-: Point, right, you're looking good in the pictures.
All right, Callie, we're ready to start.
Callie: All right, good morning.
This is Callie Farrar, Commission Secretary, I'll be serving
as the meeting moderator for today's conference.
Just a few reminders, when it's your time to speak
you'll be transferred over to video and un-muted.
When transferring, the speaker and audience
may experience a moment of delay.
Speakers will also need to begin their video,
and remove themselves from mute
for the video and audio to work.
Commission does reserve the right to remove any audio
or video sharing capabilities from
any person at any time if needed.
Chairman Craddick, we are ready to begin when you are.
-: Thank you, Callie, this is Chairman Craddick, 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 May 11th, 2021.
Under our public participation policy
anyone desiring to offer public testimony on any items
that are not noticed on today's agenda was required
to register in advance, and we did not have
anyone register in advance.
The Commission will consider out the items
on the agenda as posted on the agenda.
And, let's go to item number one, Callie.
Callie: Thank you, Frank Tomicek
will be presenting agenda item one.
Frank, we are ready when you are.
-: Thank you very much, Callie.
Madam Chairman, Commissioners, good morning.
I'm Frank Tomicek with the Oversight and Safety Division.
This first item this morning is Case No. 5808,
application made by Atmos Pipeline-Texas
for a test due 2020, annual interim rate adjustment.
This is their fifth interim rate adjustment
since the company's last rate case in GUD No. 10580,
which set the interim rate adjustment factors.
And, using those factors the company has identified
a texture incremental revenue requirement
of approximately $43,868,433, which will be recovered
from their tariffed rate CGS, and PT customers
under the proposed rate adjustment.
Staff's review of this filing has found it to be compliant,
and Atmos did provide responses to staff's inquiries
with the provisions of the GRIP statute,
and staff is recommending approval.
I can address any questions at this time.
-: Thank you, Frank, are there any questions?
Right, I move we approve the examiners recommendation.
Is there a second?
-: Second.
-: Second by Commissioner Christian, all in favor say, aye.
Commissioners: Aye.
-: Aye, motion passes, that item is approved, thanks.
-: Thank you.
-: I understand that staff wants to pass item number two,
so Callie, if you'll please call
up presenter for item number three.
Callie: Thank you, presenter for agenda item three
will be John Dodson, and looks like we're kind of,
there we go, good morning, John.
-: Good morning.
-: We are ready when you are.
-: Thank you, Callie.
Good morning, Chairman and Commissioners.
I'm Administrative Law Judge John Dodson,
with the Hearings division, agenda item three is to consider
a motion for rehearing GUD No.10597, timely filed
by complainant Vopak Moda Houston or VMH.
The Commission signed a final order in this docket on
March 9th, denying VMH's requested relief.
VMH then filed this motion for rehearing,
and Magellan filed a response opposing.
A motion will be denied by operation of law
if Commission action is not taken by June 17th,
the motion for rehearing raises no new issues of fact or law
that the Commission has not already considered, and so,
the recommendation is to deny, I'm available for questions.
-: Commissioners, we also have Bill Johnson,
representing Magellan Crude Oil Pipeline Company, LP,
registered and available for questions as well.
-: Thank you, Callie, are there any questions
of Mr. Johnson or of John?
-: No.
-: All right, I move we approve the examiners recommendation.
Is there a second, -: Second.
-: Second, by Commissioner Wright,
all those in favor say, aye.
Commissioners: Aye.
-: Aye, motion passes, that item is approved.
Thank you, John. Callie, if you'll please call presenter
for items four through six.
Callie: Yes, thank you, Veronica Ruberto will
be presenting agenda items four through six.
Veronica, good morning, we are ready when you are.
-: Good morning, Chairman and Commissioners,
Veronica Ruberto, Administrative Law Judge
with the Hearings division, item number four
is the application by Marshall Mine, LLC,
requesting acceptance of a surety bond rider
for Permit No. 59A, within Marshall Mine,
located in Harrison and Panola counties.
Marshall is requesting acceptance of a rider to adjust
the currently bonded amount of 30 million
to a reduced amount, based on the
most recently approved reclamation cost
in the amount of an approximate 16.5 million.
The rider instrument has been reviewed by the Surface
Mining and Reclamation Division
in the office of general counsel.
The terms for the current bond will remain in place,
and the proffered rider is sufficient to cover
the most recent reclamation cost estimate,
staff and Marshall are the only parties to the proceeding.
No exceptions were filed, the rider to the surety bond
adequately addresses the reduction in bond and satisfies
all requirements for the acceptance of the rider.
It is recommended that the application
for acceptance of the surety bond be approved.
I'm available for questions.
-: Thank you, Veronica, are there any questions?
-: No.
-: All right, I move we approve
the examiners recommendation, is there a second?
-: Second.
-: Second, by Commissioner Christian,
all those in favor say, aye.
Commissioners: Aye.
-: Aye, motion passes, that item is approved.
Item number five, Veronica.
-: Item number five is an application by
Texas Municipal Power Agency for a replacement
of a collateral bond and letter of credit
for Permit No. 26D, within Gibbons Creek Lignite Mine,
located in Grimes County, Texas. (clears throat)
Permit No. 26D is in reclamation, and is currently bonded
with a collateral bond and a letter of credit issued by
Wells Fargo bank, in the amount of 11,600,000,
which expires on June 8th, 2021.
TMPA request acceptance of a replacement collateral bond
with a letter of credit, also issued by
Wells Fargo, in the amount of 3,400,000.
The proffered bond has an expiration date of June 7th, 2022.
Staff's most recent reclamation costs is in
the approximate amount of 2.8 million.
The amount of the replacement bond
for the permit will exceed the approved reclamation cost
and is sufficient, all other issues have been
sufficiently addressed by TMPA for acceptance of the bond.
Staff, and TMPA are the only parties to the proceeding
where exceptions were filed, it is recommended
that the Commission accept the proffered collateral bond
and letter of credit to replace
the existing bond for Permit No. 26D.
I'm available for questions.
-: Thank you, are there any questions, all right, I move
we approve the examiners recommendation, is there a second?
-: Second.
-: Second, by Commissioner Wright,
all in favor say, aye.
Commissioners: Aye.
-: Aye, motion passes, that item is approved,
and item number six, Veronica.
-: Item number six is an application by TMPA,
for the acceptance of a replacement collateral bond
and letter of credit for Permit No. 38D,
within Gibbons Creek Lignite Mine five,
located in Grimes County, Texas.
Permit No. 38D is in reclamation, and is currently bonded
by a collateral bond letter and letter of credit issued by
Wells Fargo, in the amount of 6,500,000,
which expires on June 8th, 2021.
TMPA requests acceptance of the replacement bond,
with a letter of credit issued by
Wells Fargo, in the amount of 6,500,000.
The proffered bond expiration date is June 7th, 2022.
Staff's most recent reclamation costs
in the approximate amount of 6.1 million
is sufficient to cover the cost of reclamation costs.
All other issues have been sufficiently addressed by TMPA.
Staff, and TMPA are the only parties
to the proceeding, no exceptions were filed.
It is recommended that the Commission accept
the proffered collateral bond and letter of credit
to replace the existing bond per Permit No. 38D,
I'm available for questions.
-: Thank you, are there any questions.
-: No.
-: Right, I move we approve
the examiners recommendation, is there a second?
-: Second.
-: Second, by Commissioner Christian, all in favor, say, aye.
Commissioners: Aye.
-: Aye, motion passes, that item is approved.
Thank you, Veronica, Callie if you'll
please call up presenter for item number seven.
-: Yes, thank you, Marcella Spraggins will
be presenting agenda item seven,
Marcella, we are ready when you are.
-: Good morning, Chairman and Commissioners, for the record,
Administrative Law Judge Marcella Spraggins
with the Hearings division, item number seven
is an application by Dos Republicas Coal Partnership,
that requests acceptance of a rider to one of
its two accepted surety bonds for
the Eagle Pass Mine, Permit No. 42B.
The mine is currently bonded in
the amount of approximately $46.6 million.
With two bonds issued by Argonaut Insurance Company.
The bonds are in the amount of approximately $29.3 million,
that is not proposed to change, and in the amount
of approximately $17.4 million, that is proposed
to be reduced by the proffered rider to $2,298,596.43.
This reduction will result in a total bond amount
of $31,553,785, this is an amount that
is sufficient to cover the most recent estimate
of reclamation costs for the permit.
The parties filed waivers of the preparation and circulation
of a proposal for decision, it is recommended
that the application for acceptance of the rider
to the surety bond be approved.
I'm available to answer any questions.
-: Are there any questions, right, I move we approve
the examiners recommendation, is there a second?
-: Second.
-: Second, by Commissioner Christian, all in favor, say, aye.
Commissioners: Aye.
-: Aye, motion passes, that item is approved,
thank you, Marcy.
-: Thank you.
-: Callie, please call up item number eight.
-: Yes, thank you, Ashley Correll
will be presenting agenda item eight.
Good morning, Ashley, we are ready when you are.
-: Good morning, Chairman and Commissioners.
I am Ashley Correll, Technical Examiner for
the Hearings division, item number eight is the application
of Endeavor Natural Gas, LP, for a non-commercial permit
to dispose of fluids into a formation not productive
of oil or gas, in Dimmitt County, Texas.
Endeavor proposes to dispose of 2000 barrels a day into
the Olmos Formation, Endeavor asserts that
the use of the proposed disposal well,
with special permit conditions,
will not endanger groundwater.
The surface and production casing are cemented
to surface, due to short surface casing,
permit conditions were added for Endeavor
to perform annual annulus pressure testing,
and weekly monitoring of the tubing casing annulus pressure.
The application is protested by
Winter Garden Groundwater Conservation District,
Winter Garden contends the well is constructed
with short surface casing that does not cover
the base of usable quality water, and the age of
the well leaves the well more susceptible to degradation.
Winter Garden argues the well is not in compliance
with Rule 13, and special permit conditions
to address short surface casing are not sufficient
to reduce the risk of groundwater contamination.
The examiners find the special permit conditions may
be utilized when surface casing does not extend
below the base of usable quality water,
and these conditions are appropriate for this application.
The examiners did not find evidence in the record
that the well bore has experienced degradation.
And, a mechanical integrity test,
and a radioactive tracer survey will
be run prior to disposal operations.
The examiners recommend approval of the application.
No exceptions were filed, I'm available for questions.
-: Thank you, are there any questions, right, I move
we approve the examiners recommendation, is there a second?
-: Second.
-: Second, by Commissioner Wright, all in favor say, aye.
Commissioners: Aye.
-: Aye, motion passes, that item is approved,
thank you, Ashley, all right, let's move on
to the oil and gas Consent Agenda.
There are 31 items on this agenda, part items,
nine through 39, are there any specific comments?
-: Yeah, Commissioner, of course I always have comments
in these regards, I just wanted to let everyone know
just how much progress we're making with the part we're in.
Every operator in the Consent Agenda, either on its own
or challenged by our examiners,
reduce their flaring exception term by six to 12 months,
reduce their flaring exception volume by 80 to 90%,
and even chose to send their gas to
an alternative electric generation method,
which captures emissions that otherwise would have
been released, I'm also happy to report
that multiple operators submitted plans as part
of their learning exception application
to eliminate routine flaring in the near future.
I sincerely thank both our staff,
and industry for continuing to work together
to resolve this important issue.
Thank you, and I'm happy to hear your motion.
-: Thank you, Commissioner, any other comments?
-: Yeah, let me just say something.
It's interesting, I just received updated information
from our staff and what a great job they
and the industry are doing, like Jim has said.
The last three years, it's basically,
we decreased flaring in Texas by 1% a year.
And, it's down now to 0.7%, which means 99.3%
is not being flared, going directly to the intended use
for the consumer, and I think that's just marvelous
that less than seven hundredths of 1%
is being flared in the state of Texas.
And, it is a great example of success in an area
that we continue to watch over.
-: Well, I appreciate it, the staff and industry is going
the right direction, so thank y'all
for continuing to highlight it, and thank you, staff
for continuing to work through it.
I appreciate that piece too, any other comments?
All right, I move that we approve items nine
through 39, is there a second?
-: Second.
-: Second, by Commissioner Christian, all in favor say, aye.
Commissioners: Aye.
-: Aye, motion passes, those items are approved.
Let's go to master default items.
There are 10 master default order items.
I move that we approve items 40
through 49, is there a second?
-: Second.
-: Second, by Commissioner Wright, all in favor say, aye.
Commissioners: Aye.
-: Aye, motion passes, those items are approved,
and now agree to enforcement orders.
There are 60 agreed enforcement orders.
I move we approve items 50 through 109, is there a second?
-: Second.
-: Second, by Commissioner Christian, all in favor say, aye.
Commissioners: Aye.
-: Aye, motion passes, those items are approved.
That concludes the hearing section matters.
And, we'll now go to the administrative agenda.
And, Callie, will you please call up
the presenter for agenda item 110.
-: Thank you, Keith May will be presenting agenda item 110.
Morning, Keith, we are ready when you are.
-: Good morning, Chairman and Commissioners, for the record,
my name is Keith May, with the Oil and Gas Division.
Item 110, staff is seeking their approval
to make available for public comment,
the Commission's Oil and Gas Division's monitoring
and enforcement plan for the fiscal year 2022.
The plan was required by House Bill 1818
from the 85th Legislature, House Bill 1818
also requires Commission to seek public
input as the plan is developed.
With your approval, the plan will be made available
from today until June 10th, with the option
to submit feedback via a web based survey or via US mail.
We will return to conference on June 22nd
with the final version of the plan
for your approval, that version plan will relfect
any public comment received by June 10th.
The final version of the plan must be posted to the
Commission's website no later than July 1st.
May I answer any questions?
-: Are there any questions?
-: No.
-: Thank you, Keith, and your staff for working on this,
I move we approve the staff's recommendation.
Is there a second?
-: Second.
-: Second, by Commissioner Wright, all in favor say, aye.
Commissioners: Aye.
-: Aye, motion passes, that item is approved.
Item 111 is our public participation item,
and we don't have anybody who's signed up for,
or who's registered in advance, item 112 is
our executive session item, which we will not be going
into today, and before we adjourn.
Commissioners, obviously we've all been watching
the legislature and this is our last conference,
I think, before they adjourn.
And so, I'd like to get an update from Jeremy,
if that's okay with y'all, kind of where we are
in the storm, since we've all been focused on that.
So, Jeremy, if you will give us an update,
I appreciate you being here today.
-: Absolutely, Chairman, Commissioners, thank you for having
me here, my name's Jeremy Mazur, I'm the
Railroad Commission's director of government relations.
In the weeks following Winter Storm Uri in February,
members of the Texas House,
and Senate filed multiple bills relating
to the winter weather disaster event.
Several of those bills filed, do speak specifically
to operations of the Railroad Commission,
and attempt to assign further responsibilities
to the Commission and our oversight
of the state's oil and gas and pipeline industry.
What I'd like to do is walk you through some
of those bills that relate to the Commission,
and rather than go through each of the bills individually,
they generally fall within one of three categories.
The first category being emergency planning,
the second category being emergency preparedness.
And lastly, the third category of bills involves issues
that are directly responsive to issues
that came up during Winter Storm Uri.
Let me first start with the bills
that relate to winter disaster planning.
There are three bills that are currently moving
through legislative process that try to formalize
some sort of structure for the state.
And, that often include the Railroad Commission for planning
for future weather events, fore most among those
is Senate Bill 3, by Senator Charles Schwertner.
This bill creates the Texas Energy Reliability Council
in statute, the council includes the Railroad Commission,
as well as partner agencies, including the
Public Utility Commission, TxDOT, and
the Texas Division of Emergency Management.
The purpose of this council is
to ensure the delivery of natural gas
to human needs customers during a emergency event.
Other planning bills that are moving through
the legislative process include House Bill 13,
by Chairman Paddie, which creates
the Texas Energy Disaster Liability Council,
which again, as a council comprise of multiple agencies,
including the Railroad Commission.
And, the purpose of this council is to prevent natural gas
outages during a disaster event.
House Bill 13 has passed the House, and it was heard
in Senators Prudence Committee last week,
is still pending a committee vote and
a final decision by the Senate as a whole.
Another planning bill that's moving is House Bill 14,
by House Chairman, Craig Goldman, which creates
a Texas Electricity Supply Chain Mapping Committee.
And, the purpose of this committee is to map
the state's energy supply chain, and to identify those areas
that need to be better protected
in order to avoid future outages of natural gas supply
to human needs customers in a time of disaster.
House Bill 14, by Chairman Goldman has passed the House,
and it's going to be heard on the Senate this Thursday
and the Senate committee on jurisprudence.
The third category of bills that
are moving through legislative process.
The second category, I stand corrected,
of bills moving through legislative process relate
to the state's emergency preparedness.
And, here there's two bills that
I want to bring to your attention.
The first of those bills is Senate Bill 3,
in Senate Bill 3, is the sentence omnibus measure relating
to the weather winter weather storm.
Senate Bill 3 requires that the
Railroad Commission adopt rules requiring
that gas supply chain facilities,
including natural gas pipelines, implement measures
to prepare the facilities to operate
during a weather emergency, Senate Bill 3
also requires that gas supply chain
and pipeline operators submit emergency operation plans
to the Commission, and those plans have to describe how
they plan to operate during extreme weather conditions.
Another bill that relates to emergency preparedness
is Senate Bill 1750, by Senator Kelly Hancock.
Senate Bill 1750 has passed the Senate, and it requires that
the Railroad Commission adopt rules
to requiring gas well operators and pipeline operators
to operate during a weather emergency.
Specifically weather emergency much like we saw
during Winter Stor Uri in February.
1750 also requires natural gas, transportation,
storage, and shipping entities submit
a winter weather preparedness plan
to the Railroad Commission, for review by the agency.
The third category of bills that I wanna describe
with you, are those bills bills that are responsive
to specific issues that surfaced
during Winter Storm Uri in February.
First, there's House Bill 3648, by Chairman Charlie Garren.
And, 3648 requires that the Railroad Commission work
with PUC, Public Utility Commission
to designate natural gas facilities and entities
as critical during a time of emergency.
The purpose of 3648 is to ensure that power is delivered
to natural gas entities, should power outages
or rolling blackouts occur to ensure
that natural gas can be delivered
to human needs customers during a time of emergency.
Another major bill that has passed the House,
is House Bill 1520, by Chairman Paddie,
1520 creates a securitization program,
that would be ministered by both the Railroad Commission
and the Texas Public Finance Authority.
And, this program would work
so where the Railroad Commission authorized the issuance
of bonds, and those bond proceeds would be used
by natural gas utilities to pay for the high price
of gas that they purchased during the winter storm.
In turn, those utilities customer's would pay a lower bill
throughout the summer in the upcoming years
to pay for the gas that was ultimately purchased
during February's winter storm market.
Again, House Bill 1520 has passed the house,
and it's pending referral in the Senate.
Lastly, I wanna bring to your attention House Bill 2000,
by Chairman Dan Huberty, which also has passed the House.
House Bill 2000 creates the
State Utilities Reliability Fund,
which is a fund administered by
the Water Development Board, provided grants to natural gas,
electric, broadband, and water utilities.
For the purpose of making their facilities
more resilient to extreme weather events,
much like the winter storm we saw in February.
House Bill 200 passed the House since pending referral
in the Senate, with that Chairman, I close.
I thank you for your time, and I'm open
to any questions that you may have.
-: Thank you, Jeremy, Commissioner Christian,
I saw you raise your hand, yes sir.
-: Yes, Thank you, Jeremy, I thank you, and I thank
Chairman Craddick for excellent work that y'all done
during this session in leading, and continue to do.
And, I appreciate very much both of you for your efforts
in leading through this session.
I'm increasingly concerned though about House Bill 1520,
it's not been referred to committee in the Senate.
It passed the House 20 days ago unanimously,
without this crucial bill, I'm afraid
our constituents will receive large unexpected gas bills
from the natural gas utilities as
a surcharge from that winter storm.
As you know, the cost of gas is not controlled
by gas utilities, but instead is set by
the market and passed through to consumers without markup.
High demand for energy during the storm cause gas prices
to rise, some utilities reported incurred gas costs equal
to two or three times more than expected annual gas cost.
1520 House Bill, allows for the high cost
of gas from the storm to be securitized, are providing
great relief through extending the timeframe over
which the extraordinary costs would have to be recovered,
lowering associated financing costs.
This method allows entities to use the credit worthiness
of the state to lower the interest rates,
ensuring rate payers would not
be impacted by additional fees.
I've written the Lieutenant Governor,
and many of our friends in the Senate
about the importance of this bill,
but I just wanted to express it here today as well.
Much of the public is going to be on a fixed income
in the state of Texas, cannot afford large unexpected bills.
And, I wanted to assure them that
the Railroad Commission takes this matter seriously,
and is doing what we can to make sure
that those high bills do not happen.
-: Thank you, Commissioner, Commissioner Wright,
do you have any comments?
-: No, I'd just like to thank you Chairman,
and you Jeremy for the wonderful work
y'all done this year over at the Capitol.
It's been amazing, thank you both.
-: Thank you, and thank you for the nice comments,
I appreciate both of you, and Jeremy, thanks.
I appreciate your update, and thank you to all the staff.
I know there's been some late nights and long hours,
especially last week, and we're probably not quite finished
with the late nights and long hours.
But, I think it's been important that we've come
with meaningful solutions, and I appreciate that.
It sounds like we're, some of the ideas
that we suggested are moving forward,
and I look forward to continuing working
with the legislature in the next three, four weeks.
Hopefully they get to go home and see it through,
because I think we definitely need something specific
that happens after the storm and it needs to be thoughtful
for customers and consumers going forward.
And, I too am concerned, Commissioner Christian,
about making sure that our customers and consumers
are protected, I think they've been a priority
from, at least, this agency through this whole process.
And, I wanna make sure that we don't see unreasonably
high gas bills as well going forward.
The gas was delivered, we appreciate the job
that gas utility companies did.
And, when we had 2100 people offline is all,
I think that's impressive, but I don't want
to make all of those customers have to pay
for high gas through the summer.
So, I appreciate you highlighting that,
and the last piece that as this legislature
begins to wrap up is, and we get
some better direction hopefully.
That we've all talked about,
and I think we'll continue to look at as an agency,
has to do with the gas curtailment order.
I know that that's a commitment I've made,
and I think this agency is made to make sure
we look at it coming up forward,
and have some modern, real world priorities.
Because the world's changed a lot since 1972, '73,
since we've done it, so I know that our work will continue
even after the legislature is done.
So, I appreciate it, Jeremy, thank you for the update.
And, if there's any other questions
or comments, I'll be glad for that.
-: Madam Chairman, I do have one question for Jeremy.
Jeremy, under that HB1520 securitization, would that
be retroactive if it were passed on to the consumer.
I know that some of those bills have already hit,
and I think some of those have already been sent out to some
of the natural gas utilization customers.
Will that be something that would be retroactive for them,
to not have to pay an abnormal cost,
and spread it out over time?
Commissioner Wright, thank you for your question.
1520 does not speak to the bills that were assessed
by utilities in March or April.
What it does is that, it creates a program
that utilities may apply to receive funds,
and have those funds dispersed from the Commission.
Upon receiving those funds, those bond proceeds,
utilities can then lower their customers
long-term gas bills, so they're essentially going
to amortize the payment for gas over time,
rather than issue high gas bills
in the immediate future to Texas customers.
-: So, with effect moving forward,
not something that's happened since March 1st.
-: Yes, sir.
-: Okay, thank you.
-: And, I do think, Jeremy, that we
as an agency had been working with
those gas utility companies, trying to
understand what their gas prices are.
They've done filings with us, and to see if there's
an opportunity for them to, as the legislature is trying
to wrap up their work, to delay some of those bills
if possible, just because we all appreciate
those are some high bills potentially to come.
All right, thank you, are there any questions or comments?
Thank you, Jeremy, for the update, I appreciate the work.
I know we've got another long few weeks left.
But, I think we're gonna finish strong.
So, I appreciate that.
-: Thank you, Chairman. All right,
if there's no other comments, questions, all right.
This meeting in the Railroad Commission is adjourned.
Thank you all, and safe travels, and send pictures
of grand baby, we wanna see.
-: Okay.
-: (chuckles) Thank you. -: Thanks guys.