Press Release
From the Office of State Senator Glenn Hegar, District 18

For Immediate Release
April 15, 2011
Contact: Lisa Craven
(512) 463-0118

Texans will benefit from Railroad Commission Restructure and Revitalization

AUSTIN — In 1977, the Texas Legislature created the Sunset Advisory Commission to identify and eliminate waste, duplication, and inefficiency in government agencies. For over three decades, the 12-member Commission has reviewed the policies and programs of more than 150 state agencies, questioning the need for their continuation, looking for potential duplication of other public services or programs, and considering new and innovative changes to improve each agency's operations and activities. As a result of these efforts, Texas taxpayers have been the beneficiaries of over $783 million in savings and dozens of streamlined, more efficient state agencies and in several situations the absolute abolishment of entire state agencies that no longer benefited Texas taxpayers.

For the last year and a half, the operations of the 120-year-old Texas Railroad Commission have been scrutinized as part of the Sunset Commission's biennial review. As the State's oldest regulatory agency, the Railroad Commission's early history is rooted in the regulation of railroad rates and tariffs. Decades ago, the Commission stopped regulating railroads yet the Commission's outdated name has remained. Today, the Railroad Commission is charged specifically with overseeing Texas' oil and gas industry - a vital sector of the State's economy, though one that continues to be fraught with challenges in the 21st Century.

For most of its lengthy tenure, the Commission primarily interacted with oil and gas producers and citizens in rural Texas. Today, however, as technological advances allow oil and gas exploration in areas of the state previously thought to be economically infeasible, the Commission faces both a new set of regulatory challenges and a new constituency largely unfamiliar with the oil and gas industry.

The Sunset review of the Railroad Commission has occurred in the midst of these game-changing events, as oil and gas exploration continues to move into urban and suburban areas of the state, many times followed closely by public outcries against such development. Sunset committee members and staff evaluated the structure and functions of the Railroad Commission in the context of this new regulatory environment and identified several critical concerns with the agency's oversight, funding, and enforcement processes.

Although historic, the three-member, elected Railroad Commission is a true anomaly in Texas government. Few agencies have full-time boards and none of these boards have multiple members elected by statewide vote. In assessing this unique body and the need to bring the Railroad Commission into the 21st Century, the Sunset Commission found no ongoing need for a three-member, elected structure. In fact, critics would argue that the election of Commissioners conflicts with the agency's regulatory role, given the costs of a statewide campaign often rely on campaign contributions from the very industry it regulates. Compounding these concerns is the potential for voters and the public in general to be confused about the actual duties of the office given its outdated name. Interestingly, a recent unsuccessful candidate for the Railroad Commission even included railroad safety as part of his campaign platform, even though the Commission has absolutely nothing to do with railroad safety, much less railroads.

In years past, Railroad Commissioners were considered some of the most powerful officials in state government. They coveted their post and remained at the agency for years. In the last few decades, however, Railroad Commissioners have continually used their elected office as just another rung on the political ladder in their pursuit of higher office. One commissioner stepped down mid-term to seek the Senate seat currently held by Sen. Kay Bailey Hutchison and a second commissioner is, right now, seeking the very same seat. This revolving door fosters the perception that the duties of Railroad Commissioner are unimportant. We as a legislature have allowed this by sustaining an environment in which three very big political fish sit in the same pond with a wandering eye toward the quickest and easiest way to jump to the next and bigger one.

A potent testament to the problems this environment creates is found in a letter from a former Railroad Commission employee: "As the former director of a large, dynamic Commission District Office, I was faced with dealing with three "bosses" on a daily basis. The political nature of the three Commissioners often leads to conflicting mission goals, challenging decisions based on dubious rationale, and financial wastefulness. As an example, one commissioner may champion technology at the expense of other capital spending, while another commissioner may simultaneously support badly-needed field vehicles instead of computers, while the third commissioner may well be campaigning for a third program, perhaps additional staff in the field."

Moving to a single commissioner will provide the public, industry, and legislature with a single point of accountability, foster coherency in direction at the agency, and save the state over $1.2 million annually, a critical savings at a time when cuts to our education budget threaten the employment of our prized public school employees.

Another unusual aspect of the agency's structure relates to its funding. While the estimated $186 billion oil and gas industry makes a significant contribution to the State, the Commission relies on General Revenue to fund almost half of its more than $50 million budget for this industry's oversight. In contrast, most other state regulatory agencies are required to be self-supporting and are not subsidized by taxpayer dollars. This current funding model also limits the agency's ability to react as fluctuations in the industry occur, such as the need for more inspectors when drilling unexpectedly expands.

It is because of these compelling reasons that the members of the Sunset Commission voted overwhelmingly, not only to change the name of the agency to the more accurate Texas Oil and Gas Commission, but to make more than just cosmetic changes by reworking key structural elements of the agency so it can better fulfill its mission as our State's primary regulator of the oil and gas industry. The Sunset Commission's decision to move from three statewide elected officials to one statewide elected official was bold and historic. The decision was entered into with the full knowledge that it would be met with resistance. Nevertheless, the change is a necessary one if we are to ensure true accountability within the renamed Texas Oil and Gas Commission, which must meet the very tall test of balancing the protection of Texans and our environment while at the same time ensuring that the oil and gas industry remains vibrant in Texas. For these reasons and more, as Chairman of the Sunset Commission, I filed legislation so that these recommendations could become law.

Senate Bill 655 passed the Texas Senate with strong bi-partisan support by a vote of 28 to 3. I am proud of my Senate colleagues who joined with me in taking these bold and historic steps in making the regulation of our state's oil and gas industry more efficient and self-supporting. The matter is now being considered by the Texas House of Representatives and it is my hope that House members will join with us to revitalize the agency charged with protecting Texas citizens, our natural resources, and one of our State's most vital industries.

Senator Hegar served two terms in the Texas House of Representatives and now represents Senate District 18 in the Texas Senate. He is a sixth generation Texan, and earns a living farming on land that has been in his family since the mid 1800's. He currently resides in Katy, Texas with his wife Dara, and their three children, Claire, Julia, and Jonah.