H.B. No. 2622 1-1 AN ACT 1-2 relating to regulation of natural gas underground storage 1-3 facilities; providing penalties. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Title 102, Revised Statutes, is amended by adding 1-6 Article 6053-3 to read as follows: 1-7 Art. 6053-3. UNDERGROUND STORAGE FACILITIES FOR NATURAL GAS 1-8 Sec. 1. DEFINITIONS. In this article: 1-9 (1) "Commission" means the Railroad Commission of 1-10 Texas. 1-11 (2) "Natural gas" means any gaseous material composed 1-12 primarily of methane in either its original or manufactured state. 1-13 (3) "Natural gas underground storage" means the 1-14 storage of natural gas beneath the surface in a formation, strata, 1-15 or reservoir. 1-16 (4) "Storage facility" has the meaning assigned by 1-17 Section 91.173, Natural Resources Code, and its subsequent 1-18 amendments. 1-19 Sec. 2. APPLICABILITY. This article does not apply to a 1-20 storage facility that is part of an interstate pipeline facility as 1-21 defined by the United States Department of Transportation and that 1-22 is subject to federal minimum standards adopted under the Natural 1-23 Gas Pipeline Safety Act of 1968 (49 U.S.C. Section 1671 et seq.) 1-24 and its subsequent amendments. 2-1 Sec. 3. JURISDICTION. Except as provided by Section 2 of 2-2 this article, the commission has jurisdiction over natural gas 2-3 underground storage and over surface and subsurface equipment and 2-4 facilities used for natural gas underground storage. 2-5 Sec. 4. SAFETY STANDARDS AND PRACTICES. (a) The commission 2-6 by rule shall adopt safety standards and practices for natural gas 2-7 underground storage and storage facilities. The standards and 2-8 practices must: 2-9 (1) require the installation and periodic testing of 2-10 safety devices; 2-11 (2) establish emergency notification procedures for 2-12 the operator of a facility in the event of a release of a hazardous 2-13 substance that poses a substantial risk to the public; 2-14 (3) establish fire prevention and response procedures; 2-15 (4) require employee safety training with respect to 2-16 the operation of a storage facility for the employees of the 2-17 storage facility; and 2-18 (5) establish other safety standards and practices 2-19 that the commission finds are reasonable and necessary for 2-20 underground natural gas storage and the safe construction, 2-21 operation, and maintenance of storage facilities. 2-22 (b) The commission shall require that records of tests of a 2-23 safety device required by Subsection (a)(1) of this section be: 2-24 (1) filed with the commission; or 2-25 (2) maintained by the owner or operator and made 2-26 available for inspection by the commission. 2-27 (c) The commission may adopt different standards and 3-1 practices for different types of storage facilities and may 3-2 distinguish between natural gas underground storage in salt dome 3-3 caverns, depleted reservoirs, and embedded salt formations. 3-4 (d) The commission may grant an exception in a permit or 3-5 amended permit issued to a storage facility to standards and 3-6 practices adopted under this section if granting the exception does 3-7 not constitute an unreasonable danger to the public. The 3-8 commission may impose additional standards and practices in a 3-9 permit or amended permit issued to a storage facility. 3-10 (e) The commission may require the owner or operator of a 3-11 storage facility to prepare a safety procedure manual for each 3-12 storage facility and file a copy of the manual with the commission 3-13 or make the manual available for inspection under Section 6 of this 3-14 article. 3-15 (f) Safety standards and practices adopted by the commission 3-16 for a storage facility that is part of an intrastate pipeline 3-17 facility as defined by the United States Department of 3-18 Transportation under the Natural Gas Pipeline Safety Act of 1968 3-19 (49 U.S.C. Section 1671 et seq.) and its subsequent amendments must 3-20 be compatible with federal minimum standards. 3-21 Sec. 5. RECORDS AND REPORTS. (a) An owner or operator of a 3-22 storage facility shall: 3-23 (1) maintain records and make reports relating to 3-24 construction, operation, or maintenance of the facility as required 3-25 by commission rule; and 3-26 (2) provide any other information required by the 3-27 commission relating to construction, operation, or maintenance of 4-1 the facility. 4-2 (b) The commission may provide forms for reports required 4-3 under this section. 4-4 Sec. 6. INSPECTION AND EXAMINATION OF FACILITY AND RECORDS. 4-5 (a) The commission may inspect a storage facility for compliance 4-6 with the safety standards and practices adopted under Section 4 of 4-7 this article and the record-keeping requirements adopted under 4-8 Section 5 of this article. To conduct the inspection, a 4-9 commissioner or a designated employee or agent of the commission 4-10 may enter property on which a storage facility is located at a 4-11 reasonable time and in a reasonable manner to examine: 4-12 (1) the facility and any related buildings or 4-13 equipment; and 4-14 (2) the records required to be maintained at the 4-15 storage facility under Section 5 of this article. 4-16 (b) Before the commission or its employees or agents enter 4-17 the premises of a storage facility with on-site personnel, proper 4-18 credentials must be presented to the on-site person in charge of 4-19 the property. 4-20 Sec. 7. DAMAGE TO STORAGE FACILITY; DISABLING A SAFETY 4-21 DEVICE. A person may not intentionally damage or destroy a storage 4-22 facility and may not disable a safety device in a storage facility 4-23 except to repair, maintain, test, or replace the device or to 4-24 conduct other activities that are reasonably necessary to the safe 4-25 operation of the storage facility. 4-26 Sec. 8. INJUNCTION; CIVIL PENALTY. (a) The attorney 4-27 general, at the request of the commission, shall institute a civil 5-1 suit against a person who has violated or is violating this article 5-2 or a rule adopted or order or permit issued under this article for: 5-3 (1) injunctive relief to restrain the person from the 5-4 violation; 5-5 (2) the assessment and recovery of a civil penalty for 5-6 a violation; or 5-7 (3) both injunctive relief and a civil penalty. 5-8 (b) The penalty may not exceed $25,000 for each violation. 5-9 (c) Each day of a continuing violation may be considered a 5-10 separate violation for the purpose of penalty assessment. 5-11 (d) The maximum penalty assessed for a related series of 5-12 violations may not exceed $500,000. 5-13 Sec. 9. ADMINISTRATIVE PENALTY. (a) The commission may 5-14 assess as provided by this section an administrative penalty 5-15 against a person who violates this article or a rule adopted or 5-16 order or permit issued under this article. 5-17 (b) Except as provided by Subsection (c) of this section, 5-18 the penalty for each violation may be in an amount not to exceed 5-19 $10,000. Each day a violation continues or occurs may be 5-20 considered a separate violation for the purpose of penalty 5-21 assessment. The maximum penalty assessed for a related series of 5-22 violations under this subsection may not exceed $200,000. 5-23 (c) The penalty for each violation of Section 7 of this 5-24 article may be in an amount not to exceed $25,000. Each day a 5-25 violation continues or occurs may be considered a separate 5-26 violation for the purpose of penalty assessment. The total penalty 5-27 assessed under this subsection for a continuing violation may not 6-1 exceed $300,000. 6-2 (d) In determining the amount of the penalty, the commission 6-3 shall consider: 6-4 (1) the seriousness of the violation, including the 6-5 nature, circumstances, extent, and gravity of the prohibited acts, 6-6 and the hazard or potential hazard created to the health, safety, 6-7 or economic welfare of the public; 6-8 (2) the economic harm to property or the environment 6-9 caused by the violation; 6-10 (3) the history of previous violations; 6-11 (4) the amount necessary to deter future violations; 6-12 (5) efforts to correct the violation; and 6-13 (6) any other matter that justice may require. 6-14 (e) A civil penalty may be assessed only after the person 6-15 charged under this section has been given an opportunity for a 6-16 public hearing. 6-17 (f) If a public hearing has been held, the commission shall 6-18 make findings of fact and issue a written decision as to the 6-19 occurrence of the violation and the amount of the penalty that is 6-20 warranted, incorporating, if appropriate, an order requiring that 6-21 the penalty be paid. 6-22 (g) If appropriate, the commission shall consolidate the 6-23 hearing with other proceedings. 6-24 (h) If a person charged under this section fails to take 6-25 advantage of the opportunity for a public hearing, a civil penalty 6-26 may be assessed by the commission after it has determined that a 6-27 violation occurred and the amount of the penalty that is warranted. 7-1 (i) The commission shall then issue an order requiring the 7-2 penalty to be paid. 7-3 (j) The notice of the commission's order given to the person 7-4 under the Administrative Procedure and Texas Register Act (Article 7-5 6252-13a, Vernon's Texas Civil Statutes) and its subsequent 7-6 amendments must include a statement of the right of the person to 7-7 judicial review of the order. 7-8 (k) Not later than the 30th day after the date on which the 7-9 commission's order becomes final as provided by Section 16(c), 7-10 Administrative Procedure and Texas Register Act (Article 6252-13a, 7-11 Vernon's Texas Civil Statutes), and its subsequent amendments, the 7-12 person charged with the violation shall: 7-13 (1) pay the amount of the penalty; 7-14 (2) pay the amount of the penalty and file a petition 7-15 for judicial review contesting either the amount of the penalty or 7-16 the fact of the violation or both the amount of the penalty and the 7-17 fact of the violation; or 7-18 (3) without paying the amount of the penalty, file a 7-19 petition for judicial review contesting the amount of the penalty, 7-20 the fact of the violation, or both the amount of the penalty and 7-21 the fact of the violation. 7-22 (l) Within the 30-day period, a person who acts under 7-23 Subsection (k)(3) of this section may: 7-24 (1) stay the enforcement of the penalty by: 7-25 (A) paying the amount of the penalty to the 7-26 court for placement in an escrow account; or 7-27 (B) giving to the court a supersedeas bond in a 8-1 form approved by the court that is effective until all judicial 8-2 review of the order or decision is final; or 8-3 (2) request the court to stay enforcement of the 8-4 penalty by: 8-5 (A) filing with the court a sworn affidavit of 8-6 the person stating that the person is financially unable to pay the 8-7 amount of the penalty and is financially unable to give the 8-8 supersedeas bond; and 8-9 (B) delivering a copy of the affidavit to the 8-10 commission. 8-11 (m) If the commission receives a copy of an affidavit under 8-12 Subsection (l) of this section the commission may file with the 8-13 court not later than the fifth day after the date the copy is 8-14 received a contest to the affidavit. The court shall hold a 8-15 hearing on the facts alleged in the affidavit as soon as 8-16 practicable. The person who files an affidavit has the burden of 8-17 proving that the person is financially unable to pay the amount of 8-18 the penalty and to give a supersedeas bond. 8-19 (n) If the person does not pay the amount of the penalty and 8-20 the penalty is not stayed, the commission may refer the matter to 8-21 the attorney general for enforcement. 8-22 (o) Judicial review of the order of the commission is: 8-23 (1) instituted by filing a petition as provided by 8-24 Section 19, Administrative Procedure and Texas Register Act 8-25 (Article 6252-13a, Vernon's Texas Civil Statutes), and its 8-26 subsequent amendments; and 8-27 (2) under the substantial evidence rule. 9-1 (p) If the person paid the amount of the penalty and if that 9-2 amount is reduced or is not assessed by the court, the court shall 9-3 order that the appropriate amount plus accrued interest be remitted 9-4 to the person. The rate of interest is the rate charged on loans 9-5 to depository institutions by the New York Federal Reserve Bank and 9-6 shall be paid for the period beginning on the date the penalty is 9-7 paid and ending on the date the penalty is remitted. If the person 9-8 gave a supersedeas bond, the court shall order the release of the 9-9 bond: 9-10 (1) without further action by the person if the 9-11 penalty is not assessed by the court; or 9-12 (2) on payment of the penalty in the amount determined 9-13 by the court. 9-14 (q) A penalty collected under this section shall be 9-15 deposited to the credit of the oil-field cleanup fund. 9-16 Sec. 10. NOTICE OF NONCOMPLIANCE. In addition to other 9-17 authority specifically granted to the commission under this 9-18 article, the commission may enforce this article or any rule 9-19 adopted or order or permit issued under this article as provided by 9-20 Section 91.207, Natural Resources Code. 9-21 Sec. 11. LIMITATION ON POWERS OF MUNICIPALITIES AND 9-22 COUNTIES. A municipality or county may not adopt or enforce an 9-23 ordinance that establishes safety standards or practices applicable 9-24 to storage facilities that are subject to regulation under this 9-25 article or another state or federal law. 9-26 SECTION 2. (a) This Act takes effect September 1, 1993. 9-27 (b) Not later than January 1, 1994, the Railroad Commission 10-1 of Texas shall adopt rules and safety standards and practices 10-2 required by Article 6053-3, Revised Statutes, as added by this Act. 10-3 (c) This Act applies only to natural gas underground storage 10-4 in storage facilities on or after January 1, 1994, including 10-5 storage in facilities that commenced before January 1, 1994. 10-6 Natural gas underground storage in storage facilities before 10-7 January 1, 1994, is governed by the law as it existed immediately 10-8 before the effective date of this Act, and that law is continued in 10-9 effect for that purpose. 10-10 SECTION 3. The importance of this legislation and the 10-11 crowded condition of the calendars in both houses create an 10-12 emergency and an imperative public necessity that the 10-13 constitutional rule requiring bills to be read on three several 10-14 days in each house be suspended, and this rule is hereby suspended.