BILL ANALYSIS H.B. 1407 By: HOLZHEAUSER 02-26-95 Committee Report (Amended) BACKGROUND Current law prohibits the Commission from accepting only applications for drilling permits if an operator is in non-compliance with Commission orders, rules, or permits relating to safety or pollution. Current law does not prohibit a non-compliant operator from taking over a new well after it has been drilled. PURPOSE This legislation expands and tightens the compliance incentives enacted for drilling permits in the 91st Legislative Session. This legislation amends the Natural Resources Code to prohibit a person who has not complied with Railroad Commission enforcement orders from obtaining injection or disposal well permits, oil and gas waste storage, disposal or hauling permits or certificates of compliance from the Commission. The bill also gives the Commission discretionary authority, with guidelines, to revoke permits, a certificate of compliance or an operator's organization report if the operator has outstanding violations. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Changes Section 91.110, Natural Resources Code, to 91.114 (currently two 91.110 sections exist) and amends the Section as follows: Subsection (a) provides that the commission may not accept applications for permits under Chapters 85 or 91, Natural Resources Code, or under Chapters 26, 27, or 29, Water Code, or issue a certificate of compliance under Chapter 85.161 if certain persons named in Subdivision (a)(1) hold an specified interest in organizations that have violated a rule, order, license, permit, or certificate that relates to safety or pollution as provided in Subdivision (a)(2) and the violation has not been corrected in compliance with Subsection (d). Subsection (e) is added and provides that the commission may revoke a permit named in Subsection (a), a certificate of compliance, or an organization report, if the holder is not in compliance with the conditions set out in Subdivisions (a)(1) and (2) of the Act. The Subsection requires that the commission order entered in a revocation proceeding provide a reasonable period of time to comply with the order before revocation is effective. Subsection (f) is added and provides that the commission may not revoke a permit, certificate of compliance or organization report if the holder has fulfilled the conditions in Subsection (d) of the Act. Subsection (g) is added and provides that the commission in a revocation proceeding must consider the person's history of previous violations, the seriousness of previous violations, any hazard to the health or safety of the public, and the demonstrated good faith of the holder of the permit, certificate or report. SECTION 2. Effective Date: September 1, 1995. SECTION 4. Emergency Clause. EXPLANATION OF AMENDMENTS Committee amendment No. 1 applies Section 85.161, Natural Resources Code, to this bill rather than the incorrect citing of "Chapter" 85.161. Amendment No. 1 also allows non-complying organizations to obtain permits from the Railroad Commission if they are on schedule to correct conditions causing them to be out of compliance. SUMMARY OF COMMITTEE ACTION H.B. 1407 was considered by the Energy Resources Committee in a public hearing on March 6, 1995. The committee considered one amendment to the bill. The amendment was adopted. The following witnesses testified in favor of the bill: Lindsey Dingmore, representing T.I.P.R.O.; and, Rob Looney, representing the Texas Mid-Continent Oil and Gas Association. Brenda Loudermilk of the Railroad Commission of Texas testified neutrally on the bill. No one testified against the bill. The bill was reported favorably as amended, with the recommendation that it do pass and be printed and be sent to the Committee on Local and Consent Calendars, by a record vote of 8 ayes, 0 nays, 0 PNV, and 1 absent.