LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION March 29, 2023 TO: Honorable Brian Birdwell, Chair, Senate Committee on Natural Resources & Economic Development FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB786 by Birdwell (Relating to the regulation by the Railroad Commission of Texas of closed-loop geothermal injection wells.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for SB786, As Introduced : a negative impact of ($3,571,978) through the biennium ending August 31, 2025. 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 toGeneral Revenue Related Funds2024($2,252,738)2025($1,319,240)2026($852,491)2027($665,791)2028($572,442)All Funds, Five-Year Impact: Fiscal Year Probable (Cost) fromGeneral Revenue Fund1 Change in Number of State Employees from FY 20232024($2,252,738)3.02025($1,319,240)3.02026($852,491)3.02027($665,791)3.02028($572,442)3.0 Fiscal AnalysisThe bill would amend Chapter 27 of the Water Code as it relates to the jurisdiction over closed-loop geothermal injection well. The bill would define a closed-loop geothermal injection well and would establish that the Railroad Commission (RRC) has jurisdiction over these wells, designated as a Class V wells. The bill would allow RRC to issue individual permits, general permits, or permits by rule.The bill would transfer to the RRC all functions and activities currently performed by the Texas Commission on Environmental Quality (TCEQ) as well as any related property, money, contracts, leases, rights, and obligations held by TCEQ and any funds appropriated to TCEQ in relation to the regulation of closed-loop geothermal injection wells. The bill would provide that a rule, standard, or form adopted by TCEQ that is related to the regulation of closed-loop geothermal injection wells remains in effect until altered by the RRC. Any proceeding involving TCEQ that is related to the regulation of closed-loop geothermal injection wells would be transferred, without change in status, to the RRC per provisions of the bill and would be assumed by the RRC without change in status.The bill would require RRC to issue a substitute permit to each person who holds a valid permit issued by TCEQ no later than 90 days after the bill would come into effect. The bill would require TCEQ to transmit to the RRC all pending applications for closed-loop geothermal injection wells submitted to TCEQ before the effective date of the Act.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION
March 29, 2023
TO: Honorable Brian Birdwell, Chair, Senate Committee on Natural Resources & Economic Development FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB786 by Birdwell (Relating to the regulation by the Railroad Commission of Texas of closed-loop geothermal injection wells.), As Introduced
TO: Honorable Brian Birdwell, Chair, Senate Committee on Natural Resources & Economic Development
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: SB786 by Birdwell (Relating to the regulation by the Railroad Commission of Texas of closed-loop geothermal injection wells.), As Introduced
Honorable Brian Birdwell, Chair, Senate Committee on Natural Resources & Economic Development
Honorable Brian Birdwell, Chair, Senate Committee on Natural Resources & Economic Development
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
SB786 by Birdwell (Relating to the regulation by the Railroad Commission of Texas of closed-loop geothermal injection wells.), As Introduced
SB786 by Birdwell (Relating to the regulation by the Railroad Commission of Texas of closed-loop geothermal injection wells.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB786, As Introduced : a negative impact of ($3,571,978) through the biennium ending August 31, 2025. 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 SB786, As Introduced : a negative impact of ($3,571,978) through the biennium ending August 31, 2025. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
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:
2024 ($2,252,738)
2025 ($1,319,240)
2026 ($852,491)
2027 ($665,791)
2028 ($572,442)
All Funds, Five-Year Impact:
2024 ($2,252,738) 3.0
2025 ($1,319,240) 3.0
2026 ($852,491) 3.0
2027 ($665,791) 3.0
2028 ($572,442) 3.0
Fiscal Analysis
The bill would amend Chapter 27 of the Water Code as it relates to the jurisdiction over closed-loop geothermal injection well. The bill would define a closed-loop geothermal injection well and would establish that the Railroad Commission (RRC) has jurisdiction over these wells, designated as a Class V wells. The bill would allow RRC to issue individual permits, general permits, or permits by rule.The bill would transfer to the RRC all functions and activities currently performed by the Texas Commission on Environmental Quality (TCEQ) as well as any related property, money, contracts, leases, rights, and obligations held by TCEQ and any funds appropriated to TCEQ in relation to the regulation of closed-loop geothermal injection wells. The bill would provide that a rule, standard, or form adopted by TCEQ that is related to the regulation of closed-loop geothermal injection wells remains in effect until altered by the RRC. Any proceeding involving TCEQ that is related to the regulation of closed-loop geothermal injection wells would be transferred, without change in status, to the RRC per provisions of the bill and would be assumed by the RRC without change in status.The bill would require RRC to issue a substitute permit to each person who holds a valid permit issued by TCEQ no later than 90 days after the bill would come into effect. The bill would require TCEQ to transmit to the RRC all pending applications for closed-loop geothermal injection wells submitted to TCEQ before the effective date of the Act.
Methodology
TCEQ identified 953 injection wells as being permitted in the state, 947 of which were permitted in the 1990s, but was not able to determine the number of open or closed-loop wells under current law. According to TCEQ, these well authorizations and inventories under its purview do not generate fees and no staff are currently associated solely with this work. TCEQ estimates that 1.0 percent of 1.0 FTE in the identified strategy performs work related to closed loop geothermal injection wells in its Underground Injection Control section, which is funded with General Revenue-Dedicated Solid Waste Management Account No. 549 (GR-D 549), General Revenue, and Federal Funds. According to TCEQ, the primary source of funding for this purpose is GR-D 549, which is an account solely administered by TCEQ. The table above does not include cost savings for the transfer of the program from TCEQ to the RRC due to the minimal resources currently being used at TCEQ for this purpose.Based on information provided by the RRC, this analysis assumes RRC would need three new FTEs, related operating expenses, and a new online system to implement the provisions of the bill. The first FTE, a Project Manager III, would provide oversight of implementation activities and project management practices, manage program development efforts, and coordinate communication between the vendors developing the online system, agency management, and business areas. The second, an Information Technology Business Analyst III, would serve as a liaison between system users and development teams and assist in translating and documenting business needs into technical needs. The final FTE, a Programmer VI, would ensure the vendors adhere to the RRC Software Architecture and standards guidelines and that the system will fit into the agency's technology platform and modernization efforts. Estimated salary, benefit, and payroll contribution expenses for the three positions would total $340,742 per fiscal year from General Revenue. Operating expenses are estimated to total $45,000 each fiscal year from General Revenue. Based on information provided by the RRC, General Revenue totaling $1,866,996 in fiscal year 2024 and $933,498 in fiscal year 2025 with additional maintenance costs of $466,743 for fiscal year 2026; $280,049 for fiscal year 2027; and $186,700 in fiscal year 2028 would be necessary for the development of an online system to allow operators to submit registrations and to allow the agency to store well registrations. Based upon information provided by the RRC, it is assumed that the provisions of the bill would have a total General Revenue cost of $2,252,738 in fiscal year 2024 and $1,319,240 in fiscal year 2025.
TCEQ identified 953 injection wells as being permitted in the state, 947 of which were permitted in the 1990s, but was not able to determine the number of open or closed-loop wells under current law. According to TCEQ, these well authorizations and inventories under its purview do not generate fees and no staff are currently associated solely with this work. TCEQ estimates that 1.0 percent of 1.0 FTE in the identified strategy performs work related to closed loop geothermal injection wells in its Underground Injection Control section, which is funded with General Revenue-Dedicated Solid Waste Management Account No. 549 (GR-D 549), General Revenue, and Federal Funds. According to TCEQ, the primary source of funding for this purpose is GR-D 549, which is an account solely administered by TCEQ. The table above does not include cost savings for the transfer of the program from TCEQ to the RRC due to the minimal resources currently being used at TCEQ for this purpose.
Technology
General Revenue totaling $1,866,996 in fiscal year 2024 and $933,498 in fiscal year 2025 with additional maintenance costs of $466,743 for fiscal year 2026; $280,049 for fiscal year 2027; and $186,700 in fiscal year 2028 would be necessary for RRC to develop an online system to implement the provisions of the bill.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies: b > td > 455 Railroad Commission, 582 Commission on Environmental Quality
455 Railroad Commission, 582 Commission on Environmental Quality
LBB Staff: b > td > JMc, MOc, MW, EJ, DKN
JMc, MOc, MW, EJ, DKN