SUNSET PROCESS DRAWS TO A CLOSE

The Sunset Advisory Commission is an independent state agency that periodically reviews other state agencies to determine whether those agencies should remain in existence. The reviews include reports, hearings, and commission recommendations on legislation to improve the agencies’ functions.  After lengthy staff reports and a hearing process, last interim’s process is essentially finished.  Several agencies were up for review, and League staff monitored the process throughout the interim.  

Of particular interest to city officials are the Railroad Commission (RRC) and the Public Utility Commission (PUC).  Both of those agencies were actually reviewed prior to the 2011 session, but procedural and political issues prevented their respective “sunset legislation” from passing.  Instead, lawmakers filed a stopgap bill to continue them until this session. 

The PUC report contains many recommendations related to the administration of the agency.  One item considers whether “the state could benefit from transferring regulatory functions related to water and wastewater utilities to the [PUC].”  The commission adopted a recommendation to transfer responsibility for regulating water and wastewater rates and services from the Texas Commission on Environmental Quality to the PUC.

The RRC report contains provisions related to municipal participation in gas rate cases and gas pipeline safety.  Here are selected excerpts from the report:

Issue 1. Changing the Railroad Commission’s Name and Addressing the Appearance of Conflicts of Interest Remain Critical to Ensuring Transparent and Effective Regulation.

The need for neutral, independent staff to preside over contested enforcement and gas utility cases remains critical to ensure the fair and unbiased treatment of all parties. The 2010 Sunset review found the Railroad Commission, unlike other state regulatory agencies, relies on its own staff attorneys to preside over contested enforcement hearings and gas utility rate cases instead of using the State Office of Administrative Hearings (SOAH). Despite not supporting the transfer of gas utilities to the Public Utility Commission, if kept at the Railroad Commission, the Sunset Commission recommended that gas utility cases be handled by SOAH to ensure outside objectivity.  For enforcement cases, the Sunset Commission also adopted the staff recommendation to transfer these hearings to SOAH. Neither of these provisions made it into law, as the Sunset bill failed to pass [in 2011].

In reevaluating this issue, Sunset staff found the commission has taken steps to separate technical staff with party status and staff involved with decision making in administrative hearings into different divisions. While reducing the potential for inadvertent ex-parte communication, in-house hearings examiners remain subject to the overall pressures of working within the agency. Thus, the reasons for transferring these hearings to SOAH have not changed. Despite industry claims of additional costs and time delays, Sunset staff could find no convincing evidence to support these allegations, and even to the extent these concerns have any merit, they would not outweigh the need for an impartial hearings officer.

Recommendations:

  • Change the name of the Railroad Commission of Texas to the Texas Energy Resources Commission and continue the agency for 10 years.
  • 1.6   Require the Commission to use the State Office of Administrative Hearings to conduct independent hearings for its contested gas utility and enforcement cases.  In lieu of Recommendation 1.6, the commission adopted a modification to statutorily require the commission to develop a policy in rule to prohibit and ensure against any inadvertent ex-parte communications between hearing examiners and the commissioners, and hearing examiners and technical staff that are parties to a hearing. This recommendation would require the commissioners to not have contact with the hearing examiners other than in a formal public hearing.

Issue 6. Texas’ Interstate Pipelines Lack Damage Prevention Oversight Needed to Ensure Public Protection.

Recommendation

  • 6.1 Authorize the commission to enforce damage prevention requirements for interstate pipelines. This recommendation would authorize the commission to amend its pipeline damage prevention rules to apply to interstate as well as intrastate pipelines, and to enforce these rules for violations that affect both types of pipelines. Under this recommendation, the commission could assess administrative penalties against excavators and operators that violate damage prevention rules on interstate lines. The commission would deposit these penalties in the General Revenue Fund, as it does with penalties from its intrastate pipeline damage prevention program.

In addition to the above, the report also provided a list of new issues raised during the RRC’s sunset process.  The Texas Public Policy Foundation was quoted as making the following recommendations, which were not acted on by the Commission:

  • Eliminate original jurisdiction for cities over natural gas rates.  Instead, shift original jurisdiction to the RRC.
  • Eliminate the mandated reimbursement of legal fees for cities in gas utility rate cases before the RRC.

Once all of the reports are complete, sunset legislation will ultimately be filed to continue the RRC, PUC, and many other state agencies.  League staff will, of course, review and take appropriate action on any legislation when it is filed.  All of the sunset reports are available at http://www.sunset.state.tx.us/.

TML member cities may use the material herein for any purpose.
No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the
Texas Municipal League.

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