LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION April 18, 2009 TO: Honorable Jim Keffer, Chair, House Committee on Energy Resources FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB1537 by Burnam (Relating to safety requirements applicable to gas pipelines in certain counties.), Committee Report 1st House, Substituted Estimated Two-year Net Impact to General Revenue Related Funds for HB1537, Committee Report 1st House, Substituted: a negative impact of ($844,427) through the biennium ending August 31, 2011. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION
April 18, 2009
TO: Honorable Jim Keffer, Chair, House Committee on Energy Resources FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB1537 by Burnam (Relating to safety requirements applicable to gas pipelines in certain counties.), Committee Report 1st House, Substituted
TO: Honorable Jim Keffer, Chair, House Committee on Energy Resources
FROM: John S. O'Brien, Director, Legislative Budget Board
IN RE: HB1537 by Burnam (Relating to safety requirements applicable to gas pipelines in certain counties.), Committee Report 1st House, Substituted
Honorable Jim Keffer, Chair, House Committee on Energy Resources
Honorable Jim Keffer, Chair, House Committee on Energy Resources
John S. O'Brien, Director, Legislative Budget Board
John S. O'Brien, Director, Legislative Budget Board
HB1537 by Burnam (Relating to safety requirements applicable to gas pipelines in certain counties.), Committee Report 1st House, Substituted
HB1537 by Burnam (Relating to safety requirements applicable to gas pipelines in certain counties.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for HB1537, Committee Report 1st House, Substituted: a negative impact of ($844,427) through the biennium ending August 31, 2011. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Estimated Two-year Net Impact to General Revenue Related Funds for HB1537, Committee Report 1st House, Substituted: a negative impact of ($844,427) through the biennium ending August 31, 2011.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2010 ($455,120) 2011 ($389,307) 2012 ($389,307) 2013 ($389,307) 2014 ($389,307)
2010 ($455,120)
2011 ($389,307)
2012 ($389,307)
2013 ($389,307)
2014 ($389,307)
All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 Probable Savings/(Cost) fromFederal Funds555 2010 ($455,120) ($200,238) 2011 ($389,307) ($159,043) 2012 ($389,307) ($159,043) 2013 ($389,307) ($159,043) 2014 ($389,307) ($159,043)
Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 Probable Savings/(Cost) fromFederal Funds555 2010 ($455,120) ($200,238) 2011 ($389,307) ($159,043) 2012 ($389,307) ($159,043) 2013 ($389,307) ($159,043) 2014 ($389,307) ($159,043)
2010 ($455,120) ($200,238)
2011 ($389,307) ($159,043)
2012 ($389,307) ($159,043)
2013 ($389,307) ($159,043)
2014 ($389,307) ($159,043)
Fiscal Year Change in Number of State Employees from FY 2009 2010 7.0 2011 7.0 2012 7.0 2013 7.0 2014 7.0 Fiscal Analysis The bill would only apply to a the portion of a gas pipeline that is in a Class 3 or 4 location and in a county which is located wholly or partly above a hydrocarbon-producing geological formation in which during the preceding year the Railroad Commission of Texas issued more than 1,500 drilling permits authorizing gas wells to be completed. The bill would prohibit a gathering pipeline from being constructed within 30 feet of an established permanent structure that is regularly used by people unless the owner of the structure consents in writing or the pipeline meets the enhanced safety requirements in its design, construction, and operation, as determined by the Railroad Commission. The same prohibition would be created for transmission pipelines within 50 feet of such structures. It would also require that a gathering pipeline use advanced leak detection, as determined by the Railroad Commission. It would also prescribe guidelines for the materials used to construct gathering and transmission pipelines. In addition, the bill would require that a pipeline integrity assessment by in-line inspection, a pressure test, or a direct assessment as defined by the Railroad Commission be conducted every five years. The bill would take effect on January 1, 2010, and pipelines subject to the bill and in existence on January 1, 2010 would be required to come into compliance with the provisions of the bill by February 4, 2012. Methodology The Railroad Commission reports that the bill would apply to an estimated 20 counties located partly or above the Barnett Shale. The Railroad Commission anticipates that passage of the bill could result in new or additional safety complaints for pipelines in these counties, resulting in an increase in complaint volume. This increase in complaints would result in the agency needing to complete additional inspections, which, in turn, is expected to produce an increase in violation notices issued, along with additional hearings related to those violations. Based on an estimated 400 additional inspections, the Railroad Commission reports that it would require four additional engineering specialists and one additional administrative assistant in the agency's Safety Division to monitor the pipelines subject to the bill. Because of the bill's requirement allowing for the use of direct assessment as a methodology for integrity inspections, the agency would also require one engineer to review the plans and proposed assessment methods by the affected operators. In addition, one additional attorney would be needed to review violations that may result in enforcement action. Overall, the Railroad Commission would need 7.0 FTEs to implement the provisions of the bill and related costs totaling $655,538 in fiscal year 2010 and $548,350 in subsequent fiscal years. This estimate assumes that additional Federal Funds could be drawn down to cover approximately 30 percent of additional costs. This estimate assumes that remaining costs would be paid out of the General Revenue Fund.
Fiscal Year Change in Number of State Employees from FY 2009 2010 7.0 2011 7.0 2012 7.0 2013 7.0 2014 7.0
2010 7.0
2011 7.0
2012 7.0
2013 7.0
2014 7.0
Fiscal Analysis
The bill would only apply to a the portion of a gas pipeline that is in a Class 3 or 4 location and in a county which is located wholly or partly above a hydrocarbon-producing geological formation in which during the preceding year the Railroad Commission of Texas issued more than 1,500 drilling permits authorizing gas wells to be completed. The bill would prohibit a gathering pipeline from being constructed within 30 feet of an established permanent structure that is regularly used by people unless the owner of the structure consents in writing or the pipeline meets the enhanced safety requirements in its design, construction, and operation, as determined by the Railroad Commission. The same prohibition would be created for transmission pipelines within 50 feet of such structures. It would also require that a gathering pipeline use advanced leak detection, as determined by the Railroad Commission. It would also prescribe guidelines for the materials used to construct gathering and transmission pipelines. In addition, the bill would require that a pipeline integrity assessment by in-line inspection, a pressure test, or a direct assessment as defined by the Railroad Commission be conducted every five years. The bill would take effect on January 1, 2010, and pipelines subject to the bill and in existence on January 1, 2010 would be required to come into compliance with the provisions of the bill by February 4, 2012.
The bill would only apply to a the portion of a gas pipeline that is in a Class 3 or 4 location and in a county which is located wholly or partly above a hydrocarbon-producing geological formation in which during the preceding year the Railroad Commission of Texas issued more than 1,500 drilling permits authorizing gas wells to be completed. The bill would prohibit a gathering pipeline from being constructed within 30 feet of an established permanent structure that is regularly used by people unless the owner of the structure consents in writing or the pipeline meets the enhanced safety requirements in its design, construction, and operation, as determined by the Railroad Commission. The same prohibition would be created for transmission pipelines within 50 feet of such structures.
It would also require that a gathering pipeline use advanced leak detection, as determined by the Railroad Commission. It would also prescribe guidelines for the materials used to construct gathering and transmission pipelines. In addition, the bill would require that a pipeline integrity assessment by in-line inspection, a pressure test, or a direct assessment as defined by the Railroad Commission be conducted every five years.
The bill would take effect on January 1, 2010, and pipelines subject to the bill and in existence on January 1, 2010 would be required to come into compliance with the provisions of the bill by February 4, 2012.
Methodology
The Railroad Commission reports that the bill would apply to an estimated 20 counties located partly or above the Barnett Shale. The Railroad Commission anticipates that passage of the bill could result in new or additional safety complaints for pipelines in these counties, resulting in an increase in complaint volume. This increase in complaints would result in the agency needing to complete additional inspections, which, in turn, is expected to produce an increase in violation notices issued, along with additional hearings related to those violations. Based on an estimated 400 additional inspections, the Railroad Commission reports that it would require four additional engineering specialists and one additional administrative assistant in the agency's Safety Division to monitor the pipelines subject to the bill. Because of the bill's requirement allowing for the use of direct assessment as a methodology for integrity inspections, the agency would also require one engineer to review the plans and proposed assessment methods by the affected operators. In addition, one additional attorney would be needed to review violations that may result in enforcement action. Overall, the Railroad Commission would need 7.0 FTEs to implement the provisions of the bill and related costs totaling $655,538 in fiscal year 2010 and $548,350 in subsequent fiscal years. This estimate assumes that additional Federal Funds could be drawn down to cover approximately 30 percent of additional costs. This estimate assumes that remaining costs would be paid out of the General Revenue Fund.
The Railroad Commission reports that the bill would apply to an estimated 20 counties located partly or above the Barnett Shale. The Railroad Commission anticipates that passage of the bill could result in new or additional safety complaints for pipelines in these counties, resulting in an increase in complaint volume. This increase in complaints would result in the agency needing to complete additional inspections, which, in turn, is expected to produce an increase in violation notices issued, along with additional hearings related to those violations. Based on an estimated 400 additional inspections, the Railroad Commission reports that it would require four additional engineering specialists and one additional administrative assistant in the agency's Safety Division to monitor the pipelines subject to the bill. Because of the bill's requirement allowing for the use of direct assessment as a methodology for integrity inspections, the agency would also require one engineer to review the plans and proposed assessment methods by the affected operators. In addition, one additional attorney would be needed to review violations that may result in enforcement action.
Overall, the Railroad Commission would need 7.0 FTEs to implement the provisions of the bill and related costs totaling $655,538 in fiscal year 2010 and $548,350 in subsequent fiscal years. This estimate assumes that additional Federal Funds could be drawn down to cover approximately 30 percent of additional costs. This estimate assumes that remaining costs would be paid out of the General Revenue Fund.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies: 455 Railroad Commission
455 Railroad Commission
LBB Staff: JOB, SZ, ZS, TL, DB
JOB, SZ, ZS, TL, DB