73R7377 SMH-F By Earley H.B. No. 2622 Substitute the following for H.B. No. 2622: By Earley C.S.H.B. No. 2622 A BILL TO BE ENTITLED 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 the regulation of which has been preempted by 1-21 regulations adopted under the Natural Gas Pipeline Safety Act of 1-22 1968 (49 U.S.C. Section 1671 et seq.) and its subsequent 1-23 amendments. 1-24 Sec. 3. JURISDICTION. Except as provided by Section 2 of 2-1 this article, the commission has jurisdiction over natural gas 2-2 underground storage and over surface and subsurface equipment and 2-3 facilities used for natural gas underground storage. 2-4 Sec. 4. SAFETY STANDARDS AND PRACTICES. (a) The commission 2-5 by rule shall adopt safety standards and practices for natural gas 2-6 underground storage and storage facilities. The standards and 2-7 practices must: 2-8 (1) require the installation and periodic testing of 2-9 safety devices; 2-10 (2) establish emergency notification procedures in the 2-11 event of a release of natural gas from the facility if the owner or 2-12 operator determines that the release poses a substantial risk to 2-13 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 Sec. 5. RECORDS AND REPORTS. (a) An owner or operator of a 3-16 storage facility shall: 3-17 (1) maintain records and make reports relating to 3-18 construction, operation, or maintenance of the facility as required 3-19 by commission rule; and 3-20 (2) provide any other information required by the 3-21 commission relating to construction, operation, or maintenance of 3-22 the facility. 3-23 (b) The commission may provide forms for reports required 3-24 under this section. 3-25 Sec. 6. INSPECTION AND EXAMINATION OF FACILITY AND RECORDS. 3-26 (a) The commission may inspect a storage facility for compliance 3-27 with the safety standards and practices adopted under Section 4 of 4-1 this article and the record-keeping requirements adopted under 4-2 Section 5 of this article. To conduct the inspection, a 4-3 commissioner or a designated employee or agent of the commission 4-4 may enter property on which a storage facility is located at a 4-5 reasonable time and in a reasonable manner to examine: 4-6 (1) the facility and any related buildings or 4-7 equipment; and 4-8 (2) the records required to be maintained at the 4-9 storage facility under Section 5 of this article. 4-10 (b) Before entering the premises of a manned storage 4-11 facility, a commissioner or an employee or agent of the commission 4-12 must present to a person designated by the owner or operator of the 4-13 storage facility identification demonstrating that the 4-14 commissioner, employee, or agent is a commissioner or a designated 4-15 employee or agent of the commission. 4-16 Sec. 7. DAMAGE TO STORAGE FACILITY; DISABLING A SAFETY 4-17 DEVICE. A person may not intentionally damage or destroy a storage 4-18 facility and may not disable a safety device in a storage facility 4-19 except to repair, maintain, test, or replace the device or to 4-20 conduct other activities that are reasonably necessary to the safe 4-21 operation of the storage facility. 4-22 Sec. 8. INJUNCTION; CIVIL PENALTY. (a) The attorney 4-23 general, at the request of the commission, shall institute a civil 4-24 suit against a person who has violated or is violating this chapter 4-25 or a rule adopted by the commission under this chapter for: 4-26 (1) injunctive relief to restrain the person from the 4-27 violation; 5-1 (2) the assessment and recovery of a civil penalty for 5-2 a violation; or 5-3 (3) both injunctive relief and a civil penalty. 5-4 (b) The penalty may not exceed $1,000 for each violation. 5-5 (c) Each day of a continuing violation may be considered a 5-6 separate violation for the purpose of penalty assessment. 5-7 (d) The maximum penalty assessed for a related series of 5-8 violations may not exceed $200,000. 5-9 Sec. 9. ADMINISTRATIVE PENALTY. (a) The commission may 5-10 assess as provided by this section an administrative penalty 5-11 against a person who violates this chapter or a rule or order 5-12 adopted by the commission. 5-13 (b) Except as provided by Subsection (c) of this section, 5-14 the penalty for each violation may be in an amount not to exceed 5-15 $1,000. Each day a violation continues or occurs may be considered 5-16 a separate violation for the purpose of penalty assessment. The 5-17 maximum penalty assessed for a related series of violations under 5-18 this subsection may not exceed $200,000. 5-19 (c) The penalty for each violation of Section 7 of this 5-20 article may be in an amount not to exceed $25,000. Each day a 5-21 violation continues or occurs may be considered a separate 5-22 violation for the purpose of penalty assessment. The total penalty 5-23 assessed under this subsection for a continuing violation may not 5-24 exceed $300,000. 5-25 (d) In determining the amount of the penalty, the commission 5-26 shall consider: 5-27 (1) the seriousness of the violation, including the 6-1 nature, circumstances, extent, and gravity of the prohibited acts, 6-2 and the hazard or potential hazard created to the health, safety, 6-3 or economic welfare of the public; 6-4 (2) the economic damage to property or the environment 6-5 caused by the violation; 6-6 (3) the history of previous violations; 6-7 (4) the amount necessary to deter future violations; 6-8 (5) efforts to correct the violation; and 6-9 (6) any other matter that justice may require. 6-10 (e) If, after investigation of a possible violation and the 6-11 facts surrounding that possible violation, the commission 6-12 determines that a violation has occurred, the commission may issue 6-13 a violation report stating the facts on which the conclusion that a 6-14 violation occurred is based, recommending that an administrative 6-15 penalty under this section be imposed on the person charged, and 6-16 recommending the amount of that proposed penalty. The commission 6-17 shall base the recommended amount of the proposed penalty on the 6-18 seriousness of the violation determined by consideration of the 6-19 factors set forth in Subsection (d) of this section. 6-20 (f) Not later than the 14th day after the date on which the 6-21 report is issued, the commission shall give written notice of the 6-22 report to the person charged. The notice shall include a brief 6-23 summary of the charges, a statement of the amount of the penalty 6-24 recommended, and a statement of the right of the person charged to 6-25 a hearing on the occurrence of the violation or the amount of the 6-26 penalty, or both the occurrence of the violation and the amount of 6-27 the penalty. 7-1 (g) Not later than the 20th day after the date on which 7-2 notice is received, the person charged may accept the determination 7-3 of the commission made under Subsection (e) of this section, 7-4 including the recommended penalty, or make a written request for a 7-5 hearing on the determination. 7-6 (h) If the person charged with the violation accepts the 7-7 determination of the commission, the commission shall issue an 7-8 order approving the determination and ordering the payment of the 7-9 recommended penalty. 7-10 (i) If the person charged requests a hearing or does not 7-11 timely respond to the notice, the commission shall set a hearing 7-12 and give notice of the hearing. The hearing shall be held by a 7-13 hearing examiner designated by the commission. The hearing 7-14 examiner shall make findings of fact and conclusions of law and 7-15 promptly issue to the commission a proposal for decision as to the 7-16 occurrence of the violation, including a recommendation as to the 7-17 amount of the proposed penalty if a penalty is warranted. Based on 7-18 the findings of fact, conclusions of law, and recommendations of 7-19 the hearing examiner, the commission by order may find that a 7-20 violation has occurred and may assess a penalty or may find that no 7-21 violation has occurred. All proceedings under this subsection are 7-22 subject to the Administrative Procedure and Texas Register Act 7-23 (Article 6252-13a, Vernon's Texas Civil Statutes) and its 7-24 subsequent amendments. 7-25 (j) The commission shall give notice of the commission's 7-26 order to the person charged. The notice shall include: 7-27 (1) the findings of fact and conclusions of law 8-1 separately stated; 8-2 (2) the amount of the penalty ordered, if any; 8-3 (3) a statement of the right of the person charged to 8-4 judicial review of the commission's order, if any; and 8-5 (4) other information required by law. 8-6 (k) Not later than the 30th day after the date on which the 8-7 commission's order becomes final as provided by Section 16(c), 8-8 Administrative Procedure and Texas Register Act (Article 6252-13a, 8-9 Vernon's Texas Civil Statutes), and its subsequent amendments, the 8-10 person charged with the violation shall: 8-11 (1) pay the amount of the penalty; 8-12 (2) pay the amount of the penalty and file a petition 8-13 for judicial review contesting either the amount of the penalty or 8-14 the fact of the violation or both the amount of the penalty and the 8-15 fact of the violation; or 8-16 (3) without paying the amount of the penalty, file a 8-17 petition for judicial review contesting the amount of the penalty, 8-18 the fact of the violation, or both the amount of the penalty and 8-19 the fact of the violation. 8-20 (l) Within the 30-day period, a person who acts under 8-21 Subsection (k)(3) of this section may: 8-22 (1) stay the enforcement of the penalty by: 8-23 (A) paying the amount of the penalty to the 8-24 court for placement in an escrow account; or 8-25 (B) giving to the court a supersedeas bond in a 8-26 form approved by the court that is effective until all judicial 8-27 review of the order or decision is final; or 9-1 (2) request the court to stay enforcement of the 9-2 penalty by: 9-3 (A) filing with the court a sworn affidavit of 9-4 the person stating that the person is financially unable to pay the 9-5 amount of the penalty and is financially unable to give the 9-6 supersedeas bond; and 9-7 (B) delivering a copy of the affidavit to the 9-8 commission. 9-9 (m) If the commission receives a copy of an affidavit under 9-10 Subsection (l) of this section the commission may file with the 9-11 court not later than the fifth day after the date the copy is 9-12 received a contest to the affidavit. The court shall hold a 9-13 hearing on the facts alleged in the affidavit as soon as 9-14 practicable. The person who files an affidavit has the burden of 9-15 proving that the person is financially unable to pay the amount of 9-16 the penalty and to give a supersedeas bond. 9-17 (n) If the person does not pay the amount of the penalty and 9-18 the penalty is not stayed, the commission may refer the matter to 9-19 the attorney general for enforcement. 9-20 (o) Judicial review of the order of the commission is: 9-21 (1) instituted by filing a petition as provided by 9-22 Section 19, Administrative Procedure and Texas Register Act 9-23 (Article 6252-13a, Vernon's Texas Civil Statutes), and its 9-24 subsequent amendments; and 9-25 (2) under the substantial evidence rule. 9-26 (p) If the person paid the amount of the penalty and if that 9-27 amount is reduced or is not assessed by the court, the court shall 10-1 order that the appropriate amount plus accrued interest be remitted 10-2 to the person. The rate of interest is the rate charged on loans 10-3 to depository institutions by the New York Federal Reserve Bank and 10-4 shall be paid for the period beginning on the date the penalty is 10-5 paid and ending on the date the penalty is remitted. If the person 10-6 gave a supersedeas bond, the court shall order the release of the 10-7 bond: 10-8 (1) without further action by the person if the 10-9 penalty is not assessed by the court; or 10-10 (2) on payment of the penalty in the amount determined 10-11 by the court. 10-12 (q) A penalty collected under this section shall be 10-13 deposited to the credit of the oil-field cleanup fund. 10-14 Sec. 10. LIMITATION ON POWERS OF MUNICIPALITIES AND 10-15 COUNTIES. A municipality or county may not adopt or enforce an 10-16 ordinance that establishes safety standards or practices applicable 10-17 to storage facilities that are subject to regulation under this 10-18 article or another state or federal law. 10-19 SECTION 2. (a) This Act takes effect September 1, 1993. 10-20 (b) Not later than January 1, 1994, the Railroad Commission 10-21 of Texas shall adopt rules and safety standards and practices 10-22 required by Article 6053-3, Revised Statutes, as added by this Act. 10-23 (c) This Act applies only to natural gas underground storage 10-24 in storage facilities on or after January 1, 1994, including 10-25 storage in facilities that commenced before January 1, 1994. 10-26 Natural gas underground storage in storage facilities before 10-27 January 1, 1994, is governed by the law as it existed immediately 11-1 before the effective date of this Act, and that law is continued in 11-2 effect for that purpose. 11-3 SECTION 3. The importance of this legislation and the 11-4 crowded condition of the calendars in both houses create an 11-5 emergency and an imperative public necessity that the 11-6 constitutional rule requiring bills to be read on three several 11-7 days in each house be suspended, and this rule is hereby suspended.