Texas Legislature
As the Texas Legislature establishes new laws each legislative session to regulate industry operations, TIPRO works hard to preserve the ability to explore and produce oil and natural gas in the state of Texas. During the state's legislative session, TIPRO tracks policy changes on behalf of the association's membership, working with state leaders to ensure a stable legislative and regulatory environment that will continue to prove conducive to economic growth and favorable for energy development in the Lone Star State.
During the 2021 Texas Legislative Session, top legislative priorities for TIPRO included:
Transportation
Transportation infrastructure investment, road repair and maintenance has been a key priority for TIPRO for many years, particularly as certain regions of Texas have experienced an increase in local exploration and production activities. Quality infrastructure benefits local communities and ensures that product can get to market in the most efficient way, promoting a healthy and vibrant economy. TIPRO remains committed to working with state lawmakers, local government leaders and other stakeholders to identify solutions to improve road quality for state and county roads.
Budget and the Economic Stabilization Fund
With this year's coronavirus (COVID-19) pandemic and economic downturn, the legislature faces a tough budget cycle to come in 2021, with many comparing it to the 2011 session when the state experienced a significant budget shortfall. In spite of difficult circumstances and more limited revenue streams, the legislature nonetheless is constitutionally obligated to pass a budget. Funding projected to be available for the state budget is roughly $11.5 billion less than originally estimated, putting the state on track to end the biennium with a deficit of nearly $4.6 billion. Texas therefore will have approximately $110 billion to work with for the 2022-2023 state budget.
Lawmakers could choose to pull funding from the state's oil-fed Economic Stabilization Fund, known also as the Rainy Day Fund, to support the state budget. The Rainy Day Fund will have an ending balance of $8.8 billion at the end of the 2021 Fiscal Year, providing that officials don't withdraw any money from the account to offset budgetary deficits.
Taxes
Given current market conditions, TIPRO has received an increasing number of inquires regarding ad valorem property tax appraisals for 2020. Texas Tax Code §23.175 states that appraisals of oil and gas interests use the average price of oil or gas from the interest for the preceding calendar year multiplied by a price adjustment factor to adjust for the current year. TIPRO is evaluating potential legislative proposals that will provide greater flexibility to appraisal districts and offer relief to operators during extreme periods of market volatility.
Water Issues
Water treatment and recycling will continue to be considered by state lawmakers in the coming legislative session. Through a joint interim charge, both the House Committee on Energy Resources and House Committee on Ways and Means are exploring the status of water reuse efforts in the oil and gas industry in Texas and elsewhere, and working to evaluate options for tax credits, deductions or discounts that would serve to encourage additional water recycling, treatment or reuse of produced water from oil and gas production activities.
TIPRO continues to advocate for fair regulatory policies that will enhance environmental stewardship, without promoting administrative barriers that hinder economic growth through slower permitting or reduced E&P activities.
Eminent Domain
In the state's 87th Legislative Session, the oil and gas industry will lead on the Eminent Domain issue and present its own proposal to finally address perceived problems with the current process. Legislative proposals will focus on the three issues landowner groups sought to address in the last session. This includes: adding requirements for an initial offer, revise the land owner bill of rights to include additional information, require licensure of right away agents, prohibit incentives or kickbacks, create standardized easement terms and tweak some procedural directives.
To catch up on notable TIPRO accomplishments from the 86th Texas Legislative Session and learn about the outcome of legislative proposals relevant for the oil and gas industry during the last legislative cycle, download TIPRO's '2019 End of Session State Legislative Report' here.
