LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 24, 2001 TO: Honorable Ron E. Lewis, Chair, House Committee on Energy Resources FROM: John Keel, Director, Legislative Budget Board IN RE: HB2438 by Merritt (Relating to transferring administrative hearings performed by the Railroad Commission of Texas to the State Office of Administrative Hearings.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB2438, As Introduced: negative impact of $(2,938,264) through * * the biennium ending August 31, 2003. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2002 $(1,507,632) * * 2003 (1,430,632) * * 2004 (1,430,632) * * 2005 (1,430,632) * * 2006 (1,430,632) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Savings/(Cost) from Change in Number of State * * Year General Revenue Fund Employees from FY 2001 * * 0001 * * 2002 $(1,507,632) 20.0 * * 2003 (1,430,632) 20.0 * * 2004 (1,430,632) 20.0 * * 2005 (1,430,632) 20.0 * * 2006 (1,430,632) 20.0 * *************************************************************************** Fiscal Analysis The bill would transfer all contested case hearings under the jurisdiction of the Railroad Commission of Texas (Commission) to the State Office of Administrative Hearings (SOAH). The Commission and the Chief Administrative Law Judge (ALJ) of SOAH would adopt a Memorandum of Understanding (MOU) providing for (SOAH) to hold all Commission hearings authorized or required by law to be conducted under the Administrative Procedures Act (APA). The MOU must authorize SOAH to perform any administrative act, including giving of notice, that is required to be performed by the Commission. The SOAH administrative law judge (ALJ) conducting the hearing would issue the final decision in the case. The Commission by Interagency contract would reimburse SOAH for its hearing costs either by hourly fee or by a fixed annual fee negotiated biennially. Methodology According to SOAH, the bill would have significant fiscal impact on SOAH since this agency would hold all contested case hearings for the Commission. SOAH estimates the annual costs resulting from the transfer of the hearings function to SOAH would be $1,507,632.00 for the first full fiscal year after the transfer. According to information SOAH obtained from the Commission, in calendar year 2000 the Commission's hearing examiners recorded 16,500 hours in contested case activities. The hearing examiners are part of the Office of the General Counsel, and are assigned to the Oil and Gas Section, Gas Services Section, or Surface Mining Section. The Commission employs seven hearing examiners and one supervising attorney in the Oil and Gas Section, three hearing examiners and one half-time supervisor in the Gas Services Section, and one hearing examiner in the Surface Mining Section. Hearings support is provided by two secretaries in the Oil and Gas Section, one secretary in the Gas Services Section, and one secretary in the Surface Mining Section. The secretaries are either Administrative Technicians III or IV. Two docket clerks (Administrative Technicians III) handle the notice duties for all of the hearings. Based upon the Commission's experience, SOAH would need 20 new FTEs to handle the work transferred under the bill. This would include eleven administrative law judges (ALJs) to conduct the Commission's hearings and one ALJ/Supervisor. Given the complexity of many of the hearings, the ALJs would need to be classified as Judge II or Judge III. In addition, four Administrative Technicians would be needed to support the hearings and two Docket Clerk II would be necessary to handle docketing and notice duties. SOAH would need two FTEs to provide administrative and technical support. Other annual costs include publishing and mailing of hearing notices, which the Commissions estimates as $4,700, and travel for Gas Services hearings in the local area, which is estimated to be $1,500. Finally, because SOAH has maximized use of its existing space in the Austin office, additional space would be needed for the new personnel and equipment. Because the amount of State-owned space is unknown at this time, rent has been included for the expanded Austin office space that would be needed. There will not be any savings to the Commission because they will need staff in the office of general counsel since they will still be a party to those hearings. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 304 Comptroller of Public Accounts, 360 State Office of Administrative Hearings, 455 Railroad Commission of Texas LBB Staff: JK, CL, SK