-: 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 October 30th, 2018.
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.
Remember to turn off your cell phones
and before we get started we've got a lot of
service awards and recognition,
so we are gonna start with that.
-: Good morning, chairmen and commissioners,
today I'm here to present Outstanding Service Awards
for Fiscal Year 2018.
Each division director will present
the awards for their division.
Rich Parsons, our Director of Communications,
could not be here today,
on his behalf, I would like to present
the first Outstanding Service Award to Michelle Banks.
(applause)
Rich asked me to say a few words.
Michelle will never ask you for
kudos, compliments, or credit,
what she will ask you is how can I help you,
what can I do for you?
Michelle epitomizes what this award is all about:
outstanding service.
Whether you're a coworker or a customer,
Michelle will always find a way
to make your task easier or your goal more achievable.
We see many Commission projects and initiatives succeed
thanks to Michelle's critical eye
and solution-oriented actions,
and so today, we give you the kudos, compliments, and credit
that you never ask for but that you deserve
thanks to your commitment to serving the Railroad Commission
and the state of Texas.
(applause)
On behalf of Human Resources,
I would like to present the next award
to Wendy O'Neill.
This Fiscal Year has included
several large Human Resources projects
that affect employees and managers statewide.
Wendy has traveled to almost every district office
to ensure the launch of new policies and systems
are clear and understood by all employees.
Through these efforts, managers have received
numerous training sessions that have never
been made available to them before.
In addition to this, Wendy was instrumental
in the rewrite of the employee handbook.
She did more than 10 employee handbook trainings
with our managers at the Commission
to ensure that everyone understands the new policies.
I greatly appreciate the energy and enthusiasm
Wendy brings to our HR Department.
(applause)
Next we have Randall Collins, our Chief Operating Officer,
to present awards for the Hearings Division.
-: I'm gonna do my two sort of together,
not because I want to confuse them in any way,
however, they're two of the people in our division
that are behind the scenes.
Those of you who have attended conferences
on a regular basis see the ALJs and technical examiners
getting all the glory while they're up here,
but behind the scenes, the people taking the phone calls
from the operators, from the people involved in the dockets,
and handling everything from updating our technology
to computerizing our statistics
and two of the first people in the Hearings Division
that are gonna go out of their way
not only to serve all our stakeholders,
but also to make sure that everything
runs smoothly on conference days.
Those two are Joseph Benefee, if you would,
and David Cornet.
(applause)
(mumbling) (laughter)
(applause)
-: Next is Carrie French,
from the Oversight and Safety Division.
-: Good morning, chairmen, commissioners, everyone here
for this celebratory occasion,
I have several employees I'd like to recognize
and we'll start with Andrea Maxwell.
(applause)
Andrea is an extremely reliable and quick-learning employee
who works as a research specialist
on the Tariff Analyst Consumer Complaints Team
for Market Oversight and Safety.
Earlier this year, she was made
acting team lead as role outside of her normal job duties,
and she did an excellent job,
so she has since then been promoted,
and she's given this outstanding award
in recognition for her attitude and performance
as acting team leader.
(applause)
I'd like to ask Bruce Waterman to come up.
(applause) There he is.
Bruce is being recognized for the outstanding service
that he provided to the Commission
during the recent transition to
a new Pipeline Online Permitting System.
His leadership, dedication, expertise, and long hours
make him deserving of this award.
His dedication to serving our customers
throughout this transition has been extraordinary,
thank you, Bruce.
(applause)
Bruce: Thank you.
Carrie: Christie Schultz.
Bruce did not do it alone.
Christie Schultz is being recognized
for her dedication and leadership role
in the development of the updates
to the Pipeline Online Permitting System
that were all required due to recent rule changes.
She was instrumental in determining
necessary improvements to the system,
and worked with pipeline safety team
to coordinate the workflow.
Her attention to detail, oversight of the mapping process,
and teamwork make her truly deserving of this award.
Thank you, Christie.
(applause)
Teresa Osborne.
Teresa is an exceptional inspector
for our AFS group, Alternative Fuels.
She has consistently exceeded expectations
on her inspections and field percentages
for the past two years.
This past year, she also covered
the adjoining district due to a vacancy.
We appreciate your hard work, thank you, Teresa.
(applause)
Garnet Cantwell.
(applause)
A popular choice, Garnet is being recognized
for her outstanding attitude,
her commitment to customer service,
and I'm talking about customer service
for those of us who work here
and for those of us outside the Commission.
She has a constant willingness to go the extra mile
to ensure that not only her job, but our job,
is done in an efficient and quality manner.
She is the glue that holds our division together.
Thank you, Garnet.
(applause)
I'm gonna call the next two up together,
because, while I'll recognize them individually,
they are also a great team,
Josh Sedel and Yolanda Davis.
(applause)
Josh and Yolanda are both in our audit group,
they're both in the Fort Worth area,
and today they're being recognized for their audit work,
which consistently exceeds requirements,
and not only a very high quality,
but the quantity of their work is impressive, also.
This recommendation isn't for any specific event,
but for consistent dedication and commitment
to the success of our audit program.
Thank you so much, Josh and Yolanda.
(applause)
I have one more, and I don't know if he is here,
and if he's not, I hope if he makes it in time,
he's stuck on I-35, we can address it then.
Chris Mann?
No, not yet.
So hopefully at the end, thank you.
(applause)
-: Good morning, chairmen and commissioners,
I've got two employees for my group I'd like to recognize.
First is Jessica Mendoza.
(applause) Jessica?
Jessie is an attorney in the Legal Enforcement section
of the Office of General Counsel.
Jessica has recently worked hard
to improve enforcement practices
involving permitting facilities.
Her outstanding efforts include
visiting facilities in several districts,
analyzing inspection procedures for the facilities,
and working with inspectors and technical permitting
to identify issues and solutions.
Thank you, Jessica.
(applause)
Thanks, Jessie.
Next is Natalie Dubil.
(applause)
Natalie is an attorney in the General Law section
of the Office of General Counsel.
In the past year, Natalie has assumed
primary legal responsibility for
the Oversight Safety Division,
with emphasis on supporting gas utility rate cases.
Her hard work and exceptional customer service
have transformed the role of staff counsel on rate cases
and her dedication and support have been recognized
by not only her internal clients in division,
as well as outside attorneys.
Thank you, Natalie.
(applause)
-: Good morning, chairmen, commissioners.
We have two employees from the
Surface Mining Division to recognize today,
the first of which, Sharon Walter.
(applause)
So for you all old enough to remember the TV show, MASH,
you remember the guy, Radar, okay,
this is not Radar.
(laughter)
She knows the answer before the question.
And the attitude, the outstanding effort she gives,
makes our jobs so much easier, so much smoother,
and I'm really proud to have her receive this award.
Thanks, Sharon.
(applause)
My next employee is Kimberly Jackson.
(applause)
(laughter)
Well, she's not here today, but
let me just say something about her in her absence,
she came to us about a year ago from the division,
and this is an example of from team to agency,
the transition she made from one division to another,
and the attitude and effort she gave is outstanding,
and if you see her around the hallways,
tell her congratulations and I'll pass it onto her.
Thanks, Kimberly.
(applause)
(laughter) -: I have a lot.
Good morning, commissioners.
The first person I have is,
this is for the whole Gas Division,
the first person I have is Christian Astorga.
(applause)
Chris Astorga is responsible for
improving the accuracy and reliability
of complex groundwater determination
by transforming the GAU from
predominately two-dimensional analysis
to three-dimensional modeling organization.
Must be a smart guy. (laughter)
(applause)
(mumbling) (laughter)
The next person I have is John Tucker.
(applause)
John is familiar with Visual Basics,
Python scripting for Arc GISSQL
and the current practice for coding,
data analysis, and data management.
These skills have yielded several
successful products for the Commission,
including three major products during the Fiscal Year.
(applause)
(laughter)
Sharon Fishin.
(applause)
And I pronounced it right.
Sharon is extremely enthusiastic about her position
and always portrays positive personality and attitude.
Sharon's work ethic and willingness to be team player
has especially supported the department.
She is a true asset to the Commission.
Thank you.
(applause)
Deborah Desmuke.
(applause)
During the Fiscal Year of 2018,
Deborah has assumed the role of quality control agent.
Deborah's role plays an integral part
in the final review process.
This role demands a high level of
professionalism, accuracy, and attention to detail.
Deborah is a model employee,
putting the needs of the Commission first.
Thank you.
(applause)
Roseanne Acosta.
(applause)
Roseanne has assisted 200 operations
during Fiscal Year 2018,
gaining compliance with Oil and Gas SWR15.
Roseanne's ability to accurately comply with
complex rules and regulations to the industry
is invaluable to the department.
Roseanne is always willing to share her knowledge with staff
and is the first to take on
additional roles and responsibilities.
Thank you.
(applause)
Amanda Kent.
(applause)
Amanda voluntarily stepped up to maintain OCP processes,
monitor Project Matt assignments
and train new staff after the
previous OCP team lead retired.
Thank you.
(applause)
I was just thinking about what my wife did last night,
I'm having trouble reading, I guess 'cause I'm too young,
but she started laughing last night,
looking at the laptop or whatever you call it,
you know, and wanted me to look at it,
and it was a field of dirt and on the bottom it said,
"maze for the elderly."
(laughter)
And there was one cornstalk.
(laughter)
Okay, the next one is Brooklyn Clement.
(applause)
Brooklyn is the engineering specialist three
technical staff person in Corpus Christi.
She was recently commended by two individuals
that contacted the Corpus Industry Office for assistance,
both parties praised her for her
excellent customer service and professionalism.
Miss Clement is a model of exceeding the agency's goal
for providing excellent customer service.
Thank you.
(applause)
Clayton Farmer.
(applause)
I worked with Clayton in Kilgore,
Clayton is one of the reasons
Kilgore is such a good place to work.
When I got there Clayton was an inspector,
and had showed some interest in going into plugging,
became a plugger and is one of the reasons
we made our goals of,
we had a goal of 259, we did 263,
and a lot of that was because of this man here.
Thank you.
(applause)
Michael Sorenson.
(applause)
Micheal is another one of the employees
that I worked with in Kilgore,
he's more or less what I would call
the brains of the district.
Michael, if he doesn't know,
he will find out anything you wanna know.
He's a very, very good tech there
and has done a wonderful job.
Thank you, Mike.
(applause)
Stephanie Carball.
(applause)
Stephanie has assisted the staff service officer
and performed her duties during her absence.
Some of her qualities are communication
and the answering of our phone.
She developed calls received by the answer service
for entry into ICE,
and ensuring the proper coverage of administrative staff
during hours of operation without hesitation,
which maintained efficiency.
Thank you.
(applause)
Have I left anybody out of Oil and Gas?
Woman: I think we're good.
-: Am I good?
Okay.
-: Good morning, commissioners.
First off, I'd like to thank you
for allowing us to do this ceremony today,
building a culture for results-driven performance.
I think the first step is to recognize
the outstanding performance of our employees,
so thank you.
The first person I nominated is Olan Magnimura.
Olan is on our staff.
(applause)
Olan is one of our technical staff on Oil and Gas Division,
and because of his work, in addition
to his regular job duties,
they also serve as subject matter expert for W3A project
and his contribution was instrumental
in the success of that project.
Thank you.
(applause)
So I had this crazy idea last year
that I thought maybe we should do
a leadership training program for employees,
and very quickly, I was overwhelmed
with all the work and timeline
and picking the curriculum,
so I enlisted the help from Jamie Andrews,
and Lisa Wilmore,
and they just took and ran with it,
and in August, when we officially launched the
Grow With RRC Program,
and we currently enroll 46 employees in the program.
So we're really excited to see
people going through that program
and look forward to the result.
Thank you, please come up.
(applause)
(mumbling)
(applause)
Lorenzo Garza is our manager
for the Drilling Permit Department,
and under his leadership, our Drilling Permit Department
set a record for last quarter, and also the year.
We're currently processing drilling permits
at just nearly one business day, so.
Thank you, Lorenzo.
(applause)
(mumbling)
(chattering)
Yes, if the Drilling Permit Team,
thank you, please come up.
(applause)
(mumbling)
(applause)
And y'all heard me say this many times last year,
in FY18 we've plugged 1440 wells,
and the only reason we were able to do that
is the hard work in our district offices,
the state management and plugging team,
and we have five district offices
that exceeded their number for FY18,
which helped with our total goal.
So, I'm gonna ask them to come up, one at a time,
so the first one I'm gonna have is
Corpus Christi Well Plugging Team.
(applause)
Man: You are the Corpus Christi team?
(laughter)
-: There you go.
-: Alright, thank you.
And then we have the Kilgore plugging team,
I think Clayton is representing.
(applause)
Next one is Abilene District Office, Tim Rhymer.
(applause)
And from San Angelo, we have Ronald, Jack, and Vivian.
(applause)
-: Thank y'all.
-: Oh, we got a new thing.
-: Yes. -: A really big thing.
(applause)
-: Last but not least, we have
ED and Joan from Wichita Falls.
(applause)
-: Thank you.
(mumbling)
(applause)
-: But wait, there's more.
Alright, I'd like Chris Mann to come up.
(applause)
Not only is Chris Mann an exceptional field inspector
for alternative fuels,
he can battle that I-35 traffic
and still get here before we're done.
(laughter)
I think that's fair.
He's very willing to help train new inspectors
and answer questions that others might have
when they seek his advice.
He's also very willing to help in all areas
as the need arises.
He consistently exceeds expectations
on his goals and everything we ask him.
Thank you so much, Chris.
(applause)
-: Thank you all, you're an amazing group of people,
we appreciate everything everybody does.
You see, the drilling team's already gone back,
they've got to get more permits out.
(laughter)
Thank y'all for everything,
and thank you to our leadership team
for doing outstanding service.
Glad to do that.
(mumbling)
-: Alright, good morning.
Got everybody cleared out. I think.
Good morning.
-: Good morning, chairmen and commissioners,
my name is Claudia Gadoy,
and I'm representing the Market Oversight Section
of the Oversight and Safety Division.
Before you today is Gas Utilities Docket 10734,
the application of Hugh's Natural Gas Incorporated
for the Test Year 2017,
annual interim rate adjustment,
for the unincorporated areas
of the company's service area.
This docket is the fifth interim rate adjustment
the company has filed for the unincorporated areas
since the final ordered was issued in
Gas Utilities Docket 10190.
The adjustment represents an incremental increase
of 129,968 dollars, of which 116,582 is allocated
to the unincorporated customers.
I recommend approval for the
interim rate adjustment as proposed,
I'm available to answer any questions.
-: [Commissioner Craddick] Thank you Claudia,
are there any questions?
I move we approve the examiner's recommendation,
is there a second?
-: [Commissioner Sitton] Second.
-: [Commissioner Craddick] Second Commissioner Sitton,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, thank you. Claudia: Thank you.
-: Good morning, how are you?
-: Good morning, chairmen and commissioners,
for the record my name is Dana Louis,
Administrative Law Judge with the Hearings Division.
Item number two is Gas Utility Docket 10738,
a statement of intent filed by T&L Gas
to increase rates in the environments
in the city of Conroe and Montgomery County, Texas.
Staff intervened, and after the parties engaged
in discovery and negotiations,
the unanimous settlement agreement was reached
that resolved all issues.
The settlement includes an increase
in current annual revenue of 88,616 dollars,
approves a system replenishment fee,
and rate case expenses.
T&L'S revenue calculations reflect
the corporate tax rate of 21% passed in the
Tax Cuts and Job Act of 2017.
The parties timely filed joint exceptions,
no replies were filed.
After review and consideration of the exceptions,
non-substitutive corrections were made
to certain pages of the proposal for decision,
and clarifying language was added
to the proposed final order.
The examiners recommend the Commission
approve the terms of the settlement agreement,
as reflected in the final order.
I'm available for questions.
-: [Commissioner Craddick] Thank you.
I have one quick question, just because I've seen it.
A system replenishment fee,
will you explain why we're doing that,
I've just never seen that in that case before.
Dana: So I've only seen that in this particular case,
they had one in the previous docket
that was previously approved,
and staff recommended in this case
to continue with that system replenishment fee.
-: Okay, alright, thank you.
Are there any other questions?
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, item was approved, thank you.
Item number three.
Kyle: Good morning, commissioners.
Kyle Love, the Administrative Law Judge
with the Hearings Division.
Item three is an application by
Texas Municipal Power Agency, they're 10PA,
requesting release of phase one reclamation obligations
for 655.9 acres within the
Gibbins Creek 95 permit number 38D,
located in Grimes County.
The acreage proposed for release
is comprised of various parcels located
in the central and southwest portions of the permit area.
The approved post 99 uses include
pasture land, develop water resources,
and industrial-commercial.
Staff based on its review of the application
and multiple field inspections of the area,
recommends approval of phase one release
for 654 acres and denial of release for 1.9 acres
due to the absence of soil testing data.
In support of finding of that the top four feet
of post mound soils are free of acid
or toxic-forming materials.
TNPA agrees with staff's position,
and indicates the 1.9 acre parcel
will be addressed in a future release
after remediation of the area is complete.
After notice, no comments or request
for hearings were received,
TMPA and staff are the only parties due to proceeding.
No changes should occur in bond instruments
requested in this docket,
no exceptions were received in response
to the proposed order.
The 1.9 acre parcel is recommended for denial
without prejudice so that TMPA
may refile for release.
I recommend approval for phase one release
for the 654 acres, along with an
eligible bond reduction amount totalling
5,689,535 dollars and 41 cents.
I'm available for questions.
-: [Commissioner Craddick] Thank you,
are there any questions?
I move we approve the examiner's recommendation.
-: Second.
-: Second, Commissioner Sitton,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, item is approved,
thank you, Kyle.
Morning, Clayton.
-: Good morning, chairmen and commissioners.
Item number four is a complaint concerning a
rule eight permit for a brine pond
to be constructed in Houston,
2.4 miles south of the Astrodome,
as part of a salt cavern oil storage facility.
Complainant is a citizen's group
from City Council District K,
where the pit is to be located.
It contends the permit must be terminated
because notice was not proper
and the Commission lacked jurisdiction.
Rule 8 6 C requires notice
to be sent to the city clerk,
or other appropriate official.
Houston does not have a city clerk.
It has a city secretary, Anna Russel,
the city official who routinely distributes legal notices
to the appropriate district council members.
She's been city secretary for 64 years,
she never received notice from Fairway.
Instead, in response to rad letters
and conversations with staff on
numerous, mostly-unrelated issues,
Fairway's employee decided to send notice
of its application to HTC Utilities/Stormwater Analysis
to the attention of analyst in that department,
with whom Fairway was working for stormwater permits.
Complainants show that the city charter
and the city ordinances do not include such department,
or someone in the analyst position,
as an official of the city.
Complainant presented the testimony of District K residents,
including a city council member,
to show that those affected never received notice
as they would have if Fairway had simply
served Anna Russel, the city secretary.
Complainant contends that because
Fairway did not comply with the notice requirements
of rule eight,
the Commission had no jurisdiction
to issue the permit,
and the permit must be terminated.
Fairway relies on the purported approval of such notice
by Railroad Commission staff,
and the issuance of the permit by the Commission
as evidence of its compliance.
Fairway had the responsibility to comply
with the plain and simple language
of Statewide Rule 8 6 C, but they did not.
Basic legal principles of due process and notice
require that notice be proper
in order for the Commission to have jurisdiction
to issue a permit such as this.
Those in city council District K
never learned of Fairway's application
because of the defective and possibly
misleading notice procedure.
The recommendation is to find that Fairway
did not satisfy the notice requirements
of Statewide Rule 8 6 C,
and to terminate the permit for the ready brine pit.
Exceptions and replies were filed
but raised no issues of law or fact
not previously considered.
I'm available for questions.
-: [Commissioner Craddick] Thank you,
are there any questions?
So Randall, I want to clarify,
I'm looking at Statewide Rule eight E,
and it says we can modify, suspend, or terminate, correct?
A permit.
So we can actually, if we decide to suspend the permit
instead of terminate,
can y'all explain to me the procedure for that.
Randall: If the commissioners chose
to suspend the permit,
it would be suspended until
further action is taken by the Commission.
So in this case, they would have to go back in
and provide notice to the city of Houston,
and if anybody chose to protest it, at that point,
we would conduct a hearing just like we would
for any other contested matter.
Once that's concluded, and the PFD is written,
the Commission could then choose
to lift the suspension,
and proceed on with the application itself.
It would also, the commissioner chose to suspend it,
I believe it would allow all parties
to update or to modify the current application,
that could also be done during
the process of the suspension,
but it would take, if it is suspended,
it would take a further order by the commissioners
to lift that suspension and grant them a PFD
or granting them the permit itself.
-: [Commissioner Craddick] And they'd still have to have
appropriate notice before we could do anything,
because I think we all agree notice is important.
But it wouldn't necessarily have to go back
through all the technical review,
assuming they didn't modify their permit, correct?
For staff reasons, we've already done
some of the technical review, correct?
-: Assuming there's no modifications
or revisions to the application, yes.
That would also be addressed,
that if it was protested, some issues could arise
because of the lapse of time,
that may require some modifications,
but if there are no modifications,
I don't believe there'd be any
additional staff review for the technical specifications
that weren't in the application.
-: [Commissioner Craddick] Okay, alright.
I'm more inclined to suspend this than terminate it,
if anybody's inclined.
So I've got a motion to nix it.
-: I agree with that, but just one question, I think.
Randall, Clayton, let me ask you,
I wanna make sure I understand,
the citizens in District K that were concerned about this,
assuming that we suspend this
and ensure that proper notice is now given,
they'll have the same opportunity
as they would have had in the beginning,
in other words, they're not missing any opportunity
to protest this case if we suspend it
versus what happened in the beginning, correct?
-: I believe that's correct.
-: [Commissioner Sitton] Okay, just wanted to confirm it.
-: [Commissioner Craddick] Great.
So I'm gonna move that we suspend the permit
rather than terminate it.
Is there a second.
-: Second.
-: Second by Commissioner Christian,
all those in favor say aye.
-: Aye. -: Aye.
Motion is passed, this item is approved to that extent.
Thank you, Clayton, for your work.
Item number five, good morning, and how are you?
Jennifer: Good, good morning, commissioners,
my name is Jennifer Cook with the Hearings Division.
In Item five, Annette Ferrell filed a complaint,
claiming Gannett Operating LLC
does not have a Good Faith claim
to operate the Holcomb A lease in Young County.
Complainant is the surface owner of
part of the tract comprising the lease,
and requests the Commission order Gannett
to plug the two disposal wells on complainant's property.
Complainant asserts the contractual lease
relied on by Gannett has terminated for lack of production.
The lease has not been productive since June 2017.
Gannett contends the contractual lease is not terminated.
Gannett provided testimony and documentation
showing complainant's son,
who is the prior surface owner
and lives on the property,
has interfered with Gannett's operations,
preventing Gannett from operating.
For example, Gannett provided a final judgment
that contains a permanent injunction
against the complainant's son,
preventing him from interfering with Gannett's operations
and assessing him over 15,000 in economic damages.
Gannett plans to do secondary recovery operations
on the lease.
The examiners recommend the Commission
deny the complainant's request.
Examiners recommend the Commission find Gannett provided
a reasonably satisfactory showing
of a Good Faith claim to operate the lease.
No exceptions were filed and I'm available for questions.
-: [Commissioner Craddick] Thank you, Jennifer.
Are there any questions?
-: [Commissioner Sitton] No.
-: [Commissioner Craddick] I move we approve
the examiner's recommendation, is there a second?
-: Second.
-: Second by Commissioner Sitton,
all in favor say aye.
-: Aye. -: Aye.
-: Motion passes, item was approved,
thank you.
Item number six.
-: Good morning, chairmen and commissioners,
my name is Lynn Latomb,
I'm here to present Items six through 10,
all of which are P5 motions for rehearing.
Item number six is a motion for rehearing
filed by Philmar on August 21, 2018.
The final order was entered by the Commission,
denying the renewal of the operator's
P5 organization report,
because the operator has wells
noncompliant with Statewide Rule 15.
In this motion the operator states
they are working to complete all requirements.
Philmar explains it failed to be in compliance
because the contractor they hired to do their paperwork
lost their paperwork.
Staff responds that two wells are noncompliant.
It is recommended that the motion be denied.
The motion will be overruled by operation of law
on November 29, 2018.
I'm available for any questions.
-: [Commissioner Craddick] Thank you,
are there any questions?
-: [Commissioner Sitton] No.
-: [Commissioner Craddick] I move we approve
the examiner's recommendation, is there a second?
-: Second.
-: Second by Commissioner Christian,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, item was approved, number seven.
-: Item number seven is a motion for rehearing
filed by Restoration Energy LLC on August 21, 2018.
A final order was entered by the Commission,
denying the renewal of the operator's
P5 organization report
because the operator has wells
noncompliant with Statewide Rule 15.
In its motion, the operator explained
it has failed to be in compliance
because the operator had to travel out of state
due to the sudden illness of an immediate family member.
Staff responds that 26 wells are noncompliant.
It is recommended that the motion be denied.
The motion was overruled by operation of law
on November 29, 2018.
I'm available for any questions.
-: Okay, are there any questions?
I move we approve the examiner's recommendation,
is there a second?
-: [Commissioner Sitton] Second.
-: Second by Commissioner Sitton,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, item was approved, number eight.
-: Item number eight is a motion for rehearing
filed by CEI Operating LLC.
On August 21, 2018, a final order
was entered by the Commission,
denying the renewal of the operator's P5 report,
because the operator has wells noncompliant
with Statewide Rule number 15.
In its motion the operator explained
it failed to be in compliance
because the landowners denied access to the property.
Staff responds that five wells were noncompliant.
It is recommended that the motion be denied.
The motion is overruled by operation of law
on November 29, 2018.
I'm available for any questions.
-: [Commissioner Craddick] Okay, are there any questions?
I move we approve the examiner's recommendation,
is there a second?
-: [Commissioner Christian] Second.
-: Second by Commissioner Christian, all in favor say aye.
-: Aye. -: Aye.
-: Motion passes, item was approved--
-: Chairman?
-: Oh, I'm a representative from CEI,
may I have a chance to speak?
-: Thank you, I don't have anything
that you signed in to speak,
does anybody want to hear from this gentleman?
Thank you, I think we've taken a vote,
we appreciate you being here though.
Number nine.
-: Item number nine is a motion for rehearing
filed by CWOC on August 21, 2018.
A final order was entered by the Commission,
denying the renewal of the operator's
P5 organization report
because the operator has wells
noncompliant with Statewide Rule number 15.
In its motion the operator states
it is working to complete all requirements.
Staff responds that six wells are noncompliant.
It is recommended that the motion be denied.
The motion is overruled by operation of law
on November 29, 2018.
I'm available for any questions.
-: [Commissioner Craddick] Are there any questions?
I move we approve the examiner's recommendation,
is there a second?
-: Second.
-: Second by Commissioner Sitton,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, item was approved, item number 10.
-: Item number 10 is a motion for rehearing
filed by Oz Gas Cooperation.
On August 21, 2018, a final order
was entered by the Commission,
denying the renewal of the operator's
P5 organization report,
because the operator has wells
noncompliant with Statewide Rule 15.
In its motion, the operator states
that it failed to timely file its paperwork
because it lost files after the death
of its previous owner in 2009,
and had a reduction in staff.
Staff responds that 27 wells are noncompliant.
It is recommended that the motion be denied.
The motion is overruled by operation of law
on November 29, 2018.
I'm available for any questions.
-: [Commissioner Craddick] Thank you,
are there any questions?
I move we approve the examiner's recommendation,
is there a second?
-: Second.
-: Second by Commissioner Sitton,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, item was approved.
Thank you, Lynn.
Lynn: Thank you.
-: Item number 11.
-: Good morning, chairmen and commissioners,
for the record, Christie Reave,
Administrative Law Judge with the Hearings Division.
I will be presenting items number 11 through 28.
Item number 11 is an enforcement action
against Jet Black Oil inc.
for violations of Statewide Rules
on a five mile unit lease.
Enforcement presented Commission records
consisting of mainframe prints
and Commission district inspection reports
in support of the allegations.
Jet Black stated it is not the responsible party,
as it has not been an operator since 2015.
Jet Black asserts it was a contract operator
for the mineral rights owner, Capstone Innovations,
and in August of 2014, the mineral right holder
released the minerals to the landowner
and they assumed operator and ownership
of the mineral rights.
A Commission form P4 was submitted
to transfer the subject lease.
However, the assuming operator lacked
a Good Faith claim to operate the lease,
and the P4 could not be approved.
Stacey Rice, the individual appearing
on behalf of Jet Black,
stated that he should not be found to be
in a position of ownership or control,
as he ceased working for Jet Black
a few months prior to the closing down of the company.
The most recent Commission form P5
lists Mr. Rice as an officer of Jet Black.
It is recommended that the Commission find
that Jet Black is the responsible operator,
and find Jet Black responsible for the violations
of Statewide Rules that have occurred
as described in the PFD
and the Commission assess a penalty
of 20,609 dollars against Jet Black for violations
and order Jet Black to place the lease
and the wells in compliance with
Commission rules and statutes.
Exceptions and replies were filed,
I'm available for questions.
-: [Commissioner Craddick] Thank you,
are there any questions?
-: [Commissioner Sitton] No.
-: [Commissioner Craddick] I move we approve
the examiner's recommendation, is there a second?
-: [Commissioner Christian] Second.
-: Second by Commissioner Christian,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, item is approved.
Items 12 through 16 you're gonna present together.
-: Yes ma'am.
At their request, Sinclair Oil and Gas Company in 4/7,
a hearing was noticed, providing applicants
the opportunity to show five subject applications
filed under the mineral interest pooling act, MIPA,
should be approved,
creating five pooled units within
the city limits of the city of Big Spring,
made up of approximately 8,000
individually owned tracts of land.
It is what as known as a rooftop play.
Successfully done by applicants
in the city of Fortworth and surrounding suburbs
in Tarrant and Johnson Counties
for the Barnett Shale Resource Play.
In this case, the rooftop play
is the city of Big Spring,
whose minerals are stranded due
to the large leased acreage surrounding the town.
Applicants were successful in leasing
and or purchasing the mineral rights
to approximately 6,000 of the approximate 8,000 tracts.
Applicants assert that force pooling is necessary,
given the complexity of the urban location.
The hearing was uncontested.
Numerous letters of support for
approving the applications were received.
Applicants provided sufficient evidence
to show that granting pooling
would prevent waste, protect correlative rights,
and avoid the unnecessary drilling of wells.
However, the proposed unit sizes
are in excess of the acreage limit described
in section 102.011 of the Texas Natural Resources Code.
But for the size of the units,
the examiners would recommend approval of the applications.
However, based on recent Commission action,
the examiners recommend the Commission
deny the applications.
Exceptions were filed, I'm available for questions.
-: [Commissioner Craddick] Thank you,
are there any questions?
-: Yeah, Christie, I wanna make sure.
You go to some length in the PFD
to talk about the fact that
all of the provisions were met,
I wanna make sure I understand your logic here,
it's simply recent Commission precedents,
in other words, other votes we've taken,
that cause you to arrive at this conclusion,
not the provisions of the MIPA pact?
Christie: Correct. -: Okay.
Christie: And it depends,
there is some controversy as far as the interpretation
of Natural Resources Code 102.011,
which is the area that talks about the sizes of the unit.
There is an argument in .014B
that that's a muscle-in provision,
and allows the Commission flexibility
in altering the size limits created
in that other section.
The applicants also argued that
the Commission can look at section 85
of the Natural Resources Code to prevent waste
as another way to alter what it states
in section 102.011.
However, in August of last year,
the Commission voted that that language
should be strictly construed,
and that is the reason for the recommendation today.
-: No protestants in this case.
Christie: That's correct.
-: Okay, 80% of the minerals released,
did I read that correctly?
Christie: At least 80%, yes sir,
and they still had a presence on the ground
when we went to hearing on this,
two years prior to filing an application,
they opened an office right across the street
from the Walmart in the city of Big Spring,
put up billboards, were sending news,
you know, advertisements in the newspaper,
so it is certainly possible that
they have leased up additional acreage since that hearing,
but at the time of the hearing,
they had at least 80%.
-: [Commissioner Sitton] You're talking about
some of the ways, if I can remember the numbers right,
that if we're able to apply MIPA, in this case,
they would drill five wells,
if we don't, they would have to drill
something like 18 wells,
which has the chance of making
this entire development uneconomic.
Christie: Correct.
-: Okay.
-: [Commissioner Craddick] I have a question,
it seems to me, before we can even apply MIPA,
for the first time, instead of looking at fields,
which the Spraberry Trend is clearly
an older field than 1961,
they looked at reservoirs, correct?
Christie: Yes ma'am.
-: That's how you got to this,
because the first time we've ever
not looked at a field, but looked at a reservoir,
that I'm aware of.
Christie: Yes ma'am, the MIPA statute
only applies to reservoirs discovered after March 8, 1961.
The issue though, with the Spraberry Trend area field
is it's a consolidation of a bunch of other fields,
all with different discovery dates.
And because of technology
and how it has changed since the sixties.
So in the sixties, when MIPA would have been written,
a reservoir was just that pool underground.
And now with fracking and horizontal wells,
those boundaries aren't the same
as what they used to be.
So with the Spraberry Trend area field,
you have an initial field that was
discovered in the fifties,
and then all of these fields that were surrounding it,
that have through various Commission orders,
been moved into the Spraberry Trend area field.
So, the question raised at the hearing by applicants was,
do you then date back the entire field
to the inception of the original Spraberry,
or do you look at now what would be considered
the correlative interval, where they're looking at,
which had a field discovery date much later?
-: [Commissioner Craddick] So would your order
apply just to the correlative field that they're looking at,
or the entire Spraberry Trend?
-: I believe that their argument
was sufficient to apply it to
the entire Spraberry Trend Field,
that certainly is something for
you all to make a decision on.
In my understanding, it's something of first impression,
and it is not something that will not
be seen again in the future,
it's just something that people
are going to keep bumping up against
with these fields that are now
consolidations of multiple fields
with all different discovery dates.
-: [Commissioner Sitton] Did they lease the entire
minerals in this area,
or just certain trend areas?
Christie: So, their applications state
that they're for the Spraberry Trend area
rule 40 exception field.
There was nothing in the evidence
that they presented that limits depth
within the Spraberry-- -: [Commissioner Sitton] Okay.
-: They in fact had some evidence
where they showed where they were planning
on initially drilling,
and that initial one is gonna be
into the wolf camp, which was discovered in the eighties,
but they plan to do, I believe, six laterals
for each of these,
so they will hit different correlative intervals
within the Spraberry Trend area field.
-: [Commissioner Christian] Now Chairman,
I wanna respect our staff tremendously
for the recommendations,
and hearing that a large part of this decision
is a part of our previous vote on the issue,
I'll be voting to deny the recommendation.
Now, let me just real quick say first,
no one protested this,
second, if the application's approved,
a significant amount of additional minerals
will likely be produced,
third, in this case, relatively large
mineral rights owners forced pooling
small mineral rights owners,
instead of the reverse in the previous decision,
and last, it's not known yet
whether the wells will be oil or gas wells,
and unit sizes in the application comply
with what is allowed for gas wells
under the MIPA statute, so,
I'll be opposing staff, respectfully.
Christie: Thank you, sir.
-: I will too.
I agree with Commissioner Christian.
-: Does anybody have a motion?
-: I'll make a motion.
I move that we deny staff's recommendation,
and instead approve the MIPA proposal
per the details outlined in the PFD.
-: Second.
-: Alright, we have a motion and a second,
are there any other questions?
Alright, all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, item was approved.
Christie: Okay.
Randall: Chairman, if we could have
a point of clarification on an item.
You have denied what the relief requested,
was there any form of alternative relief
that y'all were seeking,
or just a denial of the recommendation
of the ALJ?
-: Yes sir, I was looking that we would
actually grant the application for MIPA.
-: Yes, I'd like to use the word approve.
Randall: Okay, so if you're going to,
we would submit a proposed order
that would replace the conclusion of law number six,
with the conclusion of law sent to
the examiner's proposed orders,
and replace--
Christie: Replacing number six
and adding an additional seven and eight.
-: Seven and eight to comply
with the exceptions filed by the applicant.
If that's agreeable, then we'll
submit that substitute order.
-: [Commissioner Sitton] That's perfect.
-: [Commissioner Christian] Agreed.
-: [Commissioner Craddick] So is that clear?
Do we need to re-do the motion?
Or is everybody clear where we are?
Randall: I think we're clear,
I think since y'all voted to approve it,
then deny theirs but approve another one,
the substitute one will come forward.
-: Okay. -: Thanks, Christie.
-: Thank you very much.
Now you have 17 through 28, alright.
Christie: Yes ma'am.
So items number 17 through 28
are Motions for Rehearing,
and will be presented together.
These dockets are the result of
a Good Faith claim complaint filed by
the trustee of one of the mineral owners.
On August 21, 2018, the Commission entered
an order, finding Top Op does not have
a Good Faith claim right to operate
various leases in Victoria County, Texas.
The order followed Top Op's failure to respond
to the Hearings Division's request for evidence
of its Good Faith claim, or request a hearing.
Top Op filed a motion for rehearing.
It was discovered at that time
that the address to which Top Op
was sent correspondence was defective.
The complainant did not file a reply.
It is recommended the motion be granted.
I'm available for questions.
-: [Commissioner Craddick] Thank you,
is this the last one?
We'll fix the problem, right?
Great, any questions?
-: [Commissioner Sitton] No.
-: I move we approve the examiner's recommendation,
is there a second?
-: [Commissioner Sitton] Second.
-: Second by Commissioner Sitton,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, items were approved, thank you.
Christie: Thank you very much.
-: We're going to the Oil and Gas consent agenda,
items 29 through 44,
there are 16 items on this part of the agenda,
I move we approve Items 29 through 44,
is there a second?
-: [Commissioner Christian] Second.
-: Second by Commissioner Christian,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, all those items are approved.
Master Default Item Orders, there are 12.
Items 45 through 56,
I move we approve Items 45 through 56,
is there a second?
-: Second.
-: Second by Commissioner Sitton,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, those items are approved.
Agreed Enforcement Orders, 160 of these,
I move we approve Items 57 through 216,
is there a second?
-: Second.
-: Second by Commissioner Christian,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, those items are approved.
That concludes hearing session, thank you, Randall.
-: Good morning, chairmen, commissioners.
For the record, Wei Wang, Executive Director.
As of last Friday, our agency had 750 employees,
and we're projecting by the end of November
we should have somewhere close to 760.
And so we continue to make progress on the hiring front,
and for our well plugging program,
as of last Friday, we plugged 228 wells for the year,
and again, our goal for FY19 is 1,560 wells
for a total of 3,000 wells.
The drilling permit department
and other technical permitting departments
still make progress in reducing
the turn around time for permit processing.
Currently, we're at one business day
for the drilling department,
and for the groundwater advisory unit,
we're at four days for regular letter,
and three days for expedited letter.
We have so far conducted 22,000 inspections,
33,576 wells and facilities,
so we're also making progress on the inspections.
So our goal for the year is to
reduce wells that have not been inspected
in the last five years to 20% from 33%,
which was where we ended from last year.
Things are going well, and we continue to hire employees,
and conduct more inspections,
and with a results-driven mentality,
we think that FY19 will be
an even better year than what we had in FY18.
Thank you.
-: [Commissioner Craddick] Thank you, good process.
Thank you for doing the outstanding service awards,
I had missed doing those.
I'm glad to put them back in place.
Some good people, thanks.
Oh, sorry about that, skipped you, morning.
-: That's alright, Corey Crawford, Chief Financial Officer,
staff seeks your approval for the
2018 Annual Financial Report.
You've got a copy there in your binder.
This report presents the 2018 financial information
using the generally accepted accounting principles
established by the governmental accounting standards board.
I'd be happy to answer any questions if y'all have any.
-: [Commissioner Craddick] Thank you,
are there any questions?
-: [Commissioner Sitton] Nope.
-: [Commissioner Craddick] Alright,
I move we approve this, is there a second?
-: [Commissioner Sitton] Second.
-: Second by Commissioner Sitton,
all those in favor say aye.
-: Aye. -: Aye.
-: Thank you, Corey, for your work.
Paul.
Wouldn't skip you.
-: Good morning, chairman and commissioners,
for the record my name is Paul Delaney,
I am the Internal Auditor for the Railroad Commission.
Section 2102 of the Texas Government Code
requires each state agency to prepare an annual audit plan,
and then submit a copy of that plan
to the state auditor's office by November 1 of each year.
As a result of that requirement,
I have conducted an agency-wide risk assessment,
and based upon the risk assessment,
I developed the audit plan that you have before you.
If any of the proposed audits are not completed in FY19,
they'll be rolled over into the following year's audit plan.
I'm requesting that the proposed audit plan be approved,
and I'm available to answer any questions.
-: [Commissioner Craddick] Thank you, Paul,
are there any questions?
Alright, I move we approve staff's recommendation,
is there a second?
-: Second.
-: Second by Commissioner Christian,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion was approved, thank you for your work.
Paul: Thank you.
-: Now Alex.
Alex: Good morning, chairmen and commissioners,
for the record my name is Alex Shock, General Counsel
for the Railroad Commission of Texas.
We don't have anything specific
for Item 220, which is the rules and regulations,
but we do have some rule-making regarding 221,
which will be presented by David.
-: [Commissioner Craddick] Good morning, David.
David: Good morning, chairmen, commissioners.
David Cooney from the Office of General Counsel.
I'm here requesting that the Commission
authorize our executive director to sign,
along with the executive directors of the PUC and the TCEQ,
a letter transmitting comments of the TCEQ,
which we support,
regarding the regulation of greenhouse gases
at existing electric generating units.
The highlights of the comments are,
I've got three highlights of the comments,
the rule is premature because
TPA's legal foundation for regulating in this fashion
is currently in litigation in the DC circuit.
There are questions about the necessity
of some of the information requests that
are embedded in the rule,
and there are questions about the cost estimates
to the states for providing the
information that's requested in the rule.
So I'm asking that the Commission
authorize Mr. Wang to sign or transmit a letter,
we'll get it to the TCEQ,
and those comments will get filed.
I'm available for questions.
-: [Commissioner Craddick] Thank you,
are there any questions?
Thank y'all for staying on top of this
and working through it.
-: Yes ma'am.
-: [Commissioner Craddick] Appreciate it.
I move we approve the staff's recommendation,
is there a second?
-: Second.
-: Second, Commissioner Sitton,
all those in favor say aye.
-: Aye, -: Aye.
-: Thank you.
Morning, Vanessa.
-: Vanessa Burgess, Assistant General Counsel for the record,
Item 222 on the agenda pertains to
commissioner approval of certain contracts
pursuant to the Commission's delegation of authority,
and Section 2261.254 of the Texas Government Code.
The Commission's internal delegation requires
commissioner approval of contracts
greater-than or equal to 500,000 dollars,
and section 2261.24254 of the Texas Government Code
requires approval of contracts greater than one million.
At issue today, our new master service agreements
for the site remediation section,
and an agreement related to the purchase
of agency fleet vehicles.
Approval of this item today will ensure
agency operations remain on schedule,
and the necessary approvals will be in place,
pursuant to the Commission's delegation and state law.
A summary of these agreements,
including contract number and amount,
were included in your notebooks.
Staff asks the Commission approve these agreements
pursuant to the Commission's delegation of authority.
-: [Commissioner Craddick] Thank you,
are there any questions?
I move we approve the staff's recommendation,
is there a second?
-: [Commissioner Christian] Second.
-: Second by Commissioner Christian,
all those in favor say aye.
-: Aye. -: Aye.
-: Motion passes, item was approved.
Thank you for you work. Vanessa: Thank you.
-: Alright, Alex, you didn't have anything else?
Item 223 is our public participation item,
and no one has turned in any cards
that they wish to speak on any non-posted items.
Item 224 is our Executive Session item,
which we will not be going into today.
Are there any other duly posted matters
you've brought for the Commission at this time?
Hearing none, the Commission is adjourned.
Thank you all for your work.