TITLE economic-regulation

Part I. Railroad Commission of Texas

Chapter 3. Oil and Gas Division

The Railroad Commission of Texas proposes to repeal §3.56, concerning scrubber oil and skim hydrocarbons, and concurrently to propose new §3.56 with the same title. The new rule reduces the reporting requirements for gas plant/disposal system operators and abolishes the current system for allocating scrubber and skim hydrocarbons among the producing properties served by a plant/disposal system. Because all of the requirements of existing §3.56 will be affected in the proposed rule, the commission believes that the repeal of §3.56 and adoption of a new §3.56 would be less complicated than amending the current §3.56.

The commission has determined that the current system of allocating back to each producing property a proportionate share of the monthly scrubber or skim hydrocarbons recovered at a gas plant or water disposal facility incorrectly allocates more recovered hydrocarbons to producers of dry gas than those producers actually produce. The allocation is made in the proportion that the volume of casinghead gas received from such producing property bears to the total volume of casinghead gas received by the plant during the reporting period. Therefore, producers of dry gas will be allocated a disproportionate share of recovered hydrocarbons compared to those producing properties that deliver "wetter" gas to the plant/facility.

The commission has also determined that the reporting requirements for gas plant/disposal facility operators can be reduced. Under the proposed new rule, only when the gas plant/disposal facility operator keeps the recovered hydrocarbons must it file Form R-3 or Form P-18 with the commission. If the gas plant/disposal system operator can identify the property of origin of the recovered hydrocarbons, a copy of Form R-3 or Form P-18 must be sent to that property's operator.

Rita E. Percival, systems analyst for the Oil and Gas Division, has determined that for each year of the first five- year period the proposed repeal and new rule will be in effect, there will be small positive fiscal implications to the state in that less documentation will be filed and processed at the commission. There will be no fiscal implications for local governments. The reporting requirements set forth in the new rule are less burdensome on gas plant/disposal system operators. Therefore, there will be a small decrease in the cost of compliance with the proposed rule for small businesses as a result of enforcing or administering the new rule.

Marshall F. Enquist, hearings examiner, Office of General Counsel, has determined that for each year of the first five years the new rule is in effect, there will be reduced economic costs to individuals who are required to comply with the rule as proposed because of reduced reporting requirements. In addition, for each year of the first five years the new rule is in effect, producers of dry gas will benefit from the more accurate reporting of hydrocarbon production and gas plant/disposal facility operators will benefit from reduced reporting requirements.

Comments may be submitted to Marshall F. Enquist, hearings examiner, Office of General Counsel - Oil & Gas Section, Railroad Commission of Texas, P.O. Box 12967, Austin, Texas 78711-2967. Comments will be accepted for 30 days after publication in the Texas Register . Comments are encouraged on all aspects of this rulemaking. Any commentor opposing the repeal of the allocation back provisions of this section is particularly encouraged to propose alternatives to the current system for allocating skim and scrubber oil back to producing properties.

16 TAC §3.56

(Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Railroad Commission of Texas or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The commission proposes to repeal existing §3.56 and to adopt new §3.56 pursuant to Texas Natural Resources Code, §§81.051 and 81.052, which provide the commission with jurisdiction over all persons owning or engaged in drilling or operating oil or gas wells in Texas and the authority to adopt all necessary rules for governing and regulating persons and their operations under the jurisdiction of the commission. Further, §85.202(a)(1) authorizes the commission to promulgate rules to prevent the waste of oil and gas in its storage, piping and distribution and, under §88.011, to adopt rules to provide for the method of measuring oil and gas produced from any well in this state. The commission is also authorized under §91.101(4) to promulgate rules relating to the reclamation of oil, condensate and gas.

The Texas Natural Resources Code, §§81.051, 81.052, 85.202(a)(1), 88.011, and 91.101(4) are affected by the proposed repeal and adoption.

§3.56.Scrubber Oil and Skim Hydrocarbons.

Issued in Austin, Texas on March 3, 1999.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on March 5, 1999.

TRD-9901344

Mary Ross McDonald

Deputy General Counsel

Railroad Commission of Texas

Earliest possible date of adoption: April 18, 1999

For further information, please call: (512) 463-7008

The commission proposes to repeal existing §3.56 and to adopt new §3.56 pursuant to Texas Natural Resources Code, §§81.051 and 81.052, which provide the commission with jurisdiction over all persons owning or engaged in drilling or operating oil or gas wells in Texas and the authority to adopt all necessary rules for governing and regulating persons and their operations under the jurisdiction of the commission. Further, §85.202(a)(1) authorizes the commission to promulgate rules to prevent the waste of oil and gas in its storage, piping and distribution and, under §88.011, to adopt rules to provide for the method of measuring oil and gas produced from any well in this state. The commission is also authorized under §91.101(4) to promulgate rules relating to the reclamation of oil, condensate and gas.

The Texas Natural Resources Code, §§81.051, 81.052, 85.202(a)(1), 88.011, and 91.101(4) are affected by the proposed repeal and adoption.

§3.56.Scrubber Oil and Skim Hydrocarbons.

(a)

Definitions. The following words and terms, when used in this section, shall have the following meanings unless the context clearly indicates otherwise:

(1)

Identifiable liquid hydrocarbons--Volume of scrubber oil/skim hydrocarbons that is received at a plant/salt water disposal facility where the origin of such liquid hydrocarbons can be clearly identified.

(2)

Producing property--A location from which hydrocarbons are being produced that has been assigned an identifying number by the commission and which is used in reporting production.

(3)

Scrubber oil--Liquid hydrocarbons which accumulate in lines that are transporting casinghead gas and are captured at the inlet to a gas processing plant.

(4)

Skim hydrocarbons--Oil and condensate accumulations that result from salt water disposal skimming operations.

(b)

Disposition of scrubber oil, skim hydrocarbons, and identifiable liquid hydrocarbon volumes.

(1)

Scrubber oil. Any scrubber oil that has not been returned to a producing property by the end of a monthly report period shall be reported by the operator of the plant on the monthly plant report, Form R-3 (Monthly Report for Gas Processing Plants).

(2)

Skim hydrocarbons. All liquid hydrocarbons recovered by a salt water disposal system receiving water shall be skimmed each reporting period. All skim hydrocarbons not returned to the producing property by the end of the report period shall be reported to the commission on the appropriate form for that reporting period. The operator of a salt water disposal system shall file Form P-18 (Skim Oil/Condensate Report) with the commission for each reporting period to report the operation of each separate disposal system. Such report shall be the authority for the movement of the hydrocarbons to beneficial disposition provided that the disposal system has been operated within the limits of the applicable regulations.

(3)

Identifiable liquid hydrocarbon volumes.

(A)

Identifiable liquid hydrocarbon volumes returned to the producing property during the reporting period in which the volume is received at the plant/salt water disposal facility shall not be reported to the commission on Form R-3 or Form P-18. The plant/salt water disposal facility operator shall notify the appropriate commission district office by telephone prior to the return of such volumes. The movement of these volumes back to the producing property shall comply with 16 TAC §3.72 of this title (relating to manifest to accompany each transport of liquid hydrocarbons by vehicle), commonly referred to as Statewide Rule 85.

(B)

Identifiable volumes not returned to the producing property shall be reported to the commission and to the operator of the producing property on Form R-3 or Form P-18 as prescribed in paragraph (1) or (2) of this subsection. Volumes shall be specifically identified to the appropriate producing property. The operator of the producing property shall report the disposition of such identifiable volumes as either skim oil, skim condensate, or scrubber oil on the appropriate production report.

Issued in Austin, Texas on March 3, 1999.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on March 5, 1999.

TRD-9901345

Mary Ross McDonald

Deputy General Counsel

Railroad Commission of Texas

Earliest possible date of adoption: April 18, 1999

For further information, please call: (512) 463-7008

Chapter 7. Gas Utilities Division

Subchapter B. Substantive Rules

16 TAC §7.70, §7.81

The Railroad Commission of Texas proposes to amend §7.70, relating to general and definitions, with respect to minimum safety standards and regulations applicable to natural gas pipeline facilities and natural gas transportation within the state of Texas, and §7.81, relating to safety regulations adopted concerning the transportation of hazardous liquids within the state. By these changes, the commission proposes to adopt by reference the new amendments issued by the United States Department of Transportation (USDOT) in 49 Code of Federal Regulations (CFR) Parts 192, 193, 194, 195, 198, and 199, concerning natural gas, liquified natural gas, hazardous liquids pipelines, and drug testing requirements.

The commission proposes to change the date stated in §7.70 and §7.81 to reflect the new date - January 15, 1999 - on which the commission adopts by reference the federal regulations in 49 CFR Parts 192, 193, 195, and 199 in order to adopt recent amendments to those regulations.

USDOT's Amendment No. 199-16, published at 62 Federal Register (FR) 67293, limits the applicability of the Drug Testing Rules only to operators whose employees are located within the United States territory, including the Outer Continental Shelf. This rule is based on a reevaluation of the complicated legal issues faced by DOT in enforcing its drug testing rules on employees located outside of United States territory.

Amendment No. 192-82 (later corrected to Amendment No. 192-83 in 63 FR 20134) requires operators of natural gas distribution systems to provide customers of new and replaced single residence service lines with information about excess flow valves (EFV's). This notice must explain to these customers the availability of these valves meeting USDOT prescribed performance standards and related safety benefits and costs. If a customer requests installation, the rule requires the operator to install the EFV if the customer pays all costs associated with installation. EFV's restrict the flow of gas by closing automatically if a service line breaks, thus mitigating the consequences of service line failures.

Amendments No. 192-81, and No. 195-59, published in 63 FR 12659, confirm the effective date of the federal direct final rule that excluded from USDOT safety regulations producer- operated gas and hazardous liquid pipelines located on the Outer Continental Shelf upstream from where operating responsibility transfers to a transporting operator. This rule was adopted by USDOT with an effective date of March 19, 1998.

Amendment No. 199-15, published in 63 FR 12998, requires a face-to-face evaluation by substance abuse professionals for pipeline employees who have either received a positive drug test or have refused a drug test required by the Research and Special Projects Administration. In addition, the substance abuse professional could require a pipeline employee to complete a rehabilitation program before being eligible to return to duty.

Amendment No. 199-16, published in 63 FR 14041, confirms the USDOT effective date of the federal direct final rule that amends the "Scope and Compliance" section of the Drug Testing Rules to revise the applicability requirements with respect to any operator located outside the territory of the United States or its Outer Continental Shelf.

Amendment No. 195-62, published in 63 FR 36373, adopts an industry publication for pipeline leak detection, API 1130, "Computational Pipeline Monitoring," published by the American Petroleum Institute, as a referenced document. This rule requires that an operator of a hazardous liquids pipeline use API 1130 in conjunction with other information in designing, evaluating, operating, maintaining, and testing its leak detection system.

Amendments No. 192-85, No. 193-16, No. 194-3, and No. 195-63, published in 63 FR 37500, provide metric equivalents to pipeline safety regulations. The metric equivalents are provided for informational purposes only; operators are to continue using English units for purposes of compliance and enforcement.

Amendments No. 192-83, 193-15, 194-2, 195-61, 198-3, and 199-17, published in 63 FR 7721, were part of the annual effort by the Office of Pipeline Safety, USDOT, to improve safety by clarifying and updating the pipeline safety regulations. (Amendment No.192-83 was later corrected to No. 192-84 in 63 FR 38757.) Revisions include updated references to voluntary specifications and standards incorporated by reference, and various clarifications and grammatical corrections. These updates reflect the most recent editions of each specification and standard incorporated by reference to enable pipeline operators to utilize current technology, materials, and practices. In addition, certain gender-specific terms have been replaced by gender-neutral terms.

The Research and Special Projects Administration incorporated by reference all or portions of nine updated documents containing practices, codes, standards, and specifications developed and published by technical organizations, including the American Society of Mechanical Engineers, American Society for Testing and Materials, Manufacturers Standardization Society of the Valve and Fittings Industry, and the National Fire Protection Association. The updated standards incorporate the latest technology and engineering practice. Adoption of these updated documents assures that pipeline operators will not be unnecessarily burdened with outdated materials.

These sections amend the following pipeline safety regulations to clarify their meaning:

1. Section 192.16(b)(5) states that "The operator (if applicable), plumbers, and heating contractors can assist in locating, inspecting, and repairing the customer's buried piping." This final rule clarifies the reference by deleting the term "plumbers" and inserting the word "plumbing contractors."

2. Section 192.614(b)(5) requires operators to "Provide for temporary marking of buried pipelines in the area of excavation activity before, as far as practical, the activity begins." This requirement can be confusing to the operator in terms of interpreting the meaning of "as far as practical." Therefore, this rule amends this paragraph to require temporary marking of buried pipelines before excavation activities begin "except in emergency situations[;]"

3. Section 195.56(a) describes safety-related condition reports "under § 191.55(a) . . .", which is inaccurate. Safety-related condition report requirements for Part 195 are contained in § 195.55(a). This rule makes that clarification.

4. The last line of § 199.117(a) clarifies that "samples may be discarded following the end of the 365-period." Also, this rule revises the language containing the term "his representative," removing the specific references to gender.

Sections 192.107(b)(2) and 193.2059(d)(l)(i) of the pipeline safety regulations contain minor grammatical errors and gender- specific language that is revised.

Amendments No. 192-84, No. 193-15, No. 194-2, No. 195-61, No. 198-3, and No. 199-17, published in 63 FR 38757, remove an amendment in a direct final rule titled "Periodic Updates to the Pipeline Safety Regulations" found at 62 FR 7721, and restore the regulatory text that existed prior to the direct final rule. The final rule updated references to voluntary specifications and standards incorporated by reference, and made various other corrections. Section 192.614(c)(5) requires operators to "Provide for temporary marking of buried pipelines in the area of excavation activity before, as far as practical, the activity begins." RSPA believed that this requirement could be confusing to the reader in terms of interpreting the meaning of "as far as practical." Therefore, RSPA amended the paragraph to require temporary marking of buried pipelines before excavation activities begin "except in emergency situations." Based on a comment to this clarification, RSPA removed this change from the direct final rule. The comment was based on the interpretation of""as far as practical." RSPA did not mean to distort the language of the regulation, only to clarify that operators would not be responsible for marking in an emergency situation. However, based on feedback from the pipeline industry and other regulatory bodies within RSPA, it was determined that the original language better served the reader of the regulation. RSPA plans to issue an interpretation of the language in § 192.614 to clarify its meaning.

Amendments No. 192-84, No.193-15, No. 194-2, No. 195-61, No. 198-3, and No. 199-17, published in 63 FR 38758, make minor corrections to "Periodic Updates to Pipeline Safety Rules," published on February 17, 1998. The rule incorrectly listed the amendment numbers for Part 192 at the beginning of the rule. The correct amendment number is 192-84, as noted above. Also, in updating the American Society for Testing and Materials (ASTM) Designation 2513, the rule inadvertently removed the reference to the ASTM 2513-87 edition for § 192.63(a)(1). This amendment corrects this reference to reflect the appropriate standard, ASTM Designation D 2513 "Standard Specification of Thermoplastic Gas Pressure Pipe, Tubing, and Fittings." (D 2513-96a).

Amendment No. 195-64, published in 63 FR 46692, excludes from the RSPA's safety standards for hazardous liquid pipelines regulated for safety by the US Coast Guard and low-stress pipelines less than one mile long that serve certain plants and transportation terminals without crossing an offshore area or a waterway currently used for commercial navigation. RSPA previously stayed enforcement of the standards against these pipelines to mitigate compliance difficulties that did not appear warranted by the safety risk. The rule change conforms the standards with this enforcement policy and eliminates duplicative and unnecessarily burdensome regulation.

Mary McDaniel, P.E., assistant director for Pipeline Safety Section, Gas Services Division, has determined that for each year of the first five years the sections as proposed are in effect, there will be no fiscal implications for state or local governments as a result of enforcing these sections.

The public benefits anticipated as a result of the enforcement of these amendments will be enhanced public safety and increased awareness of safety requirements in the transportation of natural gas, carbon dioxide, and hazardous liquids. The anticipated economic cost to individuals who are required to comply will be minimal. The cost of compliance will be the same for small and large businesses; but the cost cannot be determined because it depends on the type and size of the pipeline systems. Texas pipelines are already required to comply with the federal rules. Under 49 U.S.C. §§60101 et seq. , the Railroad Commission is authorized to enforce pipeline safety laws so long as the state's scheme of regulation is as strict or stricter than the federal system. In order to be considered "as strict or stricter" than the federal scheme of regulation, the state must adopt every federal rule; there are no exceptions for rules of limited application. Therefore, even though the rules already apply in Texas, the Railroad Commission must also adopt the rules for its own system.

Comments on the proposal may be submitted to Mary McDaniel, Pipeline Safety Section, Gas Services Division, Railroad Commission of Texas, P. O. Box 12967, Austin, Texas 78711-2967. Comments should refer to Gas Utilities Docket No. 8913, and should be filed no later than 14 days after this publication in the Texas Register . The Railroad Commission has determined that 14 days is a reasonable opportunity for persons to submit data, views, or arguments, inasmuch as the federal rules already apply to pipelines in Texas. For additional information, call Mary McDaniel at (512) 463-7058.

The amendments are proposed under Texas Utilities Code §121.201, which authorizes the commission to adopt rules and safety standards for the transportation of gas and for gas pipeline facilities, and under the Texas Natural Resources Code, § 117.001, which authorizes the commission to regulate the pipeline transportation of hazardous liquids and carbon dioxide and facilities related thereto under, and to take any other requisite action in accordance with, the Pipeline Safety Act, 49 United States Code § 60101.

Texas Utilities Code § 121.201 and Texas Natural Resources Code § 117.001 are affected by this proposal.

§7.70.General and Definitions.

(a)

Minimum safety standards. All gas pipeline facilities and the transportation of gas within this state, except those facilities and that transportation of gas which are subject to exclusive federal jurisdiction under the Natural Gas Pipeline Safety Act, 49 U.S.C.A. §60101 et seq., shall be designed, constructed, maintained and operated in accordance with the Minimum Safety Standards for Natural Gas, Liquified Natural Gas, and Hazardous Liquid Pipeline Operations, 49 C.F.R. Part 199, with amendments, effective January 15, 1999 [ June 2, 1997 ], and with the additional regulations set out in this section.

(b)-(k)

(No change.)

§7.81.Safety Regulations Adopted.

The commission adopts by specific reference the provisions (except as modified herein or hereafter) established by the United States Secretary of Transportation under the Pipeline Safety Act 49 U.S.C.A. §60101 et. seq. and set forth in 49 C.F.R. Part 195, Regulations for Transportation of Hazardous Liquids by Pipeline, and 49 C.F.R. Part 199, Control of Drug Use in Natural Gas, Liquified Natural Gas, and Hazardous Liquid Pipeline Operations, effective January 15, 1999 [ June 2, 1997 ]. Nothing in this section shall prevent the commission, after notice and hearing, from prescribing more stringent standards in individual situations. Any documents or parts of documents incorporated by reference into these rules shall be a part of these rules as if set out in full.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 5, 1999.

TRD-9901401

Mary Ross McDonald

Deputy General Counsel, Office of the General Counsel

Railroad Commission of Texas

Earliest possible date of adoption: April 18, 1999

For further information, please call: (512) 463-7008