Energy & Water

TPPF has issued a new report on fracking, here’s what they want you to know:

• There is no link between fracking & earth quakes.
  • Earth quakes are up globally, including in many areas where there is no fracking
• There is no link between fracking & groundwater contamination
  • US Department of Energy confirms there is no contamination link
• Emissions from fracking have decreased over the last 10 years
  • TCEQ in 2012 released data showing that noxious gas emissions from mobile sources is 15 times greater than fracking 
• Fracking bans cost cities 100s of Millions in lost tax revenue and gross product
  • A Ft. Worth Chamber of Commerce Perryman report shows Denton will lose:
    • $251.4 million in economic activity
    • 2,077 person-years of employment
    • $5.1 million in local tax revenue
    • $4.6 million in tax revenue for its schools 
• Local Control is not a governing principle
  • Cities are subject to the supremacy of the state, just as the state is subject to the supremacy of the federal government

Local control is not a governing principle? TPPF recognizes that cities do have some tools in tool belt, including:

• zoning authority
• Restrict when and where drilling activities can happen   

TPPF  

In 1932 Hermosa Beach banned oil drilling. The ban was lifted in the 1990s for a single project, which was later scrapped.

This week an election was held to overturn the oil drilling ban. Even though drilling would have provided millions in revenue for the city, voters approved continuing the ban on oil drilling. LA Times

The Department of Energy recommended the following data security priorities for the U.S. Energy Sector:

Houston Business Journal top 5 energy stories of the week include increasing momentum for  private investment in Mexico’s newly de-regulated energy market.
Houston Business Journal 

Iowa is polling on everything from potential Presidential candidates to private companies using eminent domain. Private companies using eminent domain is as popular in Iowa as it is in Texas.

• 57% favor pipelines
• A majority favor building wind transmission lines and pipelines

Iowans like energy projects, but they strongly dislike these same companies using eminent domain. 

• 74% oppose eminent domain by pipelines and transmission line companies
• 7% are not certain
• 19% support eminent domain for pipelines ans transmission lines

LBB recommendations in the Management and Performance Review of  the Brazos River Authority:

Projects receiving finance approval on 2/25/15 include:

• $500,000 in financial assistance to the Baylor Water Supply Corporation (Baylor, Knox, Archer, Throckmorton and Young counties) for a water supply project 
• $5,000,000 in financial assistance to the Central Texas Water Supply Corporation (Bell, Burnet, Coryell, Falls, Lampasas, Milam and Williamson counties) for a water supply project 
• $179,000 in financial assistance to the City of Malone (Hill County) for water meter replacements 
• $4,617,955 in financial assistance to the City of San Marcos (Hays, Caldwell, Guadalupe and Comal counties) for wastewater system improvements 
• $2,460,000 in financial assistance to the Harris County Municipal Utility District No. 50 (Harris County) for wastewater system improvements and a new wastewater treatment plant 
• $1,050,000 in financial assistance to the City of Reklaw (Cherokee and Rusk counties) for water system improvements

TWDB

Testimony before a California Senate Panel called the the state’s drought a threat to public health for 4 reasons:

• Rising food costs
• Increased respiratory disease
• Loss of drinking water
• During extreme weather health care and preventative health care services are disrupted, especially disrputive for low income individuals seeking health care   

Courthouse News Service

A legal analysis of the recent 9th Court of Appeals opinion in Denbury raises an interesting point that establishing common carrier status is not enough.

A common carrier might meet all its standards and establish a public use, but a jury could still deny its use of eminent domain in a particular case, if the jury does not find the facts of the case establish a “substantial public interest.”

Attorneys anticipate continued litigation over eminent domain and common carrier status.

Lexology 

On Wednesday a Travis County court heard arguments concerning whether to move the “ban the fracking ban” case to Denton.

An attorney for the state said he hopes the Legislature solves the issue first.

Refreshing Recollection, here’s what’s happened so far:

• November 2014 Denton voters approve a fracking ban
• Immediately thereafter, TXOGA files suit in Denton County to block the fracking ban
• Immediately after voters approved the ban, the General Land Office filed suit in Travis County to block the fracking ban
• Its up in the air if the two cases will be consolidated.
• The fracking ban is currently in effect

Denton Record Chronicle

A vocal group at a transmission line public meeting echoed the refrain- no eminent domain for private gain. It rhymes which makes it good for protest marches.

A Houston Company is the target of this group of landowners. The company, Clean Line Energy Partners, is seeking the federal government’s buy-in to a wind energy project in Oklahoma & Arkansas. If the federal government gets involved, then the company gets eminent domain authority. 

200 landowners showed up to a meeting. They were lock step in opinion. The highlights:

• “This project is about one thing, and that’s greed,” she said. “They don’t see our green trees, our land, our lives that are so important to us. They see a different kind of green, and that’s money.”
• Transmission lines would make their property useless and worthless
• Multiple local governments have voted in opposition to federal government involvement and in opposition to eminent domain

Project Supporters Say:

• The project will be a half-billion-dollar investment
• It will generate jobs
• It will provide 500 megawatts of low-cost, clean energy to Arkansas electric customers.
• Arkansas Wildlife Federation supports “the project as an opportunity to lower the state’s dependence on nonrenewable coal and other fossil fuels.”

Arkansas Online

Update to Regulating Groundwater, Texas Style:

• Texas A&M Agrilife Law Blog writes about the tensions running high in this fight
• Texas Tribune: Hays County Water Fight Portends Battles to Come

Refreshing Recollection from Information Intelligence:

In 2014, California for the first time began regulating the pumping of groundwater.  Sacramento Bee

With the 2015 Texas Legislature comes Texas foray into regulating groundwater. HB1191 would establish a process by which commercial entities could pump groundwater in buffer zones. TWDB would have regulatory authority over the process.

Legislators wants to pull back solar subsidies in Washington State. Solar leasing companies say pulling back subsidies does not help grow the solar industry. 

Washington Legislators say by pulling back state subsidies, the solar industry will then be able to access other subsidies which are currently not avialable.  Seattle Times

San Antonio is setting itself apart with solar energy. Here’s how San Antonio, via CPS Energy, embraced solar:

• Solar is on 2,500 roofs based on a COS Energy Program that offers rebates for homeowners
• A solar farm in the works that will power the equivalent of 70,000 homes.
  •  CPS Energy negotiated deals with solar power companies, like OCI Solar Power, the developer of the 400 megawatt solar farm.
    • It is the largest economic development agreement between a municipal utility and a private company in the U.S.,
    • Will create 800 permanent jobs by 2016.
•  A new pilot program from CPS Energy will make rooftop solar available to more San Antonio residents, including low-income households 
  • CPS Energy will buy the solar power output, and the solar developer will pay the customers for the use of their roofs.
• CPS Energy’s goal is to get solar energy in San Antonio to an output level equal to a power plant

USA Today

Munroe Falls, OH passed a fracking ban. The company that wanted to produce oil and gas sued.

Last week, the OH Supreme Court found that state oil and gas permitting requirements trump local ordinances based on specific provisions in the OH constitution. It’s a nuanced rational from Justice Judith L French:

• Local ordinances “prohibit – even criminalize – the act of drilling for oil and natural gas without a municipal permit”
• And because of the criminalization
• “… the ordinances represent an exercise of police power rather than local self-government.”
• The police power is specially mentioned in the home rule city amendment in the OH Constitution and states local ordinances “must yield to a state statute.”

The case has multiple opinions, but Justice French’s controls. Courthouse News  National Law Review

Similar cases are moving in Texas courts on the Denton fracking ban. Information Intelligence

In addition, multiple bills have been filed to ban local bans. Information Intelligence

The new State Interactive Water Plan Map can be adjusted by:

• Year
• Regional Water Demand
• Regional Existing Water Supplies
• Regional Water Needs
• Regional Recommended Water Strategies

In addition to mapping the above, the map settings (above) will generate interactive industry and water use data. The map will generate data about:

• Generates a tree map of water by region
• Generates a tree map & hard data by Water Use Categories:
  • irrigation
  • municipal
  • manufacturing
  • steam electric 
  • livestock 
  • mining

State Interactive Water Plan Map

Background: US Fish and Wildlife Department (USFWD) partners with Texas to protect the dunes sagebrush lizard. Conservationists not pleased as punch.

A person in the USFWD objected to allowing Texas to enter into voluntary pacts to conserve the lizard. The USFWD person gets relieved of their duties & relocated to Siberia by way of New Mexico. 

Issues: Declare the lizard an endangered species, would oil and gas industry weather away in the Permian Basin?  Is the USFWD person a whistleblower enttiled to legal protections?

Lawsuit #1, the Whistle Blower: Settles. 

Lawsuit #2, the little lizard: The whistleblower becomes a consultant. A group sues to protect the little lizard. They lose at district court. It’s on appeal.  

Houston Chronicle 

Burton says cities should not be able to infringe on private property rights. Her SB 440 ,prohibiting Denton-like fracking bans, protects private property rights.  SB440  leaves the door open for cities to regulate where, when and how oil and gas production can occur. 

Texas Municipal League Reaction:

• Burton’s SB 440 is a better starting point since city regulation remains on the table.
• Phil King’s HB 539 & HB 540 are “non-starter(s)” as they remove a city’s ability to establish distance regulation on gas wells.

FW Star Telegram

Refreshing Recollection from Information Intelligence:

HB 539 & HB 540: Local Fracking Bans Harm Texas Tax Coffers | Information Intelligence

Bill Filing: Ban Fracking Bans | Information Intelligence

12 North Texas Earthquakes on the Front Page, Impact to Fracking Legislation | Information Intelligence

Fracking Ban Meets Legislature. Bills Filed. Fight Begins, Again. | Information Intelligence

A re-map of fault lines in the Dallas area by SMU scientists, armed with more data, led to 3 new conclusions by the scientists:

•  Fault line is nearer to fracking locations than the previously mapped Texas Stadium location
• Little tie to fracking activities as  the Irving-Dallas fault lines are miles deeper than fracking wells. 
• Numerically, more injections wells have been linked to quakes than fracking 

Dallas Morning News

A notable uptick in the number of oil and gas lease disputes is hitting Texas.

The oil and gas lease disputes have led to policy issues and lawsuits.  The more legal disputes, the more legislative proposals that emerge. Lawsuits lead to legislation.  Law360

If HB 1221 passes, sellers of real property will have to disclose if:

• is located in a groundwater conservation district
• Is located in a subsidence district, or
• is located in other special purpose district with the authority to regulate the withdrawal of groundwater. 

The Lower Brazos Coalition formed in January. It is part of the Task Force of the Economic Development Alliance for Brazoria County. Let’s look at who is involved & what the goal is:

Members of the Coalition include:

• Coalition Chair: Brazoria County Judge Matt Sebesta
• Coalition Vice-Chair: Ivan Langford, general manager of the Gulf Coast Water Authority
• concerned individuals
• organizations
• municipalities
• ranchers and farmers
• environmentalists
• conservationists
• businesses and industries, e.g. Kirby Brown for Ducks Unlimited

What’s the Coalition’s goal?

• Respond to upstream efforts to limit water flowing downstream. 
• Protect down stream interests for the 840 miles of the Brazos River 
  • There are more than 1,100 water rights holders in the Brazos River
  • Downstream petrochemical projects bring thousands of direct jobs

Pearland Journal

SB 440 by Burton is a concise bill that makes it prohibitive for counties and cities to ban fracking.

Let the games begin for local control. 

Water Funding requests totaled $5.5 billion. That’s significantly more than the funding available. But, which parts of the state are asking for financial help for their water projects? 

State Impact mapped the funding requests, which naturally follow population. High population areas, higher water funding needs. 

• 1/3 of the projects were from Greater Harris County area
• 10% from Dallas Ft Worth
• 0 came from the Panhandle, which in recent years has received TWDB funding

See the Map: State Impact

In 2014, California for the first time began regulating the pumping of groundwater.  Sacramento Bee

With the 2015 Texas Legislature comes Texas foray into regulating groundwater. HB1191 would establish a process by which commercial entities could pump groundwater in buffer zones. TWDB would have regulatory authority over the process.

By fall 2015, TWDB will decide which of the 48 applications, totalling more than $5.5 Billion, will be awarded.

More funds were requested than are available in the State Water Plan. 

Statesman

Last Friday, the Texas Supreme Court did not answer the question inquiring landowners want to know:

Does wastewater creeping into your land’s groundwater constitute trespass?

 The Supreme Court was looking at a case by rice farmers. The case raised trespass issues after an energy service company injected wastewater 1½ miles below the surface, which encroached under the rice lands. Texas’ 9th Court of Appeals found that there is a valid cause of action for migration of wastewater.

Texas A&M AgriLaw walks through the 3 elements of trespass: (1) enter (2) land of another (3) without consent. The explanation highlights that with these 3 elements, wastewater groundwater trespass remains an unanswered legal question at the Texas Supreme Court. 

This legal trend is expected to produce the right case soon that will produce a jury finding of trespass, and will afford the Texas Supreme Court the opportunity to rule on underground trespass.

 Environmental Processing Sys., L.C. v. FPL Farming Ltd.   Austin American Statesman Agri Law Blog Texas A&M Agrilife Extension Fuel Fix

Solar is flaring land use and big brother controversies. Here’s the list:

• ​North Richland Hills requires solar users to get a construction permit & survey their neighbors. The cost: $600 for permitting and months to get your neighbors on board.
• Southlake also requires residents to apply for special permits for solar & to get the neighbors on board. 
  • These ordinances both are criticized by property rights activists. 
• ​Homeowner Associations are still standing in the way of solar installations even after legislation to pave the way for solar.
• Florida tea party is pushing a constitutional amendment to allow people to sell their solar power to their neighbors. They want to keep solar off the grid. Information Intelligence

Texas solar business is a fraction of Arizona and California, both of which offer solar incentives.

Dallas Morning News

Hill Country has a series of brand new underground sensors operated by The Texas Soil Observation Network (TxSON), run by the Bureau of Economic Geology at The University of Texas at Austin’s Jackson School of Geosciences.

The underground sensors are connected to NASA’s new Soil Moisture Active Passive satellite, which was launched Jan. 31.

Why are the underground sensors and satellites important?

• We’ll know how much water is in the soil in Texas
• NASA will have more data for better weather forecasting
• TX has ZERO knowledge of soil moisture levels according to  Ron Anderson, chief engineer of water resources with the Lower Colorado River Authority which determines:
  • when reservoirs get filled
  • whether there will be flash floods

PHYS.ORG

Miami-Dade County Commissioners adopted a resolution supporting a fracking ban. At the heart of the concerns over fracking:

• highly permeable limestone geology in Florida
• Florida’s drinking water supply vulnerable to contamination from fracking activities

National Law Review

Rural Pennsylvania is up in arms over a proposed pipeline crossing private lands. Two concerns are the root of the problems:

• The use of eminent domain by a private company
• Local property owner complaints of decreasing property values from oil and gas production and pipelines.

The concerns have led to a County intervening and 20 of 26 townships siding with residents to do what they can to stop the diminishing land values and land use. 

Standard Speaker

60% of the wind capacity now under construction in the U.S. is in Texas.

ERCOT says 10.6%  of its energy came from wind in 2014.

Big stats for wind in Texas.  The industry’s strength is heavily dependent upon the production tax credit it receives.

Breaking Energy

Oklahoma experienced 567 earthquakes above 3.0 in 2014. As a result, politicos took these actions:

• “Gov. Mary Fallin (R) named a coordinating council to study seismic activity.”
• “…Oklahoma Corporation Commission, an elected three-member panel that regulates oil and gas producers, has imposed new restrictions on wells in seismically active areas.”
• The Oklahoma Supreme Court has agreed to hear a case between a property owner who was injured during a 5.6 earthquake and an oil and gas company. 

Washington Posthttp://www.washingtonpost.com/business/economy/oklahoma-worries-over-swarm-of-earthquakes-and-connection-to-oil-industry/2015/01/28/eca21234-a71a-11e4-a2b2-776095f393b2_story.html

In a 199 page opinion, a federal judge in New Mexico overturned an oil and gas production ban.

The oil and gas company argued that the ban amounted to an inverse condemnation, but the court did not overturn the ban on those grounds.

The Court relied on 1st amendment, invalidating the ban as it applies to state, but not local, lands.

SWEPI LP v. Mora County

The House Version of the state budget (HB1) funds a $2.5 Million “TexNet Seismic Monitoring Program” at the University of Texas at Austin.

Oklahoma is doing it too. The Sooner State also has experienced seismic activity.

Star Telegram  HB 1

The Comptroller’s annual review of the Texas Economic Development Act is hot off the presses.

What you need to know about energy & the Texas Economic Development Act to be conversant:

• Chapter 313 projects have invested approximately $59.5 billion in Texas through 2013

• 259 active projects (as of May 2014) 
  • 53% are renewable energy 
• $123 billion estimated investment under the 259 agreements
  • 21% are in renewable energy.
  • 3% of the investments are in research and development and electric power generation (Integrated Gasification Combined Cycle)
• Jobs breakdown. Total jobs: 5,487 qualifying jobs
  • 10% are in renewable energy.
  • 1% of jobs are in research and development. 
• Gross tax benefit break down. Total benefit:  $5.5 billion
  • 26% for renewable energy projects
  • 2% for research & development
• Renewable energy projects are returning 20% of their tax benefits back to the school districts through supplemental payments

One eminent domain bill is uber-popular: HB 565 by Burkett. The bill revokes eminent domain authority from a private toll company.

Here’s why Burkett says it is important: 

• The problem is a private company overseeing a project with eminent domain authority (hello, pipelines, are you listening?)
• If property is taken for public needs, it should be “fair and transparent”

Dallas Morning News

Refreshing Recollection.   Previously on Information Intelligence.

Increasing the number of commissioners on the PUC from 3 to 5 is the first thing HB 911 does.

It also requires a commissioner appointed from recommendations by the Speaker and a commissioner from Lt. Gov. recommendations. 

The Austin Business Journal reported that water districts will be targeted when the Legislature reigns in property taxes.

How could MUDs or water districts have their taxing authority limited, either by:

• Cutting the rate in half on rollback elections, and/or 
• Imposing appraisal caps.

Austin Business Journal 

$3Billion in new capital is heading to the North American Development Bank in large part due to the deregulation of energy in Mexico. 

The NADB funds these energy projects:

• Water
• Urban Mobility/Transportation
• Solid Waste Management
• Renewable Energy/Energy Efficiency

While it can’t fund oil and gas exploration, it can fund treating water after the fracking process. San Antonio Business Journal 

The hottest of hot topics are: Open government & Open access to government records. There has been ongoing war waging over eminent domain and records at the Tarrant Regional Water Board. Wars breed bill filings.

Van Taylor’s  SB 335 , SB 336 & SB 337 clarifiy access to local governmental records.

This brewing war over eminent domain and transparency has resulted in :

• $235,000 in campaign contributions for  a local water board Information Intelligence
• Texas Tea Party Requests Information Concerning Eminent Domain from a Texas Water District  Information Intelligence 

A Texas Water Resources Institute-led initiative has received a $2.3 million grant from the U.S. Department of Agriculture’s Natural Resources Conservation Service to address water quantity and water quality concerns in the Lower Rio Grande Valley. 

Real Estate Center at Texas A&M   AgriLife Today

SJR 9 by Van Taylor would move the ball toward legislative approval of rule making.

Sound far fetched? It’s not.  Other states are doing it:

• 59 % of Arkansas Voters approved it this past November. 
• Utah does it. 
• Idaho tried. 50.59% of voters opposed it. 

A quick, non-exhaustive, list of contentious Texas rule making issues:

• The Railroad Commission common carrier rule making, which is a fight over eminent domain.
• Any urban-rural water rule making action.

Lower oil prices is expected to boost construction in downstream oil and gas.

AGC’s Chief Economist says: “In fact, petrochemical producers are probably helped by the drop in oil prices in dollar terms,” says Ken Simonson, AGC’s chief economist. “

The Flaw: Need for more skilled workers. “Texas builders report their main challenge as finding enough professional and craft workers to fill openings.”  

 Houston Public Media

It’s a toss up whether underwriters will increase scrutiny on debt and equity markets in Texas after lower oil prices. The pros & cons of whether it will impact lending:

• Con: Knee Jerk Reaction:
  • “There is a knee-jerk reactions to do that,” said Stuart Wernick, senior vice president of Dallas-based Berkadia Commercial Mortgage LLC. “I was in Miami last week at a conference, and two guys came up to me telling me, ‘You are in Texas, right? It’s going to be tough.’  “They said they are going to be more stringent in their underwriting.”
• Pro: No Current Impact: 
  • Anne Raymond, managing director of Crow Holdings, said investors will be discerning in their evaluation of the nuances of Texas’ real estate markets.

    “Of course, it is very early to understand the implications of the falling oil prices,” she said. “To date, however, we have experienced no concern from lenders and equity partners for deals in Austin or Dallas.

• Con: All of Texas is the Same:

  • “People lump the whole state together in terms of energy,” said Mark Dotzour, chief economist at the Real Estate Center at Texas A&M Univeristy. “Some underwriters may scrutinize loans in Texas more.

    “There are a lot of people who only read the headlines, and if they do, they will think Texas is in trouble.”

Dallas Morning News

It’s HB 30 for Representative Larson’s bill to develop bracking groundwater. He wants development of brackish water to be considered by:

• Regional Water Planning Groups
• TWDB 
• And, he creates a permit structure for brackish groundwater production zones

The University of Houston will lead an offshore energy project created with funding from BP Deepwater Horizon settlement. The highlights:

• “U of H was selected to lead the Subsea Systems Institute, a group of local universities, colleges and NASA, in the effort.”
• U of H beat the University of Texas at Austin, Texas Tech University and Texas A&M-Kingsville in its bid to lead one of the research coalitions
  • U of H offers the only subsea engineering academic program in the nation.
• The Houston coalition includes: Rice University, Texas Southern University, Houston Community College, Lone Star College and the Johnson Space Center.
• Another research center will be anchored at Texas A&M University-Corpus Christi

The research teams will study:

• Preventing blowouts
• Gaining an improved understanding of how oil flows from the ocean’s floor, where pressure is much higher

Funding will be administered by TCEQ.  Houston Chronicle  Houston Business Journal 

A January 5th 2015 Attorney General Opinion request asks whether the Barton Springs/Edwards Aquifer Conservation District authority extends outside the boundaries of the district.

The opinion requests raises these flags for the Attorney General Opinion Committee:

• The district claims to regulate all groundwater from aquifers in the area
• The requestor believes the authority of the district is only for the aquifers in its enabling statutes- the Barton Springs segment of the Edwards Aquifers. 
• The district’s boundaries were set in 1987 legislation and no legislation has expanded the boundaries.

Attorney General Opinion Request: RQ-003-KP

Before leaving office, Rick Perry funded a $4 million consurtium among higher education institutions for off shore energy exploration. The consortium ‘s purpose:

• research, training, and education
• for the advancement of offshore energy exploration
• help protect the environment and
• develop preventive measures against oil spills.

The funds are a result of the legal and regulatory negotiations after the BP’s Deepwater Horizon spill. 

TCEQ & Federal Connection

• TCEQ Commissioner Toby Baker announced the establishment of these centers of excellence in Texas last week.
• It’s all part of the ongoing implementation of the federal RESTORE Act.

Governor Perry Press Release

The US Geological Survey will issue a new map of earth quake risks in 2015. For the first time, it will include earthquakes that may be caused by human activity. What can this affect?

• Building Codes
• Insurance Rates and Requirements

Dallas area has had 120 quakes since 2008.   Dallas Morning News

What to do with bills that address endangered species?

The House Rules provide discretion for the Chair (The Speaker) to send bills to one of several committees, which is common.  Discretion is good.

During the House Rules debate, one committee wanted to stake claim to endangered species bills- House Energy Resources wanted first dibs. Its a hot topic for the energy industry, as endangered salamanders and prairie dogs can slow projects. 

Ultimately House Energy Resources will get first crack at bills that address endangered species “as it related to energy resources” The Amendment. The House Rules. 

Politico had speculated on the wealth of data that could be colelcted from smart meters, which garned an article in the Dallas Business Journal, and a response from AECT’s John Fainter. 

Fainter explained, ” We don’t get the kind of information that they were talking about,” Fainter said. “All we get is how much electricity they use, period. That information belongs to the customer. The customer can release it to other parties if they want to.”

Fainter also stressed the penalties in place by the PUC and Legislature for the sale of data. Dallas Business Journal

Waco Editorial stresses the need for aggressive water plans to meet Texas’ population growth.  Their ideas for the Legislature:

• Scrutiny of projects benefiting from state loans
• Much greater authority for state-created groundwater districts
• Aggressive strategies for water conservation must be part of the long-term package.

Waco Tribune 

In one place get:

• drought status
• links to financial assistance
• water and flow maps
• + more

Water Data For Texas

CTWC supports TCEQ recommendation to limit the “open” or unlimited water releases from Lakes Travis and Buchanan to flood rice fields in South Texas. 

The proposal to increase the trigger points for releases to rice farmers has been sent by the Lower Colorado River Authority (LCRA) to the TCEQ, the entity responsible for managing the state’s water plan. CTWC Press Release

Welcome to:

• Mac Abney of Marshall was elected as Board President. 
• Vice President Connie Ware of Marshall
• Secretary/Treasurer J. D. Jacobs of Rockwall and
• Secretary Pro-Tem Connie Wade of Longview. 
• Other members of the SRA Board include Past President Cliff Todd of Carthage, David Koonce of Center, Earl Williams of Orange, Stan Mathews of Pinehurst and Sharon Newcomer of Mauriceville.   The Orange Leader

Water recommendations: 

• More financial transparency for water districts
• Formal review of the purpose and function of water districts
• Performance measures of regulatory agencies should include measurable outcomes, like measured improvement in water quality
• Allow private investment in water projects
• Simplify TCEQ approval of water right amendments
• Reform junior rights restrictions on interbasin transfers
• Clarify policy of the Environmental Flow Standards
• Clarify Texas Water Development Board’s authority in Regional Groundwater Management Areas
• Allow private development of groundwater
• Uniform conflict of interest and record keeping for groundwater districts
• Simplify requirements for indirect re-use of water
• Integrate Regional Water Planning with Bay/Basin Environmental Flow
• Repeal junior rights related to interbasin transfers

TPPF Guide to the Issues 2015

Ardent private property rights supporters, TPPF, offers a litany of eminent domain recommendations, including: 

• Property owners right to buy back property if it is not used for the public use asserted when the property was acquired
• Limit the use of property to the public use for which the property was acquired 
• Limit eminent domain to public uses, not public purposes
• Place the burden of proof on the condemning entity, not the property owner
• Reduce judicial deference to executive agencies and local governments (hello, quasi governmental entities and private companies, you all are excluded from judicial deference)
• Restore a constitutional right to own and use property

TPPF’s 2015 Guide to the Issues

Whether a landman is an employee or a contractor is a big deal. The former carries a lot more liability. 

Tales of landmen treating elderly property owners unfairly float regularly through the Capitol. No one wants to be associated with people who are mean to sweet little ladies who want to serve ice tea on a hot day and ask about your well being. Hence:  HB 736 by Phil King

Is it deep underground fissures? Is it fracking? Did the drought open new faults and fissures deep under Texas?All possibilities being explored by scientists.

Scientists explain that very little is known about the faults and fissures under Texas, because the fault lines do not make themselves visible like they do in California.

An SMU team has ” linked the Cleburne and airport quakes to injection well activity.” What caused other recent quakes is being studied by teams of scientists. Dallas Morning News   NBCDFW

Speaking to the Texas Public Policy Foundation, Governor-elect Abbott connected Denton’s fracking ban to the California-ization of Texas. His quotes:

• “Now think about it — few things are more important in Texas than private property rights. Yet some cities are telling citizens that you don’t own some of the things on your own property that you have bought and purchased and owned for a long time. Things like trees. This is a form of collectivism,” Abbott said.
• “My vision is one where individual liberties are not bound by city limit signs…”

Houston Chronicle 

Whether science supports a causal connection between earthquakes and fracking is not the issue. The issue is the appearance of the link between earthquakes and fracking. 

The above the fold, front page headline from the Ft. Worth Star Telegram: Shaken & Stirred:  12 small quakes within 24 hours rattle residents and intrigue scientists.  

The City of Irving posted earthquake information on its website.  Irving schools are preparing by teaching students “drop, cover, hold on.”  

People want to feel safe, even if they already are safe. Its the rational that led to support of the City of Denton Fracking Ban.  

A couple weeks ago, we see a push for economic incentives for solar energy in Texas, and now the Tea Party in Florida & Georgia is in on the action.  

The Tea Party is offering a constitutional amendment that would allow a resident to sell electricity generated from the sun directly to their neighbors, tenants and friends, by passing utilities.  

A Georgia Tea Party advocate calls the proposal “…opening up the free market and giving people choice is a core conservative principle.” 

Washington Post

Judon Fambrough of the Texas A&M Real Estate Center writes about the Rule of Capture as it relates to oil, gas and groundwater in this month’s issue of Tierra Grande.   

He says additional groundwater taking claims may arise due to 2013 legislation that lessened liability. He relies on 2 statutory changes:

• Article I, Section 17[a] was amended to provide for ownership with possession, and
• Article I, Section 17[a] was amended to allow for a transfer of liability.

When it comes to fracking, the oil and gas company has the right to use, but not to own, usually. His conclusion:  “Any subsequent transfer of “ownership” by the lessee without the landowners’ consent may constitute a taking even though authorized by the statute. ” Tierra Grande 

For those hoping for a nationwide impact for fracking ban litigation; don’t hold your breath. Even Danish Guiness World Record Holder, Stig Severinsen, couldn’t hold his breath that long.  

The local and state bans are being litigated in state court, which means there will be no nation wide guidance on fracking bans.  New York Times

Interior Secretary Sally Jewell has criticized local and state bans on fracking as the impetus for confusion for the oil and natural gas industries. The Hill 

Dan Hunter will serve as Assistant Commissioner for Water and Rural Affairs.     

Kellie Housewright-Smith will serve as Assistant Commissioner for Operations.

Ft. Stockton Pioneer

Environment Texas supports economic incentives for solar power based on these facts:

• Solar is currently the fastest growing industry in the country
• In 2013 it  added 143,000 jobs nationwide
• Employs 4,000 people in Texas
• Is on its way to providing 20% of Texas power

Houston Chronicle 

LCRA broke ground on a new $250-million water supply reservoir near Lane City, Texas. The facts:

• Set to be completed in 2017
•  40,000-acre-foot (13-billion-gallon) reservoir constructed off the main channel of the Colorado River.
• Will secure water sources for the drought-prone Texas region.  Water World

Supporting landowners and economic prosperity simultaneously gets tricky. VT Governor supports a pipeline. But,  at the request of landowners, the Governor asked the pipeline company to pause legal proceedings and allow for negotiations.

Landowners want to be reimbursed for legal expenses they have incurred. The pipeline company initially said no, but now it says it is “definitely willing to consider reimbursement for legal expenses.”    VT Digger

Examining conventional wisdom on the economic impact of a decrease in the price of a barrel of oil, 538 analysis concludes- conventional wisdom is always wrong.  

 Why? It’s too complicated to predict what happens when the price of oil falls because the calculations include:

• politics, geo-politics greatly affects the price of oil
• complicated drilling economics
• complicated drilling financing
• no one knows what oil prices will do

Remember these are the guys with the instinct and analysis to predict Presidential elections that no one else contemplated. They did it with precision and accuracy.   538

Wind has estalished itself as a provider of power. By November, wind exceeded its power output for 2013.

With that leap into establishment power, the favorable tax treatment wind power relied on to grow may soon disappear.  Austin Business Journal  

New York prohibits fracking. Mineral rights owners and companies with existing leases may file suit claiming that the fracking prohibition is tantamount to the state government taking their private property.  

Shale Plays Media

Denton’s fracking ban has garnered a lot of attention. Law suits are proceeding. Bills have been filed.  

HB 539 would require cities to reimburse the state for taxes lost due to bans

HB 540  would require the Attorney General to approve measures before they can be placed on a ballot.  

The City of Denton’s response to the lawsuits contends that fracking is a public nuisance, and municipalities have long had the ability to regulate nuisances.  Courthouse News Service 

1. Fracking Bans: Will the Legislature Kill Local Control? Will the Legislature Support the Need for Texas to Remain the Premier Oil Producing State.    See HB 539 & 540 by Phil King

2.  Transportation funding for shale roads.  

3.  Water Use and Fracking  

4. Taxes- severance tax reductions, margins tax fixes, margins tax repeals…

5. Re-naming the Texas Railroad Commission

6. Eminent Domain, especially in relation to pipelines. Austin Business Journal 

Bruce Bullock, director of Southern Methodist University’s Maguire Energy Institute, says oil prices will begin recovering in early 2015. 

He predicts the value of a barrel should increase to $75. Additional increases will depend on global oil demands.  Dallas Morning News

National Energy Technology Lab study at the University of Texas is looking at the best ways to stabilize foams for fracking with carbon dioxide, nitrogen or gas liquids.

Several companies are field-testing new technologies that use high-pressure carbon dioxide, propane or butane instead of water.

 Some argue these new technologies are costly; and others say its the answer to economic and environmental issues related to fracking.  Shale Plays Media | Eagle Ford Texas

The Mexican government released the rules of the game for its energy de-regulation. It’s a very big deal for Texas firms.  Mexico’s Ministry of Economy Energy Rules  

According to the Energy Council of the Americas 40% of Mexico’s gas is imported from Eagle Ford Shale.  San Antonio Business Journal 

Texas A&M Bush School, Mosbacher Institute for Trade, Economics & Public Policy report on hydraulic fracking calls for better knowledge on Texas water usage. It recommends legislative and regulatory changes that will provide for:

South Texas Energy & Economic Roundtable sent a letter to TXDOT calling on more Prop 1 transportation funding dollars to support road improvements in Eagle Ford and Permian Basin oil producing regions. 

Letter highlights:

• “South Texas county judges, mayors and all elected officials, along with the oil and natural gas industry, put a premium on safety.”

• Increase in accidents in the region

• Roads were not designed to withstand the increased activity

• An investment in South Texas roads will help sustain long term economic development in a region driving the state’s economy.

• Only 15% of funds from Prop 1 will fund Energy Sector roads, & this should be reconsidered   Fuel Fix

This week TPPF released a private property rights paper about a pipeline company facing a judgment in excess of $1.6M against it. The judgment is unpaid and no bond is posted for appeal. It has ruffled feathers.

In the paper, TPPF reminds us transmission lines are no different that pipelines in that they both are private companies that have the power of eminent domain. 

TPPF stresses 2 major points:

• When private companies have eminent domain authority the scrutiny is higher
• private property rights, and the compensation for a taking of property, are fundamental 

TPPF

Information Intelligence has written about the pending TX Supreme Court case about a pipeline that owes a landowner a hefty judgment and hasn’t paid it. The case is gaining attention and momentum. TPPF weighs in on the case of the non-paying pipeline:

• “…energetic property rights is what enables individuals to attain self-sufficiency and assert their independence…”
• “Democratic government is not exempt from the temptation to circumvent the boundaries of private property rights for the sake of expediency.”
• “Texas has granted the power of eminent domain to electric trans- mission utilities and pipeline companies operating as a common carrier. ” 
• “By extended the power of eminent domain to private enti- ties, the government has introduced greater uncertainty for landowners into the eminent domain process when it comes to just and adequate compensation.”
• “Unadorned assertions of public use are constitutionally insufficient.”
• Merely registering as a common carrier does not conclu- sively convey the extraordinary power of eminent domain or bar landowners from contesting in court whether a planned pipeline meets statutory common-carrier require- ments. ” 
   
   
  A friendly reminder: When eminent domain is exercised by a private company, like a pipeline, the public and legislative scrutiny is higher.  TPPF

Washington Governor Inslee proposes a carbon charge on the state’s industrial pollution as a method to fund transportation.

The carbon fee will generate $7 Billion over 12 years, and will generate revenue equal to raising the gas tax by 12 cents.   AP via SeattlePi

Compensation of land owners is a common refrain in eminent domain debate. When property is taken by private companies, such as pipelines, the debate grows more intense. 

Massachusettes is considering a 12.5 percent royalty on any oil and gas transported in a pipeline through Massachusettes and ultimately sold to a foreign country. The royalty would be split amond land owners and is in addition to any compensation from taking of land through eminent domain. Daily Hampshire Gazette

Local control; Private Property Rights; and Economic Growth and Development all take center stage with HB 539 by Phil King. His bill seeks to dissuade future fracking bans. 

The method to curtail future bans on oil and gas production: Force cities to make up for lost revenue, and pay those lost revenues to the state. 

Dallas Morning News | HB 539 

The Houston Chronicle listed the top 10 legal stories for 2014.

# 10 Mexico Energy Deregulation

#4 Denton’s Fracking Ban

it’s been a banner year for energy and the law. 2015 will be energy, the law, and policymakers and regulators.  Houston Chronicle 

The Mosbacher Institute for Trade, Economics, and Public Policy publication, The Takeaway, features a study by Bush School students that says while fracking has brought these benefits:

• Economic benefits
• Environmental benefits

Fracking has also brought these harms:

• Adds to Texas water problem
  • The water used in fracking is pulling groundwater at a rate of 2.5 times the rate of aquifer recharge 
  • Estimated cost to fill the water infrastructure gap: $53 Billion

The study makes policy recommendations, including:

• “Incentives should be used to encourage reductions in HF water use;
• “Oil and gas com- panies could be offered severance tax reductions to substitute brackish groundwater for fresh groundwater;”
• ” Accurate and transparent data reporting on all water consumption (irrigation, munici- pal use, mining, and others)”; and
•  “policy changes to address inefficient water use practices in all sectors are needed. “

  KTBX College Station  The Bush School Report

Commissioner Craddick is considering increasing inspections in urban areas to combat safety concerns of residents.  Safety was a top concern for voters supporting passage of Denton’s fracking ban. Law 360

The South San Joaquin Irrigation District was granted approval to enter the retail electric market. South San Joaquin has its eyes on acquiring PG&E’s transmission lines, transformers and poles.  

South San Joaquin co-owns hydroelectric damns. It’s not new to electric world. PG&E wants $600 million for its infrastructure. South San Joaquin wants to pay $125 million.

The two sides are far apart in compensation. Since South San Joaquin has the authority to use eminent domain coupled with the number of lawyers involved in the negotiations, compensation will most likely be determined by the courts.  [SFGate]

Economic growth or local control? That’s the shorthand version of the battle cry from the two sides of the lawsuit over Denton’s fracking ban.

 In supporting local control argument, Denton residents point to:

• Denton, a home rule municipality, has approved drilling permits over the years. 
• A Denton approved special use permit for drilling across from a park and hospital percipitated the fracking ban [Texas Observer]

2014 Rio Grande Valley Water Awareness Summit highlights:

• Raymondville’s desalination plan is popular
  • $1.8 million TWDB grant and the agency’s $1.9 million low-interest loan to fund a $3.8 million project to drill a well and
  • install a reverse osmosis system to generate as much as 1 million gallons of water a day
• Mexico has failed to release 269,000 acre-feet into the region’s watershed causing:
  • the loss of 4,840 jobs and
  • an economic impact of $394 million a year [Valley Morning Star]

Water keeps declining in the lower Rio Grande, and New Mexico wants its share. To get its share of water, it has to fight Texas. Messing with Texas has its litigation costs. Here’s the facts:

• NM irrigators want to intevene in the current water dispute before the U.S. Supreme Court. 
• TX argues “that New Mexico is permitting groundwater pumping that effectively deprives Texas of water as the Rio Grande flows through the southern part of New Mexico. “
• NM retorts, “that it is meeting the legal requirements of the Rio Grande Compact, the interstate deal apportioning the river’s water, by delivering water downstream of Elephant Butte Reservoir.” [ABQ Journal]

Refreshing Recollection:  Previously on Informtion Intelligence:

This week the US Supreme Court appointed a Special Master to move the Texas-New Mexico water case along.

The Special Master is A. Gregory Grimsal of New Orleans. [US Supreme Court Orders 11.3.14]

The new pipeline rules were approved on December 2nd. They’ll become official March 1st. But, the fight is headed to the Legislature which favors private property rights. 

The supporters and the opposition remain the same since the rules were first announced this summer. 

• landowner groups remain skeptical to opposed
• industry remain supportive  [Ft. Worth Star Telegram] [RRC Press Release] 

Business Insider says 3 sentences from Charles Schwab’s Liz Ann Sonders sums up the economic benefit of lower oil prices:  

• Consumer spending represents 68% of the US economy.
• Oil and gas capex represents about 1% of US GDP and less than 9% of US total capex (which in turn represents about 12% of US GDP).
• Therefore, the benefit of lower energy prices to the consumer and many businesses greatly outweighs the significant hit to energy companies and/or energy-oriented capex, especially in energy-oriented states.

[Business Insider]
 

If you drill a horizontal well and go through another person’s mineral interest, did you trespass? The Texas Supreme Court will ultimately tell us yes or no.

Odds are also high that the Legislature will address this before the court says anything. [Agrilife] [Lightning Oil Company v. Anadarko E&P Onshore LLP via The Oil & Gas Lawyer]

The City of Denton is alleging that fracking creates a nuisance (think: noise, traffic, etc). Because fracking is a nuisance,  it is within the city’s authority to regulate. [Denton Response to GLO suit] [Denton Repsonse to TXDOT] [TXTribune] [Ft. Worth Star Telegram]

Background: In November 2014, Denton residents passed a proposition to prohibit fracking within its city limits. The day after the proposition passed, lawsuits were filed. The above is Denton’s response to the lawsuits.  

What’s more important than job growth to Texas economy? Research according to noted economist Ray Perryman. Quality research leads to quality education with leads to a quality, educated workforce. It’s a chicken and egg situation. [Perryman Group, ” US Energy Workforce”] [Corpus Christi Caller]

Land ownership is to Texans like blue is to the sky. Tarrant Regional Water District  (TRWD) needs to move water around to meet supply demands. The project is expected to cost $2.3 Billion in tax revenues.

Two big flags in this fact pattern:

• Billions of tax revenue draws attention of lawmakers. 
• To accomplish its goal, TRWD needs privately owned land from Texans who love their land.    

The land TRWD needs is owned by private citizens who want to continue to own their land without government interference.

State Representative Gooden requested information from TRWD, dissatisfaction ensued, campaign contributions flew around (all above board), and a grand jury is looking into the how TRWD is conducting its business. [Ft. Worth Star Telegram]

Fuel Fix honed in on Friday’s State Auditor Report on Chapter 313 Tax Abatement Agreements as cause for concern for energy industry. [SAO]  

State Auditor Keel offers these recommendations to the Legislature:

• “require independent verification”
• “set tighter policies on school board members and district employees who handle tax break applications.” [Fuel Fix]

Sen. Van Taylor has titled SB 109, ” “Opening Access to Water Act.”  It establishes a timeline for TCEQ to respond to applications for new reservoirs.  From Sen. Van Taylor: 

• The application process is “long, cumbersome and bureaucratic”
• There are “no time limit to issue permits”
• A lack of time limits has resulted in “projects have been stalled over a decade” 

From Rep. Leach:

•  “ one of the greatest challenges that still remains is the bureaucratic permitting process that hinders our ability to build reservoirs in an efficient and timely manner,”
• HB 201 will allow  “expediting much-needed projects through a more timely, reasonable and efficient system.” 

[Plano Star Courier]