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: HB3427 by Merritt (Relating to the composition of the oil-field cleanup fund, the amounts of certain fees deposited to the credit of the fund, and the use of money in the fund.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB3427, As Introduced: positive impact of $0 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 $0 * * 2003 0 * * 2004 0 * * 2005 0 * * 2006 0 * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Revenue Gain/(Loss) Probable Revenue Gain/(Loss) * * Year from Oil Field Cleanup Account/ from Coastal Protection * * GR-Dedicated Account/ GR-Dedicated * * 0145 0027 * * 2002 $51,559,000 $(8,593,000) * * 2003 53,105,000 (19,335,000) * * 2004 54,699,000 0 * * 2005 56,340,000 (17,186,000) * * 2006 58,030,000 (10,741,000) * *************************************************************************** Fiscal Analysis This bill would amend Chapter 40 of the Natural Resources Code to require that the coastal protection fee collected under Section 40.155 be deposited into GR Account No. 145 Oil-Field Cleanup fund. The bill would eliminate the $50 million limitation on the balance in GR Account No. 27, Coastal Protection; and it would double the coastal protection fee to $0.04 cents per barrel of crude oil transferred to or from a vessel at a marine terminal. In addition, the bill would remove language directing that collection of the fee stop and start depending on the balance in GR Account No. 27. The bill would grant the Railroad Commission the authority to reduce or increase, alternately, certain fees now imposed on the exploration or production of oil or gas, but it would not mandate a reduction in any such fee or allow rates to exceed the limits established by current law. Methodology According to the Comptroller of Public Accounts (CPA), currently the coastal protection fee is collected whenever the balance in GR Account No. 27 is between $14 million and $25 million. The amount the CPA determines losses will be to the Coastal Protection Account No. 27 in each year varies based on the assumption that at some point in the year fees will not be collected because the fund balance will be in excess of $25 million. Under this bill, the fee rate would double, and the revenues would be collected continuously and deposited into GR Account No. 145. Section 91.111(b) of the Natural Resources Code, which this bill would retain, requires that when the balance in GR Account No. 145 reaches $10 million, collection of the oil-field cleanup fees must stop, only to resume when the balance falls below $6 million. The CPA states that there would be no direct effect from removing the $50 million cap on the balance in GR Account No. 27 because the major source of revenue into this account is from the coastal protection fee, which would be deposited into GR Account No. 145. The CPA indicates that for the purposes of this fiscal note, it was not possible to predict when the balance in GR Account No. 145 would reach $10 million, thereby halting collection of the oil-field cleanup fees. It is not possible to predict the likely magnitude and rate for expenditures from this account pursuant to RRC actions under this bill. Likewise the CPA indicates that it is not possible to determine which, if any, of the fees authorized for reduction by RRC might ultimately be reduced or eliminated, thereby reducing the flow of revenue into the account. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies: 582 Texas Natural Resource Conservation Commission, 304 Comptroller of Public Accounts LBB Staff: JK, CL, SK, ZS