TITLE 16. ECONOMIC REGULATION

DIVISION 2. GENERAL REQUIREMENTS FOR PERMITS AND PERMIT APPLICATIONS

16 TAC §12.108

The Railroad Commission of Texas (Commission) proposes amendments to §12.108, relating to Permit Fees. The Commission proposes the amendments to implement provisions of Senate Bill 1, 89th Texas Legislature (Regular Session, 2025), and, specifically, Article VI, Railroad Commission Rider 5, which requires the amounts appropriated from general revenue for state fiscal years (FY) 2026 and 2027 to cover the cost of permitting and inspecting coal mining operations. The Rider is contingent upon the Commission assessing fees during the 2026-2027 biennium sufficient to generate revenue to cover the general revenue appropriations. The Commission proposes to amend the annual fees required by coal mining permittees in subsection (b) as explained in the following paragraphs.

The Texas State Legislature appropriated the applicable funds in Senate Bill 1 based on fees collected as set forth in Rider 5, including fees appropriated for both the coal mining program and a separate, existing program for uranium exploration permitting. The uranium program cost is subtracted from the total annual appropriation to determine the cost of the coal regulatory program. The Commission's coal mining regulatory program is partially funded with a 50 percent cost reimbursement grant from the United States Department of the Interior, Office of Surface Mining Reclamation and Enforcement. The remaining 50 percent is funded by the fees collected in §12.108.

Joseph Parks, Director, Surface Mining and Reclamation Division, has determined that the appropriated state share of the cost for implementing the coal and uranium regulatory programs of $4,263,161 in FY 2026 and $5,267,042 in FY 2027 are the costs that must be funded through fees paid by the regulated coal mining and uranium industries, resulting in an average annual state share cost of $4,765,102 for the 2026-2027 biennium.

Fees for the Commission's surface coal mining regulatory program come from two general categories: application fees and annual fees. The application fees are specified in §12.108(a), and the Commission does not propose to revise those fees in this rulemaking. The annual fees are specified in §12.108(b) and are currently based on the bonded acreage for each permit as of December 31 of each year and a fee for each permit in effect as of December 31 of each year.

The total amount of annual fees required to fund the coal regulatory program was determined by subtracting the total amount of application fees estimated to be collected in each fiscal year for the two regulatory programs (coal and uranium) from the average annual state share cost for both FY 2026 and FY 2027, $4,765,102. Mr. Parks estimates that the Commission will collect coal program application fees annually in the amount of $43,000 and uranium exploration program application fees in the amount of $72,000 in both FY 2026 and FY 2027. The remainder in state share expense, $4,650,102, is then allocated for collection from the coal mining program annual fees.

The Commission proposes splitting the annual fee for each acre of land within a permit area covered by a reclamation bond on December 31st of each year, currently at $12.85, into two fees. First, the Commission proposes a fee to remain at the current amount of $12.85 for the bonded acres of land that have met the Phase I reclamation release requirements of §12.313(a)(1) of this title (relating to Criteria and Schedule for Release of Performance Bond) based on the number of bonded acres of land identified by the applicant as meeting the requirements of §12.313(a)(1), as shown on the map required by §12.142(2)(C) of this title (relating to Operation Plan: Maps and Plans) and approved by the Commission.

Second, the Commission proposes a higher fee of $29.80 for the bonded acres of land that have not met the Phase I reclamation release requirements of §12.313(a)(1) based on the number of bonded acres of land identified by the applicant as not meeting the requirements of §12.313(a)(1), as shown on the map required by §12.142(2)(C) and approved by the Commission. The Commission proposes no change to the fee of $6,170 for each permit in effect as of December 31st of the year. The Commission anticipates that annual fees in these amounts will result in revenue of $4,650,102 for the coal regulatory program in each year of the 2026-2027 biennium, as explained below.

The Commission proposes that the fee for the bonded acres of land that have met the Phase I reclamation requirements of §12.313(a)(1) based on the number of bonded acres of land identified by the applicant as meeting the requirements of §12.313(a)(1), as shown on the map required by §12.142(2)(C), remain at the current amount of $12.85 per acre. Thus, the total amount of revenue expected to be collected from the bonded acres of land that have met the Phase I reclamation requirements is $427,507, calculated by multiplying $12.85 (current fee per acre, which based on the proposed amendments will apply only to bonded acres that have met Phase I reclamation requirements) by the estimated number of acres that will have met the Phase I reclamation requirements (33,269 acres). The Commission also proposes that the individual annual permit fee in proposed subsection (b)(3) remain at the current amount of $6,170 per permit. Thus, the total amount of revenue expected to be collected from the individual annual permit fee is $154,250, calculated by multiplying $6,170 (current annual permit fee) by the estimated number of permits on December 31, 2025 (25 permits). As a result, the proposed annual fee for acres of land that have not met the Phase I reclamation release requirements of §12.313(a)(1) based on the number of bonded acres of land identified by the applicant as not meeting the requirements of §12.313(a)(1), as shown on the map required by §12.142(2)(C), must generate revenue of approximately $4,068,345 to collect the total amount of appropriations required to be covered by the coal program annual fees ($4,650,102 (-) $427,507 (-) $154,250). Therefore, the proposed annual fee for acres of land that have not met the Phase I reclamation release requirements is $29.80 per acre, calculated by dividing $4,068,345 by the estimated number of acres that will not have met the Phase I reclamation requirements (136,560 acres).

The Commission may adjust the annual fees in future rulemakings if additional funding is needed due to changes in federal funding, legislative appropriations, the number of permits, the amount of funds received from application fees, the bonded acreage, or other relevant factors. The Commission finds that amending the annual fees in subsection (b) will allow it to continue to fund its coal mining program, and splitting the annual fees proposed in subsection (b)(1)-(2) incentivizes the coal mining industry to achieve Phase I release for its bonded acreage.

Mr. Parks has determined that during each year of the first five years the proposed amendments would be in effect, there will be no additional cost to state government as a result of enforcing and administering the amendments as proposed. There is also no fiscal effect on local government. The Commission anticipates additional revenue from annual fees due to the proposed amendments as described earlier in this preamble and described in more detail below.

Mr. Parks has determined that for each year of the first five years that the proposed amendments will be in effect, the primary public benefit resulting from the new fee structure for coal mining activities is the alignment of fees paid by the coal mining industry with the costs incurred by the Commission, as established in Senate Bill 1.

Mr. Parks has determined that for each year of the first five years the proposed amendments are in effect, there will be an increase in the economic cost to the coal mining industry of approximately $2,314,692. This number is based on a comparison of (1) the revenue that would be generated under the current annual fees in existing §12.108, and (2) the revenue that would be generated under the proposed amendments in this rulemaking. More specifically, the Commission compared (1) the revenue that would be generated under the existing fee of $12.85 per bonded acre and the existing annual fee of $6,170 per permit, and (2) the revenue that would be generated under the proposed increase of $29.80 per bonded acre that has not met Phase I reclamation requirements, the proposed fee of $12.85 per bonded acre that has met Phase I reclamation requirements, and the existing annual fee of $6,170 permit for an anticipated 25 remaining permits.

In accordance with Texas Government Code, §2006.002, the Commission has determined there will be no adverse economic effect on rural communities, small businesses or micro-businesses resulting from the proposed amendments because there are no rural communities, small businesses or micro-businesses, as those terms are defined in Texas Government Code §2006.001, holding coal mining permits from the Commission. Therefore, the Commission has not prepared the economic impact statement or regulatory flexibility analysis required under §2006.002(c).

The Commission has also determined that the proposed amendments will not affect a local economy. Therefore, the Commission has not prepared a local employment impact statement pursuant to Texas Government Code §2001.022.

The Commission has determined that the proposed amendments do not meet the statutory definition of a major environmental rule as set forth in Texas Government Code §2001.0225(a); therefore, a regulatory analysis conducted pursuant to that section is not required.

During the first five years that the amendments would be in effect, the proposed amendments would not: create or eliminate a government program; create new employee positions or eliminate any existing employee positions; increase or decrease future legislative appropriations to the agency; create a new regulation, as annual fees are currently required under the rule; expand, limit, or repeal an existing regulation; increase or decrease the number of individuals subject to the rule's applicability; or affect the state's economy. The proposed amendments would require an increase in fees paid to the agency as described above.

The Commission reviewed the proposed amendments and found that they are neither identified in Coastal Coordination Act Implementation Rules, 31 TAC §29.11(b)(4), nor would they affect any action or authorization identified in Coastal Coordination Act Implementation Rules, 31 TAC §29.11(a)(3). Therefore, the proposed amendments are not subject to the Texas Coastal Management Program.

Comments on the proposed amendments may be submitted to Rules Coordinator, Office of General Counsel, Railroad Commission of Texas, P.O. Box 12967, Austin, Texas 78711-2967; online at www.rrc.texas.gov/general-counsel/rules/comment-form-for-proposed-rulemakings; or by electronic mail to rulescoordinator@rrc.texas.gov. The Commission will accept comments until 5:00 p.m. on Monday, August 4, 2025. The Commission finds that this comment period is reasonable because the proposal and an online comment form will be available on the Commission's website prior to Texas Register publication of the proposal, giving interested persons additional time to review, analyze, draft, and submit comments. The Commission cannot guarantee that comments submitted after the deadline will be considered. For further information, call Adam Krabbenhoft, Assistant Director, Surface Mining and Reclamation Division, at (512) 305-8830. The status of Commission rulemakings in progress is available at www.rrc.texas.gov/general-counsel/rules/proposed-rules.

The Commission proposes the amendments under Texas Natural Resources Code §134.011, §134.013, and §134.055, which authorize the Commission to promulgate rules pertaining to surface coal mining operations.

Statutory Authority: Texas Natural Resources Code §134.011, §134.013 and §134.055.

Cross-reference to statute: Texas Natural Resources Code §134.011, §134.013 and §134.055.

§ 12.108. Permit Fees.

(a) Application Fees. Each application for a surface coal mining and reclamation permit or renewal or revision of a permit shall be accompanied by a fee. The initial application fee and the application fee for renewal of a permit may be paid in equal annual installments during the term of the permit. The fee schedule is as follows:

(1) application for a permit: $5,000.

(2) application for revision of a permit: $500.

(3) application for renewal of a permit: $3,000.

(b) Annual Fees. In addition to application fees required by this section, each permittee shall pay to the Commission the following annual fees due and payable not later than March 15th of the year following the calendar year for which these fees are applicable:

(1) a fee of $12.85 for each acre of land within a permit area covered by a reclamation bond that has met the requirements of §12.313(a)(1) of this chapter (relating to Criteria and Schedule for Release of Performance Bond) on December 31st of the year, based on the number of bonded acres of land identified by the applicant as meeting the requirements of §12.313(a)(1) of this chapter on the map included in the permit as required by §12.142(2)(C) of this chapter (relating to Operation Plan: Maps and Plans) and approved by the Commission;

(2) a fee of $29.80 for each acre of land within a permit area covered by a reclamation bond that has not met the requirements of §12.313(a)(1) of this chapter on December 31st of the year, based on the number of acres of land identified by the applicant as not meeting the requirements of §12.313(a)(1) on the map included in the permit as required by §12.142(2)(C) of this chapter and approved by the Commission; and

(3) [(2)] a fee of $6,170 for each permit in effect on December 31st of the year.

(c) Fees paid to the Commission under this section shall be deposited in the state treasury and credited to the general revenue fund.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 17, 2025.

TRD-202502041

Natalie Dubiel

Assistant General Counsel

Railroad Commission of Texas

Earliest possible date of adoption: August 3, 2025

For further information, please call: (512) 475-1295

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