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The Senate Committee on Natural Resources & Economic Development met on March 25th to take up a full agenda. This report covers discussions on SB 700, SB 1046, and SB 1255. A video of the hearing can be found here.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

SB 700 (Buckingham) – Relating to the continuation and functions of the Texas Parks and Wildlife Department

  • Buckingham explained base bill and then committee substitute after it was laid out
  • Sunset bill for TPWD, does not plan on taking any policy amendments on the floor
  • Substitute changes include: requires agency to evaluate progress on land and water plan every 5 years, risk based inspections for all permits and licenses
  • 4 resource witnesses are available
  • Zaffirini – question used to be on naming, did it come up or has it been resolved?
    • It has been resolved
  • Hinojosa – change on risk based inspections on boating licenses for risk on water safety rather than wildlife, thinks they would want both
    • Danielle Nasr with Sunset – those license holders don’t really have an impact on natural resources but real risk is with water safety

David Yeates, Texas Wildlife Association – for

  • Found Sunset process to be very inclusive with great public access
  • Can’t mention TPWD without mentioning CWD and countless hours have been put on focusing on this disease – thankful precedent and current trajectory is preserved in the bill

Cyrus Reed, Lone Star Chapter of Sierra Club – for

  • Pleased with them looking at land and water strategy for the future
  • Made three suggestions in his testimony and two of them have been filed as bills
  • Some on water trust and water rights issues
  • Agree we have done awesome job with parks and money but more still needs to be done on diversity
  • Appreciated parks especially during time of COVID to get out
  • Kolkhorst – question on diversity and appreciated his remark on the importance of parks and planning
    • Thinking of threatened and endangered species as well, should be planning for wildlife
    • Took Friday off and went to Lake Somerville, example of parks that are vital to Texas

John Sheppard, Executive Director of Texas Foundation for Conservation – for  

  • TPWD also plays an overlooked role in economic development of Texas
  • Bill is basis for outdoor recreational economy
  • Supports more jobs in Texas than the oil and gas industry
  • Type of legislation that will be remembered as population doubles

Bill left pending

SB 1046 (Birdwell) – Relating to the regulation of radioactive waste; reducing a surcharge; reducing a fee

  • Birdwell lays out the bill, Texas serves as a host state and received $25 million from Vermont as a result of being host
  • WCS on behalf of Texas constructed the facility to dispose of waste
  • Market for disposal has changed significantly over time; facility currently operates at an economic loss due to Texas statute
  • Updates are needed
  • Reviews bill language by each section
  • Lays out committee substitute
  • Hinojosa – Trying to make changes to adjust to changes that have taken place, your bill has 3 year capacity before they can go outside compact members?
    • Correct, why Vermont and Texas have a lower rate
    • Current rates not viable and we don’t want WCS to vacate the contract
    • Bill allows TCEQ to preserve space for in-compact and reduce space for those out of compact
  • Hinojosa – read some fees done away with, how much would it cost the state?
    • There is a fiscal note on the bill we got this morning and will have to work with leadership
    • WCS and TCEQ should have freedom to maneuver a bit in the marketplace, trying to allow freedom in the marketplace so that WCS can incentivize deposits primarily in compact but also out
  • Hinojosa – cost
    • Need to work to lower fiscal note and it is a challenge, don’t recall having that last session
    • Ultimately trying to make sure Texas’ contract has an operator that is fiscally solvent to operate the facility
  • Seliger – his involvement goes back to 2005, hospital uses radioactive materials so wide impact
  • Seliger – members of the committee are welcome to visit the site, in 1995 monies that arrived were arbitrary and should be less concerned with what WCS pays and more concerned with what state may have to pay
  • Seliger – if not addressed then WCS goes out of business then state would find themselves in position of hiring same people with additional margin, argues it would cost state of Texas far more at that time than if addressed now
  • Zaffirini – argued many years ago that you could store but not dispose of material
  • Seliger – disposal is where it goes permanently

Ashley Forbes, TCEQ – resource witness

  • Birdwell – Anything in layout of bill you would expand upon that was either inaccurate or create an impression
    • Don’t believe so
    • Do currently regulate low-level radioactive waste
  • Seliger – this moved from HHSC to TCEQ some time ago
  • 12 registered against and 4 for the bill

Cyrus Reed, Texas Lone Star Chapter of Sierra Club – against

  • Have not seen the committee substitute
  • Appreciates there is language to not allow storage of high-level waste other than at the generation sites; may be other places to put that language in the bill to make it stronger
  • Concerned about changes in fees, surcharges from 20% to 5% of imported waste
  • That money goes into a perpetual care account to use for clean-up of sites, if we decrease surcharge so much will not have funding to clean up
  • If don’t want to do it on class A that is fine but it is needed on B and C
  • Concern about containerized waste, allowing class A come into the state that is not containerized
  • Birdwell – we are not arbitrary but trying to provide latitude to move the fee because the market place has become dynamic; does have to work on fiscal note and appreciates his comments on class A
  • Birdwell – intent is economic viability but how to structure
    • If we say we need to make site economic, I don’t see a reason on class B&C when they are only game in town
    • Much more concern about charge on imported waste
  • Seliger – talking about market that can be pretty fluid, right now talking about basic viability
  • Zaffirini – used to argue waste has to be stored so it could be monitored and retrieved, is that no longer the standard?
    • All waste imported must be in big canisters that are protective
    • It should be containerized even in shallow bury but it can still be monitored

Suzie Gosling, Texas Women Voters – against

  • Bill does to require WCS to withdraw license to take high level waste
  • Inevitable volume of waste will increase
  • Eventually when WCS closes the state will accept the responsibility
  • More waste at WCS means there will be more to clean up at site
  • Better language is needed
  • Could mean Texas could bring in waste permanently

Mark Savell, County Commissioner of Andrews County – for

  • Reads letter from Judge
  • WCS continues to be transparent and committee to safety
  • Bill will help economic viability of site and be able to compete
  • Reads letter from City
  • WCS committed to safety and environment of Andrews and great corporate citizen

David Carlson, President of WCS – on

  • Safety; most protected site and no offsite exposure, transported waste is extremely safe
  • Necessary; waste generated everyday and Texas is obligated to continue to find space for material
  • Change in statute is necessary; constructed with private funds and done so for the state of Texas
  • They have a bond for when they close and it is not up to the state of Texas
  • Prices needs to be set so they can compete in the market
  • Pay 31.25% taxes compared to around 12% in Utah
  • Lucio – have you look at doing interactive partnerships at any time?
    • Not by company, but in general radioactive waste is handled by country that generated it
  • Lucio – could it happen if there is an agreement?
    • Technically it could happen but it a political question
  • Birdwell – containerization?
    • It provides worker safety only – they use containers for B & C
    • Does not provide any health or safety benefit to public
  • Birdwell – TCEQ
    • License allows for a waste amount set by TCEQ
  • Zaffirini – you are president?
    • Yes
  • Zaffirini – repeal of Health and Safety Code, to negotiate in good faith why remove that requirement
    • TCEQ has been reviewer of contracts, this says TCEQ is no longer an additional reviewed but they are still subject to all the state laws
    • Zaffirini – you may want to look at the bill to make sure that is clear
  • Zaffirini – question on anti-trust, no definition of person so what is your definition and would you include it?
    • Heard person has a broad definition but not something he put in there
  • Zaffirini – Governor has stated opposition to high level waste
    • Intent to comply with laws of state of Texas, does not intend to withdraw application
  • Lucio – TCEQ recommended against lowering fees, reducing oversight is a concern and noted colleague Rep. Tom Craddick stated concerns as well
  • Lucio – space for in-compact producers
    • Challenge is Utah facility is cheaper so in-compact producers are sending to Utah because it is cheaper, bill would allow for different in fees such as in state tuition vs out of state tuition
  • Lucio – is this a local bill or statewide
    • Statewide because generation of waste across the state such as hospital and various industries
    • Will work with Sen. Lucio and knows this is a work in progress
  • Zaffirini – the most controversial when she first came to legislature and has been controversial for a long time

Lon Burnham, Tarrant Coalition for Environmental Awareness – against

  • Don’t want high level radioactive waste
  • Need accurate numbers
  • Bill does not sufficiently band importation of high-level radioactive waste
  • Bill ignores never ending mission creep by vendor
  • Non-compact sources sent to WCS because of their statement they need money
  • Over 20 plants getting ready for decommissioning now
  • Birdwell – TCEQ still retains oversight they just don’t set price in statute, does not equate setting a price as meaning the same thing as oversight
  • Hinojosa – losing money, not making money and price set by TCEQ

Adrian Shelly, Public Citizen – against

  • Would suggest adding greater than class C
  • Fiscal note is same as House version but believe the fiscal note is far greater than the one presented
  • Think the number is off and refers committee to his written testimony for more details
  • Zaffirini – testimony says Texas could be responsible for multi-billion clean up
    • Heard site is obligation of license holder but if they were to wind down it is conceivable that Texas would be on the hook for a disaster clean-up
    • Only revenue state receives is from fees and surcharge
    • Fiscal note is looking backward at numbers, need to run forward for a few years
  • Zaffirini – asked about written testimony statement
    • Bill required expansion and removes discussion of review at future date
    • Shouldn’t handcuff ourselves that way
  • Hinojosa – asked about 20% for non compact members, we are also reducing your fee if you are out of compact
    • Yes

Edward Selig, GM Advocates for Responsible Disposal in Texas – for

  • Association of low level waste generators
  • Support disposal rates that are fair
  • This bill provides for preferred pricing and provides for guarantee of waste
  • Thanks for modification of section 2.01

Dale Bulah, self – against

  • Texas would lose $100 million or more
  • Huge volume of waste would bring huge profits
  • State needs revenue

Tommy Taylor, Fasken Oil and Ranch – against

  • Organized with others again application of storage of high level nuclear waste
  • Currently WCS operates a low level waste facility
  • Here arguing again for something WCS said they would not do
  • Really worried about high level nuclear waste
  • When you redact laws on how you deal with contracts and take out TCEQ is a problem
  • This is not the place to put the fuel rods, not a risk free endeavor
  • Not against things Andrews city and county want but when it threatens assets of family and Permian Basin they cannot support; need to two the line and make them withdraw the application
  • Zaffirini – removal of anti-trust or negotiate in good faith
    • Dealing within companies under Umbrella
    • Bill is about decommissioning nuclear plants
    • Permit wants to house a large majority of that – sets us up for failure
  • Zaffirini – “way out” in West Texas comment, can you talk about low level and high-level waste
    • Terrible accidents on railroads, bad roads, if we had an accident
    • They said they put them in containers but test have never been done on the fuel roads
    • It will go right downtown Midland into Abilene, etc
    • People dealing with rods are on site but this is not a nuclear power plant but a waste facility
    • If they would pull permit would be able to sleep at night
  • Seliger – Governor and Committee has said they are not supportive of high level waste, as for transportation a truck leaving almost every day with materials and believes there is risk but it should be assessed and dealt with

Tom “Smitty” Smith  – against

  • Well meaning intent to band high level waste coming to Texas
  • Definition of person does not include the federal government and they would be the title holder
  • We think we have responsibility but not to bring in waste from the rest of the country
  • Need to look forward on fiscal implication
  • Hinojosa – main objection about out of state
    • Correct

Bridget Hyde – against

  • Find language in bill very confusing
  • Why reduce the surcharge and eliminate fee if really against high level nuclear waste
  • Would separate the issues rather than put low level and high level in same bill

Karen Hadden, SEED Coalition – against

  • Considers bill similar to poison apple
  • Does not think language is strong enough
  • Needs to include greater than Class C
  • A lot of money to the state would be lost if they reduced the surcharges
  • Don’t remove regulation of TCEQ
  • Need to containerize even class A waste
  • Zaffirini – do you have concerns about contamination at site?
    • Yes other sites have leaked can range from millions to billions in clean up
    • In New York the state was stuck for $2 billion
    • Need to collect money in surcharges
  • Zaffirini – was SEED coalition involved when permit was initially denied and then approved?
    • Because of water and contamination many staff resigned on principal of licensing site
    • Some wells are still testing saturated at the site
    • Workers in cafeteria were exposed before current ownership
  • Zaffirini – fiscal note?
    • It significantly underestimates cost in lost revenues
    • Need to look at decommissioning reports to help better estimate cost
    • Hundreds of millions if not billions at stake

Bill left pending

SB 1255 (Birdwell) – Relating to the Texas Economic Development Act

  • Ch 313s was last renewed in 2013 and set to expire on Dec 31, 2022
  • Bill improves public notice requirements and additional required notification time, etc
  • Seliger – This has been in place a long time but made changes a few years ago that limited amounts, why only energy generating facilities?
    • Mainly because they are reliably unreliable
    • Issues with ERCOT and electricity generation prompted another look at this issue
  • Kolkhorst – Tools that will help us recruit the right kinds of businesses to Texas is important. Good to give incentives to companies especially if they would not normally locate in Texas, like chip production.
  • Kolkhorst – 313 agreements have become something we did not intend for them to become over the years. When a foundation has millions of dollars for students in a district, it stops being an equitable system. We need to give counties and cities the ability to attract businesses, but we need to balance this with the fiscal note and long-term finances.
  • Seliger – Want to point out that in many counties, there are not these foundations with millions of dollars. I agree that transparency is important, but certain things are permissible in executive session, in private. If there is a problem with transparency, it is not due to statutory problems.

Rebecca Kelley, Brazosport ISD – For

  • The procedural changes are likely not an obstacle to our arrangements
  • Approved 13 agreements in recent years
  • Many corporate partners are petrochemical firms, but recently branching out into liquified natural gas
  • Companies invest more infrastructure in the area, and look to the district to provide a pipeline for workers
  • Able to issue millions in bonds without increasing property tax rate
  • Zafrini – Why is it important to remove renewables from 313?
    • We don’t currently have any projects, it doesntn affect us

Cyrus Reed, Lone Star Chapter Sierra Club – On

  • Either include everyone or include no one
  • If the 313 program is worth the squeeze, why would we remove part of the puzzle, removing renewables but keeping gas and oil companies in?
  • Want to ensure strong public participation components to ensure awareness about tax abatements
  • Birdwell – Would you include nuclear?
    • Looking at the ERCOT grid, it is unlikely we will have new nuclear proposals anytime soon
    • Yes
  • Zafrini – Any suggestions about how local governments could recuperate losses if renewables were excluded from 313?
    • Difficult question, not sure because I don’t develop renewable projects
    • It is probably a real concern, but not my area of expertise

Dale Craymer, Texas Taxpayers and Research Association – On

  • Support extension of 313, but concerned with elimination of renewables from 313, and we are concerned that the program is becoming less competitive with other states
  • The exemption has never been particularly generous, not applying to debt and only applying on M&O taxes up to a certain point
  • 313 only offers a 37% discount on school taxes, while other states offer 100% off
  • Concerned with revenue protection payments – originally designed to make up for revenue losses in districts, but HB 3 eliminated aspects of the finance formula that made RPP outdated
  • Some consultants still trying to leverage new rules on the old RPP formula
  • Birdwell – So the RPP and supplemental payments are different?
    • Yes, they are distinct
    • In 2009, RPP amounted to about 2.7% of taxpayer benefit, while supplemental payments were about 11%
    • Now, RPP are greater than supplemental payments, but there is no revenue loss to make up, so they are purely revenue generation payments now
  • Birdwell – Would a flat tax rate and known discount rate be better than the current system?
    • Yes, step in the right direction
    • RPP changes yearly and will change with statute
    • Anything that brings certainty to the table for agreement negotiations is good
  • Zafrini – Any suggestions about how local governments could recuperate losses if renewables were excluded from 313?
    • These projects don’t create a cost to the local community
    • Projects are coming regardless of the incentive, if they aren’t coming without an incentive, its not revenue loss because its revenue you were never going to have
  • Zafrini – Why should renewables be included then?
    • It’s the status quo, no real reason to eliminate them
    • Rather than single out renewables, consider expanding 313 to all electricity generation to grow supply

Bob Adair, Principal Advisor in the Real Estate Services at Phillips 66 – For

  • Texas property tax rate is 62% higher than other states ranked highly for capital investment
  • Texas could be more business friendly than it is already
  • 313 essential for Texas to remain competitive

James LeBas, Texas Oil and Gas Association – For

  • OAG good for jobs and higher pay
  • Dominant form of energy investment in the state
  • 313 increases competitiveness and investments in the state

Mark Goloby, Self – On

  • Believes that 313 allows school districts to manipulate property tax rates and pass costs on to other districts and the state
  • Kolkhorst – Is the abolition of 313 a bipartisan issue?
    • Both parties would like to see it expire, especially grassroots

Eric Pustejovsky, Superintendent of Abbot ISD – Against

  • 313 programs help the district, currently have a solar farm 313 project in Abbot ISD
  • Will receive ~70,000 for 14 years from this project, which constitutes an additional teacher
  • Oppose removal of renewables from 313
  • Without financial incentives, Abbot ISD cannot lower the tax rate, but additional payments take burden off the state to fund schools
  • Birdwell – What was the reason of the 30 year lease?
    • Negotiated between the company and the landowners, but not sure
    • Only guess is that’s the life expectancy of solar panels before they become ineffective
  • Kolkhorst – Could you disclose the PILOT amount?
    • Approximately $1.9 million, when the project is completed

Tony Bennett, Texas Association of Manufacturers – For

  • Appreciate the extension of 313, but request 2 key changes:
  • School District RPPs should be repealed
  • Renewable projects should qualify
  • RPPs create a barrier for jobs and investment, reduces competitiveness of Texas compared to surrounding states
  • Birdwell – How does renewables help with 313?
    • Even OAG fields and plants are experimenting with solar and wind
    • Rest assured that most multinational companies are experimenting with renewables and speculating on future role

Charlie Hemmeline, Texas Solar Power Association – On

  • Strongly support 313, but would like to see renewables remain as a qualifying area
  • Solar is unique in it having a depreciation floor established in legislature
  • New solar projects diversity the electricity portfolio and provide important power supplements for high demand months
  • Hancock – So solar has about 16,000 MW in the queue?
    • Yes, significant build
  • Kolkhorst – Without 313, would your project come to Texas?
    • Every project would need to make that analysis
    • Many companies are all over the United States and even the world – competitors include California, Louisiana, and more – almost every state has solar resources now
  • Kolkhorst – Do you get 312s as well?
    • Many projects get both 312s and 313s

Suzanne Bellsnyder, The High Ground of Texas – On

  • 313 is one of the most important tools for the Panhandle region for economic development
  • Kolkhorst – How many projects do you have in the region?
    • Not sure exactly, at least 100, maybe 200
  • Kolkhorst – Are most of those renewables?
    • Not sure, definitely possible, but a mix

Jeffery Clark, Advanced Power Alliance – On

  • 312 and 313 are vital programs
  • Programs have brought Texas economic development, electric development and diversification, and it’s a long-term investment districts can factor in to long-term projections
  • Take renewables out of the program, and about 2/3 of the counties participating will no longer be able to
  • Massive regions in the state where renewable opportunities are huge and increasing
  • Only 28% of the tax benefit is going to renewables, and a slightly higher percentage of tax revenue is coming from those same programs

Mark Ruffin, Superintendent of Normangee ISD – On

  • Currently constructing a solar farm in the district as a part of a 313
  • Districts receive excellent financial benefits from 313s, and those benefits provide for an additional revenue stream for the district to fund new programs, construction, and other issues
  • Renewables key to continue to include in 313 eligibility
  • Kolkhorst – In the funding formula, when a 313 is decided on, do you get anything through the formula for the agreement and the new business?
    • We get a temporary hold harmless adjustment

Hector Rivero, Texas Chemical Council – For

  • 313 is a critical tool for attracting large industrial investments
  • Study shows that around 2.5% growth in tax revenues in cities with 313 programs
  • Eliminate RPPs; HB 3 requires current year property values for calculation, which negates the need for RPPs

Dick Lavine, Every Texan – Against

  • Good that 313 has a sunset date, but rolling over an additional 10 years is too long – roll over 2-4 years and conduct an interim study on effectiveness
  • Transparency is key – 313 is often praised for this, but the bill would eliminate the current transparency website and create a new database that would probably be very confusing and might unintentionally hide some information
  • Also opposed to section 6, where Comptroller would not collect as much information
  • Section 7 shrinks reporting, eliminating useful information
  • Kolkhorst – Are you against 313s?
    • There are some projects that could come to Texas or go somewhere else that would require competition, but many projects will come here regardless
    • Proponent of rethinking incentives, like the Enterprise Fund
    • Could also provide for greater accountability and transparency in costs for the programs
  • Kolkhorst – Have you ever seen a district say no to one?
    • No, but I have seen communities complain

Bob Harvey, President and CEO of Greater Houston Partnership – For

  • Benefits greatly from Chapter 313, County footprint has 103 active agreements, 88 are manufacturing, and around 3,000 jobs are invested in these projects
  • Needs a tool to offset property tax to compete with Louisiana
  • Favor eliminating revenue protection payment and renewable energy in the program
  • Lucio – In agreement
  • Alvarado – Challenges in Energy Sector regarding employment
    • We have lost 240,000 jobs since a year ago
  • Seliger – Who built the new refinery several years ago?
    • I’m not sure
  • Seliger – It was an intense competition between Texas and Louisiana, we used these incentives for a similar facility in Amarillo
    • We can tell from the aspect of the negotiation that we are competing against someone
  • Seliger – Cities in Texas will grow no matter what happens, but 313s make a huge difference in rural areas
    • Houston is huge and we could use tools in areas that aren’t necessarily urban

Brent Bennett, Policy Director of Life Powered/Texas Public Policy Foundation – On

  • Should be sent to sunset and shorten the sunset period
  • Vast majority go to energy projects built around geography
  • Appreciate the need for rural areas to engage in economic development, but rural areas tend to not be in favor of big developments
  • Wind and solar have hidden costs, subsidizing these projects pushes these beyond their marketing equilibrium
  • Wants to improve aspects of this bill
  • Kolkhorst – Interesting diversity of support for this or against it
  • Seliger – Could you identify the people who are for or against this?
    • It is mostly citizens that come to us
  • Seliger – Were there any incentives involved when San Antonio got Toyota?
    • I’m not sure
  • Seliger – Do you believe a foreign company should have gotten that?
    • As a general rule, we should focus on more broad tax breaks

Left pending