By: Earley H.B. No. 2622 73R5098 DLF-F 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) "Executive director" means the executive director 1-12 of the commission. 1-13 (3) "Natural gas" has the meaning assigned by Section 1-14 91.173, Natural Resources Code, and its subsequent amendments. 1-15 (4) "Natural gas underground storage" means the 1-16 storage of natural gas beneath the surface in a formation, strata, 1-17 or reservoir. 1-18 (5) "Storage facility" has the meaning assigned by 1-19 Section 91.173, Natural Resources Code, and its subsequent 1-20 amendments. 1-21 Sec. 2. APPLICABILITY. This article does not apply to the 1-22 storage of natural gas covered by the provisions of the Natural Gas 1-23 Pipeline Safety Act of 1968 (49 U.S.C. Section 1671 et seq.) and 1-24 its subsequent amendments or by Article 6053-1, Revised Statutes, 2-1 and its subsequent amendments, or to the storage of a hazardous 2-2 liquid governed under Chapter 117, Natural Resources Code, and its 2-3 subsequent amendments. 2-4 Sec. 3. JURISDICTION. Except as provided by Section 2 of 2-5 this article, the commission has jurisdiction over natural gas 2-6 underground storage and over surface and subsurface equipment and 2-7 facilities used for natural gas underground storage. 2-8 Sec. 4. SAFETY STANDARDS AND PRACTICES. (a) The commission 2-9 by rule shall adopt safety standards and practices for natural gas 2-10 underground storage and storage facilities. The standards and 2-11 practices must: 2-12 (1) require the installation and periodic testing of 2-13 safety devices; 2-14 (2) establish emergency notification procedures in the 2-15 event of a release of natural gas from the facility if the owner or 2-16 operator determines that the release poses a substantial risk to 2-17 the public; 2-18 (3) establish fire prevention and response procedures; 2-19 (4) require employee safety training for the employees 2-20 of the storage facility; and 2-21 (5) establish other safety standards and practices 2-22 that the commission finds are reasonable and necessary for 2-23 underground natural gas storage and the safe construction, 2-24 operation, and maintenance of storage facilities. 2-25 (b) The commission shall require that records of tests of a 2-26 safety device required by Subsection (a)(1) of this section be 2-27 filed with the commission. 3-1 (c) The commission may adopt different standards and 3-2 practices for different types of storage facilities and may 3-3 distinguish between natural gas underground storage in salt dome 3-4 caverns, depleted reservoirs, and embedded salt formations. 3-5 (d) The commission may grant an exception in a permit or 3-6 amended permit issued to a storage facility to standards and 3-7 practices adopted under this section if granting the exception does 3-8 not constitute an unreasonable danger to the public. The 3-9 commission may impose additional standards and practices in a 3-10 permit or amended permit issued to a storage facility. 3-11 (e) The commission may require the owner or operator of a 3-12 storage facility to prepare a safety procedure manual for each 3-13 storage facility and file a copy of the manual with the commission 3-14 or make the manual available for inspection under Section 6 of this 3-15 article. 3-16 Sec. 5. RECORDS AND REPORTS. (a) An owner or operator of a 3-17 storage facility shall: 3-18 (1) maintain records and make reports relating to 3-19 construction, operation, or maintenance of the facility as required 3-20 by commission rule; and 3-21 (2) provide any other information required by the 3-22 commission relating to construction, operation, or maintenance of 3-23 the facility. 3-24 (b) The commission may provide forms for reports required 3-25 under this section. 3-26 Sec. 6. INSPECTION AND EXAMINATION OF FACILITY AND RECORDS. 3-27 (a) The commission may inspect a storage facility for compliance 4-1 with the safety standards and practices adopted under Section 4 of 4-2 this article and the record-keeping requirements adopted under 4-3 Section 5 of this article. To conduct the inspection, a 4-4 commissioner or a designated employee or agent of the commission 4-5 may enter property on which a storage facility is located at a 4-6 reasonable time and in a reasonable manner to examine: 4-7 (1) the facility and any related buildings or 4-8 equipment; and 4-9 (2) the records required to be maintained under 4-10 Section 5 of this article. 4-11 (b) Before entering the premises of a storage facility, a 4-12 commissioner or an employee or agent of the commission must present 4-13 to a person designated by the owner or operator of the storage 4-14 facility identification demonstrating that the commissioner, 4-15 employee, or agent is a commissioner or a designated employee or 4-16 agent of the commission. 4-17 Sec. 7. DAMAGE TO STORAGE FACILITY; DISABLING A SAFETY 4-18 DEVICE. A person may not intentionally damage or destroy a storage 4-19 facility and may not disable a safety device in a storage facility 4-20 except to repair, maintain, or replace the device. 4-21 Sec. 8. INJUNCTION; CIVIL PENALTY. (a) The attorney 4-22 general, at the request of the commission, shall institute a civil 4-23 suit against a person who has violated or is violating this chapter 4-24 or a rule adopted by the commission under this chapter for: 4-25 (1) injunctive relief to restrain the person from the 4-26 violation; 4-27 (2) the assessment and recovery of a civil penalty for 5-1 a violation; or 5-2 (3) both injunctive relief and a civil penalty. 5-3 (b) The penalty must be not less than $50 or more than 5-4 $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. 5-23 (d) In determining the amount of the penalty, the executive 5-24 director shall consider: 5-25 (1) the seriousness of the violation, including the 5-26 nature, circumstances, extent, and gravity of the prohibited acts, 5-27 and the hazard or potential hazard created to the health, safety, 6-1 or economic welfare of the public; 6-2 (2) the economic damage to property or the environment 6-3 caused by the violation; 6-4 (3) the history of previous violations; 6-5 (4) the amount necessary to deter future violations; 6-6 (5) efforts to correct the violation; and 6-7 (6) any other matter that justice may require. 6-8 (e) If, after investigation of a possible violation and the 6-9 facts surrounding that possible violation, the executive director 6-10 determines that a violation has occurred, the executive director 6-11 may issue a violation report stating the facts on which the 6-12 conclusion that a violation occurred is based, recommending that an 6-13 administrative penalty under this section be imposed on the person 6-14 charged, and recommending the amount of that proposed penalty. The 6-15 executive director shall base the recommended amount of the 6-16 proposed penalty on the seriousness of the violation determined by 6-17 consideration of the factors set forth in Subsection (d) of this 6-18 section. 6-19 (f) Not later than the 14th day after the date on which the 6-20 report is issued, the executive director shall give written notice 6-21 of the report to the person charged. The notice shall include a 6-22 brief summary of the charges, a statement of the amount of the 6-23 penalty recommended, and a statement of the right of the person 6-24 charged to a hearing on the occurrence of the violation or the 6-25 amount of the penalty, or both the occurrence of the violation and 6-26 the amount of the penalty. 6-27 (g) Not later than the 20th day after the date on which 7-1 notice is received, the person charged may accept the determination 7-2 of the executive director made under Subsection (e) of this 7-3 section, including the recommended penalty, or make a written 7-4 request for a hearing on the determination. 7-5 (h) If the person charged with the violation accepts the 7-6 determination of the executive director, the commission shall issue 7-7 an order approving the determination and ordering the payment of 7-8 the recommended penalty. 7-9 (i) If the person charged requests a hearing or does not 7-10 timely respond to the notice, the executive director shall set a 7-11 hearing and give notice of the hearing. The hearing shall be held 7-12 by a hearing examiner designated by the commission. The 7-13 commission may designate the State Office of Administrative 7-14 Hearings to hold the hearing. The hearing examiner shall make 7-15 findings of fact and conclusions of law and promptly issue to the 7-16 commission a proposal for decision as to the occurrence of the 7-17 violation, including a recommendation as to the amount of the 7-18 proposed penalty if a penalty is warranted. Based on the findings 7-19 of fact, conclusions of law, and recommendations of the hearing 7-20 examiner, the commission by order may find that a violation has 7-21 occurred and may assess a penalty or may find that no violation has 7-22 occurred. All proceedings under this subsection are subject to the 7-23 Administrative Procedure and Texas Register Act (Article 6252-13a, 7-24 Vernon's Texas Civil Statutes) and its subsequent amendments. 7-25 (j) The executive director shall give notice of the 7-26 commission's order to the person charged. The notice shall 7-27 include: 8-1 (1) the findings of fact and conclusions of law 8-2 separately stated; 8-3 (2) the amount of the penalty ordered, if any; 8-4 (3) a statement of the right of the person charged to 8-5 judicial review of the commission's order, if any; and 8-6 (4) other information required by law. 8-7 (k) Not later than the 30th day after the date on which the 8-8 commission's order becomes final as provided by Section 16(c), 8-9 Administrative Procedure and Texas Register Act (Article 6252-13a, 8-10 Vernon's Texas Civil Statutes), and its subsequent amendments, the 8-11 person charged with the violation shall: 8-12 (1) pay the amount of the penalty; 8-13 (2) pay the amount of the penalty and file a petition 8-14 for judicial review contesting either the amount of the penalty or 8-15 the fact of the violation or both the amount of the penalty and the 8-16 fact of the violation; or 8-17 (3) without paying the amount of the penalty, file a 8-18 petition for judicial review contesting the amount of the penalty, 8-19 the fact of the violation, or both the amount of the penalty and 8-20 the fact of the violation. 8-21 (l) Within the 30-day period, a person who acts under 8-22 Subsection (k)(3) of this section may: 8-23 (1) stay the enforcement of the penalty by: 8-24 (A) paying the amount of the penalty to the 8-25 court for placement in an escrow account; or 8-26 (B) giving to the court a supersedeas bond in a 8-27 form approved by the court that is effective until all judicial 9-1 review of the order or decision is final; or 9-2 (2) request the court to stay enforcement of the 9-3 penalty by: 9-4 (A) filing with the court a sworn affidavit of 9-5 the person stating that the person is financially unable to pay the 9-6 amount of the penalty and is financially unable to give the 9-7 supersedeas bond; and 9-8 (B) delivering a copy of the affidavit to the 9-9 executive director. 9-10 (m) If the executive director receives a copy of an 9-11 affidavit under Subsection (l) of this section the executive 9-12 director may file with the court not later than the fifth day after 9-13 the date the copy is received a contest to the affidavit. The 9-14 court shall hold a hearing on the facts alleged in the affidavit as 9-15 soon as practicable. The person who files an affidavit has the 9-16 burden of proving that the person is financially unable to pay the 9-17 amount of the penalty and to give a supersedeas bond. 9-18 (n) If the person does not pay the amount of the penalty and 9-19 the penalty is not stayed, the executive director may refer the 9-20 matter to the attorney general for enforcement. 9-21 (o) Judicial review of the order of the commission is: 9-22 (1) instituted by filing a petition as provided by 9-23 Section 19, Administrative Procedure and Texas Register Act 9-24 (Article 6252-13a, Vernon's Texas Civil Statutes), and its 9-25 subsequent amendments; and 9-26 (2) under the substantial evidence rule. 9-27 (p) If the person paid the amount of the penalty and if that 10-1 amount is reduced or is not assessed by the court, the court shall 10-2 order that the appropriate amount plus accrued interest be remitted 10-3 to the person. The rate of interest is the rate charged on loans 10-4 to depository institutions by the New York Federal Reserve Bank and 10-5 shall be paid for the period beginning on the date the penalty is 10-6 paid and ending on the date the penalty is remitted. If the person 10-7 gave a supersedeas bond, the court shall order the release of the 10-8 bond: 10-9 (1) without further action by the person if the 10-10 penalty is not assessed by the court; or 10-11 (2) on payment of the penalty in the amount determined 10-12 by the court. 10-13 (q) A penalty collected under this section shall be remitted 10-14 to the comptroller for deposit to the general revenue fund. 10-15 Sec. 10. LIMITATION ON POWERS OF MUNICIPALITIES AND 10-16 COUNTIES. A municipality or county may not adopt or enforce an 10-17 ordinance that establishes safety standards or practices applicable 10-18 to storage facilities that are subject to regulation under this 10-19 article or another state or federal law. 10-20 SECTION 2. (a) This Act takes effect September 1, 1993. 10-21 (b) Not later than January 1, 1994, the Railroad Commission 10-22 of Texas shall adopt rules and safety standards and practices 10-23 required by Article 6053-3, Revised Statutes, as added by this Act. 10-24 (c) This Act applies only to natural gas underground storage 10-25 in storage facilities on or after January 1, 1994, including 10-26 storage in facilities that commenced before January 1, 1994. 10-27 Natural gas underground storage in storage facilities before 11-1 January 1, 1994, is governed by the law as it existed immediately 11-2 before the effective date of this Act, and that law is continued in 11-3 effect for that purpose. 11-4 SECTION 3. The importance of this legislation and the 11-5 crowded condition of the calendars in both houses create an 11-6 emergency and an imperative public necessity that the 11-7 constitutional rule requiring bills to be read on three several 11-8 days in each house be suspended, and this rule is hereby suspended.