The Texas Railroad Commission, which dates to 1891 and for decades used its power to limit production in the world’s most important oil fields, could soon undergo a facelift and lose its storied name.
A bill pending in the Legislature would rename the agency the Texas Energy Commission.
The commission would keep authority over the state’s oil and gas industry, but the Department of Transportation would take over the commission’s original job of railroad regulation.
Changing the commission’s name and duties has been discussed for years but got new life from a council created by Gov. Rick Perry and led by Railroad Commission Chairman Victor Carrillo.
In December, the group proposed a 10-point energy plan that included overhauling the commission’s focus, approving tax breaks for drilling exploratory oil and gas wells and encouraging the construction of Gulf Coast terminals to import liquefied natural gas.
In March, Sen. Florence Shapiro, R-Plano, introduced a bill containing the panel’s recommendations to restructure and rename the Railroad Commission. The chairman of the Senate Government Organization Committee plans a hearing this month, an aide said.
There is no guarantee that Shapiro, whose office declined an interview, will succeed.
Shapiro has already promised to drop a provision that upset Comptroller Carole Keeton Strayhorn. It would have moved an energy-conservation unit from Strayhorn’s office to the new energy department.
Rep. David Farabee, D-Wichita Falls, who proposes to eliminate two of three seats on the Railroad Commission, predicted the name change would pass because it reflects the agency’s job.
Institutional resistance to change
However, proposals to change the Railroad Commission run into strong institutional resistance, said Rex H. White Jr., a former general counsel to the commission.
A proposal to merge the agency and the Public Utility Commission died two years ago on the Senate floor. White said even oil and gas producers who love to grouse about the Railroad Commission fear change, having grown accustomed to the agency’s ways.
“The name is, in one sense, misleading, but they’re known all across the United States and in Congress as the Railroad Commission,” White said. “Bills designed to restructure the commission are usually pretty hard-fought, and not many of them make it.”
The Legislature created the commission in 1891 to set railroad shipping rates. In 1917 _ 16 years after the first big oil gusher at Spindletop _ the Legislature added oil and gas pipelines to the commission’s jurisdiction. Two years later, lawmakers gave the commission the job of enforcing a state law against wasting oil and gas, by then already a critical part of the state economy.
Over the years, the commission’s power grew. It told operators how far apart to drill wells and how much oil to pump out of the ground to avoid wasting the state’s most important natural resource.
Producers often chafed under the commission’s production limits, called prorationing. In the 1930s, troops were called in to maintain peace when the commission limited production in the then-new East Texas oil field. Producers wanted to run their wells wide open, but the courts and Legislature sided with the commission.
The United States was the world’s largest oil producer until 1974, and Texas was the biggest oil state, so the Railroad Commission’s actions affected oil prices everywhere.
“At one time, it had influence far beyond the boundaries of the state,” White said. “The commission never delved into pricing, but there was a side effect on prices.”
The commission was forced to abandon production limits in the early 1970s, as the nation’s oil surplus ran out and Americans waited in long gas lines. The Organization of Petroleum Exporting Countries, took on the power to influence oil prices.
Carrillo, the Railroad Commission chairman, said he favors changing the name because the agency simply doesn’t have much to do with rails anymore. He said only 14 of the commission’s 700-plus employees are assigned to rail safety.
“I must admit I like the historical aspect of what the Railroad Commission stands for,” Carrillo said. “When Texas dominated the world oil market, it was as important as the role OPEC plays today. But it’s time for that name to reflect what we do in 2005 instead of 1891.”
