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Texas Regulator Banned From Waiving Environmental Rules

The Texas Railroad Commission has been banned from enforcing a string of environmental rule waivers after a judge ruled the agency had failed to provide the public with adequate advance notice of such moves, first proposed in the spring.

Bloomberg recalls that the TRRC approved measures including fee waivers and cleanup deadline extensions to help troubled oil and gas companies in the state cope more easily with the fallout from the pandemic, which in late April pushed West Texas Intermediate into negative territory for a few hours.

“The Commission does not agree with the Court’s order, and has filed a notice of appeal with the Third Court of Appeals,” said Andrew Keese, spokesman for the Commission, in a statement sent to Reuters.

The measures, according to the statement, as quoted by Bloomberg, “were approved in accordance with the open meetings act, state and federal law, and Commission rules.”

Fee waivers and extensions of environmental cleanup deadlines were not the only steps the Texas Railroad Commission took this spring in response to the pandemic, which decimated oil demand. The regulator was also considering imposing mandatory production cuts on companies active in the state in a bid to control the oil price drop.

The RRC stopped short of taking this step, however, despite backing from some in the industry, who argued the regulator needed to step in and order production cuts. Pioneer Natural Resources and Parsley Energy were pushing for the first proration of oil production in Texas since the 1970s. Meanwhile, major companies, including ExxonMobil and pipeline operators, expressed opinions that the regulators should let the free market dictate the state’s oil production.

Smaller independent producers tend to support some kind of coordinated action to restrict supply, arguing that the free market will wipe out the smaller guys in the industry. Indeed, later this year, Pioneer bought Parsley in one of the few M&A deals amid the crisis.

By Irina Slav for Oilprice.com

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