| TO: | Honorable Tom Craddick, Speaker of the House, House of Representatives |
| FROM: | John S. O'Brien, Deputy Director, Legislative Budget Board |
| IN RE: | HB951 by West, George "Buddy" (Relating to construction affecting pipeline easements and rights-of-way.), As Passed 2nd House |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2006 | $0 |
| 2007 | $0 |
| 2008 | $0 |
| 2009 | $0 |
| 2010 | $0 |
| Fiscal Year | Probable (Cost) from GENERAL REVENUE FUND 1 |
Probable Revenue Gain/(Loss) from GENERAL REVENUE FUND 1 |
Change in Number of State Employees from FY 2005 |
|---|---|---|---|
| 2006 | ($375,818) | $375,818 | 5.0 |
| 2007 | ($364,768) | $364,768 | 5.0 |
| 2008 | ($364,768) | $364,768 | 5.0 |
| 2009 | ($364,768) | $364,768 | 5.0 |
| 2010 | ($364,768) | $364,768 | 5.0 |
The bill would amend the Natural Resources Code and the Utilities Code to allow a municipality to assess a reasonable annual charge for the placement, construction, maintenance, repair, replacement, operation, use, relocation, or removal by an owner or operator of hazardous liquid or carbon dioxide pipeline facility of public right-of-ways (streets, streams, canals, alleys, etc.) located within the municipality. The bill also would allow a municipality to recover the reasonable cost of repairing damage to a public right-of-way (ROW) caused by the placement, construction, operation, relocation, removal or other use of a pipeline facility if the owner of the facility does not repair damages in accordance with generally applicable paving or other applicable standards in the municipality. The owner or operator of a pipeline facility could appeal the assessment of the annual charge to the Railroad Commission to determine if the charge is reasonable.
The bill would amend Subchapters G and H, Chapter 756 of the Health and Safety Code to establish that a constructor who violates the subchapters would be liable to the owner or operator of a pipeline facility for damages proximately caused by the violation, including any liability that the owner or operator would incur as a result of the damage. A suit for injunctive relief to prevent or abate the violation may be brought by the applicable county attorney, the attorney general, or by the owner or operator of the pipeline facility.
Under current statute, there are two Subchapter Gs in Chapter 756, Health and Safety Code. The proposed amendments to Subchapter G and Subchapter H are identical. If other acts of the Seventy-ninth Legislature, 2005, relating to nonsubstantive additions to and corrections in enacted codes do not become law (leaving two Subchapter Gs), then the proposed amendments to Subchapter G in the bill would take effect; otherwise, that portion of the bill would not take effect. If the amendments to Subchapter G in the bill do not become law (because other nonsubstantive corrections are enacted), then the proposed amendments to Subchapter H would take effect. Conversely, if Subchapter G in the bill becomes law, then the proposed amendments to Subchapter H would not take effect.
Regardless of whether amendments to Subchapter G or Subchapter H become law, enactment of the bill would have the impact described in the first paragraph of this fiscal note.
The bill would take effect immediately if it receives the required two-thirds vote in each house; otherwise, it would take effect September 1, 2005 and would apply only to conduct that occurs on or after the effective date.
This estimate assumes that municipalities throughout the state would assess annual charges to owners and operators of oil and gas pipelines. The Railroad Commission expects that a significant number of oil and gas operators would appeal to the Commission annually. The agency estimates that the number of complaints handled by its Office of General Counsel's Gas Services Section and the Gas Services Market Oversight Section would increase by 190, including as many as 100 formal complaints. This would represent a substantial increase over the agency's current annual workload of only 25 such formal complaints. It is therefore anticipated that the Railroad Commission would require an additional 5.0 FTEs, with associated annual costs of $364,768 and one-time startup costs of $11,050 in fiscal year 2006, as a result of the bill's passage. This estimate assumes that all costs resulting from the bill's passage would be recovered from oil and gas pipeline operators as provided in the bill.
The Office of Attorney General estimates that costs associated with any additional lawsuits processed by that office as a result of provisions within the bill could be absorbed using existing resources. It is anticipated that local government entities would also process suits using existing resources.
There are provisions of the bill that could have a positive fiscal impact that would vary by municipality, as well as provisions that could have a negative fiscal impact.
By imposing an annual charge for usage of the public ROWs located within and maintained by the municipality, it would incur a revenue gain that would help offset maintenance costs for those public ROWs. Authorization to charge to recover the costs of repairing damage caused by the pipeline would provide a savings to the municipality.
Requiring a municipality to share equally in the cost of an appeal with the owner or operator of a pipeline facility would result in a cost to the municipality. The overall negative fiscal impact would depend on how many appeals occur and the level of costs associated with the appeals. If the municipality were to lose the appeal, there also would be a reduction in revenue.
| Source Agencies: | 455 Railroad Commission
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| LBB Staff: | JOB, SD, WK, ZS, DLBa, TL
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