Critics continue to doubt the commission’s vigilance in enforcing a rule that they say lacks teeth.
AUSTIN — The Texas Railroad Commission approved Texas’ first weatherization standards for natural gas infrastructure Tuesday, placing new regulations on an industry that saw major failures during the 2021 winter storm that contributed to widespread blackouts.
The regulation requires natural gas wells, processing facilities and pipelines to prepare for extreme weather, including freezing events. Violators will be subject to enforcement fines that could be as high as $1 million for major violations.
“This rule is about preparation,” Commissioner Jim Wright said. “It’s about planning for the unknown. It’s about communicating. It’s about ensuring that those … identified as a critical piece of our natural gas supply system can continue to do so when they’re most needed.”
The regulation has been criticized for a fee structure that some watchdog groups and some power provider advocates say lacks teeth and might lead natural gas extraction companies to pay a fine instead of spending money to harden their equipment for extreme weather. It also did nothing to prevent natural gas operators from shutting down their equipment ahead of inclement weather.
The Railroad Commission has no authority to mandate a natural gas facility continue operations at any time, and that doing so would be antithetical to how Texas does business, said Wright, the only commissioner who commented on the regulation before it was unanimously approved.
“It is impossible to write rules or legislation to remove all risk or mandate normal operations,” Wright said. “To envision every conceivable weather event and how it might impact the various parts of our system is not feasible. But what we can do is ask those entities to look at their operations, identify potential vulnerabilities, and have plans and procedures to fortify their operations to avoid or minimize disruptions.”
The oddly named Railroad Commission is the main regulatory body overseeing Texas’ massive oil and gas industry. The Texas Legislature mandated the action in its 2021 omnibus electric grid fortification bill, Senate Bill 3.
Tuesday’s vote was the second major regulatory action by the commission in response to the 2021 winter storm.
In November, the commission approved rules outlining what natural gas facilities would be subject to weatherization requirements. That regulation came amid outcry from the public and a contentious meeting at the Texas Senate, in which the commission was chastised for creating an opt-out option that would allow companies to avoid weatherization by paying a $150 fee.
The fee was ultimately scrapped and commissioners created a tiered system that applied the most strict weatherization standards to the largest natural gas extraction, processing and pipeline facilities.
But even as the commission created new regulations Tuesday, it already appears to be moving toward loosening requirements for which facilities are required to be weatherized.
The commission has opened up the critical infrastructure designation rule outlining which facilities must weatherize to amendments. The changes have not yet been made public, but comments from Wright appeared to indicate that the Railroad Commission intends to remove a large number of medium-sized operators from the list.
Commissioner Christi Craddick said the proposed amendment removes some “marginal wells” from being designated as critical infrastructure. Railroad Commission staff indicated about 78.4% of daily production would still be required to come from weatherized facilities.
About a third of electric power production on the ERCOT grid is fueled by natural gas.
Democratic candidate for Railroad Commission Luke Warford attended the meeting. After the vote, Warford said the weatherization rule still lacks teeth and he doubts the commission will enforce the rule with vigilance.
“Even if they had passed a strong rule, which this isn’t one, the Railroad Commission has a terrible track record of enforcement,” he said. “I don’t have any confidence in them actually enforcing the existing rules.”
Warford’s opponent in November’s election is Republican Wayne Christian. Christian attended the meeting remotely because of an illness. He did not make any comments on the weatherization rule.