could make amendments later.
I just don't wanna put out something
where if we sit here today, and say
I'm not gonna approve this the way it's written today,
I don't wanna put it out there for public comment.
I wanna get it to a point that I feel confident
in it, before we put it out for public comment.
That's my approach. -: I understand.
Let me say, I'm okay,
I feel comfortable with the public comment part,
and that the staff hears your recommendations,
and I agree with that we say it correctly
with the legislation that was passed.
It's not a requirement, that needs to be clarified.
But I would think, am I correct,
that some of the comments made will be considered
by the staff, as they take comments,
and you've heard comments from the Commissioner.
So that would be under consideration
for this commentary time.
Correct? -: Yes, sir.
-: Okay.
Let me do my,
I have a statement before I would do a second.
As a Conservative, I'm not proposing raising taxes
and fees on the industry we regulate.
However, I'm also not a proponent of a person
being forced to pay for person A, from B's services.
And currently, Texas taxpayers are on the hook
to pay for the pipeline industry's regulation.
The last session, part of Sunset,
the Texas Legislature asked us to assess a new fee
to shift the burden from paying our pipeline program,
from the average Texas family,
to the pipeline industry we regulate.
And I commend the industry for agreeing to that.
It shows good faith on the industry, I believe.
I believe it is the Conservative right move forward
for our agency, as long as the fees are not frivolous,
and simply cover the cost
of our pipeline inspection programs.
This provision of our Sunset legislation
was passed with industry support,
because the industry believes pipeline companies,
not Texas families, should pay for the pipeline regulation.
If we don't at very least propose the rule change,
how can we go back to the Legislature, next session,
and ask 'em, ask the people of Texas to fund this agency,
when we're not willing to do what's necessary
to fund ourselves.
And again, since this is commentary
toward some of the good suggestions you made,
I will second the motion that is made.
-: Okay.
And I appreciate that, and I think
we're trying to keep up with the Sunset recommendations,
which obviously took us eight years to get there.
This was part of it that they never took out for us.
So I think we've had a lot of conversations,
and I agree with you, with the Legislature,
spent a lot of time last session
about how we're gonna fund this agency.
And it's showing that our regulatory programs
are funded by people
that we provide the services to.
So the Legislature and the Texas taxpayers
don't have to fund those services.
I think this is part of that effort,
and I'm glad we're moving in the step
to do what the Legislature's asked us to do, quite frankly,
as we go forward.
So I look forward to the comments back.
I think it is always difficult
to increase, or add additional fees to people.
So I appreciate the comments, and I look forward to those.
So I'm gonna move that we put this out for comment.
-: Sorry, can I clarify, one second?
Because we've had two suggestions
that y'all wanted to remove the word requires
from the preamble.
And so I wanna make sure that the version that y'all sign
is what you wanna sign.
So do you want to remove the word "requires" from the preamble
or y'all moving forward with the preamble as is?
Wayne: I agree with Commissioner Sitton,
that "requires," if it's not in the law,
we shouldn't have it in ours.
We should match what the Legislature passed.
Christi: But I think you can say "authorizes,"
would be appropriate.
The "require" part, if we're going to do a fee,
"requires" is to pay,
to put a fee in place that pays for the whole program.
That's how I read the statute.
Is that correct? -: Yes, I think
our interpretation was that the effect
requires us to implement a fee,
because we have to get the money from a different fund
than we were before.
But the law itself does not say "requires," that's correct.
Christi: Okay.
So if you wanna tweak that, that might be helpful.
I think authorizes us, and then requires us to pay
for the fund, with a fund, pay for itself.
So however you wanna adjust that, that would be fine.
-: I'll just make it on this version
that I'm gonna bring to y'all in writing,
and then we'll make a correction when we file it.
-: Okay, that'd be fine.
So with that tweak--
-: Can I make one last comment?
I just wanna make sure,
I'm not opposed to, just to make sure,
I'm not opposed to us having, being a fee-based agency.
So I'm comfortable with fees,
I'm just not comfortable with the way
this presents itself right now.
So I wanna make sure
I'm clear about that. -: Yes, sir.
-: And I think it'd be helpful, that's why I think
companies of all sizes, I know we've started some feedback,
but I think it's important to get the feedback,
because we may see a different way to do things.
So with that, we've got a--
-: Second. -: Second?
I move we approve the staff's recommendation,
with the tweak you're gonna make for us.
Is there a second?
And we have one. -: Second.
-: All in favor say aye.
-: Aye. -: Aye.
-: Opposed? -: No.
-: Motion passes.
Thank you, Hailey, for the work on this.
Okay.
Alex, are you done?
Are you still up?
Okay, didn't know if you had anything else to report.
-: No. -: Okay, alright.
We're on 302.
Is that correct?
-: Yes. -: Did I skip something?
Okay.
-: Good morning, Chairman, Commissioners.
For the record, my name's Lori Wrotenbery.
I'm the Director of the Oil and Gas Division.
And item 302 is another Sunset action.
It is the Draft Oil and Gas Division
Monitoring and Enforcement Strategic Plan
for Fiscal Year 2019.
And today what we're doing is asking your approval
to make the draft plan available for public comment.
Once finalized, this plan will be the Commission's first
annual Oil and Gas Division Monitoring
and Enforcement Strategic Plan,
as required by House Bill 1818.
The plan is intended to set goals for, and measure
the effectiveness of the Commission's Oil and Gas
monitoring and enforcement activities.
To develop this plan, the Commission staff
convened a work group of about 15 employees
from the Executive Office, the Oil and Gas Division,
the Office of General Counsel,
and the Information Services Technology Division.
The work group met five times between October and February.
And we are very thankful for the contributions
of all of the members of the work group,
but in particular, we wanna thank Colleen Forest.
Right here, you moved up.
Colleen Forest, who shared her strategic planning
and performance measurement expertise with us,
and also, through her organizational skills,
helped to keep us on track and on schedule
in development of this plan.
House Bill 1818 requires the Commission to seek input
from stakeholders when developing the plan.
With your approval, we will make the draft plan
available for public comment, for about a month,
through April 20th.
Members of the public who are interested in providing input
will have a couple of options:
they'll be able to file comments online
through a survey mechanism, and they also will be able
to submit written comments through the mail.
The final version of the plan has to be posted
to the Commission's website by July 1st.
So we plan to bring to conference
on June 5th, the final version of the plan
for your approval.
That final version will reflect the public comments
that we've received, and it will also include
updated data and projections on the performance measures.
And with that, we're available to answer questions.
-: Thank you.
Are there any questions?
I appreciate the work y'all have done on this,
and again, more things from Sunset,
that we'll go, moving forward.
So I move we approve staff's recommendation.
Is there a second?
-: Second. -: Second, Commissioner Sitton.
All those in favor, say aye.
-: Aye. -: Aye.
Motion passed, this item is approved.
Thank y'all for the time.
Alright, item 303.
Good morning, gentlemen.
How are you?
-: Good morning, Chairman, Commissioners.
For the record, I'm Clay Woodul
with the Oil and Gas Division.
Item 303 is the oil field cleanup program
status report for the second quarter of fiscal year 2018.
I will present the well plugging report,
and Peter Pope will present the site remediation portion.
During the second quarter, plugging operations
were completed, and files were closed
on 350 wells, at a cost
of $4,564,560.
This includes only those wells that were plugged,
invoiced by the plugging contractor,
and approved for payment by field operations.
During this same period, 524 new wells were approved
for plugging, with State funds.
The fiscal year to-date totals through the end
of the second quarter, includes 571 wells completed
with files closed, and 934 new wells
approved for plugging with State funds.
As of last Friday, March 16th,
722 wells have been physically plugged
at an estimated cost of $11.1 million.
The well plugging target for fiscal year 2018
is 1,500 wells.
I'll now turn over the presentation to Peter Pope.
-: Good morning, Chairman, Commissioners.
For the record, I'm Peter Pope,
Manager of the Site Remediation section.
During the second quarter of fiscal year 2018,
Site Remediation completed and closed 40 activities
at a cost of $410,018.89.
We also authorized an additional 60 activities.
And at the end of the quarter, we had 93
authorized activities that remain to be completed.
Year-to-date, we've completed 56 activities,
at a cost of $645,359.
And as of March 16th, last Friday,
we had completed another 13 activities.
So year-to-date, we have, well as of Friday,
we have a total of 69 activities at an approximate cost
of about $650,000.
And on top of that, we have an additional 29 activities
that are completed in the field,
we're just waiting to make final payments on the invoices.
May I answer any questions?
-: I have a question.
So clearly, we got pretty aggressive.
Can we hit our numbers?
I know we start slow and then we finish heavy,
finish fast at the end.
Right?
-: The summer seems to be our, the warmer weather,
the longer days, historically,
we really do a great job in our districts.
As you can tell by the numbers,
our districts are out there.
They're doing a great job for us.
We've got 25 rigs currently running across the State,
and as you, the earlier item,
we're looking to put some more out there.
So we're going to do everything we can
to meet that target number.
-: Great.
Well both of y'all, thank you very much.
Any questions?
Alright, thank you. -: Thank you.
-: Alright.
Item 304 is our public participation item,
and nobody's turned in cards indicating
they wish to speak.
On posted items, under items 305 and 306
are our executive session,
which we are going into executive session.
So having duly convened in an open notice meeting,
the Railroad Commission now, at 10:15
on Tuesday, March 20th, 2018,
will hold a closed meeting in the Willa May Conference Room
on the 12th Floor of the William B. Travis
State Office Building,
pursuant to the Texas Government Code chapter 551.
The Commission will discuss personnel matters
and possible candidate interviews
related to the position of Executive Director,
pursuant to section 551.074 of the Code.
The Commission will reconvene the open meeting
in the Willa May Conference Room,
on the 12th floor of the William B. Travis
State Office Building.
Thank you, we are recessed.