Several bills filed to support Texas oil and natural gas industry

(The Center Square) – Several bills have been filed to support the oil and natural gas industry and protect consumers from California-style regulatory policies.

State Sen. Brian Birdwell, R-Fort Worth, and Rep. Brooks Landgraf, R-Odessa, filed companion bills, SB 1017 and HB 2374, to protect Texans’ energy choices. If enacted into law, local government entities would be prohibited from banning the sale of engines based on their fuel source, according to the bill language.

“California-style restrictions on engines or fuel sources that limit consumers and business owners from being able to access the energy sources they need have no place in Texas,” Birdwell said.

The legislation would prevent political subdivisions from adopting or enforcing ordinances, orders, regulations, or similar measures to limit access to specific fuel sources or prohibit the sale of engines based on their fuel source. Political subdivisions include counties, municipalities, special districts, school districts, junior college districts, or housing authorities. The purpose is to prevent these entities from banning the sale of gas-powered lawn equipment, generators, and other small engines similar to what was done in California in 2021. The following year, California moved to restrict the sale of gasoline-powered cars.

The legislation will “ensure that Texans are free to make their own choices without interference from government,” Landraf, said, and “protect energy choice.”

The Texas Oil & Gas Association praised the proposal, issuing a statement saying, “Misguided attempts to ban the use of particular types of engines or even specific fuel sources only serve to disrupt the lives of consumers and business owners who rely on affordable, reliable energy sources.”

Rep. Tom Craddick, R-Midland, and Landgraf also filed bills to redirect tax money the oil and natural gas industry pays back into their local communities by creating a new fund. Craddick’s is the Generate Recurring Oil Wealth (GROW); Landgraf’s is Texas Fund and Texas Severance Tax Revenue and Oil and Natural Gas (STRONG) Defense Fund. Both proposals involve the legislature passing a joint resolution to create a constitutional amendment, which if approved, would be put on the ballot for voters to approve or reject.

Craddick filed House Joint Resolution (HJR) 27 to create the GROW account and be funded by severance taxes, grants, gifts, and legislative appropriations. The resolution stipulates that account monies can only be spent in the counties where oil and natural gas is primarily generated and only on infrastructure projects. It also would create a 7-member commission chosen by the governor, lieutenant governor and House speaker to administer the funds.

He also filed HB 1392, which would authorize the commission to allocate funds through grants awarded to “construct or maintain roads, schools, health care facilities, and other infrastructure in the areas of this state the commission determines to be significantly affected by oil and gas production.”

Landgraf’s joint resolution, HJR 111, creates the STRONG account, which would also be funded by severance taxes, grants, gifts, and legislative appropriations. This resolution stipulates that funds be deposited into three existing funds: the Texas Emissions Reductions Fund Plan (TERP), the Oil and Gas Regulation Cleanup Fund (OGCF), and the Property Tax Relief Fund (PTRF).

The Texas Commission on Environmental Quality, which administers TERP, has already allocated more than $1 billion in grants subsidizing the purchase of new electric and natural gas fleet vehicles and heavy equipment to replace gasoline and diesel vehicles. The Texas Railroad Commission established OGCF to pay for “plugging abandoned oil and gas wells and cleanup abandoned oilfield sites.” The PTRF relates to reducing pubic school district maintenance and operations tax rates.

Landgraf also filed HB 2207 to provide a grant funding mechanism.

Craddick’s proposal has received endorsements from Chevron, ConocoPhillips, DiamondBack Energy, Halliburton, Exxon Mobil, the Midland/Odessa Transportation Alliance and the Texas Oil and Gas Association, he says. Landgraf said during a Midland-Odessa Legislative Days Conference panel discussion earlier this month that their proposals would be “transformative” for the west Texas region.

The Texas oil and natural gas industry paid a record $24.7 billion in taxes and state royalties in fiscal 2022, by far the highest total in Texas history.

The $24.7 billion translates to the industry paying roughly $67 million every day in taxes, which fund the Economic Stabilization Fund (the state’s Rainy Day Fund), the Permanent School Fund (PSF) and the Permanent University Fund (PUF).

In 2022, 99% of the state’s oil and natural gas royalties were deposited into the PSF and the PUF, which support Texas public education. Each fund received $2.1 billion, more than double the amounts paid the previous year. The Rainy Day Fund received $1.5 billion from oil and natural gas production taxes.

Texas Independent School Districts received $1.65 billion; counties received a record $608.6 million.