Higher Penalties for Oil and Gas Industry Have Bipartisan Support in Legislature

Photo Courtesy of The Texas Tribune

Rep. Gene Wu, D-Houston introduced HB 1863 to increase maxmim penalties from the Railroad Commission.

Freshman State Representative Gene Wu, D-Houston, introduced a bill this week that would substantially increase many penalties oil and gas companies would have to pay for violating state rules.

HB1863 would increase the maximum fines The Railroad Commission of Texas, the agency that oversees the state’s oil and gas industry, could impose on rule-breaking drillers and pipeline operators.

“There are bad actors out there that are violating state law and Railroad Commission policy,” Wu says. “The Railroad Commission fines them, and they say, ’You know, business is so good that were going to take these fines as a cost of business, and keep doing what were doing.’ These bad actors are giving the rest of the industry a black eye.”

Current violations in pipeline safety can cost companies a maximum of $10,000 per violation per day. If the bill passes, the maximum fine would be 20 times higher, meaning a company could be fined up to $200,000 per day, per violation.

However, Wu says the bill is meant to act as more than just a deterrent against violating state guidelines.

“It’s not merely meant to punish, and it’s not merely meant to correct for inflation, but it’s also meant to supplement the budget,” Wu says.

Senator Troy Fraser, a Republican from Horseshoe Bay and Chairman of the Senate Natural Resources Committee, introduced a companion bill this week. SB 900 is identical to Wu’s bill. The changes advocated in both bills are also laid out in a sunset bill covering the Railroad Commission, a routine review of state agencies by the legislature.

“This is a belt and suspenders type of bill,” Wu says. “The sunset bill is going to take care of this, but just to be sure we are going to put on the suspenders.”

Bill Stevens, a government affairs consultant for the Texas Alliance of Energy Producers, says he is fine with increased fines, as long as the Railroad Commission determines the severity of each violation.

“If you are a violator, you’re a violator,” Stevens says. “But we want to make sure that we understand the degrees of a violation, and the response of the individual or the company to correct the situation. I want to make sure the bill allows for that type of discretion.”

Wu says the Energy Resources Committee, which he serves on, will most likely hear the bill.