The Senate Committee on Natural Resources and Economic Development has released their interim report to the 85th Legislature which includes discussion, recommendations and letters to the Chair. Below is a link to the report and a spotlight on the recommendations; however, for complete details please refer to the full report.
Charge #1 – Implementation of Federal Regulations
The Committee finds that federal litigation is the only effective means of resisting federal regulations that harm the interests of the State and that the Office of the Attorney General of Texas has successfully delayed or defeated many harmful actions by the EPA over the last eight years. The Committee further finds that, when challenged federal regulations cannot be defeated in the courts, the State should attempt to comply with them using the means that will be the least disruptive and most cost-effective to its citizens. With this in mind, the Committee recommends that the 85th Legislature:
- Fully fund and support the Attorney General's Office in its ongoing battles against overreach by the EPA and other federal agencies;
- Extend TERP as the least disruptive means of complying with the recently-lowered national ambient air quality standards for tropospheric ozone, as discussed in more detail below in response to Charge 2; and
- Implement the least disruptive means of complying with challenged federal regulations the State is unable to defeat in court.
Charge #2 – Texas Emission Reduction Plan (TERP)
The Committee finds that, viewed as a whole, TERP is an effective program that serves a
critical role in the State's effort to comply with the EPA’s ozone standards. Nevertheless, its
byzantine funding mechanism, the wide range in efficiencies between its different programs, and the Legislature's history of failing to appropriate all of its revenues limit its effectiveness and
warrant attention. With this in mind, the Committee recommends:
- The 85th Legislature consider legislation extending TERP beyond 2019.
- The 85th Legislature consider detangling the TERP Fund from the Texas Mobility Fund and the State Highway Fund in a manner that neither reduces TERP Fund revenues nor violates the Texas Constitution's protection of the Texas Mobility Fund's revenue stream.
- The 85th Legislature consider appropriating a greater portion of TERP Fund revenue in the next biennium and beginning the process of spending down the TERP Fund balance over the next several sessions.
- In sessions in which TERP appropriations threaten to violate the spending limit, the Legislature should not decrease the overall amount appropriated, but instead should make the appropriations that would otherwise violate the limit from the portion of the TERP Fund revenues and the TERP Fund balance that is attributable to fee revenue.
- In sessions in which violating the spending limit is not a concern, the Legislature should make as much of its TERP appropriations as possible from the portion of TERP Fund revenues and the TERP Fund balance that is attributable to tax revenue, to lessen the impact of the spending limit in subsequent sessions.
- The Legislature should appropriate the overwhelming majority of the increased funding to the diesel emission reduction incentive program.
- The Legislature should explore creating additional TERP programs that cost effectively reduce nitrogen oxides emissions, especially if those programs also provide additional benefits to the State's economy through increased use of natural gas or other alternative fuels.
Charge #3 – Economic Development Incentives
The economic incentives debate is never-ending. The issues studied during this interim pursuant to this interim charge are eerily reminiscent of the issues studied during the 74th legislative interim by the Senate Committee on Economic Development exactly 20 years ago. The interim charge back then was almost the same, and all of the arguments made both for and against economic development incentives are still being made now—almost verbatim. The only thing that has changed is that the dollar amounts at issue have gotten higher and the breadth of the programs has gotten wider both in Texas and in other states. This makes the work of the new Economic Incentive Oversight Board that much more important. Recommendations:
- The Legislature may wish to reconsider its methodologies for creating and maintaining economic development incentives.
Additionally, or in the alternative, the Legislature may wish to consider;
- Amending Chapter 313 so that school districts cannot waive the minimum jobs requirement. Otherwise the legislative purposes and intent of creating high-paying jobs is not met pursuant to Texas Tax Code § 313.004 and § 313.003.
- Eliminating projects from eligibility for Chapter 313 unless the depreciation of such projects is limited by statute, thereby preserving the taxable value of the project upon he expiration of the appraisal limitation term. Otherwise, the legislative intent of providing a net benefit to the State over the long term pursuant to Texas Tax Code § 313.004 and the legislative purpose of expanding and enlarging the ad valorem tax base of this State are not met pursuant to Texas Tax Code § 313.03.
- Amending Chapter 313 in the following ways: Implementing broad-based property tax reform, in the form of reduced rollback rates and reduced or eliminated taxability of business personal property and business inventory while simultaneously (a) reducing the number of years an appraisal limitation can be in effect under Chapter 313; and (b) increasing the minimum limitations amounts set forth in Texas Tax Code § 313.027.
- Strengthening the accountability requirements of Chapter 313 agreements by eliminating self-reporting by recipients and instead requiring independent audits.
- Amending Tex. Gov. Code § 490G to require that programs and funds administered by local taxing units that award to business entities and other persons local monetary or tax incentives are evaluated by the Economic Incentive Oversight Board for their effectiveness, efficiency, and overall effect on state finances, just like state funds and incentives.
Charge #4 – Expedited Permitting
- If the EPA adopts its proposed e-notice rules for major NSR and Title V operating permits under the Clean Air Act, then the Legislature may consider adopting similar rules in order to provide time and cost savings to businesses seeking permits.
- The Legislature may consider appropriating the requested $1 million for administration of the expedited permitting program and adopting exemption rider language that will accommodate TCEQ's hiring of more persons to work on expedited permitting applications.
- The Legislature may consider eliminating the contested case hearing process and in its place adopting a notice-and-comment process with an EAB-style appeal option.
Charge #5 – ERCOT/PUC Electricity Issues
- The Committee took no action on this charge.
Charge #6 – Oil Field Theft
The Committee finds that oilfield theft is widespread, ongoing, and seriously damaging to
the State's economy. With this in mind, the Committee recommends that the 85th Legislature:
- Consider passing legislation to enhance penalties for oilfield theft and oil laundering to better enable district attorneys and law enforcement officers to prosecute all levels of the criminal organizations that perpetrate oilfield crime; and
- Avoid relying on prosecutorial discretion to narrow its drafting. Any enhancements designed to fight the problem of oilfield theft should be narrowly-tailored to prohibit the specific conduct the Legislature seeks to punish.
Charge #7 – Monitoring Charge
Legislation Relating to Texas Aerospace Incentives
SpaceX is presently under construction. The Governor has appointed members to the Advisory Committee representing all three spaceport development corporations. The remainder of the Advisory Committee members and their biographies are available on the Governor's appointments page. The Senate Committee on Natural Resources and Economic Development awaits the Aerospace and Aviation Advisory Committee's report on December 1, 2016, including recommendations by the members of the Advisory Committee.
Expedited Permitting
The Committee will continue to monitor the status of permit applications and their movements under the new procedures.
Electric Utility Rate Adjustments
The Committee took no action on this charge.