Truck Traffic Blamed for Damaged Roads

June 15, 2007

Weatherford Democrat

Galen Scott

*Personal Note from Representative King:

I wanted to add here that I did successfully get the bill discussed in this article ammended on to HB 2982, which finally passed the legislature and will be effective on January 1, 2008. In the article Mr. Scott correctly states that the bill I carried (HB 913) was left pending in Senate committee. This bill will enable the counties where the portable drilling rigs are actually being used, to see the benefits of the tax revenues from these rigs.*

Big trucks and the gas drilling industry, in particular, are damaging some Parker County roads so much that they are becoming dangerous, according to Precinct 3 Commissioner John Roth, and even if his road and bridge budget doubled, it still wouldn’t be enough to keep up, he said.

After recently driving roads in Johnson County, where Barnett Shale exploration developed more rapidly, Roth decided to air his concern with members of the Parker County Commissioners Court. He said the edges of some Johnson County roads are “beat out” all the way to the middle.

“I’m afraid that our roads are going to end up just like theirs,” he said during the Court’s June 6 regular meeting. “We’re headed that direction and it’s dangerous and I want to enter into this debate before it gets absolutely horrible.”

Roth acknowledged heavy trucks not associated with the drilling industry are also to blame, and said gas operators shouldn’t foot the entire repair bill because some Parker County roads weren’t exactly in great shape to begin with. But Roth was crystal clear about which user he believes is responsible for most of the recent roadway impairment.

“The roads are breaking down,” he said. “I think the [oil and gas] industry has had a significant impact in the last two years on the number of overweight vehicles and what they’re doing to the roads.”

Precinct 4 Commissioner Jim Webster, whose territory contains the vast majority of new gas wells in Parker County, agreed the situation has become a problem. He said some roads in his Precinct have already lost 2 feet of surface on either side and there is no longer enough room for a passenger vehicle to pass an 18-wheeler without somebody moving over.

“You will be killed if you don’t get into the shoulder and that is a fact,” he said. “We have dangerous safety issues to consider here.”

Roth said tax revenue produced by gas wells is just not enough to offset the damage caused by trucks involved in Barnett Shale production and that he doesn’t have enough road and bridge money to adequately maintain his precinct’s roads.

The Parker County Appraisal District reported Precinct 4, which represents the southeast quadrant of Parker County, had the most new drilling activity last year with 74 new gas wells completed before January 1 2007. After the county’s road and bridge tax rate was applied to the collective valuation of those 74 wells, each one contributed an average of about $1,500 for the precinct’s road and bridge fund.

Roth contends $1,500 worth of damage is done when the big rigs, “roll their first tire down the road.”

He said he is not trying to start a fight with the oil and gas industry. He noted having several conversations with what he called the “major players” and said they have all expressed a willingness to ante up.

“We’re pretty much building and maintaining the roads for this industry and charging them pennies on the dollar for what it’s costing us,” Roth said. “I need to double my budget and that’s not going to get us far enough; it’s going to put us closer to not falling behind as fast as we are now.”

At Roth’s behest, State Rep. Phil King (R-Weatherford) agreed to request an opinion from Texas Attorney General Greg Abbott regarding the legality of county-imposed impact fees, which would tax the operator of each new drilling location. As a general rule, King said industry ought to carry its own load.

“If industry is specifically causing damage to roads, then that industry needs to be specifically liable for it,” he said. “There is no question that the industry is … it takes an average of 40 truck loads to move one rig, and then you’ve got all the water trucks and everything else.”

In order to address deteriorating roadway conditions last year, the Commissioners Court began requesting a voluntary payment of $25,000 for each operator’s first well, and $5,000 for each following well. County Treasurer Jim Thorp said some operators will occasionally contribute a few thousand dollars “here and there,” but to date, he said the county has not received any larger voluntary payments.

King submitted a bill this year, which would have allowed the county in which a drilling rig is located on January 1 to levy ad valorem taxes against the value of the equipment. Previously, those taxes were paid to the county where the rig’s owner was based. The extra revenue was touted to help Barnett Shale counties compensate for emergency services and road maintenance associated with the drilling boom, but King’s bill was left pending in a Senate Committee.

Economic benefits produced by exploration should compensate for the cost of maintaining county infrastructure, according to King. In fact, a recent study concluded the 14-county core area of the Barnett Shale realized $5.2 billion worth of new economic activity last year. King compared road damage associated with the Barnett Shale to problems on Interstate-35, a highway Texans pay to maintain even though trucks using the route are headed to destinations throughout the nation.

“All these other entities are benefiting from the economic benefit that is coming with the development of the Barnett Shale, but the money to offset to the infrastructure costs is not getting back to [the road and bridge fund] where it needs to be,” King said.

County-wide taxing entities that receive a cut of the revenue generated by gas wells include Weatherford College, the Parker County Hospital District, the county’s general fund and the lateral road and bridge fund. Taxes associated with eight of the school districts in Parker County are levied at a rate more than 10 times the road and bridge rate.

Nevertheless, Roth said he wanted to be clear that he doesn’t favor increasing the road and bridge tax rate because doing so would, “make everybody else finance the damages that one particular industry is causing.”

Commissioner Webster suggested he would favor new taxes on mineral owners and operators alike. If he was fortunate enough to own minerals, Webster said he would be glad to pay a “spud-fee,” which is a fee paid when drilling commences.

“I would like to see a tax imposed on the mineral owners, or a spud fee, and also on these oil companies,” Webster said. “I don’t know if we can do that, but why should non-mineral-rights people subsidize the oil companies and subsidize the mineral owners who are enjoying the fruits of Parker County?”

Exactly how the county will address the road situation remains to be seen.

Depending on a number of legal issues, the Court could perhaps vote to levy a tax on operators, increase overweight enforcement and fines, tax mineral owners, realign tax revenue distributions, issue debt, earmark bond money or raise county-wide tax rates. King allowed finding a local solution could require legislation and said he would not favor a county-wide tax increase.

“The school districts, the cities and the county general fund are all benefiting from this greatly, because you have an industry coming in here and generating a lot of tax revenue,” Roth said, adding those entities aren’t really responsible for supplying services to the oil and gas industry. “It’s basically money sitting there, is what it is. So there are a lot of huge benefits economically, but it’s totally lopsided. We’re providing all those other entities a tax source by providing the operators a way to get their trucks to the rig.”

County Judge Mark Riley warned that if a financial instrument is selected to bolster the road and bridge fund, the Court will need to be specific about how the money is used. Commissioners agreed to revisit the issue during a future meeting.