LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 7, 2001
TO: Honorable J.E. "Buster" Brown, Chair, Senate Committee on
Natural Resources
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1750 by Haywood (Relating to authorizing plans for
unit operations for oil or oil and gas production.), As
Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1750, As Introduced: negative impact of $(496,698) 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. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(252,474) *
* 2003 (244,224) *
* 2004 (244,224) *
* 2005 (244,224) *
* 2006 (244,224) *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Savings/(Cost) from Change in Number of State *
* Year General Revenue Fund Employees from FY 2001 *
* 0001 *
* 2002 $(252,474) 3.0 *
* 2003 (244,224) 3.0 *
* 2004 (244,224) 3.0 *
* 2005 (244,224) 3.0 *
* 2006 (244,224) 3.0 *
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Fiscal Analysis
The bill would require the Railroad Commission (RRC) to adopt and enforce
rules or orders necessary to carry out unitization for oil or oil and
gas production. The RCC would determine whether a plan of unitization
and participation formula is fair, reasonable and equitable for all
interests concerned and necessary to carry out the purposes of the bill.
The RRC would dismiss applications for unitization unless specified
notice and consent requirements are met. The RRC would be required to
set the matter for hearing and ensure that a minimum 31-day notice of
hearing is mailed to all on a list supplied by the applicant. After
notice and hearing, the Commission determines whether the plan of
unitization, expenses, and allocations of profits are reasonable and
necessary and that basically all interests are protected. If all
conditions are met as outlined in the proposed act, the Commission
issues an order approving the unit and a plan for the unit. Any
expansions of existing units must follow the same procedure.
Methodology
According to the RRC implementation of this bill would require extensive
rulemaking and approximately 25-35 unitization application hearings to be
held annually. Each hearing is estimated to have an average duration of
2-3 days. It is anticipated that the additional workload would require
three new FTEs in the Office of General Counsel to timely hear and
resolve these complex cases. Estimated costs for salaries are
approximately $150,000 per year plus benefits at approximately $43,000
per year.
Each of the unitization applications hearings will require that the
Commission mail notice of the hearings to interested owners. The mailed
notices are estimated to cost approximately $40 per hearing. The
Commission is also required to publish notice of the hearings once a
week for four consecutive weeks in a newspaper. RRC estimates this to
cost $1,000 per hearing. These fiscal implications will continue as long
as the provisions of the bill remain in place.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 455 Railroad Commission of Texas, 304 Comptroller
of Public Accounts
LBB Staff: JK, CL, SK