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We'll begin momentarily.
Thank you for your patience.
-: Now, is everybody in place and can you see me?
-: Yes, sir.
Callie: Everybody looks fabulous this morning.
Good morning, this is Callie Farar, Commission Secretary.
I will be serving as the meeting moderator
for today's conference.
Just a few reminders for those speaking today.
When it is your time to speak you will be transferred
over to video at the necessary time and if needed.
Please remember you'll also need to remove yourself
from mute for the audience to hear you.
The Commission does reserve the right to remove any audio
or video sharing capabilities from any person if needed.
Chairman and Commissioners,
we are ready to begin when you are.
-: Before we begin our meeting officially,
I want to ask those who would like to please join me
in just a word of prayer.
Father, we come to you this morning recognizing
an attack upon us as a country, as a industry.
Father, where there are decisions to be made
that we need your counsel
and for this morning we know that we are your people
and our pledge is to the flag,
it specifically says one nation, one state under God.
So come to you confessing that we are looking for an answer
which we ask you to provide
and as your people, called by your name,
we are humbling ourselves before you
and asking for guidance.
And we hope and pray that you'll give us the answer
to the situations we have in the emergency
both the disease, the virus and give us wisdom
that only your counsel can provide.
In your name I pray, amen.
-: Amen.
-: Members, this is Chairman Christian
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 April 21, 2020.
Under our Public Participation Policy
anyone desiring to offer public testimony
on any item that were not noticed on today's agenda
was required to register in advance.
We did not have anyone
registering in advance for this meeting.
Commission will consider the Items Only Agenda
as posted on the agenda.
Before we get started on today's open meeting,
I wanted to make another moment
to acknowledge the elephant in the room.
West Texas Intermediate traded as low as
negative $40 yesterday,
was in the positive the last I heard a few moments ago.
But according to our primary vision
over the course of the last five weeks
the rig count is down 33%, fracking jobs are down 50%.
This drop in price and reduction in production
unfortunately means harm to Texas jobs and our economy.
There is no simple answer during this time,
but the Texas Oil and Gas industry is resilient
and full of hardworking, creative professionals
that solve problems for a living.
While this is a dark time for our energy producers
in our economy I have not doubt
once this COVID-19 has rescinded
and America's back to work a rebound will occur.
This is not gonna be easy, will not happen over night,
but Texans will rebuild this industry
which has quite literally changed worldwide power dynamics
and surrounding energy policy.
We will discuss this more once we get to Item 309 and 310.
Before we begin business as usual I wanted to make sure
everyone who's watching knows that our agency
is not taking this issue lightly
and our hearts are with the thousands of Texans
dealing with job loss and uncertainty during this time.
Callie, please call up the presenter for Agenda Item One.
Callie: Yes, thank you.
Agenda Item Number One, Dee Marlo Chico presenting.
You are invited to speak.
-: Good morning, Chairman and Commissioners.
-: Good morning.
-: My name is Dee Marlo Chico, Administrative Law Judge
with the Hearings Division.
Item Number one is a gas utility rate case
that resulted in a settlement
between NatGas Incorporated and Staff.
NatGas filed its statement of intent on September 27, 2019
to increase rates in and around
the unincorporated community of Ozona, Texas.
The examiners recommend approval of this settlement
as set forth in the proposed final order.
The settlement represents diverse interests
and the parties have engaged in significant discovery
regarding the issues in dispute.
The deadline for Commission action is April 23, 2020.
I'm available for questions.
-: Are their any questions, members?
I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
-: Second Commissioner Sitton.
All those in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, that item is approved.
-: Callie, please call up Item Number Two.
-: Thank you, Dee. -: Okay.
Agenda Item Number Two,
John Dodson is presenting.
You are invited to speak.
-: Good morning, Chairman and Commissioners.
I'm Administrative Law Judge, John Dodson,
with the Hearings Division.
Agenda Item Two, GUD 10900, is a rate case
filed by Atmos Energy's, West Texas Division.
Atmos seeks to establish cost-based rates
for it's Triangle Distribution System
for 10 transportation customers
currently paying market-based rates.
Commission staff intervened,
as well as a coalition of 70 effected cities.
Ultimately, the parties reached a settlement
resolving all issues and agreeing to the establishment
of cost-based rates for the Triangle.
Premised on the revenue requirement of $7,681,934
which is a decrease in annual base revenue
provided from current market-based rates.
Parties also agreed that the Triangle is properly treated
as a natural gas distribution system
for rate making purposes
and that its acquisition by Atmos in 2003
was in the public interest.
The recommendation is to approve the settlement.
Today is the last scheduled conference
prior to the deadline for Commission action
and I'm available for questions.
Wayne: Are there any question?
Callie: This is Callie.
Really quickly, this is Callie, a moderator.
Ann Coffin on behalf of Atmos Energy has registered
and is available for questions if needed.
-: Are there any questions members?
-: No.
-: I hear none.
I move the recommendation of the Examiner's recommendation,
I move...
I move the approved Examiner's recommendation.
Do I hear a second?
-: Second.
-: Second, by Commissioner Craddick.
All in favor say aye.
Members: Aye.
-: Opposed?
No, I didn't vote no, aye.
That item is approved unanimously.
This is not comfortable, not being able to see you guys.
-: Thank you, John.
-: Thank you.
-: Callie, please call up the presenter
for Item Number Three.
Callie: Certainly, Agenda Item Number Three
presented by Kyle Lebby.
You are invited to speak.
-: Good morning, Chairman and Commissioners.
Kyle Lebby, Administrative Law Judge.
Item Three is an application
by San Miguel Electric Cooperative, Inc.
in question Release of Phase II Reclamation Obligations
on 477.7 acres within the San Miguel C-Area Mine,
Permit Number 52A located in Atascosa County.
The approved post-mine land use
for the acreage is pastureland.
Evidence in record indicates that reclamation activities
related to revegetation and surface water protection
as required for Phase II Release have been accomplished
in accordance with the terms of the approved permit
and the regulations.
After notice, no comments
or requests for a hearing were received,
San Miguel and Staff are the only parties to the proceeding.
No exceptions were filed.
No changes to the current bond instrument are requested
in this docket.
The subject area is bonded
based upon the worst-case bond method.
Therefore, San Miguel is not eligible
to reduce the amount of bond for the permit
based on the release sought in this application.
Phase II Release of the 477.7 acres is recommended.
I'm available for questions.
Wayne: Are there any questions?
-: No. -: No.
Wayne: No questions.
I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
-: Second by Commissioner Sitton.
All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, that item is approved.
-: Thank you, Kyle.
Kyle: Thank you.
Callie: All right, moving right along.
Conference Agenda Item Number Four,
presented by Veronica Ruberto.
You are invited to speak.
-: Good morning, Chairman, Commissioners.
For the record, Veronica Ruberto, Administrative Law Judge
with the Hearings Division.
I will be presenting Items Four through Eight.
Item Number Four is an application
by Luminant Mining Company, LLC
for Release of Phase I, II and III
Reclamation Obligations for an aggregate 516.34 acres,
Permit Number 34F within Monticello Winfield Mine
located in Titus and Franklin Counties.
There are five approved post-mine land uses
within the subject area; pastureland,
fish and wildlife habitat, develop water resources,
forestry and industrial-commercial.
Evidence in the record supports Luminant
has satisfied all requirements
for the requested release of the subject area.
After notice, no comments
or requests for a hearing were received.
Staff and Luminant are the only parties to the proceeding.
No exceptions were filed.
No changes to the current bond are requested in this docket.
It is recommended the request for Phase I, II and III
Release for the subject area be approved
and that Luminant be eligible
to reduce the amount of bond for the permit
that is attributable to the subject area.
I'm available for questions.
Wayne: Thank you.
Are there any questions?
-: No.
-: I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
-: Second by Commissioner Craddick.
All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, that item is approved, Callie.
Callie: Thank you.
Veronica, if will continue with Agenda Item Number Six,
you're invited to speak.
-: I have not presented Item Number Five.
Callie: My apologies.
I'm trying to move along too quickly, here.
(she chuckles)
Agenda Item Number Five, thank you.
-: Item Number Five is an application
by the Sabine Mining Company
for Release of Phase I Reclamation Obligations
for 76.6 acres, Permit Number 55A within Rusk Mine
located in Harrison, Panola, and Rusk Counties.
The approved post-mine land use
is fish and wildlife habitat.
Evidence in the record supports Sabine
has satisfied all requirements
for the requested release of the subject area.
After notice, no comments
or requests for a hearing were received.
Staff and Sabine are the only parties to the proceeding.
No exceptions were filed.
No changes to the current bond are requested on this docket.
It is recommended that the request for Phase One Release
for the subject area be approved
and that Sabine be eligible to reduce the amount of the bond
for the permit that is attributable to the subject area.
I'm available for questions.
-: Any questions, members?
-: No.
-: I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
-: Second by Commissioner Sitton.
All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, that item is approved.
Callie.
Callie: Yes, thank you.
Agenda Item Number Six, Veronica,
if you will still please continue.
-: Item Six is an application
by San Miguel Electric Cooperative, Inc.
for Release of Phase I Reclamation Obligations
for 100.4 acres, Permit Number 52A,
within San Miguel Lignite Mine, Area C
located in Atascosa County.
The approved post-mine land use
within the area is pastureland.
Evidence in the record supports San Miguel
has satisfied all requirements
for the requested release of the subject area.
After notice, no comments
or requests for a hearing were received.
Staff and San Miguel are the only parties to the proceeding.
No exceptions were filed.
No eligible bond reduction amount
is attributable to the acreage
requested for Phase I Release
because the bond has been calculated
with the worst-case pit bond method.
It is recommended that the request for Phase I Release
for the subject area be approved
and that San Miguel is not eligible.
to reduce its bond amount at this time.
I'm available for questions.
-: Are there any questions?
-: No. -: No.
Wayne: I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
-: Second by Commissioner Craddick.
All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, that item is approved.
Callie, please call up Item Seven.
Callie: Thank you, Agenda Item Number Seven.
Veronica, if you will still please continue.
Thank you.
-: Item Number Seven is an application
by the Sabine Mining Company for Release of Phase I,
II and III Reclamation Obligations for 24.6 acres,
Permit Number 33I within South Hallsville,
Number One Mine located in Harrison County.
The approved post-mine land use within the subject area
consists of industrial and commercial.
Evidence in the record supports Sabine
has satisfied all requirements
for the requested release of the subject area.
After notice, no comments
or requests for a hearing were received.
Staff and Sabine are the only parties in proceeding.
No exceptions were filed.
No changes to the current bond
are requested in this docket.
It is recommended that the request for Phase I, II
and III Release for the subject area be approved
and that Sabine be eligible to reduce
the amount of the bond for the permit
that is attributable to the subject acreage.
I'm available for questions.
-: Are there any questions, members?
-: No. -: No.
Wayne: Hearing none,
I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
-: All in favor, the second by Commissioner Sitton.
All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, that item is approved.
Callie, please call up Item Eight.
Callie: Agenda Item Number Eight, Veronica,
if you will still please continue.
-: Item Number Eight is an application by Marshall Mine, LLC
for the Renewal/Revision/Expansion of Permit Number 59,
Consolidation of Permit Numbers 57 and 59
and Release of Existing Bond for Permit Number 57
within Marshall Mine and Marshall Mine facilities
located in Harrison and Panola counties.
The proposed permit area as revised, expanded
and consolidated consists of approximate 3,025 acres.
Marshall has selected Caddo Creek as its mine operator
and proposes to mine approximately 1.8 million tons
of lignite during the five year permit term.
Marshall requests release of the amount of bond
for Permit Number 57 which is currently bonded at 200,000.
Permit Number 59 is currently bonded at 30 million
exceeding the minimum required bond amount
for this subject application.
Evidence in the record supports that Marshall
has satisfied all requirements for the requested mining
and reclamation operations within the proposed permit area.
The only parties to the proceeding are Marshall and Staff.
All comments after public notice
are addressed in the proposed order.
No exceptions were filed.
No hearing on the merits was held.
It is recommended Marshall's application
be approved with the adoption
of permit provisions contained in Appendix One
and soil testing plan contained in Appendix Two.
The existing bond for Permit Number 57 be released
and that Permit Number 59 be renumbered
as Permit Number 59A.
I'm available for questions.
-: Are there any questions?
I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
-: Second by Commissioner Craddick.
All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, that item is approved.
Callie, please call up Items Nine and 10.
-: Thank you, Veronica.
-: Yes, thank you.
Callie: Agenda Items Number Nine and 10.
Peter Buva will be presenting.
You are invited to speak.
-: Good morning, Chairman, Commissioners.
My name is Peter Buva, Technical Examiner
with the Hearings Division.
I will be presenting Items Number Nine and 10 together.
Items Number Nine and 10 are applications
by Boykin Energy, LLC for two new,
noncommercial disposal wells.
For each well, Boykin requests authority to dispose
a maximum of 20,000 barrels per day of produced water
into the Delaware Mountain Group formation
and a maximum surface injection pressure at 1,100 psig.
The application is protested by Colgate Operating, LLC.
The protestor maintains that Boykin's
two proposed disposal wells would endanger Colgate's
underlying oil and gas formations.
According to Colgate,
there are naturally occurring
fractured zones in the vicinity
of the proposed injection wells.
Protestant's concern is that the graben-like fractured zones
could potentially serve as a conduit
and push the injected water from the Delaware Mountain Group
down to the Upper Wolfcamp Formation,
thereby, harming Colgate's production.
Boykin presented evidence
addressing each of the requirements
in the Statewide Rule Nine regarding protestant's concern
about graben-like fracture zones.
Examiners find that these wells
given their distance from the fractured zones
would not generate sufficient pressure
to impact the Wolfcamp Formation.
Examiners recommend approval of the applications.
Exceptions and replies have been filed.
I'm available for questions.
-: Callie.
Callie: If I may (audio echoing drowns out speaker)
George Neale and Seth Crawford on behalf of Boykin Energy
and John Hicks from Colgate Operating are all registered
and are available for questions if needed.
-: Okay, are there any questions for George, Seth,
Doug or John on this agenda item, members?
-: No.
-: Okay, I hear no questions.
This is Agenda Item Number Nine and 10.
I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
Second.
-: Okay, a second by Commissioner Sitton.
All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, those items are approved.
Callie, please call up the presenters
for Agenda Items 11 through 13.
-: Thank you, Peter.
Callie: Okay, thank you.
Yes, hopefully, my-
-: Better.
Callie: Better, good.
(she chuckles)
Jennifer Cook is presenting Items Number 11 through 13.
You are invited to speak.
-: Good morning, Chairman and Commissioners.
I am Jennifer Cook, an Administrative Law Judge
with the Hearing Division.
I am presenting Items 11 through 13 together.
Items 11 through 13 regard an enforcement case
alleging violations of Commission rules
by Votaw Production Company, LLC.
Commission staff initiated this case claiming Votaw
is responsible for violations of Statewide Rule 14(b)(2)
on three leases and an additional violation
of Statewide Rule 3-2 on one of the leases.
Staff requests that the Commission assess a penalty
in the amount of $24,155,
order Votaw to flood the subject wells
and place the leases in compliance with Commission rules.
Staff provided Commission records and workplace violations.
Staff provided evidence that penalty requested
is consistent with the Commission's practice
in Statewide Rule 107.
Votaw maintains it has made efforts to achieve compliance.
It maintains the penalty amount requested is unwarranted
considering the efforts that it's made.
It is recommended that the Commission find the violations
of Statewide Rules have occurred as alleged,
assess a penalty of $24,155
and order Votaw to plug the wells
and place the leases in compliance with Commission rules.
Exceptions and a reply were filed
and I'm available for questions.
-: Are there any questions, members?
-: No. -: No.
Wayne: I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
-: Second by Commissioner Craddick.
All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes.
-: Thank you, Jennifer.
Callie: Yes, thank you.
All right, Item- -: Please call up.
Callie: Yes, Agenda Item Number 14
presented by Joe Menefe.
You are invited to speak.
-: Good morning, Chairman, Commissioners.
For the record, Joe Menefe,
Paralegal in the Hearings Division.
I'll be presenting Items 14 through 16
all of which are P-5 Motions for rehearing
filed as a result of a final order denying renewal
of the operator's P-5
because of wells noncompliant with Statewide Rule 15.
Item Number 14.
In its motion, Guardian Energy Operating Company, LLC
states it needs more time to come into compliance
but it does not give a reason
for failure to request a hearing.
Staff opposes the motion.
Two wells remain noncompliant.
It is recommended the motion be denied.
The motion will be overruled
by operation of law on April 23rd.
I'm available for questions.
Wayne: Are there any questions?
-: No. -: No.
Wayne: I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
-: Second by Commissioner Sitton.
All in favorite say aye.
Members: Aye.
-: Any opposed?
Motion passes, that item is approved.
Please call up, Callie, Item 15.
Callie: All right, continuing Joe Menefe
presenting for Agenda Item Number 15.
-: We lost Joe.
There he is.
Callie: Okay, welcome back.
-: Item Number 15 in its motion for rehearing
LT Oil, LLC states that due to medical problems
the operator has been unable to address compliance issues
and needs more time to come into compliance,
but fails to give a reason to request a hearing.
Staff opposes the motion.
10 wells remain noncompliant.
It is recommended the motion be denied.
The motion will be overruled
by operational of law on April 23rd.
I'm available for questions.
-: Any questions, members?
-: No.
-: I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
-: Second by Commissioner Craddick.
-: All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, that item is approved.
Please call up Item 16, Callie.
Callie: Yes, thank you.
Item Number 16 still continuing, Joe Menefe is presenting.
-: Item Number 16.
Subsequent to filing its motion rehearing
Tristar Oil and Gas has come into compliance.
Therefore, it's recommended the motion be granted
and the underlying docket dismissed as moved.
I'm available for questions.
Wayne: Are there any questions, members?
-: We sure like good news.
Thank you, Joe.
-: I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
-: Second by Commissioner Craddick.
-: All in favor say aye.
Members: Aye.
-: That item is approved.
Let me find, I'm back on Number Two.
Let me get my pages straightened out.
Ah, got ya.
Callie: Joe is it my understanding
that we have an agenda Item Number 17?
Dana: Agenda Item 17 is moving on to the Consent Agenda.
-: Okay, well, let's move on
to the Oil and Gas Consent Agenda.
I've got my paper back.
Okay, we have Cyrus Reed and the Sierra Club
who has registered for Items 23 and 24.
Does anyone want to hear from Cyrus?
Okay, there are also 58 items on the Consent Agenda.
I move we approve Item 17 through 75,
except for Item 37.
Is there a second?
-: Second.
-: Second by Commissioner Sitton.
All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, those items are approved.
Let's move on to Rule 15 Inactive Well Items.
There are 15 items on Rule 15 Inactive Wells list.
I move we approve Items 76 through 96,
except for Items 79, 82, 90, 91, 95 and 96.
Are there any questions?
Dana: Excuse me, Commissioner.
We also need to pass item Item 82.
-: Okay. -: And he said 82.
He said it.
Dana: Okay.
-: You wanna pass 82, Dana,
or do we wanna not vote on it?
Dana: It is a pass of 82.
And then an exception of 79, 90, 91 and 95.
-: And 96, right?
Dana: Yes, yes.
-: Very good.
All right, I'll move that we approve those items as stated.
Is there a second?
-: Second.
-: Second by Commissioner Craddick.
-: All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, those items are approved.
Let's move to the Master Default Orders.
There are 11 Master Default Orders.
I move we approve Items 97 through 107.
Is there a second?
-: Second.
-: Second by Commissioner Sitton.
All in favorite say aye.
Members: Aye.
-: Any opposed?
Motion passes, those items are approved.
Let's moved to the Agreed Enforcement Orders.
There are 198 Agreed Enforcement Orders.
I move we approve Items 108 through 305.
Is there a second?
-: Second.
All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, those items are approved.
The second was by Commissioner Craddick.
That concludes the hearing sections.
We will now take up our Administrative Agenda.
Callie, please call up the presenters for Agenda Items 306.
Callie: Yes, thank you.
Presenter for Agenda Item Number 306,
Randall Collins, you are invited to speak.
And I believe he is ready to go.
We'll give him just a few moments.
We may need to come back to Mr. Collins.
Can we go on to Number 307, 308
and come back to Mr. Collins?
-: If you'll remind us to come back, Callie.
Callie: I will.
-: I'll put my paper right there.
Callie: I'm writing it down.
-: Please call up Item 307.
-: Okay, thank you. -: Oh, there's Randall.
There's Randall.
-: Did we get him?
Callie: We got him.
Welcome, Randall.
-: Take you off of mute.
There you go, Randall, we're ready for you.
Callie: Okay, Agenda Item Number 306,
Randall Collins.
Ready when you are, Randall.
-: He got skipped.
Callie: Poor guy's just having issues this morning.
-: The sound didn't come in.
Callie: Okay, looks like we're moving on to 307, 308.
We'll come back to Randall.
Agenda Item 307 and 308 will be given by Clay Woodul.
Clay, you are invited to speak.
-: Good morning, Chairman and Commissioners.
Clay Woodul, the Assistant Director
of the Oil and Gas Division for Field Operations.
I will be presenting Items 307 and 308 this morning.
Item 307 is the Oil Field Cleanup Program,
Second Quarter Status Report for fiscal year 2020.
During the second quarter,
plugging operations were completed
and files were closed on 277 wells
at the cost of $6,852,065.
This includes only those wells that were plugged,
invoiced by the plugging contractor
and approved for payment by Field Operations.
During this same period,
238 new wells were approved for plugging with state funds.
The fiscal year-to-date totals
through the end of the second quarter
include 722 wells physically plugged,
of which 587 have been invoiced and paid.
As of last Friday, April 17th,
922 wells have been physically plugged
at an estimated cost 20.8 million.
The well plugging target
for fiscal year 2020 is 1,400 wells.
The state managed cleanup program completed
and closed 96 cleanup activities
at a cost of $1,228,911 using OGRC funds
and two activities at a cost of $31,134 using grant funds
during the second quarter of fiscal year 2020.
42 new activities were authorized during the second quarter.
The fiscal year-to-date totals
through the end of the second quarter include a total
of 135 cleanup activities completed and closed.
As of April 16th, 194 activities have been completed
at an estimated cost of $3 million.
May I answer any questions?
Wayne: Any questions, members?
Ryan: No.
-: Thank you, Clay.
-: I'm advised that votes are not needed
by the Commissioners on this agenda item.
So thank you, Clay.
Appreciate your good work.
-: Thank y'all.
Thank you very much.
-: Callie.
Callie: Okay, do I understand Clay
that you have Agenda Item Number 309 as well?
-: I have 308.
-: Right, it's next.
Callie: Oh, I'm sorry.
Let's backup.
Let's do 308 and then we'll be bringing
Mr. Collins back in for 306.
-: Thank you.
-: Very good, Item 308.
Staff is seeking your approval to make available
for public comment the Commission's
Oil and Gas Division Monitoring and Enforcement Plan
for fiscal year 2021.
The Plan was required by House Bill 1818
from the 85th Legislature.
House Bill 1818 also requires the Commission
to seek public input as the plan is developed.
With your approval the plan will be made available
to the public from today until May 21st,
with the option to submit feedback via a web-based survey
or via U.S. mail.
We will return to conference on June 16th
with a final version of the plan for your approval.
That version will reflect
any public comment received by May 21st.
The final version of the plan must be posted
to the Commission's website no later than July 1st.
May I answer any questions?
-: Any questions, members?
-: No.
-: I move we approve the draft Oil and Gas Monitoring
and Enforcement Strategic Plan for fiscal year 2021, boom.
It just-
-: Second.
-: Okay, a second by Commissioner Craddick.
All in favor say aye.
Members: Aye.
-: Any opposed?
Motion passes, that item is approved.
-: Thank you. -: Callie.
-: Thank you, Clay. -: Thank you.
Callie: We are now gonna go back
to Agenda Item Number 306
with Mr. Randall Collins presenting.
-: Good morning, Commissioners.
For the record, I'm Randall Collins,
Chief Operating Officer.
Item Number 306 on the agenda
pertains to the Commission approval
of an emergency purchase order
pursuant to the Commission's delegation authority,
Section 2261.254 of the Texas Government code.
The Commission's internal delegation authority
and Section 2261.254 of the Texas Government Code
requires Commissioner approval of contracts
and associated amendments greater than
or equal to $1 million.
At issue today is an emergency purchase order
for well plugging.
Approval of this item will ensure
emergency well pugging operations remain on schedule
and the necessary approvals will be in place
with the Commission's delegation authority and state law.
A summary of the emergency purchase order is included
in your notebooks along with the EPO Number and amount.
Staff asks the Commission to approve the contract
pursuant to Commission's delegation authority
and I'm available if you have any questions.
Wayne: Are there any questions, members?
-: No. -: No.
Wayne: Okay.
I move we approve the Examiner's recommendation.
Is there a second?
-: Second.
-: Second by Commissioner Sitton.
All in favor say aye.
Members: Aye.
-: Any opposed?
Hearing none, motion passes.
That item is approved.
-: Thank you, Randall.
-: Thank you.
-: Okay, I believe it's Items 309 and 310.
And Commission if it's okay with you,
I'd like to go out of order and discuss Item 310
before we move to Item 309 an issue on proration.
Item 310 is a consideration and possible action
of potential waiver or suspension of applicable statutes,
rules, final orders, or other regulatory requirements
due to the COVID-19 pandemic.
While industry was split on whether
or not proration is the answer,
they were unified in their message
the state must do everything it can to ensure
the longterm future of the Texas Oil and Gas industry
and I agree.
That's why I would like to provide a big picture overview
of everything the Commission has done so far
during this downturn and some things we're working on
to stabilize the Texas industry.
In the start of this COVID-19,
the Railroad Commission of Texas has been diligent
about offering relief and flexibility through our operators.
Some of these measures we have put in place by our own
and others have been suggested by industry operators
and trade associations.
These include deadline extensions
for certain requirements filings;
online processing and electronic submissions;
enforcement discretions and waiver considerations.
I would like to call upon our agency's Executive Director,
Wei Wang, to go into what our agency
has done in greater depth, Wei.
-: Good morning, Chairman, Commissioners.
For the record, Wei Wang, Executive Director.
So shortly after the Governor issued the declaration
of disaster the following Monday we issued several notices
to operators advising the operators that they may submit
a request for extension on issues
that they see appropriate during the COVID response time.
And about a couple weeks after that in early April,
we issued another notice to operators,
essentially, granting an extension for all permits,
licenses, registration, rule exceptions,
that are expiring after March 1st.
We extended that expiration til September 30th.
So that would allow operators
more time to apply for renewals.
And, in addition to that, in the same notice
we clarified on certain violations if they're not related
to safety, health or environmental concerns
that the operators will have more time
to get into compliance.
And it's important to know that these are not related
to health and safety issues.
These are just extensions for filing paperwork.
In addition to oil and gas or gas services,
we issued a notice to operators essentially,
in the common order from the department advising them
to create an account in their financial records
to keep track of all COVID-19 related expenses
and also we encouraged all utilities in Texas
to not disconnect customers during COVID response time.
And in addition to these notices to our operators,
we also started in March a online training platform
to provide electronic capabilities for people
that are needing continuing education credits
to keep their licenses.
And also in March, we released our docket management
system public portal RRC CASES.
This online application allow the public
and the practitioners to search case records online
and also, they may file documents
to a docketed case online as well.
So, although a majority of our employees
are working remotely from home,
our agency's operation is running as normal.
Our mailroom remains open.
Our docket services remain open
and our finance departments, the cash registers
and the revenue department remains open.
So thanks to the hard work of our employees
and your leadership, I think our agency is well prepared
and we are in good shape
in terms of meeting our performance target.
And as a matter of fact, for certain areas
our performance has been becoming
more efficient during this time.
And I'm glad to report that for inspections,
we already exceeded the number of oil
and gas inspection target
for the year by 30,000 inspections.
And for the performance measure of wells
not inspected in the last five years, the target is 5%
and as of yesterday, we already met that target.
So we're four months ahead of schedule.
So, again, I think our agency is well prepared to respond
and we continue to work with operators
to answer their questions, provide electronic methods
for them to file applications and reports electronically.
So in summary, I think our agency staff,
in terms of operations,
we're not suffering during this time.
-: Thank you, Wei.
Are there an questions at this time, members?
-: Mr. Chairman, if I could just reiterate I think
what you've already said and what Wei's been saying.
Wei, thank you to our staff and for you
and all our administrators for keeping us up and going.
I'm impressed 'cause there are other agencies
not doing their job as effectively
and efficiently as we are.
And I would ask y'all and I know you have
and will continue to work with operators
and people who come and need some help.
I think we're trying to continue to do that
and if they come up with any other ideas
that we night can look at or some creative things,
I'd appreciate y'all continuing to do that as well.
So thank you for keeping our agency up and running
and to your staff.
Y'all are doing a great job for us.
-: Thank you, ma'am.
Thank you, Commissioner.
-: Thank you, Mr. Chairman.
-: Thank you, Wei.
I appreciate you.
If you visit our website you'll see a full list
of our notice to operators and learn more about
the various relief initiatives to our agency.
If you have any additional ideas,
I believe I speak for everyone at our agency
when I say we would love to hear them.
So please don't hesitate to reach out.
I also wanna make sure people are aware
of the Production Tax Credit for all producing oil leases.
This statute allows credits of 25% to 100%
of your Production Tax as a result of sustained drop
in oil prices below $30 a barrel.
This tax credit could help thousands of small producers
across the state.
A low producing well is a well that produces less
than 15 barrels a day or 5% recoverable oil per barrel
of the produced water over a 90 day period.
That credit applies when the previous three month period
drops below $30 or the amount of credit
and it increases as the price decreases.
At the meeting last week, we heard several times
that small producer contracts with shippers
and purchasers are being reduced or canceled altogether.
If you're in this situation
and feel you've been unfairly discriminated against
by a purchase you can file a complaint
at the Railroad Commission under the Common Purchaser Act.
Common carriers must provide space for walkup customers.
Texas Natural Resources Code authorizes our agency
to request common carrier pipelines to provide a report
of their unfilled storage capacity.
I have instructed the staff to request
and compile this information
so we have a better picture of the aggregate amounts
held by all common carriers and their storage capacity.
And speaking with enterprise partners last week,
they told me they currently have 250,000 barrels per day
of crude pipeline capacity,
over two million barrels per day of crude export capacity.
It'll be useful to know what is available generally
by the midstream operators across the state.
We have also reached out to the 25 refineries in Texas
and asked them to submit an update R1 report
to provide the latest on their unfilled crude oil capacity.
My phone's been ringing off the hook this last week
speaking with producers big and small
about the right course of action for our agency.
The Texas Oil and Gas industry is resilient
and full of big ideas during this challenging time.
On that note, I'm excited to announce today
the formation of a Blue Ribbon Task Force
for oil economic recovery.
I want to challenge the Task Force to look at
every aspect of what can be done at the state level
to assist operators and to save jobs
as we endure these historic circumstances.
Operator's permitting timelines, tax policy
and deadlines, storage capacity expansion,
pipeline capacity, market access barriers,
anything else the Task Force can think of
that will aid the industry
in managing through difficult times.
The goal is to save as many jobs,
enable operators to survive
and return to a robust level as quickly as possible.
The heads of our state's many trade association
have graciously volunteered to lead this effort.
Including the leadership
of the Texas Oil and Gas Association,
the Texas Alliance of Energy Producers,
the Texas Independent Producers
and Royalty Owners Association,
the Permian Basin Petroleum Association,
the Panhandle Producers and Royalty Owners Association
and the Pipeline Association.
Everything should be on the table during this downturn.
Given the immediate nature of this emergency,
I've ask them to get us recommendations quickly
in my advance of our next open meeting on May the 5th.
Given this, I would like to pass on any action
on Item 310 at this time if there's no objections.
And at this time, we're gonna take up Agenda Item 309,
which is a motion by Pioneer and Parsley
on the Reasonable Market Demand
and Commissioner Craddick
has requested a time to comment at this time.
Commissioner Craddick. -: Well, first, Mr. Chairman.
I wanna thank you for your Task Force
and for, I think we've all been looking for real solutions
and I appreciate you putting that group together.
I look forward to seeing what they come up with.
If there's some other ideas as well.
I think that's gonna be really important
and I, too, about two weeks ago
asked the Controller to look at severance tax.
In fact, asked him to give operators more time
and in a 24 hour period he told us no.
So I think there's some opportunity now
for those operators to go back and look at severance tax
and see if there's a chance for them to pay less
and, hopefully, the Controller posts something timely
so we can move that process along.
And I think between that and what's going on today
and in the future there's some opportunity for that.
You started the meeting by talking about families
and people and their job losses and I wanna reiterate that.
I think we've been up a lot of nights,
or I have at least at my house for about a month,
knowing that some of that was coming
and some of them are personal friends and a lot of them are.
And I think that that's one of the reasons
why we're all taking this very, very seriously.
But I wanna thank you for having a hearing last week.
I thought it was important.
We've received a lot of information from all sides.
Look, I took 15 pages of notes
and I continue to receive more information
and visit with people.
And, look, I think it's our job as the Commission
to protect the industry as well as the overall state
as we look at this oil and gas world.
And one of the things that came up quite a bit last week
and think we're all continuing to do it
is we need to have conversations
whether they're states and the federal government
to see how we best continue to go forward.
But I still have some questions
that I believe need to be answered.
Based on newspaper reports, believe them or not,
but at the least the ones I'm thinking of
anything we do probably will end up in court.
So being the attorney,
I kind of look at the world from that direction.
Look, litigation for the next four to six years
doesn't help anyone if we don't do this right.
And so I think we should direct staff
to look at all the options, procedures
and answer the questions that were raised
during this hearing last week
and, specifically, we need to make sure
that we have the legal grounds to do what's appropriate.
If we have to do something right now that isn't legal,
then it shouldn't be done.
I believe our staff should consult with the Attorney General
who will be our attorney if we go forward
to help us answer these questions.
And so I have a few issues that this isn't exhaustive,
but these are some questions I still have
that are outstanding.
One, the Administrative Procedures Act has been implemented
since our proration hearings were enacted 50 years ago,
as there's been other case law.
What does that do to us?
What does that mean in our process?
Two, can we legally prorate statewide
or must we do it field by field?
Three, do we need an evidentiary hearing prior to any order
and is one necessary to defend an order?
Four, are marginal wells gonna be left out?
What about other types of wells?
What about other types of operators of certain sizes?
And last, do we need a data call to determine markets?
I think that's an important question for us.
So these are just some questions I have.
I'm sure plenty of others,
but those I wanna highlight today.
And I appreciate everybody's input
and I look forward to continuing to get input.
I think it's gonna be important for us
as we go through this historic time.
Thank you, Mr. Chairman, for allowing me a few minutes.
-: Thank you, Commissioner Craddick.
Commissioner Sitton, would you like
to make any remarks at this time?
-: Yes, thank you, Chairman, I would.
And I also appreciate your leadership on this.
I appreciate the hearing last week.
As I said at the end of that hearing,
it was the longest that I'm aware of
the Railroad Commission ever having.
And certainly the level of engagement
the three of us had and asking questions
brought out information and challenged folks
to think not just within the range
or the realm of where they came in,
but also what do you hear about,
what do you think about what other people are saying?
Which I think is crucial to this kind of move.
I'm gonna start by saying this,
while the Blue Ribbon Task Force is a great idea
and that's where we wanna get ideas from
is from industry, from trade associations,
from the general population, from any groups concerned
and we wanna bring that information in
and have an opportunity to consider it.
Let's be clear taking weeks,
even days right now to act is in itself a choice.
And we are seeing a level of demand destruction
and a level of oil industry downturn
that in the past happened over a course of years,
now happening over a course of days.
And so our normal process to go out and get information
and to allow input, if it takes us,
what normally would be considered
a very rapid amount of time, you know a couple,
three weeks, in the meantime the entire world changes.
In the last just five weeks,
we've seen the price of oil go from, I guess six weeks now,
the price of oil go from $50 a barrel down
to minus $37 a barrel.
Now, I recognize that that is all
about the May delivery contract
and I get that this has to do with specifically,
storage filling up in Cushing, Oklahoma,
which is a delivery point for those contracts.
The fact is the Spot Price
has moved $90 a barrel in six weeks.
You know when I think about the incumbency on us
to consider the landscape in front of us
and to make a decision on action or no action,
I think back to the history of the United States
over the last 40 years, 50 years even.
From the last time we prorated to today,
we've gone through in 1973, 1976 the United States
was at peak oil production up until the last five years.
The oil production began to decline as the Middle East
flooded the oil markets from the 1980s
all the way until 2006,
our oil production just dropped steadily.
And over that 40 year period the words energy independence
were used around this country
and especially, in this state constantly.
Because we watched as anything from military instability
to civil unrest, oil market flooding,
you know incidents around the world
would reek havoc on oil prices in the United States
and we watched as we were dependent
on foreign oil powers to make decisions.
And if you look back our peak oil production it took,
literally, 30 years for the oil production
in the state of Texas and in the United States
to drop at the rate that it is going to drop
in a matter of two months,
from a month ago to a month from now.
And so we have to inform our decisions
with the fact that what took 30 years before
is now gonna take two months with our own level of urgency.
I think that if we, we heard some of the testimony last week
about what's gonna happen in this market.
People talking about the numbers of jobs
that are gonna be lost.
Let's be clear about this,
if the oil industry drops
and the tens maybe hundreds of thousands are laid off,
eventually, those jobs will come back.
But they may never come back in the State of Texas
and the United States.
We may be sitting here in 10 years,
looking back at this time in history
and saying that America, we finally achieved
American energy independence over the last five years.
And some people will say, well,
you're still buying foreign oil.
Yeah, but we, the nation, determines when we buy that oil.
We're not incumbent.
We're not dependent on any one producer.
If any one producer decides they're not gonna sell
the United States oil, that's fine.
We saw just this past summer when Saudi Arabia was attacked
and five million barrels came offline
the price of a gallon gas in the United States
didn't change almost at all.
Because of our independence in energy.
And I believe that in 10 years people are gonna look back
and say that energy independence was threatened right now
at this time in history by these unprecedented,
we talk about unprecedented and things like that.
Let's talk about the market for a second.
We're in a market where the government has effectively
shutdown every restaurant in the United States.
We have planes flying from one city to another
carrying one passenger, a doctor to get them
from Las Vegas to New York to help with this pandemic.
This is not unprecedented,
this is completely out of the ordinary.
And when I hear people talk about the market is working,
I cannot help but ask myself
what part of this looks like the market?
So my concern is this,
go back to this idea of the market.
People are gonna look down in 10 years,
they're gonna look back
and say American energy independence was threatened
and I don't believe that inaction on our part is acceptable.
I believe that we have to step up
and do things to protect that energy independence,
because in the end, we don't work for the energy industry,
we work for 27, 28 million Texans.
And I believe it is in their interest
for our energy economy, our energy industry to be strong.
So while I think that all of the points
that we have discussed
about how this could be done are good points
and I think they should be discussed in the context
of taking action, not waiting to take action.
So where I sit today is I believe that we should take,
put it this way, I'm ready to vote.
And I'm ready for us to vote on proration
and following a motion that was filed
by Pioneer and Parsley to prorate
20% of Texas oil production, however, I've got some criteria
that I think we need to make it dependent on.
One is I think that that proration has to got to be tied to
other countries, other nations prorating.
So here's how I would do that.
I would prorate 20% of Texas oil production
starting June 1st, if another four million barrels per day
of production is brought offline by other U.S.,
Canadian and OPEC Plus producers.
I'm expecting that other states in the nation would cut.
Canada would cut and then OPEC Plus would cut
another four million barrels to back up our one.
And so if we took a vote cutting a million barrels
contingent upon that four million,
then we would have done exactly what the statute requires
which is to take steps to minimize waste
and that definition of waste being reduction
in excess of reasonable market demand.
I think that this should absolutely be temporary.
In fact, I think what we should do is tie
that proration to market demand
and when market demand gets back to 85 million barrels a day
then I think that our proration should lift
without us taking affirmative action.
'Cause one of my real big concerns is
that we set a precedent that the Railroad Commission
gets involved in regulating the market,
but I think if we tie it to 85 million barrels a day
which is 15% less than market demand was just two months ago
I think we have set an extremely high threshold
for the Railroad Commission to get involved in the future,
since that's never happened before.
I think that this should only apply to Texas producers
who produce over 1,000 barrels a day.
I think that this proration should be done
by operator not by lease.
I think that we should, the basis for the new allowable
should be the maximum of their production in October,
November and December.
So whichever month they produced the most,
that becomes their maximum, it becomes their current basis
and we set the allowable at 20% of that.
I think we should be flexible to consider those
who have drilled new wells in-between that time to come in
and address or adjust allowables
or the basis depending on
if they've taken activity in the last three months,
but we don't have the production reports.
And then, finally, I think we should evaluate
this on a monthly basis as we go forward.
And we'll have two conference meetings between now
and June 1st to consider this action
and to take additional action
or additional adjustments if we need to.
I know that this is not comfortable for us.
I know that in general the rules of politics tells us
that we should wait for a consensus,
that it's politically risky to take these kind of votes.
And trust me, I see the opportunities out there
for challenges from across the spectrum,
but as I said in the beginning I believe
that this is much bigger than simply oil industry.
It's much bigger than production numbers.
It's bigger than corporate interests
and all those sort of things.
The fact is there is waste.
We saw yesterday that there's waste dollars,
there's waste economics on a dollar per barrel basis
is in the tens, if not hundreds of millions of dollars
a day of waste.
We all know that this is due to market oversupply.
Supply in excess of reasonable market demand
and so I believe that it is incumbent upon us
to take action.
So, I will say I respect the two of you tremendously
and that I know this is challenging
and I have appreciated the conversation
and the difficulty that we've had in making this decision,
but I for one am ready to vote today.
And so, if either one of you is ready to take a vote
and I'm open for more discussion
before you get to that point,
then I'd say we move forward and we start the clock running
and we begin this process.
If neither of you are ready,
then I will instruct staff to bring an order
with all these specifics to vote on in the future.
-: Thank you, Commissioner.
If you would, I'd like to make my comments before
since we're all expressing what's going on
and I appreciate your view
and it's a challenging time to all of us.
And I wish there was a clear,
crystal clear picture to take on this
and want to make sure we do that.
But if you'd allow me.
-: Please. -: I'd like to make
a few comments before we go to the subject if I could.
Now, I'll just take a moment, of course,
and thank everyone who joined last week
for our 10 hour virtual open meeting on prioritization
and what Texans can do to stabilize
the international price of crude oil.
About 30,000 people in 86 countries, 49 states, tuned in,
over 50 witnesses, 130 written testimonies,
a variety of ideas people testified on what could be done.
Just to bring you up, Commissioners,
in the last 24 hours including just minutes prior
while dragging a little late having trouble getting set up,
this was Senator Cruz on the phone.
John Cornyn has reached out and scheduled calls
to discuss what is happening in our oil markets
and I've invited the North Dakota Oil Executive
or Oil Commissioner, whatever his title, to join in that.
Working with other states like North Dakota
and Oklahoma, at their request.
I visited with my friend in North Dakota
this morning regarding this.
And North Dakota will be going into a meeting noon today
and they have come to the point that they are considering
this is waste when the price gets to the price it is
on their natural resources
and are considering implementing that.
As has a judge in a case before Oklahoma
said that this is waste
and has ordered them to consider the same.
And I am to get back with our North Dakota friend
and visit with him today prior to his meeting,
to let him know where we stand
as a Railroad Commission in the state of Texas.
I think a lot of the testimony that we heard
said it would be much more powerful to move in conjunction
with other states and other countries
and so I've reached out to Canada this past week
and talked to their Oil Minister
and she has offered to help us if we decide.
And that they have been implementing some probate,
capping some of their supplies.
And they have been doing such in the past.
So she's offered to help us if we decide to.
Working with stakeholders
that participated in the hearing last week,
we've tried to find a solution that'll work for everybody.
But again, this is not a time, I think, to be timid.
Agenda Item is 311.
Well, we're still on 310, I'm sorry.
It's a time folks, we are here
and I've got the Senators asking to input federally.
We're on 309 right now, Item 309 and considering this.
And before we turn it back to Commissioner Sitton,
I just wanna say that I believe that with the forces
we have that are out working
trying to get the information together for us
with the Task Force,
I believe being called on by other states to visit
with them in the decision
and coordinate an action rather than go on our own alone
and I think it's time that we really need
to get the information correct
before we make a move alone and by ourself in Texas.
And with that, Commissioner Sitton, I recognize you.
-: Well, thank you, Chairman.
I appreciate your comments and I agree that it is
if we had more luxury to make more aggressive,
take more time I would take it.
But I just don't think we do.
But at the end of the day, as I said,
there's a reason that this is a three member commission
and that it takes two of us to make a vote to move forward.
I agree completely with your sentiment
that we have to do something leading a group
as opposed to simply on our own.
My point is that with a motion like the one I'm proposing
we begin that process by making a formal motion,
yes, we're gonna prorate a million barrels a day
if the rest of the world will prorate
an additional four million barrels a day
then we do that and we start that movement.
So as I said, though, if neither of the two of you are ready
I respect that and I'll ask the staff
to prepare an order for May 5th.
But if either of the two of you's ready to vote on this,
then I'll make a motion.
I'll follow you're lead.
-: I appreciate that Commissioner.
Callie: Commissioners, if I could, I'm sorry.
I do wanna include that Brian Sullivan
representing Pioneer Natural Resources
is available for questions if needed.
-: Are there any questions, members?
-: No, and if I could, Mr. Chairman.
Look, I think, Ryan, you can direct staff how you wish,
'cause I think that there are still questions
that I really would like staff to come back
and give us a process like I said in my statement
about what we do, how we do it.
I'm not sure, by law,
that some of what you're proposing is legal or not.
I think we need to clarify some of that.
I would hope that staff comes back
and not just if you direct them with your order,
but also a broad-based understanding of what we need to do
going down the road with proration.
Other options, all options should be on the table,
not just one perspective, but all options.
And we need to make sure our legal counsel is up-to-date
and knows what they are supposed to do
or what we can do legally.
'Cause I think there are some real questions about that.
And, look, I may be the only lawyer on the group,
but I'm telling you this is going to the courthouse
and we need to really think about that, too.
And I appreciate, Mr. Chairman, that you are continuing
to visit with other states and with our federal leadership,
because I hope that there is an all of the above
conversation that we continue
to figure out how to do it together.
So I think it's important for the United States,
Canada and, frankly, Mexico, too, to be all together
if we decide to go down this road.
So, thank y'all for both of your thoughts
and how we're working through this.
-: Frankly, Commissioner,
you know, frankly, there's a flotilla
from Saudi Arabia headed with a lot of oil
coming to the United States right now as we speak
that we need to visit with our senators
and federal administration regarding of the intent
that they had when OPEC made it's agreement.
There's a lot of challenges here folks
and I agree that this is not
the typical time of watching what's going on.
This is clearly a war on our industry by foreign advisories
and it's a time we need to respond.
I am still concerned to do it today as a vote,
because I'm with Commissioner Craddick
that I would rather our team at the Railroad Commission
make sure we research how we do it,
so it doesn't get turned around in some court
or get delayed even beyond the time
that we could do anything if it gets hung up
in some type of judge ruling.
I'd rather bring in General Paxton
to review this with our staff
here at the Railroad Commission
to make sure when we do make the motion,
that it doesn't get delayed.
In that case, that would impose a restriction
that'd be far out into the future.
So I agree with Commissioner Craddick
that we need to make darn sure when we make the motion
that it fits legal requirements not to get stuck in court
in another week and then we're sitting here for months
and it's totally too late for us to take action
if the courts tell us that we can't
or waiting on some court ruling.
And I've seen that for decades.
So what I do not want anybody from this meeting
to go forward that the Railroad Commission is hesitant,
is not taking action.
I want everybody to know that it is the intent
of all three of us Commissioners
and if you object say this, that we are proceeding
and have been working as independently
and now as a Commission giving orders
for both the industry, by our staffs,
for the Railroad Commission staff, General Paxton,
calling them all together to make darn sure
that when we make this motion that it will have affect.
I fear as Commissioner Craddick has expressed
and I repeat myself, I've seen too many times
the courts come in and have some quick ruling
by some opposing faction, which there will be in this,
guaranteed and if we make the motion today
without legal counsel screening this
and General Paxton going through it
and making sure that we stand together legally,
I have great fear, Commissioner Sitton,
that that would delay it past even two weeks, very easily.
And so I would request that we...
That I appreciate, I honor your suggestion
that if the two of us decide
we don't want to exactly move on that motion today
it's not because we don't have an intent
to desire to reflect it,
it's I'm negotiating again with other states,
with other countries.
I believe, as Commissioner Craddick has suggested,
have it reviewed by the Attorney General's office
and make darn sure we don't get shut down.
I'm repeating myself.
And so, I would request at this time
that we not consider a motion,
but, indeed, that we need to work toward that motion.
Commissioner Sitton.
-: Mr. Chair, thank you for that.
And in fact, since you both articulated the concerns
over legal precedent since Brian Sullivan is on the phone.
-: Well, I appreciate that Brian Sullivan's on the phone.
But I think we've heard
and I appreciate Brian has one perspective.
And, look, Brian I appreciate you as an attorney,
but I don't think until we hear all sides
and since he's the only one on the phone.
This is, frankly, above my pay grade
and above Brian's at this point.
That we really need to hear from the Attorney General
and our counsel staff.
Brian has a perspective, in my opinion,
about the motion you wanna bring.
But I think there are, we heard a lot of sides
this past week and just 'cause this is the direction
that his clients wanna go,
I'm not sure that that's exactly the direction
anybody else would wanna go.
So that's where I hope that our staff looks not just
at your proposed motion but gives us lots of options
of some other things we need to look at.
I like Brian, but I'm not sure that that's,
Mr. Chairman, necessarily appropriate
since there's not an opposing person on the phone as well.
And we always try to give everybody an opportunity.
-: I haven't made a motion.
So at this point I just wanna get some,
you both expressed concerns over legal input.
I'd like to get some legal input.
And I know that Brian and his team have studied this,
so I want an answer to the question,
Commissioner Craddick you brought up a number of questions.
I'd like to get his input on that
and all the research they've done.
Since I haven't make a motion I don't there's any risk
in us getting more input on this.
I'd like to go ahead and let Brian answer some questions.
-: Okay, Brian.
-: Now look, I mean I feel like
we heard a lot of it last week.
And, like I said, I appreciate Brian
and I appreciate the feedback.
And, Brian, you've given us some good memos
and I've read them and I still,
not all this has been answered.
It's my understanding that we've got a process
to make sure that we have people available.
And so I wanna make sure all sides are available on this
and I am concerned that we don't have all sides available.
And so, Brian's not my attorney.
Brian's a party's attorney and I think our attorneys
whether it's Alex, who is on the call
and I'm not sure that they're or Haley,
and I'm not sure they're ready to answer this question.
That's why I think that we need to make sure
some of these questions are answered.
And my list wasn't exhaustive,
I've got like I said a list.
But I think the Attorney General is our attorney
and that's who I would like to listen to.
-: We'll get a chance to listen to them, too.
But if we could, let's go ahead and have Brian come on.
I'd like him to answer some of these questions.
-: I agree and, Brian, I welcome you,
because I think we want to make sure
all people get to speak anytime
and I believe I will allow.
It's okay, the power of the Chair,
to recognize Brian Sullivan for comments at this time.
Brian: Thank you, Commissioners.
Can you hear me?
-: Yes.
Brian: I'm happy to answer questions.
I'm also happy to address the questions
that Commissioner Craddick raised in her statement.
What is best for you in terms of how I could address this?
-: If it's okay for my part, Brian,
I'd like to keep it specific to Commissioner Craddick
brought up some really good points.
We're gonna need a lot of opinions on this.
But just for your part, I know you guys have studied this
in terms of does the Administrative Procedures Act
affect us?
Can we legally prorate statewide as opposed to by field?
Some of the things Commissioner Craddick asked
and then in so far as the items that I've proposed,
didn't make a motion,
but that I think we should include in our motion.
I'd like to get your opinion on all those things.
And you can just take it in order
and I can re-offer my list if you need it.
Brian: No, I just briefly I think
I would point out to you that 85.051
says very clearly that you, as the Commission,
may issue any order that is reasonably required
to correct, prevent or lessen the waste.
So if you decide that you want to address this order
to operators you can do that.
The statutory provision that talks about
prorating as to field starts with the word if.
The Commission historically had a staff
that did an analysis on a field by field basis.
That is not required by the statute.
You can direct operators to reduce production
and provide the exceptions that you have recommended.
So, I don't see any legal impediment to the order
that you have proposed.
So, in my opinion, the Commission could do exactly
what you have proposed.
I think Commissioner Craddick makes a good point, though,
that there's going to be litigation,
but there could be litigation on either side.
If the Commission issues your order
and somebody seeks to enjoin it,
which I doubt they will,
won't they have to post a bond.
What would the bond be for some company
to interrupt the Commission's order?
I think your order would be affective
until some court ruled against you down the road.
So my view is that you can do this, if you choose to.
-: Brian, I appreciate the efficiency with your answer
and I understand what you're saying is
that the concern being if we took this action
it may get quickly overturned
with some sort of injunctive action to cancel it,
but you believe is it would be effective
until it was overturned in court.
And thank you for that commentary.
My question's in some of the more specific legal questions
in terms of, for example, making our action
contingent upon others
which is some things I proposed.
You already spoke to doing it by producer
as opposed to lease, I believe.
Brian: By field.
-: By field, sorry, yeah.
Well, actually I'm asking it too by lease.
Doing it, I'm pretty sure, as opposed to by lease.
Sounds like you've spoken to all that,
but if I missed something say so.
What about limiting it to a producer
producing over 1,000 barrels a day.
So is anything that I said in there give you any concern
or anything that we need to do from your perspective,
anymore homework on?
And not looking for a yes or a no.
I'm looking for a yeah, you need to look in this.
I'm assuming we're not gonna vote on something today.
but as we get ready for May 5th,
what things should we be looking at?
Brian: Sir, our legal team
and it's more than just me.
There are some other law firms that have been involved
and have vetted this.
We don't see any problem with you all
issuing a contingent order
as long as the contingencies are clear.
So the fact that you would not implement this until June 1st
if others participated we don't think is a legal impediment.
-: Okay.
Brian: We had the required hearing.
-: Any more comments?
I continue, thank you very much, Brian.
Appreciate your comments
and, again, I join Commissioner Craddick in believing
we need to check with our Attorney General on this
to confirm those points.
Frankly, agreeing with Commissioner Sitton
a date of June the 1st would be very good.
We will have power May the 1st,
hopefully, to meet that deadline.
So I would consider right now that we would not take action
on this motion if it's the pleasure of the Commissioners.
Okay, and let's move on to Agenda Item 311
is our Public Participation Item.
No one has registered indicating that they wish to speak
on any non-posted items.
Agenda Number 312 is our Executive Session item
which we will not be going into today.
Are there any other duly posted matters
to be brought before the Commission at this time?
Hearing none, this meeting
of the Railroad Commission of Texas is adjourned.
-: Thank you.