tidrc002 oilfield waste dumping (a)

Local Control of Oil and Gas Waste

Online Class TIDRC002

Companion website: http://www.tidrc.com/onlineoil.html

Approved by Department of State Health Services

Six Continuing Education Units

Developed March, 2013

Revised: December 5, 2013

John H. Ockels, Ph.D.

Copyright (c) 2013 John H. Ockels

No Claim to Original Texas State Government Works

All rights reserved.

TIDRC002 Oil and Gas Waste

1

Local Control of Oil and Gas Waste

1. INTRODUCTION

Welcome

Welcome to the class Local Control of Oil and Gas Waste (TIDRC002). This class provides basic information about how local governments — cities, counties, and some special districts — can use their code, health authority, law enforcement, and environmental civil suit powers to deal with illegal disposal of oil and gas waste when it occurs in their community.

My name is John Ockels, and I’m your instructor for this class. I'm the Director of the Texas Illegal Dumping Resource Center, and I’ve been teaching the subject of general illegal dumping enforcement for almost 20 years, and its application to oil and gas waste for two years. I wrote this document that you’re reading, so if you spot any errors or unbelievable assertions, please direct your comments to me at [email protected]. Thank you in advance for your feedback.

What We Do

At TIDRC our mission is helping Texas cities and counties get better at responding to illegal dumping and other kinds of local pollution, including dealing with oil and gas waste. We’ve presented hundreds of day-long classes around Texas over the past six years, and if you haven't attended one, I'd encourage you to do so. They're a lot of fun, you earn CE credits, and you might even learn something useful to you and your city, county, or district. You can find out more about our in-person classes elsewhere on the TIDRC.com website, and if you want to host a class in your community, just drop me an email. At this time, this class is available both in this online format and in person. Either way, the class material is identical.

We also provide DSHS-approved online classes in several other subjects — Illegal Dumping Enforcement; Ethics of Local Enforcement; Illegal Outdoor Burning; Legal / Legislative Update Related to the Profession of Code Enforcement — and this one in Local Control of Oil and Gas Waste. Our plans for 2014 include providing more of these online classes to help you stretch your training dollar and reduce the need for you to travel. To really manage your travel and training cost, check into our Continuing Student

mailto:[email protected]

http://TIDRC.com


2

program (TIDRC.com home page). This program enables you to access all TIDRC online classes for one low annual fee, and includes some other premiums too.

DSHS required continuing education for code enforcement officers is defined in 25 Texas Administrative Code Section 140.168 Continuing Education. The acceptable curriculum listed at sub-section (j) in Section 140.168 names twelve specific areas where training is authorized, including (6) nuisance violations; (9) health ordinances; and, (10) basic processes of law related to code enforcement. This subject falls within all three of these instructional areas.

TIDRC has been providing training classes in local environmental enforcement since 2008, and was authorized in April of 2011 by the Texas Department of State Health Services to add online continuing education classes to our in-person programs. If you need a copy of that authorization for your records, just let us know.

Note that this particular class has a short Study Guide that is found in Step 2 of the Class Home Pages. The questions on the Study Guide are those that will appear on the examination at the end of there class. A good study strategy is to print a copy of the Study Guide and answer the questions as you go through the reading. There are 25 questions on the test, and passing is 72%, which is 18 correct answers. There is an explanation of the correct answer for each question, and you may take the test as many times as you like.

About this Class

Throughout this paper we’ll italicize the term oil and gas waste, since its very important that new and experienced officers always be sure of the type of waste they have encountered. Oil and gas waste cases are generally handled with unique laws, although the provisions of more general anti-pollution laws can often be used also.

The statutes we’ll cover in this class are not particularly new. In fact, the basic misdemeanor statute (Texas Water Code Chapter 29. OIL AND GAS WASTE HAULERS) has been on the books since at least 1977. What is new is the notion that local governments can use their criminal enforcement powers to deal with oil and gas waste. Cities and counties using these old powers for the first time are pretty happy, and are doing their job of being a good partner to the Railroad Commission of Texas. That agency is charged with administrative and civil enforcement of the oil and gas industry; cities and counties handle almost all of the criminal violations.

http://TIDRC.com


3

Like in all efforts to keep our land, water, and air free from pollution and our citizens free from health nuisances, there are roles for both state and local governments in dealing with oil and gas waste. It’s fair to say that, except for a very few places, the state has done a much better job at this than local communities. But this is changing fast; more and more cities and counties are learning that using criminal laws can help keep their communities clean and healthy.

We considered this to be an “advanced” or “special topics” course. This is not because the material is particularly hard, but oil and gas waste is handled differently than solid waste and litter by the state and by local governments. To make sure you have the basic understanding of local environmental enforcement, we suggest that you also take our class Illegal Dumping Enforcement (TIDRC003), either online or in-person. Or if you prefer, just download a copy of the .pdf on the Illegal Dumping Enforcement class page or use the online reader provided for that class. Use of the material is free; earning a Certificate of Completion in that class will cost a little bit.

If you’re an experienced environmental enforcement officer — knowledgeable of Texas Health and Safety Code Chapters 341, 343, 365 (this last chapter, by the way, cannot be used for oil and gas waste cases), and Texas Water Code Chapter 7 (Subchapter E) — you’ll have no problem learning this new material. But our advise is to not use this particular class as an introduction to local environmental enforcement. If you’re not clear on the statutes just mentioned, please become so before taking this class. And if you’re concerned that you have registered for the wrong class, let me know and we’ll make the changes.

The State Legislature has assigned administrative and civil enforcement oversight of oil and gas exploration and production activity — including administrative and civil regulation of oil and gas waste — to the Railroad Commission of Texas (“RRC”). This is different from the overall administrative oversight that the legislature has provided to the Texas Commission on Environmental Quality (“TCEQ”) to protect our land, water, and air from pollution by more general kinds of waste. So even if you are a very experienced local environmental officer with many years working with the TCEQ, you’ll need to learn to work with another agency on oil and gas waste issues when administrative or civil enforcement is involved.

In cases involving oil and gas waste, we suggest that you make a policy at the beginning to always inform the district office of the Railroad Commission when you are working an oil and gas waste criminal case. Cities and counties should enforce the


4

criminal laws locally, but be sure to let the RRC know what’s going on; a local criminal case may make a big difference to the RRC in handling a new or related administrative case. (There is a great RRC district boundary map with contact information at http://www.rrc.state.tx.us/forms/maps/ogdivisionmap.php.) Cooperation is the rule.

The RRC doesn’t have a section that responds to criminal violations involving oil and gas waste, even though the State Legislature has provided several criminal laws that can be used specifically for these violations. So criminal enforcement will virtually always come from local governments, or not happen at all.

For a local community, there are really two levels of enforcing involved: (1) using Texas law to protect local land, water, and air resources and public health in general (cooperating with the Texas Commission on Environmental Quality); and, (2) using Texas laws to respond to dumping and mis-handling of oil and gas waste specifically (in cooperation with the Railroad Commission of Texas). In both situations, local criminal cases are generally handled in local courts by local prosecutors.

The primary purpose of this class is to get local governments started doing their part in the oil and gas waste enforcement process. We’ll do that by discussing the specific criminal laws that the State Legislature has provided for local police agencies to use. Most of these laws provide for misdemeanor level penalties, although some — such as knowing or intentional water pollution — provide for felony terms of confinement and/or extremely high fines.

It’s important for code enforcement officers, registered sanitarians, and designated representatives to know these criminal laws. These officers cannot enforce these directly (except for health nuisance enforcement by a local health authority), but everybody involved in any kind of local enforcement needs to know these laws. When oil and gas waste is mis-handled or dumped, it affects the entire community.

The picture on the cover shows drilling mud spilled and then abandoned by the driver in Jim Wells County. The deputy caught the driver, and the company did the clean-up (not a local fire department or TxDOT, although these are useful resources where time is an important factor). Several misdemeanor criminal charges were filed, which were resolved in county court. Such enforcement has become routine in Jim Wells County and in several other places. By the time you have completed this class, hopefully you will know the specific laws available to your agency to handle these kinds of situations.

http://www.rrc.state.tx.us/forms/maps/ogdivisionmap.php



5

Class Contents1. Introduction [Page 1]

Welcome [1]What We Do [1]About this Class [2]Class Contents [5]About the Process [6]Basic Situation [7]Class Objectives [10]Basic Environmental Criminal Laws are Not Well-Known [10]Finding Information on the RRC Site [12]Finding the State Criminal Environmental Laws [14]

2. What Is Oil and Gas Waste [17]General Observations [17]Oil and Gas Waste Specifically Defined [18]Different Forms of Oil and Gas Waste Occur at Different Times [21]Memorandum of Understanding [23]What Makes Oil and Gas Waste Such a Problem? [25]

3. Laws Local Governments Can Use [28]1. Laws Specifically for Oil and Gas Waste [29]

a. TWC Chapter 29 Oil and Gas Waste Haulers [29]b. Texas Natural Resources Code Chapter 91 [33]c. Breaking Statewide Rule 8: An Administrative and Criminal Violation [38]

2. Using Other Anti-Pollution Laws and Ordinances [48]a. Municipal Ordinances [48]b. A Law You CAN’T Use: The Texas Litter Abatement Act [49]c. THSC Chapters 341 and 343 Health Nuisance Laws [53]d. TWC Chapter 7 (Subchapter E) [57]

Water Pollution [58]Illegal Outdoor Burning [62]Other TWC Chapter 7 (Subchapter E) Violations [63]

e. TWC Chapter 11 Water Rights [63]f. TWC Sec. 7.351 Civil Suits [66]


6

4. The Waste Hauling Permit [68]Certifications Made in WH-1 Application Process [69] Example Waste Hauling Permit: Notes [71]WHP Example: Face of WH-1 [74]WHP Example: Back of WH-1 and Expiration Date [75]Permit Conditions On Back of WH-1 Form [76]WHP Example: Attachment A - Permitted Vehicles [77]WHP Example: Attachment B - Permitted Disposal Sites [78]What Could Be Wrong with a Waste Hauler’s Permit? [79]

5. Ten Questions and Answers [82]

6. Conclusion [94]

8. Reference Appendix [96]TWC Chapter 29 Oil and Gs Waste Haulers [96]Natural Resources Code Chapter 91 [102]Statewide Rule 8 (16 T.A.C. Sec. 3.8) [160]

About the Process

1. Be sure to read all of the material here before taking the test; avoid the temptation to hurry through this material.

2. Additional TIDRC online classes can be seen at www.tidrc.com.

This particular online class is easy to complete:1. Register and pay your fee (you probably already did that).2. Read this material, taking your time.3. Pass the un-timed test (you can take it as many times as necessary).4. Certify that you did the work yourself. 5. Receive your Certificate of Completion.

That’s all there is to it. When you’ve finished all five of these steps, we’ll send you your Certificate of Completion, just as the Department of State Health Services has authorized us to do. This certificate will attest to the fact that you have earned six credit hours in Local Control of Oil and Gas Waste.

However, the Certificate will not prove that you’ve actually learned anything; that is


7

entirely up to you. Like every other subject, the more time you spend reading and thinking about this material, the better you’ll be able to use it to solve local problems.

Your city or county personnel section may want you to give them a copy of your Certificate of Completion for their files, but its your responsibility to retain a personal copy. If you are selected for audit by DSHS or other certifying agency, this Certificate is part of what you’ll have to provide. We maintain training records at this end too, as required by the state. So if you lose your Certificate, just contact us for a free replacement.

If you are involved in law enforcement and need TCLEOSE hours, ask your Chief or Training Officer to approve your work in this class and to update your training record at the state, like any other online class you may have taken. The TCLEOSE number for this class is 3880 - Environmental Enforcement, which is the number they use for all environmental enforcement classes. Your Certificate of Completion will show this class number and attest goat you were awarded six hours for your work. Please let me know if your Chief or Training Officer needs additional documentation from us, and we’ll send it along.

A number of firefighters and fire marshals take our classes too, and will retain the Certificate of Completion for this one with the others they earn during the year.

As you can see, taking this class is an easy process, and it should take you about six hours to complete the reading and take the test. Please don’t feel like you have to do all the work at once. Just read along as you have time, and, when you’re finished, take the test. Don’t forget that you can download this document and read it later, too.

Basic Situation

Everybody loves the oil and gas industry — well, I do, anyway — and we all use the products that begin with these natural resources every day. Without our oil and natural gas resources, we Texans would still be huddled in caves dug into the banks of the Brazos River or someplace. Not only would we still be plowing by hand and riding horses — I love to ride, but not from Dallas to Austin for a meeting; flying or driving is better — but we would simply not be anywhere near as prosperous a place as we are. Energy resources are our heritage and our future.

However, the oil and gas exploration and production process generates a great deal of waste, and when this waste is mishandled or illegally dumped it can pollute our water


8

(a natural resource even more precious than oil and natural gas) and create other dangerous and polluting messes for us all. There’s no reason at all why the industry cannot operate in such a manner that the wastes generated are handled in a safe manner, and the industry generally does a great job. But this is one of those situations where 98% perfect isn’t good enough, and local governments have a big role to play in dealing with that last 2%.

The State Legislature has assigned overall responsibility for regulating the oil and gas industry to the Railroad Commission of Texas. As far as oil and gas waste is concerned, RRC responsibility includes such things as seeing that oil and gas waste haulers operate properly, determining what constitutes safe disposal practices, and keeping watch over the process administratively.

The RRC beginning point in controlling waste haulers is the rule that

A person who transports oil and gas waste for hire by any method other than by pipeline shall not haul or dispose of oil and gas waste off a lease, unit, or other oil or gas property where it is generated unless such transporter has qualified for and been issued an oil and gas waste hauler permit by the commission. [16 TAC Sec. 3.8(f)]

If a person wants to haul oil and gas waste for hire and for off-site disposal, unless they are doing so by way of a pipeline, they are going to have to do so under a permit issued by the RRC. The exact permitting and waste disposal requirements to be followed are found in Title 16 Texas Administrative Code, Section 3.8 Water Protection — called “Statewide Rule 8” by the industry. A copy of this rule is in the Appendix to this document. It’s about twenty-five pages long, and you should read it. This entire rule is interesting, and parts of it are very useful for local officers. For example, look at the specific requirements for waste haulers at section (f). Since this is the primary rule the RRC follows to protect water by controlling oil and gas waste, if you have any question as to what a section of it means, why not call your RRC district office and start talking to those folks? This is the primary rule they are using to control waste; local governments get to use state criminal laws.

Personally, I think the RRC does a great job at administering the waste hauler permitting process, especially considering the number of active oil and gas producing wells in Texas (about 264,000 as of October 31, 2013), the amount of new drilling activity, the amount of waste generated (perhaps as much as 1.2 barrels [50.8 gallons] of waste generated per foot drilled, according to the American Petroleum Institute), the


9

number of waste haulers, and the size of the RRC’s inspection staff.

Virtually all waste is regulated by the State Legislature in some manner. When it come to “waste that arises out of or incidental to the drilling for or producing of oil or gas,” the State Legislature has assigned that responsibility to the Railroad Commission. Usually, this waste is easy to identify — used drilling mud, well work-over waste fluids, produced saltwater — but sometimes the waste is “just” trash and sewage, both generated by workers at well sites. Most folks probably think that things like trash and sewage generated by workers at wells are always regulated by the TCEQ, but they would be incorrect. If these more common types of waste are generated “incidental to the drilling for or producing of oil or gas,” then they are oil and gas waste, to be regulated by the RRC.

As we go through this class, you’ll see little boxes like the one below. These contain basic concepts and important information that you really don’t want to miss. Throughout the class, if you have any question at all, please contact me at [email protected].

Important: Local Governments Should Always Work with the RRC on Oil and Gas Waste Cases

1. The State Legislature has assigned to the Railroad Commission of Texas administrative and civil enforcement responsibilities for the proper handling and disposal of oil and gas waste in Texas;

2. The State Legislature has also created various criminal laws that can be used by local governments to respond to violations involving oil and gas waste and other kinds of waste too;

3. When a local government undertakes any criminal case against a person involving hauling or dumping oil and gas waste, the local government should routinely report the facts to the RRC District office covering their county. It’s entirely possible that the RRC is contemplating an administrative action against some person, and the fact that a local government is dealing with him criminally may be very important to the agency.

Throughout this class “TWC” will refer to the Texas Water Code; “THSC” will refer to the Texas Health and Safety Code; “NRC” will refer to the Texas Natural Resources Code; “TCEQ” will refer to the Texas Commission on Environmental Quality; “RRC” will refer to the Railroad Commission of Texas; and “TPWD” will refer to the Texas Parks and Wildlife Department.” Both the TCEQ and TPWD, but not the RRC, maintain extremely effective, but small, Environmental Crimes Units (“ECUs”).



10

Class Objectives

This class has seven formal objectives, all of which are in support of helping local governments to get started in the overall oil and gas waste enforcement process:

1. Define oil and gas waste and show officers where they can find these definitions in state laws and rules;

2. Describe how administrative and civil enforcement responsibilities of state rules and statutes pertaining to oil and gas waste have been assigned to the Railroad Commission of Texas by the State Legislature;

3. Provide an overview of applicable criminal laws used to respond to illegal hauling and dumping of oil and gas waste for use by Texas officers, elected officials, citizens, media, and industry;

4. Provide an overview of “Statewide Rule 8,” formally known as Title 16 Texas Administrative Code Sec. 3.8, the rule under which the Railroad Commission issues oil and gas waste hauling permits (violating this rule is both an administrative and criminal activity);

5. Show an example of the documentation — the Waste Hauling Permit — required to be on-board all vehicles when hauling oil and gas waste off-site for hire disposal for disposal;

6. Discuss some recurring criminal enforcement issues arising from local control of oil and gas waste; and,

7. Provide a means for local officers to earn continuing education credits without travel.

Along the way we’ll discuss other related topics, but we’ll be sure to address these main points.

Basic Criminal Laws Protecting the Environment are Not Well-Known

1. Basic Texas criminal laws against illegal dumping, water pollution, and outdoor burning are not well known.

2. State criminal laws for local control of oil and gas wastes are even more obscure.

Basic illegal dumping and water pollution criminal enforcement has a fairly long history in Texas. Some counties and cities have been using state criminal laws to protect our natural resources and the health of Texans for well over 25 years. Of course,


11

the opposite is more true: in most places even enforcing very basic laws against illegal dumping and water pollution is just beginning. Many cities use local municipal codes to keep most illegal dumping under control; but using municipal codes to respond to criminal dumping is ineffective and will eventually get a code officer hurt. To deal with any kind of crime, you need to use trained and certified peace officers.

Fortunately the State Legislature has provided cities and counties with specific criminal laws to use to keep our water, land, and air resources clean. The Texas Litter Abatement Act (THSC Chapter 365), for instance, has been available in it’s current form since 1989, and earlier provisions existed too. This law sets misdemeanor to state jail felony levels of punishment for most illegal dumping, based on the weight or volume of the waste illegally dumped, transported, or received. Nevertheless, today’s police academies generally fail to provide instruction to officers in responding to dumping, water pollution, illegal outdoor burning, and specialized environmental crimes. Moreover, even if a local government is expert in using this law, it only applies to solid waste and litter; it cannot be used to deal with oil and gas waste cases.

The fines set by the State Legislature for many of these environmental violations are far greater than the penalty for felonies found in the Penal Code.

For instance, felony water pollution (in violation of Texas Water Code Sec. 7.145) carries a penalty for a first conviction (for an individual) of a fine ranging from $1,000 to $100,000 and/or confinement for five years. For a non-individual violator — such as a company or association — the maximum fine increases to $250,000. For both, those penalties are per day, per offense, and an ongoing violation can be treated as a series of separate offenses. For both individuals and non-individuals, subsequent conviction for the same violation can result in a doubling of maximum fines and confinement available.

As another example, recklessly emitting an air contaminant (including smoke and fumes), without a permit, that results in another person being put in imminent danger of death or serious bodily injury (e.g., some guy is burning insulation off of wire he has stolen and his nephew, an asthmatic, has to be transported to the emergency room because he has a reaction to the smoke) constitutes one form of felony illegal burning (see Texas Water Code Sec. 7.182). The penalty for this violation, if committed by an individual, is a fine ranging from $1,000 to $250,000 and/or confinement for five years. For non-individual violators, the fine ranges from $2,000 to $500,000. If the person dies as a result of his or her exposure to the air contaminant, the potential penalties go out of


12

sight.

Our State Legislature has been extremely serious about protecting the natural resources all of us rely upon. Yet local peace officers receive virtually no training in recognizing and using the criminal laws developed for this purpose.

Unfortunately, the same is true for county and district prosecutors; the fine law schools in our state simply do not address state criminal environmental violations. If a law student wanted to study environmental law, there is often only one course available: an elective that deals with federal environmental administrative enforcement. Nor do our city and county elected officials and administrators study this material in their basic professional training. For instance, I know of no Masters of Public Administration program in our state that includes a consideration of local enforcement of state criminal laws designed to protect our natural resources.

When communities first begin to use our state criminal laws to deal with controlling pollution, it is usually a learning process for everybody, from the responding officer to law enforcement management to local elected officials to prosecutors to judges and to juries. However, the list of cities and counties that have developed effective local enforcement and resource protection programs continues to grow. Effective resource and public health protection is what the public demands.

This same situation exists today in Texas regarding local enforcement of state criminal laws aimed at controlling illegal hauling and dumping of oil and gas waste … except the subject is even more obscure to local officials.

However, as in the case of basic illegal dumping, water pollution, and air pollution, there are several local governments that have created outstanding local enforcement programs to control oil and gas waste, based on local use of the criminal laws provided by the State Legislature. Places like Jim Wells and Webb Counties demonstrate to the rest of Texas what can be accomplished.

Finding Information on the Railroad Commission’s Website

From time to time I have heard various people criticize the Railroad Commission’s website as not containing sufficient information. Having worked with information processing for almost fifty years, I would say that this is simply an ill-informed judgement. Of all the website I know and regularly work with — both in commercial and government areas — the Railroad Commission’s site is one of the best. In fact, if you


13

are working in any way with the oil and gas industry, spending a couple of hours just looking around the site would be very beneficial. Get started at www.rrc.state.tx.us.

Data & StatisticsAfter you’ve familiarized yourself with the site layout, take a look at “Data & Statistics” at www.rrc.state.tx.us/data/index.php. This is a good gateway into the detailed information available on the site. You may want to bookmark this page for future use.

Summary Page of Wells MonitoredOne of the most fascinating pages is called “Distribution of Wells Monitored by the Railroad Commission.” This is a one-page diagram of the various types and numbers of wells overseen by the Railroad Commission. This page shows that as of October 30, 2013 there were 263,996 active oil and gas wells in the state, of which 167,472 were producing oil wells. The total producing well count has increased by just over 6% in the last year. All 263,996 wells were producing some kind of waste too. The same data display shows that, as of the same date, there were 34,015 injection/disposal wells active in the state. This page will help you get an overview of the size of the regulatory job the RRC faces — and that’s before you consider their responsibilities for pipelines. It’s updated every month, and the URL changes slightly. The history of well types and sizes can be accessed through http://www.rrc.state.tx.us/data/wells/welldistribution/index.php.

Public GIS ViewerAmong the most impressive data available on the site is the “Public GIS Map Viewer for Oil, Gas, and Pipeline Data” at www.rrc.state.tx.us/data/online/gis/index.php# . This section of the site shows the location and essential information for all of those items, arranged on county maps. A good exercise would be to go look at the data for your own county on this viewer. At first, you won’t see any wells at all — then begin to use the navigation tool to zoom into a specific area. Very impressive.

Permitted Waste Haulers and Commercial Disposal Wells and Surface Disposal SitesThe information about permitted waste haulers is on a page called “Oil and Gas Exploration and Production Permitted Oil & Gas Haulers, Commercial Disposal Wells, and Commercial Surface Disposal Facilities.” This page can is accessed at www.rrc.state.tx.us/environmental/environsupport/wastfac/index.php, and shows

http://www.rrc.state.tx.us/data/wells/welldistribution/index.php


14

the permitted waste haulers by the RRC District in which they are permitted to operate. Additional contact information on these entities can be found in the “Oil & Gas Directory” at www.rrc.state.tx.us/data/operators/ogdirectory/index.php. Officers can use this information when verifying that a particular WHP is in effect.

The more time you spend looking in the Railroad Commission’s website, the more you’ll know about the industry itself, the state regulatory process, and how to locate the data that will support local enforcement activities.

If you ever hear anybody criticizing the RRC’s website, please ask them to compare the amount of current information on the site maintained by their own agency with the information on the Railroad Commission’s site. I don’t personally know the staff at the RRC responsible for information processing, but they are very good.

Finding the State Criminal Environmental Laws

The laws discussed in this class are found in several sections of Texas statutes, including the Health and Safety Code, Water Code, and Natural Resources Code. All of these statutes are available in their complete form in several places on the Internet, including www.tidrc.com and our mobile phone site www.mtidrc.com.

In this class we’ll focus on parts of the following criminal laws that can be enforced by cities and counties (and the rule described in number 10):

1. THSC Chapter 341 for basic health nuisance criminal violations [Fine for individual: $10 - $200; Confinement: None]. If you’re operating as a Designated Representative of the TCEQ generally enforcing THSC Chapter 366, your county may want to have you become certified to use THSC Chapter 341 for on-site sewage and related health nuisance issues as a trained representative of your county health authority, when the sewage generated is actually oil and gas waste [authority located at THSC Sec. 121.003(c)]. Read THSC Sec. 341.012 for more information on this;

2. THSC Chapter 365 for illegal dumping of just about everything EXCEPT oil and gas waste. Even though this is the most commonly used law by local governments to fight illegal dumping, you cannot use it for oil and gas waste cases, and general trash produced incidental to oil and gas production activities is oil and gas waste. Local governments can use it to deal with dumping by residents of “man-camps” and other off-well-site living accommodations, however [Fines and confinement are based on weight or volume of waste dumped, and range from Class C misdemeanors to State Jail Felonies];

3. TWC Chapter 7, Subchapter E for water pollution and several other criminal charges

http://www.tidrc.com

http://www.mtidrc.com


15

[Fine for felony water pollution by an individual: $1,000 - $100,000; Confinement: To 5 years; Fine for a company or association: $1,000 to $250,000]. Oil and gas waste dumped in such a way as to violate the water pollution statutes may be appropriately handled through the criminal laws in this chapter, especially TWC Sec. 7.145 and Sec. 7.147);

4. TWC Chapter 11 for improper usage of state waters;

5. TWC Chapter 29 for common misdemeanor violations of oil and gas waste haulers [Fine: $100 - $1,000; Confinement: To 10 days in county jail]. This is usually the place for local enforcement of oil and gas waste haulers to begin;

6. NRC Section 91.002 setting a criminal penalty for oil and gas waste handling that violates Section 91.101 or a rule, order, or permit issued by the RRC under that section (Section 91.101 is the general rule making authority of the RRC and the oil and gas waste handling rule referred to as Statewide Rule 8 was issued under its authority; hence, a violation of Statewide Rule 8 is a criminal violation of NRC Sec. 91.002) [Fine for person $10,000 per day per offense; local county has venue];

7. NRC Section 91.143 includes felony provisions for creating false documents such as forged or false waste hauling permits [Fine to $10,000 and/or confinement form 2 to 5 years]. Using the better-known and more general charge found in the Penal Code for tampering with a government record may be more familiar to local officers and prosecutors (see below);

8. NRC Section 91.458 (setting a penalty for certain violations concerning unauthorized saltwater disposal pits) and NRC Section 91.604 (setting a penalty for violations concerning oil and gas hazardous waste) will not be addressed in this class; we mention these laws here as a reminder of their existence, although officers working closely with RRC field inspectors might use these provisions at some point;

9. Penal Code Sec. 37.10, setting a penalty for tampering with a government record, such as a waste hauling permit [third or second degree felony, depending on the situation];

10. Statewide Rule 8, more formally known as Title 16 Texas Administrative Code Section 3.8, which is the rule developed by the RRC to issue waste hauling permits and control the disposal of oil and gas waste. This rule is enforced by the RRC administratively. However, violating this rule is also a criminal act under NRC Sec. 91.002, and several of it’s provisions may easily be enforced locally; and,

11. TWC Sec. 7.351 Civil Suits by local governments where it makes sense to impose major financial civil penalties rather than apply criminal laws, including violations of TWC Chapter 26, which regulates dumping any waste or pollutant (including saltwater) into water. The RRC has exclusive civil suit powers for the industry under TWC Sec. 29.051; however, local governments may find using these powers


16

effective where the violation is of the Texas Water Code or other environmental statute, rule, order, or permit normally involving the TCEQ. For instance, if the owner of a man-camp dumped solid waste from the workers, and refused to stop the pros3ecc with lower levels of enforcement, the city or county may simply sue the owner for a violation of the Solid Waste Disposal Act.

Generally in this class, we’ll be looking at specific criminal sections of these laws, but not those parts that cover administrative enforcement or civil suits by the Railroad Commission. However, you may want to read these laws in their entirety at some time, and they are available at several locations on the Internet. The full text of TWC Chapter 29, NRC Chapter 91, and Statewide Rule 8 are found in the Appendix to this document, and the remainder of the material is readily available online.

Finally, there are several summary charts available of the laws we use in local environmental enforcement, called Field Reference Guides. They can be found at www.tidrc.com/resources.html. Field Reference Guides numbers 5 and 6 deal with oil and gas waste specifically, but you may want to take a look at all of them. Many officers laminate these charts and put them in their vehicles for quick reference.


17

2. WHAT IS OIL AND GAS WASTE?

General Observations

1. Oil and gas waste has it’s own definition; it’s NOT the same as solid waste or litter or any other forms of waste defined in state laws and rules; all these different kinds of waste have their unique definitions, and sometimes their own criminal laws too;

2. You can use many criminal environmental laws to deal with this waste EXCEPT the Texas Litter Abatement Act (THSC Chapter 365). That particular law only deals with solid waste and litter and specifically excludes oil and gas waste from its area of responsibility.

State law defines different types of waste, and different laws and rules exist to deal with these various kinds. For example, if you want to use the Texas Litter Abatement Act — THSC Chapter 365 — to file criminal charges against a person who dumps waste in some unauthorized location, you’ll quickly see that this law can only be used to control two types of waste: litter and solid waste. THSC Chapter 365 is limited to dealing with these two classes of waste; litter is defined in the statute itself at THSC Sec. 365.011(6), and the statute at Sec. 365.011(9) reads "Solid waste" has the meaning assigned by Section 361.003. So you would go read that section for the definition of solid waste.

So if you think you want to use TWC Chapter 365 to deal with illegal dumping, you must be sure that the material that has been criminally mishandled meets the definition of either litter or solid waste contained in the law. If you try to use THSC Chapter 365 to deal with anything that does not meet the definition of litter or solid waste — such as oil and gas waste — then you are simply using the wrong law, and the case hopefully will not be accepted by your prosecutor.

Likewise, if you want to enforce the felony water pollution section found at Texas Water Code Sec. 7.145, you must be sure that the material that was intentionally or knowingly discharged into or adjacent to water was either a waste or pollutant as defined in the Texas Water Code at Chapter 26. If the material being discharged meets either of these definitions, you can use TWC Sec. 7.145; but if the material discharged does not meet either of these two definitions, then you can’t use this particular law. Happily, we’ll learn that the items defined as oil and gas waste also meet the definitions found in the Water Code for waste or pollutant, so we are free to use the Water Code.

In addition to using the felony and misdemeanor water pollution laws in some oil and


18

gas waste cases, there are two criminal laws the State Legislature has provided local governments that deal specifically with this type of waste: Texas Water Code Chapter 29 (which deals with oil and gas waste haulers) and Texas Natural Resources Code Chapter 91, which, among other things, provides a criminal penalty (at Sec. 91.002) for those operating outside the confines of Statewide Rule 8 willfully or with criminal negligence. That’s the rule the RRC most relies upon to regulate oil and gas waste haulers.

NRC Chapter 91 also defines three other criminal activities applicable to the oil and gas industry, but enforcing two of these is probably beyond the capability of most local law enforcement agencies, at least for now.

In addition to requiring carriers of oil and gas waste off-site for disposal for hire to be

permitted, Statewide Rule 8 also requires anyone using a carrier of oil and gas waste — such as a driller generating the waste or an disposal well operator receiving the waste — be sure that the hauler has a valid permit. Otherwise, the generator or receiver has committed a crime himself by using an un-permitted hauler. The rule places a positive duty on the generator and receiver to know the person he’s working with has a valid WHP.

The whole system is carefully designed to make sure this waste gets safely to where it is permitted to be; but the system, unfortunately, has to be policed to properly work.

The starting point is making sure that the waste in question is actually oil and gas waste or some other substance.

Oil and Gas Waste Specifically Defined

1. Oil and gas waste is waste that comes from oil and gas exploration and production activities.

2. It includes saltwater, brine, sludge, drilling mud, and other liquid, semiliquid, or solid waste material … and other waste generated from the processes too.

3. For instance, it also includes domestic sewage (including waterborne human waste and waste from activities such as bathing and food preparation), and trash (including inert waste, barrels, dope cans, oily rags, mud sacks, and garbage), if those wastes are byproducts of the E&P activities.

Oil and gas waste is specifically defined at several places in the laws and rules (don’t worry — the definitions all agree). You don’t need to memorize this definition, but


19

you do need to know where to find it and what it contains.

The rule under which the waste hauling permit — WHP — is issued defines oil and gas waste as:

16. T.A.C. Sec. 3.8 Water ProtectionSec. (a)(26) Oil and gas wastes--Materials to be disposed of or reclaimed which have been generated in connection with activities associated with the exploration, development, and production of oil or gas or geothermal resources, as those activities are defined in paragraph (30) [paragraph printed below] of this subsection, and materials to be disposed of or reclaimed which have been generated in connection with activities associated with the solution mining of brine. The term "oil and gas wastes" includes, but is not limited to, saltwater, other mineralized water, sludge, spent drilling fluids, cuttings, waste oil, spent completion fluids, and other liquid, semiliquid, or solid waste material. The term "oil and gas wastes" includes waste generated in connection with activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants unless that waste is a hazardous waste as defined by the administrator of the United States Environmental Protection Agency pursuant to the federal Solid Waste Disposal Act, as amended (42 United States Code Sec. 6901 et seq.).

16. T.A.C. Sec. 3.8 Water ProtectionSec. (a)(30) Activities associated with the exploration, development, and production of oil or gas or geothermal resources--Activities associated with:

(A) the drilling of exploratory wells, oil wells, gas wells, or geothermal resource wells;(B) the production of oil or gas or geothermal resources, including:

(i) activities associated with the drilling of injection water source wells that penetrate the base of usable quality water;(ii) activities associated with the drilling of cathodic protection holes associated with the cathodic protection of wells and pipelines subject to the jurisdiction of the commission to regulate the production of oil or gas or geothermal resources;(iii) activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants;(iv) activities associated with any underground natural gas storage facility, provided the terms "natural gas" and "storage facility" shall have the meanings set out in the Texas Natural Resources Code, Sec. 91.173;(v) activities associated with any underground hydrocarbon storage facility, provided the terms "hydrocarbons" and "underground hydrocarbon storage facility" shall have the meanings set out in the Texas Natural Resources Code, Sec. 91.201; and


20

(vi) activities associated with the storage, handling, reclamation, gathering, transportation, or distribution of oil or gas prior to the refining of such oil or prior to the use of such gas in any manufacturing process or as a residential or industrial fuel;

(C) the operation, abandonment, and proper plugging of wells subject to the jurisdiction of the commission to regulate the exploration, development, and production of oil or gas or geothermal resources; and(D) the discharge, storage, handling, transportation, reclamation, or disposal of waste or any other substance or material associated with any activity listed in subparagraphs (A)-(C) of this paragraph, except for waste generated in connection with activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants if that waste is a hazardous waste as defined by the administrator of the United States Environmental Protection Agency pursuant to the federal Solid Waste Disposal Act, as amended (42 United States Code Sec. 6901, et seq.).

Texas Natural Resources Code Chapter 91 Provisions Generally ApplicableSec. 91.1011. Oil and Gas Waste(a) In this subchapter, "oil and gas waste" means waste that arises out of or incidental to the drilling for or producing of oil or gas, including waste arising out of or incidental to:

(1) activities associated with the drilling of injection water source wells which penetrate the base of useable quality water;(2) activities associated with the drilling of cathodic protection holes associated with the cathodic protection of wells and pipelines subject to the jurisdiction of the commission;(3) activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants;(4) activities associated with any underground natural gas storage facility, provided the terms "natural gas" and "storage facility" shall have the meanings set out in Section 91.173, Natural Resources Code;(5) activities associated with any underground hydrocarbon storage facility, provided the terms "hydrocarbons" and "underground hydrocarbon storage facility" shall have the meanings set out in Section 91.201, Natural Resources Code; and(6) activities associated with the storage, handling, reclamation, gathering, transportation, or distribution of oil or gas prior to the refining of such oil or prior to the use of such gas in any manufacturing process or as a residential or industrial fuel.

(b) "Oil and gas waste" includes saltwater, brine, sludge, drilling mud, and other liquid, semiliquid, or solid waste material.


21

Most oil and gas waste is exempted from being handled as hazardous waste by federal law. This includes most waste from hydraulic fracturing and other well work-over waste. There is, however, a category of waste defined under federal law as “oil and gas hazardous waste,” but we won’t be dealing with that type of waste in this class. If you want to know more about oil and gas hazardous waste, visit with your district RRC office.

Different Forms of Oil and Gas Waste May Occur at Different Times

1. In order to know which criminal laws to use to respond to any waste violation, you must first be certain as to what type of waste is involved.

2. Remember: if it’s oil and gas waste, you cannot use the Texas Litter Abatement Act (THSC Chapter 365). You can use the other general environmental criminal laws and the special criminal laws for oil and gas waste, but not THSC Chapter 365.

Different types of oil and gas waste are often generated during different phases of the exploration and production process:

1. During the drilling process itself, the most common waste is used drilling mud;

2. During the well completion process, the most common wastes are waste fluids from hydraulic fracturing and other liquid wastes generated by the well completion process;

3. During the life of the well, liquid wastes from various work-over process; hydraulic fracturing may occur more than once, producing oil and gas waste each time;

4. During the life of the well, the most common waste is produced saltwater that comes with the oil and gas extracted. This produced saltwater is separated at the well site, and must be properly disposed, usually off-site into an injection/disposal well;

5. Not all oil and gas waste is obvious. For example, discarded equipment and metal storage tanks used to extract, process, or temporarily store oil or gas prior to the refining of such oil or prior to the use of such gas in any manufacturing process or as a residential or industrial fuel may also be classified as oil and gas waste. If you are having trouble deciding if a particular waste is oil and gas waste or not, talk it over with your district RRC office; and,

5. At anytime, such wastes as human sewage and common trash and rubbish may be generated by the persons engaged in the processes of drilling for or producing of oil or gas. This waste is also classified as oil and gas waste.


22

Right Way to Dispose of Produced Salt WaterSaltwater Disposal Well

Wrong Way to Dispose of Produced SaltwaterPossible Felony Water Pollution

Thus, in the Eagle Ford Shale formation area, there is still a lot of used drilling mud being generated, along with completion fluids and saltwater. But in the Barnett Shale gas area in North Texas, where there is not a great deal of new drilling going on now, the most common waste is saltwater that is a byproduct of the oil and gas extraction process. In the two pictures shown, the one on the left shows a proper saltwater disposal well. Permitted carriers use wells such as these — and many less beautiful — to dispose of production saltwater hauled from oil and gas wells. The picture on the right shows a carrier who has picked up a load of produced saltwater, and rather than dispose of it in a proper injection well has decided to dump part of the load on the way, to reduce disposal costs. Note that the truck is not properly marked with a Waste Hauler Permit number and company name. Not only is this driver or company violating several provisions of TWC Chapter 29 and Statewide Rule 8, but the driver may also be violating Texas’s felony water pollution statute, Texas Water Code Sec. 7.145.

All of these types of oil and gas waste — from drilling mud to waste hydraulic fracturing fluids and other completion fluids to produced saltwater — have to go to state-authorized disposal sites as specified in Statewide Rule 8, and they have to be moved to those disposal sites in non-leaking vehicles that have been permitted as waste carriers by the RRC. Failure to comply with these strict rules for transporting and disposal can easily result in multiple crimes being committed, as well as various administrative rule violations.


23

Memorandum of Understanding

1. The TCEQ usually is responsible for administrative violations concerning trash and domestic sewage.

2. But if this waste comes from activities associated with oil and gas exploration and production, it becomes the RRC’s administrative responsibility.

3. But, no matter the source, dumped trash and domestic sewage is always subject to criminal law enforcement by cities and counties.

Under most circumstances, dumping trash — solid waste and litter — is responded to administratively by the TCEQ and criminally by local governments, and there is often a lively back-and-forth on who is going to respond to a particular situation. Since 1996, however, responding to most illegal dumping has been the responsibility the county, with the TCEQ getting involved in more complex cases, where the accused is running an un-permitted commercial dumping business, or where human lives or the environment is being endangered by the dumping. Responding to most illegal dumping, consequently, is the county’s responsibility, with the TCEQ providing various kinds of technical help.

At the state agency level, managers and staff attorneys from the TCEQ and RRC have carefully worked through enforcement responsibilities assigned each agency by the State Legislature to make sure everybody is clear as to what response is expected from which agency. The resulting understanding can be read at 16 Texas Administrative Code Sec. 3.30, where it is entitled Memorandum of Understanding between the Railroad Commission of Texas (RRC) and the Texas Commission on Environmental Quality (TCEQ). This entire document is very much worth reading by local officers interested in how the State Legislature has allocated the responsibility for handling various sorts of waste between these two agencies.

The most important thing to remember by local governments, is that this MoU is between the RRC and the TCEQ: local governments and other state agencies are not a party to it, and are not, consequently, directly subject to its provisions. Local governments’ job in Texas is to apply the criminal laws provided by the State Legislature to handle all criminal violations including the various types of waste we generate — including oil and gas waste. However, knowledge of the content of the MoU is useful to local governments who are wondering which administrative agency has responsibility in a particular situation.

If local criminal enforcement officers are wanting to discuss administrative


24

enforcement of trash dumping in a farmer’s field, they would normally contact the TCEQ’s regional office. However, if in the course of their investigation local officers discover that the waste originated as a byproduct of the oil and gas exploration or production process, the correct administrative agency for them to contact would be the Railroad Commission. But if the local peace officers are exercising their law enforcement powers, they don’t need to talk with anybody at the state. What these officers would have to do is to determine if the waste is or is not oil and gas waste. If it’s NOT oil and gas waste — is rather solid waste or litter — the officers use THSC Chapter 365; if it is oil and gas waste, the officers would use any available law except THSC Chapter 365.

Here’s some of what the MoU says at (d)(1). Local officers might find this language useful in deciding what sort of waste is involved in a particular situation:

Several types of waste materials can be generated during the drilling, operation, and plugging of these [oil, gas, or geothermal resource] wells. These waste materials include drilling fluids (including water-based and oil-based fluids), cuttings, produced water, produced sand, waste hydrocarbons (including used oil), fracturing fluids, spent acid, workover fluids, treating chemicals (including scale inhibitors, emulsion breakers, paraffin inhibitors, and surfactants), waste cement, filters (including used oil filters), domestic sewage (including waterborne human waste and waste from activities such as bathing and food preparation), and trash (including inert waste, barrels, dope cans, oily rags, mud sacks, and garbage). Generally, these wastes, whether disposed of by discharge, landfill, land farm, evaporation, or injection, are subject to the jurisdiction of the RRC. Wastes from oil, gas, and geothermal exploration activities subject to regulation by the RRC when those wastes are to be processed, treated, or disposed of at a solid waste management facility authorized by the TCEQ under 30 TAC Chapter 330 are, as defined in 30 TAC §330.3(148) (relating to Definitions), "special wastes."

In more than a few situations, this division of responsibility between the two agencies has resulted in TCEQ having to patiently explain to local officials why they are not responding to a particular dumping situation. It may look like the waste being disposed is solid waste or litter, but, since it is produced as a byproduct of the oil and gas exploration and production process, the material is actually oil and gas waste, responding to which is reserved to the Railroad Commission administratively. Local governments can still get involved with criminal enforcement, but they will not be able to use the Texas Litter Abatement Act; they’ll use another law.


25

What Makes Oil and Gas Waste Such a Problem?

1. There’s a lot of it.2. It can be dangerous when disposed in an unauthorized (by the RRC) place.3. Dumping it improperly can make a lot of extra money for waste haulers willing to

commit crimes and violate their RRC permits.

Any waste in the wrong place almost always constitutes a health or safety issue, regardless of its source. But this is especially true in the case of oil and gas waste. Drilling mud spilled on the road, and not immediately cleaned, constitutes a danger to drivers, and there have been several fatality accidents attributed to drivers hitting the super-slick conditions that these spills create. Many of these drilling muds are oil-based, adding to the dangerous conditions created by spills.

Not all waste fluids recovered in hydraulic fracturing operations makes it to an injection well for proper disposal either. Although generally not classified as hazardous waste, these fluids can nevertheless be extremely polluting to water and land. Moreover, with the amount of public attention that hydraulic fracturing is attracting to the oil and gas industry now, it’s inconceivable that any mishandling of this waste would be tolerated by the industry itself. Mishandling of this waste is not only potentially dangerous to water, it is also politically dangerous to the industry and their relations with local citizens.

Over the long term life of a well, however, the greatest danger, in our opinion, comes from the produced saltwater taken from the well. As this Railroad Commission map of the Eagle Ford area shows, there are a LOT of oil and gas wells, every one producing waste in every phase of its life process. Over time, produced saltwater will easily be the major waste to be handled.


26

Every oil and gas well in every county generates waste

Over thirty years ago, the state was given responsibility under the federal Safe Drinking Water Act for administering various types of waste disposal wells, including “Class II Underground Injection Control” wells that are used to dispose — far below aquifers — various types of oil and gas wastes and other materials. Texas Water Code Sec. 27.002 defines an injection well thusly:

(11)AA"Injection well" means an artificial excavation or opening in the ground made by digging, boring, drilling, jetting, driving, or some other method, and used to inject, transmit, or dispose of industrial and municipal waste or oil and gas waste into a subsurface stratum; or a well initially drilled to produce oil and gas which is used to transmit, inject, or dispose of industrial and municipal waste or oil and gas waste into a subsurface stratum; or a well used for the injection of any other fluid; but the term does not include any surface pit, surface excavation, or natural depression used to dispose


27

of industrial and municipal waste or oil and gas waste.

As mentioned earlier, there are a large number of Class II injection/disposal wells in Texas — around 34,000 as of October 31, 2013 — and more are being permitted by the RRC regularly. If you want to know more about these wells, you can begin with the state statute covering them — TWC Chapter 27 Injection Wells — and read the excellent material on the RRC web site. You might begin there with the excellent Injection/Disposal Well Permit Testing and Monitoring Seminar Manual, which you can access at http://s.coop/sbie. The RRC has developed Statewide Rule 9 — 16 T.A.C. Sec. 3.9 — to provide details on the disposal of saltwater and other produced fluids into formations.

Drilling mud, on the other hand, may be disposed of by a variety of ways, including “land farming” it by plowing in into land authorized by the RRC (and the owner’s written approval) to be used for this process. Land farming is generally a destructive process; land seldom benefits from having rock cuttings and fluids high in salt and petroleum residues being plowed into land. Land owners considering allowing the use of their land as a disposal location for drilling mud are well-advised to use a competent lawyer to draft the disposal agreement. Otherwise, over time the land owner may find that the drilling mud being disposed contains undesirable and unanticipated chemicals, which the agreement allowed. In our opinion, this is a place for good attorneys. The clearer the parties are about what, when, and how much waste will be land farmed on a particular piece of property, the less contentious the process will be over time.

From (a) the number of wells drilled and anticipated, (b) the fact that all wells generate waste throughout their life, and (c) the fact that this waste can must usually be disposed of off-site, the fact emerges that there is simply a lot of oil and gas waste being transported on the roads of Texas at any given time. This is particularly true when there is a new find of oil or gas or a new technology emerges that enables production of oil or gas from difficult locations and formations.

Whenever waste of any type gets moved in quantity around any state, it tends to get spilled-and-abandoned occasionally and sometimes even intentionally dumped. Dealing with these spills and dumps mostly falls on local peace officers as soon as elected officials and the public realize that the police have enforcement power. Citizens demand enforcement as soon as they realize it is available.


28

3. LAWS LOCAL GOVERNMENTS CAN USE

1. Laws Specifically for Oil and Gas Wasta. TWC Chapter 29 Oil and Gas Waste Haulers (most-used criminal law for WHP

violations)b. Texas Natural Resources Code Chapter 91 (four criminal provisions)

2. Other Anti-Pollution Laws and Ordinances You Can Use in Many Situationsa. Municipal Ordinancesb. THSC Chapters 341 and 343 Health and Nuisance Lawsc. TWC Chapter 7 (Subchapter E) (water pollution and several other criminal provisions)

d. TWC Chapter 11 Water Rights violationse. General anti-pollution civil suit powers at TWC Sec. 7.351 (water pollution violations)

Now we’ve arrived at the heart of the class: the specific criminal laws that local governments can use to deal with oil and gas waste.

The box above has an outline that will guide us through the next few pages. Notice that local governments can use two kinds of laws, and we’ll discuss each in the sections that follow.

1. Laws Specifically for Oil and Gas WasteThese are two laws that the State Legislature has provided specifically to be used by local governments to deal with oil and gas waste. Generally, they are not well-known nor are they widely-used in Texas at this time. Since one of these contains a section setting a criminal penalty for violating laws and rules pertaining to handling oil and gas waste — NRC Sec. 91.002 — we’ll also discuss some of the provisions of Statewide Rule 8 in this group.

2. Other Anti-Pollution Laws and Ordinances You Can Use in Many SituationsThese are more common environmental criminal laws used by local governments that can also be used to respond to many situations involving oil and gas waste. Many cities and counties in Texas are already well-experienced at using these laws, and will simply have to learn to apply them to situations involving oil and gas waste. For laws in this group, the kinds of waste covered is broad enough to include many things classified as oil and gas waste, such as saltwater produced from a well.


29

1. Laws Specifically for Oil and Gas Waste

This section discusses two Texas criminal laws that the State Legislature has provided local governments to use in dealing specifically with oil and gas waste that is dumped and slopped-and-abandoned on roads and otherwise mishandled.

The first of these — TWC Chapter 29 — contains several violations that are very straight-forward and easy to use. These provisions are beginning to be used by governments effectively, especially in the Eagle Ford Shale areas.

The second — Texas Natural Resources Code Chapter 91 — is much broader. It contains four violations, but local government response will probably be limited to using two of these provisions, at least until more experience is gained.

In both cases, when a local government undertakes a criminal case involving oil and gas waste or against a person it knows to hold a Waste Handler’s Permit, the local government should always let the RRC district office know about the situation.

a. TWC Chapter 29 Oil and Gas Waste Haulers

The violations in this statute are the most common that local officers are likely to encounter. The criminal sections of this law will be the most commonly used to deal with oil and gas waste by most local governments.

They allow the officer to focus on the problem vehicle and driver, to arrest the driver if appropriate, and to impound the vehicle as evidence until the matter is resolved, usually after having the permit holding company come vacuum out the rest of the load for proper disposal.

If the permit holder sends a second vehicle to clean the dumped oil and gas waste — or sends a second vehicle to off-load the waste from an impounded vehicle — make sure these second vehicles are operating under a proper WHP also.

These sections deal with very commonly observed violations: unmarked vehicles transporting oil and gas waste; hauling oil and gas waste without a permit; dumping and spilling-and-abandoning oil and gas waste on streets and in other unauthorized locations; and, using a hauler who does not hold a valid WHP. The same criminal penalty applies to each of these.


30

The individual vehicle involved in the violation may not be the only such vehicle operated by permit holder. That is, if this particular vehicle is unmarked or leaking, why would anyone expect the entire fleet of vehicles operated by the permit holder to be free of similar violations? Officers enforcing these laws are encouraged to maintain sufficient records concerning violators so that they can identify patterns. If you find yourself dealing with the same company for related problems on different vehicles, it may be time to focus on the company itself rather than individual vehicles.

This is just one more reason for establishing and maintaining good working relations with your district RRC office. As criminal cases grow beyond responding to a single offending vehicle, effective enforcement to solve problems will require greater levels of cooperation and coordination. TWC Chapter 29 will probably not be useful in dealing with these structural issues. Faced with several offending vehicles from the same permit holder, the officer will need to look deeply into the overall behavior of the permit holder, comparing the company’s activity against the detailed requirements of Statewide Rule 8. In doing this, the local peace officer will need to take more time to develop the case, often working with the Railroad Commission in examining overall permit-holder behavior, or perhaps proceeding under a criminal search warrant.

Nevertheless, the starting place for local enforcement against oil and gas waste haulers who illegally dump their loads or abandon spills is TWC Chapter 29.

The following criminal provisions of that law are useful in dealing with the lone offending vehicle and driver:

Texas Water Code Chapter 29 OIL AND GAS WASTE HAULERS TWC Sec. 29.041 HAULING WITHOUT PERMIT.No hauler may haul or dispose of oil and gas waste off the lease, unit, or other oil or gas property where it is generated unless the hauler has a permit issued under this chapter.

TWC Sec. 29.042. EXCEPTIONS. (a) A person may haul oil and gas waste for use in connection with drilling or servicing an oil or gas well without obtaining a hauler's permit under this chapter.(b) The commission by rule may except from the permitting requirements of this chapter specific categories of oil and gas waste other than saltwater.

TWC Sec. 29.043. USING HAULERS WITHOUT PERMIT. No person may knowingly utilize the services of a hauler to haul or dispose of oil


31

and gas waste off the lease, unit, or other oil or gas property where it is generated if the hauler does not have a permit as required under this chapter.

This is particularly interesting since it establishes a violation simply to use an unpermitted hauler. Moreover, Statewide Rule 8 requires that the generator and receiver of the waste — the oil or gas production well and the waste injection well — actively determine that the waste hauler has a WHP permit (requirement shown below). However, I’ve yet to hear of a case where an unpermitted hauler was stopped and processed by a police officer, and that stop become the basis for eventually issuing a violation under TWC Sec. 29.043 against a generator or receiver, but I’m sure this will be a next step in local enforcement. After all, the documentation carried by the hauler shows the source of the material transported. As soon as haulers learn that they need to follow their permits — and as soon as waste generators and receivers understand that they are subject to enforcement for failure to use a permitted hauler — waste will be handled better. So why not create a “Welcome from the Sheriff” letter to production and disposal well operators reminding them of their responsibility only to use permitted haulers, and explaining the provisions of TWC Sec. 29.043?

Statewide Rule 8 Sec. (d) Pollution Control.(5) Responsibility for disposal.(A) Permit required. No generator or receiver may knowingly utilize the services of a carrier to transport oil and gas wastes if the carrier is required by this rule to have a permit to transport such wastes but does not have such a permit. … Any person who plans to utilize the services of a carrier or receiver is under a duty to determine that the carrier or receiver has all permits required by the Oil and Gas Division to transport, store, handle, treat, reclaim, or dispose of oil and gas wastes.

TWC Sec. 29.044. DISPOSING OF OIL AND GAS WASTE. (a) No hauler may dispose of oil and gas waste on public roads or on the surface of public land or private property in this state in other than a railroad commission-approved disposal facility without written authority from the railroad commission.

When oil and gas waste is spilled and then abandoned by the driver — or the waste is dumped on a street or on other public or private property other than a RRC-approved disposal facility — this is the provision commonly cited by local officers. Note that it is a violation of Statewide Rule 8 to transport oil and gas waste in a vehicle that leaks [see Sec. (f)(1)(c)(ix)]. If officers enforce NRC Sec. 91.002, the fact that the vehicle was operated in such a manner that it leaked can be the basis for additional criminal fines (maximum: $10,000). However, at this time officers seem to


32

be using TWC Sec. 29.044 to deal with road spills that are abandoned.

(b) No hauler may dispose of oil and gas waste on property of another in other than a railroad commission-approved disposal facility without the written authority of the landowner.

This violation would cover such situations as when used drilling mud was being landfarmed, but, on investigation of a complaint, the land owner had not given his permission for this to take place. Such permission has to be in writing. Perhaps an employee of an absentee land owner was allowing landfarming without the owner’s permission in order to make illicit money.

TWC Sec. 29.045 USE OF UNMARKED VEHICLES. No person who is required to have a permit under this chapter may haul oil and gas waste in a vehicle that does not bear the owner's name and the hauler's permit number. This information shall appear on both sides and the rear of the vehicle in characters not less than three inches high.

If a vehicle is being used to haul oil and gas waste, it must be properly marked with both the permit holder’s name and the valid WHP number on the back and sides, in characters at least three inches high. A WHP number with no name — or a name with no WHP number — would both violate this provision, as would proper marking on fewer than the three locations specified. When the officer checks the WHP permit itself (see Section 4 below), he or she will want to verify that the name and WHP number on the back and sides of the vehicle matches the name and WHP number on the copy of the permit carried on the vehicle. Missing and incomplete markings are one of the primary causes for investigations by officers, and may lead to additional charges.

TWC Sec. 29.046 PENALTY. A person who violates any provision of this chapter is guilty of a misdemeanor and upon conviction is punishable by a fine of not less than $100 nor more than $1,000 or by confinement in the county jail for not more than 10 days or by both.

These sections are being effectively enforced in several Texas counties now, and more are sure to follow.

Here’s a recent (June 2012) email detailing results from a county environmental enforcement deputy in the Eagle Ford area who aggressively uses TWC Chapter 29 to deal with oil and gas waste:

“WE TOOK SOME PEOPLE TO COURT TODAY ON VIOLATIONS OF TEXAS WATER CODE, CHAPTER 29, OIL FIELD WASTE HAULERS. HERE'S THE OUTCOME FOR THE DAY.


33

EIGHT (8) DEFENDANTS WAIVED ARRAIGNMENT AND WILL BE SET UP FOR TRIAL. FIFTEEN (15) DEFENDANTS PLEAD GUILTY AND WERE FINED $500.00 PLUS $299.00 COURT COSTS. ONE (1) DEFENDANT PLEAD GUILTY AND WAS FINED $400.00 PLUS $299.00 COURT COSTS. TWO (2) DEFENDANTS PLEAD GUILTY AND WERE FINED $250.00 PLUS $299.00 COURT COSTS. THREE (3) DEFENDANTS PLEAD GUILTY AND WERE FINED $100.00 AND $299.00 COURT COSTS. NINE (9) DEFENDANTS FAILED TO APPEAR AND WARRANTS WERE ISSUED FOR THEIR ARREST WITH A $2,000.00 BOND. SOME OF THE DEFENDANTS WERE GIVEN A BREAK BY THE JUDGE AND FOUND GUILTY ON DISPOSING OF OILFIELD WASTE ON PUBLIC ROAD AND HAVING THE USE OF UNMARKED VEHICLE DISMISSED. I WAS REAL HAPPY WITH JUDGE'S ACTIONS. FOUND OUT SOME DRIVERS WERE FIRED AND SOME QUIT BECAUSE THEY REFUSED TO PULL THE TRAILERS THAT WERE NOT REPAIRED BY COMPANY.”

Your county could get the same results with systematic enforcement of TWC Chapter 29. The State Legislature absolutely has provided local government with all the tools needed to stop criminal mishandling of oil and gas waste.

b. Texas Natural Resources Code Chapter 91

This is the second group of criminal provisions created by the State Legislature. Of these four provisions, the first and second will possibly be used by local officers. However, the third and fourth mentioned here probably won’t be applied locally for awhile.

Criminal Provision #1: Violating a Waste Handling Code, Rule, Order, or PermitThis is the criminal section of NRC Chapter 91 most likely to be enforced by local law enforcement agencies. Very likely, officers will begin to use this section when (a) the provisions of TWC Chapter 29 don’t produce the desired results; (2) the target moves from being the individual violating vehicle to being a violating WHP holder as an entity; and, (3) when local authorities grow in sophistication and working with district RRC offices becomes more standard.

Statewide Rule 8 — Title 16 T.A.C. Sec. 3.8 — is a rule issued under Section 91.101 of


34

the Natural Resources Code [see Preface to the issuance of this rule in the Texas Register, Aug 27, 2004]. Consequently, a violation of Statewide Rule 8 would be included in the violations possible in Sec. 91.002(a) immediately below.

NRC Sec. 91.002. CRIMINAL PENALTY. (a) A person who wilfully or with criminal negligence violates Section 91.101 of this

code or a rule, order, or permit of the commission issued under that section commits an offense.

(b) An offense under Subsection (a) of this section is punishable by a fine of not more than $10,000 a day for each day a violation is committed.

(c) Venue for prosecution of an alleged violation of this section is in a court of competent jurisdiction in the county in which the violation is alleged to have occurred.

This section could be used, for example, to respond to a WHP holding entity who is running multiple unpermitted, mis-marked, or leaking vehicles, and when direct action against individual vehicles is not changing behavior. Note especially the provisions in Statewide Rule 8 at section (f) Oil and gas waste haulers. Violating any of those specifically listed operational and record-keeping requirements would probably constitute a separate violation of NRC Sec. 91.002. Cities and counties contemplating a criminal action at this level should keep the RRC informed of their actions, and probably proceed under criminal search warrants rather than relying on any other entry process. Local officers should be guided by their county attorney in planning the use of this provision in a particular situation. I know of no city or county using this statute at this time, but I can certainly anticipate its being used when the problem moves beyond the “one vehicle” enforcement of TWC Chapter 29.

Criminal Provision #2: Various Paperwork and Gauge TamperingThis is the next criminal section of NRC Chapter 91 that local officers might use. An immediate use might be of section (a)(3) below when faced with what turns out to be a forged or altered Waste Hauler’s Permit.

There’s also the possibility that vehicles that leak oil and gas waste in transit were included in the WH-2 vehicle list submitted to the RRC as part of the WHP application. The WH-2 list of vehicles was certified by the applicant as being designed to be leak-free: “I certify that the vehicles listed on this form are designed so that they will not leak during transportation.”

Given the number of haulers and the number of vehicles involved, RRC staff cannot possibly personally inspect each vehicle submitted in the application to make sure that the vehicle isn’t designed in such a way as to leak. Requiring a certification on the application to this effect is the best approach. However, proving that such a false certification was filed will probably be time


35

consuming to local officers, although a subject to be discussed if the county finds itself dealing with multiple leaking vehicles from the same permit holder.

It’s also interesting that section (a)(5) below can be used to respond to situations where a person has “knowingly rendered inaccurate any monitoring device required to be maintained by a commission rule, order, or permit.” One chief of security for an operator in the Ft. Worth area reports successfully persuading local law enforcement there to use this provision to arrest a person who was stealing batteries from remote sites, thereby rendering the gauges at those sites “inaccurate.” An arrest was made and the individual was charged with a violation of NRC Sec. 91.143(a)(5), which carries a potential penalty of 2 to 5 years confinement and/or a fine of $10,000.

Sec. 91.143. FALSE APPLICATIONS, REPORTS, AND DOCUMENTS AND TAMPERING WITH GAUGES.

(a) A person may not:(1) make or subscribe any application, report, or other document required or

permitted to be filed with the commission by the provisions of Title 102, Revised Civil Statutes of Texas, 1925, as amended, including provisions of this code formerly included in that title, knowing that the application, report, or other document is false or untrue in a material fact;

(2) aid or assist in, or procure, counsel, or advise the preparation or presentation of any of these applications, reports, or other documents that are fraudulent, false, or incorrect in any material matter, knowing them to be fraudulent, false, or incorrect in any material matter;

(3) knowingly simulate or falsely or fraudulently execute or sign such an application, report, or other document;

(4) knowingly procure these applications, reports, or other documents to be falsely or fraudulently executed, or advise, aid in, or connive at this execution; or

(5) knowingly render inaccurate any monitoring device required to be maintained by a commission rule, order, or permit.

(b) A person commits an offense if the person violates this section. An offense under this section is a felony punishable by:(1) imprisonment in the Texas Department of Criminal Justice for a term of not

less than two years or more than five years;(2) a fine of not more than $10,000; or(3) both the imprisonment and the fine.

(c) If other penalties prescribed in Title 102, Revised Civil Statutes of Texas, 1925, as amended, including provisions of this code formerly included in that title, overlap offenses that are also punishable under this section, the penalties prescribed in this section shall be in addition to other penalties.


36

(d) No application, report, or other document required or permitted to be filed with the commission under Title 102, Revised Civil Statutes of Texas, 1925, as amended, including provisions of this code formerly included in that title, may be required to be under oath, verification, acknowledgment, or affirmation.

(e) The commission may impose an administrative penalty in the manner provided by Sections 81.0531-81.0534 on a person who violates this section. The amount of the penalty may not exceed $1,000 for each violation.

Faced with a forged WHP, such as a WHP that has been altered to change an expired expiration date, to add a new vehicle without the authorization of the RRC, to list another disposal site without RRC authorization, or to make some other material change, the local officer is more likely to use the more familiar Penal Code Sec. 37.10 Tampering with a Government Record in response.

Criminal Provision #3: Saltwater Storage and Evaporation PitsThis section sets a criminal sanction for using an unauthorized saltwater pit and for failing to remove such a pit when ordered to do so by the RRC. Given the technical nature of this violation, it is unlikely that local officers will ever use this provision unless requested to do so by the RRC.

NRC Sec. 91.458. CRIMINAL PENALTY. (a) A person who violates Section 91.452 of this code or an order of the commission

under Subsection (a), Section 91.457, commits an offense.(b) An offense under this section is a Class A misdemeanor.

Sec. 91.452. PROHIBITED ACTIVITY. Except as provided by this subchapter, a person conducting oil and gas development or production operations, geothermal operations, or underground hydrocarbon storage operations may not use a saltwater disposal pit for storage or evaporation of oil field brines.

Sec. 91.457. REMOVAL OF UNAUTHORIZED PIT. (a) The commission may order a person who is operating a saltwater disposal pit in violation of this subchapter to close the pit in compliance with this subchapter and commission rules, standards, and specifications, at the pit operator's own expense.(b) If a person ordered to close a saltwater disposal pit under Subsection (a) fails or refuses to close the pit in compliance with the commission's order and rules, the commission may close the pit using money from the oil and gas regulation and cleanup fund and may direct the attorney general to file suits in any courts of competent jurisdiction in Travis County to recover applicable penalties and the costs incurred by the commission in closing the saltwater disposal pit.

Criminal Provision #4: Violations Concerning Oil and Gas HAZARDOUS WasteThis is another law that local officers will probably not use, unless requested to do so by


37

the RRC. However, it is something that local officers should basically understand.

Most oil and gas waste is not “hazardous,” by definition under federal law: it’s just oil and gas waste. However, if certain oil and gas waste does meet the definitions provided under federal law, it is classified as “oil and gas hazardous waste” and becomes subject to other handling and disposal requirements.

In order to know more about the federal rules that exempt most oil and gas waste from being classified as “hazardous,” there is an excellent presentation at http://www.epa.gov/osw/nonhaz/industrial/special/oil/oil-gas.pdf. That document sets a simple “rule of thumb” to be used :

(1) Has the waste come from down-hole, i.e., was it brought to the surface during oil and gas E&P operations?

(2) Has the waste otherwise been generated by contact with the oil and gas production stream during the removal of produced water or other contaminants from the product?

If the answer to either question is yes, then the waste is likely considered exempt from RCRA Subtitle C regulations (i.e., it is not classified as hazardous).

As you can see, the oil and gas waste commonly encountered by local officers probably meets one or both of these criteria and would therefore not be classified as “hazardous.” However, as the EPA document makes clear, all oil and gas waste must be handled properly in order to minimize risks to persons and property.

If you want to do additional reading on this subject beyond the EPA document cited above, we suggest you begin with Title 16 T.A.C. Sec 3.98 Standards for Management of Hazardous Oil and Gas Waste. This rule was drafted by the RRC, as directed by the State Legislature.

Local officers who think they have encountered oil and gas hazardous waste should immediately verify their suspicions through their RRC district office and get into contact with the Texas Parks & Wildlife Department’s Environmental Crimes Unit for assistance.

NRC Sec. 91.604. CRIMINAL PENALTY. (a) A person who knowingly violates a rule, order, or permit of the commission issued

under this subchapter commits an offense.(b) An offense under this section is punishable by imprisonment for up to six months,

by a fine of up to $10,000 for each day the violation is committed, or by both.

http://www.epa.gov/osw/nonhaz/industrial/special/oil/oil-gas.pdf

http://www.epa.gov/osw/nonhaz/industrial/special/oil/oil-gas.pdf


38

(c) Venue for prosecution under this section is in the county in which the violation is alleged to have occurred.

Sec. 91.601. DEFINITIONS. In this subchapter:(1) "Oil and gas hazardous waste" means oil and gas waste that is a hazardous waste

as defined by the administrator of the United States Environmental Protection Agency under the federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.).

(2) "Oil and gas waste" means oil and gas waste as defined in Section 91.1011 of this chapter.

So of the four criminal sections available to local officers in Chapter 91 of the Natural Resources Code, the one that they are most likely to use is the first one discussed — NRC Sec. 91.002. Paperwork and “inaccurate gauge” violations of NRC Sec. 91.143 may also happen from time to time, but the primary violation will be of Sec. 91.002 for a violation of one or more of the provisions of Statewide Rule 8. So let’s now briefly discuss that rule.

c. Breaking Statewide Rule 8: An Administrative and Criminal Violation

This is a long rule (about 25 pages in the Appendix), and some of its provisions are more easily applied by local government than others. Some of this document are more understandable to non-specialists than others, and we caution you about getting bogged-down in the definitions. We will briefly discuss each of the sections of the rule — to help you get oriented — and then look more deeply at rule requirements that officers are likely to encounter in the field.

Remember that each and every violation of Statewide Rule 8 is an administrative violation for the RRC and a criminal violation of NRC Sec. 91.002 for local peace officers.

For officers familiar with the way misdemeanor outdoor burning violations arise in Texas, this same concept applies: any violation of the Texas Outdoor Burning Rule is both an administrative violation — to be handled by the TCEQ — and a misdemeanor criminal violation — to be handled by local law enforcement.

In both situations, effective enforcement requires close coordination between local government and the state agency. There may be situations where it is far better for the state to respond with administrative enforcement; in other situations, it may make more sense for local governments to respond with criminal sanctions. I would suggest — and


39

certainly not everybody agrees — that there are two ways of approaching this “dual responsibility” that should not be followed, even though both are easier than coordination:

(1) Locals and the state should not both just do their thing without regard for the activities of the other. Now or eventually, coordination always pays off; and,

(2) Locals and the state should not fail to act, on the assumption that the other guys are taking care of business in a particular situation.

As an aid to local enforcement, the State Legislature has “lifted out” several provisions of Statewide Rule 8 and codified them in TWC Chapter 29. These are the WHP violations most commonly seen by local police. But if applying these TWC Chapter 29 laws is not sufficient to respond to a particular situation, use of NRC Sec. 91.002 to respond to a more detailed rule violation may be necessary. We suggest local officers be guided by their county attorney in making this determination. And keep talking with the RRC district office.

1. What the various sections of Statewide Rule 8 cover:

(a) Definition

(b) No pollution. No person conducting activities subject to regulation by the commission may cause or allow pollution of surface or subsurface water in the state. (That’s the entire content of this section.)

(c) Exploratory wells

(d) Pollution control

(e) Pollution prevention

(f) Oil and gas waste haulers

(g) Record keeping

(h) Penalties

(i) Coordination between the Railroad Commission of Texas and the Texas Commission on Environmental Quality or its successor agencies.

(j) Consistency with the Texas Coastal Management Program.

2. Selected parts of Statewide Rule 8 useful to local peace officers:

Water pollution prohibited(b) No pollution. No person conducting activities subject to regulation by the commission may cause or allow pollution of surface or subsurface water in the state.


40

Note: The point of “Statewide Rule 8” is water protection. Therefore, the primary prohibited activity for permit holders is anything that pollutes water. The definition of “surface or subsurface water” used in this rule is identical to the definition of “water” used in the laws against water pollution in TWC Chapter 26. So if a driver is dumping oil and gas waste into a creek — or legally disposing of drilling mud in an authorized land farming operation, but the waste is running off of the property into a creek and polluting the water — then they have probably committed (1) an administrative violation of this section; (2) which constitutes a related criminal violation of NRC Sec. 91.002; and, (3) a felony or misdemeanor violation of TWC Sec. 7.145 or Sec. 7.147. Deciding which of these criminal tools is appropriate for the situation is a matter of local policy.

Who Must Have a Permit(d) (5) Responsibility for disposal.

Note: This section imposes responsibilities on the carriers themselves, as well as the generators of the waste and the receivers of the waste. Even though only the carrier receives the permit, the generators and receivers using any carrier are required to honor the permit process as well. All three are subject to these provisions. Note also the last section immediately below setting a positive responsibility for the generators and receivers to be sure they are doing business with permitted carriers. Not doing so is punishable by a fine of up to $10,000 per violation. One would think that letters pointing out this possible criminal liability to waste generators and receivers would be welcomed … by everybody except a criminal carrier, who is relying on everybody’s ignorance to keep making fast money by breaking the law.

Even a sophisticated compliance section of an major operator can inadvertently place themselves in a position to violate this provision. For example, an operator doing business with several hundred holders of WHPs may have its own program of annually verifying that the WHP permit held by each vendor is valid and in force. However, the WHP is an annual permit with it’s own expiration date. Operators wanting to make sure that they are doing business with holders of proper permits would time their internal verification program to coincide with the expiration and renewal date for the WHP holder, not some arbitrary internal “compliance check” date set at the operator. Failure to do this could easily result in the operator doing business with a company whose WHP had expired and not been properly renewed.

(A) Permit required.


41

Generators and receivers must use permitted carriersNo generator or receiver may knowingly utilize the services of a carrier to transport oil and gas wastes if the carrier is required by this rule to have a permit to transport such wastes but does not have such a permit.

Carrier may use only permitted second carriersNo carrier may knowingly utilize the services of a second carrier to transport oil and gas wastes if the second carrier is required by this rule to have a permit to transport such wastes but does not have such a permit.

Generators and carriers must use permitted receiversNo generator or carrier may knowingly utilize the services of a receiver to store, handle, treat, reclaim, or dispose of oil and gas wastes if the receiver is required by statute or commission rule to have a permit to store, handle, treat, reclaim, or dispose of such wastes but does not have such a permit.

Receiver may use only permitted second receiverNo receiver may knowingly utilize the services of a second receiver to store, handle, treat, reclaim, or dispose of oil and gas wastes if the second receiver is required by statute or commission rule to have a permit to store, handle, treat, reclaim, or dispose of such wastes but does not have such a permit.

User of carrier or receiver must assure party is permittedAny person who plans to utilize the services of a carrier or receiver is under a duty to determine that the carrier or receiver has all permits required by the Oil and Gas Division to transport, store, handle, treat, reclaim, or dispose of oil and gas wastes.

f) Oil and gas waste haulers

Section (f) contains the most details of the violations peace officers are likely to encounter. So this would be a particularly good section to study, along with Section (b) which simply prohibits disposal practices that pollute water, and Section (d) which includes generators and receivers as the bad carrier’s “unofficial partners” in the violation.

Hauling oil and gas waste off the lease for disposal for hire requires permit(1) A person who transports oil and gas waste for hire by any method other than by pipeline shall not haul or dispose of oil and gas waste off a lease, unit, or other oil or gas property where it is generated unless such transporter has qualified for and been issued an oil and gas waste hauler permit by the commission.

Hauling of inert waste, asbestos-containing material regulated under the Clean Air Act (42 USC Secs. 7401 et seq), polychlorinated biphenyl (PCB) waste regulated under the Toxic Substances Control Act (15 USCA Sec. 2601


42

et seq), or hazardous oil and gas waste subject to regulation under Sec. 3.98 of this title (relating to Standards for Management of Hazardous Oil and Gas Waste), is excluded from this subsection.

This subsection is not applicable to the hauling of oil and gas wastes for recycling.

For purposes of this subsection, injection of saltwater or other oil and gas waste into an oil and gas reservoir for purposes of enhanced recovery does not qualify as recycling.

A person who has a saltwater hauler permit does not need to apply for an oil and gas waste hauler permit until the person is scheduled to file an application for permit renewal.

(A) Application for an oil and gas waste hauler permit will be made on the commission-prescribed form, and in accordance with the instructions thereon, and must be accompanied by:

(i) the permit application fee required by Sec. 3.78 of this title (relating to Fees and Financial Security Requirements) (Statewide Rule 78);

(ii) vehicle identification information to support commission issuance of an approved vehicle list;

Applicant for permit must have affidavit from every proposed disposal site(iii) an affidavit from the operator of each commission-permitted disposal system the hauler intends to use stating that the hauler has permission to use the system; and

Applicant for permit must certify that trucks don’t leak(iv) a certification by the hauler that the vehicles listed on the application are designed so that they will not leak during transportation.

Note: See (C)(ix) below also. Not only must the trucks be maintained and operated in such a way that they don’t leak, but the permit applicant must certify at the time of application that they are designed so they won’t leak in operation. But many times in the Eagle Ford Shale area one will see oil and gas waste being transported in open trucks, sometimes even dump trucks with a lining, which are guaranteed to leak. So why are these vehicles on the list of authorized trucks submitted to the


43

RRC by the permit applicant, and why are they approved and added to the permit by the RRC in the first place? I asked a couple of RRC investigators that question recently, and about all we could come up with was that the vehicles are never physically inspected for potential leakage prior to being added to the list of permitted vehicles. As long as the vehicle has a current safety inspection, no leak inspection is going to take place. That “inspection” will happen at the site of a spill by local peace officers. RRC staffing limits simply can’t physically inspect the vehicles before a permit is issued; about all that the RRC can do is to rely on the applicant’s certification. I think that’s reasonable, but leaking trucks will continue to be permitted until local officers begin to respond to the results.

If a truck is leaking or spilling oil and gas waste, it very possibly was fraudulently permitted in the first place: there may have been a false certification filed with the permit application. You might want to discuss this with a RRC investigator in your district. I can’t see any reason that a false certification on a WH-2 application form wouldn’t be a possible violation of NRC Sec. 91.143.

(B) An oil and gas waste hauler permit may be issued for a term not to exceed one year, subject to renewal by the filing of an application for permit renewal and the required application fee for the next permit period. The term of an oil and gas waste hauler permit will be established in accordance with a schedule prescribed by the director to allow for the orderly and timely renewal of oil and gas waste hauler permits on a staggered basis.

Note: The officer should be sure that the copy of the permit required to be on each vehicle is current, but also that the expiration date has not been altered by the permit holder. The RRC maintains a list of permitted waste haulers on their web site that local peace officers can easily use to catch date forgeries.

(C) Each oil and gas waste hauler shall operate in strict compliance with the instructions and conditions stated on the permit which provide:

Note: The physical copy of the permit required to be on each vehicle contains a list of basic required actions and prohibitions on the back of the approved WH-1 form. Everybody involved has good notice of the core requirements under their WHP.


44

Permit is good for one year(i) This permit, unless suspended or revoked for cause shown, shall remain valid until the expiration date specified in this permit.

Vehicles must be properly marked with WHP/Name(ii) Each vehicle used by a permittee shall be marked on both sides and the rear with the permittee's name and permit number in characters not less than three inches high. (For the purposes of this permit, "vehicle" means any truck tank, trailer tank, tank car, vacuum truck, dump truck, garbage truck, or other container in which oil and gas waste will be hauled by the permittee.)

Note: Often a missing name — just a WHP number is showing — or missing side markings are the first clue the local peace officer has of a possible violation in process.

Copy of permit with attachments must be in cab(iii) Each vehicle must carry a copy of the permit including those parts of the commission-issued attachments listing approved vehicles and commission-permitted disposal systems that are relevant to that vehicle's activities. This permit authority is limited to those vehicles shown on the commission-issued list of approved vehicles.

Note: The permit on board must be for the vehicle marked with a WHP number; the number on the permit must be the number on the back and sides of the vehicle; and, the disposal sites must be near by. For instance, using a permit issued for waste hauling in North Texas — and containing an Attachment B list of selected disposal wells in North Texas — to haul waste in the Eagle Ford area would probably be a violation. Using a vehicle with one WHP number, while carrying a permit for other vehicles, would also be a violation. Officers who get involved in these cases should take their time when inspecting the paperwork.

Sometimes the permit holding company will offer to bring a copy of the permit to the spill scene when the required copy wasn’t on the vehicle. There’s no provision for this to excuse the requirement for a copy of the WHP to be onboard the vehicle. When a WHP document is finally produced, check it carefully and verify it against the RRC web site to see if it is actually valid and issued to the named party. Local agencies handle this “I left the WHP copy at the office” situation differently, some issuing citations and others issuing warnings, provided there is a valid WHP in force.


45

(iv) This permit is issued pursuant to the information furnished on the application form, and any change in conditions must be reported to the commission on an amended application form. The permit authority will be revised as required by the amended application.

(v) This permit authority is limited to hauling, handling, and disposal of oil and gas waste.

Carrier can only use disposal systems listed on permit(vi) This permit authorizes the permittee to use commission permitted disposal systems for which the permittee has submitted affidavits from the disposal system operators stating that the permittee has permission to use the systems. These disposal systems are listed as an attachment to the permit. This permit also authorizes the permittee to use a disposal system operated under authority of a minor permit issued by the commission without submitting an affidavit from the disposal system operator. In addition, this permit authorizes the permittee to transport hazardous oil and gas waste to any facility in accordance with the provisions of Sec. 3.98 of this title (relating to Standards for the Management of Hazardous Oil and Gas Wastes), provided the shipment is accompanied by a manifest. Finally, this permit authorizes the transportation of oil and gas waste to a disposal facility permitted by another agency or another state provided the commission has granted separate authorization for the disposal.

(vii) The permittee must file an application for a renewal permit, using the permittee's assigned permit number, before the expiration date specified in this permit.

(viii) The permittee must compile and keep current a list of all persons by whom the permittee is hired to haul and dispose of oil and gas waste, and furnish such list to the commission upon request.

Vehicles permitted to haul waste cannot leak(ix) Each vehicle must be operated and maintained in such a manner as to prevent spillage, leakage, or other escape of oil and gas waste during transportation.

Just because a vehicle has been certified at the time of the WHP application to have been designed in such a way as not to leak during operations, does not automatically authorize the vehicle’s use. This provision here goes even further; regardless of how the


46

vehicle came to be listed on the permit, it still cannot be operated or maintained in such a way that leaking during transport occurs.

(x) Each vehicle must be made available for inspection upon request by commission personnel.

(2) A record shall be kept by each oil and gas waste hauler showing daily oil and gas waste hauling operations under the permitted authority.

Note: When local peace officers decide to move beyond the particular offending vehicle into an examination of the permit holder, the investigation becomes a process of record examination. If you find yourself moving an investigation into this phase, you’ll most likely act under a criminal search warrant. The rest of this section and (g) provide the list of materials you’ll be seeking in your criminal investigation. Be sure to discuss this process with your county attorney before proceeding, and be sure the RRC district office is kept informed.

(A) Such daily record shall be dated and signed by the vehicle driver and shall show the following information:

(i) identity of the property from which the oil and gas waste is hauled;

(ii) identity of the disposal system to which the oil and gas waste is delivered;

(iii) the type and volume of oil and gas waste received by the hauler at the property where it was generated; and

(iv) the type and volume of oil and gas waste transported and delivered by the hauler to the disposal system.

(B) Such record shall be kept open for the inspection of the commission or its representatives.

(C) Such record shall be kept on file for a period of three years from the date of operation and recordation.

(g) Record keeping.

(1) Oil and gas waste. When oil and gas waste is hauled by vehicle from the lease, unit, or other oil or gas property where it is generated to an off-lease disposal


47

facility, the person generating the oil and gas waste shall keep, for a period of three years from the date of generation, the following records:

(A) identity of the property from which the oil and gas waste is hauled;

(B) identity of the disposal system to which the oil and gas waste is delivered;

(C) name and address of the hauler, and permit number (WHP number) if applicable; and

(D) type and volume of oil and gas waste transported each day to disposal.

(2) Retention of run tickets. A person may comply with the requirements of paragraph (1) of this subsection by retaining run tickets or other billing information created by the oil and gas waste hauler, provided the run tickets orother billing information contain all the information required by paragraph (1) of this subsection.

(3) Examination and reporting. The person keeping any records required by this subsection shall make the records available for examination and copying by members and employees of the commission during reasonable working hours. Upon request of the commission, the person keeping the records shall file such records with the commission.

Note: It’s not likely that these various pieces of information will be mutually consistent. Since each violation of Statewide Rule 8 is a potential fine of up to $10,000 under NRC Sec. 91.002 — and may also support other environmental crimes, such as water pollution — it’s very possible that such an investigation will result in the shutting of any marginal, under-capitalized oil and gas waste hauling company that is taking short-cuts in the pursuit of profits. The fines will simply be too large for the company to continue operating by breaking the law. Since such criminal investigations by local government are extremely rare, be sure to discuss this process and your agency’s intent fully with your county attorney and the RRC field investigators in the district where the permit holder is located.

(h) Penalties. Violations of this section may subject a person to penalties and remedies specified in the Texas Natural Resources Code, Title 3, and any other statutes administered by the commission. The certificate of compliance for any oil, gas, or geothermal resource well may be revoked in the manner provided in Sec. 3.73 of this title (relating to Pipeline Connection; Cancellation of Certificate of Compliance; Severance) (Rule 73) or violation of this section.


48

We recommend a thorough reading of Statewide Rule 8, and the resolution of any questions you have, before attempting to use it in conjunction with NRC Sec. 91.002.

2. Using Other Anti-Pollution Laws and Ordinances

This section briefly describes several other Texas criminal laws that can be used by local governments to deal with recurring problems concerning oil and gas waste and the exploration and development industry. These laws are not designed specifically for oil and gas waste, but the definitions and circumstances covered are so broad as to include those wastes.

a. Municipal Ordinances

If you’re inside a city, don’t overlook developing a good municipal ordinance to control all aspects of drilling, including waste handling and disposal. These codes seem to expand as the city becomes more experienced at dealing with exploration and production inside the city limit, and you can look to the codes of cities with a long history (larger cities in the Barnett Shale area of North Texas, for example) for guidance as to areas that good ordinances often cover.

If the well is being drilled inside the bounds of a municipality, local government is in a great position to assure that the drilling, completion, and ongoing servicing operations happen in a manner that results in the least impact on the community while at the same time supporting the development of this resource. The Flower Mound, Texas, Oil and Natural Gas Ordinance is a comprehensive example that dates from 2003 and illustrates the range of issues that a local ordinance may address. Their basic fee for granting permission to drill a well inside the city limit of Flower Mound is $10,000.

Where the operator is to access water for hydraulic fracturing and other completion and well work over, these activities can be effectively addressed through local ordinance. For instance, the operator may be required to provide his own water, either through digging his own water well or buying it commercially from a source other than the city. Or perhaps the city feels like it has well-water to spare, and the code can require the operator to use city water at some specified cost. The cost of water is the least expensive aspect of a hydraulic fracturing job, but it probably has the biggest limiting impact on the future of the city, especially in more arid parts of Texas. We are all in the process of learning a very important lesson: growth is limited by the resources available, regardless of anybody’s opinion or assurances to the contrary. [Note the


49

reference in section e. TWC Chapter 11 Water Rights below to the University of Texas’ Bureau of Economic Geology’s forecast of a 770% increase in water demand in the Eagle Ford area between 2010 and 2020.]

Still, don’t overlook the possible unintended consequences of good municipal ordinances. For instance, not allowing the use of various sorts of open pits, including drilling mud reserve pits, and requiring the disposal of such waste through land farming or at commercial drilling-fluid disposal sites is a good policy for urban drilling, but may result in rural illegal dumping of this material unless evidence of proper disposal is required by the city. Just because an activity is already regulated by state administrative and criminal law does not necessarily make it off-limits for further regulation through sound municipal ordinances. Don’t inadvertently support bad practices elsewhere.

Ordinances don’t have to be fancy, however, and can just address a particular problem. For instance, rather than use TWC Chapter 29 to respond to waste hauler dumping and slopping criminal violations, some cities have adopted specific ordinances aimed at controlling this same sloppy and dangerous activity. Ordinances are enforced by municipal code officers, and have penalties of up to $500 or $2,000 per day per violation, including the risk of having drilling activities suspended while hearing on violations take place.

Cities with exploration and production activities in progress or anticipated are advised to “get ahead” of the problems by considering adopting good basic process control ordinances now rather than later. It’s OK to plan, and looking at the issues — rather than the specific answers — that more experienced cities in Texas have identified can be helpful in developing sound local ordinances.

b. A Law You CAN'T Use: Texas Litter Abatement Act

As mentioned earlier in this class, over and over, the Texas Litter Abatement Act — THSC Chapter 365 — cannot be used to deal with oil and gas waste; this type of waste is specifically excluded from the definitions of solid waste that is used in this law. In this law, the term solid waste is defined, and then three types of waste products are excluded. The language that puts oil and gas waste outside the Texas Litter Abatement Act is contained in the definition of solid waste used in this law. One of the three things excluded from the definition are:

(iii) waste materials that result from activities associated with the exploration, development, or production of oil or gas or geothermal resources and other substance or material


50

regulated by the Railroad Commission of Texas under Section 91.101, Natural Resources Code; [s.i.c. are not included in the definition of solid waste].

Since Section 91.101 of the Natural Resources Code defines oil and gas waste, those sorts of waste are effectively removed from the Texas Litter Abatement Act.

At the same time, the Litter Abatement Act is the most widely used Texas criminal law to fight general illegal dumping. You should recall that this law sets misdemeanor to state jail felony penalties for disposing, receiving for disposal, and transporting for disposal any litter and solid waste, if the location involved has not been approved by the State.

So the first decision to be made concerning this law is: Don’t make a rookie error and try to use this law just because you happen to know it — and be sure other officers are aware of this limitation when an oil and gas waste dumping or abandoned-spill case arises.

Although the Litter Abatement Act does not apply to oil and gas waste, it does apply to virtually all other sorts of disposed items. Check the definitions of litter and solid waste used in this law to be sure the waste you’re seeing fits within the scope of these definitions. For example, solid waste and litter illegally disposed by residents and owners of off-well-site man-camps can generally be controlled by use of this law.

The penalty for an individual's first conviction are fines to $10,000 and/or confinement of up to two years (C, B, and A Misdemeanors and State Jail Felonies, based on the weight or volume of what was dumped); subsequent violations (if they occur ever in the life of the violator) can be charged at the next highest level from what would be charges based on the weight or volume alone.

Note: This law can probably be useful in dealing with some wastes closely associated with the exploration and production business. For example, if a drilling company has hired a waste hauler to remove the trash and garbage generated by the people living and working at the well site — included in the definition of oil and gas waste — and the waste was dumped in a field someplace, the problem is probably with the contracted waste hauler rather than the drilling company or operator. These haulers are subject to state criminal laws, including THSC Chapter 365.

Trash that began life as oil and gas waste at a well site becomes special waste (a


51

type of solid waste) “when those wastes are to be processed, treated, or disposed of at a solid waste management facility authorized by the TCEQ” (see the Memorandum of Understanding between the TCEQ and the RRC at section d.1., cited above. This MoU reflects the decision of the State Legislature regarding the waste management responsibilities of the two agencies). There’s no indication of when this transformation from oil and gas waste to special waste takes place that I can find. As soon as the trash is placed in a dumpster at the well site by a trash hauler? As soon as the waste leaves the well site itself? Not specified. However, I think it’s safe to treat such trash as special waste when it is dumped in a field on the way to a landfill by a contracted waste hauler. Since special waste is a category of solid waste, it’s dumping is subject to THSC Chapter 365. Talk this situation over with your local prosecutor if you have such a case, but I suspect that handling it as solid waste under THSC Chapter 365 will be the conclusion.

Of course, if there is water anywhere close you can avoid this whole issue by using TWC Sec. 7.145 and treat the event as water pollution. In this instance the definition of waste and other waste are so broad that the dumped material will be included. Or perhaps use THSC Sec. 341.013(c) to treat such dumping as a health nuisance makes more sense in a particular situation. In this statute, whatever the waste, the polluting situation resulting from its being dumped is the focus of the law. So you’ll have some choices to consider. Of course, there is a lot of difference between charging a five-year felony instead of a $200 fine, but the circumstances will dictate the best approach.

In some situations the waste classification may not be at all clear. For instance, if a contractor dumped a load of unused sand that had been chemically treated that is left over from hydraulic fracturing processes. Would this be handled as oil and gas waste — waste that “arises out of or incidental to the drilling for or producing of oil or gas” as defined in NRC Sec. 91.101 — or would it be a non-inert waste material, which meets the definition of solid waste used in the Litter Abatement Act? In most situations the classification of the waste is very easy; in a few, however, knowing how the waste actually should be classified can be complex and require some real thought and discussion with the district RRC office and regional TCEQ folks.

A good example of waste definition ambiguity recently arose near Houston. The items dumped were several large tanks used to store oil at a well site before it was collected for use. The well owner had needed new tanks, so he just rolled these old ones down near the water’s edge — the Houston Ship Channel — and left them on their side, with residue of stored oil still intact. Any storm would have resulted in the tanks, or their


52

residual oil, winding up in the Channel. The city discovered the situation and was dealing with it.

The question immediately became, “Forgetting about the oil residue for a moment, what kind of waste are the old tanks themselves, since that determines the law that can be used to deal with it?” Are the oil and gas waste or litter, as defined in state law? If they are litter, the city could use the Litter Abatement Act; but if they are oil and gas waste, the city couldn’t use that particular law.

The officer noted that the definition of oil and gas waste at NRC Sec. 91.1011(a)(6) included waste from “activities associated with the storage, handling, reclamation, gathering, transportation, or distribution of oil or gas prior to the refining of such oil or prior to the use of such gas in any manufacturing process or as a residential or industrial fuel.” This would certainly include storing oil just produced. Just to be sure, however, the officer asked a field inspector from the RRC to come take a look, and a couple of them did. According to the city employee, the officers acknowledged that the tanks probably met the definition the municipal officer was citing and were, in fact, good examples of non-liquid oil and gas waste. However, and this may have been those particular officers dealing with their large work loads, the field inspectors declined to get involved, saying that they were currently focusing exclusively on liquid oil and gas waste mishandling.

That put the municipal officer in a slightly difficult position, since the RRC’s non-response to this “dry oil and gas waste” didn’t magically transform the tanks into solid waste, thereby clearing the way to use the Texas Litter Abatement Act. The tanks were probably still oil and gas waste, so what to do? Remembering that the felony water pollution statute — TWC Sec. 7.145 — covers virtually all forms of waste and pollutant, the municipal officer decided to use the water pollution laws to deal with the problem. When the officer contacted the owner of the tanks, he was able to cite the correct law that the city would be using to force compliance if it was not gained voluntarily. Faced with the option — having to defend being charged with multiple felony violations of the water pollution laws — the owner immediately cleaned the site to the officer’s satisfaction. This worked as well as it did because the municipal officer took the time to classify the waste properly before proceeding.

There are at least three issues raised by this story:

1. At the time the field inspectors declared that the tanks were oil and gas waste, but that they were not working on that sort of thing, the municipal officer didn’t think that sounded exactly right. However, the path toward a solution the municipal officer took was to find another law to use, not to argue with the field


53

inspectors, call the RRC district office, or escalate the question to the RRC headquarters in Austin. There’s no telling why the field inspectors reached the decision they did; it was probably just a simple error over agency policy. After all, when 150-or-so field inspectors are making 118,484 inspections a year — as the RRC reported happened in FY 2012 — a few mistakes are bound to creep into the system occasionally. Moreover, in any large organization, policies don’t always make it out to the end of the chain of command. I’m absolutely sure that the RRC is focusing on education of it’s field investigators every day.

2. The second issue this story raises is the value of ongoing education of local officers. Because the municipal officer was aware of the power the city had to investigate the dumped tanks as a case of criminal water pollution, an alternative solution was quickly found. Knowing one’s enforcement options is always empowering.

3. The third issue has to do with the action of the owner of the tanks. The municipal officer reported that trying to get this person’s attention had been difficult. However, when the municipal officer began to talk of possible criminal law enforcement, the person decided that the time had come to act, and he “voluntarily” clean up. There’s nothing surprising about this.

The whole story illustrates that enforcement of oil and gas waste violations are a partnership between state and local governments. Moreover, this is a partnership in which it is undisputed that the RRC has been doing a far better job than local governments.

You can read THSC Chapter 365 at several places on the Internet, including www.tidrc.com, by clicking under the “laws” tab on the main menu at that site.

There is also an online class at the www.tidrc.com site in Basic Illegal Dumping Enforcement that might be useful if you need to know more about this particular law, or you can attend one of the free or low-cost classes we provide around the state on this subject.

c. THSC Chapters 341 and 343 Health and Nuisance Laws

When faced with a sanitation issue at the drilling site or small-scale illegal dumping of general trash, you might want to use one of these two laws in response: Texas Health and Safety Code Chapter 341 and THSC Chapter 343. Both deal with general health and public nuisances. The difference is that

Chapter 341 is applicable everywhere in Texas, but




54

Chapter 343 is restricted to the unincorporated areas of the state.

So out in the unincorporated areas where wells are often drilled, both of these are available for use. Like all state laws, these are totally under the control of the State Legislature. Neither has to be “adopted” by a city or county before they are in force; they are available for use now.

If the driller or well operator creating a health nuisance defined in these two violations will simply fix the problem as soon as he learns of it, all would be well. But not everybody works that way; somebody always wants to argue that the law doesn’t apply to them. These two laws — and especially the first one — can be enforced locally and will have two impacts: (1) the violator will have to stop creating the health nuisance; and, (2) the violator will have to spend some time in JP court fighting the charge.

The potential to cost the operator time (rather than a little money) is the greatest threat to him, so, once the violator understands what is at risk, he will probably comply with these laws pretty quickly.

THSC Chapter 341 Minimum Standards of Sanitation and Health Protection MeasuresTHSC Chapter 341 contains a list of twelve defined health nuisances in Section.

341.011. These may be enforced by health department officers, designated county representatives, and Texas peace officers. At the local level they can be enforced either as civil or criminal violations. So if you have a health department you can use — and there are just 61 of these formally organized in Texas — that’s great, but your local police, deputies, T.C.L.E.O.S.E.-certified fire marshals, and constables can also enforce them directly.

As you read the provisions of THSC Chapter 341, available from www.tidrc.com, you will see that many of its provisions deal with highly specific situations. However, we recommend using the following general offense which probably covers any health nuisance violation you can imagine:

THSC Sec. 341.013(c)(c) Waste products, offal, polluting material, spent chemicals, liquors, brines, garbage, rubbish, refuse, used tires, or other waste of any kind may not be stored, deposited, or disposed of in a manner that may cause the pollution of the surrounding land, the contamination of groundwater or surface water, or the breeding of insects or rodents.



55

The penalty for an individual's first offense for a Chapter 341 violation is a fine $10 to $200 and is prosecuted in Justice or Municipal courts; subsequent violations (if they occur within one year of the first conviction) carry penalties of fines $50 to $1,000 and/or confinement to 30 days.

Abatement of the Health Nuisance Under THSC Sec. 341.012One interesting aspect of this law is its Section 341.012 ABATEMENT OF

NUISANCE. Under this provision a local health authority — city or county — can order an abatement of any condition that constitutes a public health nuisance. Few health authorities follow the process established by the State Legislature in this section, but perhaps that is because the power of the health authority to act quickly is not well known. Usually one thinks of a “health authority” being a formally organized Health Department, set-up by the city or county under THSC Chapter 121 LOCAL PUBLIC HEALTH REORGANIZATION ACT. However, there are only about 60 “Full Service Local Health Departments and Districts of Texas,” according to DSHS. A list is at http://www.dshs.state.tx.us/regions/lhds.shtm. Officers from these local health departments routinely enforce violations to THSC Chapter 341, although few probably provide enforcement at well sites — through oversight, most likely, rather than by policy.

Counties without a formally organized local health department can designate an officer to work with the local health authority — and all counties have one of these — to enforce the health nuisance provisions of THSC Chapter 341. Local health authorities are empowered to act under THSC Sec. 341.012 to deal with these health nuisances, and a county can have a person trained to respond under its authority at THSC SEc. 121.003(c). That officer, once trained, can represent the county’s health authority and enforce the health nuisance laws — including the abatement process detained at THSC Sec. 341.012.

A potential problem arises when there is already an officer doing part of this job — enforcing THSC Chapter 366 as the Designated Representative (“DR”) of the TCEQ, who is actually a county employee. This is the program that helps counties do On-Site Sewage Facility inspections. The problem with using the DR at well sites is the fact that the State Legislature has appointed the RRC as the party to manage oil and gas waste (including sewage generated at drilling sites); the TCEQ has no immediate role in this process at well sites. Consequently, a county attempting to use a DR to enforce sewage sanitation at well sites may have a problem. I personally know of one situation where DR was asked to leave a site by a RRC inspector on the grounds that the RRC had jurisdiction. So, how can this problem be solved, since ignoring health nuisance

http://www.dshs.state.tx.us/regions/lhds.shtm

http://www.dshs.state.tx.us/regions/lhds.shtm


56

violations at well sites is not in anybody’s interest (including the guys that have to work in needlessly unsanitary conditions)?

I think the solution — which certainly has to be discussed with your local county attorney — is to (1) use a health department (if you have one) employee who is not a DR to enforce THSC Chapter 341 health nuisance laws; or, (2) for the county to appoint a person to work at the direction of the health authority, as provided for in THSC Sec. 121.003(c). If the only health professional available in a county to do this is already being used as the DR, perhaps that person could wear a “second hat” from time-to-time as the local health authority’s eyes-and-ears at well sites. Your local county attorney would be able to quickly determine if this can happen within the constraints of the county’s participation in the DR program. There are probably other work-arounds the DR “problem,” but this one immediately comes to mind. The “solution” certainly is not to simply ignore the enforcement of Texas health nuisance laws at well sites.

Of course, the easiest solution by far is simply to teach local deputies, constables, T.C.L.E.O.S.E.-certified fire marshals, and police enough of THSC Chapter 341 — and we recommend simply using Sec. 343.013(c) over and over — so that these peace officers can deal with health nuisance violations when they occur at wells. This is a criminal law, and is certainly enforced throughout the state by peace officers, with or without the simultaneous enforcement activities of a local health department.

There are enough of these violations to go around, and when a peace officer observes a violation of THSC Sec. 341.013(c), he or she can just respond. There’s no need to call the health department unless an immediate abatement is needed (not something the police can order). But like all criminal enforcement, courtesy notices should routinely be sent to the district RRC office having jurisdiction.

THSC Chapter 343 Abatement of Public NuisancesThe companion law — THSC Chapter 343 — works in about the same manner, but it

applies only to unincorporated areas of Texas (excepting property carried on tax rolls as “agricultural”). It also defines twelve public nuisances, and enforcement can be from health department officers as well as the same peace officers that enforce Chapter 341: local police, deputies, T.C.L.E.O.S.E.-certified fire marshals, and constables.

This law contains two useful “general condition” definitions that might be useful for dealing with public nuisances in unincorporated areas that one might see at drilling sites:


57

THSC Sec. 343.011(c)(3)(3) maintaining premises in a manner that creates an unsanitary condition likely to attract or harbor mosquitoes, rodents, vermin, or disease-carrying pests;

Note: “Premise” is defined under this law as virtually all private property in unincorporated Texas.

THSC Sec. 343.011(c)(12) (12) Discarding refuse on property that is not authorized for that activity.

This law applies only to private, non-agricultural property in unincorporated areas of the county, so if you use it you’ll want to be sure of the status of the property where the violation occurs. If the violation is on land that is being taxed as agricultural land as designated at the local Tax Assessor’s office, you may want to use Chapter 341 instead (that law contains no agricultural land exemption).

The penalty for an individual's first offense under Chapter 343 is a fine of $50 to $200 and is prosecuted in JP courts; subsequent violations (if they occur ever in the life of the violator) carry penalties of fines $200 to $1,000 and/or confinement to 180 days. Note that this law — and not THSC Chapter 341 — requires a 30-day period following notice form the county before the actual violation has happened. This gives the subject 30 days to correct the situation.

Comparing the Two LawsGenerally, when comparing the differences between THSC Chapter 341 and 343,

many officers come to favor using the first one. Chapter 341 covers all of Texas (including agricultural land, where wells so often are drilled), there is no 30-day wait before an offense is declared to have happened, and there’s always the possibility that the local health department or health authority could also order an abatement, in addition to the criminal charges levied by the peace officer.

However, once the violator understands that the peace officer, county health department officer, or health authority representative has the power to enforce these laws, rapid compliance generally should be expected. People managing oil and gas drilling operations certainly have better things to do than spend their time in JP court explaining to the judge how they should be considered exempt from state laws protecting public health.

d. TWC Chapter 7 (Subchapter E)

Texas Water Code Chapter 7 (Subchapter E) contains around 40 criminal


58

environmental laws that protect our land, air, and water resources. They all apply to the oil and gas exploration and production sector of the Texas economy just like they apply to dry cleaners, liquor store operators, and farmers and ranchers. These laws apply to individuals as well as companies, associations, and other forms of organization. The fines set by the State Legislature for violating man of these are the highest fines found in state law; moreover, individuals can expect significant confinement time for many of these violations too.

In this class we’ll focus on two areas likely to be encountered by local officers: water pollution and illegal outdoor burning.

Water PollutionIf any kind of waste — municipal solid waste or oil and gas waste — is intentionally

or knowingly discharged into or adjacent to “water” (including dry creek beds), a criminal violation may have taken place. There are two laws available to deal with this, one providing for felony-level punishment — TWC Sec. 7.145 — and the other providing for misdemeanor punishment — TWC Sec. 7.147.

Note that the definition of “water” under state law is extremely broad, and included virtually anywhere water would run when it rains. The other definitions that follow will be helpful in understanding the water pollution statutes.

TWC Sec. 26.001 (5) "Water" or "water in the state" means groundwater, percolating or otherwise, lakes, bays, ponds, impounding reservoirs, springs, rivers, streams, creeks, estuaries, wetlands, marshes, inlets, canals, the Gulf of Mexico, inside the territorial limits of the state, and all other bodies of surface water, natural or artificial, inland or coastal, fresh or salt, navigable or nonnavigable, and including the beds and banks of all watercourses and bodies of surface water, that are wholly or partially inside or bordering the state or inside the jurisdiction of the state.

TWC Sec 26.001 (19) "To discharge" includes to deposit, conduct, drain, emit, throw, run, allow to seep, or otherwise release or dispose of, or to allow, permit, or suffer any of these acts or omissions.

TWC Sec 26.001 (13) "Pollutant" means dredged spoil, solid waste, incinerator residue, sewage, garbage, sewage sludge, filter backwash, munitions, chemical wastes, biological materials, radioactive materials, heat, wrecked or discarded equipment, rock, sand, cellar dirt, and industrial, municipal, and agricultural waste discharged into any water in the state. The term:(A) includes:

(i) tail water or runoff water from irrigation associated with an animal feeding


59

operation or concentrated animal feeding operation that is located in a major sole source impairment zone as defined by Section 26.502; or(ii) rainwater runoff from the confinement area of an animal feeding operation or concentrated animal feeding operation that is located in a major sole source impairment zone, as defined by Section 26.502; and

(B) does not include tail water or runoff water from irrigation or rainwater runoff from other cultivated or uncultivated rangeland, pastureland, and farmland or rainwater runoff from an area of land located in a major sole source impairment zone, as defined by Section 26.502, that is not owned or controlled by an operator of an animal feeding operation or concentrated animal feeding operation on which agricultural waste is applied.

TWC Sec 26.001 (6) "Waste" means sewage, industrial waste, municipal waste, recreational waste, agricultural waste, or other waste, as defined in this section.

TWC Sec 26.001 (12) "Other waste" means garbage, refuse, decayed wood, sawdust, shavings, bark, sand, lime, cinders, ashes, offal, oil, tar, dyestuffs, acids, chemicals, salt water, or any other substance, other than sewage, industrial waste, municipal waste, recreational waste, or agricultural waste.

TWC Sec 26.001 (14) "Pollution" means the alteration of the physical, thermal, chemical, or biological quality of, or the contamination of, any water in the state that renders the water harmful, detrimental, or injurious to humans, animal life, vegetation, or property or to public health, safety, or welfare, or impairs the usefulness or the public enjoyment of the water for any lawful or reasonable purpose.

TWC Sec 26.001 (21) "Point source" means any discernible, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants or wastes are or may be discharged into or adjacent to any water in the state.

Examples of water pollution violations involving oil and gas waste include drivers discharging production saltwater into or adjacent to water (including roadside borrow ditches and dry creeks) and dumping used drilling mud near water rather than delivering it to a permitted disposal facility or land application location. Both of the statutes used involve improper disposal of a waste or pollutant. The felony violation requires (along with other elements) that the waste or pollutant be discharged into or adjacent to water; the misdemeanor requires the waste or pollutant to be into the water (adjacent isn’t close enough). Note that the term adjacent is undefined, but prosecutors using this law report that “uphill from water” is a good working definition. Anyplace from which a waste or pollutant will flow into water when it rains is arguably “adjacent” to the water.


60

TWC Sec. 7.145. INTENTIONAL OR KNOWING UNAUTHORIZED DISCHARGE.This is the felony water pollution statute and is becoming more widely used. As you

read the statute below, note that there are two possible separate violations defined here:

(1) discharging a waste or pollutant into or adjacent to water that causes water pollution (or threatens to do so) without a permit to make the discharge. Proving that pollution actually took place (read the definition above) will probably require taking samples of the waste or pollutant, having those samples properly analyzed and interpreted, and defending the procedures used under cross-examination by defense attorneys; and,

(2) discharging a waste or pollutant from a point source (definition above) in violation of TWC Chapter 26 (discharging without a permit in violation of TWC Sec. 26.121(a) being the most common violation). That section reads: Sec. 26.121. UNAUTHORIZED DISCHARGES PROHIBITED. (a) Except as authorized by the commission, no person may: (1) discharge sewage, municipal waste, recreational waste, agricultural waste, or industrial waste into or adjacent to any water in the state.

Thus a saltwater hauler who is dumping this substance from a tank truck (i.e., a point source) into or adjacent to water (which could include a borrow ditch or dry creek bed), without a permit, is probably violating this second provision (which could be asserted without testing for water pollution). Enforcing these violations is certainly within the capacity of local peace officers.

Here’s the language of the felony statute itself:

TWC Sec. 7.145. INTENTIONAL OR KNOWING UNAUTHORIZED DISCHARGE.(a) A person commits an offense if the person, acting intentionally or knowingly with

respect to the person's conduct, discharges or allows the discharge of a waste or pollutant:(1) into or adjacent to water in the state that causes or threatens to cause water pollution unless the waste or pollutant is discharged in strict compliance with all required permits or with an order issued or a rule adopted by the appropriate regulatory agency; or(2) from a point source in violation of Chapter 26 or of a rule, permit, or order of the appropriate regulatory agency.

(b) An offense under this section is punishable for an individual under Section 7.187(1)


61

(C) [Fine of $1,000 to $100,000] or Section 7.187(2)(F) [Confinement to 5 years] or both.

(c) An offense under this section is punishable for a person other than an individual under Section 7.187(1)(D) [Fine of $1,000 to $250,000].

As he or she understands these two ways of proceeding, your prosecutor will probably appreciate the opportunity to prosecute felony cases under (a)(2) alone, which will mean that there will be no need to collect samples and prove that the water was actually polluted by the discharge.

The penalty for an individual's first offense is a fine of $1,000 to $100,000 and/or confinement to five years; subsequent violations carry potential penalties of twice the maximum fine and prison time. There are greater fines for non-individuals, including corporations (i.e., first offense for companies is a fine to $250,000). Punishment for subsequent conviction is a doubling of both the maximum confinement time and maximum fine.

TWC Sec. 7.147. UNAUTHORIZED DISCHARGE.The misdemeanor water pollution charge is similar to TWC Sec. 7.145 except that

no culpable mental state must be proven, but the discharge must be into the water and not simply adjacent, as in the case of the felony. The act itself is sufficient. Note the threshold of 15 p.p.m. measured after the discharge of used oil, presumably restricted to storm water. There is no guidance as to where the water is to be tested, nor any guidance as to where to test if the watercourse is dry at the time of discharge. However, because it is a strict liability statute, this provision is becoming more widely used by local prosecutors.

Here’s the language of the misdemeanor statute itself:

Sec. 7.147. UNAUTHORIZED DISCHARGE. (a) A person commits an offense if the person discharges or allows the discharge of any

waste or pollutant into any water in the state that causes or threatens to cause water pollution unless the waste or pollutant: (1) is discharged in strict compliance with all required permits or with a valid and

currently effective order issued or rule adopted by the appropriate regulatory agency; or

(2) consists of used oil and the concentration of used oil in the waste stream resulting from the discharge as it enters water in the state is less than 15 parts per million following the discharge and the person is authorized to discharge storm water


62

under a general permit issued under Section 26.040.

(b) An offense under this section may be prosecuted without alleging or proving any culpable mental state.

(c) An offense under this section is punishable for an individual under Section 7.187(1)(B) [Fine of $1,000 to $50,000] or Section 7.187(2)(D) [Confinement to one year] or both.

(d) An offense under this section is punishable for a person other than an individual under Section 7.187(1)(C) [Fine of $1,000 to $100,000].

These two sections of the Texas Water Code implement nicely the general point behind Statewide Rule 8 also, which at section (b) reads: “No pollution. No person conducting activities subject to regulation by the commission may cause or allow pollution of surface or subsurface water in the state.” If that’s the policy, TWC Secs. 7.145 and 7.147 can be among the tools used by local governments to implement it.

Illegal Outdoor BurningOccasionally workers may decide to burn general waste at the well site. If this

burning is done without a permit (including a “permit by rule” — “if you follow the rule, you have a permit”), a criminal violation may occur, either at the misdemeanor or felony level.

Misdemeanor illegal outdoor burning can result in a fine of $1,000 to $50,000 and/or 180 days in jail. Misdemeanor burning violations are the most common violations and usually arise when a person violates the Texas Outdoor Burning Rule, which is found at 30 Texas Administrative Code Sec. 111 (Subchapter B). This is an administrative violation which may bring the TCEQ into the enforcement picture and result in administrative penalties being levied. However, violations of the Texas Outdoor Burning Rule are also criminal violations of Texas Water Code Sec. 7.177(a)(5), and such violations carry the penalties indicated above. As is true of all criminal Texas Water Code violations, enforcement officers include local police, deputies, TCLEOSE-certified fire marshals, and constables. The basic concept for officers is: Violating the Texas Outdoor Burning Rule = Breaking the criminal statute at TWC Sec. 7.177(a)(5).

Felony illegal outdoor burning can have massive penalties — $1,000 minimum to $500,000 — and imprisonment of up to five (5) years for an individual violator. Corporate violators are fined at a higher rate. Felony outdoor burning is addressed by two statutes: TWC Sec. 7.182 and TWC Sec. 7.183. If an un-


63

permitted emission of smoke, fumes or any other air contaminant (as defined in THSC Chapter 382 Texas Clean Air Act) puts another person in “imminent danger of death or serious bodily injury,” a felony air violation may have taken place. If the emission of the air contaminant was done in a reckless manner with no intention of the victim being harmed, then the lesses charge of TWC Sec. 7.182 is used, and the maximum fine for an individual is $250,000. On the other hand, if the emission of the air contaminant was done in an intentional or knowing manner, with the additional element that the burner knowingly harmed the victim, then the proper charge is TWC Sec. 7.183, and the $500,000 maximum fine would apply. In each case, if the victim actually dies, the maximum penalty is even greater.

Note that there is an online class in Illegal Outdoor Burning that is available on the TIDRC.com site if you need additional information. You may take that class for credit, or simply use the information on the class home page at http://www.tidrc.com/onlineburning.html.

Other TWC Chapter 7 (Subchapter E) ViolationsAltogether, there are over forty criminal violations found in TWC Chapter 7

(Subchapter E). The ones most likely to be violated by a generator, carrier, or receiver of oil and gas waste are the two indicated above. However, other statutes that may be violated by this industry include dumping lead-acid batteries (each improperly disposed lead-acid battery is a Class A misdemeanor (TWC Sec. 7.185) or mishandling or dumping used motor oil (penalties run from a fine of $1,000 to $50,000 and/of five years confinement under TWC Sec. 7.176).

As local governments become more knowledgeable of the laws available in TWC Chapter 7, they may find specific sections that can be used to address local problems involving oil and gas waste and other forms of waste or pollutants.

e. TWC Chapter 11 Water Rights

Producing gas and oil from shale deposits often requires hydraulic fracturing of the formations in which the gas and oil are held. Or as a friend once said, “When you drill a hole in shale, it’s like drilling a hole in a bowling ball: when you take out the drill, nothing comes out. You have to frack the formation before the oil and gas will flow.”

Hydraulic fracturing is nothing new, however. It’s been around since it was first used in Kansas in 1947, but it wasn’t used on a large scale until 1997 in the Barnett Shale

http://TIDRC.com

http://www.tidrc.com/onlineburning.html

http://www.tidrc.com/onlineburning.html


64

gas area in North Texas. Now this technique is all the rage: approximately 60% of all gas and oil wells worldwide use hydraulic fracturing, and in some states as many as 90% of new wells over the coming decade will use the process (Phillips L. Is oil, gas well fracking a threat to fresh water supplies? High Plains Daily Online Leader & Times, first published April 5, 2012, http://s.coop/s9yk). In Texas approximately 85% of gas wells drilled use hydraulic fracturing in the well completion process (Lee, M. Parched Texans Impose Water-Use Limits for Fracking Gas Wells, Bloomberg Business Week, first published October 6, 2011, http://s.coop/s9zi).

Hydraulic fracturing is an emotional topic, and wild assertions can be heard on all sides. So if you want to know more about the process, you need to be careful about any potential bias of the providers of the information. The EPA released a good study of the process about a year ago “Hydraulic Fracturing and Its Potential Impact on Drinking Water Resources,” and you can access it at http://epa.gov/hfstudy/. This is a nice piece of work, and you can learn a lot about the process by reading this study and looking at the illustrations on this website.

What is beyond dispute, at least at this time, is that this process uses a lot of water. This common well completion process uses 3 to 10 million gallons of water mixed with sand and chemicals in fracturing each new well drilled. These chemicals and sand are called “proppants” because they stay behind to prop open the small fractures in the formation caused by the process, thereby allowing the oil or gas to escape. Not all of the fluids pumped down the well are recovered, but a fair amount is (the EPA studies show initial fluid flowback recovery of 15% to 80% — which is a very wide range). No doubt, some of the produced saltwater that is extracted with the oil and gas is flowback too — most of which eventually winds-up in an injection/disposal well.

Hence increased drilling activity not only results in the need for more injection/disposal wells for this waste fluid, but also puts enormous pressures on the availability of water for other uses. The Business Week article cited above makes this point well:

In the Eagle Ford Shale formation in South Texas, oil and gas companies are forecast to increase water consumption to 44,800 acre-feet of water in 2020, up from 5,800 in 2010, according to a study by the University of Texas’ Bureau of Economic Geology. An acre-foot is about 325,000 gallons, enough to supply three average households for a year.

There is a great deal of research being done on using alternatives to fresh water in fracking, including developing reduced-volume water approaches (such as Baker

http://s.coop/s9yk

http://s.coop/s9zi

http://epa.gov/hfstudy/


65

Hughes’ VaporFrac) and using liquid petroleum gas gel in place of water.

Since there is such great desire to produce oil and gas with water-free methods, there are also various investment scams floating around the industry claiming to have perfected zero-water fracking.

For the immediate future, fracking oil and gas wells will make huge demands on our water resources, as the Business Week article suggests.

Since the counties in the western end of the Eagle Ford Shale formation are some of the driest in Texas, the increased need for water for hydraulic fracturing will compete with the increasing need for domestic, community, and agricultural use for the booming population south of San Antonio. Given the increased need for water to accommodate our growing state and the growing oil and gas industry, and other water users, some individuals and companies may simply attempt to take water illegally for their use.

The provisions governing the use of state water are found at Texas Water Code Sec. 7.142, which sets various criminal penalties for violating different parts of Texas Water Code Chapter 11 WATER RIGHTS.

The beginning point in using state water is that most uses require a permit issued by the TCEQ. A few examples of how TWC Sec. 7.142 works with TWC Chapter 11 to set penalties are:

Violation of TWC Sec. 11.081 - Unlawful use of state water that results from appropriating state water without complying with Chapter 11; carries a fine to $1,000 and/or jail to 180 days;

Violation of TWC Sec. 11.083 - Other unlawful taking such as diverting water onto one’s own land without being entitled to do as defined in Chapter 11; carries a fine to $1,000 and/or jail to 180 days;

Violation of TWC Sec. 11.084 - Selling a permanent water right without having obtained a permit from the TCEQ; carries a fine to $1,000 and/or jail to one year;

Violation of TWC Sec. 11.088 - Destruction of a waterway owned by another or in which another has a property right … or simply opening a gate to enter the property … to steal water from a waterway; carries a fine to $1,000 and confinement to two (2) years (a felony).

Note: This is the major offense in Chapter 11 to my way of thinking. It focuses on breaking into someone’s property for the purpose of stealing water or damaging


66

water works in some manner.

If you observe a person pumping water from a stream or lake, unless the person has a permit from the TCEQ to use this water or has purchased the water from a permitted seller, you may well be observing a criminal violation of TWC Chapter 11. On the other hand, if you see a person pumping anything into a stream, lake, creek, borrow ditch, or dry water course without a TCEQ permit, you’re probably seeing a case of felony or misdemeanor water pollution. Seeing any private sector truck interacting with surface water should set off alarms in the officer’s head and result in an investigation.

Stealing water can be a felony; polluting water is too. But both of these criminal violations will need to be understood and enforced by local peace officers for these practices to stop.

f. TWC Section 7.351 Civil Suits

In dealing with general environmental pollution, such as waste tires that have been dumped, local government has roughly the same power to file civil suits as does the State Attorney General. These powers are found in Texas Water Code Sec. 7.351 and cover violations (1) of most (but not all) state environmental statutes, (2) of the rules that have been adopted to provide administrative enforcement of these statutes, (3) of any permits that have been issued under the statutes and rules; and, (4) of any orders that the TCEQ Commissioners have issued.

You’ll find that most local city and county attorneys are simply unaware of these powers. Sometimes filing a large civil suit is the correct approach to take, especially in those cases where the Litter Abatement Act cannot be used because the dumping happened over three years previously. The civil penalty that a city or county can be awarded can be as much as $25,000 per day, which is split evenly with the state. There is also statutory provision for the recovery of attorney fees.

From TWC Sec. 29.051, however, when the violation is of TWC Chapter 29 or related rule, order, license, permit, or certificate issued by the RRC under that chapter is the issue, the power to use civil suits is limited to the RRC. Likewise, the powers to use civil suit for oil and gas waste violations connected with NRC Chapter 91 also seems to be limited to the RRC.

However, if the violation is of TWC Chapter 26 WATER QUALITY CONTROL, the power to sue does include local government, since that’s one of the statutes specifically listed in TWC Sec. 7.351. So, suppose a person who has been issued a permit to transport produced saltwater to an injection well decides to save money and simply


67

dump the waste into or adjacent to water, the person has not only criminally violated TWC Sec. 7.145 (covering felony water pollution), but apparently has also violated TWC Sec. 26.121(a)(1):

Texas Water Code Sec. 26.121. UNAUTHORIZED DISCHARGES PROHIBITED. (a) Except as authorized by the commission, no person may: (1) discharge sewage, municipal waste, recreational waste, agricultural waste, or industrial waste into or adjacent to any water in the state.

Rather than charge the violator with felony water pollution, the city or county may decide to handle the violation through a civil suit.

We recommend that cities or counties that want to know more about this approach to get in contact with Daniel Ray at Scott, Money & Ray, PLLC, in Greenville. This is the private firm that Hunt County, Greenville, Commerce, Ector County, Grayson County, Sulphur Springs, and several other Texas cities and counties are using to handle these suits. Dan’s number is 903/454-0044 and his email address is [email protected].

I personally think that using civil suits to handle major acts of pollution at the local level could become the most common approach taken, after code enforcement, in the years to come. Usually, as soon as the city or county files the suit, a defense attorney will immediately appear to explain how the pollution was just a big mistake and to make immediate show of good faith by cleaning up the mess. After all, when a polluting company is caught red-handed and sued, about all they can do is to quickly clean the mess and agree to never do it again, in hopes of reaching a fast settlement and avoid paying significant civil damages. Since that is generally what local governments are seeking — abatement of the problem — using civil suits can be a good tool.



68

4. THE WASTE HAULING PERMIT

The RRC issues permits to waste haulers as specified in Statewide Rule 8. These permits are very exact and are good for one year only. The application process requires a formal application be filed with the RRC on their WH-1 form, which can be accessed at http://www.rrc.state.tx.us/forms/forms/og/pdf/wh-1p.pdf.

The process also requires that the applicant submit a list of vehicles that he is requesting be included in the permit as well as an affidavit from each RRC-regulated disposal facility he proposes to use. Once issued, a copy of this permit — which is the WH-1 approved application, the WH-2 list of authorized vehicles (appearing as “Permit Attachment A” on the issued permit), and the WH-3 list of authorized disposal facilities (appearing as “Permit Attachment B” on the issued permit) — must be carried on each vehicle hauling oil and gas waste off-site for hire for disposal. Moving this material on-site and moving this material for re-use to another drilling site does not require a WHP be on board. When any material being relocated for subsequent use is eventually depleted to the point where it is to be finally disposed, then hauling such waste off of the site for hire for disposal requires a WHP.

So the WHP is:1. Issued by the RRC under the provisions of Statewide Rule 8; 2. Required to be on each vehicle hauling oil and gas waste off-site for disposal;3. Is valid for up to a year, with the expiration date appearing on the back of the

WH-1 approved application;4. Has a required attachment — “Permit Attachment A” — that lists the vehicles the

RRC has authorized; and,5. Has another required attachment — “Permit Attachment B” — that lists the

disposal sites authorized by the RRC for use under this permit.

Consequently, any local enforcement involving possible criminal violations of TWC Chapter 29 OIL AND GAS WASTE HAULERS or other state laws should also examine the Waste Hauler’s Permit for any basic errors and apparent violations. Hence every criminal enforcement efforts would normally involve two steps: (1) responding to the underlying violation; and, (2) responding to any associated possible WHP violations.

Just to repeat what was stated in the beginning of this document, any local criminal action involving oil and gas waste hauler violations should also be routinely reported to the regional RRC office having jurisdiction for the county. A

http://www.rrc.state.tx.us/forms/forms/og/pdf/wh-1p.pdf


69

list of the regional offices associated with each Texas county can be seen at http://www.rrc.state.tx.us/forms/maps/ogicd.php and contact information for the regional offices (and a map) is at http://www.rrc.state.tx.us/forms/maps/ogdivisionmap.php.

Certifications Made in WH-1 Application Process

The WHP application process involves making three certifications to the RRC: two from the applicant for the WHP, and one from each disposal system to be included in the permit. Should, upon investigation, any of these prove to be false, there may have been a violation of Penal Code Sec. 37.10 (Tampering with a Government Record) or the provisions of NRC Sec. 91.143 (False Applications, Reports, and Documents and Tampering with Gauges).

1. Certification by the applicant on the WH-1 APPLICATION FOR OIL AND GAS WASTE HAULER’S PERMIT:

“I certify that I am authorized to make this application, that this application was prepared by me or under my supervision and direction, and that the data and facts stated herein are true, correct, and complete to the best of my knowledge. If the above-named hauler is a corporation, I further certify that it is either subject to and not delinquent on the State of Texas Franchise Tax or exempt from or not subject to the tax.”

2. Certification by the applicant on the WH-2 OIL AND GAS WASTE HAULER’S LIST OF VEHICLES

“I certify that the vehicles listed on this form are designed so that they will not leak during transportation.”

3. Certification from each disposal system planned for use by the permit holder on individual WH-3 OIL AND GAS WASTE HAULER’S AUTHORITY TO USE APPROVED DISPOSAL/INJECTION SYSTEM:

“I certify that the waste hauler named above is authorized to dispose of oil and gas waste at the systems identified on this form; that I am authorized to make this report; that the report was prepared by me or under my supervision and direction; and that the data and facts contained herein are true, correct and complete to the best of my knowledge.”

http://www.rrc.state.tx.us/forms/maps/ogicd.php




70


71

Example Waste Hauling Permit: Notes

WH-1 (Face) Application for Oil and Gas Waste Hauler’s Permit (Page 74)1. The face of the WHP is the approved WH-1 application form submitted by the hauler;2. The Hauler named in Block 1 is the official permit holder. This is the name that will be

shown on the rear and both sides of the trailer hauling the waste. Use the online Oil & Gas Directory at http://www.rrc.state.tx.us/data/operators/ogdirectory/index.php to verify this entry;

3. The number in Block 3 — in this case 3315 — is the WHP number that will be shown with the hauler’s name on the sides and back of the trailer in letters of at least two inches in height;

4. The RRC districts for which this permit is valid are shown in Block 4. The counties making up each RRC district are shown on the RRC site at http://www.rrc.state.tx.us/forms/maps/ogicd.php and on the map on the previous page. Waste haulers are not authorized to operate outside of the counties corresponding to the RRC districts shown in Block 4;

5. Current holders of WHPs are shown by RRC district at http://www.rrc.state.tx.us/environmental/environsupport/wastfac/index.php;

6. Block 5 shows the RRC district where the trailer is authorized to be housed;7. WHPs are good for one year.

WH-1 (Back) Permit Conditions (75)1. This is the second page of the WH-1 application form submitted by the person

seeking a WHP. The conditions on this page are a summary of Statewide Rule 8, but only a summary. All other conditions found in Statewide Rule 8 also apply;

2. The expiration date for the WHP is shown in Section L — 03/31/2014 — at the bottom of the back of the WHP permit. This date can be verified at http://www.rrc.state.tx.us/environmental/environsupport/wastfac/index.php ;

3. If the hauler is operating after the expiration date shown in section L, he is hauling without a valid permit;

4. Also note the date of issuance of the WHP is shown on the RRC signature line on the bottom of this same page;

5. Note that the RRC issued this particular WHP within about two weeks of its being submitted, relying on the accuracy of the data and the certification statement on the WHP application face. Intentionally submitted incorrect information would presumably be a felony violation of NRC Sec. 91.143.

http://www.rrc.state.tx.us/data/operators/ogdirectory/index.php



http://www.rrc.state.tx.us/environmental/environsupport/wastfac/index.php





72

WHP Permit Conditions - Details (76)1. This page is simply a clearer version of the conditions printed on the back of

the WH-1 application form;2. Every person handling the WHP is certainly on notice of these key provisions

from Statewide Rule 8;3. Notice particularly requirement F: “Each vehicle must be operated and

maintained in such a manner as to prevent spillage, leakage, or other escape of oil and gas waste during transportation.” Not only has the applicant certified that the vehicles submitted for approval are “designed so that they will not leak during transportation.” Statewide Rule 8 goes even further by setting this requirement that there be no leakage, spillage, or escape of waste during transportation, regardless of the fact that a vehicle is operating under the permit. Any such leakage or spillage or escape of waste would be a permit violation and, consequently, a criminal violation of NRC Sec. 91.002 and probably TWC Sec. 29.044 (and possible other criminal charges). This waste is not supposed to wind-up at any place other than the locations listed in Permit Attachment B - Oil and Gas Waste Hauler Approved Disposal Injection Systems.

WHP Attachment A - Waste Hauler Vehicle Identification (77)1. At the time the WHP application was submitted, a list of the trailers to be used to

transport oil and gas waste was included on a separate WH-2 application form;2. Each of the vehicles listed on this application were certified as follows: “I certify that

the vehicles listed on this form are designed so that they will not leak during transportation”;

3. The vehicles listed on the WH-2 appear as Permit Attachment A - Oil and Gas Waste Hauler Vehicle Identification;

4. A copy of this list of vehicles must be carried in each vehicle subject to the permit;5. Sometimes a hauler will use a vehicle not covered under the permit. When this

happens, the hauler is operating without a valid WHP and is subject to RRC administrative penalties and local criminal enforcement;

6. A vehicle may have been stenciled with the WHP number and hauler’s name, but not ever added to the list of permitted vehicles. This is probably evidence of fraud under PC Sec. 37.10 and/or NRC Sec. 91.143.


73

WHP Attachment B - Approved Disposal Injection Systems (78)1. At the time of application, the applicant must submit a certified statement from each

disposal location that he contemplates using;2. This set of locations will appear as Permit Attachment B - Oil and Gas Waste Hauler

Approved Disposal Injection Systems;3. A copy of these destinations is part of the WHP and must be carried in each vehicle

subject to the permit;4. If a hauler uses a injection facility not on the WHP list that has been approved by the

RRC, he is operating in violation of his WHP;5. Likewise, if the driver decides to illegally dump all or part of his load in an

unauthorized location — such as a ditch or creek — then he has not only violated the terms of the WHP and become subject to RRC administrative penalties, but has also violated multiple criminal provisions of state law, to be handled by local peace officers.

Note that new vehicles and new disposal locations can be easily added legally to an existing WHP through a simple amendment process. However, not all WHP holders are willing to take the time to operate within the laws of the state of Texas.

Operators dependent on WHP holders — and themselves subject to penalties for failure to use haulers possessing valid WHPs — need to impose adequate internal administrative systems to assure that they are working only with holders of valid WHPs.


74


75


76

Permit Conditions On Back of WH-1 Form

PERMIT CONDITIONS

A. This permit authority is limited to the hauling, handling and disposal of oil and gas waste off a lease, unit, or other oil and gas property.

B. This permit authorizes the permitted hauler to dispose of oil and gas waste only at the following disposal/injection systems:

• Commission-permitted disposal/injection systems for which a Form WH-3 has been submitted and which are listed on Permit Attachment B (Approved Disposal/Injection Systems);

• disposal systems operated under authority of a minor permit issued by the Commission; and

• disposal systems permitted by another state agency or another state provided the Commission has granted separate

authorization for the disposal.

C. Each vehicle must be marked on both sides and in the rear with the permitted hauler’s name (exactly as shown on the P-5 Organization Report) and permit number in characters not less than three inches high.

D. This permit authorizes the permitted hauler to use only those vehicles shown on the Commission-issued listing of approved vehicles, Permit Attachment A (Waste Hauler Vehicle Identification).

E. Each vehicle must carry a copy of this permit along with a copy of those parts of Permit Attachment A (Waste Hauler Vehicle Identification) and Permit Attachment B (Approved Disposal/Injection Systems) that are relevant to that vehicle’s activities.

F. Each vehicle must be operated and maintained in such a manner as to prevent spillage, leakage, or other escape of oil andgas waste during transportation.

G. The permitted hauler must make each vehicle available for inspection upon request by Commission personnel.

H. The permitted hauler must compile and keep current a list of all persons by whom the permitted hauler is hired to haul and dispose of oil and gas waste and furnish such list to the Commission upon request.

I. The permitted hauler must adequately train all drivers to ensure compliance with Commission rules, including record keepingrequirements, and adherence to proper emergency response and notification procedures.

J. The permitted hauler must keep a DAILY record of the oil and gas waste hauling operations of each approved vehicle. The daily record, signed and dated by the vehicle driver, must be kept open for Commission inspection and must contain the following information:

1. Identity of the property from which the oil and gas waste is hauled (operator name, lease name and number or other facility name or number, and county; and

2. Type and volume of oil and gas waste received by the hauler at the property where it was generated;

3. Identity of the disposal system to which the oil and gas waste is delivered (operator name, lease name and number or system name, well number or system permit number, and county); and

4. Type and volume of oil and gas waste transported and delivered to the disposal system.

K. This permit is not transferable without the consent of the Commission.

L. This permit expires on __________________________. This permit, unless suspended or revoked for cause shown, will remain valid until the expiration date.


77


78


79

What Could Be Wrong with a Waste Hauler’s Permit?

The WHP on a particular vehicle hauling oil and gas waste for disposal off-site being investigated may be:

1. Completely valid and permitting the activity being investigated — the paperwork is in good order so the officer can deal with the situation that generated the investigation. Most of the WHPs encountered in the field will be in this category. The example WHP shown in the following pages is in this category: it’s perfectly fine; or,

2. Missing from the vehicle, but valid and in-force for the activity being investigated (the hauler’s office has the valid WHP that he proposes to “hot shot” to the scene of the investigation); or,

3. Not valid because:A. No WHP is currently in force for the individual/company being investigated

(perhaps the hauler has no WHP at all or there once was a valid WHP that has expired);

B. The vehicle being used to transport the waste off-site for disposal simply is not listed on the Permit Attachment A;

C. The driver is headed to some disposal location that is not listed on the Permit Attachment B (i.e., North Texas sites listed for a truck operating in the Eagle Ford Shale area or the destination site is local, but just not listed);

D. The WHP is not “intact” (i.e., one or both attachments are for some other WHP permit number than the approved application WH-1 page — this may be an office error by the person who was responsible for duplicating the WHPs for placement in each vehicle — or something else may be going on); or,

E. The WHP is valid and intact, but is for some other vehicle entirely (i.e., the WHP number on the vehicle back and sides differs from the WHP number on the permit carried by the hauler); or,

4. Physically altered without RRC authorization. In this case the WHP is not valid because it has been physically altered without RCC authorization (i.e., expiration date changed; vehicle added to Permit Attachment A; waste disposal site added to Permit Attachment B, etc.). In this case the officer and prosecutor may want to deal with the probable document crimes as well as the waste hauling violations themselves.

Vehicle stops that begin with (1) a missing WHP number and/or permit holder name


80

from the sides and back of a vehicle; or (2) abandoned-spills and dumping of the waste in unauthorized places may progress into other violations when the WHP is itself investigated.

If the WHP is simply missing from the vehicle, but exists back at the permit holders’ office and can be immediately made available by “hot-shot,” perhaps the city or county may want to dismiss the charges at the court appearance or even authorize the officer to issue a warning. Using one of these may be all that is required to assure that a copy of the WHP is carried in all of the vehicles on the permit in the future. I can certainly see this as a teaching — rather than punishment — opportunity.

At the other extreme is the situation where the WHP on-board the vehicle is an actual forgery (i.e., no such WHP number actually exists, or the expiration date of the WHP has been altered without the approval of the RRC, or a vehicle or disposal site has been added to the permit without state approval, etc.). For these forgeries, the prosecutor should consider enforcing the provisions of Penal Code Sec. 37.10 (Tampering with a Government Record) or the provisions of NRC Sec. 91.143 (False Applications, Reports, and Documents and Tampering with Gauges). In both cases, the violations are felonies, and the offender is virtually always the permit holder himself rather than the driver caught using the altered permit. Work closely with the RRC to determine suitable state and local response to such situations, which are hopefully rare.

Between these two extremes falls most of the situations that local officers will encounter, and most of the WHP document-related violations will probably reflect hauling under an expired permit, using a vehicle not listed, or hauling to an unauthorized location — in addition to the TWC Chapter 29 violation that generated the investigation in the first place (i.e., leaking vehicle, abandoned spills, and unmarked or partially-marked vehicle being the most common).

A list of the companies, associations, and individuals holding valid WHPs is maintained on the RRC website at http://www.rrc.state.tx.us/environmental/environsupport/wastfac/index.php. These sites provide immediate access to the RRC data base for each RRC District, where you can verify that a particular WHP being worked with is valid. Checking this list online will quickly verify that the WHP is in force or not and verify the name and address of the holder.

The expiration date for the WHP (at the bottom of the page marked “Permit Conditions”) should be the same as the date on the RRC online file. If these don’t


81

match, the officer should call the RRC office listed on the face of the WHP to determine if (1) the WHP is valid, but the online system is in error for some reason (and small errors creep into all information systems); or, (2) the WHP the officer is considering is invalid. If the WHP carried on the vehicle is invalid, then the driver is possibly hauling oil and gas waste without a permit, a violation of TWC Sec. 29.041.

At the bottom of the RRC WHP district listing on their web site, there is a link to all Commercial Surface Disposal Facilities currently authorized by the RRC to operate in the state. For most of these surface disposal facilities, there is a more detailed link to the actual permit issued by the RRC. If you are wondering about what has been permitted for land farming at a particular location, for instance, the RRC has made it very easy for you to access the information you are seeking.

The next several pages show the example of a completely valid Waste Hauler Permit issued by the Railroad Commission and used to haul oil and gas waste off-site for disposal at RRC-approved sites in Jim Wells, Zapata, and Duval Counties in the Eagle Ford Shale area. All WHPs encountered by officers should be this coherent and complete. Note that the expiration date of the permit appears on the bottom of the back of the approved WH-1 application.


82

5. TEN QUESTIONS AND ANSWERS

1. Isn’t it the Railroad Commission’s job to respond to oil and gas waste dumping and mishandling?

Not by themselves alone.

The State Legislature has given the Railroad Commission the job of regulating most things happening in the oil and gas industry, including regulating oil and gas waste. They do their job in regulating waste by issuing various kinds of waste handling permits, and regulating the permit holders to be sure they are staying within the bounds of their permits. This is the world of administrative and civil enforcement.

Given the size and growth of the regulated oil and gas exploration and production community (and the due processes required by administrative law) the Railroad Commission does a great job of responding to most violators. It should be noted that virtually all of the rule violations to which the RRC responds are discovered by the RRC investigators doing their job. For instance, the report to the State Legislature for FY 2012 showed the RRC performed 118,484 field inspections and discovered 55,960 violations through their efforts. During the same time the agency received 727 complaints from other sources and resolved 561 of them. By any standards, that’s impressive.

There are three ways that any activity can be regulated: through administrative enforcement, through civil enforcement, and through criminal enforcement. The RRC uses the first two of these approaches, but, having no criminal enforcement unit, does not undertake the third.

Criminal environmental enforcement in general is provided almost exclusively by police, constables, deputies, fire marshals, and other certified peace officers working for local governments. If a local community is to benefit from criminal enforcement of Texas criminal laws regulating oil and gas waste, it will most likely be through the efforts of its own officers.

The state has extremely limited resources to use in policing general environmental crimes, and even fewer resources to police environmental crimes involving oil and gas waste. Moreover, most of the criminal statutes available are misdemeanors. Consequently, just about all government response to criminal


83

violations involving oil and gas waste will come from cities and counties, just as the State Legislature anticipated.

It is important, however, for local police to keep the RRC informed of cases involving oil and gas waste. The strongest approach is for local peace officers doing these cases to get to know the district RRC administrative investigator.

2. Can local governments enforce criminal laws against persons with a Waste Hauler’s Permit?

Yes.

Local governments have primary response authority within their jurisdictions for most criminal violations, regardless of whether a person holds a state permit or not.

The enforcement and regulation system works best when everybody just does their their thing: the Railroad Commission does administrative and civil enforcement of violations involving oil and gas waste; local peace officers respond to criminal cases, and local prosecutors resolve the criminal charges, either through agreements with the guilty party or local trials.

The criminal laws used to deal with oil and gas waste violations are just more criminal laws. Instead of being found in the Penal Code, they are found in the Water Code, the Health and Safety Code, and in the Natural Resources Code.

3. What are the easiest criminal laws for local governments to use to deal with oil and gas waste?

ALL OF THE CRIMINAL LAWS BELOW CAN BE ENFORCED BY LOCAL PEACE OFFICERS

Texas Water Code Chapter 29 can be used to deal with most visible violations by both permitted and unpermitted oil and gas waste haulers (such as dumping on streets and using unmarked vehicle). Investigation of one of these two common offenses might result in the discovery that a person is transporting without a valid Waste Hauler’s Permit, which is another criminal violation. The specific sections of the law used are:


84

TWC Sec. 29.041 HAULING WITHOUT PERMIT.No hauler may haul or dispose of oil and gas waste off the lease, unit, or other oil or gas property where it is generated unless the hauler has a permit issued under this chapter.

TWC Sec. 29.042. EXCEPTIONS. (a) A person may haul oil and gas waste for use in connection with drilling or servicing an oil or gas well without obtaining a hauler's permit under this chapter.(b) The commission by rule may except from the permitting requirements of this chapter specific categories of oil and gas waste other than saltwater.

TWC Sec. 29.043. USING HAULERS WITHOUT PERMIT. No person may knowingly utilize the services of a hauler to haul or dispose of oil and gas waste off the lease, unit, or other oil or gas property where it is generated if the hauler does not have a permit as required under this chapter.

This is particularly interesting since it establishes a violation simply to use an unpermitted hauler. Moreover, Statewide Rule 8 requires that the generator and receiver of the waste — the oil or gas production well and the waste injection well — actively determine that the waste hauler has a WHP permit. However, there have probably been few cases where an unpermitted hauler was stopped and processed by a police officer, and that stop become the basis for issuing a violation under TWC Sec. 29.043 against a generator or receiver of the waste, but this will be a next step in local enforcement. As soon as haulers learn that they need to follow their permits — and as soon as waste generators and receivers understand that they are subject to enforcement for failure to use a permitted hauler — waste will be handled better. So why not create a “Welcome from the Sheriff” letter to production and disposal well operators reminding them of their responsibility only to use permitted haulers, and explaining the provisions of TWC Sec. 29.043?

TWC Sec. 29.044. DISPOSING OF OIL AND GAS WASTE. (a) No hauler may dispose of oil and gas waste on public roads or on the surface of public land or private property in this state in other than a railroad commission-approved disposal facility without written authority from the railroad commission.

When oil and gas waste is spilled and then abandoned by the driver — or


85

dumped on a street or on private property without using a RRC-approved disposal facility or having written authority from the RRC — this is the provision commonly cited by local officers. Note that it is a violation of Statewide Rule 8 to transport oil and gas waste in a vehicle that leaks [see Statewide Rule 8 Sec. F(1)(c)(ix)], and, if officers enforce NRC Sec. 91.002, the fact that the vehicle was operated in such a manner that it leaked can be the basis for additional criminal fines (maximum: $10,000). However, at this time officers seem to be using TWC Sec. 29.044 to deal with road spills.

(b) No hauler may dispose of oil and gas waste on property of another in other than a railroad commission-approved disposal facility without the written authority of the landowner.

This violation would cover such situations where used drilling mud was being landfarmed, but, on investigation of a complaint, the land owner had not given his permission for this to take place. Such permission has to be in writing. Perhaps an employee of an absentee land owner was allowing landfarming without the owner’s permission in order to make illicit money.

TWC Sec. 29.045 USE OF UNMARKED VEHICLES. No person who is required to have a permit under this chapter may haul oil and gas waste in a vehicle that does not bear the owner's name and the hauler's permit number. This information shall appear on both sides and the rear of the vehicle in characters not less than three inches high.

If a vehicle is being used to haul oil and gas waste, it must be properly marked with both the permit holder’s name and the valid WHP number on the back and sides, in characters at least three inches high. A WHP with no name — or a name with no WHP — would violate this provision, as would proper marking on fewer than the three locations specified. When the officer checks the WHP permit itself (required by Statewide Rule 8 to be carried on each vehicle), he or she will want to verify that the name and WHP number on the back and sides of the vehicle matches the name and WHP number on the copy of the permit carried on the vehicle.

TWC Sec. 29.046 PENALTY. A person who violates any provision of this chapter is guilty of a misdemeanor and upon conviction is punishable by a fine of not less than $100 nor more than $1,000 or by confinement in the county jail for not more than 10 days or by both.


86

Texas Natural Resources Code Sec. 91.002 can be used if the person is violating a rule contained in Statewide Rule 8. Reaching this conclusion will generally happen in discussion with a RRC investigator, but occasionally by the officer alone (many of the Statewide Rule 8 requirements are so basic as to easily enforceable by local officers).

An offense under this section is punishable by a fine of not more than $10,000 a day for each day a violation is committed. Venue for prosecution of an alleged violation of this section is in a court of competent jurisdiction in the county in which the violation is alleged to have occurred.

Texas Health and Safety Code Sec. 341.013(c) can be used to deal with public health nuisances everywhere in the state, for all industries and types of waste. Enforcement by local health departments, officers trained by local health authorities, and peace officers works well in using this law to deal with basic health nuisance violations. There is a serious question of whether or not a county employee who is a “Designated Representative” of the TCEQ can enforce this violation or THSC Chapter 366 against violations arising from oil and gas exploration and production activities. So, avoid this potential conflict by using another county officer (who is not the “DR”) to enforce this section, or otherwise resolve this issue with the TCEQ. The criminal law shown below can be enforced by all peace officers in Texas. The penalty is low, but it interrupts operations and causes the violator to have to appear before a JP or Municipal judge.

THSC Sec. 341.013(c)(c) Waste products, offal, polluting material, spent chemicals, liquors, brines, garbage, rubbish, refuse, used tires, or other waste of any kind may not be stored, deposited, or disposed of in a manner that may cause the pollution of the surrounding land, the contamination of groundwater or surface water, or the breeding of insects or rodents.

Texas Water Code Sec. 7.145 and Sec. 7.147 if the waste is dumped into or adjacent to water. Look at the definition of “other waste” in TWC Chapter 26.001(12) for the best description of what might have originated as oil and gas waste, but is now other waste that is being used to pollute water. If a hauler disposes virtually any kind of waste — including the materials we’re discussing here — into or adjacent to water in Texas, without a permit, he or she has probably committed a crime. These water pollution violation carries very high potential penalties:


87

FOR FELONY WATER POLLUTION (TWC Sec. 7.145) The penalty for an individual's first offense is a fine of $1,000 to $100,000 and/or confinement to five years; subsequent violations carry potential penalties of twice the maximum fine and prison time. There are greater fines for non-individuals, including corporations (i.e., first offense for companies is a fine to $250,000). Punishment for subsequent conviction is a doubling of both the maximum confinement time and maximum fine.

FOR MISDEMEANOR WATER POLLUTION (TWC Sec. 7.147) The penalty for an individual's first offense is a fine of $1,000 to $50,000 and/or confinement to one year; subsequent violations carry potential penalties of twice the maximum fine and prison time. There are greater fines for non-individuals, including corporations (i.e., first offense for companies is a fine to $100,000). Punishment for subsequent conviction is a doubling of both the maximum confinement time and maximum fine.

TWC Sec. 7.182 and 7.183 can be used to deal with felony illegal burning. If the violator is releasing an air contaminant note: this is a defined term that includes smoke) without a TCEQ-issued permit (or permit-by-rule) that places another person (not including a first-responder) in imminent danger of death or serious bodily injury, one of these provisions may have been violated. The penalties for these two felony illegal burning violations are huge ($1,000 to $500,000 and/or confinement to 5 years).

TWC Sec. 7.177(a)(5) can be used to deal with misdemeanor illegal burning. This section is the criminal violation used when the underlying act is a violation of the Texas Outdoor Burning Rule. This is the misdemeanor outdoor burning rule, which is enforced administratively and civilly by the TCEQ (even against violations in the oil and gas industry) and criminally and civilly by local governments. Check with your local county attorney before using this section as there is some potential confusion as to penalties.

4. Does the Railroad Commission have to give it’s permission for local governments to act?

No. The RRC does it’s thing administratively and civilly, and local government does its thing criminally.


88

However, it’s always good policy for local officers doing criminal enforcement to know and work with their RRC district counterparts doing administrative investigations. Local officers should always let the district RRC office know about cases that local government is working and resolving.

5. Why can’t local government use the same law it does to stop general illegal dumping?

Because the State Legislature says you can’t.

The most commonly used law to stop illegal dumping is the Texas Litter Abatement Act — Texas Health and Safety Code Chapter 365. This law sets fines and confinement for various illegal dumping acts (i.e., dumping, allowing dumping, receiving, hauling for dumping) based on the weight or volume of solid was or litter involved.

Since this law deals specifically with solid waste and litter, officers pay strict attention to what’s included — and not included — in those definitions.

As it turns out, the State Legislature has provided language in the definition of solid waste that specifically removes oil and gas waste from that category:

THSC Sec. 361.003(36)(A) The term (i.e. solid waste) does not include (iii) waste materials that result from activities associated with the exploration, development, or production of oil or gas or geothermal resources and other substance or material regulated by the Railroad Commission of Texas under Section 91.101, Natural Resources Code.

Since oil and gas wastes are excluded from the definition of waste covered by the Litter Abatement Act, you have to use other laws to deal with this type of waste.

As it turns out, this is not a real problem: the State Legislature has provided several specific criminal laws to use in dealing with oil and gas waste and most of the more commonly used environmental criminal laws can still be used.


89

6. Can local governments use other general anti-pollution laws to control oil and gas waste?

Often times, they can.

As long as you’re not using THSC Chapter 365 — the Texas Litter Abatement Act — you can use many of the general environmental criminal laws to respond to oil and gas waste issues.

Just be sure you know and use the laws listed at Question 3 above, and you should be all set.

Also, note that sewage and general trash generated as a byproduct of the oil and gas exploration and production process at a well or other related location is considered to be oil and gas waste. Please help educate the general public — and elected officials — that items generally under the jurisdiction of the TCEQ are NOT, if it’s oil and gas waste.

However, trash and sewage improperly disposed at trailer camps, “man-camps,” and other places folks live off-site when they are not working are not considered to be exempt from any of the state criminal environmental laws and rules. Local government can use the standard environmental criminal laws to respond to violations in these places — including using THSC Chapter 365 to deal with illegal dumping.

7. Why isn’t the TCEQ acting to control oil and gas waste in our community?

The State Legislature has specifically assigned that task to the Railroad Commission … and to local government.

For a clarification of the overall decisions of the State Legislature concerning which agency is to handle various types of waste, read the Memorandum of Understanding between the Railroad Commission of Texas (RRC) and the Texas Commission on Environmental Quality (TCEQ) at Title 16 T.A.C. Sec. 3.30. The attorneys and managers from the two agencies have followed the direction of the State Legislature for decades, and are regularly updating this document that expresses their common understanding. One interesting section reads:


90

16 T.A.C. Sec. 3.30(d)(1). Several types of waste materials can be generated during the drilling, operation, and plugging of these [oil, gas, or geothermal resource] wells. These waste materials include drilling fluids (including water-based and oil-based fluids), cuttings, produced water, produced sand, waste hydrocarbons (including used oil), fracturing fluids, spent acid, workover fluids, treating chemicals (including scale inhibitors, emulsion breakers, paraffin inhibitors, and surfactants), waste cement, filters (including used oil filters), domestic sewage (including waterborne human waste and waste from activities such as bathing and food preparation), and trash (including inert waste, barrels, dope cans, oily rags, mud sacks, and garbage). Generally, these wastes, whether disposed of by discharge, landfill, land farm, evaporation, or injection, are subject to the jurisdiction of the RRC. Wastes from oil, gas, and geothermal exploration activities subject to regulation by the RRC when those wastes are to be processed, treated, or disposed of at a solid waste management facility authorized by the TCEQ under 30 TAC Chapter 330 are, as defined in 30 TAC §330.3(148) (relating to Definitions), "special wastes."

So the Railroad Commission handles the enforcement of administrative violations concerning oil and gas waste, and local government handles the enforcement of criminal violations.

The TCEQ may be able to answer questions for local government as part of their Small Business and Local Government Assistance program, but the State Legislature has placed enforcement responsibility for oil and gas waste violations with the RRC and local government.

But in all honesty, the problem in controlling oil and gas waste is not at the state level. Most problems arise from local governments not using the criminal enforcement powers given by the State Legislatures, as is true when the issue is controlling general illegal dumping, water pollution, and other environmental violations.

8. We’re smart people here in our local government; why have we never heard of our enforcement powers?

Environmental criminal laws are almost never covered in law enforcement academies, so the peace officers trained in these academies are generally unaware of the state criminal laws protecting our air, land, and water resources. The criminal


91

laws provided to local governments to control oil and gas waste are even more unknown.

The same situation exists in Texas law schools, where most of our criminal prosecutors are trained. If a law student wants to study environmental law, he or she may be limited to one class that covers federal law and the administrative enforcement thereof. Specific classes on Texas criminal law — and on the criminal laws that can be used for oil and gas waste — are simply not available. Moreover, when the city administrator decides to further his or her education an earns a Masters of Public Administration degree, it’s extremely likely that the entire program had no mention at all of the criminal environmental laws that can be used to control waste of all types, including oil and gas waste.

This general lack of training can result in a situation where several local officials find themselves agreeing with each other (incorrectly) that “This is a state problem; there’s nothing we can do.”

In some situations, local officials may even be under the impression that citizens don’t expect them to respond to oil and gas waste violations. However, as citizens become wiser as to what to expect, these views can change quickly.

A few tires: maybe easy to ignore Drilling mud: politically impossible to ignore

It’s really that simple. Local government is a very busy place these days, and nobody is loafing. But if police, prosecutors, city attorneys, and elected officials all agree that “There is nothing that we can do,” it can be difficult to break through that road block.


92

But all local officials have to do is to look around. Many cities and counties have developed outstanding programs of local environmental protection through enforcing state criminal laws. Now more and more counties and cities in the oil patch are learning that criminal laws exist to stop bad hauling and dumping of oil and gas waste, and that using these laws just takes a little learning and a decision.

9. Doesn’t local criminal enforcement of laws against oil and gas waste make the industry mad?

No. Just the opposite.

If a law is on the books in Texas, the oil and gas industry definitely supports it. Otherwise, it wouldn’t be on the books at all.

Virtually all handling, hauling, and disposal of oil and gas waste is done by the industry in a very responsible and lawful manner: the companies doing things right certainly don’t want to be underpriced by outlaws.

Moreover, when outlaws make a mess, it reflects on the entire oil and gas industry, not just on the bad actors. Since virtually all oil and gas operators want to be in a long, stable, friendly relationship with their neighbors, there is wide support for using state and local authorities to keep things clean.

As local officers get to know the oil and gas operators in their community, they will find that virtually all of the industry supports enforcement against violators.

10. What if local government doesn’t want to act to control oil and gas waste dumping?

Well, that would be pretty weird. The’ll probably have a needlessly messy, and dangerous, city and county.

It’s a matter of math. The RRC has a limited number of inspectors — around 150 oil and gas field inspectors statewide — and they are looking at the entire oil and gas exploration and production business. Their work is not limited to oil and gas waste violations. Moreover, Texans and others are drilling more and more wells every day. The well count for February 2013 shows almost 400,000 wells of all types (oil and gas, active, capped, and injection/disposal) in Texas, of which almost


93

270,000 are active oil and gas production wells.

Every one of these wells produces some kind of waste throughout its life. The American Petroleum Institute estimates that about 1.21 barrels of waste are generated per foot drilled, over the life of a well (see note below).

In FY 2012, the RRC reports that its inspectors performed 118,484 inspections of these wells and other permitted facilities. That’s a lot of work for a small crew trying to cover 8.6% of the land mass of the “Lower 48” states.

What’s the chance that a RRC inspector will be immediately available when an event of outlaw hauling or oil and gas waste dumping happens? Isn’t it much more likely that local police, deputies, constables, fire marshals, and other sworn officers already working to protect the city and county will be immediately available?

The RRC investigators are doing all they can to respond to oil and gas waste problems throughout the state, but if local government is going to sit there and watch problems happen, with no local response, there’s not much chance things will get better as fast as citizens want.

Note: The estimate of 1.21 barrels (50.8 gallons) of waste per foot drilled was calculated in a 2000 paper from the American Petroleum Institute called “Overview of Exploration and Production Waste Volumes and Waste Management Practices in the United States.” The estimate was based on a 1985 API study, which the paper asserts was still a valid estimate in 1995. This is a widely used figure in the literature discussing oil and gas waste, both for and against various practices. See, for instance, a 2011 series of articles in the Denton Record Chronicle called “Practice lays waste to land” that reports on some negative effects of landfarming; various presentations oil and gas well service companies; and, “Environmental Benefits of Advanced Oil and Gas Exploration and Production Technology” by the Department of Energy. When everybody agrees on a particular figure, and that figure comes from one twenty-or-thirty-year old source, it’s reasonable to question it. Technology moves forward in most fields, including reducing the amount of oil and gas waste generated in the exploration and production process. What seems beyond debate is that (1) there is a lot of oil and gas waste generated, in spite of efforts to reduce the volume; (2) most of it is in the form of produced saltwater; (3) most of it winds-up in injection/disposal wells; (4) all waste handling methods — including landfarming — are controversial; (5) the RRC doesn’t have enough field inspectors to be everywhere at once; (6) when the cats away the mice will play; and, (7) local governments are not doing all they can to control oil and gas wastes in their boundaries.


94

6. CONCLUSION

The conclusions we reach are pretty straight-forward, and they are based on the notion that it’s time for local governments to start learning and using their considerable powers to help control oil and gas waste:

1. The State Legislature has passed the laws they think are necessary for handling all types of waste in Texas, including oil and gas waste.

2. Through the actions of the State Legislature, the TCEQ is generally not involved in regulating oil and gas waste;

3. Through the actions of the State Legislature, the RRC is responsible for administrative and civil regulation of the oil and gas industry in general and for regulating oil and gas waste specifically;

4. The RRC controls oil and gas waste movement and disposal primarily through their Waste Handler’s Permit program, as described in Statewide Rule 8 (Title 16 T.A.C. Sec. 3.8);

5. However, there is simply too many wells, too much waste, and too many operators for the RRC’s limited field inspector staff to spot and respond to every waste handling and disposal violation;

6. That’s where local governments come in: the State Legislature has provided several specific criminal laws that can be used locally to respond to oil and gas waste hauling and disposal violations;

7. Additionally, thanks to the State Legislature, most (but not all) standard criminal environmental laws can also be used by local governments to respond to violations;

8. However, local peace officers, prosecutors, elected officials, and government staff are generally unaware — untrained — on the content and use of the general anti-pollution laws that they can use, much less of the specific criminal laws provided to deal with oil and gas waste crimes.

9. Cities and counties are slowly realizing that they can use criminal anti-pollution


95

laws to respond to oil and gas waste violations, just as they have learned to respond to general illegal dumping, water pollution, and air contamination;

10.Citizens are learning that there are specific things that their city and county can do to respond to outlaw hauling and illegal dumping of oil and gas waste, and they expect local officials to act.

That’s the end of this class reading assignment.

All you have to do now is to return to the Class Home Page, take to simple test there (just click on the link), and send us the certification statement in Step 4 that you did all the work yourself. The password for the test is on the email message you received when you registered. If you can’t fine that email, just let me know and I’ll send you the password.

In return, I’ll send your Certificate of Completion for this class.

Thanks for reading this material and taking this class. If you found any errors — in typing or thinking — please let me know and we’ll make the corrections.

All the best, and please contact me if you have any questions about this or other local environmental enforcement issue.


96

7. REFERENCE APPENDIX

Texas Water Code Chapter 29

WATER CODECHAPTER 29. OIL AND GAS WASTE HAULERS SUBCHAPTER A. GENERAL PROVISIONS Sec. 29.001. SHORT TITLE. This chapter may be cited as the Oil and Gas Waste Haulers Act. Sec. 29.002. DEFINITIONS. In this chapter:

(1) "Person" means an individual, association of individuals, partnership, corporation, receiver, trustee, guardian, executor, or a fiduciary or representative of any kind.

(2) "Railroad commission" means the Railroad Commission of Texas.(3) "Oil and gas waste" means oil and gas waste as defined by Section 91.1011, Natural

Resources Code, and includes water containing salt or other mineralized substances produced by drilling an oil or gas well or produced in connection with the operation of an oil or gas well.

(4) "Hauler" means a person who transports oil and gas waste for hire by any method other than by pipeline.

SUBCHAPTER B. PERMITS Sec. 29.011. APPLICATION FOR PERMIT.

Any person may apply to the railroad commission for a permit to haul and dispose of oil and gas waste.

Sec. 29.012. APPLICATION FORM.

The railroad commission shall prescribe a form on which an application for a permit may be made and shall provide the form to any person who wishes to submit an application.

Sec. 29.013. CONTENTS OF APPLICATION.

The application for a permit shall:(1) state the number of vehicles the applicant plans to use for hauling oil and gas waste;(2) affirmatively show that the vehicles are designed so that they will not leak during

transportation of oil and gas waste;(3) include an affidavit from a person who operates an approved system of oil and gas

A

75650.65131

29.001

75651.65131

29.002

75652.65132

B

75653.65133

29.011

75654.65133

29.012

75655.65134

29.013

75656.65135


97

waste disposal stating that the applicant has permission to use the approved system;(4) state the applicant's name, business address, and permanent mailing address; and(5) include other relevant information required by railroad commission rules.

Sec. 29.014. REJECTING AN APPLICATION.

If an application for a permit does not comply with Section 29.013 of this code or with reasonable rules of the railroad commission, the railroad commission may reject the application.

Sec. 29.015. APPLICATION FEE.

With each application for issuance, renewal, or material amendment of a permit, the applicant shall submit to the railroad commission a nonrefundable fee of $100. Fees collected under this section shall be deposited in the oil and gas regulation and cleanup fund.

Sec. 29.018. SUSPENSION; REFUSAL TO RENEW. The railroad commission may suspend or refuse to renew a permit for a period not to exceed one year if the permittee:

(1) violates the provisions of this chapter;(2) violates reasonable rules promulgated under Section 29.031 of this code; or(3) does not maintain his operation at the standards that entitled him to a permit under

Section 29.013 of this code. Sec. 29.019. APPEAL.

Any person whose permit application is refused, whose permit is suspended, or whose application for permit renewal is refused by the railroad commission may file a petition in an action to set aside the railroad commission's act within the 30-day period immediately following the day he receives notice of the railroad commission's action.

Sec. 29.020. SUIT TO COMPEL RAILROAD COMMISSION TO ACT.

If the railroad commission does not act within a reasonable time after a person applies for a permit or for renewal of a permit, the applicant may notify the railroad commission of his intention to file suit. After 10 days have elapsed since the day the notice was given, the applicant may file a petition in an action to compel the railroad commission to show cause why it should not be directed by the court to take immediate action.

Sec. 29.021. VENUE.

The venue in actions under Sections 29.019 and 29.020 of this code is fixed exclusively in the district courts of Travis County.

SUBCHAPTER C. COMMISSION AUTHORITY

29.014

75657.65136

29.015

75658.134355

29.018

75659.65138

29.019

75660.65139

29.020

75661.65140

29.021

75662.65141


98

Sec. 29.031. RULEMAKING POWER.

The railroad commission shall adopt rules to effectuate the provisions of this chapter. Sec. 29.032. COPIES OF RULES.

The railroad commission shall print the rules and provide copies to persons who apply for them.

Sec. 29.033. EFFECTIVE DATE OF RULES. No rule or amendment to a rule is effective until after the 30-day period immediately following the day on which a copy of the rule is filed with the Secretary of State.

Sec. 29.034. ACCESS TO PROPERTY. Members and employees of the railroad commission, on proper identification, may enter public or private property to inspect and investigate conditions relating to the hauling of oil and gas waste, to monitor compliance with a rule, permit, or other order of the railroad commission, or to examine and copy, during reasonable working hours, those records or memoranda of the business being investigated. Members or employees acting under the authority of this section who enter an establishment on public or private property shall observe the establishment's posted safety, internal security, and fire protection rules.

SUBCHAPTER D. OFFENSES; PENALTIES Sec. 29.041. HAULING WITHOUT PERMIT.

No hauler may haul or dispose of oil and gas waste off the lease, unit, or other oil or gas property where it is generated unless the hauler has a permit issued under this chapter.

Sec. 29.042. EXCEPTIONS.

(a) A person may haul oil and gas waste for use in connection with drilling or servicing an oil or gas well without obtaining a hauler's permit under this chapter.

(b) The commission by rule may except from the permitting requirements of this chapter specific categories of oil and gas waste other than saltwater.

Sec. 29.043. USING HAULERS WITHOUT PERMIT.

No person may knowingly utilize the services of a hauler to haul or dispose of oil and gas waste off the lease, unit, or other oil or gas property where it is generated if the hauler does not have a permit as required under this chapter.

Sec. 29.044. DISPOSING OF OIL AND GAS WASTE. (a) No hauler may dispose of oil and gas waste on public roads or on the surface of public

land or private property in this state in other than a railroad commission-approved

29.031

75664.65142

29.032

75665.65143

D

75668.65146

29.041

75669.65146

29.042

75670.65147

29.043

75671.65148


99

disposal facility without written authority from the railroad commission.(b) No hauler may dispose of oil and gas waste on property of another in other than a

railroad commission-approved disposal facility without the written authority of the landowner.

Sec. 29.045. USE OF UNMARKED VEHICLES. No person who is required to have a permit under this chapter may haul oil and gas waste in a vehicle that does not bear the owner's name and the hauler's permit number. This information shall appear on both sides and the rear of the vehicle in characters not less than three inches high

Sec. 29.046. PENALTY.

A person who violates any provision of this chapter is guilty of a misdemeanor and upon conviction is punishable by a fine of not less than $100 nor more than $1,000 or by confinement in the county jail for not more than 10 days or by both.

Sec. 29.047. ADMINISTRATIVE PENALTY.

(a) If a person violates the provisions of this chapter or a rule, order, license, permit, or certificate issued under this chapter, the person may be assessed a civil penalty by the railroad commission.

(b) The penalty may not exceed $10,000 a day for each violation. Each day a violation continues may be considered a separate violation for purposes of penalty assessments.

(c) In determining the amount of the penalty, the railroad commission shall consider the permittee's history of previous violations of this chapter, the seriousness of the violation, any hazard to the health or safety of the public, and the demonstrated good faith of the permittee or person charged.

Sec. 29.048. PENALTY ASSESSMENT PROCEDURE.

(a) A civil penalty may be assessed only after the permittee or person charged with a violation described under Section 29.047 of this code has been given an opportunity for a public hearing.

(b) If a public hearing has been held, the railroad commission shall make findings of fact, and it shall issue a written decision as to the occurrence of the violation and the amount of the penalty that is warranted, incorporating, when appropriate, an order requiring that the penalty be paid.

(c) If appropriate, the railroad commission shall consolidate the hearings with other proceedings under this chapter.

(d) If the permittee or person charged with the violation fails to avail himself of the opportunity for a public hearing, a civil penalty may be assessed by the railroad commission after it has determined that a violation did occur and the amount of the penalty that is warranted.

29.046

75674.65151

29.047

75675.65152

29.048

75676.65153


100

(e) The railroad commission shall then issue an order requiring that the penalty be paid. Sec. 29.049. PAYMENT OF PENALTY; REFUND.

(a) On the issuance of an order finding that a violation has occurred, the railroad commission shall inform the permittee and any other person charged within 30 days of the amount of the penalty.

(b) Within the 30-day period immediately following the day on which the decision or order is final as provided in Subchapter F, Chapter 2001, Government Code, the person charged with the penalty shall:(1) pay the penalty in full; or(2) if the person seeks judicial review of either the amount of the penalty or the fact of

the violation, or both:(A) forward the amount to the railroad commission for placement in an escrow

account; or(B) in lieu of payment into escrow, post a supersedeas bond with the railroad

commission under the following conditions. If the decision or order being appealed is the first final railroad commission decision or order assessing any administrative penalty against the person, the railroad commission shall accept a supersedeas bond. In the case of appeal of any subsequent decision or order assessing any administrative penalty against the person, regardless of the finality of judicial review of any previous decision or order, the railroad commission may accept a supersedeas bond. Each supersedeas bond shall be for the amount of the penalty and in a form approved by the railroad commission and shall stay the collection of the penalty until all judicial review of the decision or order is final.

(c) If through judicial review of the decision or order it is determined that no violation occurred or that the amount of the penalty should be reduced or not assessed, the railroad commission shall, within the 30-day period immediately following that determination, if the penalty has been paid to the railroad commission, remit the appropriate amount to the person, with accrued interest, or where a supersedeas bond has been posted, the railroad commission shall execute a release of such bond.

(d) Failure to forward the money to the railroad commission within the time provided by Subsection (b) of this section results in a waiver of all legal rights to contest the violation or the amount of the penalty.

(e) Judicial review of the order or decision of the railroad commission assessing the penalty shall be under the substantial evidence rule and shall be instituted by filing a petition with the district court of Travis County, Texas, and not elsewhere, as provided for in Subchapter G, Chapter 2001, Government Code.

Sec. 29.050. RECOVERY OF PENALTY.

Civil penalties owed under Sections 29.047-29.049 of this code may be recovered in a civil

29.049

75677.65154

29.050

75678.65155


101

action brought by the attorney general at the request of the railroad commission. SUBCHAPTER E. CIVIL ENFORCEMENT Sec. 29.051. CIVIL PENALTY.

(a) A person who violates this chapter, a rule or order of the railroad commission adopted under this chapter, or a term, condition, or provision of a permit issued under this chapter, is subject to a civil penalty of not to exceed $10,000 for each offense. Each day a violation is committed is a separate offense.

(b) An action to recover the penalty under Subsection (a) of this section may be brought by the railroad commission in any court of competent jurisdiction in the county in which the offending activity occurred, in which the defendant resides, or in Travis County.

Sec. 29.052. INJUNCTION.

The railroad commission may enforce this chapter, a valid rule or order made under this chapter, or a term or condition of a permit issued by the railroad commission under this chapter by injunction or other appropriate remedy. The action may be brought in a court of competent jurisdiction in the county in which the offending activity has occurred, in which the defendant resides, or in Travis County.

Sec. 29.053. PROCEDURE.

(a) At the request of the railroad commission, the attorney general shall institute and conduct a suit in the name of the state for injunctive relief or other appropriate remedy or to recover a civil penalty as provided by Section 29.051 or 29.052 of this code or for both injunctive relief or other appropriate remedy and recovery of a civil penalty.

(b) A party to a suit may appeal from a final judgment as in other civil cases.

E

75679.65156

29.051

75680.65156

29.052

75681.65157

29.053

75682.65158


102

Natural Resources Code Chapter 91

NATURAL RESOURCES CODETITLE 3. OIL AND GASSUBTITLE B. CONSERVATION AND REGULATION OF OIL AND GASCHAPTER 91. PROVISIONS GENERALLY APPLICABLE SUBCHAPTER A. GENERAL PROVISIONS Sec. 91.001. DEFINITIONS. In this chapter:

(1) "Commission" means the Railroad Commission of Texas.(2) "Gas" means natural gas.(3) "Oil" means crude oil and crude petroleum oil.

Sec. 91.002. CRIMINAL PENALTY.

(a) A person who wilfully or with criminal negligence violates Section 91.101 of this code or a rule, order, or permit of the commission issued under that section commits an offense.

(b) An offense under Subsection (a) of this section is punishable by a fine of not more than $10,000 a day for each day a violation is committed.

(c) Venue for prosecution of an alleged violation of this section is in a court of competent jurisdiction in the county in which the violation is alleged to have occurred.

Sec. 91.003. ADDITIONAL ENFORCEMENT AUTHORITY.

(a) In addition to other authority specifically granted to the commission under this chapter, the commission may enforce this chapter or any rule, order, or permit of the commission adopted under this chapter in the manner and subject to the conditions provided in Chapters 81 and 85 of this code, including the authority to seek and obtain civil penalties and injunctive relief as provided by those chapters.

(b) If the enforcement authority in Section 81.054, Natural Resources Code, is used to institute a civil action alleging a violation of an NPDES permit issued under this chapter, the attorney general may not oppose intervention by a person who has standing to intervene as provided by Rule 60, Texas Rules of Civil Procedure.

SUBCHAPTER B. DUTIES RELATING TO OIL AND GAS WELLS Sec. 91.011. CASING.

(a) Before drilling into the oil or gas bearing rock, the owner or operator of a well being drilled for oil or gas shall encase the well with good and sufficient wrought iron or steel casing or with any other material that meets standards adopted by the commission, particularly where wells could be subjected to corrosive elements or high pressures and temperatures, in a manner and to a depth that will exclude surface or fresh water from

A

51678.44571

91.001

51679.44571

91.002

51680.44572

91.003

51681.44573

B

51682.44574

91.011

51683.128010


103

the lower part of the well from penetrating the oil or gas bearing rock, and if the well is drilled through the first into the lower oil or gas bearing rock, the well shall be cased in a manner and to a depth that will exclude fresh water above the last oil or gas bearing rock penetrated.

(b) The commission shall adopt rules regarding the depth of well casings necessary to meet the requirements of this section.

Sec. 91.0115. CASING; LETTER OF DETERMINATION.

(a) The commission shall issue, on request from an applicant for a permit for a well to be drilled into oil or gas bearing rock, a letter of determination stating the total depth of surface casing required for the well by Section 91.011.

(b) The commission may charge a fee in an amount to be determined by the commission for a letter of determination.

(c) The commission shall charge a fee not to exceed $75, in addition to the fee required by Subsection (b), for processing a request to expedite a letter of determination. Money collected under this subsection may be used to study and evaluate electronic access to geologic data and surface casing depths under Section 91.020.

Sec. 91.012. WATER IN WELLS.

(a) In boring any well for oil or gas, if a person pierces any cap rock or other geological formation in a manner that will cause a flow of saltwater or fresh water injurious to an already bored oil well or any oil or gas deposits and that will probably result in the injury of the oil or gas field or already bored oil or gas well, the person shall abandon immediately all work on the well if the flow of water cannot be cased off and shall plug and fill the well in a manner and with materials that will stop the flow of the water.

(b) No well owner or person boring a well described under Subsection (a) of this section may remove the casing from the drilled well until the flow of water is stopped either by casing off or plugging the well.

(c) The provisions of this section apply only if the cap rock or other formation is pierced at a depth below the horizon at which oil or gas has been discovered already.

Sec. 91.013. PLUGGING AND SHUTTING IN WELLS BY OTHERS.

(a) If the owner of a well described in Subsection (a) of Section 91.012 of this code neglects or refuses to have the well plugged or shut in for more than 20 days after written notice is given to him, the owner or operator of adjacent or neighboring land may enter the premises on which the well is located and have the well plugged if it is an abandoned well or shut in if it is not abandoned, in the manner provided by law.

(b) Notice may be given to the owner of the well either by personal service on the owner or by posting the notice at a conspicuous place at or near the well.

(c) The reasonable cost and expense incurred in plugging or shutting in the well shall be paid by the owner of the well and may be recovered as debts of like amount are

91.0115

137989.128011

91.012

51684.44575

91.013

51685.44576


104

recovered under the law. Sec. 91.014. PETITION TO RESTRAIN WASTE.

(a) In addition to any other penalties, a district judge, in term time or vacation time, shall hear and determine any petition that is filed to restrain the waste of gas in violation of this subchapter and may issue mandatory or restraining orders that in his judgment are necessary.

(b) The petition may be filed by any citizen of this state and does not have to allege further financial interest of the petitioner in the state's natural resources than that possessed in common with all citizens of the state.

Sec. 91.015. PREVENTION OF WASTE.

Operators, contractors, drillers, pipeline companies, and gas distributing companies that drill for or produce oil or gas or pipe oil or gas for any purpose shall use every possible precaution in accordance with the most approved methods to stop and prevent waste of oil, gas, or both oil and gas in drilling and producing operations, storage, piping, and distribution and shall not wastefully use oil or gas or allow oil or gas to leak or escape from natural reservoirs, wells, tanks, containers, or pipes.

Sec. 91.016. CONFINING GAS TO ORIGINAL STRATUM.

(a) If gas located in a gas-bearing stratum known to contain gas in paying quantities is encountered in a well drilled for oil or gas in this state, the gas shall be confined to its original stratum until it can be produced and used without waste.

(b) Gas-bearing strata shall be adequately protected from infiltrating water.

Sec. 91.017. USING GAS IN THE OPEN AIR. (a) Any person who uses gas in lights in the open air or in or around derricks shall turn off

the gas not later than 8 a. m. of each day the lights are burning or are used and shall not turn the lights on or relight them between 8 a. m. and 5 p. m.

(b) The person consuming the gas and using the burners in the open air shall enclose them in glass globes or lamps.

Sec. 91.018. ILLUMINATION.

No person, copartnership, or corporation may use gas for illuminating purposes in flambeau lights. The use of "jumbo" burners or other burners consuming no more gas than the "jumbo" burners is not prohibited.

Sec. 91.019. STANDARDS FOR CONSTRUCTION, OPERATION, AND MAINTENANCE OF ELECTRICAL POWER LINES.

An operator shall construct, operate, and maintain an electrical power line serving a well site or other surface facility employed in operations incident to oil and gas development and

91.014

51686.44577

91.015

51687.44578

91.016

51688.44579

91.017

51689.44580

91.018

51690.44581

91.019

128394.117766


105

production in accordance with the National Electrical Code published by the National Fire Protection Association and adopted by the Texas Commission of Licensing and Regulation under Chapter 1305, Occupations Code.

Sec. 91.020. ELECTRONIC GEOLOGIC DATA.

The commission shall work cooperatively with other appropriate state agencies to study and evaluate electronic access to geologic data and surface casing depths necessary to protect usable groundwater in this state.

SUBCHAPTER C. STANDARD GAS MEASUREMENT Sec. 91.051. TITLE.

This subchapter may be cited as the Standard Gas Measurement Law. Sec. 91.052. DEFINITION.

(a) The term "cubic foot of gas" or "standard cubic foot of gas" means the volume of gas contained in one cubic foot of space at a standard pressure base and at a standard temperature base.

(b) The standard pressure base shall be 14.65 pounds per square inch absolute, and the standard temperature base shall be 60 degrees Fahrenheit. If the conditions of pressure and temperature differ from this standard, conversion of the volume from these conditions to the standard conditions shall be made in accordance with the ideal gas laws, corrected for deviation.

Sec. 91.053. COMMISSION DETERMINATION.

The commission shall determine the average temperature of gas as produced in each oil and gas field in Texas, other variable factors necessary to calculate the metered volumes in accordance with the ideal gas laws, and the variable factors to correct for deviation from the ideal gas laws in each of the oil and gas fields in the state.

Sec. 91.054. NOTICE AND HEARING.

On request of any interested person, the commission shall give proper notice and hold a public hearing before making a determination under Section 91.053 of this code.

Sec. 91.055. FINDINGS AND RULES.

On making the determination, the commission promptly shall make its findings and shall adopt reasonable field rules that may be necessary to effectuate the provisions of this subchapter.

Sec. 91.056. USE OF FINDINGS AND FIELD RULES.

(a) Any person may use the findings and field rules of the commission for any purposes

91.020

137990.128012

C

51691.44582

91.051

51692.44582

91.052

51693.44583

91.053

51694.44584

91.054

51695.44585

91.055

51696.44586

91.056

51697.44587


106

under this subchapter.(b) If the findings or field rules are not used as provided in Subsection (a) of this section in

determining volumes under this subchapter, the volumes otherwise determined shall be corrected to the basis of the standard cubic foot of gas as defined in Section 91.052 of this code.

Sec. 91.057. METHOD OF REPORTING.

A person required to report volumes of gas under the laws of this state shall report the volumes in number of standard cubic feet calculated and determined under the provisions of this subchapter.

Sec. 91.058. SALE, PURCHASE, DELIVERY, AND RECEIPT OF GAS.

(a) Each sale, purchase, delivery, and receipt of gas by volume made in this state by, for, or on behalf of an oil and gas lease owner, royalty owner under a lease, or other mineral interest owner shall be made and the gas shall be measured, calculated, purchased, delivered, and accounted for on the basis of a standard cubic foot of gas as defined in this subchapter and determined under this subchapter.

(b) If the provisions of this subchapter operate to change the basis of measurement provided in existing contracts, the price for gas, including royalty gas, provided for in the contracts shall be adjusted to compensate for the change in the method of measuring the volume of gas delivered under the contracts if either the purchaser or seller so desires.

(c) This section is intended to protect parties to contracts in existence on October 4, 1949, so that the total amount of money paid for a volume of gas purchased or required to be accounted for under these contracts shall remain unaffected by this subchapter.

Sec. 91.059. CONSTITUTIONALITY.

If the provisions of Section 91.058 of this code or any part of that section are held to be invalid or unconstitutional by the courts, the remaining portions of this subchapter shall become ineffective and inoperative.

Sec. 91.061. CIVIL SUIT.

None of these provisions shall prevent an aggrieved person from maintaining a civil suit for damages in the county or counties in which the gas is produced.

Sec. 91.062. APPLICABILITY OF CERTAIN PROVISIONS. None of the provisions of Sections 91.058 through 91.061 of this code affect or apply to purchases or sales made on any basis other than a volume basis.

SUBCHAPTER D. PREVENTION OF POLLUTION

91.057

51698.44588

91.058

51699.44589

91.059

51700.44590

91.061

51701.44591

91.062

86061.74749

D

50458.43509

91.101

51703.44593


107

Sec. 91.101. RULES AND ORDERS. Text of section effective until delegation of RCRA authority to Railroad Commission of Texas

(a) To prevent pollution of surface water or subsurface water in the state, the commission shall adopt and enforce rules and orders and may issue permits relating to:(1) the drilling of exploratory wells and oil and gas wells or any purpose in connection

with them;(2) the production of oil and gas, including:

(A) activities associated with the drilling of injection water source wells which penetrate the base of useable quality water;

(B) activities associated with the drilling of cathodic protection holes associated with the cathodic protection of wells and pipelines subject to the jurisdiction of the commission;

(C) activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants;

(D) activities associated with any underground natural gas storage facility, provided the terms "natural gas" and "storage facility" shall have the meanings set out in Section 91.173, Natural Resources Code;

(E) activities associated with any underground hydrocarbon storage facility, provided the terms "hydrocarbons" and "underground hydrocarbon storage facility" shall have the meanings set out in Section 91.201, Natural Resources Code; and

(F) activities associated with the storage, handling, reclamation, gathering, transportation, or distribution of oil or gas prior to the refining of such oil or prior to the use of such gas in any manufacturing process or as a residential or industrial fuel;

(3) the operation, abandonment, and proper plugging of wells subject to the jurisdiction of the commission; and

(4) the discharge, storage, handling, transportation, reclamation, or disposal of oil and gas waste as defined in Section 91.1011 of this subchapter, or of any other substance or material associated with any operation or activity regulated by the commission under Subdivisions (1), (2), and (3) of this subsection.

(b) Notwithstanding the provisions of Subsection (a) of this section, the authority granted to the commission by this section does not include the authority to adopt and enforce rules and orders or issue permits regarding the collection, storage, handling, transportation, processing, or disposal of waste arising out of or incidental to activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants if that waste is a hazardous waste as defined by the administrator of the United States Environmental Protection Agency pursuant to the federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., as amended.


108

Sec. 91.101. RULES AND ORDERS. Text of section effective upon delegation of RCRA authority to Railroad Commission of Texas

To prevent pollution of surface water or subsurface water in the state, the commission shall adopt and enforce rules and orders and may issue permits relating to:(1) the drilling of exploratory wells and oil and gas wells or any purpose in connection with

them;(2) the production of oil and gas, including:

(A) activities associated with the drilling of injection water source wells which penetrate the base of useable quality water;

(B) activities associated with the drilling of cathodic protection holes associated with the cathodic protection of wells and pipelines subject to the jurisdiction of the commission;

(C) activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants;

(D) activities associated with any underground natural gas storage facility, provided the terms "natural gas" and "storage facility" shall have the meanings set out in Section 91.173, Natural Resources Code;

(E) activities associated with any underground hydrocarbon storage facility, provided the terms "hydrocarbons" and "underground hydrocarbon storage facility" shall have the meanings set out in Section 91.201, Natural Resources Code; and

(F) activities associated with the storage, handling, reclamation, gathering, transportation, or distribution of oil or gas prior to the refining of such oil or prior to the use of such gas in any manufacturing process or as a residential or industrial fuel;

(3) the operation, abandonment, and proper plugging of wells subject to the jurisdiction of the commission; and

(4) the discharge, storage, handling, transportation, reclamation, or disposal of oil and gas waste as defined in Section 91.1011 of this subchapter, or of any other substance or material associated with any operation or activity regulated by the commission under Subdivisions (1), (2), and (3) of this section.

Sec. 91.1011. OIL AND GAS WASTE. Text of section effective until delegation of RCRA authority to Railroad Commission of Texas

(a) In this subchapter, "oil and gas waste" means waste that arises out of or incidental to the drilling for or producing of oil or gas, including waste arising out of or incidental to:(1) activities associated with the drilling of injection water source wells which penetrate

91.101

51703.44594

91.1011

51704.44595


109

the base of useable quality water;(2) activities associated with the drilling of cathodic protection holes associated with the

cathodic protection of wells and pipelines subject to the jurisdiction of the commission;

(3) activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants;

(4) activities associated with any underground natural gas storage facility, provided the terms "natural gas" and "storage facility" shall have the meanings set out in Section 91.173, Natural Resources Code;

(5) activities associated with any underground hydrocarbon storage facility, provided the terms "hydrocarbons" and "underground hydrocarbon storage facility" shall have the meanings set out in Section 91.201, Natural Resources Code; and

(6) activities associated with the storage, handling, reclamation, gathering, transportation, or distribution of oil or gas prior to the refining of such oil or prior to the use of such gas in any manufacturing process or as a residential or industrial fuel.

(b) "Oil and gas waste" includes saltwater, brine, sludge, drilling mud, and other liquid, semiliquid, or solid waste material, but does not include waste arising out of or incidental to activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants if that waste is a hazardous waste as defined by the administrator of the United States Environmental Protection Agency pursuant to the federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., as amended.

Sec. 91.1011. OIL AND GAS WASTE. Text of section effective upon delegation of RCRA authority to Railroad Commission of Texas

(a) In this subchapter, "oil and gas waste" means waste that arises out of or incidental to the drilling for or producing of oil or gas, including waste arising out of or incidental to:(1) activities associated with the drilling of injection water source wells which penetrate

the base of useable quality water;(2) activities associated with the drilling of cathodic protection holes associated with the

cathodic protection of wells and pipelines subject to the jurisdiction of the commission;

(3) activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants;

(4) activities associated with any underground natural gas storage facility, provided the terms "natural gas" and "storage facility" shall have the meanings set out in Section 91.173, Natural Resources Code;

(5) activities associated with any underground hydrocarbon storage facility, provided the

91.1011

51704.44596


110

terms "hydrocarbons" and "underground hydrocarbon storage facility" shall have the meanings set out in Section 91.201, Natural Resources Code; and

(6) activities associated with the storage, handling, reclamation, gathering, transportation, or distribution of oil or gas prior to the refining of such oil or prior to the use of such gas in any manufacturing process or as a residential or industrial fuel.

(b) "Oil and gas waste" includes saltwater, brine, sludge, drilling mud, and other liquid, semiliquid, or solid waste material.

Sec. 91.1012. ACCESS TO PROPERTY AND RECORDS.

Members and employees of the commission, on proper identification, may enter public or private property to inspect and investigate conditions relating to the quality of water in the state, to inspect and investigate conditions relating to development of rules, orders, or permits issuable under Section 91.101 of this code, to monitor compliance with a rule, permit, or other order of the commission, or to examine and copy, during reasonable working hours, those records or memoranda of the business being investigated. Members or employees acting under the authority of this section who enter an establishment on public or private property shall observe the establishment's safety, internal security, and fire protection rules.

Sec. 91.1013. APPLICATION FEES.

(a) With each application for a fluid injection well permit, the applicant shall submit to the commission a nonrefundable fee of $200. In this section, "fluid injection well" means any well used to inject fluid or gas into the ground in connection with the exploration or production of oil or gas other than an oil and gas waste disposal well regulated by the commission pursuant to Chapter 27, Water Code.

(b) With each application for a permit to discharge to surface water under this chapter and commission rules, other than a permit for a discharge that meets National Pollutant Discharge Elimination System requirements for agricultural or wildlife use, the applicant shall submit to the commission a nonrefundable fee of $300.

(c) Fees collected under this section shall be deposited in the oil and gas regulation and cleanup fund.

Sec. 91.1015. GROUNDWATER PROTECTION REQUIREMENTS.

The commission shall adopt rules to establish groundwater protection requirements for operations that are within the jurisdiction of the commission, including requirements relating to the depth of surface casing for wells.

Sec. 91.102. ADDITIONAL PERSONNEL.

The commission is directed to employ additional personnel necessary to administer this subchapter and related laws and rules and orders adopted by the commission.

91.1012

51705.44597

91.1013

51706.44598

91.1015

137991.128013

91.102

51707.44599


111

Sec. 91.103. PERSONS REQUIRED TO EXECUTE BOND, LETTER OF CREDIT, OR CASH DEPOSIT.

Any person, including any firm, partnership, joint stock association, corporation, or other organization, required to file an organization report under Section 91. 142 of this code shall execute and file with the commission a bond, letter of credit, or cash deposit.

Sec. 91.104. BONDS, LETTERS OF CREDIT, CASH DEPOSITS, AND WELL-SPECIFIC PLUGGING INSURANCE POLICIES.

(a) The commission shall require a bond, letter of credit, or cash deposit to be filed with the commission as provided by Subsection (b).

(b) A person required to file a bond, letter of credit, or cash deposit under Section 91.103 who is an inactive operator or who operates one or more wells must, at the time of filing or renewing an organization report required by Section 91.142, file:(1) an individual bond as provided under Section 91.1041;(2) a blanket bond as provided under Section 91.1042; or(3) a letter of credit or cash deposit in the same amount as required for an individual

bond under Section 91.1041 or a blanket bond under Section 91.1042.(c) A person required to file a bond, letter of credit, or cash deposit under Section 91.103

who operates one or more wells is considered to have met that requirement for a well if the well bore is included in a well-specific plugging insurance policy that:(1) is approved by the Texas Department of Insurance;(2) names this state as the owner and contingent beneficiary of the policy;(3) names a primary beneficiary who agrees to plug the specified well bore;(4) is fully prepaid and cannot be canceled or surrendered;(5) provides that the policy continues in effect until the specified well bore has been

plugged;(6) provides that benefits will be paid when, but not before, the specified well bore has

been plugged in accordance with commission rules in effect at the time of plugging; and

(7) provides benefits that equal the greatest of:(A) an amount equal to $2 for each foot of well depth, as determined in the manner

specified by the commission, for the specified well;(B) if the specified well is a bay well and regardless of whether the well is producing

oil or gas, the amount required under commission rules for a bay well that is not producing oil or gas;

(C) if the specified well is an offshore well and regardless of whether the well is producing oil or gas, the amount required under commission rules for an offshore well that is not producing oil or gas; or

(D) the payment otherwise due under the policy for plugging the well bore.

91.103

51708.44601

91.104

51709.75929

91.1041

50459.44604


112

Sec. 91.1041. INDIVIDUAL BOND. (a) A person required to file a bond, letter of credit, or cash deposit under Section 91.103

who operates one or more wells may file a bond in an amount equal to $2 for each foot of well depth for each well.

(b) Notwithstanding Subsection (a), the commission by rule shall set the amount of the bond for an operator of one or more bay or offshore wells at a reasonable amount that exceeds the amount provided by Subsection (a).

(c) When calculating under Subsection (a) the amount of the bond a person who operates one or more wells is required to file, the commission shall exclude a well if the well bore is included in a well-specific plugging insurance policy described by Section 91.104(c).

(d) If the inclusion of a bay or offshore well whose well bore is included in a well-specific plugging insurance policy described by Section 91.104(c) in the calculation under Subsection (b) of the amount of the bond an operator of one or more bay or offshore wells is required to file would result in an increase in the amount of the bond that would otherwise be required, the rules must provide for the exclusion of the well from the calculation.

Sec. 91.1042. BLANKET BOND.

(a) A person required to file a bond, letter of credit, or cash deposit under Section 91.103 may file a blanket bond to cover all wells for which a bond, letter of credit, or cash deposit is required as follows:(1) a person who operates 10 or fewer wells shall file a $25,000 blanket bond;(2) a person who operates more than 10 but fewer than 100 wells shall file a $50,000

blanket bond; and(3) a person who operates 100 or more wells shall file a $250,000 blanket bond.

(b) Notwithstanding Subsection (a), the commission by rule shall set the amount of the bond for an operator of bay or offshore wells at a reasonable amount that exceeds the amount provided by Subsection (a)(1), (2), or (3), as applicable.

(c) When calculating the number of an operator's wells for purposes of Subsection (a), the commission shall exclude a well if the well bore is included in a well-specific plugging insurance policy described by Section 91.104(c).

(d) If the inclusion of a bay or offshore well whose well bore is included in a well-specific plugging insurance policy described by Section 91.104(c) in the calculation under Subsection (b) of the amount of the bond an operator of bay or offshore wells is required to file would result in an increase in the amount of the bond that would otherwise be required, the rules must provide for the exclusion of the well from the calculation.

Sec. 91.105. BOND CONDITIONS.

Each bond required by Section 91.103 shall be conditioned that the operator will plug and abandon all wells and control, abate, and clean up pollution associated with an operator's oil and gas activities covered under the bond in accordance with the law of the state and the

91.1042

51710.44606

91.105

51711.75930


113

permits, rules, and orders of the commission. This section does not apply to a well-specific plugging insurance policy described by Section 91.104(c).

Sec. 91.106. EXECUTION OF BOND.

Each bond shall be executed by a corporate surety authorized to do business in this state and shall be renewed and be continued in effect until the conditions have been met or release is authorized by the commission.

Sec. 91.107. NEW BOND, LETTER OF CREDIT, OR CASH DEPOSIT.

If an active or inactive well is transferred, sold, or assigned by its operator, the commission shall require the party acquiring the well to file a new bond, letter of credit, or cash deposit as provided by Section 91.104(b), and the financial security of the prior operator shall continue to be required and to remain in effect, and the commission may not approve the transfer of operatorship, until the new bond, letter of credit, or cash deposit is provided or the commission determines that the bond, letter of credit, or cash deposit previously submitted to the commission by the person acquiring the well complies with this subchapter. A transfer of a well from one entity to another entity under common ownership is a transfer for purposes of this section. This section does not apply to a well bore that is included in a well-specific plugging insurance policy described by Section 91.104(c).

Sec. 91.108. DEPOSIT AND USE OF FUNDS.

Subject to the refund provisions of Section 91.1091, if applicable, proceeds from bonds and other financial security required pursuant to this chapter and benefits under well-specific plugging insurance policies described by Section 91.104(c) that are paid to the state as contingent beneficiary of the policies shall be deposited in the oil and gas regulation and cleanup fund and, notwithstanding Sections 81.068 and 91.113, may be used only for actual well plugging and surface remediation.

Sec. 91.109. FINANCIAL SECURITY FOR PERSONS INVOLVED IN ACTIVITIES OTHER THAN OPERATION OF WELLS.

(a) A person applying for or acting under a commission permit to store, handle, treat, reclaim, or dispose of oil and gas waste may be required by the commission to maintain a performance bond or other form of financial security conditioned that the permittee will operate and close the storage, handling, treatment, reclamation, or disposal site in accordance with state law, commission rules, and the permit to operate the site. However, this section does not authorize the commission to require a bond or other form of financial security for saltwater disposal pits, emergency saltwater storage pits (including blow-down pits), collecting pits, or skimming pits provided that such pits are used in conjunction with the operation of an individual oil or gas lease. Subject to the refund provisions of Section 91.1091, proceeds from any bond or other form of financial security required by this section shall be placed in the oil and gas regulation and cleanup

91.106

51712.44608

91.107

51713.75931

91.108

51714.134248

91.109

51715.44613


114

fund. Each bond or other form of financial security shall be renewed and continued in effect until the conditions have been met or release is authorized by the commission.

(b) In addition to the financial security requirements of Subsection (a), a person required to file a bond, letter of credit, or cash deposit under Section 91.103 who is involved in activities other than the ownership or operation of wells must file the bond, letter of credit, or cash deposit at the time of filing or renewing an organization report required by Section 91.142 according to the following schedule:(1) no bond, letter of credit, or cash deposit if the person is a:

(A) local distribution company;(B) gas marketer;(C) crude oil nominator;(D) first purchaser;(E) well servicing company;(F) survey company;(G) saltwater hauler;(H) gas nominator;(I) gas purchaser; or(J) well plugger; or

(2) a bond, letter of credit, or cash deposit in an amount not to exceed $25,000 if the person is involved in an activity that is not associated with the ownership or operation of wells and is not listed in Subdivision (1).

(c) A person who engages in more than one activity or operation, including well operation, for which a bond, letter of credit, or cash deposit is required under this subchapter is not required to file a separate bond, letter of credit, or cash deposit for each activity or operation in which the person is engaged. The person is required to file a bond, letter of credit, or cash deposit only in the amount required for the activity or operation in which the person engages for which a bond, letter of credit, or cash deposit in the greatest amount is required. The bond, letter of credit, or cash deposit filed covers all of the activities and operations for which a bond, letter of credit, or cash deposit is required under this subchapter.

Sec. 91.1091. REFUND.

The commission shall refund the proceeds from a bond, letter of credit, or cash deposit required under this subchapter if:

(1) the conditions that caused the proceeds to be collected are corrected;(2) all administrative, civil, and criminal penalties relating to those conditions are paid;

and(3) the commission has been reimbursed for all costs and expenses incurred by the

commission in relation to those conditions. Sec. 91.110. OIL AND GAS WASTE REDUCTION AND MINIMIZATION.

91.1091

51716.75933

91.110

51717.44615


115

To encourage the reduction and minimization of oil and gas waste, the commission shall implement a program to:

(1) provide operators with training and technical assistance on oil and gas waste reduction and minimization;

(2) assist operators in developing oil and gas waste reduction and minimization plans; and

(3) by rule establish incentives for oil and gas waste reduction and minimization. Sec. 91.113. INVESTIGATION, ASSESSMENT, OR CLEANUP BY COMMISSION.

(a) If oil and gas wastes or other substances or materials regulated by the commission under Section 91.101 are causing or are likely to cause the pollution of surface or subsurface water, the commission, through its employees or agents, may use money in the oil and gas regulation and cleanup fund to conduct a site investigation or environmental assessment or control or clean up the oil and gas wastes or other substances or materials if:(1) the responsible person has failed or refused to control or clean up the oil and gas

wastes or other substances or materials after notice and opportunity for hearing;(2) the responsible person is unknown, cannot be found, or has no assets with which to

control or clean up the oil and gas wastes or other substances or materials; or(3) the oil and gas wastes or other substances or materials are causing the pollution of

surface or subsurface water.(b) For purposes of this section, "responsible person" means any operator or other person

required by law, rules adopted by the commission, or a valid order of the commission to control or clean up the oil and gas wastes or other substances or materials.

(c) The commission or its employees or agents, on proper identification, may enter the land of another for the purpose of conducting a site investigation or environmental assessment or controlling or cleaning up oil and gas wastes or other substances or materials under this section.

(d) The conducting of a site investigation or environmental assessment or the control or cleanup of oil and gas wastes or other substances or materials by the commission under this section does not prevent the commission from seeking penalties or other relief provided by law from any person who is required by law, rules adopted by the commission, or a valid order of the commission to control or clean up the oil and gas wastes or other substances or materials.

(e) The commission and its employees are not liable for any damages arising from an act or omission if the act or omission is part of a good-faith effort to carry out this section.

(f) If the commission conducts a site investigation or environmental assessment or controls or cleans up oil and gas wastes or other substances or materials under this section, the commission may recover all costs incurred by the commission from any person who was required by law, rules adopted by the commission, or a valid order of the commission to control or clean up the oil and gas wastes or other substances or

91.113

51720.44618


116

materials. The commission by order may require the person to reimburse the commission for those costs or may request the attorney general to file suit against the person to recover those costs. At the request of the commission, the attorney general may file suit to enforce an order issued by the commission under this subsection. A suit under this subsection may be filed in any court of competent jurisdiction in Travis County. Costs recovered under this subsection shall be deposited to the oil and gas regulation and cleanup fund.

Sec. 91.1131. RISK ASSESSMENT STANDARDS.

(a) The commission by rule may establish risk assessment as the guide for:(1) conducting site investigations and environmental assessments; and(2) controlling and cleaning up oil and gas wastes and other substances and materials.

(b) Rules adopted under this section must provide for:(1) determining whether an actual or potential risk exists at a site;(2) screening contaminants at the site to identify those that pose a risk;(3) developing cleanup standards based on contamination levels that are protective of

human health and the environment; and(4) establishing a reporting mechanism for informing the commission regarding specific

remediation activities. Sec. 91.1132. PRIORITIZATION OF HIGH-RISK WELLS.

The commission by rule shall develop a system for:(1) identifying abandoned wells that pose a high risk of contaminating surface water or

groundwater;(2) periodically testing high-risk wells by conducting a fluid level test or, if necessary, a

pressure test; and(3) giving priority to plugging high-risk wells with compromised casings.

Sec. 91.1135. OIL-FIELD CLEANUP FUND ADVISORY COMMITTEE.

(a) In this section, "committee" means the Oil-Field Cleanup Fund Advisory Committee.(b) The committee is composed of 10 members as follows:

(1) one member of the senate appointed by the lieutenant governor;(2) the presiding officer of the house committee with primary jurisdiction over matters

affecting energy resources;(3) one public member appointed by the governor;(4) one member appointed by the lieutenant governor from the academic field of

geology or economics;(5) one member appointed by the speaker of the house of representatives from the

academic field of geology or economics; and(6) the executive officer, or a person designated by the executive officer, of each of the

following organizations:

91.1131

51721.44619

91.1132

51722.44620

91.1135

51723.44621


117

(A) the Texas Oil and Gas Association;(B) the Texas Independent Producers and Royalty Owners Association;(C) the Panhandle Producers and Royalty Owners Association;(D) the Permian Basin Petroleum Association; and(E) the Alliance of Energy Producers.

(c) An appointed member of the committee serves at the will of the authority that appointed the member.

(d) The committee shall:(1) meet at least quarterly with the commission;(2) receive information about rules proposed by the commission relating to the oil-field

cleanup fund;(3) review recommendations for legislation proposed by the commission; and(4) monitor the effectiveness of the oil-field cleanup fund.

(e) The commission shall provide quarterly reports to the committee and the Legislative Budget Board that include:(1) the following information with respect to the period since the last report was provided

as well as cumulatively:(A) the amount of money deposited in the oil-field cleanup fund;(B) the amount of money spent from the fund;(C) the balance of the fund;(D) the number of wells plugged with money from the fund;(E) the number of sites remediated with money from the fund; and(F) the number of wells abandoned; and

(2) any additional information or data requested in writing by the committee.(f) The committee may:

(1) submit to the commission comments of the committee regarding proposed rules relating to the oil-field cleanup fund; and

(2) request reports and other information from the commission as necessary to implement this section.

(g) Not later than November 15 of each even-numbered year, the committee shall report to the governor, lieutenant governor, and speaker of the house of representatives on the committee's activities. The report must include:(1) an analysis of any problems with the administration of the oil-field cleanup fund; and(2) recommendations for any legislation needed to address any problems identified with

the administration of the fund or otherwise needed to further the purposes of the fund.

Sec. 91.114. ACCEPTANCE OF ORGANIZATION REPORT OR APPLICATION FOR PERMIT; APPROVAL OF CERTIFICATE OF COMPLIANCE; REVOCATION.

(a) Except as provided by Subsection (d), the commission may not accept an organization report required under Section 91.142 or an application for a permit under this Chapter,

91.114

51724.44622


118

Chapter 85, or Chapter 26, 27, or 29, Water Code, or approve a certificate of compliance under Section 91.701 if:(1) the organization that submitted the report, application, or certificate violated a

statute or commission rule, order, license, certificate, or permit that relates to safety or the prevention or control of pollution; or

(2) a person who holds a position of ownership or control in the organization has, within the seven years preceding the date on which the report, application, or certificate is filed, held a position of ownership or control in another organization and during that period of ownership or control the other organization violated a statute or commission rule, order, license, permit, or certificate that relates to safety or the prevention or control of pollution.

(b) An organization has committed a violation if:(1) a final judgment or final administrative order finding the violation has been entered

against the organization and all appeals have been exhausted; or(2) the commission and the organization have entered into an agreed order relating to

the alleged violation.(c) Regardless of whether the person's name appears or is required to appear on the

organization report required by Section 91.142, a person holds a position of ownership or control in an organization if:(1) the person is:

(A) an officer or director of the organization;(B) a general partner of the organization;(C) the owner of a sole proprietorship organization;(D) the owner of at least 25 percent of the beneficial interest in the organization; or(E) a trustee of the organization; or

(2) the person has been determined by a final judgment or final administrative order to have exerted actual control over the organization.

(d) The commission shall accept the report or application or approve the certificate if:(1) the conditions that constituted the violation are corrected or are being corrected in

accordance with a schedule to which the commission and the organization have agreed;

(2) all administrative, civil, and criminal penalties and all cleanup and plugging costs incurred by the state relating to those conditions are paid or are being paid in accordance with a payment schedule to which the commission and the organization have agreed; and

(3) the report, application, or certificate is in compliance with all other requirements of law and commission rules.

(e) If a report or application is rejected or a certificate is disapproved under this section, the commission shall provide the organization with a written statement explaining the reason for the rejection or disapproval.

(f) Notwithstanding Subsection (a), the commission may issue a permit to an organization


119

described by Subsection (a) for a term specified by the commission if the permit is necessary to remedy a violation of law or commission rules.

(g) A fee tendered in connection with a report or application that is rejected under this section is nonrefundable.

(h) If the commission is prohibited by Subsection (a) from accepting an organization's organization report or application or approving the organization's certificate or would be prohibited from doing so by that subsection if the organization submitted a report, application, or certificate, the commission, after notice and opportunity for a hearing, by order may revoke:(1) the organization's organization report filed under Section 91.142;(2) a permit issued to the organization under this chapter, Chapter 85, or Chapter 26,

27, or 29, Water Code; or(3) any certificate of compliance approved under Section 91.701.

(i) An order under Subsection (h) shall provide the organization a reasonable period of time to comply with the judgment or order finding the violation before the revocation takes effect.

(j) On revocation of its organization report, an organization may not perform any activities under the jurisdiction of the commission under this title or Chapter 26, 27, or 29, Water Code, except as necessary to remedy a violation of law or commission rules and as authorized by the commission.

(k) The commission may not revoke an organization's organization report, permit, or certificate of compliance under Subsection (h) if it finds that the organization has fulfilled the conditions set out in Subsection (d).

(l) In determining whether or not to revoke an organization's organization report, permit, or certificate of compliance under Subsection (h), the commission shall consider the organization's history of previous violations, the seriousness of previous violations, any hazard to the health or safety of the public, and the demonstrated good faith of the organization.

(m) Revocation of an organization's organization report, permit, or certificate does not relieve the organization of any existing or future duty under law, rules, or permit conditions to:(1) protect surface or subsurface water from pollution;(2) properly dispose of oil and gas waste; or(3) clean up unpermitted discharges of oil and gas waste.

Sec. 91.115. FIRST LIEN ON EQUIPMENT AND STORED HYDROCARBONS.

(a) If a responsible person fails to clean up a site or facility that has ceased oil and gas operations under the commission's jurisdiction on or before the date the site or facility is required to be cleaned up by law or by a rule adopted or order issued by the commission, the state has a first lien, superior to all preexisting and subsequent liens and security interests, on the responsible person's interest in any hydrocarbons stored

91.115

51725.44623


120

at the site or facility and in any equipment that is:(1) located at the site or facility; and(2) used by the responsible person in connection with the activity that generated the

pollution.(b) The lien is in the amount of the total costs of cleaning up the oil and gas wastes or other

substances from the site or facility and arises on the date the site or facility is required by law or by a rule or order of the commission to be cleaned up.

(c) The commission may foreclose on the lien by entering into a contract to clean up the site or facility. The commission is not required to give notice or an opportunity for a hearing to subordinate lienholders before entering into a contract to clean up the site or facility.

(d) The lien is extinguished if the site or facility is cleaned up in accordance with commission rules by any person before the commission enters into a contract to clean up the site or facility.

(e) The lien is extinguished as to any stored hydrocarbons or items of equipment that are lawfully removed by any person other than the operator or a nonoperator according to a lien, lease, judgment, written contract, or security agreement before the commission enters into a cleanup contract. An item of equipment may not be removed from an abandoned site or facility if the removal will cause the release of a substance that may cause pollution unless the substance is lawfully disposed of.

(f) Equipment or stored hydrocarbons subject to a lien under this section are presumed to have been abandoned on the date the commission enters into a contract to clean up the site or facility on which the equipment or hydrocarbons are located. The commission may dispose of the equipment or stored hydrocarbons in accordance with the provisions of Sections 89.085, 89.086, and 89.087 of this code for the disposition of well-site equipment and hydrocarbons.

(g) In this section "responsible person" has the meaning assigned by Section 91.113 of this code.

(h) The lien provided by this section, as it relates to stored hydrocarbons, shall be subject to and inferior to any lien in favor of the State of Texas to secure royalty payments.

Sec. 91.116. NOTICE OF COMMERCIAL SURFACE DISPOSAL FACILITY PERMIT APPLICATION.

(a) In this section, "commercial surface disposal facility" means a facility whose primary business purpose is to provide, for compensation, surface disposal of oil field fluids or oil and gas wastes, including land application for treatment and disposal.

(b) A person who files an application for a permit for a commercial surface disposal facility shall publish notice of the application in accordance with this section.

(c) The notice must include:(1) the date the application was filed;(2) a description of the location of the site for which the application was made, including

the county in which the site is located, the name of the original survey and abstract

91.116

51726.44624


121

number, and the direction and distance from the nearest municipality;(3) the name of the owner of the site;(4) the name of the applicant;(5) the type of fluid or waste to be disposed of at the facility;(6) the disposal method proposed; and(7) the procedure for protesting the application.

(d) The notice must be published:(1) at least once each week for two consecutive weeks with the first publication

occurring not earlier than the date the application is filed and not later than the 30th day after the date on which the application is filed; and

(2) in a newspaper of general circulation in the county in which the proposed disposal would occur.

Sec. 91.117. PUBLIC INFORMATION HEARING ON APPLICATION FOR COMMERCIAL SURFACE DISPOSAL FACILITY PERMIT.

(a) In this section, "commercial surface disposal facility" has the meaning assigned by Section 91.116.

(b) The commission may hold a public meeting to receive public comment on an application for a commercial surface disposal facility if the commission determines a public meeting is in the public interest.

(c) The meeting must be held in the county in which the proposed facility would be located. SUBCHAPTER E. BOOKS, RECORDS, AND REPORTS Sec. 91.141. BOOKS AND RECORDS.

(a) Owners and operators of oil and gas wells shall keep books that show accurately:(1) the amount of sold and unsold stock;(2) the amount of promotion money paid;(3) the amount of oil and gas produced and disposed of and the price for which the oil

and gas was sold;(4) the receipts from the sale or transfer of leases or other property; and(5) disbursements made in connection with or for the benefit of the business.

(b) The books shall be kept open for the inspection of the commission or any accredited representative of the commission and any stockholder or shareholder or royalty owner in the business.

(c) The owners and operators of oil and gas wells shall report the information to the commission for its information if required by the commission to do so.

Sec. 91.142. REPORT TO COMMISSION.

(a) A person, firm, partnership, joint stock association, corporation, or other domestic or foreign organization operating wholly or partially in this state and acting as principal or

91.117

51727.44625

E

51728.44626

91.141

51729.44626

91.142

51730.44627


122

agent for another for the purpose of performing operations which are within the jurisdiction of the commission shall file immediately with the commission:(1) the name of the company or organization;(2) the post-office address of the company or organization;(3) the plan under which the company or organization was organized;(4) the names and post-office addresses of the trustee or trustees of the company or

organization;(5) the names, unique identifying numbers such as driver's license numbers, and post-

office addresses of the officers and directors; and(6) if required by Subsection (b) of this section, the name and address of the resident

agent.(b) Any foreign or nonresident entity listed in Subsection (a) of this section shall maintain or

designate a resident agent upon whom any process, notice, or demand required or permitted by law to be served upon such entity may be served.

(c) If any such entity required by the terms of this section to maintain or designate such agent shall fail to do so, then and in such event, the organization report required to be filed with the commission is not valid.

(d) Failure by any such entity listed in Subsection (a) of this section to answer such process or demand shall render the organization report invalid.

(e) The commission shall require an entity described by Subsection (a) of this section to refile an organization report annually according to a schedule established by the commission.

(f) If an entity described by Subsection (a) does not maintain on file with the commission an organization report and financial security as required by this chapter:(1) the entity may not perform operations under the jurisdiction of the commission

except as necessary to remedy a violation of law or commission rules and as authorized by the commission; and

(2) the commission, on written notice, may suspend:(A) any permits held by the entity; or(B) any certificates of compliance approved under Subchapter P.

(g) An organization report filed under this section must be accompanied by the following fee:(1) for an operator of not more than 25 wells, $300;(2) for an operator of more than 25 but not more than 100 wells, $500;(3) for an operator of more than 100 wells, $1,000;(4) for an operator of one or more natural gas pipelines as classified by the commission,

$225;(5) for an operator of one or more service activities or facilities who does not operate

any wells, an amount determined by the commission but not less than $300 or more than $500;

(6) for an operator of one or more liquids pipelines as classified by the commission who


123

does not operate any wells, an amount determined by the commission but not less than $425 or more than $625;

(7) for an operator of one or more service activities or facilities, including liquids pipelines as classified by the commission, who also operates one or more wells, an amount determined by the commission based on the sum of the amounts provided by the applicable subdivisions of this subsection but not less than $425 or more than $1,125; and

(8) for an entity not currently performing operations under the jurisdiction of the commission, $300.

(h) To enable the commission to better protect the state's resources, an entity described by Subsection (a) or an affiliate of such an entity performing operations within the jurisdiction of the commission that files for federal bankruptcy protection shall give written notice to the commission of that action by submitting the notice to the office of general counsel not later than the 30th day after the date of filing.

Sec. 91.143. FALSE APPLICATIONS, REPORTS, AND DOCUMENTS AND TAMPERING WITH GAUGES.

(a) A person may not:(1) make or subscribe any application, report, or other document required or permitted

to be filed with the commission by the provisions of Title 102, Revised Civil Statutes of Texas, 1925, as amended, including provisions of this code formerly included in that title, knowing that the application, report, or other document is false or untrue in a material fact;

(2) aid or assist in, or procure, counsel, or advise the preparation or presentation of any of these applications, reports, or other documents that are fraudulent, false, or incorrect in any material matter, knowing them to be fraudulent, false, or incorrect in any material matter;

(3) knowingly simulate or falsely or fraudulently execute or sign such an application, report, or other document;

(4) knowingly procure these applications, reports, or other documents to be falsely or fraudulently executed, or advise, aid in, or connive at this execution; or

(5) knowingly render inaccurate any monitoring device required to be maintained by a commission rule, order, or permit.

(b) A person commits an offense if the person violates this section. An offense under this section is a felony punishable by:(1) imprisonment in the Texas Department of Criminal Justice for a term of not less than

two years or more than five years;(2) a fine of not more than $10,000; or(3) both the imprisonment and the fine.

(c) If other penalties prescribed in Title 102, Revised Civil Statutes of Texas, 1925, as amended, including provisions of this code formerly included in that title, overlap

91.143

51731.44628


124

offenses that are also punishable under this section, the penalties prescribed in this section shall be in addition to other penalties.

(d) No application, report, or other document required or permitted to be filed with the commission under Title 102, Revised Civil Statutes of Texas, 1925, as amended, including provisions of this code formerly included in that title, may be required to be under oath, verification, acknowledgment, or affirmation.

(e) The commission may impose an administrative penalty in the manner provided by Sections 81.0531-81.0534 on a person who violates this section. The amount of the penalty may not exceed $1,000 for each violation.

SUBCHAPTER F. UNDERGROUND NATURAL GAS STORAGE AND CONSERVATION Sec. 91.171. SHORT TITLE.

This subchapter may be cited as the Underground Natural Gas Storage and Conservation Act of 1977.

Sec. 91.172. DECLARATION OF POLICY.

The underground storage of natural gas promotes the conservation of natural gas, permits the building of reserves for orderly withdrawal in periods of peak demand, makes more readily available natural gas resources to residential, commercial, and industrial customers of this state, provides a better year-round market to the various gas fields, and promotes the public interest and welfare of this state.

Sec. 91.173. DEFINITIONS. In this subchapter:

(1) "Person" means any natural person, partnership or other combination of natural persons, corporation, group of corporations, trust, or governmental entity.

(2) "Gas utility" means a gas utility as defined in Section 101.003, Utilities Code, or Subchapter A, Chapter 121, Utilities Code.

(3) "Natural gas" means any gaseous material composed predominantly of the following hydrocarbons or mixtures thereof: methane, ethane, propane, butane (normal or isobutane), in either its original or manufactured state, or gas which has been processed to separate it into one or more of its component parts after its withdrawal from the earth.

(4) "Native gas" means:(A) natural gas which has not previously been withdrawn from the earth; or(B) natural gas which has been withdrawn from the storage facility, processed, and

reinjected into the storage facility.(5) "Storage facility" means any subsurface sand, stratum, or formation used or to be used

for the underground storage of natural gas and all surface and subsurface rights and appurtenances necessary to the operation of a facility for the underground storage of

F

51732.44629

91.171

51733.44629

91.172

51734.44630

91.173

51735.44631


125

natural gas.(6) "Storer" means (A) a gas utility, (B) a wholly owned subsidiary of a gas utility, (C) the

parent corporation of a gas utility, or (D) a wholly owned subsidiary of a parent corporation which also wholly owns a subsidiary gas utility, but a nonutility storer included in category (B), (C), or (D) must operate the storage facility pursuant to a contract with its affiliated gas utility that provides that all withdrawals of natural gas from the storage facility must be delivered to the affiliated gas utility.

(7) "Substantially depleted" means that at least 75 percent of the estimated volume of recoverable native gas reserves originally in place in any gas-bearing sand, formation, or stratum have been withdrawn from the sand, formation, or stratum.

(8) "Interested person" means any person who enters an appearance at the commission hearing required by Section 91.174 of this code.

(9) "Commission" means the Railroad Commission of Texas. Sec. 91.174. FINDINGS OF COMMISSION.

(a) Any storer desiring to exercise the right of eminent domain for the acquisition of a storage facility shall, as a condition precedent to the filing of its petition in the appropriate court, obtain from the commission an order finding:(1) that the underground formation or stratum sought to be acquired is classified by the

commission as a gas reservoir and is suitable for the underground storage of natural gas and that the storage of natural gas is necessary for the gas utility to provide adequate service to the public and is in the public interest;

(2) that the use of the formation or stratum as a storage facility will cause no injury to surface or underground water resources;

(3) that the formation or stratum does not contain native gas producible in paying quantities unless the recoverable volumes of native gas originally in place are substantially depleted and unless the formation or stratum has a greater value of ultimate use to the consuming public as a storage facility to ensure an adequate supply of natural gas or for the conservation of natural gas than the production of native gas which remains;

(4) the extent of the horizontal limits of the reservoir expected to be penetrated by displaced or injected gas; and

(5) that no portion of the formation or stratum sought to be acquired has been condemned or is being utilized for the injection, storage, and withdrawal of gas by others.

(b) The designation of a storage facility does not prevent any storer from instituting additional proceedings in the event it is later determined that the underground reservoir should be extended to prevent the escape, displacement, or withdrawal by others of injected gas.

Sec. 91.175. COMMISSION JURISDICTION.

91.174

51736.44632

91.175

51737.44633


126

The commission shall have jurisdiction to supervise the construction and operation of all storage facilities formed pursuant to this subchapter, and in addition to the findings required by Section 91.174 of this code, the commission shall include in any order of approval a requirement that the storer file a report each month, including each month prior to the time the storage facility is in operation, with the commission showing, for that month, the volume of gas injected and stored gas withdrawn from storage.

Sec. 91.176. WITHDRAWAL OF NATIVE GAS.

A storer may withdraw from storage injected and stored gas as market demand dictates. However, any time a storer's withdrawals from a storage facility equal the volume of gas injected for storage, the storer shall not withdraw additional gas from the storage facility without first obtaining specific authority from the commission.

Sec. 91.177. STORAGE OPERATIONS MUST BE BONA FIDE.

(a) A storer must initiate injection operations for gas storage within 12 months after the condemnation order of the court becomes final and storage operations must continue with reasonable diligence after that time.

(b) Should the monthly reports to the commission indicate that bona fide underground gas storage operations are not being conducted, the commission may, on its own motion or on motion of any interested person, schedule a public hearing, giving the storer the opportunity to show cause why the commission approval of the project should not be withdrawn.

(c) If the commission finds that the storage project is not being conducted in a bona fide manner, it shall issue an order withdrawing approval of the storage facility, and all property, both mineral and surface, that was condemned by the storer shall revert to those who owned the property at the time of condemnation or their successors.

Sec. 91.178. RELOCATION OF FACILITIES.

In the event the acquisition or operation of a storage facility acquired through the exercise of the power of eminent domain requires the relocation or alteration of any railroad, electric, telegraph, telephone, or pipeline lines or facilities, the expense of the relocation or alteration shall be borne by the storer. The expense of relocation means the actual cost incurred in providing a comparable replacement line or facility, less net salvage value from the sale or other disposition of the old facility.

Sec. 91.179. APPROPRIATION OF STORAGE FACILITIES; LIMITATIONS.

After an order of the commission is issued approving a storage facility, a storer may condemn without further attack as to its right to condemn, any subsurface sand, stratum, or formation for the underground storage of natural gas, condemning all mineral and royalty rights as are reasonably necessary for the operation of the storage facility, subject to the limitations of this subchapter, and the storer may condemn any other interests in property

91.176

51738.44634

91.177

51739.44635

91.178

51740.44636

91.179

51741.44637


127

that may be required, including interests in the surface estate in the sand, stratum, or formation reasonably necessary to the operation of the storage facility, provided that:

(1) no part of a reservoir is subject to condemnation unless the storer has acquired by option, lease, conveyance, or other negotiated means at least 66-2/3 percent of the ownership of minerals, including working interests, and 66-2/3 percent of the ownership of the royalty interests, computed in relation to the surface area overlying the part of the reservoir which as found by the commission to be expected to be penetrated by displaced or injected gas;

(2) no dwelling, barn, store, or other building is subject to condemnation; and(3) the right of condemnation is without prejudice to the rights of the owners or holders

of other rights or interests of land to drill through the storage facility under such terms and conditions as the commission may prescribe for the purpose of protecting the storage facility against pollution or escape of natural gas and is without prejudice to the rights of the owners or holders of other rights or interests of the land to all other uses so long as those uses do not interfere with the operation of the storage facility.

Sec. 91.180. INSTITUTION OF CONDEMNATION PROCEEDINGS.

(a) The finding by the commission that underground storage is in the public interest is binding on all persons whose property the storer has the right to condemn. After that finding of the commission, the storer has the right to condemn all of the underground storage area and any surface area required for the use and enjoyment of the storage facility.

(b) The storer shall initiate eminent domain proceedings in the court having jurisdiction in the area in which a portion of the land is situated. The petition shall set forth the purpose for which the property is sought to be acquired, a description of the sand, stratum, or formation and of the land under which it is alleged to be contained, the names of the owners as shown by the deed records of the county, and a description of all other property and rights sought to be appropriated for use in connection with the storage facility, including any parts of the surface necessary for any facilities incidental to the operation of the storage facility.

(c) The petition shall state facts showing that the storer has obtained the findings of the commission required by Section 91.174 of this code, that the storer in good faith has been unable to acquire the rights sought to be appropriated, that the storer has acquired, prior to the filing of the petition, by any means other than condemnation, at least 66-2/3 percent of the ownership of the minerals, including working interests, and 66-2/3 percent of the royalty interests of the property rights in the storage facility required for that purpose, and shall describe the surface area overlying the storage facility the storer seeks to acquire and the names of the owners of those rights and interests.

(d) Where more than one tract of land is involved, all or any tracts may be joined in one proceeding, without prejudice to the right of the storer to institute additional proceedings; provided, that the failure to make service upon a defendant does not affect the right of

91.180

51742.44638


128

the storer to proceed against any or all other of the defendants upon whom service has been made.

Sec. 91.181. EXERCISE OF RIGHT OF EMINENT DOMAIN.

All proceedings in connection with the condemnation and acquisition of storage facilities shall be in accordance with Articles 3264 through 3271, Revised Civil Statutes of Texas, 1925, as amended, and to the extent of any conflict between those articles and this subchapter, the provisions of this subchapter prevail.

Sec. 91.182. OWNERSHIP OF STORED GAS.

All natural gas in the stratum condemned which is not native gas, and which is subsequently injected into storage facilities is personal property and is the property of the injector or its assigns, and in no event is the gas subject to the right of the owner of the surface of the land or of any mineral or royalty owner's interest under which the storage facilities lie, or of any person other than the injector to produce, take, reduce to possession, either by means of the law of capture or otherwise, waste, or otherwise interfere with or exercise any control over a storage facility. Upon failure, neglect, or refusal of the person to comply with this section, the storer has the right to compel compliance by injunction or by other appropriate relief by application to a court of competent jurisdiction.

Sec. 91.183. RIGHTS OF PURCHASERS OF NATIVE GAS.

(a) In the event there are remaining reserves of native gas in the storage facility which are dedicated to a purchaser and the purchaser and storer are unable to agree on an equitable settlement of rights with respect to the remaining native gas within a period of time that will prevent interference with the operation of the storage facility, the storer or purchaser may apply to the commission for an adjudication concerning remaining reserves of native gas.

(b) Upon application, the commission shall direct a settlement of remaining reserves of native gas that is equitable to all parties, but which does not interfere with the public benefits arising from the operation of the storage facility.

(c) In addition to any other disposition that is equitable to all parties, the commission may make a finding of the quantity of remaining recoverable native gas and an allocation of future production on a reasonable production schedule and order delivery to the purchaser by the storer of the amounts of native gas that the commission finds would have been taken by the purchaser during the term of the purchase agreement.

Sec. 91.184. ABANDONMENT.

(a) When a storer has permanently abandoned the storage facility, the storer shall file with the commission a notice of abandonment, and shall file an instrument in the deed records in the appropriate county or counties, stating that the storage has ceased, and that all property, both mineral and surface, condemned by the storer has reverted to

91.181

51743.44639

91.182

51744.44640

91.183

51745.44641

91.184

51746.44642


129

those who owned the property at the time of condemnation, or their heirs, successors, or assigns.

(b) The storer shall also file in the deed records in the appropriate county or counties a list of the owners of the mineral, royalty, and surface owners to whom the various interests have reverted, together with an affidavit that the storer has compiled the list from a current examination of title records and that the list is true and correct to the best of the knowledge of the affiant.

SUBCHAPTER G. UNDERGROUND HYDROCARBON STORAGE Sec. 91.201. DEFINITIONS.

In this subchapter:(1) "Underground hydrocarbon storage facility" or "storage facility" means a subsurface

sand, stratum, or geological formation used for the underground storage of hydrocarbons, and includes surface or subsurface rights and appurtenances necessary for the operation of the facility.

(2) "Hydrocarbons" means oil, gas, or products of oil or gas, as those terms are defined by Section 85.001 of this code.

(3) "Waste" means surface or subsurface waste, as defined by Section 85.046 of this code, of hydrocarbons, including, but not limited to, the physical or economic waste or loss of hydrocarbons in the creation, operation, maintenance, or abandonment of an underground hydrocarbon storage facility.

(4) "Commission" means the Railroad Commission of Texas. Sec. 91.202. POLICY.

It is the policy of this state and the purpose of this subchapter to prevent the waste of oil, gas, and products of oil or gas, to protect the ground and surface water of the state from unreasonable degradation, and to protect the public health, welfare, and physical property in the creation, operation, maintenance, and abandonment of underground hydrocarbon storage facilities.

Sec. 91.203. AUTHORITY; RULES.

(a) The commission shall supervise or monitor the construction, operation, maintenance, and closure of storage facilities.

(b) The commission may adopt reasonable rules or issue reasonable orders to implement the policies of this subchapter and may establish minimum standards regulating the creation, operation, maintenance, and abandonment of underground hydrocarbon storage facilities. The rules and standards of the commission may include, but are not limited to, requirements for monitoring, recordkeeping, and reporting, the drilling and creation of the facility, selecting the site of the facility, and for proper closure of the facility on abandonment.

G

51747.44643

91.201

51748.44643

91.202

51749.44644

91.203

51750.44645


130

Sec. 91.204. PERMITS.

(a) The commission by rule may require a person who creates, operates, maintains, or abandons an underground hydrocarbon storage facility to obtain a permit from the commission. A permit issued by the commission may contain provisions and conditions necessary to implement the policies of this subchapter. The commission may adopt reasonable rules for the amendment, revocation, transfer, or suspension of a permit.

(b) A person desiring to obtain a permit or to amend a permit must submit an application containing the information required by the commission.

Sec. 91.205. AUTHORITY TO ENTER PROPERTY.

Members and employees of the commission may enter public or private property at reasonable times to inspect and investigate conditions relating to the creation, operation, maintenance, or abandonment of an underground hydrocarbon storage facility. The members and employees may not enter private property having management in residence without notifying the management of their presence and shall observe safety, internal security, and fire protection rules of the establishment being inspected.

Sec. 91.206. AUTHORITY TO EXAMINE RECORDS.

Members and employees of the commission may examine and copy during regular business hours records pertaining to the creation, operation, maintenance, or abandonment of an underground hydrocarbon storage facility.

Sec. 91.207. NOTICE OF NONCOMPLIANCE.

(a) On receipt of notice from the commission that a person creating, operating, maintaining, or abandoning an underground hydrocarbon storage facility has violated this subchapter or a term, condition, or provision of a permit issued under this subchapter, an operator of the pipeline or other carrier connected to the facility shall disconnect from the facility and shall remain disconnected from the facility until notice of compliance has been received from the commission.

(b) On receipt of notice from the commission of a violation of this subchapter, a rule of the commission issued under this subchapter, or a term, condition, or provision of a permit issued under this subchapter, the owner or operator of an underground hydrocarbon storage facility shall discontinue any removal of hydrocarbons from the facility or any addition of hydrocarbons to the facility and may not begin or renew removal of hydrocarbons from the facility or begin or renew addition of hydrocarbons to the facility until notice of compliance has been received from the commission.

SUBCHAPTER H. UNDERGROUND STORAGE FACILITIES FOR NATURAL GAS Sec. 91.251. DEFINITIONS.

91.204

51751.44646

91.205

51752.44647

91.206

51753.44648

91.207

51754.44649

H

51755.44650

91.251

51756.44650


131

In this subchapter:(1) "Intrastate gas pipeline facility" has the meaning assigned by the United States

Department of Transportation under Chapter 601, Title 49, United States Code (49 U.S.C. Section 60101 et seq.), and its subsequent amendments.

(2) "Natural gas" means any gaseous material composed primarily of methane in either its original or its manufactured state.

(3) "Natural gas underground storage" means the storage of natural gas beneath the surface of the earth in a formation, stratum, or reservoir.

(4) "Storage facility" has the meaning assigned by Section 91.173. Sec. 91.252. COMMISSION JURISDICTION.

(a) The commission has jurisdiction over:(1) natural gas underground storage; and(2) surface and subsurface equipment and facilities used for natural gas underground

storage.(b) This subchapter does not apply to a storage facility that is:

(1) part of an interstate gas pipeline facility as defined by the United States Department of Transportation; and

(2) subject to federal minimum standards adopted under Chapter 601, Title 49, United States Code (49 U.S.C. Section 60101 et seq.), and its subsequent amendments.

Sec. 91.253. COMMISSION ENFORCEMENT.

(a) In addition to other authority specifically granted to the commission under this subchapter, the commission may enforce this subchapter or a rule adopted or an order or permit issued under this subchapter as provided by Section 91.207.

(b) Section 91.003 does not apply to this subchapter.

Sec. 91.254. INSPECTION; EXAMINATION; CREDENTIALS. (a) The commission may inspect a storage facility for compliance with the safety standards

and practices and the recordkeeping requirements adopted under Sections 91.255, 91.257, and 91.258.

(b) To conduct an inspection under this section, a commissioner or a designated commission employee or agent may enter property on which a storage facility is located at a reasonable time and in a reasonable manner to examine:(1) the facility and any related buildings or equipment; and(2) the records required to be maintained at the storage facility under Section 91.258.

(c) A commissioner or a commission employee or agent may not enter the premises of a storage facility having personnel on the premises of the facility unless proper credentials are first presented to the person at the facility who is in charge of the property.

Sec. 91.255. SAFETY STANDARDS AND PRACTICES.

91.252

51757.44651

91.253

51758.44652

91.254

51759.44653

91.255

51760.44654


132

(a) The commission by rule shall adopt safety standards and practices for natural gas underground storage and storage facilities. The standards and practices must:(1) require the installation and periodic testing of safety devices;(2) establish emergency notification procedures for the operator of a facility in the event

of a release of a hazardous substance that poses a substantial risk to the public;(3) establish fire prevention and response procedures;(4) require training for the employees of the storage facility on the safe operation of the

storage facility; and(5) establish any other safety standard or practice that is reasonable and necessary for

underground natural gas storage and the safe construction, operation, and maintenance of a storage facility.

(b) The commission may adopt different standards and practices for different types of storage facilities and may distinguish among natural gas underground storage in salt dome caverns, depleted reservoirs, and embedded salt formations.

(c) The commission may grant an exception to a standard or practice adopted under this section in a permit or amended permit issued to a storage facility if the exception will not constitute an unreasonable danger to the public.

(d) The commission may impose an additional standard or practice in a permit or amended permit issued to a storage facility.

(e) A safety standard or practice adopted by the commission for a storage facility that is part of an intrastate gas pipeline facility must be compatible with federal minimum standards.

(f) The commission shall require that records of safety device tests required by Subsection (a)(1) be:(1) filed with the commission; or(2) maintained by the owner or operator and made available for inspection by the

commission. Sec. 91.256. LIMITATION ON POWERS OF MUNICIPALITIES AND COUNTIES.

A municipality or county may not adopt or enforce an ordinance that establishes a safety standard or practice applicable to a storage facility that is subject to regulation under this subchapter, another state law, or a federal law.

Sec. 91.257. SAFETY PROCEDURE MANUAL.

The commission may require the owner or operator of a storage facility to prepare a safety procedure manual for each storage facility and to:

(1) file a copy of the manual with the commission; or(2) make the manual available for inspection under Section 91.254.

Sec. 91.258. RECORDS; REPORTS.

(a) An owner or operator of a storage facility shall:(1) maintain records and make reports relating to construction, operation, or

91.256

51761.44655

91.257

51762.44656

91.258

51763.44657


133

maintenance of the facility as required by commission rule; and(2) provide any other information required by the commission relating to construction,

operation, or maintenance of the facility.(b) The commission may provide forms for reports required under Subsection (a).

Sec. 91.259. DAMAGE TO STORAGE FACILITY; DISABLING A SAFETY DEVICE.

A person may not:(1) intentionally damage or destroy a storage facility; or(2) disable a safety device in a storage facility except to:

(A) repair, maintain, test, or replace the device; or(B) conduct other activities that are reasonably necessary for the safe operation of

the storage facility. Sec. 91.260. INJUNCTION; CIVIL PENALTY.

(a) The attorney general, at the request of the commission, shall bring a civil action against a person who has violated or is violating this subchapter or a rule adopted or an order or permit issued under this subchapter for:(1) injunctive relief to restrain the person from the violation;(2) the assessment and recovery of a civil penalty for a violation; or(3) both injunctive relief and a civil penalty.

(b) A civil penalty assessed under this section may not exceed $25,000 for each violation.(c) Each day of a continuing violation may be considered a separate violation for the

purpose of penalty assessment.(d) The maximum penalty assessed for a related series of violations may not exceed

$500,000. Sec. 91.261. ADMINISTRATIVE PENALTY.

(a) The commission may assess, as provided by this section and Sections 91.262, 91.263, and 91.264, an administrative penalty against a person who violates this subchapter or a rule adopted or an order or permit issued under this subchapter.

(b) Except as provided by Subsection (c), the penalty for each violation may be in an amount not to exceed $10,000. The maximum penalty assessed under this subsection for a related series of violations may not exceed $200,000.

(c) The penalty for each violation of Section 91.259 may be in an amount not to exceed $25,000. The maximum penalty assessed under this subsection for a continuing violation may not exceed $300,000.

(d) Each day a violation continues or occurs may be considered a separate violation for the purpose of penalty assessment under Subsection (b) or (c).

(e) In determining the amount of the penalty, the commission shall consider:(1) the seriousness of the violation, including the nature, circumstances, extent, and

gravity of the prohibited act and the hazard or potential hazard created to the health,

91.259

51764.44658

91.260

51765.44659

91.261

51766.44660


134

safety, or economic welfare of the public;(2) the economic harm to property or the environment caused by the violation;(3) the history of previous violations;(4) the amount necessary to deter future violations;(5) efforts to correct the violation; and(6) any other matter that justice may require.

Sec. 91.262. ADMINISTRATIVE PENALTY ASSESSMENT PROCEDURE.

(a) An administrative penalty may be assessed only after the person charged under Section 91.261 has been given an opportunity for a public hearing. If a public hearing is held, the commission shall make findings of fact and issue a written decision as to the occurrence of the violation and the penalty amount warranted by the violation, incorporating, if appropriate, an order requiring that the penalty be paid. If appropriate, the commission shall consolidate the hearing with other proceedings.

(b) If a person charged under Section 91.261 fails to take advantage of the opportunity for a public hearing, a penalty may be assessed by the commission after it has determined that a violation occurred and the penalty amount warranted by the violation. The commission shall then issue an order requiring the penalty to be paid.

(c) The commission shall give notice of the commission's order to the person charged with the violation as provided by Chapter 2001, Government Code. The notice must include a statement of the right of the person to judicial review of the order.

Sec. 91.263. PAYMENT OF ADMINISTRATIVE PENALTY.

(a) Not later than the 30th day after the date on which the commission's order imposing an administrative penalty becomes final as provided by Section 2001.144, Government Code, the person charged with the violation shall:(1) pay the amount of the penalty;(2) pay the amount of the penalty and file a petition for judicial review contesting:

(A) the amount of the penalty;(B) the fact of the violation; or(C) both the amount of the penalty and the fact of the violation; or

(3) without paying the amount of the penalty, file a petition for judicial review contesting:(A) the amount of the penalty;(B) the fact of the violation; or(C) both the amount of the penalty and the fact of the violation.

(b) Within the 30-day period, a person who acts under Subsection (a)(3) may:(1) stay the enforcement of the penalty by:

(A) paying the amount of the penalty to the court for placement in an escrow account; or

(B) giving to the court a supersedeas bond in a form approved by the court that is effective until all judicial review of the order or decision is final; or

91.262

51767.44661

91.263

51768.44662


135

(2) request the court to stay enforcement of the penalty by:(A) filing with the court a sworn affidavit stating that the person is financially unable

to pay the amount of the penalty and is financially unable to give the supersedeas bond; and

(B) delivering a copy of the affidavit to the commission.(c) If the commission receives a copy of an affidavit under Subsection (b), the commission

may file a contest to the affidavit with the court not later than the fifth day after the date the copy is received. The court shall hold a hearing on the facts alleged in the affidavit as soon as practicable. The person who files an affidavit has the burden of proving that the person is financially unable to pay the amount of the penalty and to give a supersedeas bond.

(d) If the person does not pay the amount of the penalty and the penalty is not stayed, the commission may refer the matter to the attorney general for enforcement.

Sec. 91.264. JUDICIAL REVIEW OF ADMINISTRATIVE PENALTY.

(a) Judicial review of a commission order imposing an administrative penalty is:(1) instituted by filing a petition as provided by Subchapter G, Chapter 2001,

Government Code; and(2) under the substantial evidence rule.

(b) If the person paid the amount of the penalty and that amount is reduced or is not assessed by the court, the court shall order that the appropriate amount plus accrued interest be remitted to the person. The rate of interest is the rate charged on loans to depository institutions by the New York Federal Reserve Bank and shall be paid for the period beginning on the date the penalty is paid and ending on the date the penalty is remitted. If the person gave a supersedeas bond, the court shall order the release of the bond:(1) without further action by the person if the penalty is not assessed by the court; or(2) on payment of the penalty in the amount determined by the court.

(c) A penalty collected under this section shall be deposited to the credit of the general revenue fund.

SUBCHAPTER J. PAYMENT FOR PROCEEDS OF SALE Sec. 91.401. DEFINITIONS.

In this subchapter:(1) "Payee" means any person or persons legally entitled to payment from the proceeds

derived from the sale of oil or gas from an oil or gas well located in this state.(2) "Payor" means the party who undertakes to distribute oil and gas proceeds to the

payee, whether as the purchaser of the production of oil or gas generating such proceeds or as operator of the well from which such production was obtained or as lessee under the lease on which royalty is due. The payor is the first purchaser of

91.264

51769.44663

J

51770.44664

91.401

51771.44664


136

such production of oil or gas from an oil or gas well, unless the owner of the right to produce under an oil or gas lease or pooling order and the first purchaser have entered into arrangements providing that the proceeds derived from the sale of oil or gas are to be paid by the first purchaser to the owner of the right to produce who is thereby deemed to be the payor having the responsibility of paying those proceeds received from the first purchaser to the payee.

(3) "Division order" means an agreement signed by the payee directing the distribution of proceeds from the sale of oil, gas, casinghead gas, or other related hydrocarbons. The order directs and authorizes the payor to make payment for the products taken in accordance with the division order. When used herein "division order" shall also include "transfer order".

(4) "Transfer order" means an agreement signed by a payee and his transferee (new payee) directing the payor under the division order to pay another person a share in the oil or gas produced.

Sec. 91.402. TIME FOR PAYMENT OF PROCEEDS.

(a) The proceeds derived from the sale of oil or gas production from an oil or gas well located in this state must be paid to each payee by payor on or before 120 days after the end of the month of first sale of production from the well. After that time, payments must be made to each payee on a timely basis according to the frequency of payment specified in a lease or other written agreement between payee and payor. If the lease or other agreement does not specify the time for payment, subsequent proceeds must be paid no later than:(1) 60 days after the end of the calendar month in which subsequent oil production is

sold; or(2) 90 days after the end of the calendar month in which subsequent gas production is

sold.(b) Payments may be withheld without interest beyond the time limits set out in Subsection

(a) of this section when there is:(1) a dispute concerning title that would affect distribution of payments;(2) a reasonable doubt that the payee:

(A) has sold or authorized the sale of its share of the oil or gas to the purchaser of such production; or

(B) has clear title to the interest in the proceeds of production;(3) a requirement in a title opinion that places in issue the title, identity, or whereabouts

of the payee and that has not been satisfied by the payee after a reasonable request for curative information has been made by the payor.

(c) [missing](1) As a condition for the payment of proceeds from the sale of oil and gas production to

payee, a payor shall be entitled to receive a signed division order from payee containing only the following provisions:

91.402

86113.74801


137

(A) the effective date of the division order, transfer order, or other instrument;(B) a description of the property from which the oil or gas is being produced and the

type of production;(C) the fractional and/or decimal interest in production claimed by payee, the type of

interest, the certification of title to the share of production claimed, and, unless otherwise agreed to by the parties, an agreement to notify payor at least one month in advance of the effective date of any change in the interest in production owned by payee and an agreement to indemnify the payor and reimburse the payor for payments made if the payee does not have merchantable title to the production sold;

(D) the authorization to suspend payment to payee for production until the resolution of any title dispute or adverse claim asserted regarding the interest in production claimed by payee;

(E) the name, address, and taxpayer identification number of payee;(F) provisions for the valuation and timing of settlements of oil and gas production to

the payee; and(G) a notification to the payee that other statutory rights may be available to a payee

with regard to payments.(2) Such a division order does not amend any lease or operating agreement between

the interest owner and the lessee or operator or any other contracts for the purchase of oil or gas.

(d) In the alternative, the provisions of Subsection (c) of this section may be satisfied by a division order for oil payments in substantially the following form and content:

DIVISION ORDER TO: (Payor) Property No. Effective (Date) The undersigned severally and not jointly certifies it is the legal owner of the interest set out below of all the oil and related liquid hydrocarbons produced from the property described below:OPERATOR:


138

Property name: County: State: Legal Description: OWNER NO. TAX I.D./SOC. SEC. NO. PAYEE DIVISION OF INTEREST THIS AGREEMENT DOES NOT AMEND ANY LEASE OR OPERATING AGREEMENT BETWEEN THE INTEREST OWNERS AND THE LESSEE OR OPERATOR OR ANY OTHER CONTRACTS FOR THE PURCHASE OF OIL OR GAS.The following provisions apply to each interest owner ("owner") who executes this agreement:TERMS OF SALE: The undersigned will be paid in accordance with the division of interests set out above. The payor shall pay all parties at the price agreed to by the operator for oil to be sold pursuant to this division order. Purchaser shall compute quantity and make corrections for gravity and temperature and make deductions for impurities.PAYMENT: From the effective date, payment is to be made monthly by payor's check, based on this division of interest, for oil run during the preceding calendar month from the property listed above, less taxes required by law to be deducted and remitted by payor as purchaser. Payments of less than $100 may be accrued before disbursement until the total amount equals $100 or more, or until 12 months' proceeds accumulate, whichever occurs first. However, the payor may hold accumulated proceeds of less than $10 until production ceases or the payor's responsibility for making payment for production ceases, whichever occurs first. Payee agrees to refund to payor any amounts attributable to an interest or part of an interest that payee does not own.INDEMNITY: The owner agrees to indemnify and hold payor harmless from all liability resulting from payments made to the owner in accordance with such division of interest, including but not limited to attorney fees or judgments in connection with any suit that affects the owner's interest to which payor is made a party.DISPUTE; WITHHOLDING OF FUNDS: If a suit is filed that affects the interest of the owner, written notice shall be given to payor by the owner together with a copy of the complaint or petition filed.In the event of a claim or dispute that affects title to the division of interest credited herein, payor is authorized to withhold payments accruing to such interest, without interest unless otherwise required by applicable statute, until the claim or dispute is settled.TERMINATION: Termination of this agreement is effective on the first day of the month that begins after the 30th day after the date written notice of termination is received by either party.NOTICES: The owner agrees to notify payor in writing of any change in the division of interest, including changes of interest contingent on payment of money or expiration of time.No change of interest is binding on payor until the recorded copy of the instrument of change or documents satisfactorily evidencing such change are furnished to payor at the time the change


139

occurs.Any change of interest shall be made effective on the first day of the month following receipt of such notice by payor.Any correspondence regarding this agreement shall be furnished to the addresses listed unless otherwise advised by either party.In addition to the legal rights provided by the terms and provisions of this division order, an owner may have certain statutory rights under the laws of this state. Signature of Social Security/ Witness Interest Owner Tax I.D. No. Address____________ _________________ _________________ ________________________ _________________ _________________ ________________________ _________________ _________________ ____________

Failure to furnish your Social Security/Tax I.D. number will result in withholding tax in accordance with federal law, and any tax withheld will not be refundable by payor.

(e) If an owner in a producing property will not sign a division order because it contains provisions in addition to those provisions provided for in this section, payor shall not withhold payment solely because of such refusal. If an owner in a producing property refuses to sign a division order which includes only the provisions specified in Subsection (c) of this section, payor may withhold payment without interest until such division order is signed.

(f) Payment may be remitted to a payee annually for the aggregate of up to 12 months' accumulation of proceeds if the payor owes the payee a total amount of $100 or less for production from all oil or gas wells for which the payor must pay the payee. However, the payor may hold accumulated proceeds of less than $10 until production ceases or the payor's responsibility for making payment for production ceases, whichever occurs first. On the written request of the payee, the payor shall remit payment of accumulated proceeds to the payee annually if the payor owes the payee less than $10. On the written request of the payee, the payor shall remit payment of proceeds to the payee monthly if the payor owes the payee more than $25 but less than $100.

(g) Division orders are binding for the time and to the extent that they have been acted on and made the basis of settlements and payments, and, from the time that notice is given that settlements will not be made on the basis provided in them, they cease to be binding. Division orders are terminable by either party on 30 days written notice.

(h) The execution of a division order between a royalty owner and lessee or between a royalty owner and a party other than lessee shall not change or relieve the lessee's specific, expressed or implied obligations under an oil and gas lease, including any obligation to market production as a reasonably prudent lessee. Any provision of a division order between payee and its lessee which is in contradiction with any provision of an oil and gas lease is invalid to the extent of the contradiction.

(i) A division order may be used to clarify royalty settlement terms in the oil and gas lease.


140

With respect to oil and/or gas sold in the field where produced or at a gathering point in the immediate vicinity, the terms "market value," "market price," "prevailing price in the field," or other such language, when used as a basis of valuation in the oil and gas lease, shall be defined as the amount realized at the mouth of the well by the seller of such production in an arm's-length transaction.

Sec. 91.403. PAYMENT OF INTEREST ON LATE PAYMENTS.

(a) If payment has not been made for any reason in the time limits specified in Section 91.402 of this code, the payor must pay interest to a payee beginning at the expiration of those time limits at two percentage points above the percentage rate charged on loans to depository institutions by the New York Federal Reserve Bank, unless a different rate of interest is specified in a written agreement between payor and payee.

(b) Subsection (a) of this section does not apply where payments are withheld or suspended by a payor beyond the time limits specified in Section 91.402 of this code because of the conditions enumerated in Section 91.402 of this code.

(c) The payor's obligation to pay interest and the payee's right to receive interest under Subsection (a) of this section terminate on delivery of the proceeds and accumulated interest to the comptroller as provided by Title 6, Property Code.

Sec. 91.404. NONPAYMENT OF OIL AND GAS PROCEEDS OR INTEREST.

(a) If a payee seeks relief for the failure of a payor to make timely payment of proceeds from the sale of oil or gas or an interest in oil or gas as required under Section 91.402 or 91.403 of this code, the payee must give the payor written notice by mail of that failure as a prerequisite to beginning judicial action against the payor for nonpayment.

(b) The payor has 30 days after receipt of the required notice from the payee in which to pay the proceeds due, or to respond by stating in writing a reasonable cause for nonpayment.

(c) A payee has a cause of action for nonpayment of oil or gas proceeds or interest on those proceeds as required in Section 91.402 or 91.403 of this code in any court of competent jurisdiction in the county in which the oil or gas well is located.

Sec. 91.405. EXEMPTIONS.

This subchapter does not apply to any royalties that are payable to:(1) the board of regents of The University of Texas System under a lease of land

dedicated to the permanent university fund; or(2) the General Land Office as provided by Subchapter D, Chapter 52, of this code.

Sec. 91.406. ATTORNEY'S FEES AND MINIMUM AWARD.

If a suit is filed to collect proceeds and interest under this subchapter, the court shall include in any final judgment in favor of the plaintiff an award of:

(1) reasonable attorney's fees; and

91.403

51773.44666

91.404

51774.44667

91.405

51775.44668

91.406

51776.44669


141

(2) if the actual damages to the plaintiff are less than $200, an additional amount so that the total amount of damages equals $200.

Sec. 91.407. NOTICE OF CHANGE OF PAYOR.

(a) Following a change in payor, the new payor shall give written notice to each payee to whom the payor is responsible for distributing oil or gas proceeds. The notice must be given to the payee or the payee's designee at the payee's or designee's most recent known address.

(b) Upon receipt of payee's address from the operator or lessee, the payor must provide the notice within the time permitted for payment of proceeds and in accordance with the conditions for payment provided by Section 91.402. The notice must include:(1) the information required by Sections 91.502(1), (2), and (12) and Section 91.503;

and(2) the payor's telephone number.

(c) The notice may be given by any writing, including a division order, check stub, or attachment to a payment form.

(d) A payor that is obligated to pay interest to a payee under Section 91.403 and that does not give the payee a notice required by this section is liable to the payee for interest under that section at a rate that is two percent more than the rate provided by that section.

Sec. 91.408. INFORMATION FOR PAYEES OF PROCEEDS OF PRODUCTION FROM CERTAIN GAS WELLS.

(a) A payor of proceeds from the sale of gas produced from a tight formation as defined by Section 29(c)(2)(B), Internal Revenue Code of 1986, annually shall furnish the payee a statement providing the information necessary to compute the federal income tax credit provided by that section for the gas for which payment was made in the preceding year, including:(1) information as described in Section 91.502(1) of this code; and(2) the volume of the gas, measured in:(A) thousands of cubic feet and heating value; or(B) millions of British thermal units for each thousand cubic feet.

(b) A payor shall furnish a statement required by Subsection (a) not later than March 15 each year.

SUBCHAPTER K. SALTWATER DISPOSAL PITS Sec. 91.451. DEFINITION.

In this subchapter, "saltwater disposal pit" means a collecting pit on the surface of the ground used to store or evaporate oil field brines, geothermal resource water, or other mineralized water.

91.407

51777.44670

91.408

51778.44671

K

51779.44672

91.451

51780.44672


142

Sec. 91.452. PROHIBITED ACTIVITY.

Except as provided by this subchapter, a person conducting oil and gas development or production operations, geothermal operations, or underground hydrocarbon storage operations may not use a saltwater disposal pit for storage or evaporation of oil field brines.

Sec. 91.453. COMMISSION AUTHORIZED.

(a) On written application, the commission or its designated employee may administratively authorize a person to use a saltwater disposal pit on a temporary emergency basis.

(b) On written application, the commission or its designated employee may administratively authorize a person to use an impervious surface pit in conjunction with a geothermal operation, an underground hydrocarbon storage operation, or an approved saltwater disposal operation.

(c) In cases where it may be conclusively shown that use of a saltwater disposal pit can cause no pollution of surrounding productive agricultural land and no pollution of ground or surface water supplies, either because of the absence of such waters, or due to physical isolation of such waters by naturally occurring impervious barriers, the commission or its designated employee may administratively authorize a person to use a saltwater disposal pit.

(d) An authorization under this section must be in writing and must state the conditions under which any pit may be operated.

Sec. 91.454. REMOVAL OF AUTHORIZED PITS.

(a) A person who is authorized to operate a saltwater disposal pit under Section 91.453 of this code shall close the pit within 45 days after being ordered to close the pit by the commission; provided that the commission may grant an extension or extensions for a reasonable period or periods of time on a showing of good cause or upon request for an extension by the surface owner or owners of the land upon which the pit is situated.

(b) A saltwater disposal pit must be closed in compliance with this subchapter and rules, standards, and specifications adopted by the commission.

(c) In closing a saltwater disposal pit, the person authorized to operate the pit shall remove all saltwater and wastes and shall backfill and compact in compliance with commission-approved procedures.

Sec. 91.455. RULES, STANDARDS, AND SPECIFICATIONS.

(a) The commission shall adopt rules that:(1) define the procedures for obtaining authorization to operate a saltwater disposal pit;(2) define the conditions under which authorizations for saltwater disposal pits will be

granted;(3) establish standards for saltwater disposal pits authorized by the commission;(4) provide for standards for the proper closing of saltwater disposal pits authorized by

91.452

51781.44673

91.453

51782.44674

91.454

51783.44675

91.455

51784.44676


143

the commission; and(5) provide other standards, procedures, and requirements necessary to carry out this

subchapter.(b) The commission, by rule, shall require:

(1) liner specifications and installation procedures that are adequate to insulate a saltwater disposal pit; and

(2) the draining, cleaning, and closing of saltwater disposal pits. Sec. 91.456. INJUNCTIVE RELIEF.

If a person is operating a saltwater disposal pit in violation of this subchapter or the commission's rules, standards, or specifications, the commission may have the attorney general institute a suit in a district court in the county in which the saltwater disposal pit is located for injunctive relief to restrain the person from continuing to operate the pit in violation of this subchapter or the rules, standards, or specifications of the commission.

Sec. 91.457. REMOVAL OF UNAUTHORIZED PIT.

(a) The commission may order a person who is operating a saltwater disposal pit in violation of this subchapter to close the pit in compliance with this subchapter and commission rules, standards, and specifications, at the pit operator's own expense.

(b) If a person ordered to close a saltwater disposal pit under Subsection (a) fails or refuses to close the pit in compliance with the commission's order and rules, the commission may close the pit using money from the oil and gas regulation and cleanup fund and may direct the attorney general to file suits in any courts of competent jurisdiction in Travis County to recover applicable penalties and the costs incurred by the commission in closing the saltwater disposal pit.


(a) A person who violates Section 91.452 of this code or an order of the commission under Subsection (a), Section 91.457, commits an offense.

(b) An offense under this section is a Class A misdemeanor. Sec. 91.459. CIVIL PENALTY.

(a) A person who violates this subchapter or a rule, standard, or specification of the commission or who fails to close a saltwater disposal pit in compliance with this subchapter, a rule, standard, or specification of the commission, an order of the commission, or the authorization for the pit is subject to a civil penalty of not less than $100 nor more than $10,000 for each act of violation or failure to comply.

(b) The attorney general shall recover the civil penalty provided by Subsection (a) of this section in a court of competent jurisdiction.

(c) Any costs recovered by the attorney general under this subchapter shall be deposited in the oil and gas regulation and cleanup fund.

91.456

51785.44677

91.457

51786.44678

91.458

51787.44679

91.459

51788.44680


144

(d) Repealed by Acts 1991, 72nd Leg., ch. 603, Sec. 32(1), eff. Sept. 1, 1991. SUBCHAPTER L. ROYALTY REPORTING STANDARDS Sec. 91.5001. DEFINITION.

In this subchapter, "payor" has the meaning assigned by Section 91.401. Sec. 91.501. INFORMATION REQUIRED.

If payment is made to a royalty interest owner from the proceeds derived from the sale of oil or gas production pursuant to a division order, lease, servitude, or other agreement, the payor shall include the information required by Section 91.502 on the check stub, an attachment to the payment form, or another remittance advice.

Sec. 91.502. TYPES OF INFORMATION PROVIDED.

Each check stub, attachment to a payment form, or other remittance advice must include:(1) the lease, property, or well name, any lease, property, or well identification number

used to identify the lease, property, or well, and a county and state in which the lease, property, or well is located;

(2) the month and year during which the sales occurred for which payment is being made;

(3) the total number of barrels of oil or the total amount of gas sold;(4) the price per barrel or per MCF of oil or gas sold;(5) the total amount of state severance and other production taxes paid;(6) the windfall profit tax paid on the owner's interest;(7) any other deductions or adjustments;(8) the net value of total sales after deductions;(9) the owner's interest in sales from the lease, property, or well expressed as a

decimal;(10) the owner's share of the total value of sales before any tax deductions;(11) the owner's share of the sales value less deductions; and(12) an address and telephone number at which additional information regarding the

payment may be obtained and questions may be answered. Sec. 91.503. LEASE, PROPERTY, OR WELL DESCRIPTION.

If a division order is not provided that includes the information required by Section 91.402(c)(1)(B), the payor must, at a minimum, provide prior to or with the first payment to which this subchapter applies the information required by Section 91.402(c)(1)(B) for the lease, property, or well for which payment of proceeds is being reported.

Sec. 91.504. PROVIDING INFORMATION ABOUT PAYMENT DEDUCTIONS AND ADJUSTMENTS, HEATING VALUE, OR LEASE IDENTIFICATION.

L

51789.44681

91.5001

51790.44681

91.501

51791.44682

91.502

51792.44683

91.503

51793.44684

91.504

51794.44685


145

(a) If the payor does not explain on the check stub, attachment to the payment form, or other remittance advice, or by a separate mailing, deductions from or adjustments to payments, the payor must provide an explanation by certified mail not later than the 60th day after the date the payor receives a request from the royalty interest owner. The royalty interest owner must send the request by certified mail.

(b) If a royalty interest owner requests information by certified mail concerning the heating value of the gas produced or sold from the lease, property, or well in which the owner has an interest, the payor must, not later than the 60th day after the date the payor receives the request, provide by certified mail:(1) a copy of the Form G-1 filed with the commission; or(2) a check stub or separate statement that includes the information.

(c) A royalty interest owner who received a payment from a payor during the preceding calendar year may request in writing by certified mail that the payor provide a report listing the following information for the preceding year:(1) each lease, property, or well identification number;(2) each lease, property, or well name;(3) the field name;(4) the county and state in which the property is located; and(5) the commission lease identification number or commingling permit number or any

other identification number under which the production for the lease, property, or well is being reported to the state.

(d) A payor who receives a request for information under Subsection (c) shall provide the information by certified mail not later than the 60th day after the date the payor receives the request.

(e) At least once every 12 months, a payor shall provide the following statement to each royalty interest owner to whom the payor makes a payment:

Section 91.504, Texas Natural Resources Code, gives an owner of a royalty interest in oil or gas produced in Texas the right to request from a payor information about itemized deductions, the heating value of the gas, and the Railroad Commission of Texas identification number for the lease, property, or well that may not have been provided to the royalty interest owner. The request must be in writing and must be made by certified mail. A payor must respond to a request regarding itemized deductions, the heating value of the gas, or the Railroad Commission of Texas identification number by certified mail not later than the 60th day after the date the request is received. An owner of a royalty interest in oil or gas may obtain information regarding production that has been reported to the Railroad Commission of Texas by contacting the oil and gas division of the commission or accessing the commission's website and providing the identification number of the lease and the county in which the lease is located.

Sec. 91.505. PROVIDING OTHER INFORMATION.

91.505

51795.44686


146

If a royalty interest owner requests information or answers to questions concerning a payment made pursuant to this subchapter, other than information requested under Section 91.504, and the request is made by certified mail, the payor must respond to the request by certified mail not later than 30 days after the request is received.

Sec. 91.506. EXEMPTION.

If the information required by Section 91.502 is provided in some other manner on a monthly basis, the payor is not required to include the information on the check stub, attachment to the payment form, or other remittance advice.

Sec. 91.507. ENFORCEMENT.

(a) A royalty interest owner who does not receive the information required to be provided under Section 91.502 or 91.503 in a timely manner may send a written request for the information to the payor by certified mail.

(b) Not later than the 60th day after the date the payor receives the written request for information under this section, the payor shall provide the requested information by certified mail.

(c) If a payor fails to provide the requested information within the period specified by Subsection (b), either party may request mediation.

(d) If the royalty interest owner makes a written request for information under Section 91.504 or this section and the payor does not provide the information within the 60-day period, the royalty interest owner may bring a civil action against the payor to enforce the provisions of Section 91.504 or this section, as applicable. The prevailing party is entitled to recover reasonable court costs and attorney's fees.

SUBCHAPTER M. ELECTRIC LOGS Sec. 91.551. DEFINITIONS.

(a) In this subchapter:(1) "Well" means a well drilled for any purpose related to exploration for or production or

storage of oil or gas or both oil and gas, including a well drilled for injection of fluids to enhance hydrocarbon recovery, disposal of produced fluids, disposal of waste from exploration or production activity, or brine mining.

(2) "Electric log" means a wireline survey, except dipmeter surveys and seismic wireline surveys, run in an open hole or a cased hole of a well for purposes of obtaining geological information.

(3) "Drilling operation" means a continuous effort to drill or deepen a well bore for which the commission has issued a permit.

(4) "Operator" means a person who assumes responsibility for the regulatory compliance of a well as shown by a form the person files with the commission and the commission approves.

91.506

51796.44687

91.507

51797.44688

M

51798.44689

91.551

51799.44689


147

(b) In this subchapter, "operator" includes a predecessor or successor operator. Sec. 91.552. ELECTRIC LOGS REQUIRED TO BE FILED; CRITERIA.

(a) Except as otherwise provided by this subchapter, not later than the 90th day after the date a drilling operation is completed, the operator shall file with the commission a copy of a basic electric log run after September 1, 1985, in conjunction with the drilling or deepening of the well that meets basic criteria established by the commission.

(b) The commission by rule shall establish criteria for basic electric logs to be filed with the commission.

Sec. 91.553. AVAILABILITY OF ELECTRIC LOGS.

(a) Except as specifically provided by this section, each electric log filed with the commission under this subchapter is not confidential and is public information under Chapter 552, Government Code.

(b) Not later than the date by which an electric log is required to be filed with the commission under Section 91.552, the operator may file a written request with the commission asking that the electric log remain confidential and not be made available as public information. On filing this request, the electric log or copy of the electric log required to be filed with the commission may be retained by the operator, and the electric log may remain in the possession of the operator for the period of confidentiality and any extensions of that period. On filing of the request for confidentiality, the electric log becomes confidential and remains confidential for a period of one year after the date that the drilling operation was completed.

(c) If an electric log is made confidential under Subsection (b), the operator is entitled to have the period of confidentiality extended once for an additional period of two years. The commission shall grant the two-year extension on written request of the operator. The written request must be made to the commission before the one-year period of confidentiality under Subsection (b) expires.

(d) If an electric log is made confidential under Subsection (b) and the log was run in a well drilled on land submerged in state water, the operator is entitled to have the period of confidentiality extended for not more than two additional periods of two years each. The commission shall grant the extension or extensions on written request of the operator. The written request must be made to the commission before the expiration of the one-year period of confidentiality under Subsection (b) or the expiration of the first extension granted under this subsection.

(e) An operator required to file an electric log under this section who has held the log during a period of confidentiality or any extensions of that period shall file the log with the commission within 30 days after the conclusion of the period of confidentiality or the period of the last extension.

(f) An operator who fails to timely file with the commission a written request under Subsection (b) that an electric log remain confidential and not be made available as

91.552

51800.44690

91.553

51801.44691


148

public information or a written request under Subsection (c) or (d) for an extension of the period of confidentiality shall file the log with the commission immediately after the conclusion of the period for filing the request.

Sec. 91.554. AVAILABILITY OF CONFIDENTIAL ELECTRIC LOGS.

If the commission requires an electric log to be filed before the expiration of a period of confidentiality, the commission shall make that electric log available for inspection during the period of confidentiality only to:

(1) a person authorized in writing by the operator; and(2) members of the commission and its employees in the exercise of their powers and

duties under this code. Sec. 91.555. MANAGEMENT AND STORAGE OF ELECTRIC LOGS.

The commission may contract with any person for the management and storage of the electric logs filed with the commission.

Sec. 91.556. DENIAL OF ALLOWABLE.

If an operator fails to file an electric log as required by this subchapter, the commission may refuse to assign an allowable or a change in allowable for production from the well for which the electric log is required until the operator files the electric log with the commission.

SUBCHAPTER N. OIL AND GAS HAZARDOUS WASTE Sec. 91.601. DEFINITIONS.

In this subchapter:(1) "Oil and gas hazardous waste" means oil and gas waste that is a hazardous waste

as defined by the administrator of the United States Environmental Protection Agency under the federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.).

(2) "Oil and gas waste" means oil and gas waste as defined in Section 91.1011 of this chapter.

Sec. 91.602. RULES.

(a) To protect human health and the environment, the commission shall adopt and enforce rules and orders and may issue permits relating to the generation, transportation, treatment, storage, and disposal of oil and gas hazardous waste.

(b) The rules adopted by the commission under this section must be consistent with the hazardous waste regulations adopted by the administrator of the United States Environmental Protection Agency under the federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.). The commission may adopt and enforce rules that are more stringent than

91.554

51802.80093

91.555

51803.44693

91.556

51804.80094

N

51805.44695

91.601

51806.44695

91.602

51807.44696


149

the federal hazardous waste regulations if necessary to protect human health. Sec. 91.603. ACCESS TO PROPERTY AND RECORDS.

(a) A member or employee of the commission, on proper identification, may enter public or private property to:(1) inspect and investigate conditions relating to the generation, transportation,

treatment, storage, or disposal of oil and gas hazardous waste;(2) inspect and investigate conditions relating to the development of rules, orders, or

permits under Section 91.602 of this code;(3) monitor compliance with a rule, order, or permit of the commission; or(4) examine and copy, during reasonable working hours, those records or memoranda

of the business being investigated.(b) A member or employee acting under this section who enters an establishment on public

or private property shall observe the establishment's posted safety, internal security, and fire protection rules.


(a) A person who knowingly violates a rule, order, or permit of the commission issued under this subchapter commits an offense.

(b) An offense under this section is punishable by imprisonment for up to six months, by a fine of up to $10,000 for each day the violation is committed, or by both.

(c) Venue for prosecution under this section is in the county in which the violation is alleged to have occurred.

Sec. 91.605. HAZARDOUS OIL AND GAS WASTE GENERATION FEE.

(a) An annual fee is imposed on each operator who generates hazardous oil and gas waste.(b) The commission by rule shall set the fee, which must:

(1) be based on the volume of hazardous oil and gas waste generated by the operator; and

(2) be reasonably related to the costs of implementing this subchapter and enforcing the rules, orders, and permits adopted or issued by the commission under this subchapter.

(c) The commission by rule shall also prescribe the procedures by which an operator must account for the volume of hazardous oil and gas waste generated and pay the fee.

(d) This section does not apply to an operator who, at all facilities operated in this state, satisfies the requirements established by the administrator of the United States Environmental Protection Agency for a conditionally exempt small quantity generator.

(e) The fees collected under this section shall be deposited in the oil and gas regulation and cleanup fund.

SUBCHAPTER O. RAILROAD COMMISSION VOLUNTARY CLEANUP PROGRAM

91.603

51808.44697

91.604

51809.44698

91.605

51810.44699

O

51811.44700


150

Sec. 91.651. DEFINITIONS.

In this subchapter:(1) "Contaminant" includes a waste, pollutant, or substance regulated by, or that results

from an activity under the jurisdiction of, the commission under this chapter, Chapter 141 of this code, or Chapter 27, Water Code.

(2) "Environmental assessment" means the assessment described by Section 91.654.(3) "Response action" means the cleanup or removal of a contaminant from the

environment.(4) "Voluntary cleanup" means a response action taken under and in compliance with

this subchapter. Sec. 91.652. PURPOSE.

The purpose of the voluntary cleanup program is to provide an incentive to remediate property by removing the liability to the state of lenders, developers, owners, and operators who did not cause or contribute to contamination released at the site covered by the certificate. The program does not replace other voluntary actions and is restricted to voluntary actions.

Sec. 91.653. ELIGIBILITY FOR VOLUNTARY CLEANUP PROGRAM.

(a) Any site that is contaminated with a contaminant is eligible for participation in the voluntary cleanup program except the portion of a site that may be subject to a commission order.

(b) A person electing to participate in the voluntary cleanup program must:(1) enter into a voluntary cleanup agreement as provided by Section 91. 656; and(2) pay all costs of commission oversight of the voluntary cleanup.

Sec. 91.654. APPLICATION TO PARTICIPATE IN VOLUNTARY CLEANUP PROGRAM.

(a) A person who desires to participate in the voluntary cleanup program under this subchapter must submit to the commission an application and an application fee as prescribed by this section.

(b) An application submitted under this section must:(1) be on a form provided by the commission;(2) contain:

(A) general information concerning:(i) the person and the person's capability, including the person's financial

capability, to perform the voluntary cleanup;(ii) the site; and(iii) the name, address, and telephone number of all surface and mineral owners;

(B) other background information requested by the commission;(C) an environmental assessment of the actual or threatened release of the

91.651

51812.44700

91.652

51813.44701

91.653

51814.44702

91.654

51815.44703


151

contaminant at the site; and(D) if the person applying is not the surface owner, written authorization from the

surface owner agreeing to the applicant's participation in the program;(3) be accompanied by an application fee of $1,000; and(4) be submitted according to schedules set by the commission.

(c) The environmental assessment required by Subsection (b) must include:(1) a legal description of the site;(2) a description of the physical characteristics of the site;(3) the operational history of the site to the extent that history is known by the applicant;(4) information of which the applicant is aware concerning the nature and extent of any

relevant contamination or release at the site and immediately contiguous to the site, or wherever the contamination came to be located; and

(5) relevant information of which the applicant is aware concerning the potential for human exposure to contamination at the site.

(d) An application shall be processed in the order in which it is received.(e) Fees collected under this section shall be deposited to the credit of the oil and gas

regulation and cleanup fund under Section 81.067. Sec. 91.655. REJECTION OF APPLICATION.

(a) The commission may reject an application submitted under Section 91.654 if:(1) a state or federal enforcement action is pending that concerns the remediation of the

contaminant described in the application;(2) a federal grant requires an enforcement action at the site;(3) the application is incomplete or inaccurate; or(4) the site is ineligible under Section 91.653.

(b) If an application is rejected because it is incomplete or inaccurate, the commission, not later than the 45th day after receipt of the application, shall provide the person with a list of all information needed to make the application complete or accurate. A person may resubmit an application once without submitting an additional application fee if the person resubmits the application not later than the 45th day after the date the commission issues notice that the application has been rejected.

(c) If the commission rejects the application, the commission shall:(1) notify the person that the application has been rejected;(2) explain the reasons for rejection of the application; and(3) inform the person that the commission will refund half the person's application fee

unless the person indicates a desire to resubmit the application. Sec. 91.656. VOLUNTARY CLEANUP AGREEMENT.

(a) Before the commission evaluates any plan or report detailing the remediation goals and proposed methods of remediation, the person desiring to participate in the voluntary cleanup program must enter into a voluntary cleanup agreement that sets forth the

91.655

51816.44704

91.656

51817.44705


152

terms and conditions of the evaluation of the reports and the implementation of work plans.

(b) A voluntary cleanup agreement must provide for:(1) recovery by the commission of all reasonable costs:

(A) incurred by the commission in review and oversight of the person's work plan and reports and as a result of the commission's field activities;

(B) attributable to the voluntary cleanup agreement; and(C) in excess of the amount of fees submitted by the applicant under Section

91.654;(2) a schedule of payments to the commission to be made by the person for recovery of

all commission costs fairly attributable to the voluntary cleanup program, including direct and indirect costs of overhead, salaries, equipment, and utilities, and legal, management, and support costs; and

(3) appropriate tasks, deliverables, and schedules.(c) The voluntary cleanup agreement shall:

(1) identify all statutes and rules with which the person must comply;(2) describe any work plan or report to be submitted for review by the commission,

including a final report that provides all information necessary to verify that all work contemplated by the voluntary cleanup agreement has been completed;

(3) include a schedule for submitting the information required by Subdivision (2); and(4) state the technical standards to be applied in evaluating the work plans and reports,

with reference to the proposed future land use to be achieved.(d) If an agreement is not reached between a person desiring to participate in the voluntary

cleanup program and the commission on or before the 30th day after good faith negotiations have begun:(1) the person or the commission may withdraw from the negotiations; and(2) the commission retains the person's application fee.

(e) The commission may not initiate an enforcement action against a person who is in compliance with this section for the contamination or release that is the subject of the voluntary cleanup agreement or for activity that resulted in the contamination or release.

Sec. 91.657. TERMINATION OF AGREEMENT; COST RECOVERY. (a) The commission or the person in its sole discretion may terminate the agreement by

giving 15 days' advance written notice to the other. Only those costs incurred or obligated by the commission before notice of termination of the agreement are recoverable under the agreement if the agreement is terminated.

(b) Termination of the agreement does not affect any right the commission has under other law to recover costs.

(c) If the person does not pay to the commission the state's costs associated with the voluntary cleanup before the 31st day after the date the person receives notice that the costs are due and owing, the attorney general, at the request of the commission, shall


153

bring an action in the name of the state in Travis County to recover the amount owed and reasonable legal expenses, including attorney's fees, witness costs, court costs, and deposition costs.

Sec. 91.658. VOLUNTARY CLEANUP WORK PLANS AND REPORTS. (a) After signing a voluntary cleanup agreement, the person shall prepare and submit the

appropriate work plans and reports to the commission.(b) The commission shall review and evaluate the work plans and reports for accuracy,

quality, and completeness. The commission may approve a voluntary cleanup work plan or report or, if a work plan or report is not approved, notify the person concerning additional information or commitments needed to obtain approval.

(c) At any time during the evaluation of a work plan or report, the commission may request the person to submit additional or corrected information.

(d) After considering future land use, the commission may approve work plans and reports submitted under this section that do not require removal or remedy of all discharges, releases, and threatened releases at a site if the partial response actions for the property:(1) will be completed in a manner that protects human health and the environment;(2) will not cause, contribute, or exacerbate discharges, releases, or threatened

releases that are not required to be removed or remedied under the work plan; and(3) will not interfere with or substantially increase the cost of response actions to

address the remaining discharges, releases, or threatened releases.

Sec. 91.659. CERTIFICATE OF COMPLETION. (a) If the commission determines that a person has successfully completed a voluntary

cleanup approved under this subchapter, the commission shall certify that the action has been completed by issuing the person a certificate of completion.

(b) The certificate of completion must:(1) acknowledge the protection from liability provided by Section 91.660;(2) indicate the proposed future land use; and(3) include a legal description of the site and the name of the site's surface and mineral

owner and mineral operator at the time the application to participate in the voluntary cleanup program was filed.

(c) If the commission determines that the person has not successfully completed a voluntary cleanup approved under this subchapter, the commission shall notify of this determination the person who undertook the voluntary cleanup and the current surface and mineral owner and mineral operator of the site that is the subject of the cleanup.

Sec. 91.660. PERSONS RELEASED FROM LIABILITY. (a) A person who is not a responsible person under Section 91.113 at the time the person

applies to perform a voluntary cleanup:


154

(1) does not become a responsible person solely because the person signs the application; and

(2) is released, on certification under Section 91.659, from all liability to the state for cleanup of areas of the site covered by the certification, except for releases and consequences that the person causes.

(b) A person who is not a responsible person under Section 91.113 at the time the commission issues a certificate of completion under Section 91.659 is released, on issuance of the certificate, from all liability to the state for cleanup of areas of the site covered by the certificate, except for releases and consequences that the person causes.

(c) The release from liability provided by this section does not apply to a person who:(1) caused or contributed to the contamination at the site covered by the certificate;(2) acquires a certificate of completion by fraud, misrepresentation, or knowing failure to

disclose material information;(3) knows at the time the person acquires an interest in the site for which the certificate

of completion was issued that the certificate was acquired in a manner provided by Subdivision (2); or

(4) changes land use from the use specified in the certificate of completion if the new use may result in increased risks to human health or the environment.

Sec. 91.661. PERMIT NOT REQUIRED.

(a) A state or local permit is not required for removal or remedial action conducted on a site as part of a voluntary cleanup under this subchapter. A person shall coordinate a voluntary cleanup with ongoing federal and state waste programs.

(b) The commission by rule shall require that the person conducting the voluntary cleanup comply with any federal or state standard, requirement, criterion, or limitation to which the remedial action would otherwise be subject if a permit were required.

SUBCHAPTER P. CERTIFICATE OF COMPLIANCE Sec. 91.701. WELL OWNERS AND OPERATORS CERTIFICATES.

The owner or operator of any well subject to the jurisdiction of the commission under this title, Section 26.131, Water Code, or Subchapter C, Chapter 27, Water Code, shall secure from the commission a certificate showing compliance with that title, section, or subchapter, as applicable, rules adopted and orders issued under that title, section, or subchapter, as applicable, and any license, permit, or certificate issued to the owner or operator under that title, section, or subchapter, as applicable.

Sec. 91.702. PROHIBITED CONNECTION.

No operator of a pipeline or other carrier shall connect with any well subject to the jurisdiction of the commission under this title, Section 26.131, Water Code, or Subchapter C,

91.661

51822.44710

P

122089.111457

91.701

122090.111457

91.702

122091.111457


155

Chapter 27, Water Code, until the owner or operator of the well furnishes a certificate from the commission that the owner or operator has complied with that title, section, or subchapter, as applicable, rules adopted and orders issued under that title, section, or subchapter, as applicable, and any license, permit, or certificate issued to the owner or operator under that title, section, or subchapter, as applicable.

Sec. 91.703. TEMPORARY CONNECTION.

The provisions of this subchapter do not prevent a temporary connection with a well in order to take care of production and prevent waste until opportunity shall have been given the owner or operator of the well to secure the certificate.

Sec. 91.704. CANCELLATION OF CERTIFICATE.

The commission may cancel any certificate of compliance issued under the provisions of this subchapter if it appears that the owner or operator of a well covered by the provisions of the certificate, in the operation of the well or the production of oil or gas from the well, has violated or is violating this title, Section 26.131, Water Code, or Subchapter C, Chapter 27, Water Code, a rule adopted or order issued under that title, section, or subchapter, as applicable, or a license, permit, or certificate issued to the owner or operator under that title, section, or subchapter, as applicable. Before canceling a certificate of compliance, the commission shall give notice to the owner or operator by personal service or by registered or certified mail of the facts or conduct alleged to warrant the cancellation and shall give the owner or operator an opportunity to show compliance with all requirements of law for retention of the certificate as required by Section 2001.054, Government Code.

Sec. 91.705. EFFECT OF CANCELLATION ON OPERATOR OF PIPELINE OR OTHER CARRIER.

(a) On notice from the commission to the operator of a pipeline or other carrier connected to a well that the certificate of compliance pertaining to that well has been cancelled, the operator of the pipeline or other carrier shall disconnect from the well.

(b) It shall be unlawful for the operator of a pipeline or other carrier to reconnect to the well until a new certificate of compliance has been issued by the commission.

Sec. 91.706. EFFECT OF CANCELLATION ON OWNER OR OPERATOR OF WELL.

(a) On notice from the commission that a certificate of compliance for a well has been cancelled, it shall be unlawful for the owner or operator of the well to use the well for production, injection, or disposal until a new certificate of compliance covering the well has been issued by the commission.

(b) If an operator uses or reports use of a well for production, injection, or disposal for which the operator's certificate of compliance has been cancelled, the commission may refuse to renew the operator's organization report required by Section 91.142 until the operator pays the fee required by Section 91.707 and the commission issues the certificate of

91.703

122092.111457

91.704

122093.111457

91.705

122094.111457

91.706

122095.111457


156

compliance required for that well. Sec. 91.707. FEE FOR REISSUED CERTIFICATE.

(a) If a certificate of compliance for a well has been canceled for one or more violations of provisions of this title, Section 26.131, Water Code, or Subchapter C, Chapter 27, Water Code, rules adopted or orders issued under that title, section, or subchapter, as applicable, or licenses, permits, or certificates issued to the owner or operator of the well under that title, section, or subchapter, as applicable, the commission may not issue a new certificate of compliance until the owner or operator submits to the commission a nonrefundable fee of $300 for each severance or seal order issued for the well.

(b) Fees collected under this section shall be deposited to the oil and gas regulation and cleanup fund.

SUBCHAPTER Q. NOTICE OF PERMIT FOR CERTAIN OIL AND GAS OPERATIONS Sec. 91.751. DEFINITION.

In this subchapter, "surface owner" means the first person who is shown on the appraisal roll of the appraisal district established for the county in which a tract of land is located as owning an interest in the surface estate of the land at the time notice is required to be given under this subchapter.

Sec. 91.752. APPLICABILITY. This subchapter applies only to the drilling of a new oil or gas well or the reentry of a plugged and abandoned oil or gas well. This subchapter does not apply to:

(1) the plugging back, reworking, sidetracking, or deepening of an existing oil or gas well that has not been plugged and abandoned; or

(2) the use of a surface location that is the site of an existing oil or gas well that has not been plugged and abandoned to drill a horizontal oil or gas well.

Sec. 91.753. NOTICE REQUIRED.

(a) Not later than the 15th business day after the date the commission issues an oil or gas well operator a permit to drill a new oil or gas well or to reenter a plugged and abandoned oil or gas well, the operator shall give written notice of the issuance of the permit to the surface owner of the tract of land on which the well is located or is proposed to be located.

(b) An oil or gas well operator is not required to give notice under this subchapter to a surface owner if:(1) the operator and the surface owner have entered into an agreement that contains

alternative provisions regarding the operator's obligation to give notice of oil and gas operations; or

(2) the surface owner has waived in writing the owner's right to notice under this

91.707

122096.111457

Q

128370.117747

91.751

128390.117761

91.753

128392.117763


157

subchapter. Sec. 91.754. ADDRESS FOR NOTICE.

The notice must be given to the surface owner at the surface owner's address as shown by the records of the county tax assessor-collector at the time the notice is given.

Sec. 91.755. COMMISSION PERMITS AND RIGHTS OF OWNER OF MINERAL ESTATE NOT AFFECTED.

(a) This subchapter does not affect the status of any rule of law to the effect that the mineral estate in land is dominant over the surface estate.

(b) Failure to give notice as required by this subchapter does not restrict, limit, work as a forfeiture of, or terminate any existing or future permit issued by the commission or right to develop the mineral estate in land.

SUBCHAPTER R. AUTHORIZATION FOR MULTIPLE OR ALTERNATIVE USES OF WELLS Sec. 91.801. RULES AUTHORIZING MULTIPLE OR ALTERNATIVE USES OF WELLS.

The commission shall adopt rules allowing:(1) a person to obtain a permit for a well from the commission that authorizes the well to

be used for multiple purposes; and(2) an operator of a well authorized by a permit issued by the commission to convert the

well from its authorized purpose to a new or additional purpose. Sec. 91.802. LAW APPLICABLE TO GEOLOGIC STORAGE FACILITIES AND ASSOCIATED INJECTION WELLS.

(a) In this section, "anthropogenic carbon dioxide injection well" has the meaning assigned by Section 27.002, Water Code.

(b) If a well is authorized as or converted to an anthropogenic carbon dioxide injection well for geologic storage, Subchapter C-1, Chapter 27, Water Code, applies to the well.

(c) A conversion of an anthropogenic carbon dioxide injection well from use for enhanced recovery operations to use for geologic storage is not considered to be a change in the purpose of the well.

SUBCHAPTER S. DISCLOSURE OF COMPOSITION OF HYDRAULIC FRACTURING FLUIDS Sec. 91.851. DISCLOSURE OF COMPOSITION OF HYDRAULIC FRACTURING FLUIDS.

(a) The commission by rule shall:(1) require an operator of a well on which a hydraulic fracturing treatment is performed

to:(A) complete the form posted on the hydraulic fracturing chemical registry Internet

91.754

128393.117764

91.755

134331.122687

R

128371.117748

91.801

128372.117748

91.802

128373.117748

S

137985.127999

91.851

137986.127999


158

website of the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission with regard to the well;

(B) include in the form completed under Paragraph (A):(i) the total volume of water used in the hydraulic fracturing treatment; and(ii) each chemical ingredient that is subject to the requirements of 29 C.F.R.

Section 1910.1200(g)(2), as provided by a service company or chemical supplier or by the operator, if the operator provides its own chemical ingredients;

(C) post the completed form described by Paragraph (A) on the website described by that paragraph or, if the website is discontinued or permanently inoperable, post the completed form on another publicly accessible Internet website specified by the commission;

(D) submit the completed form described by Paragraph (A) to the commission with the well completion report for the well; and

(E) in addition to the completed form specified in Paragraph (D), provide to the commission a list, to be made available on a publicly accessible website, of all other chemical ingredients not listed on the completed form that were intentionally included and used for the purpose of creating a hydraulic fracturing treatment for the well. The commission rule shall ensure that an operator, service company, or supplier is not responsible for disclosing ingredients that:(i) were not purposely added to the hydraulic fracturing treatment;(ii) occur incidentally or are otherwise unintentionally present in the treatment; or(iii) in the case of the operator, are not disclosed to the operator by a service

company or supplier. The commission rule shall not require that the ingredients be identified based on the additive in which they are found or that the concentration of such ingredients be provided;

(2) require a service company that performs a hydraulic fracturing treatment on a well or a supplier of an additive used in a hydraulic fracturing treatment on a well to provide the operator of the well with the information necessary for the operator to comply with Subdivision (1);

(3) prescribe a process by which an entity required to comply with Subdivision (1) or (2) may withhold and declare certain information as a trade secret for purposes of Section 552.110, Government Code, including the identity and amount of the chemical ingredient used in a hydraulic fracturing treatment;

(4) require a person who desires to challenge a claim of entitlement to trade secret protection under Subdivision (3) to file the challenge not later than the second anniversary of the date the relevant well completion report is filed with the commission;

(5) limit the persons who may challenge a claim of entitlement to trade secret protection under Subdivision (3) to:(A) the landowner on whose property the relevant well is located;


159

(B) a landowner who owns property adjacent to property described by Paragraph (A); or

(C) a department or agency of this state with jurisdiction over a matter to which the claimed trade secret is relevant;

(6) require, in the event of a trade secret challenge, that the commission promptly notify the service company performing the hydraulic fracturing treatment on the relevant well, the supplier of the additive or chemical ingredient for which the trade secret claim is made, or any other owner of the trade secret being challenged and provide the owner an opportunity to substantiate its trade secret claim; and

(7) prescribe a process, consistent with 29 C.F.R. Section 1910.1200, for an entity described by Subdivision (1) or (2) to provide information, including information that is a trade secret as defined by Appendix D to 29 C.F.R. Section 1910.1200, to a health professional or emergency responder who needs the information in accordance with Subsection (i) of that section.

(b) The protection and challenge of trade secrets under this section is governed by Chapter 552, Government Code.


160

Statewide Rule 8

Title 16 Texas Administrative CodeSec. 3.8 WATER PROTECTION

(a) The following words and terms when used in this section shall have the following meanings, unless the context clearly indicates otherwise.

(1) Basic sediment pit--Pit used in conjunction with a tank battery for storage of basic sediment removed from a production vessel or from the bottom of an oil storage tank. Basic sediment pits were formerly referred to as burn pits.

(2) Brine pit--Pit used for storage of brine which is used to displace hydrocarbons from an underground hydrocarbon storage facility.

(3) Collecting pit--Pit used for storage of saltwater prior to disposal at a tidal disposal facility, or pit used for storage of saltwater or other oil and gas wastes prior to disposal at a disposal well or fluid injection well. In some cases, one pit is both a collecting pit and a skimming pit.

(4) Completion/workover pit--Pit used for storage or disposal of spent completion fluids, workover fluids and drilling fluid, silt, debris, water, brine, oil scum, paraffin, or other materials which have been cleaned out of the wellbore of a well being completed or worked over.

(5) Drilling fluid disposal pit--Pit, other than a reserve pit, used for disposal of spent drilling fluid. (6) Drilling fluid storage pit--Pit used for storage of drilling fluid which is not currently being used but

which will be used in future drilling operations. Drilling fluid storage pits are often centrally located among several leases.

(7) Emergency saltwater storage pit--Pit used for storage of produced saltwater for limited period of time. Use of the pit is necessitated by a temporary shutdown of disposal well or fluid injection well and/or associated equipment, by temporary overflow of saltwater storage tanks on a producing lease or by a producing well loading up with formation fluids such that the well may die. Emergency saltwater storage pits may sometimes be referred to as emergency pits or blowdown pits.

(8) Flare pit--Pit which contains a flare and which is used for temporary storage of liquid hydrocarbons which are sent to the flare during equipment malfunction but which are not burned. A flare pit is used in conjunction with a gasoline plant, natural gas processing plant, pressure maintenance or repressurizing plant, tank battery, or a well.

(9) Fresh makeup water pit--Pit used in conjunction with drilling rig for storage of water used to make up drilling fluid.

(10) Gas plant evaporation/retention pit--Pit used for storage or disposal of cooling tower blowdown, water condensed from natural gas, and other wastewater generated at gasoline plants, natural gas processing plants, or pressure maintenance or repressurizing plants.

(11) Mud circulation pit--Pit used in conjunction with drilling rig for storage of drilling fluid currently being used in drilling operations.

(12) Reserve pit--Pit used in conjunction with drilling rig for collecting spent drilling fluids; cuttings, sands, and silts; and wash water used for cleaning drill pipe and other equipment at the well site. Reserve pits are sometimes referred to as slush pits or mud pits.

(13) Saltwater disposal pit--Pit used for disposal of produced saltwater. (14) Skimming pit--Pit used for skimming oil off saltwater prior to disposal of saltwater at a tidal


161

disposal facility, disposal well, or fluid injection well. (15) Washout pit--Pit located at a truck yard, tank yard, or disposal facility for storage or disposal of oil

and gas waste residue washed out of trucks, mobile tanks, or skid-mounted tanks. (16) Water condensate pit--Pit used in conjunction with a gas pipeline drip or gas compressor station

for storage or disposal of fresh water condensed from natural gas. (17) Generator--Person who generates oil and gas wastes. (18) Carrier--Person who transports oil and gas wastes generated by a generator. A carrier of another

person's oil and gas wastes may be a generator of his own oil and gas wastes. (19) Receiver--Person who stores, handles, treats, reclaims, or disposes of oil and gas wastes

generated by a generator. A receiver of another person's oil and gas wastes may be a generator of his own oil and gas wastes.

(20) Director--Director of the Oil and Gas Division or his staff delegate designated in writing by the director of the Oil and Gas Division or the commission.

(21) Person--Natural person, corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, or any other legal entity.

(22) Affected person--Person who, as a result of the activity sought to be permitted, has suffered or may suffer actual injury or economic damage other than as a member of the general public.

(23) To dewater--To remove the free water. (24) To dispose--To engage in any act of disposal subject to regulation by the commission including,

but not limited to, conducting, draining, discharging, emitting, throwing, releasing, depositing, burying, landfarming, or allowing to seep, or to cause or allow any such act of disposal.

(25) Landfarming--A waste management practice in which oil and gas wastes are mixed with or applied to the land surface in such a manner that the waste will not migrate off the landfarmed area.

(26) Oil and gas wastes--Materials to be disposed of or reclaimed which have been generated in connection with activities associated with the exploration, development, and production of oil or gas or geothermal resources, as those activities are defined in paragraph (30) of this subsection, and materials to be disposed of or reclaimed which have been generated in connection with activities associated with the solution mining of brine. The term "oil and gas wastes" includes, but is not limited to, saltwater, other mineralized water, sludge, spent drilling fluids, cuttings, waste oil, spent completion fluids, and other liquid, semiliquid, or solid waste material. The term "oil and gas wastes" includes waste generated in connection with activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants unless that waste is a hazardous waste as defined by the administrator of the United States Environmental Protection Agency pursuant to the federal Solid Waste Disposal Act, as amended (42 United States Code §6901 et seq.).

(27) Oil field fluids--Fluids to be used or reused in connection with activities associated with the exploration, development, and production of oil or gas or geothermal resources, fluids to be used or reused in connection with activities associated with the solution mining of brine, and mined brine. The term "oil field fluids" includes, but is not limited to, drilling fluids, completion fluids, surfactants, and chemicals used to detoxify oil and gas wastes.

(28) Pollution of surface or subsurface water--The alteration of the physical, thermal, chemical, or biological quality of, or the contamination of, any surface or subsurface water in the state that renders the water harmful, detrimental, or injurious to humans, animal life, vegetation, or


162

property, or to public health, safety, or welfare, or impairs the usefulness or the public enjoyment of the water for any lawful or reasonable purpose.

(29) Surface or subsurface water--Groundwater, percolating or otherwise, and lakes, bays, ponds, impounding reservoirs, springs, rivers, streams, creeks, estuaries, marshes, inlets, canals, the Gulf of Mexico inside the territorial limits of the state, and all other bodies of surface water, natural or artificial, inland or coastal, fresh or salt, navigable or nonnavigable, and including the beds and banks of all watercourses and bodies of surface water, that are wholly or partially inside or bordering the state or inside the jurisdiction of the state.

(30) Activities associated with the exploration, development, and production of oil or gas or geothermal resources--Activities associated with:

(A) the drilling of exploratory wells, oil wells, gas wells, or geothermal resource wells; (B) the production of oil or gas or geothermal resources, including: (i) activities associated with the drilling of injection water source wells that penetrate the

base of usable quality water; (ii) activities associated with the drilling of cathodic protection holes associated with the

cathodic protection of wells and pipelines subject to the jurisdiction of the commission to regulate the production of oil or gas or geothermal resources;

(iii) activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants;

(iv) activities associated with any underground natural gas storage facility, provided the terms "natural gas" and "storage facility" shall have the meanings set out in the Texas Natural Resources Code, §91.173;

(v) activities associated with any underground hydrocarbon storage facility, provided the terms "hydrocarbons" and "underground hydrocarbon storage facility" shall have the meanings set out in the Texas Natural Resources Code, §91.201; and

(vi) activities associated with the storage, handling, reclamation, gathering, transportation, or distribution of oil or gas prior to the refining of such oil or prior to the use of such gas in any manufacturing process or as a residential or industrial fuel;

(C) the operation, abandonment, and proper plugging of wells subject to the jurisdiction of the commission to regulate the exploration, development, and production of oil or gas or geothermal resources; and

(D) the discharge, storage, handling, transportation, reclamation, or disposal of waste or any other substance or material associated with any activity listed in subparagraphs (A)-(C) of this paragraph, except for waste generated in connection with activities associated with gasoline plants, natural gas or natural gas liquids processing plants, pressure maintenance plants, or repressurizing plants if that waste is a hazardous waste as defined by the administrator of the United States Environmental Protection Agency pursuant to the federal Solid Waste Disposal Act, as amended (42 United States Code §6901, et seq.).

(31) Mined brine--Brine produced from a brine mining injection well by solution of subsurface salt formations. The term "mined brine" does not include saltwater produced incidentally to the exploration, development, and production of oil or gas or geothermal resources.

(32) Brine mining pit--Pit, other than a fresh mining water pit, used in connection with activities associated with the solution mining of brine. Most brine mining pits are used to store mined brine.

(33) Fresh mining water pit--Pit used in conjunction with a brine mining injection well for storage of


163

water used for solution mining of brine. (34) Inert wastes--Nonreactive, nontoxic, and essentially insoluble oil and gas wastes, including, but

not limited to, concrete, glass, wood, metal, wire, plastic, fiberglass, and trash. (35) Coastal zone--The area within the boundary established in Title 31, Texas Administrative Code,

§503.1 (Coastal Management Program Boundary). (36) Coastal management program (CMP) rules--The enforceable rules of the Texas Coastal

Management Program codified at Title 31, Texas Administrative Code, Chapters 501, 505, and 506.

(37) Coastal natural resource area (CNRA)--One of the following areas defined in Texas Natural Resources Code, §33.203: coastal barriers, coastal historic areas, coastal preserves, coastal shore areas, coastal wetlands, critical dune areas, critical erosion areas, gulf beaches, hard substrate reefs, oyster reefs, submerged land, special hazard areas, submerged aquatic vegetation, tidal sand or mud flats, water in the open Gulf of Mexico, and water under tidal influence.

(38) Coastal waters--Waters under tidal influence and waters of the open Gulf of Mexico. (39) Critical area--A coastal wetland, an oyster reef, a hard substrate reef, submerged aquatic

vegetation, or a tidal sand or mud flat as defined in Texas Natural Resources Code, §33.203. (40) Practicable--Available and capable of being done after taking into consideration existing

technology, cost, and logistics in light of the overall purpose of the activity.

(b) No pollution. No person conducting activities subject to regulation by the commission may cause or allow pollution of surface or subsurface water in the state.

(c) Exploratory wells. Any oil, gas, or geothermal resource well or well drilled for exploratory purposes shall be governed by the provisions of statewide or field rules which are applicable and pertain to the drilling, safety, casing, production, abandoning, and plugging of wells.

(d) Pollution control. (1) Prohibited disposal methods. Except for those disposal methods authorized for certain wastes by

paragraph (3) of this subsection, subsection (e) of this section, or §3.98 of this title (relating to Standards for Management of Hazardous Oil and Gas Waste), or disposal methods required to be permitted pursuant to §3.9 of this title (relating to Disposal Wells) (Rule 9) or §3.46 of this title (relating to Fluid Injection into Productive Reservoirs) (Rule 46), no person may dispose of any oil and gas wastes by any method without obtaining a permit to dispose of such wastes. The disposal methods prohibited by this paragraph include, but are not limited to, the unpermitted discharge of oil field brines, geothermal resource waters, or other mineralized waters, or drilling fluids into any watercourse or drainage way, including any drainage ditch, dry creek, flowing creek, river, or any other body of surface water.

(2) Prohibited pits. No person may maintain or use any pit for storage of oil or oil products. Except as authorized by paragraph (4) or (7)(C) or (8) of this subsection, no person may maintain or use any pit for storage of oil field fluids, or for storage or disposal of oil and gas wastes, without obtaining a permit to maintain or use the pit. A person is not required to have a permit to use a pit if a receiver has such a permit, if the person complies with the terms of such permit while using the pit, and if the person has permission of the receiver to use the pit. The pits required by this


164

paragraph to be permitted include, but are not limited to, the following types of pits: saltwater disposal pits; emergency saltwater storage pits; collecting pits; skimming pits; brine pits; brine mining pits; drilling fluid storage pits (other than mud circulation pits); drilling fluid disposal pits (other than reserve pits or slush pits); washout pits; and gas plant evaporation/retention pits. If a person maintains or uses a pit for storage of oil field fluids, or for storage or disposal of oil and gas wastes, and the use or maintenance of the pit is neither authorized by paragraph (4) or (7)(C) or (8) of this subsection nor permitted, then the person maintaining or using the pit shall backfill and compact the pit in the time and manner required by the director. Prior to backfilling the pit, the person maintaining or using the pit shall, in a permitted manner or in a manner authorized by paragraph (3) of this subsection, dispose of all oil and gas wastes which are in the pit.

(3) Authorized disposal methods. (A) Fresh water condensate. A person may, without a permit, dispose of fresh water which has

been condensed from natural gas and collected at gas pipeline drips or gas compressor stations, provided the disposal is by a method other than disposal into surface water of the state.

(B) Inert wastes. A person may, without a permit, dispose of inert and essentially insoluble oil and gas wastes including, but not limited to, concrete, glass, wood, and wire, provided the disposal is by a method other than disposal into surface water of the state.

(C) Low chloride drilling fluid. A person may, without a permit, dispose of the following oil and gas wastes by landfarming, provided the wastes are disposed of on the same lease where they are generated, and provided the person has the written permission of the surface owner of the tract where landfarming will occur: water base drilling fluids with a chloride concentration of 3,000 milligrams per liter (mg/liter) or less; drill cuttings, sands, and silts obtained while using water base drilling fluids with a chloride concentration of 3,000 mg/liter or less; and wash water used for cleaning drill pipe and other equipment at the well site.

(D) Other drilling fluid. A person may, without a permit, dispose of the following oil and gas wastes by burial, provided the wastes are disposed of at the same well site where they are generated: water base drilling fluid which had a chloride concentration in excess of 3,000 mg/liter but which have been dewatered; drill cuttings, sands, and silts obtained while using oil base drilling fluids or water base drilling fluids with a chloride concentration in excess of 3,000 mg/liter; and those drilling fluids and wastes allowed to be landfarmed without a permit.

(E) Completion/workover pit wastes. A person may, without a permit, dispose of the following oil and gas wastes by burial in a completion/workover pit, provided the wastes have been dewatered, and provided the wastes are disposed of at the same well site where they are generated: spent completion fluids, workover fluids, and the materials cleaned out of the wellbore of a well being completed or worked over.

(F) Effect on backfilling. A person's choice to dispose of a waste by methods authorized by this paragraph shall not extend the time allowed for backfilling any reserve pit, mud circulation pit, or completion/workover pit whose use or maintenance is authorized by paragraph (4) of this subsection.

(4) Authorized pits. A person may, without a permit, maintain or use reserve pits, mud circulation pits, completion/workover pits, basic sediment pits, flare pits, fresh makeup water pits, fresh mining water pits, and water condensate pits on the following conditions.


165

(A) Reserve pits and mud circulation pits. A person shall not deposit or cause to be deposited into a reserve pit or mud circulation pit any oil field fluids or oil and gas wastes, other than the following: (i) drilling fluids, whether fresh water base, saltwater base, or oil base; (ii) drill cuttings, sands, and silts separated from the circulating drilling fluids; (iii) wash water used for cleaning drill pipe and other equipment at the well site; (iv) drill stem test fluids; and (v) blowout preventer test fluids.

(B) Completion/workover pits. A person shall not deposit or cause to be deposited into a completion/workover pit any oil field fluids or oil and gas wastes other than spent completion fluids, workover fluid, and the materials cleaned out of the wellbore of a well being completed or worked over.

(C) Basic sediment pits. A person shall not deposit or cause to be deposited into a basic sediment pit any oil field fluids or oil and gas wastes other than basic sediment removed from a production vessel or from the bottom of an oil storage tank. Although a person may store basic sediment in a basic sediment pit, a person may not deposit oil or free saltwater in the pit. The total capacity of a basic sediment pit shall not exceed a capacity of 50 barrels. The area covered by a basic sediment pit shall not exceed 250 square feet.

(D) Flare pits. A person shall not deposit or cause to be deposited into a flare pit any oil field fluids or oil and gas wastes other than the hydrocarbons designed to go to the flare during upset conditions at the well, tank battery, or gas plant where the pit is located. A person shall not store liquid hydrocarbons in a flare pit for more than 48 hours at a time.

(E) Fresh makeup water pits and fresh mining water pits. A person shall not deposit or cause to be deposited into a fresh makeup water pit any oil and gas wastes or any oil field fluids other than water used to make up drilling fluid. A person shall not deposit or cause to be deposited into a fresh mining water pit any oil and gas wastes or any oil field fluids other than water used for solution mining of brine.

(F) Water condensate pits. A person shall not deposit or cause to be deposited into a water condensate pit any oil field fluids or oil and gas wastes other than fresh water condensed from natural gas and collected at gas pipeline drips or gas compressor stations.

(G) Backfill requirements. (i) A person who maintains or uses a reserve pit, mud circulation pit, fresh makeup water pit,

fresh mining water pit, completion/workover pit, basic sediment pit, flare pit, or water condensate pit shall dewater, backfill, and compact the pit according to the following schedule. (I) Reserve pits and mud circulation pits which contain fluids with a chloride concentration

of 6,100 mg/liter or less and fresh makeup water pits shall be dewatered, backfilled, and compacted within one year of cessation of drilling operations.

(II) Reserve pits and mud circulation pits which contain fluids with a chloride concentration in excess of 6,100 mg/liter shall be dewatered within 30 days and backfilled and compacted within one year of cessation of drilling operations.

(III) All completion/workover pits used when completing a well shall be dewatered within 30 days and backfilled and compacted within 120 days of well completion. All completion/workover pits used when working over a well shall be dewatered within 30


166

days and backfilled and compacted within 120 days of completion of workover operations.

(IV) Basic sediment pits, flare pits, fresh mining water pits, and water condensate pits shall be dewatered, backfilled, and compacted within 120 days of final cessation of use of the pits.

(V) If a person constructs a sectioned reserve pit, each section of the pit shall be considered a separate pit for determining when a particular section should be dewatered.

(ii) A person who maintains or uses a reserve pit, mud circulation pit, fresh makeup water pit, or completion/workover pit shall remain responsible for dewatering, backfilling, and compacting the pit within the time prescribed by clause (i) of this subparagraph, even if the time allowed for backfilling the pit extends beyond the expiration date or transfer date of the lease covering the land where the pit is located.

(iii) The director may require that a person who uses or maintains a reserve pit, mud circulation pit, fresh makeup water pit, fresh mining water pit, completion/workover pit, basic sediment pit, flare pit, or water condensate pit backfill the pit sooner than the time prescribed by clause (i) of this subparagraph if the director determines that oil and gas wastes or oil field fluids are likely to escape from the pit or that the pit is being used for improper storage or disposal of oil and gas wastes or oil field fluids.

(iv) Prior to backfilling any reserve pit, mud circulation pit, completion/workover pit, basic sediment pit, flare pit, or water condensate pit whose use or maintenance is authorized by this paragraph, the person maintaining or using the pit shall, in a permitted manner or in a manner authorized by paragraph (3) of this subsection, dispose of all oil and gas wastes which are in the pit.

(5) Responsibility for disposal. (A) Permit required. No generator or receiver may knowingly utilize the services of a carrier to

transport oil and gas wastes if the carrier is required by this rule to have a permit to transport such wastes but does not have such a permit. No carrier may knowingly utilize the services of a second carrier to transport oil and gas wastes if the second carrier is required by this rule to have a permit to transport such wastes but does not have such a permit. No generator or carrier may knowingly utilize the services of a receiver to store, handle, treat, reclaim, or dispose of oil and gas wastes if the receiver is required by statute or commission rule to have a permit to store, handle, treat, reclaim, or dispose of such wastes but does not have such a permit. No receiver may knowingly utilize the services of a second receiver to store, handle, treat, reclaim, or dispose of oil and gas wastes if the second receiver is required by statute or commission rule to have a permit to store, handle, treat, reclaim, or dispose of such wastes but does not have such a permit. Any person who plans to utilize the services of a carrier or receiver is under a duty to determine that the carrier or receiver has all permits required by the Oil and Gas Division to transport, store, handle, treat, reclaim, or dispose of oil and gas wastes.

(B) Improper disposal prohibited. No generator, carrier, receiver, or any other person may improperly dispose of oil and gas wastes or cause or allow the improper disposal of oil and gas wastes. A generator causes or allows the improper disposal of oil and gas wastes if: (i) the generator utilizes the services of a carrier or receiver who improperly disposes of the


167

wastes; and (ii) the generator knew or reasonably should have known that the carrier or receiver was likely

to improperly dispose of the wastes and failed to take reasonable steps to prevent the improper disposal.

(6) Permits. (A) Standards for permit issuance. A permit to maintain or use a pit for storage of oil field fluids or

oil and gas wastes may only be issued if the commission determines that the maintenance or use of such pit will not result in the waste of oil, gas, or geothermal resources or the pollution of surface or subsurface waters. A permit to dispose of oil and gas wastes by any method, including disposal into a pit, may only be issued if the commission determines that the disposal will not result in the waste of oil, gas, or geothermal resources or the pollution of surface or subsurface water. A permit to maintain or use any unlined brine mining pit or any unlined pit, other than an emergency saltwater storage pit, for storage or disposal of oil field brines, geothermal resource waters, or other mineralized waters may only be issued if the commission determines that the applicant has conclusively shown that use of the pit cannot cause pollution of surrounding productive agricultural land nor pollution of surface or subsurface water, either because there is no surface or subsurface water in the area of the pit, or because the surface or subsurface water in the area of the pit would be physically isolated by naturally occurring impervious barriers from any oil and gas wastes which might escape or migrate from the pit. Permits issued pursuant to this paragraph will contain conditions reasonably necessary to prevent the waste of oil, gas, or geothermal resources and the pollution of surface and subsurface waters. A permit to maintain or use a pit will state the conditions under which the pit may be operated, including the conditions under which the permittee shall be required to dewater, backfill, and compact the pit. Any permits issued pursuant to this paragraph may contain requirements concerning the design and construction of pits and disposal facilities, including requirements relating to pit construction materials, dike design, liner material, liner thickness, procedures for installing liners, schedules for inspecting and/or replacing liners, overflow warning devices, leak detection devices, and fences. However, a permit to maintain or use any lined brine mining pit or any lined pit for storage or disposal of oil field brines, geothermal resource waters, or other mineralized waters will contain requirements relating to liner material, liner thickness, procedures for installing liners, and schedules for inspecting and/or replacing liners.

(B) Application. An application for a permit to maintain or use a pit or to dispose of oil and gas wastes shall be filed with the commission in Austin. The applicant shall mail or deliver a copy of the application to the appropriate district office on the same day the original application is mailed or delivered to the commission in Austin. A permit application shall be considered filed with the commission on the date it is received by the commission in Austin. When a commission-prescribed application form exists, an applicant shall make application on the prescribed form according to the instructions on such form. The director may require the applicant to provide the commission with engineering, geological, or other information which the director deems necessary to show that issuance of the permit will not result in the waste of oil, gas, or geothermal resources or the pollution of surface or subsurface water.

(C) Notice. The applicant shall give notice of the permit application to the surface owners of the tract upon which the pit will be located or upon which the disposal will take place. When the


168

tract upon which the pit will be located or upon which the disposal will take place lies within the corporate limits of an incorporated city, town, or village, the applicant shall also give notice to the city clerk or other appropriate official. Where disposal is to be by discharge into a watercourse other than the Gulf of Mexico or a bay, the applicant shall also give notice to the surface owners of each waterfront tract between the discharge point and 1/2 mile downstream of the discharge point except for those waterfront tracts within the corporate limits of an incorporated city, town, or village. When one or more waterfront tracts within 1/2 mile of the discharge point lie within the corporate limits of an incorporated city, town, or village, the applicant shall give notice to the city clerk or other appropriate official. Notice of the permit application shall consist of a copy of the application together with a statement that any protest to the application should be filed with the commission within 15 days of the date the application is filed with the commission. The applicant shall mail or deliver the required notice to the surface owners and the city clerk or other appropriate official on or before the date the application is mailed or delivered to the commission in Austin. If, in connection with a particular application, the director determines that another class of persons, such as offset operators, adjacent surface owners, or an appropriate river authority, should receive notice of the application, the director may require the applicant to mail or deliver notice to members of that class. If the director determines that, after diligent efforts, the applicant has been unable to ascertain the name and address of one or more persons required by this subparagraph to be notified, then the director may authorize the applicant to notify such persons by publishing notice of the application. The director shall determine the form of the notice to be published. The notice shall be published once each week for two consecutive weeks by the applicant in a newspaper of general circulation in the county where the pit will be located or the disposal will take place. The applicant shall file proof of publication with the commission in Austin. The director will consider the applicant to have made diligent efforts to ascertain the names and addresses of surface owners required by this subparagraph to be notified if the applicant has examined the current county tax rolls and investigated other reliable and readily available sources of information.

(D) Protests and hearings. If a protest from an affected person is made to the commission within 15 days of the date the application is filed, then a hearing shall be held on the application after the applicant requests a hearing. If the director has reason to believe that a person entitled to notice of an application has not received such notice within 15 days of the date an application is filed with the commission, then the director shall not take action on the application until reasonable efforts have been made to give such person notice of the application and an opportunity to file a protest to the application. If the director determines that a hearing is in the public interest, a hearing shall be held. A hearing on an application shall be held after the commission provides notice of hearing to all affected persons, or other persons or governmental entities who express an interest in the application in writing. If no protest from an affected person is received by the commission, the director may administratively approve the application. If the director denies administrative approval, the applicant shall have a right to a hearing upon request. After hearing, the hearings examiner shall recommend a final action by the commission.

(E) Modification, suspension, and termination. A permit granted pursuant to this paragraph, or a renewal permit granted pursuant to paragraph (7) of this subsection, or a permit which


169

remains in effect pursuant to paragraph (7)(A) or (B) or (8) of this subsection, may be modified, suspended, or terminated by the commission for good cause after notice and opportunity for hearing. A finding of any of the following facts shall constitute good cause: (i) pollution of surface or subsurface water is occurring or is likely to occur as a result of the

permitted operations; (ii) waste of oil, gas, or geothermal resources is occurring or is likely to occur as a result of

the permitted operations; (iii) the permittee has violated the terms and conditions of the permit or commission rules; (iv) the permittee misrepresented any material fact during the permit issuance process; (v) the permittee failed to give the notice required by the commission during the permit

issuance process; (vi) a material change of conditions has occurred in the permitted operations, or the

information provided in the application has changed materially. (F) Emergency permits. If the director determines that expeditious issuance of the permit will

prevent or is likely to prevent the waste of oil, gas, or geothermal resources or the pollution of surface or subsurface water, the director may issue an emergency permit. An application for an emergency permit to use or maintain a pit or to dispose of oil and gas wastes shall be filed with the commission in the appropriate district office. Notice of the application is not required. If warranted by the nature of the emergency, the director may issue an emergency permit based upon a verbal application, or the director may verbally authorize an activity before issuing a written permit authorizing that activity. An emergency permit is valid for up to 30 days, but may be modified, suspended, or terminated by the director at any time for good cause without notice and opportunity for hearing. Except when the provisions of this subparagraph are to the contrary, the issuance, denial, modification, suspension, or termination of an emergency permit shall be governed by the provisions of subparagraphs (A)-(E) of this paragraph.

(G) Minor permits. If the director determines that an application is for a permit to store only a minor amount of oil field fluids or to store or dispose of only a minor amount of oil and gas waste, the director may issue a minor permit provided the permit does not authorize an activity which results in waste of oil, gas, or geothermal resources or pollution of surface or subsurface water. An application for a minor permit shall be filed with the commission in the appropriate district office. Notice of the application shall be given as required by the director. The director may determine that notice of the application is not required. A minor permit is valid for 30 days, but a minor permit which is issued without notice of the application may be modified, suspended, or terminated by the director at any time for good cause without notice and opportunity for hearing. Except when the provisions of this subparagraph are to the contrary, the issuance, denial, modification, suspension, or termination of a minor permit shall be governed by the provisions of subparagraphs (A)-(E) of this paragraph.

(7) Existing permits and pits (other than existing brine mining pit permits and brine mining pits). (A) Existing permits. Each permit to maintain or use a lined or unlined pit for storage or disposal

of oil field brines, geothermal resource water, or other mineralized waters, which has been issued by the commission prior to the effective date of this subsection, shall expire 180 days after the effective date of this subsection. Every other permit to store oil field fluids or oil and gas wastes or to dispose of oil and gas wastes, which permit has been issued by the


170

commission prior to the effective date of this subsection, shall remain in effect until modified, suspended, or terminated by the commission pursuant to paragraph (6)(E) of this subsection. The permits which will expire pursuant to this paragraph include, but are not limited to, permits for the following types of pits: saltwater disposal pits, emergency saltwater storage pits, skimming pits, and brine pits.

(B) Renewal permits. Any person holding a permit scheduled to expire pursuant to subparagraph (A) of this paragraph may apply to the commission for renewal of the permit. If a person makes timely and sufficient application for renewal of a permit, then, notwithstanding the provisions of subparagraph (A) of this paragraph, the permit shall not expire until final commission action renewing or denying renewal of the permit. An application for renewal of a permit shall be filed with the commission in Austin within 180 days of the effective date of this subsection. No notice of the application is required. The director may administratively approve an application for renewal of a permit. No hearing shall be held on an application for renewal of a permit unless the applicant requests a hearing or the director determines that a hearing is necessary. No renewal permit will be issued unless the standards for permit issuance stated in paragraph (6)(A) of this subsection have been met.

(C) Operating existing unpermitted pits. If, as of the effective date of this subsection, a person is maintaining or using a pit, which is required by this subsection to be permitted but which was not required to be permitted prior to the effective date of this subsection, then the person maintaining or using the pit may continue to maintain or use the pit for 180 days after the effective date of this subsection. If a person makes timely and sufficient application for a permit to maintain or use such an existing but unpermitted pit, then the person may continue to use the pit until final commission action denying the permit. An application for a permit shall be considered timely if it is filed with the commission within 180 days of the effective date of this subsection. The issuance or denial of the permit shall be governed by the provisions of paragraph (6) of this subsection. The unpermitted pits, whose use or maintenance is authorized by this subparagraph, include, but are not limited to, the following types of pits: drilling fluid storage pits, gas plant evaporation/retention pits, and washout pits.

(D) Backfilling existing pits. If, as of the effective date of this subsection, a person is maintaining or using a basic sediment pit which does not meet the 50-barrel size limitation of paragraph (4)(C) of this subsection, then that person shall dewater, backfill, and compact the pit or rebuild the pit to comply with the 50-barrel size limitation within 180 days of the effective date of this subsection. Any person who, as of the effective date of the subsection, is maintaining or using a lined or unlined pit for storage or disposal of oil field brines, geothermal resource waters, or other mineralized waters, which pit was permitted prior to the effective date of this subsection, shall dewater, backfill, and compact the pit within 270 days of the effective date of this subsection unless the person applies for a renewal permit pursuant to subparagraph (B) of this paragraph. If a person applies for a renewal of a permit to maintain or use a lined or unlined pit for storage or disposal of oil filled brines, geothermal resource waters, or other mineralized waters, the director may extend the time for dewatering, backfilling, and compacting the pit to up to 90 days after final commission action denying renewal of the permit. If, as of the effective date of this subsection, a person is maintaining or using a pit, which is required by this subsection to be permitted but which was not required to be permitted prior to the effective date of this subsection, then the person maintaining or using


171

the pit shall dewater, backfill, and compact the pit within 270 days of the effective date of this subsection unless the person applies for a permit to maintain or use the pit within the 180-day period allowed by subparagraph (C) of this paragraph. If a person applies for such a permit to maintain or use a previously unpermitted pit, the director may extend the time for dewatering, backfilling, and compacting the pit to up to 90 days after final commission action denying issuance of the permit. The director may require that pits required to be backfilled by this subparagraph be dewatered, backfilled, and compacted sooner than the time prescribed by this subparagraph if the director determines that oil and gas wastes are likely to escape from the pit or that the pit is being used for improper disposal of oil and gas wastes.

(8) Existing brine mining pit permits and brine mining pits. Existing brine mining pit permits and brine mining pits will be governed by the provisions of this paragraph rather than the provisions of paragraph (7) of this subsection. (A) Existing brine mining pit permits. Any permit to maintain or use a brine mining pit, which

permit has been issued by the commission prior to January 6, 1987, will remain in effect until modified, suspended, or terminated by the commission pursuant to paragraph (6)(E) of this subsection.

(B) Existing brine mining pits. If, as of January 6, 1987, a person is maintaining or using a brine mining pit and has not obtained a permit from the commission to maintain or use the pit, then the person may continue to use the pit through January 30, 1987. If the person makes timely and sufficient application for a permit to maintain or use the pit, then the person may continue to use the pit until final commission action denying the permit. An application for a permit to maintain or use the pit will be considered timely if it is filed with the commission by January 30, 1987. The issuance or denial of the permit will be governed by the provisions of paragraph (6) of this subsection. Unless the person maintaining or using the pit makes timely and sufficient application for a permit to maintain or use the pit, the person shall close the pit by May 1, 1987. If the person maintaining or using the pit makes timely and sufficient application for a permit to maintain or use the pit, but the permit is denied, then the person shall close the pit within 90 days after final commission action denying the permit. A pit required by this subparagraph to be closed shall be closed in accordance with a plan approved by the director. A closure plan must be submitted to the director for approval at least 60 days before the pit is required to be closed. The closure plan must describe the manner in which the pit will be dewatered or emptied, backfilled, and compacted. The director may require that a pit required to be closed by this subparagraph be closed sooner than the time prescribed by this subparagraph if the director determines that oil and gas wastes or oil field fluids are likely to escape from the pit or that the pit is being used for improper storage or disposal of oil and gas wastes or oil field fluids.

(9) Used oil. Used oil as defined in §3.98 of this title (relating to Standards for Management of Hazardous Oil and Gas Waste), shall be managed in accordance with the provisions of 40 CFR, Part 279.

(e) Pollution prevention (reference Order Number 20-59,200, effective May 1, 1969). (1) The operator shall not pollute the waters of the Texas offshore and adjacent estuarine zones

(saltwater bearing bays, inlets, and estuaries) or damage the aquatic life therein. (2) All oil, gas, and geothermal resource well drilling and producing operations shall be conducted in


172

such a manner to preclude the pollution of the waters of the Texas offshore and adjacent estuarine zones. Particularly, the following procedures shall be utilized to prevent pollution. (A) The disposal of liquid waste material into the Texas offshore and adjacent estuarine zones shall

be limited to saltwater and other materials which have been treated, when necessary, for the removal of constituents which may be harmful to aquatic life or injurious to life or property.

(B) No oil or other hydrocarbons in any form or combination with other materials or constituent shall be disposed of into the Texas offshore and adjacent estuarine zones.

(C) All deck areas on drilling platforms, barges, workover unit, and associated equipment both floating and stationary subject to contamination shall be either curbed and connected by drain to a collecting tank, sump, or enclosed drilling slot in which the containment will be treated and disposed of without causing hazard or pollution; or else drip pans, or their equivalent, shall be placed under any equipment which might reasonably be considered a source from which pollutants may escape into surrounding water. These drip pans must be piped to collecting tanks, sumps, or enclosed drilling slots to prevent overflow or prevent pollution of the surrounding water.

(D) Solid combustible waste may be burned and the ashes may be disposed of into Texas offshore and adjacent estuarine zones. Solid wastes such as cans, bottles, or any form of trash must be transported to shore in appropriate containers. Edible garbage, which may be consumed by aquatic life without harm, may be disposed of into Texas offshore and adjacent estuarine zones.

(E) Drilling muds which contain oil shall be transported to shore or a designated area for disposal. Only oil-free cutting and fluids from mud systems may be disposed of into Texas offshore and adjacent estuarine zones at or near the surface.

(F) Fluids produced from offshore wells shall be mechanically contained in adequately pressure-controlled piping or vessels from producing well to disposition point. Oil and water separation facilities at offshore and onshore locations shall contain safeguards to prevent emission of pollutants to the Texas offshore and adjacent estuarine zones prior to proper treatment.

(G) All deck areas on producing platforms subject to contamination shall be either curbed and connected by drain to a collecting tank or sump in which the containment will be treated and disposed of without causing hazard or pollution, or else drip pans, or their equivalent, shall be placed under any equipment which might reasonably be considered a source from which pollutants may escape into surrounding water. These drip pans must be piped to collecting tanks or sumps designed to accommodate all reasonably expected drainage. Satisfactory means must be provided to empty the sumps to prevent overflow.

(H) Any person observing water pollution shall report such sighting, noting size, material, location, and current conditions to the ranking operating personnel. Immediate action or notification shall be made to eliminate further pollution. The operator shall then transmit the report to the appropriate commission district office.

(I) Immediate corrective action shall be taken in all cases where pollution has occurred. An operator responsible for the pollution shall remove immediately such oil, oil field waste, or other pollution materials from the waters and the shoreline where it is found. Such removal operations will be at the expense of the responsible operator.

(3) The commission may suspend producing and/or drilling operations from any facility when it appears that the provisions of this rule are being violated.

(4) (Reference Order Number 20-60,214, effective October 1, 1970.) The foregoing provisions of Rule


173

8(D) shall also be required and enforced as to all oil, gas, or geothermal resource operations conducted on the inland and fresh waters of the State of Texas, such as lakes, rivers, and streams.

(f) Oil and gas waste haulers. (1) A person who transports oil and gas waste for hire by any method other than by pipeline shall not

haul or dispose of oil and gas waste off a lease, unit, or other oil or gas property where it is generated unless such transporter has qualified for and been issued an oil and gas waste hauler permit by the commission. Hauling of inert waste, asbestos-containing material regulated under the Clean Air Act (42 USC §§7401 et seq), polychlorinated biphenyl (PCB) waste regulated under the Toxic Substances Control Act (15 USCA §§2601 et seq), or hazardous oil and gas waste subject to regulation under §3.98 of this title (relating to Standards for Management of Hazardous Oil and Gas Waste), is excluded from this subsection. This subsection is not applicable to the hauling of oil and gas wastes for recycling. For purposes of this subsection, injection of salt water or other oil and gas waste into an oil and gas reservoir for purposes of enhanced recovery does not qualify as recycling. A person who has a salt water hauler permit does not need to apply for an oil and gas waste hauler permit until the person is scheduled to file an application for permit renewal. (A) Application for an oil and gas waste hauler permit will be made on the commission-prescribed

form, and in accordance with the instructions thereon, and must be accompanied by: (i) the permit application fee required by §3.78 of this title (relating to Fees and Financial

Security Requirements) (Statewide Rule 78); (ii) vehicle identification information to support commission issuance of an approved vehicle

list; (iii) an affidavit from the operator of each commission-permitted disposal system the hauler

intends to use stating that the hauler has permission to use the system; and (iv) a certification by the hauler that the vehicles listed on the application are designed so that

they will not leak during transportation. (B) An oil and gas waste hauler permit may be issued for a term not to exceed one year, subject to

renewal by the filing of an application for permit renewal and the required application fee for the next permit period. The term of an oil and gas waste hauler permit will be established in accordance with a schedule prescribed by the director to allow for the orderly and timely renewal of oil and gas waste hauler permits on a staggered basis.

(C) Each oil and gas waste hauler shall operate in strict compliance with the instructions and conditions stated on the permit which provide: (i) This permit, unless suspended or revoked for cause shown, shall remain valid until the

expiration date specified in this permit. (ii) Each vehicle used by a permittee shall be marked on both sides and the rear with the

permittee's name and permit number in characters not less than three inches high. (For the purposes of this permit, "vehicle" means any truck tank, trailer tank, tank car, vacuum truck, dump truck, garbage truck, or other container in which oil and gas waste will be hauled by the permittee.)

(iii) Each vehicle must carry a copy of the permit including those parts of the commission-issued attachments listing approved vehicles and commission-permitted disposal systems that are relevant to that vehicle's activities. This permit authority is limited to those vehicles shown on the commission-issued list of approved vehicles.


174

(iv) This permit is issued pursuant to the information furnished on the application form, and any change in conditions must be reported to the commission on an amended application form. The permit authority will be revised as required by the amended application.

(v) This permit authority is limited to hauling, handling, and disposal of oil and gas waste. (vi) This permit authorizes the permittee to use commission-permitted disposal systems for

which the permittee has submitted affidavits from the disposal system operators stating that the permittee has permission to use the systems. These disposal systems are listed as an attachment to the permit. This permit also authorizes the permittee to use a disposal system operated under authority of a minor permit issued by the commission without submitting an affidavit from the disposal system operator. In addition, this permit authorizes the permittee to transport hazardous oil and gas waste to any facility in accordance with the provisions of §3.98 of this title (relating to Standards for the Management of Hazardous Oil and Gas Wastes), provided the shipment is accompanied by a manifest. Finally, this permit authorizes the transportation of oil and gas waste to a disposal facility permitted by another agency or another state provided the commission has granted separate authorization for the disposal.

(vii) The permittee must file an application for a renewal permit, using the permittee's assigned permit number, before the expiration date specified in this permit.

(viii) The permittee must compile and keep current a list of all persons by whom the permittee is hired to haul and dispose of oil and gas waste, and furnish such list to the commission upon request.

(ix) Each vehicle must be operated and maintained in such a manner as to prevent spillage, leakage, or other escape of oil and gas waste during transportation.

(x) Each vehicle must be made available for inspection upon request by commission personnel. (2) A record shall be kept by each oil and gas waste hauler showing daily oil and gas waste hauling

operations under the permitted authority. (A) Such daily record shall be dated and signed by the vehicle driver and shall show the following

information:(i) identity of the property from which the oil and gas waste is hauled; (ii) identity of the disposal system to which the oil and gas waste is delivered; (iii) the type and volume of oil and gas waste received by the hauler at the property where it was

generated; and (iv) the type and volume of oil and gas waste transported and delivered by the hauler to the

disposal system. (B) Such record shall be kept open for the inspection of the commission or its representatives. (C) Such record shall be kept on file for a period of three years from the date of operation and

recordation.

(g) Recordkeeping. (1) Oil and gas waste. When oil and gas waste is hauled by vehicle from the lease, unit, or other oil or

gas property where it is generated to an off-lease disposal facility, the person generating the oil and gas waste shall keep, for a period of three years from the date of generation, the following records: (A) identity of the property from which the oil and gas waste is hauled;


175

(B) identity of the disposal system to which the oil and gas waste is delivered; (C) name and address of the hauler, and permit number (WHP number) if applicable; and (D) type and volume of oil and gas waste transported each day to disposal.

(2) Retention of run tickets. A person may comply with the requirements of paragraph (1) of this subsection by retaining run tickets or other billing information created by the oil and gas waste hauler, provided the run tickets or other billing information contain all the information required by paragraph (1) of this subsection.

(3) Examination and reporting. The person keeping any records required by this subsection shall make the records available for examination and copying by members and employees of the commission during reasonable working hours. Upon request of the commission, the person keeping the records shall file such records with the commission.

(h) Penalties. Violations of this section may subject a person to penalties and remedies specified in the Texas Natural Resources Code, Title 3, and any other statutes administered by the commission. The certificate of compliance for any oil, gas, or geothermal resource well may be revoked in the manner provided in §3.73 of this title (relating to Pipeline Connection; Cancellation of Certificate of Compliance; Severance) (Rule 73) or violation of this section.

(i) Coordination between the Railroad Commission of Texas and the Texas Commission on Environmental Quality or its successor agencies. The Railroad Commission and the Texas Commission on Environmental Quality both have adopted by rule a memorandum of understanding regarding the division of jurisdiction between the agencies over wastes that result from, or are related to, activities associated with the exploration, development, and production of oil, gas, or geothermal resources, and the refining of oil. The memorandum of understanding is adopted in §3.30 of this title (relating to Memorandum of Understanding between the Railroad Commission of Texas (RRC) and the Texas Commission on Environmental Quality (TCEQ)).

(j) Consistency with the Texas Coastal Management Program. The provisions of this subsection apply only to activities that occur in the coastal zone and that are subject to the CMP rules. (1) Specific Policies.

(A) Disposal of Oil and Gas Waste in Pits. The following provisions apply to oil and gas waste disposal pits located in the coastal zone:

(i) no commercial oil and gas waste disposal pit constructed after the effective date of this subsection shall be located in any CNRA; and

(ii) all oil and gas waste disposal pits shall be designed to prevent releases of pollutants that adversely affect coastal waters or critical areas.

(B) Discharge of Oil and Gas Waste to Surface Waters. The following provisions apply to discharges of oil and gas waste that occur in the coastal zone: (i) no discharge of oil and gas waste to surface waters may cause a violation of the Texas

Surface Water Quality Standards adopted by the Texas Commission on Environmental Quality or its successor agencies and codified at Title 30, Texas Administrative Code, Chapter 307;

(ii) in determining whether any permit to discharge oil and gas waste that is comprised, in whole or in part, of produced water is consistent with the goals and policies of the CMP, the


176

commission shall consider the effects of salinity from the discharge;(iii) to the greatest extent practicable, in the case of any oil and gas exploration, production, or

development operation from which an oil and gas waste discharge commences after the effective date this subsection, the outfall for the discharge shall not be located where the discharge will adversely affect any critical area;

(iv) in the case of any oil and gas exploration, production, or development operation with an oil and gas waste discharge permitted prior to the effective date of this subsection that adversely affects any critical area, the outfall for the discharge shall either: (I) be relocated within two years after the effective date of this subsection, so that, to the

greatest extent practicable, the discharge does not adversely affect any critical area; or (II) the discharge shall be discontinued; and

(v) the commission shall notify the Texas Commission on Environmental Quality or its successor agencies and the Texas Parks and Wildlife Department upon receipt of an application for a permit to discharge oil and gas waste that is comprised, in whole or in part, of produced waters to waters under tidal influence.

(C) Development in Critical Areas. The provisions of this subparagraph apply to issuance under §401 of the federal Clean Water Act, United States Code, Title 33, §1341, of certifications of compliance with applicable water quality requirements for federal permits authorizing development affecting critical areas. Prior to issuing any such certification, the commission shall confirm that the requirements of Title 31, Texas Administrative Code, §501.14(h)(1)(A)-(G), have been satisfied. The commission shall coordinate its efforts under this subparagraph with those of other appropriate state and federal agencies.

(D) Dredging and Dredged Material Disposal and Placement. The provisions of this subparagraph apply to issuance under §401 of the federal Clean Water Act, United States Code, Title 33, §1341, of certifications of compliance with applicable water quality requirements for federal permits authorizing dredging and dredged material disposal and placement in the coastal zone. Prior to issuing any such certification, the commission shall confirm that the requirements of Title 31, Texas Administrative Code, §501.14(j), have been satisfied.

(2) Consistency Determinations. The provisions of this paragraph apply to issuance of determinations required under Title 31, Texas Administrative Code, §505.30 (Agency Consistency Determination), for the following actions listed in Title 31, Texas Administrative Code, §505.11(a)(3): permits to dispose of oil and gas waste in a pit; permits to discharge oil and gas wastes to surface waters; and certifications of compliance with applicable water quality requirements for federal permits for development in critical areas and dredging and dredged material disposal and placement in the coastal area. (A) The commission shall issue consistency determinations under this paragraph as an element of

the permitting process for permits to dispose of oil and gas waste in a pit and permits to discharge oil and gas waste to surface waters.

(B) Prior to issuance of a permit or certification covered by this paragraph, the commission shall determine if the proposed activity will have a direct and significant adverse effect on any CNRA identified in the provisions of paragraph (1) of this subsection that are applicable to such activity. (i) If the commission determines that issuance of a permit or a certification covered by this

paragraph would not result in direct and significant adverse effects to any CNRA identified in


177

the provisions of paragraph (1) of this subsection that are applicable to the proposed activity, the commission shall issue a written determination of no direct and significant adverse effect which shall read as follows: "The Railroad Commission has reviewed this proposed action for consistency with the Coastal Management Program (CMP) goals and policies, in accordance with the regulations of the Coastal Coordination Council (council), and has found that the proposed action will not have a direct and significant adverse affect on any coastal natural resource area (CNRA) identified in the applicable policies."

(ii) If the commission determines that issuance of a permit or certification covered by this paragraph would result in direct and significant adverse affects to a CNRA identified in the provisions of paragraph (1) of this subsection that are applicable to the proposed activity, the commission shall determine whether the proposed activity would meet the applicable requirements of paragraph (1) of this subsection. (I) If the commission determines that the proposed activity would meet the applicable

requirements of paragraph (1) of this subsection, the commission shall issue a written consistency determination which shall read as follows: "The Railroad Commission has reviewed this proposed action for consistency with the Texas Coastal Management Program (CMP) goals and policies, in accordance with the regulations of the Coastal Coordination Council (council), and has determined that the proposed action is consistent with the applicable CMP goals and policies."

(II) If the commission determines that the proposed activity would not meet the applicable requirements of paragraph (1) of this subsection, the commission shall not issue the permit or certification.

(3) Thresholds for Referral. Any commission action that is not identified in this paragraph shall be deemed not to exceed thresholds for referral for purposes of the CMP rules. Pursuant to Title 31, Texas Administrative Code, §505.32 (Requirements for Referral of an Individual Agency Action), the thresholds for referral of consistency determinations issued by the commission are as follows: (A) for oil and gas waste disposal pits, any permit to construct a pit occupying five acres or more of

any CNRA that has been mapped or that may be readily determined by a survey of the site; (B) for discharges, any permit to discharge oil and gas waste consisting, in whole or in part, of

produced waters into tidally influenced waters at a rate equal to or greater than 100,000 gallons per day;

(C) for certification of federal permits for development in critical areas: (i) in the bays and estuaries between Pass Cavallo in Matagorda Bay and the border with the

Republic of Mexico, any certification of a federal permit authorizing disturbance of: (I) ten acres or more of submerged aquatic vegetation or tidal sand or mud flats; or (II) five acres or more of any other critical area; and

(ii) in all areas within the coastal zone other than the bays and estuaries between Pass Cavallo in Matagorda Bay and the border with the Republic of Mexico, any certification of a federal permit authorizing disturbance of five acres or more of any critical area;

(D) for certification of federal permits for dredging and dredged material disposal or placement, certification of a permit authorizing removal of more than 10,000 cubic yards of dredged material from a critical area.