The document discusses the role and responsibilities of the Texas Railroad Commission (TRRC). It notes that while called the Railroad Commission, the TRRC no longer regulates railroads and instead regulates the oil and gas industry, gas utilities, pipeline safety, liquefied petroleum gas, and surface coal and uranium mining in Texas. It oversees divisions related to oil and gas production, pipeline safety, liquefied petroleum gas transportation and storage, and surface mining. The TRRC is an elected body that aims to prevent waste of natural resources and protect property rights related to oil and gas production in Texas.

1. © 2015 Mark Miller
Mark Miller, PhD, PE
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 Wikipedia:
 “The state agency that regulates the oil and gas industry,
gas utilities, pipeline safety, safety in the liquefied
petroleum gas (LPG) industry, and surface coal and
uranium mining.”
 Despite its name, the last railroad-related
responsibilities were removed in 2005
 The TRRC actually stopped regulating railroads in 1984!
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 Oil & Gas Division
 Prevent waste of the State’s natural resources
 Protect correlative rights of different interest owners
 Prevent groundwater pollution
 Provide for public safety
 Regulate injection wells (under federal program)
 Oversight & Safety Division
 Provide for safety of intrastate pipelines
 Regulate city-gate and unincorporated area gas utility rates
 Regulate storage, transportation, and use of LPG, CNG, and LNG
 Alternative Fuels Research and Education
 Public outreach and education on use of LPG, CNG, and LNG
 Surface Mining and Reclamation
 Regulate surface mining of coal and uranium
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 Part of Texas’ plural executive, which includes:
 Secretary of State (appointed by Governor)
 Lieutenant Governor
 Attorney General
 Comptroller of Public Accounts
 Commissioner of the General Land Office
 Commissioner of Agriculture
 Railroad Commissioners (3)
 State Board of Education (15, elected from districts)
 Railroad Commissioners are elected to rotating 6-yr
terms, one every 2 years
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 Ryan Sitton (2020)
 Asset Integrity (mechanical) engineer from Houston
 Texas A&M BS Mechanical Engineering
 Christi Craddick, Chair (2018)
 Attorney, Midland native, daughter of Tom Craddick (former
Speaker of Texas House of Representatives)
 UT Plan II, Law School graduate
 David Porter (2016)
 CPA from Midland
 Harding University BS Accounting
 The only petroleum engineer to serve as Railroad
Commissioner (1947-63) was Bill Murray, UT MSPE 1937
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 Established in 1891 to regulate railroads
 Expanded to oil pipelines (1917), oil and gas production (1919),
natural gas delivery systems (1920), bus lines (1927), trucking (1929)
 Following the Splindletop discovery in 1901, Texas, by 1930, had
become the #1 oil producing province in the world
 A series of regulatory “crises” ensued after the East Texas field
was discovered in 1930
 Subsequent legislation established the Commission’s right to
prorate oil, eventually for both physical and economic reasons
 From 1930-70 the TRRC managed the world’s oil surplus
 Consistently sought to protect independent oil companies and
mineral rights owners from unrestrained competition
 Rationale – unregulated production brings chaos – i.e., normal
economic considerations are precluded because oil is discovered, a
problem exacerbated by the legal principal of rule of capture
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 Huge!
 45 miles long by 12 miles wide, extending across five counties
 7 billion barrels originally in-place, 5.4 billion barrels produced to date
 Less than a year after discovery:
 Producing > 1 million barrels of oil per day
 A new well was being completed every hour!
 Kilgore at one time had 1000 producing oil wells in its downtown.
 Poorly understood (at the time) geologic trap (interestingly, source
rocks are Eagle Ford shale)
 Major companies failed to acquire leases
 Regulatory issues were complicated by the (controversial and poorly
understood at the time) strong waterdrive
 Oil prices fell from $1.10 per barrel to less than $0.10 per barrel
 So much chaos (caused by large diversity of ownership) that in 1931,
Texas Gov. Sterling sent in the National Guard and Rangers to enforce
martial law
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3.4 million
BOPD
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0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
TexasProduction,MillionsofBarrelsperDay
1998
Mar 2015:
3.6 million
barrels per day
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0
2
4
6
8
10
12
14
1900 1920 1940 1960 1980 2000 2020
USPetroleumProduction
BarrelsofOilEquivalentPerDay
Crude Oil
Natural Gas
Texas produces ~30%
of US oil and gas

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What happened to
Dallas and Ft Worth?
Ft Worth Dallas
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$2.9 million to Wise
County family

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Near Weatherford, TX

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Near Azle/Reno, TX

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 Rapidly advancing new technologies
 Of which large portions of the public are fearful
 Means that oil & gas will become more like manufacturing
than traditional explore & exploit
 Expanding geographic footprint of shale production
 Even though per-well footprint is greatly diminished
 Surface rights are increasingly severed from mineral rights
 Mineral rights are legally dominant in Texas
 Water issues (both usage and disposal)
 Increasing public visibility and distrust
 Perception that Commissioners are more beholden to the oil
& gas industry than to voters
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 Change the name to the Texas Energy Resources Commission
 Limit campaign contributions to 1.5 yrs before an election rather
than throughout full six-year terms
 Prohibit Commissioners from accepting contributions from
parties with contested cases
 Require resignation when a Commissioner becomes a candidate
for another elected office
 Require the Commission to adopt a robust recusal policy
 Transform the TRRC into an agency governed by a part-time
appointed board
 Transfer the Commission’s enforcement hearings to the State
Office of Administrative Hearings
 Transfer gas utility regulation to the Public Utility Commission
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 Human induced earthquakes
 Eminent domain
 Groundwater trespass
 Local control of oil & gas operations
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 Most recent serious controversy began after Azle/Reno earthquakes
Nov.2013
 Potential for seismic activity triggered by wastewater disposal (but not
fracking) well-known for at least 50 years
 Yet denied by the TRRC up until very recently
 Conditions that allow a priori predictions are yet to be determined
 Responses:
 TRRC hired a seismologist Apr.2014
 SMU, USGS, and U. of Texas published study Apr.2015
 Show-cause hearings held, but no action as yet
 Texas House approved $4.5 million for BEG earthquake studies
May.2015
 Meanwhile, there were more earthquakes in Johnson County and
elsewhere likely caused by wastewater injection
 Meanwhile, TRRC issued preliminary finding that wastewater injection
was most likely not responsible for the Azle/Reno earthquakes
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 Increase the reporting requirements for wastewater
injection wells
 Provide a liability system for earthquake damage
 Better public data collection, including monitoring of
seismic events
 Conduct studies (privately if at all possible) to establish
scientific relationships between injection and earthquakes
 Require wastewater disposal wells to be appropriately
located (geologically) so as to minimize earthquake risk
 As well as subject to emergency curtailment or rate/pressure
modification
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 Private common carrier pipelines have statutory
eminent domain authority in Texas
 Brought keenly to public attention by the Texas Rice
Land Partners Ltd. v. Denbury Green Pipeline case
decided by Texas Supreme Court Aug. 2011
 Authority to grant common carrier status is in statute,
but not with TRRC
 Denbury was not a common carrier, in spite of rulings by
both District and Appeals courts
 TRRC developed additional (inadequate) permitting
requirements in Oct 2014.
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 Transfer pipeline regulation to TxDOT
 Better diligence on common carrier status
 Penalties for negligently claiming common carrier status
 Provisions for relinquishing common carrier status
 Make land seizure a last resort not a first resort
 Require route-specific appraisals by pipeline operators
 Set seizure price at 150% of appraised value
 Require seizing entity to pay legal feels when price is
successfully challenged
 Encourage operators to use existing rights-of-way
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 TRRC has jurisdiction to protect groundwater from oil
and gas operations
 Lipsky case
 Methane in groundwater observed in Parker County
wells, possibly from nearby hydraulically-fractured wells
 TRRC issued several reports, finally concluding that the
gas was not a result of Barnett Shale production
activities ... and no further studies are planned
 Final TRRC report was largely unconvincing (to me)
 Defamation lawsuit against property owner still pending
 Meanwhile, there’s another similar case pending with
the TRRC from Palo Pinto County
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 Utilize Texas’ deep oil and gas bench for technical
studies
 Submit Commission reports to a peer-review process
 Allow hearings to be conducted by video conference
 Provide public-defender type counsel to claimants
with limited resources
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 Response to 2014 Denton fracking ban passed Nov.2014
 HB 40 expressly preempts local regulation of oil and gas:
 “... a municipality or other political subdivision may not enact or
enforce an ordinance or other measure ... that bans, limits, or
otherwise regulates an oil and gas operation ...”
 Exceptions, any ordinance that:
 “regulates only aboveground activity related to an oil and gas operation
... including a regulation governing fire and emergency response,
traffic, lights, or noise, or imposing notice or reasonable setback
requirements” and
 “is commercially reasonable” and
 “does not effectively prohibit an oil and gas operation conducted by a
reasonably prudent operator” and
 “is not otherwise preempted by state or federal law.”
 Went into effect 18.May.2015
 Vantage Energy resumed fracking operations 01.Jun.2015
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 Block grant fraction of severance taxes to local
jurisdictions
 So that risks and rewards are appropriately reconciled
 Change Texas statutes to better balance the rights of
surface and mineral owners by encouraging negotiated
solutions, e.g.,
 Royalty sharing between surface and mineral owners
 Per diem payments to surface owners during drilling and
completion operations
 Buyouts of surface property or subsurface rights
 Use the quasi-judicial role of the Railroad Commission
to resolve surface and mineral rights conflicts
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 Transparency
 Change the name:
 Texas Energy Resources Commission?
 Texas Energy Commission?
 Abandon Commission’s role as oil & gas industry champion
 Regulatory Reform
 Shed some current responsibilities, e.g., natural gas rate
setting, pipeline safety and permitting
 Sunset review regulations @ 20% per year
 Property Rights
 Increased attention to surface property rights
 Including recommendations for statutory changes
 Treat earthquakes and pollution as trespass issues
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