| TO: | Honorable George "Buddy" West, Chair, House Committee on Energy Resources |
| FROM: | John S. O'Brien, Deputy Director, Legislative Budget Board |
| IN RE: | HB2984 by West, George "Buddy" (Relating to the composition and use of money in the oil-field cleanup fund. ), Committee Report 1st House, Substituted |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2006 | ($3,075,227) |
| 2007 | ($3,192,727) |
| 2008 | ($3,192,727) |
| 2009 | ($3,192,727) |
| 2010 | ($3,192,727) |
| Fiscal Year | Probable Revenue Gain/(Loss) from GENERAL REVENUE FUND 1 |
Probable Savings/(Cost) from GENERAL REVENUE FUND 1 |
Probable Revenue Gain/(Loss) from OIL-FIELD CLEANUP ACCT 145 |
|---|---|---|---|
| 2006 | $110,200 | ($3,185,427) | ($110,200) |
| 2007 | $110,200 | ($3,302,927) | ($110,200) |
| 2008 | $110,200 | ($3,302,927) | ($110,200) |
| 2009 | $110,200 | ($3,302,927) | ($110,200) |
| 2010 | $110,200 | ($3,302,927) | ($110,200) |
The bill would restrict the use of the Oil Field Cleanup (OFCU) Account No. 145 to the plugging of orphaned wells and to site assessment, investigation, and cleanup of orphaned sites.
The bill would redirect the proceeds of hazardous oil and gas waste generation fees and volutary cleanup program fees from the OFCU Account No. 145 to the General Revenue Fund. The bill would prohibit the use of the OFCU Account No. 145 to pay costs of related programs.
The bill would prohibit the Railroad Commission from using more than 25 percent of funds spent in a fiscal year from the OFCU Account No. 145 for purposes other than paying agents of the commission to plug orphaned wells or remeidate surface locations, including the administration of the oil field cleanup program. The bill also would require that, of amounts spent at orphaned well sites, at least 80 percent of spending would be solely for the plugging of orphaned wells.
The bill's provision that revenues from the hazardous oil and gas waste generation fee and the voluntary cleanup program fee be redirected from the OFCU Account No. 145 to the General Revenue Fund would result in a revenue gain to the General Revenue Fund of $110,200 per fiscal year and an equal revenue loss to the OFCU Account No. 145. Since the Railroad Commission reports that costs of these programs are covered by the revenue stream, appropriations to the commission out of the General Revenue Fund would increase by $110,200 each fiscal year and decrease out of the OFCU Account No. 145 by an equal amount.
The bill's provision that no more than 25 percent of OFCU Account No. 145 spending be used for administering the OFCU program would result in the Railroad Commission requiring additional General Revenue. Based on anticipated expenditures of $18.2 million in fiscal year 2006 and $17.7 million in fiscal year 2007 out of the OFCU Account 145 (Committee Substitute for Senate Bill 1), less $0.1 million for the hazardous waste, oil and gas waste, and voluntary cleanup programs, this estimate assumes that the bill would result in $18.1 million being appropriated out of the OFCU Account No. 145 in fiscal year 2006 and $17.6 million being appropriated in fiscal year 2007. Of this amount, no more than $4.5 million and $4.4 million, respectively, could be used each year for purposes other than plugging wells and remediating surface locations the OFCU program. Since the cost to administer the OFCU program, conduct site investigations and environmental assessments, control waste, administer and enforce permits, orders, and rules to prevent pollution is $7.7 million per fiscal year, and no more than 25 percent of such costs could be paid out of the OFCU Account No. 145 upon passage of the bill, this esimate assumes that the remaining $3.2 million in fiscal year 2006 and $3.3 million in fiscal year 2007 would be paid out of the General Revenue Fund.
This estimate uses fiscal year 2007 as a basis for determining fiscal impacts in fiscal years 2008-10.
| Source Agencies: | 455 Railroad Commission
|
| LBB Staff: | JOB, WK, ZS, TL
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