TITLE 16.ECONOMIC REGULATION

Part 1. RAILROAD COMMISSION OF TEXAS

Chapter 3. OIL AND GAS DIVISION

The Railroad Commission of Texas proposes amendments to §3.5, relating to applications to drill, deepen, reenter or plug back; §3.11, relating to inclination and directional surveys; §3.37, relating to statewide spacing rule; §3.38, relating to well densities; the repeal of existing §3.70, relating to Commission forms required to be filed; amendments to §3.78, relating to fees, performance bonds and alternate forms of financial security required to be filed; new §3.80, relating to Commission forms, applications and filing requirements; and amendments to §3.86, relating to horizontal drainhole wells.

The Commission proposes the repeal of §3.70, commonly referred to as Statewide Rule 80, to conform the Texas Administrative Code section number to the Statewide Rule number. Proposed new §3.80 will also conform the title in the Texas Administrative Code with the title adopted by the Commission for this rule. Additionally, the text of proposed new §3.80 contains some substantive changes from the current text of §3.70.

The purpose of the amendments and new rule is to facilitate implementation of the Commission's Electronic Compliance and Approval Process (ECAP). The ECAP system provides operators with the option to file applications for drilling permits electronically. The Commission's current rules contain no provision authorizing electronic filings; the amendments and new rule will provide the necessary regulatory foundation for current Commission procedures relating to electronic filings, including participation in both the ECAP and the Electronic Data Interchange (EDI) systems. Additionally, the amendments and new rule will provide a regulatory framework for the Commission as it expands both the ECAP and EDI programs to meet the needs of the oil and gas industry. The amendments and new rule will also eliminate confusion and assist in the comprehension of general Commission filing requirements and current Commission procedures relating to electronic filings by incorporating the requirements and procedures in a single Commission rule, new §3.80. Additionally, the amendments and new rule will promote administrative efficiency and facilitate implementation of additional phases of ECAP by clarifying application requirements under §3.11, §3.37, §3.38, and §3.86.

The Commission simultaneously proposes the review and readoption of §3.11 in accordance with Texas Government Code, 2001.039. The agency's reasons for adopting this rule continue to exist. The notice of proposed review was filed with the Texas Register concurrently with this proposal.

Leslie Savage, Planning and Administration, Oil and Gas Division, has determined that for each year of the first five years that the amendments, repeal, and proposed new §3.80 (to be referred to as Statewide Rule 80) will be in effect there will be minimal fiscal implications for state government. The purpose of the proposed rule amendments and new rule is to facilitate electronic filing and processing of applications and other requests under the ECAP system. The Commission does not anticipate that the amendments and proposed new rule will result in either an increase or decrease in the total number of applications or requests filed, reviewed, and ruled on administratively, although the Commission expects an increase in filings being made through the ECAP system. Currently, the Commission is accepting and processing electronically certain types of drilling permit applications and expects that current staffing will be sufficient to continue to do so. There will be no effect on local government.

Ms. Savage has also determined that for each year of the first five years the proposed amendments, repeal, and new rule will be in effect, the public will benefit from the increased ease and expedited filing of applications to drill an oil or gas well, and other requests associated with oil and gas exploration and production as the Commission develops the necessary capabilities. Any cost of compliance with the proposed new rule and amendments for the small business or micro-business producer will be offset by increased efficiency and cost savings obtained through the use of the ECAP and EDI systems. Further, because participation in both the ECAP and EDI systems is voluntary, the Commission anticipates that there will be no mandatory costs of compliance for those organizations and individuals that opt not to participate in any electronic filings with the Commission.

Mark Helmueller, Hearings Examiner, Oil and Gas Section, Office of General Counsel, has determined that for each year of the first five years that the repeal, the new rule, and the amendments will be in effect the public benefit will be the implementation of the Commission's ECAP and EDI systems. The new rule and amendments will further effect the public benefit by specifying requirements for plats submitted with applications for drilling permits; outlining Commission requirements for electronic filings; incorporating within a single rule current Commission filing and permit requirements; and clarifying current language to be consistent with both current and future Commission procedures for electronic filings.

Mr. Helmueller has also determined that there is a public benefit in eliminating any potential confusion by conforming the section number with the statewide rule numbers. The Commission anticipates that there will be a net reduction in administrative costs as a result of eliminating improper designations which require administrative correction. The new designation will provide a similar benefit to persons who are required to comply with the new section and amendments.

Comments may be submitted to Mark Helmueller, Hearings Examiner, Oil and Gas Section, Office of General Counsel, Railroad Commission of Texas, P. O. Box 12967, Austin, Texas 78711-2967 or via electronic mail to mark.helmueller@rrc.state.tx.us. Comments will be accepted for 30 days after publication in the Texas Register and should refer to the docket number of this rulemaking proceeding: 20-0223059. For further information, call Mr. Helmueller at 512- 463-6802.

16 TAC §§3.5, 3.11, 3.37, 3.38, 3.78, 3.80, 3.86

The Commission proposes amendments to §§3.5, 3.11, 3.37, 3.78, and 3.86, and new §3.80 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.

The Texas Natural Resources Code, §§81.051, 81.052, 85.202(a)(1), 88.011, 91.101(4), and 92.001-92.007, are affected by the proposed new rule and amendments.

Issued in Austin, Texas, on March 6, 2001.

§3.5.Application to Drill, Deepen, Reenter, or Plug Back.

(a)

Requirements [ Permit requirements ] for spacing, density, and units. An application for a permit to drill, deepen, plug back, or reenter any oil well, gas well, or geothermal resource well shall be made under the provisions of §§3.37, 3.38, 3.39, and/or 3.40 of this title (relating to Statewide Spacing Rule; Well Densities; Proration and Drilling Units: Contiguity of Acreage and Exception Thereto; and Assignment of Acreage to Pooled Development and Proration Units) (Statewide Rules 37, 38, 39, and 40), or as an exception thereto, or under special rules governing any particular oil, gas, or geothermal resource field or as an exception thereto and filed with the commission on a form approved by the commission. An application must be accompanied by any relevant information, form, or certification required by the Railroad Commission or a commission representative necessary to determine compliance with this rule and state law.

(b)

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

(1)

Application--Request by an organization made either on the prescribed [ appropriate ] form or electronically pursuant to procedures for electronic filings adopted by the commission for a permit to drill, deepen, plug back, or reenter any oil well, gas well, or geothermal resource well.

(2)

Commission--The Railroad Commission of Texas.

(3)

Commission representative--A commission employee authorized to act for the commission. Any authority given to a commission representative is also retained by the commission. Any action taken by the commission representative is subject to review by the commission.

[(4)

Organization--Any person, firm, partnership, joint stock association, corporation, or other organization, domestic or foreign, operating wholly or partially within this state, acting as principal or agent for another, for the purpose of performing operations within the jurisdiction of the commission.]

[(5)

Outstanding final order--Either a commission order against an organization finding that the organization has committed a violation and all appeals have been exhausted or an agreed order entered into by the commission and an organization relating to an alleged violation, where:]

[(A)

the conditions that constituted the violation or alleged violation have not been corrected;]

[(B)

all administrative, civil, and criminal penalties, if any, relating to the violation or agreed settlement relating to an alleged violation have not been paid; or]

[(C)

all reimbursements of costs and expenses, if any, assessed by the commission relating to the violation or to the alleged violation have not been collected.]

[(6)

Position of ownership or control--A person holds a position of ownership or control in an organization if the person is:]

[(A)

an officer or director of the organization;]

[(B)

a general partner of the organization;]

[(C)

the owner of an organization which is a sole proprietorship;]

[(D)

the owner of more than a 25% ownership interest in the organization; or]

[(E)

the designated trustee of the organization.]

[(7)

Violation--Noncompliance with the Texas Natural Resources Code, Title 3, or a commission rule, order, license, permit, or certificate relating to safety or the prevention or control of pollution.]

[(c)

Organization eligibility to file an application. The commission may not accept an application from an organization, if within the five years preceding the date on which the application is filed:]

[(1)

the applicant organization has any outstanding final orders against it; or]

[(2)

any person holding a position of ownership or control in the applicant organization also has held a position of ownership or control in any organization, including the applicant organization, registered with the commission that has an outstanding final order against it relating to a violation during that period of ownership or control.]

[(d)

Compliance certification.]

[(1)

The commission or a commission representative may require an applicant organization to file a compliance certification. The certification shall include a statement that within the last five years:]

[(A)

the applicant organization has no outstanding final orders against it; and]

[(B)

no person in a position of ownership or control of the applicant organization has held a position of ownership or control in any organization, including the named organization, that has an outstanding final order against it relating to a violation during that period of ownership or control.]

[(2)

Failure to file a required certification will delay or prevent approval of the application. Knowingly filing a false certification may be a violation of the Texas Natural Resources Code, §91.143, and may also subject a permit to denial or revocation. A permit that is issued on the basis of a certification statement that is later determined to be incorrect is also subject to revocation.]

[(3)

If the certification is signed by an agent of an applicant organization, the certification is binding on the agent and the organization as if signed by a person holding a position of ownership or control in the organization.]

(c)

[ (e) ] Commencement of operations. Operations of drilling, deepening, plugging back, or reentering shall not be commenced until the permit has been granted by the commission and the waiting period, if any, has terminated, or authorization has been granted pursuant to subsection (d) [ (f) ] of this section.

(d)

[ (f) ] Testing of existing wells in other reservoirs inside the casing. For an existing well, an operator may request authorization to commence operations to deepen inside the casing or plug back prior to the granting of a permit to deepen or plug back.

(1)

This authorization shall be requested by submitting a request [ filing ] with the district office [ a letter of intent ] to deepen inside the casing or plug back. The request [ letter ] shall include:

(A)

the operator name;

(B)

the lease name;

(C)

the lease number or gas identification number;

(D)

well number;

(E)

county;

(F)

field name;

(G)

a list of all reservoir(s) to be tested;

(H)

the casing setting depth and the depth of the deepest reservoir to be tested;

(I)

a plat showing the well location; and

(J)

a statement as to whether or not the well location would require an exception to §§3.37, 3.38, 3.39, and/or 3.40 of this title (relating to Statewide Spacing Rule; Well Densities; Proration and Drilling Units: Contiguity of Acreage and Exception Thereto; and Assignment of Acreage to Pooled Development and Proration Units) (Statewide Rules 37, 38, 39, and 40) if completed in any of the reservoirs to be tested. If an exception would be required, the request [ letter of intent ] shall also include a statement that all affected offsets have been given written notice of the intent to test with the opportunity to witness the testing and the offsets shall be identified on the plat.

(2)

Operations of deepening inside the casing or plugging back shall not be commenced until the district office has reviewed and approved the request [ signed the letter of intent ]. Testing pursuant to this authorization shall be completed within 90 days from the date the district office approves the request [ signs the letter of intent ].

(A)

No reservoir tested pursuant to the provisions of this subsection shall be tested for more than 15 days.

(B)

If the operator desires to place the well on production, the operator shall shut in the well, with no production being sold, and file a permit application for the tested reservoirs with the appropriate fees. If the permit application for the tested reservoirs requires an exception to §§3.37, 3.38, 3.39, and/or 3.40 of this title (relating to Statewide Spacing Rule; Well Densities; Proration and Drilling Units: Contiguity of Acreage and Exception Thereto; and Assignment of Acreage to Pooled Development and Proration Units) (Statewide Rules 37, 38, 39, and 40), no consideration will be given by the commission to the cost of recompleting and testing the well in determining whether or not to grant the exception.

(C)

Within 30 days of completion of testing, the operator must either file an application for a permit to produce a reservoir tested pursuant to this subsection or file an amended completion report in accordance with §3.16 of this title (relating to Log and Completion of Plugging Report) (Statewide Rule 16) with a copy of the request [ intent to test ] signed by the district office and a statement that a permit to produce a tested reservoir is not being sought, or if the well has been plugged and abandoned, a plugging report including reservoir and perforation data. If a permit is not obtained for the tested reservoirs and/or an allowable is not assigned, the producer shall report all test production in the producer's monthly report filed for the last permitted reservoir in which the well was completed and may request authorization to sell the test production. The test production may be sold after such authorization is granted.

(e)

[ (g) ] Exploratory and specialty wells. An application for any exploratory well or cathodic protection well that penetrates the base of the fresh water strata, fluid injection well, injection water source well, disposal well, brine solution mining well, or underground hydrocarbon storage well shall be made and filed with the commission on a form approved by the commission. Operations for drilling, deepening, plugging back, or reentering shall not be commenced until the permit has been granted by the commission. For an exploratory well, an exception to filing such form prior to commencing operations may be obtained if an application for a core hole test is filed with the commission.

[(h)

Exception permits. If an application for a permit presents a question of an exception to the applicable density rule as well as an exception to the spacing rule, the operator seeking a spacing and density exception must obtain such an exception as required under the applicable spacing and density rules.]

(f)

[ (i) ] Drilling permit fee. With each application or materially amended application, the applicant shall submit to the commission a nonrefundable fee as determined by §3.78 of this title (relating to Fees, Performance Bonds, and Alternate Forms of Financial Security Required To Be Filed) (Statewide Rule 78).

(g)

Expiration. Any permit to drill, deepen, plug back, or reenter granted by the commission expires no later than two years after the date of original approval.

(h)

Plats. An application to drill, deepen, plug back, or reenter shall be accompanied by a neat, accurate plat, with a scale of one inch equals 1,000 feet. The plat for the initial well on the lease, pooled unit, or unitized tract shall show the entire lease, pooled unit, or tract, including all tracts being pooled. If necessary to show the entire lease, the scale may be one inch equals 2,000 feet. Plats for subsequent wells on a lease or pooled unit shall show at least the lease or pooled unit line nearest the proposed location and the nearest survey/section lines. The Division Director or the director's delegate may approve plats with other scales upon request.

(1)

The lease shall be outlined on the plat using either a heavy line or crosshatching.

(2)

The plat is to include the following:

(A)

surface location of the proposed drilling site;

(B)

perpendicular lines providing the distance in feet from two nearest non-parallel survey/section lines to the surface location;

(C)

perpendicular lines providing the distance in feet from two nearest non-parallel lease lines to the surface location;

(D)

a line providing the distance in feet from the surface location to the nearest point on the lease line, pooled unit line, or unitized tract line. If there is an unleased interest in a tract of the pooled unit that is nearer than the pooled unit line, the nearest point on that unleased tract boundary shall be used;

(E)

a line providing the distance in feet from the surface location to the nearest oil, gas, or oil and gas well identified by number either applied for, permitted, or completed in the same lease, pooled unit, or unitized tract and in the same field and reservoir;

(F)

the geographic location information;

(G)

a labeled scale bar; and

(H)

northerly direction.

(3)

Requirements for plats as provided for in §3.11, §3.37, §3.38, and §3.86 of this title may supplement or replace the plat requirements set out above.

§3.11.Inclination and Directional Surveys Required.

(a) - (c)

(No change.)

(d)

Intentional deviation of wells.

(1) - (2)

(No change.)

(3)

Applications for deviation.

(A)

Applications for wells to be directionally deviated must specify on the application to drill [ , and on the plat attached, ] both the surface location of the well and [ the target area within which ] the projected bottom hole location of the well [ is to be made ]. On the plat, in addition to the plat requirements provided for in §3.5 of this title (relating to Application to Drill, Deepen, Reenter, or Plug Back) (Statewide Rule 5), the following shall be included:

(i)

two perpendicular lines providing the distance in feet from the projected bottomhole location, rather than the surface location, to the nearest points on the lease, pooled unit, or unitized tract line. If there is an unleased interest in a tract of the pooled unit or unitized tract that is nearer than the pooled unit or unitized tract line, the nearest point on that unleased tract boundary shall be used;

(ii)

a line providing the distance in feet from the projected bottomhole location to the nearest point on the lease line, pooled unit line, or unitized tract line. If there is an unleased interest in a tract of the pooled unit that is nearer than the pooled unit line, the nearest point on that unleased tract boundary shall be used;

(iii)

a line providing the distance in feet from the projected bottomhole location, rather than the surface location, to the nearest oil, gas, or oil and gas well, identified by number, applied for, permitted, or completed in the same lease, pooled unit, or unitized tract and in the same field and reservoir; and

(iv)

perpendicular lines providing the distance in feet from the two nearest non-parallel survey/section lines to the projected bottomhole location.

(B)

If the necessity for directional deviation arises unexpectedly after drilling has begun, the operator shall give written notice by letter or telegram of such necessity to the appropriate district office and to the commission office in Austin, and upon giving such notice, the operator may proceed with the directional deviation. The commission may, at its discretion, accept written notice electronically transmitted. If the operator proceeds with the drilling of a deviated well under such circumstances, he proceeds at his own risk. Before any allowable shall be assigned to such well, a permit for the subsurface location of each completion interval shall be obtained from the commission under the provisions set out in the commission rules. However, should the operator fail to show good and sufficient cause for such deviation, no permit will be granted for the well.

(C)

If the necessity for random deviation arises unexpectedly after the drilling has begun, the operator shall give written notice by letter or telegram of such necessity to the appropriate district office and to the commission office in Austin, and, upon giving such notice, the operator may proceed with the random deviation, subject to compliance with the provisions of this section on inclination surveys. The commission may, at its discretion, accept written notice electronically transmitted.

(e) - (f)

(No change.)

§3.37.Statewide Spacing Rule.

(a)

Distance requirements.

(1)

(No change.)

(2)

When an exception to this section is desired, application shall be made by filing the proper fee as provided in §3.78 of this title (relating to Fees, Performance Bonds, and Alternate Forms of Financial Security Required To Be Filed) and the appropriate form according to the instructions on the form, accompanied by a plat as described in subsection (c) of this section. A person acquainted with the facts pertinent to the application shall certify that all facts stated in it are true and within the knowledge of that person [ and that the accompanying plat is accurately drawn to scale and correctly reflects all pertinent and required data ].

(A) - (B)

(No change.)

(3)

(No change.)

(b)

(No change.)

(c)

In filing an application for an exception to the distance requirements of this section, in addition to the plat requirements in §3.5 of this title (relating to Application to Drill, Deepen, Reenter, or Plug Back) (Statewide Rule 5), the applicant shall attach to each copy of the form a plat that:

(1)

shows to scale the property on which the exception is sought; all other applied for, permitted, and completed oil, gas, or oil and gas wells in the same field and reservoir on said property; and all adjoining surrounding properties and completed wells in the same field and reservoir within the prescribed minimum between-well spacing distance of the applicant's well;

(2)

shows the entire lease, pooled unit, or unitized tract indicating the names and offsetting properties of all affected offset operators;

(3)

corresponds to the listing required under subsection (a)(2) of this section;

(4)

is certified by a person acquainted with the facts pertinent to the application that the plat is accurately drawn to scale and correctly reflects all pertinent and required data.

[(c)

In filing the form, as hereinabove provided, applicant shall attach a plat to each copy of the form. The plat shall be drawn preferably to the scale of one inch equaling 1,000 feet; however scales of one inch equaling 500 feet or one inch equaling 2,000 feet will be accepted. On request and approval by the division director or the director's delegate, other scales may be accepted based on unusual circumstances. The plat must accurately show to scale the property on which the exception is sought; all other completed, drilling, or permitted wells in the same field(s) on said property; and all adjoining surrounding properties and completed wells in the same field(s) within the prescribed minimum between-well spacing distance of the applicant's well. The plat must show the entire lease or unit, indicating the names and offsetting properties of all adjacent offset operators and unleased mineral interest owners, and all operators and unleased mineral interest owners of tracts nearer to the well than the prescribed minimum lease-line distance requirement. For exceptionally large leases or units, an applicant, on request and approval by the Division Director or the director's delegate, may file one plat of the entire lease or unit with the initial application only. In subsequent applications for the same lease or unit, such applicant shall reference this plat, and file only that portion of the plat containing the drilling unit and well site that are the subject of the subsequent application.]

(d) - (m)

(No change.)

§3.38.Well Densities.

(a)

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

(1)

(No change.)

(2)

Drilling unit--The acreage assigned to a well for drilling purposes [ and outlined on the plat submitted with an application to drill ].

(3) - (6)

(No change.)

(b) - (f)

(No change.)

(g)

Filing [ General filing ] requirements.

(1)

Application. An application for permit to drill shall include the fees required in §3.78 of this title (relating to Fees, Performance Bonds, and Alternate Forms of Financial Security Required To Be Filed) and shall be certified by a [ some ] person acquainted with the facts, stating that all information in the application is true and complete to the best of that person's knowledge [ and that the accompanying plat is accurately drawn to scale and correctly reflects all pertinent and required data ].

(2)

Plat. When filing an application for an exception to the density requirements of this section, in addition to the plat requirements in §3.5 of this title (relating to Application to Drill, Deepen, Reenter, or Plug Back) (Statewide Rule 5), the applicant shall attach to each copy of the application a plat that:

(A)

depicts the lease, pooled unit, or unitized tract, showing thereon the acreage assigned to the drilling unit for the proposed well and the acreage assigned to all current applied for, permitted, or completed oil, gas, or oil and gas wells in the same field or reservoir which are located within the lease, pooled unit, or unitized tract;

(B)

on large leases, pooled units, or unitized tracts, if the established density is not exceeded as shown on the face of the application outlines the acreage assigned to the well for which the permit is sought and the immediately adjacent wells on the lease, pooled unit, or unitized tract;

(C)

on leases, pooled units, or unitized tracts from which production is secured from more than one field, outlines the acreage assigned to the wells in each field that is the subject of the current application;

(D)

corresponds to the listing required under subsection (g)(1)(A) of this section.

(E)

is certified by a person acquainted with the facts pertinent to the application that the plat is accurately drawn to scale and correctly reflects all pertinent and required data.

[(2)

Plat. The required plat must depict the lease, pooled unit, or unitized tract, showing thereon the acreage assigned to the drilling unit for the proposed well and the acreage assigned to all current applied for, permitted, or completed wells on the lease, pooled unit, or unitized tract. A permit to drill a well for oil, gas, or geothermal resource will not be granted until such plat has been attached to and made a part of such form.]

[(A)

On large leases, pooled units, or unitized tracts, if the established density is not exceeded as shown on the fact of the form, a plat will suffice that depicts the acreage assigned to the well for which the permit is sought and to the immediately adjacent wells on the lease, pooled unit, or unitized tract.]

[(B)

On plats of leases, pooled units, or unitized tracts from which production is secured from more than one field, the plat shall depict the acreage assigned to the wells in each field that is the subject of the current application.]

(3)

Substandard acreage. An application for a permit to drill on a lease, pooled unit, or unitized tract composed of substandard acreage must include a certification in a prescribed form indicating the date the lease, or the drillsite tract of a pooled unit or unitized tract, took its present size and shape.

(4)

Surplus acreage. An application for permit to drill on surplus acreage pursuant to subsection (c) of this section must include a certification in a prescribed form indicating the date the lease, pooled unit, or unitized tract took its present size and shape.

(h) - (i)

(No change.)

§3.78.Fees, Performance Bonds and Alternate Forms of Financial Security Required To Be Filed.

(a)

(No change.)

(b)

Filing fees. The following filing fees are required to be paid to the Railroad Commission.

(1)

(No change.)

(2)

An application for a permit to drill, deepen, plug back, or reenter a well will be considered materially amended if the amendment is made for a purpose other than:

(A)

to add omitted required information;

(B)

to correct typographical errors; or

(C)

to correct clerical errors.

[(2)

An application will be considered materially amended if the amendment requires the issuance of a new permit. A materially amended application includes an application in which an additional field or a change in location or field is sought for a previously permitted well. However, if a new application and/or permit becomes necessary because of commission action, the fee may be waived.]

(3) - (12)

(No change.)

(c) - (r)

(No change.)

§3.80.Commission Forms and Filing Requirements.

(a)

Forms. Forms required to be filed at the commission will be those prescribed by the commission. The commission may revise any forms, at its discretion, without having a rulemaking proceeding if the revisions do not result in any substantive changes to the forms. A complete set of all commission forms required to be filed at the commission will be kept by the commission secretary. Notice of any new or amended forms shall be issued by the commission.

(b)

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

(1)

Commission--The Railroad Commission of Texas.

(2)

Position of ownership or control--A person holds a position of ownership or control in an organization if the person is:

(A)

an officer or director of the organization;

(B)

a general partner of the organization;

(C)

the owner of an organization which is a sole proprietorship;

(D)

the owner of more than a 25 percent ownership interest in the organization; or

(E)

the designated trustee of the organization.

(3)

Violation--Non-compliance with a statute, commission rule, order, license, permit, or certificate relating to safety or the prevention or control of pollution.

(4)

Electronic filing--An electronic transmission to the commission in the prescribed form and format authorized by the commission.

(5)

Organization--Any person, firm, partnership, joint stock association, corporation, or other organization, domestic or foreign, operating wholly or partially within this state, acting as principal or agent for another, for the purpose of performing operations within the jurisdiction of the commission.

(c)

Organization eligibility. The commission may not accept an organization report or an application for a permit, or approve a certificate of compliance 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)

any person who holds a position of ownership or control in the organization has, within the five 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.

(d)

Violations. An organization has committed a violation if there is either a commission order against an organization finding that the organization has committed a violation and all appeals have been exhausted or an agreed order entered into by the commission and an organization relating to an alleged violation, and:

(1)

the conditions that constituted the violation or alleged violation have not been corrected;

(2)

all administrative, civil and criminal penalties, if any, relating to the violation or agreed settlement relating to an alleged violation have not been paid; or

(3)

all reimbursements of costs and expenses, if any, assessed by the commission relating to the violation or to the alleged violation have not been collected.

(e)

Requirements for electronic filing under the Electronic Compliance and Approval Process (ECAP). An organization may submit to the commission an electronic filing pursuant to the Electronic Compliance and Approval Process if:

(1)

the organization and the commission have executed a Master Electronic Filing Agreement;

(2)

the commission has authorized the electronic filing in a prescribed form and format as identified in Supplement 1 to the Master Electronic Filing Agreement;

(3)

the organization has filed a Security Administrator Designation with the commission; and

(4)

the organization pays all required filing fees.

(f)

Requirements for electronic filing under the Electronic Data Interchange (EDI) program. An organization may submit an electronic filing with the commission pursuant to the Electronic Data Interchange program if:

(1)

the organization has executed a Master Electronic Filing Certification;

(2)

the commission has authorized the electronic filing in a prescribed form and format under the Electronic Data Interchange program; and

(3)

the organization and any authorized agent comply with all provisions published by the commission for electronic filings.

(g)

Other electronic transmissions. The commission may at its discretion accept written notice electronically transmitted.

§3.86.Horizontal Drainhole Wells.

(a) - (e)

(No change.)

(f)

Drilling applications and required reports.

(1)

Application. Any intent to develop a new or existing well with horizontal drainholes must be indicated on the application to drill. An application for a permit to drill a horizontal drainhole shall include the fees required by Statewide Rule 78, §3.78 of this title (relating to Fees, Performance Bonds, and Alternate Forms of Financial Security Required To Be Filed), and shall be certified by a person acquainted with the facts, stating that all information in the application is true and complete to the best of that person's knowledge [ and that the accompanying plat is accurately drawn to scale and correctly reflects all pertinent and required data ].

(2)

Drilling unit plat. The application to drill a horizontal drainhole shall be accompanied by a plat.

(A)

In addition to the plat requirements provided for in §3.5 of this title (relating to Application to Drill, Recomplete, or Reenter) (Statewide Rule 5), the plat shall include:

(i)

the lease, pooled unit, or unitized tract, showing the acreage assigned to the drilling unit for the proposed well and the acreage assigned to the drilling units for all current applied for, permitted, or completed oil, gas, or oil and gas wells on the lease, pooled unit, or unitized tract;

(ii)

the surface location of the proposed horizontal drainhole well, and the proposed path, penetration points, and terminus locations of all drainholes;

(iii)

two perpendicular lines from the nearest point on the lease line, pooled unit line, or any unleased interest in a tract of the pooled unit, depicting the distance(s) to:

(I)

the penetration point(s); and

(II)

the terminus location(s);

(iv)

perpendicular lines providing the distance in feet from the two nearest non-parallel survey lines to the terminus location(s);

(v)

a line providing the distance in feet from the closest point along the horizontal course(s) of the drainhole(s) to the nearest point on the lease line, pooled unit line, or unitized tract line. If there is an unleased interest in a tract of the pooled unit that is nearer than the pooled unit line, the nearest point on that unleased tract boundary shall be used; and

(vi)

lines from the nearest oil, gas, or oil and gas well, applied for, permitted or completed in the same lease or pooled unit and in the same field and reservoir depicting the distance to:

(I)

the penetration point(s);

(II)

the closest point along the horizontal course(s) of the drainhole(s); and

(III)

the terminus location(s).

(B)

An amended drilling permit application and plat shall be filed after completion of the horizontal drainhole well if the commission determines that the drainhole as drilled is not reasonable with respect to the drainhole represented on the plat filed with the drilling permit application.

[(2)

Drilling Unit Plat. The required plat must depict the lease, pooled unit or unitized tract, showing the acreage assigned to the drilling unit for the proposed well and the acreage assigned to the drilling units for all current applied for, permitted or completed wells on the lease, pooled unit or unitized tract, the surface location of the proposed horizontal drainhole well, and the proposed path, penetration point, and terminus of all drainholes. An amended drilling application permit and plat shall be filed after completion of the horizontal drainhole well if the commission determines that the drainhole as drilled is not reasonable with respect to the drainhole represented on the plat filed with the drilling permit application.]

(3) - (4)

(No change.)

(g)

(No change.)

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 6, 2001.

TRD-200101329

Mary Ross McDonald

Deputy General Counsel

Railroad Commission of Texas

Earliest possible date of adoption: April 22, 2001

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


16 TAC §3.70

(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 the repeal of §3.70 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.

The Texas Natural Resources Code, §§81.051, 81.052, 85.202(a)(1), 88.011, 91.101(4), and 92.001-92.007, are affected by the proposed repeal.

Issued in Austin, Texas, on March 6, 2001.

§3.70.Commission Forms Required to be Filed.

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 6, 2001.

TRD-200101328

Mary Ross McDonald

Deputy General Counsel

Railroad Commission of Texas

Earliest possible date of adoption: April 22, 2001

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


Chapter 9. LIQUEFIED PETROLEUM GAS DIVISION

Subchapter A. GENERAL REQUIREMENTS

16 TAC §§9.2, 9.3, 9.8, 9.10, 9.51 - 9.54

The Railroad Commission of Texas proposes amendments to §§9.2, 9.3, 9.8, 9.10, 9.51, 9.52, 9.53, and new §9.54, relating to Definitions; LP-Gas Report Forms; Application for a New Certificate; Rules Examination; General Requirements for Training and Continuing Education; Training and Continuing Education Courses; Continuing Education Credit for Previous Courses; and Commission-Approved Outside Instructors. The main purpose of the rulemaking is to propose new §9.54 which establishes requirements for individuals who wish to be approved as outside instructors to offer training or continuing education courses approved by the Commission for Commission training or continuing education credit. The Commission has determined that applicants for outside instructors must hold a current Category E certification because this certification authorizes the widest number of LP-gas activities and the Commission believes that outside instructors should be knowledgeable and experienced in LP-gas activities. The outside instructor application includes a $300 registration fee which covers the applicable subject- matter course examinations, the train-the-trainer course, and administrative review of curriculum, credentials, and any other investigation or review that may be necessary.

The proposed new rule was published in the September 29, 2000, issue of the Texas Register as part of the Commission's proposed repeals and new sections for 16 TAC Chapter 9. That rulemaking, which was adopted effective February 1, 2001, added requirements for certain applicants for LP-gas certificates and certain current LP-gas certificate holders to attend training or continuing education, respectively, in order to obtain or maintain those certificates. Proposed new §9.54 was withdrawn from the adoption because changes the Commission wanted to make to the rule were outside the scope of the notice in that rulemaking.

During the original public comment period, the Texas Propane Gas Association (TPGA) suggested that outside instructor applicants also be required to attend the Commission's individual subject matter courses (in addition to the "Train-the-Trainer" course) and to pass the subject-matter examinations with a score of at least 85 percent rather than 75 percent. The Commission agreed with this suggestion and proposes this new version.

TPGA also suggested that outside instructors be required to attend a Commission-taught renewal course whenever a new edition of NFPA 54 or NFPA 58 is adopted by the Commission. The Commission agreed this would be preferable, but due to staff and budget constraints, the Commission cannot offer renewal courses for outside instructors at this time. Currently, the Commission has four instructors to provide the training and continuing education for the approximately 10,000 certified individuals currently in the LP-gas industry in Texas. The Commission has attempted to clarify, in this version of §9.54, the duties of outside instructors to remain knowledgeable about the Commission's requirements.

TPGA had also commented that the $300 application fee for outside instructors be changed to $100. The Commission disagreed with that comment and has retained the $300 fee in this version of the rule. This application fee includes curriculum and qualification review by three Commission employees, plus the Train-the-Trainer course, plus the subject matter examinations for the subject the outside instructor applicant wishes to teach. Therefore, the Commission has determined that this is a reasonable fee at this time.

The Commission also proposes amendments to §§9.2, 9.3, 9.8, 9.10, 9.51, 9.52, and 9.53 to clarify some issues with regard to training and continuing education. In §§9.2, 9.3, and 9.51(g), the title of the Pipeline and LP-Gas Safety Section is being changed to the LP-Gas Safety Section due to a recent reorganization in the Gas Services Division. The amendments to §9.8 add new subsection (b) to address requirements for an employee who wants to pursue a management-level certificate. The examination fee language in §9.10(a)(3)(D) is being corrected to clarify that the examination fee is not included in the Category E or I course fee as stated in §9.51(f)(2)(A). In §9.52, language is being added to subsection (a) to clearly specify that certain new employees must attend at least eight hours of training. The table in §9.52(g) is being revised to clarify the dates of previous and new Commission courses, to clarify the class hours for the Train-the-Trainer course, and to add a new CETP course for large industrial/commercial installations. Reference to the new CETP course is also being added to §9.53(3).

Thomas D. Petru, Director of Training, Alternative Fuels Research and Education Division, has determined that, for each year of the first five years that the sections are proposed to be in effect, there will be no fiscal implications for state or local governments.

Mr. Petru has also determined that, for each year of the first five years the sections are proposed to be in effect, the public benefit anticipated as a result of enforcing the sections as proposed will be more options for individuals in the LP-gas industry to obtain required training and continuing education. The ultimate public benefit is enhanced safety in LP-gas activities.

There is an anticipated economic cost to individuals, small businesses, or micro-businesses required to comply with proposed new §9.54 should they wish to become an outside instructor. This cost includes the $300 registration fee to be paid to the Commission and a $150 renewal fee due once every three years. If an outside instructor revises any previously approved curricula, the outside instructor must pay a $100 review fee as outlined in §9.54(i).

Comments on the proposal may be submitted to Kellie Martinec, Rules Coordinator, Office of General Counsel, 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 and should refer to LP-Gas Docket No. 1661. For more information, call Thomas D. Petru at (512) 463-6930.

The new section and amendments are proposed under the Texas Natural Resources Code, §113.051, which authorizes the Commission to adopt rules relating to any and all aspects or phases of the LP-gas industry that will protect or tend to protect the health, welfare, and safety of the general public, and §113.052, which authorizes the Commission to adopt by reference the published codes of nationally recognized societies, including the National Fire Protection Association.

The Texas Natural Resources Code, §§113.051 and 113.052, are affected by the proposed new section and amendments.

Issued in Austin, Texas on March 6, 2001.

§9.2.Definitions.

In addition to the definitions in any adopted NFPA pamphlets, the following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) - (3)

(No change.)

(4)

Assistant director--The assistant director of the [ Pipeline and ] LP-Gas Safety Section who is the Commission's delegate responsible for the enforcement of the LP-Gas Safety Rules and the Texas Natural Resources Code.

(5) - (46)

(No change.)

§9.3.LP-Gas Report Forms.

Under the provision of the Texas Natural Resources Code, Chapter 113, the Railroad Commission of Texas has adopted the following forms for use by the [ Pipeline and ] LP-Gas Safety Section of the Gas Services Division.

(1) - (37)

(No change.)

§9.8.Application for a New Certificate.

(a)

An applicant for a new certificate shall:

(1)

file with the Commission a properly completed LPG Form 16 and the applicable rules examination fee specified in §9.10 of this title (relating to Rules Examination);

(2)

pass the applicable rules examination with a score of at least 75%; and

(3)

complete any required training and AFT in §9.51 and §9.52 of this title (relating to General Requirements for Training and Continuing Education; and Training and Continuing Education Courses).

(b)

An individual who holds an employee-level certificate who wishes to obtain a management-level certificate shall comply with the requirements of this section, including training and fees.

§9.10.Rules Examination.

(a)

An individual who has filed LPG Form 16 and the applicable nonrefundable examination fee may take the rules examination at the Commission's Austin office between the hours of 8:00 a.m. and 2:00 p.m., Monday through Friday, except for state holidays, and at other designated times and locations around the state.

(1) - (2)

(No change.)

(3)

Exam fees.

(A) - (C)

(No change.)

(D)

Individuals who register and pay for a Category E or I training course as specified in §9.51(e)(2)(A) of this title (relating to General Requirements for Training and Continuing Education) shall pay the charge specified for the applicable examination [ not be charged a separate rules examination fee unless they wish to retake a rule examination ].

(b) - (c)

(No change.)

§9.51.General Requirements for Training and Continuing Education.

(a) - (f)

(No change.)

(g)

Retention of records. Individual employees shall be responsible for promptly notifying the AFRED training section of any discrepancies or errors in the training or continuing education records, and shall notify the [ Pipeline and ] LP-Gas Safety Section for discrepancies or errors in examination records. In the event of a discrepancy, the Commission's records shall be deemed correct unless the individual has copies of applicable documents which clarify the discrepancy.

§9.52.Training and Continuing Education Courses

(a)

Training. Applicants for a new license or certificate listed in this subsection, other than Category E or I management- level individuals and except as stated in paragraph (4) of this subsection, shall attend at least eight hours of training prior to their first certificate renewal deadline of May 31 the following year. Applicants for Category E or I management-level shall attend the course or courses specified for the category [ comply with the applicable training requirements as shown in Table 1 of this section ].

(1) - (4)

(No change.)

(b) - (f)

(No change.)

(g)

Training and continuing education courses and other information are shown in Table 1 of this subsection. Items on the table marked with an "x" indicate courses that meet training or continuing education requirements for management-level or employee-level certificate holders in that category.

Figure: 16 TAC §9.52(g)

§9.53.Continuing Education Credit for Previous Courses.

An individual who is a current and valid certificate holder as of March 1, 2001, may receive credit toward the first continuing education requirement randomly assigned by the Commission as described in §9.52(b) of this title (relating to Training and Continuing Education Courses) if the individual completed one or more of the following:

(1) - (2)

(No change.)

(3)

CETP courses. An individual who has attended a CETP course on or after September 1, 1997, shall receive credit as shown in the table in §9.52(g) if the course applies directly to the LP-gas activities authorized by the individual's certificate. Individuals wishing to receive credit for a CETP course shall submit to the AFRED training section, in writing, the individual's name, address, phone number, valid Social Security number, CETP course date, and a copy of the CETP certificate for an equivalent CETP course as follows:

(A) - (E)

(No change.)

(F)

Appliance Installation; [ or ]

(G)

Appliance Service ; or [ . ]

(H)

Large Industrial/Commercial.

§9.54.Commission-Approved Outside Instructors.

(a)

General.

(1)

The Commission may approve and award continuing education credit or new employees' training credit for courses offered by an outside instructor provided the outside instructor complies with the requirements of this section.

(2)

LP-gas companies may offer courses to their own personnel and to other companies' personnel provided that the LP-gas company and the outside instructor comply with the requirements of this section.

(3)

All curriculum and course materials submitted for Commission review by an outside instructor applicant shall be printed or typewritten, organized, and easily readable, and shall remain confidential within the limits of Tex. Gov't Code, Chapter 552 (Public Information Act).

(4)

Copies of the Commission's curricula and materials are available from the Commission at a reasonable cost.

(b)

Application process. Outside instructor applicants shall submit the following to the Commission:

(1)

a non-refundable $300 registration fee for each outside instructor;

(2)

a copy of the applicant's Category E current certification card;

(3)

for each course the outside instructor applicant intends to teach:

(A)

the curriculum for and a description of the course;

(B)

the course materials and related supporting information or a statement that the instructor will use the Commission's course materials;

(C)

a statement specifying whether the outside instructor seeks approval to certify any AFT described in §9.52 of this title (relating to training and continuing education courses);

(4)

proof that the outside instructor applicant has experience, during at least three of the four years prior to the date of filing the application, in both:

(A)

conducting LP-gas training or continuing education courses and

(B)

performing or supervising LP-gas activities; and

(5)

any other information required by this section.

(c)

Curriculum standards. The curriculum for each course that an outside instructor applicant intends to teach shall include, where applicable, information that is at least the equivalent of the Commission's course or courses on the same topic or topics, and shall include all applicable current LP-gas regulations for Texas. Courses not offered by the Commission may be approved if the courses are equal or greater in overall quality to other approved courses.

(d)

Commission review. The Commission shall review the application for approval as an outside instructor and, within 14 business days of the filing of the application, shall notify the applicant in writing that the application is approved, denied, or incomplete. If an application is incomplete, the Commission's notice of deficiency shall identify the necessary additional information, including any deficiencies in course materials. The outside instructor applicant shall file the necessary additional information within 30 calendar days of the date of the Commission's notice of deficiency. The outside instructor applicant's failure to file the necessary additional information within the prescribed time period may result in the dismissal of the outside instructor's application and the necessity of the outside instructor applicant again paying the non-refundable $300 registration fee for each subsequent filing of an application.

(e)

Additional requirements for approval. Outside instructor applicants whose applications are approved in writing by the Commission shall attend the Commission's Train-the-Trainer Course, the fee for which is included in the $300 registration fee. The Train-the-Trainer Course shall include classroom instruction and the subject-matter examinations for each course for which the applicant seeks approval to conduct. An outside instructor applicant shall pass the subject-matter examination for each course with a score of at least 85 percent and shall attend the subject-matter courses for which the applicant seeks approval to conduct.

(f)

Notification of approval. Within 10 business days of the outside instructor applicant's completion of the requirements of this section, the Commission shall notify the applicant in writing that the applicant is approved as an outside instructor and the outside instructor may then begin offering the courses for which the Commission approved the outside instructor.

(g)

Term of approval. Commission approval of an outside instructor remains valid for three years unless the Commission revokes the approval pursuant to subsection (l) of this section.

(h)

Renewal of approval. To continue offering Commission- approved LP-gas courses, an outside instructor shall renew his or her Commission approval every three years by paying a $150 renewal fee to the Commission. An outside instructor who is renewing his or her approval shall not be required to attend the Train-the-Trainer Course again, provided that the outside instructor has conducted at least one Commission-approved LP-gas course within the 12 months immediately prior to the month in which a renewal would become effective.

(i)

Revision of course materials. An outside instructor who substantively revises any course materials previously approved by the Commission shall submit the revisions in writing, along with a $100 review fee to the Commission, and shall not use the materials in a course until the outside instructor has received written Commission approval. The Commission shall review the revised course materials and, within 14 business days, shall notify the outside instructor in writing that the revised course materials are approved or not approved. If the revised course materials are not approved, the Commission's notice shall identify the portion or portions that are not approved and/or shall describe any deficiencies in the revised course materials. The outside instructor shall file any necessary additional information within 30 calendar days of the date of the Commission's notice of disapproval. The outside instructor's failure to file the necessary additional information within the prescribed time period may result in the dismissal of the outside instructor's request for approval of revised course materials and the necessity of again paying the $100 review fee for each subsequent filing of revised course materials.

(j)

Continuing requirements. Outside instructors shall:

(1)

maintain their Category E certificate in continuous good standing. Any interruption of the required Category E certification may result in the Commission revoking the outside instructor's approval;

(2)

adhere to professional standards of conduct in course presentations; and

(3)

report to the Commission within three business days of the conclusion of a course the names, social security numbers, and any other information required by the Commission, of the persons completing the course. The report shall be made by electronic mail (e-mail) in an electronic format provided by the Commission. The outside instructor shall ensure that the Commission receives the report by securing written acknowledgment of its receipt by the Commission. This acknowledgement may be by return electronic mail (e-mail).

(k)

Disclaimer. Outside instructors are responsible for every aspect of the courses they teach, including the location, schedule, date, time, duration, price, content, material, demeanor and conduct of the outside instructor, and reporting of attendance information. The Commission shall not monitor or supervise the actual course presentations by outside instructors. The Commission is not obligated to gather, maintain, or distribute information about outside instructors' course offerings, other than the names, telephone numbers, and addresses of approved outside instructors and the date on which an outside instructor's approval would expire, absent renewal. The Commission may refuse to issue or renew a certificate for an individual who presents for Commission credit an unapproved course; a course taught by an unapproved outside instructor; or a course taught using unapproved, incomplete, or incorrect materials.

(l)

Complaints.

(1)

Complaints regarding outside instructors shall be made to the Commission in writing by electronic mail (e-mail), facsimile transmission (fax), or U. S. Postal Service; shall include the printed name, address, telephone number, and, if filed by fax or U.S. Postal Service, the signature of the person complaining; shall state the outside instructor's name, the date, location, and title of the course; and shall set forth the facts that the complainant alleges demonstrate that the outside instructor:

(A)

failed to meet or maintain Commission requirements for outside instructor approval;

(B)

failed to deliver a course as approved, including failure to follow the approved curriculum, to use the approved course materials, or to deliver the requisite numbers of hours of instruction; or

(C)

engaged in other conduct, including the use of language, that created an atmosphere not conducive to learning. Such conduct includes but is not limited to demeaning, derogating, or stereotyping women or men, disabled persons, members of any political, religious, racial, or ethnic group, or a particular individual, organization, or product.

(2)

Upon receipt of a complaint and at its discretion, the Commission may gather any additional information necessary or appropriate to making a full and complete analysis of the complaint. The Commission shall deliver a written copy of the analysis and any findings by certified mail to the outside instructor who is the subject of the complaint. The outside instructor may file a written response within 20 calendar days from the date the findings are postmarked.

(3)

If the Commission determines that an outside instructor has engaged in conduct prohibited by this section, the Commission may prepare a report that states the facts on which the determination is based and the recommendation as to the action the Commission intends to take. The Commission may issue a written warning to the outside instructor; decline to approve or renew the outside instructor's approval; or revoke the outside instructor's approval.

(4)

The Commission shall mail a copy of the report and recommendation to the outside instructor by certified mail and shall include a statement that the outside instructor has a right to a hearing on the determination contained in the report.

(5)

Within 20 calendar days after the date the notice is postmarked, the outside instructor shall file a written response either accepting the determination and recommended action or requesting a hearing on the determination.

(6)

If the outside instructor accepts the determination, he or she shall notify the Commission in writing of the acceptance, and the Commission shall take the action indicated in the report.

(7)

If an outside instructor requests a hearing or fails to respond timely to the notice given under paragraph (5) of this subsection, the director shall refer the matter to the Office of General Counsel for the setting of a hearing. The Office of General Counsel shall assign an examiner to conduct a hearing, which shall be conducted under the Commission's General Rules of Practice and Procedure, Chapter 1 of this title (relating to Practice and Procedure).

(8)

Following hearing, the Commission may enter an order finding that the outside instructor has violated Commission rules or that no violation has occurred; and may make any other finding based on the evidence in the record.

(9)

If the outside instructor does not comply with the order of the Commission, and if the enforcement of the Commission's order is not stayed, then the Office of General Counsel may refer the matter to the attorney general for enforcement of the Commission's order.

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 6, 2001.

TRD-200101347

Mary Ross McDonald

Deputy General Counsel

Railroad Commission of Texas

Earliest possible date of adoption: April 22, 2001

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


Chapter 12. COAL MINING REGULATIONS

The Railroad Commission of Texas proposes amendments to 16 TAC §§12.80, relating to Procedures: Initial Processing, Record Keeping, and Notification Requirements; 12.385, relating to Backfilling and Grading: General Grading Requirements; 12.552, relating to Backfilling and Grading: General Grading Requirements; and 12.651, relating to Coal Processing Plants: Performance Standards. The commission proposes the amendments to maintain consistency with federal regulations and to streamline the effectiveness of commission rules.

The commission proposes to amend §12.80(a)(1) to reduce the number of days, from 60 to 30 days from the date of receipt of petition, within which the commission must notify a petitioner of petition completeness. This amendment is proposed to parallel federal regulation 30 CFR §764.15(a)(1), relating to initial processing, record-keeping, and notification requirements.

The commission proposes to amend §12.80(a) to remove paragraph (3), which states that the commission may reject frivolous petitions for designation or petitions for termination of designations, that no party bears the burden of proof, and that each petition shall be considered and acted upon by the commission. The commission proposes to remove this paragraph to streamline the effectiveness of commission rules and to parallel the federal regulation 30 CFR §764.15(a)(1), relating to initial processing, record-keeping, and notification requirements.

The commission proposes to amend §12.80(a)(4) to add that a petition can be determined to be frivolous if available information shows that either no mineable coal resources exist in the petitioned area or the petitioned area is not or could not be subject to related surface coal mining operations and surface impacts incident to an underground coal mine or an adjoining surface mine. This language is proposed to parallel federal regulations dealing with designation of federal lands as unsuitable for coal mining, 30 CFR §769.140(a)(3)(ii), relating to initial processing, record-keeping, and notification requirements.

The commission proposes nonsubstantive amendments to §§12.80(a)(4) through (a)(7) by redesignating them as §§12.80(a)(3) through (a)(6).

The commission proposes to remove §12.80(b)(2) that states the commission may provide for a hearing or period of written comments on completeness of the petition. This proposal is to streamline the effectiveness of commission rules and to parallel the federal regulation 30 CFR §764.15(a)(1), relating to initial processing, record-keeping, and notification requirements.

The commission proposes a nonsubstantive amendment to §12.80(b)(3) by redesignating it as (b)(2).

The commission proposes to amend §12.385(a) by deleting the provisions that pertain to performance standards for backfilling and grading of previously mined land. This amendment is required by the Office of Surface Mining Reclamation and Enforcement, United States Department of Interior (OSM).

The commission proposes to add new §12.385(e) to include provisions for backfilling and grading of previously mined areas that are substantially identical to the corresponding federal regulation 30 CFR §816.106, relating to backfilling and grading: previously mined areas. This addition is required by OSM.

The commission proposes to amend §12.552(a) by deleting the provisions that pertain to performance standards for backfilling and grading on previously mined land. This amendment is required by OSM.

The commission proposes to add new §12.552(e) to include provisions for backfilling and grading of previously mined areas that are substantially identical to the corresponding federal regulation 30 CFR §817.106, relating to backfilling and grading: previously mined areas. This addition is required by OSM.

The commission proposes to amend §12.651(13) to add reference citations to §§12.224 through 12.338, relating to proper topsoil handling. This amendment is required by OSM.

Melvin Hodgkiss, Director, Surface Mining and Reclamation Division, has determined that, during each year of the first five years the proposed amendments are in effect, there will likely be no fiscal impacts to state government associated with the proposed amendments to regulations concerning the remining of previously mined lands or proposed amendments to procedures for processing of petitions for designation of lands as unsuitable for mining. The proposed amendments to the latter should have the effect of streamlining the decision process, allowing the commission to issue decisions on petitions in a shorter time period. Mr. Hodgkiss has also determined that, during each year of the first five years the proposed amendments are in effect, there will be no discernable fiscal impacts to local governments as a result of their adoption.

Mr. Hodgkiss has also determined that the public benefit from adoption of the proposed amendments will be increased accuracy in the rules due to addition or correction of internal cites, clarity of descriptions and continued compliance with OSM requirements.

Mr. Hodgkiss has determined that for each year of the first five years the amendments are in effect there will be no increased costs of compliance with the amended rules. These rule amendments are largely housekeeping measures that are anticipated to have virtually no practical effect in Texas, but which will keep the Texas program in compliance with OSM requirements.

The commission has not requested a local employment impact statement pursuant to Texas Government Code, §2001.022(b).

Comments on these proposed amendments should be submitted to Melvin Hodgkiss, Director, Surface Mining and Reclamation Division, Railroad Commission of Texas, P.O. Box 12967, Austin, Texas 78711-2967 or via electronic mail at melvin.hodgkiss@rrc.state.tx.us. Comments will be accepted until 5:00 p.m. on the 30th day after publication in the Texas Register . For further information, please call Mr. Hodgkiss at (512) 463-6901.

Subchapter F. LANDS UNSUITABLE FOR MINING

4. PROCESS FOR DESIGNATING AREAS AS UNSUITABLE FOR SURFACE COAL MINING OPERATIONS

16 TAC §12.80

The commission proposes the amendments under Texas Natural Resources Code §134.013, which provides the commission the authority to promulgate rules pertaining to surface coal mining operations.

Texas Natural Resources Code, §134.013, is affected by the proposed amendments.

Issued in Austin, Texas, on March 6, 2001.

§12.80.Procedures: Initial Processing, Record Keeping, and Notification Requirements.

(a)

Initial processing procedures.

(1)

Within 30 [ 60 ] days of receipt of a petition, the Commission shall notify the petitioner by certified mail whether or not the petition is complete under §§12.79(b) or (c) of this title (relating to Procedures: Petitions). Complete, for a designation or termination petition, means that the information required under §§12.79(b) or (c) of this title (relating to Procedures: Petitions) has been provided.

(2)

The Commission shall determine whether any identified coal resources exist in the area covered by the petition, without requiring any showing from the petitioner. If the Commission finds there are not any identified coal resources in that area, it shall return the petition to the petitioner with a statement of the findings.

[ (3)

The Commission may reject petitions for designations or terminations of designations which are frivolous. Once the petition requirements for completeness are met, no party shall bear any burden of proof, but each accepted petition shall be considered and acted upon by the Commission pursuant to the procedures of this subchapter (relating to Lands Unsuitable for Mining).]

(3)

[ (4) ] If the Commission determines that the petition is incomplete, frivolous, or that the petitioner does not meet the requirement of §12.79(a) of this title (relating to Procedures: Petitions), it shall return the petition to the petitioner with a written statement of the reasons for the determination and the categories of information needed to make the petition complete. A frivolous petition is one in which the allegations of harm lack serious merit or available information shows that either no mineable coal resources exist in the petitioned area or the petitioned area is not or could not be subject to related surface coal mining operations and surface impacts incident to an underground coal mine or an adjoining surface mine .

(4)

[ (5) ] When considering a petition for an area which was previously and unsuccessfully proposed for designation, the Commission shall determine if the new petition presents significant new allegations of facts with evidence which tends to establish the allegations. If the petition does not contain such materials, the Commission may choose not to consider the petition and may return the petition to the petitioner, with a statement of its findings and a reference to the record of the previous designation proceedings where the facts were considered.

(5)

[ (6) ] The Commission shall notify the person who submits a petition of any application for a permit received which includes any area covered by the petition.

(6)

[ (7) ] The Commission may determine not to process any petition received in so far as it pertains to lands for which an administratively complete permit application has been filed and the first newspaper notice has been published. Based on such a determination, the Commission may issue a decision on a complete and accurate permit application and shall inform the petitioner why the Commission cannot consider the part of the petition pertaining to the proposed permit area.

(b)

Public notice and hearing procedures.

(1)

Promptly after a petition is received, the Commission shall notify the general public of the receipt of the petition by a newspaper advertisement placed in the locale of the area covered by the petition. The notice shall be published in the county newspaper of the largest circulation in the county, for each county of the petitioned area and in the Texas Register . The Commission shall make copies of the petition available to the public and shall provide copies of the petition to other interested governmental agencies, intervenors, persons with an ownership interest of record in the property, and other persons known to the Commission to have an interest in the property. Proper notice to persons with an ownership interest of record in the property shall comply with the requirements of applicable State law.

[ (2)

The Commission may provide for a hearing or a period of written comments on completeness of petitions. If a hearing or comment period on completeness is provided, the Commission shall inform interested governmental agencies, intervenors, persons with an ownership interest of record in the property, and other persons known to the Commission to have an interest in the property of the opportunity to request to participate in such a hearing or provide written comments. Proper notice to persons with an ownership interest of record in the property shall be accomplished by placing a postage paid notice, addressed as shown in the public record, in the U.S. Mail. Notice of such a hearing shall be made by a newspaper advertisement placed in the locale of the area covered by the petition. The notice shall be published in the county newspaper of the largest circulation in the county, for each county of the petitioned area and in the Texas Register . The Commission shall notify the petitioner of such a hearing by certified mail. On the basis of the Commission's review, as well as consideration of all comments, the Commission shall determine whether the petition is complete.]

(2)

[ (3) ] Promptly after the determination that a petition is complete, the Commission shall request submissions from the general public of relevant information by a newspaper advertisement placed once a week for two consecutive weeks in the locale of the area covered by the petition, in the county newspaper of the largest circulation in the county, for each county of the petitioned area, and in the Texas Register .

(c) - (d)

No change.

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 6, 2001.

TRD-200101356

Mary Ross McDonald

Deputy General Counsel

Railroad Commission of Texas

Earliest possible date of adoption: April 22, 2001

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


Subchapter K. PERMANENT PROGRAM PERFORMANCE STANDARDS

2. PERMANENT PROGRAM PERFORMANCE STANDARDS - SURFACE MINING ACTIVITIES

16 TAC §12.385

The commission proposes the amendments under Texas Natural Resources Code §134.013, which provides the commission the authority to promulgate rules pertaining to surface coal mining operations.

Texas Natural Resources Code, §134.013, is affected by the proposed amendments.

Issued in Austin, Texas, on March 6, 2001.

§12.385.Backfilling and Grading: General Grading Requirements.

(a)

The final graded slopes shall not exceed in grade either the approximate premining slopes, or any lesser slopes approved by the Commission based on consideration of soil, climate, or other characteristics of the surrounding area. Postmining final graded slopes need not be uniform but shall approximate the general nature of the premining topography. [ The requirements of this section may be modified by the Commission where the surface mining activities are reaffecting previously mined lands that have not been restored to the standards of §§12.330-12.384, this section, and §§12.386-12.403 of this title (relating to Permanent Program Performance Standards -- Surface Mining Activities) and sufficient spoil is not available to otherwise comply with this section. ] The person who conducts surface mining activities shall, at a minimum:

(1) - (2)

No change.

(b) - (d)

No change.

(e)

Backfilling and grading of previously mined areas shall be subject to the following requirements:

(1)

remining operations on previously mined areas that contain a preexisting highwall shall comply with the requirements of §12.384 of this title (relating to Backfilling and Grading: General Requirements), this section, and §§12.386-12.388 of this title (relating to Backfilling and Grading: Covering Coal and Acid- and Toxic-Forming Materials, to Backfilling and Grading: Thin Overburden, and to Backfilling and Grading: Thick Overburden), except as provided in this subsection; and

(2)

the requirements of §12.384(b)(1) requiring the elimination of highwalls shall not apply to remining operations where the volume of all reasonably available spoil is demonstrated in writing to the Commission to be insufficient to completely backfill the reaffected or enlarged highwall. The highwall shall be eliminated to the maximum extent technically practical in accordance with the following criteria:

(A)

all spoil generated by the remining operation and any other reasonably available spoil shall be used to backfill the area. Reasonably available spoil in the immediate vicinity of the remining operation shall be included within the permit area;

(B)

the backfill shall be graded to a slope which is compatible with the approved postmining land use and which provides adequate drainage and long-term stability;

(C)

any highwall remnant shall be stable and not pose a hazard to the public health and safety or to the environment. The operator shall demonstrate, to the satisfaction of the Commission, that the highwall remnant is stable; and

(D)

spoil placed on the outslope during previous mining operations shall not be disturbed if such disturbances will cause instability of the remaining spoil or otherwise increase the hazard to the public health and safety or to the environment.

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 6, 2001.

TRD-200101357

Mary Ross McDonald

Deputy General Counsel

Railroad Commission of Texas

Earliest possible date of adoption: April 22, 2001

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


3. PERMANENT PROGRAM PERFORMANCE STANDARDS - UNDERGROUND MINING ACTIVITIES

16 TAC §12.552

The commission proposes the amendments under Texas Natural Resources Code §134.013, which provides the commission the authority to promulgate rules pertaining to surface coal mining operations.

Texas Natural Resources Code, §134.013, is affected by the proposed amendments.

Issued in Austin, Texas, on March 6, 2001.

§12.552.Backfilling and Grading: General Grading Requirements.

(a)

The final graded slopes shall not exceed in grade either the approximate premining slopes, or any lesser slopes approved by the Commission based on consideration of soil, climate, or other characteristics of the surrounding area. Postmining final graded slopes need not be uniform but shall approximate the general nature of the premining topography. [ The requirements of this section may be modified by the Commission where the underground mining activities are reaffecting previously mined lands that have not been restored to the standards of §§12.500-12.551, this section, and §§12.553-12.572 of this title (relating to Permanent Program Performance Standards -- Underground Mining Activities) and sufficient spoil is not available to otherwise comply with this section. ] The person who conducts underground mining activities shall, at a minimum:

(1) - (2)

No change.

(b) - (d)

No change.

(e)

Backfilling and grading of previously mined areas shall be subject to the following requirements:

(1)

remining operations on previously mined areas that contain a preexisting highwall shall comply with the requirements of §12.551 of this title (relating to Backfilling and Grading: General Requirements), this section, and §12.553 of this title (relating to Backfilling and Grading: Covering Coal and Acid- and Toxic-Forming Materials), except as provided in this subsection; and

(2)

the requirements of §12.551(b)(1) requiring the elimination of highwalls shall not apply to remining operations where the volume of all reasonably available spoil is demonstrated in writing to the Commission to be insufficient to completely backfill the reaffected or enlarged highwall. The highwall shall be eliminated to the maximum extent technically practical in accordance with the following criteria:

(A)

all spoil generated by the remining operation and any other reasonably available spoil shall be used to backfill the area. Reasonably available spoil in the immediate vicinity of the remining operation shall be included within the permit area;

(B)

the backfill shall be graded to a slope which is compatible with the approved postmining land use and which provides adequate drainage and long-term stability;

(C)

any highwall remnant shall be stable and not pose a hazard to the public health and safety or to the environment. The operator shall demonstrate, to the satisfaction of the Commission, that the highwall remnant is stable; and

(D)

spoil placed on the outslope during previous mining operations shall not be disturbed if such disturbances will cause instability of the remaining spoil or otherwise increase the hazard to the public health and safety or to the environment.

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 6, 2001.

TRD-200101358

Mary Ross McDonald

Deputy General Counsel

Railroad Commission of Texas

Earliest possible date of adoption: April 22, 2001

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


7. SPECIAL PERMANENT PROGRAM PERFORMANCE STANDARDS--COAL PROCESSING PLANTS AND SUPPORT FACILITIES NOT LOCATED AT OR NEAR THE MINESITE OR NOT WITHIN THE PERMIT AREA FOR A MINE

16 TAC §12.651

The commission proposes the amendments under Texas Natural Resources Code §134.013, which provides the commission the authority to promulgate rules pertaining to surface coal mining operations.

Texas Natural Resources Code, §134.013, is affected by the proposed amendments.

Issued in Austin, Texas, on March 6, 2001.

§12.651.Coal Processing Plants: Performance Standards.

Construction, operation, maintenance, modification, reclamation, and removal activities at operations covered by §12.650 of this title (relating to Applicability) and this section shall comply with the following:

(1) - (12)

No change.

(13)

reclamation shall include proper topsoil-handling procedures, revegetation, and abandonment, in accordance with §§12.334-12.338 of this title (relating to Topsoil: General Requirements, to Topsoil: Removal, to Topsoil: Storage, to Topsoil: Distribution and to Topsoil: Nutrients and Soil Amendments), §12.354 of this title (relating to Hydrologic Balance: Postmining Rehabilitation of Sedimentation Ponds), §§12.383-12.389 of this title (relating to Contemporaneous Reclamation, to Backfilling and Grading: General Requirements, to Backfilling and Grading: General Grading Requirements, to Backfilling and Grading: Covering Coal and Acid- and Toxic- Forming Materials, to Backfilling and Grading: Thin Overburden, to Backfilling and Grading: Thick Overburden, and to Stabilization of Surface Areas for Surface Mining), §§12.390- 12.393 and 12.395 of this title (relating to Revegetation: General Requirements, to Revegetation: Use of Introduced Species, to Revegetation: Timing, to Revegetation: Mulching and Other Soil Stabilizing Practices, and to Revegetation: Standards for Success) and §§12.397-12.399 of this title (relating to Cessation of Operations: Temporary, to Cessation of Operations: Permanent, and to Postmining Land Use);

(14) - (15)

No change.

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 6, 2001.

TRD-200101359

Mary Ross McDonald

Deputy General Counsel

Railroad Commission of Texas

Earliest possible date of adoption: April 22, 2001

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


Part 2. PUBLIC UTILITY COMMISSION OF TEXAS

Chapter 25. SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS

Subchapter I. TRANSMISSION AND DISTRIBUTION

2. TRANSMISSION AND DISTRIBUTION APPLICABLE TO ALL ELECTRIC UTILITIES

16 TAC §25.214

The Public Utility Commission of Texas (commission) proposes an amendment to §25.214 relating to Terms and Conditions of Retail Distribution Service Provided by Investor Owned Transmission and Distribution Utilities. The proposed amendment modifies the effective date of the tariff in subsection (d) and is otherwise limited to changes to the pro-forma tariff (Tariff for Retail Delivery Service). Specifically, amendments to section 4.11.1 and section II of Appendix A, Agreement between Company and Competitive Retailer Regarding Terms and Conditions of Delivery of Electric Power and Energy (delivery service agreement form), as adopted by reference with §25.214, are necessary to conform section II of the delivery service agreement form with the language of pro-forma tariff section 4.11.1. Section 25.214, as recently adopted, implements the Public Utility Regulatory Act, Texas Utilities Code Annotated §39.203 (Vernon 1998, Supplement 2001) (PURA), as it relates to the establishment of non-discriminatory terms and conditions of retail distribution service, including the service provided to a retail customer at transmission voltage, provided by a transmission and distribution utility. The rulemaking to effect these amendments will proceed under Project Number 22187.

The proposed amendment to pro-forma tariff section 4.11.1 and Appendix A, section II is available under Project Number 22187 in the commission's Central Records office and at the commission's website.

Parties have raised the issue of how to proceed in the interim period, before this amendment is effected, for purposes of signing pilot project delivery service agreements. Because the commission certainly intended that the delivery service agreement (Appendix A) would reflect the language adopted in the body of the tariff, parties should embody the language and options of section 4.11.1 in their pilot project delivery service agreements.

Evan Farrington, attorney, Policy Development Division, has determined that for each year of the first five-year period the proposed amendment is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Mr. Farrington has also determined that for each year of the first five years the proposed amendment is in effect the public benefit anticipated as a result of enforcing the section will be increased competition in the sale of electric power to retail customers. Furthermore, there will be no adverse economic effect on small businesses or micro-businesses as a result of enforcing this section. There may be economic costs to persons who are required to comply with the proposed section as originally adopted; however, the proposed amendment will not affect these costs. These costs are likely to vary from business to business, and are difficult to ascertain. It is believed that the benefits accruing from implementation of the proposed section will outweigh these costs.

Moreover, Mr. Farrington has determined that for each year of the first five years the proposed section is in effect there should be no effect on a local economy, and, therefore, no local employment impact statement is required under Administrative Procedure Act §2001.022.

The commission seeks comments on the proposed amendments from interested persons. Comments should be organized in a manner consistent with the organization of the proposed amendment.

Comments on the proposed amendment (16 copies) may be submitted to the Filing Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, PO Box 13326, Austin, Texas 78711-3326, within 14 days after publication. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed amendments. The commission will consider the costs and benefits in deciding whether to adopt these amendments. All comments should refer to Project Number 22187.

Unless specifically requested as detailed in Texas Government Code §2001.029, commission staff does not plan to conduct a public hearing on this rulemaking.

This amendment is proposed under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2001) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. The commission also proposes this amendment pursuant to PURA §39.203, which grants the commission authority to establish reasonable and comparable terms and conditions for open access on distribution facilities for all retail electric utilities offering customer choice, and comparable rates for open access for all retail electric utilities offering customer choice.

Cross Reference to Statutes: PURA §14.002 and §39.203.

§25.214.Terms and Conditions of Retail Delivery Service Provided by Investor Owned Transmission and Distribution Utilities.

(a) - (c)

(No change.)

(d)

Pro-forma Retail Delivery Tariff. The commission adopts by reference the form "Tariff for Retail Delivery Service," effective date of March 7, 2001 [ December 13, 2000 ]. This form is available in the commission's Central Records division and on the commission's website at www.puc.state.tx.us.

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 9, 2001.

TRD-200101418

Rhonda Dempsey

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: April 22, 2001

For further information, please call: (512) 936-7308