The Texas Legislature meets in a regular session every two years, convening on the second Tuesday in January of every odd-numbered year. These biennial sessions are limited to 140 days. The governor has the authority to call special sessions as necessary, which cannot exceed 30 days. The 87th Texas Legislature is set to meet January 12 through May 31, 2021. Texas legislators began pre-filing bills on Nov. 9, 2020, cataloging some 745 prefiled bills and joint resolutions in the first week of prefiling.
The New Mexico Legislature convenes in Santa Fe on the third Tuesday in January of each year. The Legislature holds 60-day sessions in odd-numbered years and 30-day sessions in even-numbered years. The 55th Session of the New Mexico Legislature will open on Jan. 19, 2021, and adjourn March 20. Lawmakers will begin prefiling bills on Jan. 4.
The weeks before every legislative session carry certain unknowns: Who will be elected to leadership roles? How will committees take shape? What issues will rise to the top of the legislative agenda?
The continued shadow of the Coronavirus introduced a new set of questions that had not been asked in our lifetime:
- Will the Capitol buildings be open?
- Who will be allowed in, and what health protocols must be followed?
- Will virtual testimony be the norm?
The New Mexico State Legislature convened special sessions June 18-22, 2020, and Nov. 24, 2020, to pass economic relief bills. The Senate voted to allow its members to take part either in person or online from their offices. Details surrounding the 2021 sessions in both states were not settled as of press time.
“The upcoming legislative sessions in Texas and New Mexico will both be greatly impacted by COVID-19,” observed Ben Shepperd, president of the Permian Basin Petroleum Association (PBPA). “Impacts will be seen in how the sessions are conducted, including the public’s access to the capitol buildings, elected officials, and their staff. However, the greater impact will probably be on both states’ budgets, as revenues have been drastically reduced because of the pandemic.”
Budget Shortfalls
Lawmakers in both the Lone Star State and the Land of Enchantment have two monumental tasks ahead of them. One is redistricting, a process that is not only time consuming, but sometimes contentious. The other gargantuan responsibility is passing a state budget.
Texas Comptroller Glenn Hager has issued various reports and spoken with the Legislative Budget Board in the past several months, giving a general picture of the economic climate.
In July, Hegar wrote a letter to Gov. Greg Abbott predicting the state would end the biennium, which runs through August 2021, with a deficit of nearly $4.6 billion.
According to the 2020 State of Texas Annual Cash Report, from August 2019 to August 2020, the Texas economy lost 616,600 nonfarm jobs, largely due to economic shocks from the COVID-19 pandemic and the recent fall in energy prices. https://comptroller.texas.gov/transparency/reports/cash-report/
During late November, Hegar revised earlier estimates saying despite “historic declines,” state lawmakers will have more money to work with in the upcoming legislative session than expected over the summer. Sales tax revenues, the largest part of the state budget, fell by 4.8 percent in the second half of the 2020 fiscal year compared with the same stretch last year, Hegar reported. This lighter “hit” was likely due to Texans staying home and spending money on “staycations instead of vacations,” he said.
Other revenue streams, such as taxes related to alcohol, hotel occupancy, and oil and gas, were down more than 40 percent in the same period this year compared with last.
While Hegar has hinted at a larger budget, he has yet to release a new figure for the next budget cycle, which runs from September 2021 through August 2023.
In July 2020, a New Mexico legislative panel predicted a $991 million state budget gap for fiscal year 2022, and the Legislative Finance Committee recommended that the state cut spending by 5 percent.
Industry Issues
“Revenues have been reduced because of COVID-19, and all agencies are having to find ways to accomplish their missions with less funding,” Shepperd cautioned. Particularly in Texas, this will mean fights on funding for the regulatory agencies that oversee oil and gas operations, namely the Railroad Commission of Texas and the Texas Commission on Environmental Quality.
“Securing proper funding for these agencies is a top priority for PBPA,” Shepperd emphasized. “The industry needs fully funded and functioning regulatory agencies to ensure the industry can function efficiently and that the general public has confidence in the regulatory framework.”
Budget tightening could also hit other efforts like the Bureau of Economic Geology’s (BEG) TexNet seismic monitoring network, he added.
“PBPA is supportive of BEG’s work in this area and also sees their budget request, which would go toward new seismometers, technical staff, mapping of Texas faults with annual updates, and the scoping and implementing of seismicity response protocols, as another priority,” Shepperd detailed.
As of press time, numerous bills restricting natural gas flaring had been prefiled.
“Some of these are intended to improve environmental conditions,” Shepperd noted, “and others are designed to slow or shut down the industry.”
Infrastructure topics, such as eminent domain for pipelines, county road funding, broadband for rural Texas, electrical transmission and distribution systems, and others will also be priorities for PBPA.
Industry advocates from other areas of the state are expressing similar concerns.
“Ensuring infrastructure like roads, water, electric, and pipelines will be the most critical issue our industry and communities will face this session to ensure industry and communities can grow and prosper,” shared Stephanie Moreno, executive director of the South Texas Energy and Economic Roundtable. Infrastructure does not just provide the critical movement of essential goods and services, but infrastructure jobs are an important funding mechanism to communities, she added.
A new study released by the Texas Pipeline Association credits the ongoing operations and construction of pipelines with generating $48.6 billion in economic impact, 238,000 high-paying jobs, and an injection of $2.7 billion in state and local tax revenues in 2019, Moreno reported. The study found that on average, Texas counties receive an estimated $12,350 in property taxes per year for each mile of pipeline located in the county.
“These pipelines are essential to continued growth and economic development in our region,” she emphasized. “Pipelines are a key component to rebuilding our economy and improving our environment.”
A Respected Voice
Throughout 2020, the oil and gas industry saw unprecedented, worldwide demand destruction due in large part to COVID-19, which caused the devastating drop in oil prices, Shepperd said. During the initial stages of the pandemic, the PBPA worked tirelessly with agencies and each state’s governors to understand that industry employees were and continue to be essential employees.
Additionally, the PBPA worked to build more flexibility within the regulatory structures to provide operators and agencies the opportunity to develop practices that ensured continued monitoring and inspections of sites and facilities without making personnel subject to health risks associated with COVID-19.
“We will monitor any and all developments from a legislative perspective, but we feel that both states understood our challenges and recognized how important our industry has been to the production of personal protective equipment (PPE), including medical and consumer grade plastics, sanitizers, and of course, masks for frontline health workers and the general public,” Shepperd remarked.
How You Can Help
“The PBPA is the voice of the Permian Basin oil and gas industry and plans to be that voice for many years to come,” Shepperd offered. “Members’ involvement with the association, through our committees, talking with our staff and leadership, and overall membership support of the association are each great ways for members to help with advocacy.”
The PBPA is still learning exactly how those in the public, including PBPA, will be able to interact with legislators both in Austin and Santa Fe because of possible COVID-19 protocols.
“This could make one-on-one advocacy a bit more complicated this year,” Shepperd predicted.
“The industry is in a fragile place economically with high unemployment and many companies struggling to survive,” Shepperd summarized. “We will remain vigilant in protecting the industry during these uncertain times.”
For more information on PBPA and the Texas and New Mexico legislature, go to https://www.pbpa.info/resources/legislation.
Dates of Interest for the 87th Regular Session of the Texas Legislature
Official deadlines will be set when the House and Senate adopt their rules, but until then, the Texas Legislative Council Drafting Manual provides the following general calendar According to the Manual:
Bill pre-filing began: Nov. 9, 2020
1st day of session: Jan. 12, 2021
60-day bill filing deadline: March 12, 2021
Adjournment sine die: May 31, 2021
Post-session 20-day deadline for governor to sign or veto: June 20, 2021
Effective date (91st day after adjournment): Aug. 28, 2021
Dates of Interest for the First Session of the 55th New Mexico Legislature
Bill pre-filing begins: Jan. 4, 2021
1st day of session: Jan. 19, 2021
Deadline for introduction: Feb. 18, 2021
Session ends: March 20, 2021
Legislation not acted upon by governor is pocket vetoed: April 9
Effective date of legislation not a general appropriation bill or a bill carrying an emergency clause or other specified date: June 18, 2021