Railroad Commission of Texas

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Railroad Commission of Texas
Railroad Commission of Texas seal.jpg
Seal of the Railroad Commission of Texas
Agency overview
Formed1891
JurisdictionFlag of Texas.svg  Texas
Headquarters Austin, Texas
Agency executives
Website www.rrc.texas.gov

The Railroad Commission of Texas (RRC; also sometimes called the Texas Railroad Commission, TRC) is the state agency that regulates the oil and gas industry, gas utilities, pipeline safety, safety in the liquefied petroleum gas (LPG) industry, and surface coal and uranium mining. Despite its name, it ceased regulating railroads in 2005. [1]

Texas State of the United States of America

Texas is the second largest state in the United States by both area and population. Geographically located in the South Central region of the country, Texas shares borders with the U.S. states of Louisiana to the east, Arkansas to the northeast, Oklahoma to the north, New Mexico to the west, and the Mexican states of Chihuahua, Coahuila, Nuevo León, and Tamaulipas to the southwest, and has a coastline with the Gulf of Mexico to the southeast.

Liquefied petroleum gas chemical compound

Liquefied petroleum gas or liquid petroleum gas, also referred to as simply propane or butane, are flammable mixtures of hydrocarbon gases used as fuel in heating appliances, cooking equipment, and vehicles.

Contents

Established by the Texas Legislature in 1891, it is the state's oldest regulatory agency and began as part of the Efficiency Movement of the Progressive Era. From the 1930s to the 1960s it largely set world oil prices, but was displaced by OPEC (Organization of Petroleum Exporting Countries) after 1973. In 1984, the federal government took over transportation regulation for railroads, trucking and buses, but the Railroad Commission kept its name. With an annual budget of $79 million, it now focuses entirely on oil, gas, mining, propane, and pipelines, setting allocations for production each month. [2] [3]

Texas Legislature

The Legislature of the state of Texas is the state legislature of Texas. The legislature is a bicameral body composed of a 31-member Senate and a 150-member House of Representatives. The state legislature meets at the Capitol in Austin. It is a powerful arm of the Texas government not only because of its power of the purse to control and direct the activities of state government and the strong constitutional connections between it and the Lieutenant Governor of Texas, but also due to Texas's plural executive.

The Progressive Era was a period of widespread social activism and political reform across the United States that spanned the 1890s to the 1920s. The main objectives of the Progressive movement was eliminating problems caused by industrialization, urbanization, immigration, and political corruption. The movement primarily targeted political machines and their bosses. By taking down these corrupt representatives in office, a further means of direct democracy would be established. They also sought regulation of monopolies and corporations through antitrust laws, which were seen as a way to promote equal competition for the advantage of legitimate competitors.

Propane is a three-carbon alkane with the molecular formula C3H8. It is a gas at standard temperature and pressure, but compressible to a transportable liquid. A by-product of natural gas processing and petroleum refining, it is commonly used as a fuel. Propane is one of a group of liquefied petroleum gases (LP gases). The others include butane, propylene, butadiene, butylene, isobutylene, and mixtures thereof.

The three-member commission was initially appointed by the governor, but an amendment to the state's constitution in 1894 established the commissioners as elected officials who serve overlapping six-year terms, like the sequence in the U.S. Senate. No specific seat is designated as chairman; the commissioners choose the chairman from among themselves. Normally the commissioner who faces reelection is the chairman for the preceding two years. The current commissioners are Christi Craddick since December 17, 2012, Ryan Sitton since January 5, 2015, and Wayne Christian since January 9, 2017. [4] [5]

Christi Craddick Member of the Texas Railroad Commission; lawyer

Christi Leigh Craddick is one of three members of the Texas Railroad Commission, the elected regulatory body over oil, natural gas, utilities, and surface mining first established in 1891. She is a Republican. The commission ended all controls over railroads in 2005 but is still known as the "Railroad Commission" for historical reasons.

Ryan Christopher Sitton is a Republican politician and current Texas Railroad Commissioner at the Texas Railroad Commission. A resident of Friendswood outside Houston, Sitton has been serving on the Railroad Commission since November 4, 2014.

Wayne Christian is a financial planner from Center, Texas, who is a Republican member of the Texas Railroad Commission, having won the position in the November 8, 2016 general election.

Origins

Attempts to establish a railroad commission in Texas began in 1876. After five legislative failures, an amendment to the state constitution providing for a railroad commission was submitted to voters in 1890. The amendment's ratification and the 1890 election of Governor James S. Hogg, a liberal Democrat, permitted the legislature in 1894 to create the Railroad Commission, giving it jurisdiction over operations of railroads, terminals, wharves, and express companies. It could set rates, issue rules on how to classify freight, require adequate railroad reports, and prohibit and punish discrimination and extortion by corporations. George Clark, running as an independent "Jeffersonian Democratic" candidate for governor in 1892, denounced the TRE as, "Wrong in principle, undemocratic, and unrepublican Commissions do no good. They do harm. Their only function is to harass. I regard it as essentially foolish and essentially vicious." [6] Clark lost the 1892 election to Hogg but a federal judge ruled the TRC illegal; the judge in turn was overruled by the United States Supreme Court. The governor appointed the first members; the first elections to the commission were held in 1893, with three commissioners serving six-year, overlapping terms. The TRC did not have jurisdiction over interstate rates, but Texas was so large that the in-state traffic it regulated was of dominant importance.

John H. Reagan (1818–1903), the first head of the TRC (1891–1903), had been the most outspoken advocate in Congress of bills to regulate railroads in the 1880s. He feared the corruption caused by railroad monopolies and considered their control a moral challenge. As chairman of the TRC, he changed his views when he became acquainted with the realities of the complex forces affecting railroad management. Reagan turned to the Efficiency Movement for ideas, establishing a pattern of regulatory practice that TRC used for decades. He believed that the agency should pursue two main goals: to protect consumers from unfair railway practices and excessive rates, and to support the state's overall economic growth. To find the optimal rates that met these goals he focused the TRC on the collection of data, direct negotiation with railway executives, and compromises with the parties involved. The agency did not have the legal authority to set rates, nor did it have the resources to spend much of its time in court battles. The carrot was far more important than the stick. Freight rates continued to decline dramatically. In 1891, a typical rate was 1.403 cents per ton mile. By 1907 the rate was 1.039 cents – a decline of 25%. However the railroads did not have rates high enough for them to upgrade their equipment and lower costs in the face of competition from pipelines, cars and trucks, and the Texas railway system began a slow decline. [7]

John Henninger Reagan American politician

John Henninger Reagan was an American politician from the U.S. state of Texas. A Democrat, Reagan resigned from the U.S. House of Representatives when Texas seceded from the Union and joined the Confederate States of America. He served in the cabinet of Jefferson Davis as Postmaster General. After the Confederate defeat, he called for cooperation with the federal government, an unpopular position. He was elected to Congress in 1874, after his predictions of harsh treatment for resistance were proved correct. He also served in the U.S. Senate from 1887 to 1891, and as chairman of the Texas Railroad Commission. He was among founders of the Texas State Historical Association.

Segregation

From the 1890s through the 1960s, the Texas Railroad Commission found it difficult to enforce fully Jim Crow segregation legislation. Because of the expense involved, Texas railroads often allowed wealthier blacks to mix with whites, rather than provide separate cars, dining facilities, and even depots. In addition, West Texas authorities often refused to enforce Jim Crow laws because few African Americans resided there. In the 1940s, the railroad commission's enforcement of segregation laws began collapsing further, in part because of the great number of African American soldiers that were transported during World War II. The trains were integrated in the early 1960s. [8]

African Americans are an ethnic group of Americans with total or partial ancestry from any of the black racial groups of Africa. The term typically refers to descendants of enslaved black people who are from the United States.

Expansion to oil

The agency's reach expanded as it took over responsibility for regulating oil pipelines (in 1917), oil and gas production (1919), natural gas delivery systems (1920), bus lines (1927), and trucking (1929). It grew from 12 employees in 1916 to 69 in 1930 and 566 in 1939. It does not have jurisdiction over investor owned utility companies; that falls under the jurisdiction of the Public Utility Commission of Texas. [9] [10]

A crisis for the petroleum industry was created by the East Texas oil boom of the 1930s, as prices plunged to 25 cents a barrel. The traditional TRC policy of negotiating compromises failed; the governor was forced to call in the state militia to enforce order. Texas oilmen decided they preferred state to federal regulation, and wanted the TRC to give out quotas so that every producer would get higher prices and profits. Pure Oil Company opposed the first statewide oil prorationing order, which was issued by the TRC in August 1930. The order, which was intended to conserve oil resources by limiting the number of barrels drilled per day, was seen by small producers like Pure as a conspiracy between government and major companies to drive them out of business and foster monopoly in the oil industry. [9]

Ernest O. Thompson (1892–1966), head of the TRC from 1932 to 1965, took charge of the agency and indeed the oil industry by appealing to an ideal of Texas' role in the global oil order—the civil religion of Texas oil. He cajoled, harangued, and browbeat recalcitrant producers into compliance with the TRC's prorationing orders. The New Deal allowed the TRC to set national oil policy. [11] As late as the 1950s the TRC controlled over 40% of United States crude production and approximately half of estimated national proved reserves. It served as a model in the creation of OPEC. [12] Gordon M. Griffin, chief engineer of the TRC during World War II, developed the formula for prorationing to keep production flowing for the military.

Because it needed access to the Texas headquarters of the various oil companies, it became a long term tenant at the Milam Building. [13]

Operations

Regulation was a practical rather than ideological affair. The TRC typically worked with the regulated industries to improve operations, share best practices, and address consumer complaints. Radical activities like rate setting to favor shippers or producers or consumers, and heated court battles, were the exception rather than the rule.

Within the oil and gas industry, it took into account production in other states, in effect bringing total available supply, (including imports, which were small) within the principle of prorationing to market demand. Allowable oilfield production was calculated as follows: estimated market demand, minus uncontrolled additions to supply, gave the Texas total; this was then prorated among fields and wells in a manner calculated to preserve equity among producers, and to prevent any well from producing beyond its Maximum Efficient Rate (MER). Scheduled allowables are expressed in numbers of calendar days of permitted production per month at MER. [14] [15] In the Spring of 2013, new hydraulic fracturing water recycling rules were adopted in the state of Texas by the Railroad Commission of Texas. The Water Recycling Rules are intended to encourage Texas hydraulic fracturing operators to conserve water used in the hydraulic fracturing process for oil and gas wells. [16]

Recent history

As of January 2017, the commission members are Christi Craddick (Chairman), Ryan Sitton, and Wayne Christian. All three members are Republicans. Craddick was elected for a six-year seat in the 2012 general election. Sitton was elected for a six-year term in the 2014 general election. Christian was elected for a six-year term in the 2016 general election. [17] Craddick was re-elected to another six-year term in 2018. [18]

Effective October 1, 2005, as a result of House Bill 2702 the rail oversight functions of the Railroad Commission were transferred to the Texas Department of Transportation. [19] The traditional name of the Commission was not changed despite the loss of its titular regulatory duties. [1]

Court cases involving the Commission

The Shreveport Rate Case, also known as Houston E. & W. Ry. Co. v. United States , 234 U.S. 342 (1914) arose from the Railroad Commission's setting railroad freight rates unequally. Because of the low intrastate rates, shippers in eastern Texas tended to ship their wares to Dallas (in Texas), rather than to Shreveport, Louisiana, although Shreveport was considerably closer to much of eastern Texas. The Railroad Commission's (and the railroad's) position was that only the state could regulate commerce within a state, and that the federal government had no power so to do. The Supreme Court ruled that the federal government's ability to regulate interstate commerce necessarily included the ability to regulate intrastate "operations in all matters having a close and substantial relation to interstate traffic" and to ensure that "interstate commerce may be conducted upon fair terms".

The Railroad Commission has also figured prominently in two major U.S. Supreme Court cases on the doctrine of abstention:

The main offices of the Railroad Commission of Texas are located in the William B. Travis State Office Building TravisStateOfficeBuilding.JPG
The main offices of the Railroad Commission of Texas are located in the William B. Travis State Office Building

Offices and Districts

The agency is headquartered in the William B. Travis State Office Building at 1701 North Congress Avenue in Austin. [20] In addition, the Texas Railroad Commission has twelve oil and gas district offices located throughout the state. The district offices facilitate communication between industry representatives and the Commission. [21]

NameOffice Region
District 1 San Antonio Texas Hill Country
District 2 San Antonio Greater Golden Crescent Region
District 3 Houston Southeast Texas + Greater Houston
District 4 Corpus Christi South Texas south of Refugio County
District 5 Kilgore west half of Northeast Texas
District 6 Kilgore east half of Northeast Texas
District 7B Abilene West Central Texas
District 7C San Angelo Concho Valley
District 8 Midland Trans-Pecos + Midland and surrounding counties
District 8A Abilene South Plains
District 9 Wichita Falls Northern Dallas–Fort Worth metroplex and North
District 10 Pampa Texas Panhandle

See also

Bibliography

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References

  1. 1 2 Who regulates railroads in Texas? ...Don't let our name throw you off track., RRC, Railroad Commission of Texas, 2010, retrieved 2015-09-28
  2. David F. Prindle, "Railroad Commission," Handbook of Texas Online (2008)
  3. Railroad Commission: An Informal History Compiled for Its Centennial (April 1991), RRC, Railroad Commission of Texas, 1991, retrieved 2015-09-28
  4. "Railroad Commissioners Past through Present". Texas Railroad Commission. Retrieved 22 December 2015.
  5. "Commissioners". Texas Railroad Commission. Retrieved 22 December 2015.
  6. See for quote
  7. Gerald Nash, "The Reformer Reformed: John H. Reagan and Railroad Regulation." Business History Review 1955 29(2): 189–196. ISSN   0007-6805 in Jstor; Ben H. Procter, "Reagan, John Henninger," Handbook of Texas Online (2008)
  8. William S. Osborn, "Curtains for Jim Crow: Law, Race, and the Texas Railroads," Southwestern Historical Quarterly 2002 105(3): 392–427. ISSN   0038-478X
  9. 1 2 Childs, (1990)
  10. Who has jurisdiction over natural gas rates (Texas Natural Gas Rates Frequently Asked Questions), RRC, Railroad Commission of Texas, retrieved 2013-03-31[ permanent dead link ]
  11. George N. Green, "Thompson, Ernest Othmer," The Handbook of Texas Online (2008)
  12. Childs, (2005)
  13. Saporito, Susan (October 17, 2014). "Milam Building stands tall on skyline". San Antonio Business Journal . San Antonio. Retrieved December 11, 2015.
  14. The "Maximum Efficient Rate" is an engineering determination of the theoretical optimum rate of flow of crude oil from each well in a pool that will not endanger ultimate recovery from the pool by a too rapid release of underground pressures. MER depends on the character of the oil-bearing structure and the nature of the natural drive – whether water pressure, a gas cap, or gas in solution in the crude oil. Engineers look at indices like the pressure at the bottom of the well ("bottom-hole pressure") or the ratio of gas to oil in the crude produced. Childs, (2005)
  15. Title 30 of the Code of Federal Regulations of the United States of America — Mineral Resources. Chapter II — Minerals Management Service, Dept. of the Interior. § 250.170 Definitions for production rates, Office of the Federal Register, revised as of July 1, 1989, p. 254, retrieved 2013-03-31, Maximum Efficient Rate (MER) means the maximum sustainable daily oil or gas withdrawal rate from a reservoir which will permit economic development and depletion of that reservoir without detriment to ultimate recovery.Check date values in: |publication-date= (help)
  16. Beveridge & Diamond PC (May 1, 2013). "New Hydraulic Fracturing Water Recycling Rules Published in Texas Register". The National Law Review. Retrieved 10 May 2013.
  17. "Texas RRC – Commissioners" Railroad Commission of Texas. January 3, 2017. Retrieved on June 30, 2017.
  18. "" Texas Secretary of State 2018 election results. November 6, 2018. Retreived on May 16, 2019.
  19. "RRC: Former Rail Division [ dead link ]." Railroad Commission of Texas. June 2, 2008. Retrieved on September 20, 2010.
  20. "Contact." Railroad Commission of Texas. Accessed June 30, 2017.
  21. "Texas RRC – District Offices" . Retrieved 25 February 2016.

Coordinates: 30°16′45″N97°44′18″W / 30.279064°N 97.738270°W / 30.279064; -97.738270