Dear Friends,

It’s been an exciting few weeks since 98th Meridian Foundation issued our first white paper, Texas Disposal and Injection Well Regulations. Thank you all for the positive feedback and support.

Next, we’ll be looking at hosting workshops and seminars to publicly discuss the ideas and recommendations contained in the paper, as well as examining what other organizations and entities are working toward in regards to managing produced water.

While we’re eager to continue this conversation, in the meantime we wanted to bring to your attention how discussions on this topic are playing out in the Texas Legislature. Numerous bills have been filed regarding water, but a few in particular specifically tie into our efforts at 98th Meridian Foundation and support recommendations made in our white paper.

House Bill 3717 by Rep. Dominguez and its Senate companion, Senate Bill 1999 by Sen. Hinojosa, offer an oil and gas production tax credit for oil and gas producers that provide treated produced water to aquifer storage and recovery project operators. HB 3717 and SB 1999 create a mechanism with which entities can lower the cost to treat produced water when it is treated to a quality level that is permitted to inject and store in an aquifer for subsequent recovery and beneficial use.

House Bill 2545 by Rep. Guillen would provide an franchise tax credit for certain desalination facility operations based on the total dissolved solids (tds) concentration of the source water it treats. The tax credit can be transferred and applied as a severance tax credit.

This bill would serve as a catalyst to a burgeoning yet potentially lucrative industry in our state: desalination. The Committee Substitute for HB 2545 was voted out of committee this week, and the next step is to receive approval by the full House.

Both of these legislative proposals would help secure a new, reliable, drought-proof source of water, which our state – with its frequent droughts and booming population growth – desperately needs.

During my time as a Texas Railroad Commissioner, we amended the RRC’s water recycling rules to encourage recycling and reuse. Through this process, I realized that you can have the best regulations on the books but if there is no use for the water once it’s been treated, then it’s a moot point. I’ve long encouraged beneficial reuses for produced water, and I believe these bills help achieve a solution for the problem of what to do with the water once it’s cleaned up.

HB 3246, co-authored by Representatives Darby, Geren and Larson, seeks to clarify ownership rights of produced water between water haulers and oil and gas operators. Specifically, the bill states that when fluid oil and gas waste (water) is produced and used by a person who takes possession of the waste for the purpose of treating it for subsequent beneficial reuse, the waste is considered property of that person until it is transferred to another person for disposal or use (unless otherwise stated in a legally binding agreement such as an oil and gas lease). This bill is currently in the Calendars Committee waiting to be considered by the full House of Representatives.

Earlier this week, I visited the Texas Capitol in Austin to visit with lawmakers on these legislative proposals, sharing my experience with regulating produced water management at the Railroad Commission. To learn more about these bills and other proposed laws, visit the Texas Legislature Online.


David Porter