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Oil and Gas Undervaluation Bill Receives Favorable Support

By Aurora Flores
Legislative Liaison

On Monday, April 4, the Senate Finance Committee heard CSSB 1505 by Sen. Carlos Uresti (D-San Antonio) — the bill written to address the oil and gas undervaluation problem — and no opposition was voiced.

Uresti and Rep. Tryon Lewis (R-Odessa) both introduced legislation to correct the inherent undervaluation and utilize market-based methodology. Lewis’ HB 889 is currently waiting to be heard in the House Ways & Means Committee.

After weeks of stakeholder meetings to work out the best possible language in the legislation, testimony was heard on the bill’s merits. Providing the counties’ perspective in support of the bill were San Patricio County Judge Terry Simpson; Jim Allison, general counsel for County Judges & Commissioners Association of Texas (CJCAT); and Texas Association of Counties President and Roberts County Judge Vernon Cook’s letter to the committee. Representatives from the Permian Basin Petroleum Association and the Texas Alliance of Energy Producers also testified in favor of CSSB 1505. No opposing testimony was heard or presented to the committee.

The Comptroller of Public Accounts and the revenue estimating methodology have been removed from the proposed bill language. The legislation would use the price estimated for the coming year in the US Energy Information Administration (EIA) Annual Energy Outlook at the full value to determine the price adjustment for the first year.

This “price adjustment” will be calculated by the chief appraiser, using the forecasted price for current calendar year and dividing by the estimated price for oil for the previous calendar year. The escalation rate for future years is based on the Producer Price Index (PPI) rate and would be capped at an additional five years.

While CSSB 1505 does not meet all of the counties’ concerns, it is a definite improvement over the present statute. In a few years, proposed legislation should produce higher oil and gas appraisals than with the current methodology, producing better results for counties over time.

Senate Finance will meet weekly to vote out pending business, including CSSB 1505. The next step will be to have the legislation set on the Senate calendar and heard on the Senate floor.

TAC staff will continue to monitor the movement of this and other bills important to counties.

For more information, please contact Aurora Flores at or (800) 456-5974.