1-1 By: Earley (Senate Sponsor - Turner) H.B. No. 2622 1-2 (In the Senate - Received from the House May 5, 1993; 1-3 May 6, 1993, read first time and referred to Committee on Natural 1-4 Resources; May 21, 1993, reported favorably by the following vote: 1-5 Yeas 9, Nays 0; May 21, 1993, sent to printer.) 1-6 COMMITTEE VOTE 1-7 Yea Nay PNV Absent 1-8 Sims x 1-9 Truan x 1-10 Armbrister x 1-11 Barrientos x 1-12 Bivins x 1-13 Brown x 1-14 Carriker x 1-15 Lucio x 1-16 Montford x 1-17 Ratliff x 1-18 Shelley x 1-19 A BILL TO BE ENTITLED 1-20 AN ACT 1-21 relating to regulation of natural gas underground storage 1-22 facilities; providing penalties. 1-23 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-24 SECTION 1. Title 102, Revised Statutes, is amended by adding 1-25 Article 6053-3 to read as follows: 1-26 Art. 6053-3. UNDERGROUND STORAGE FACILITIES FOR NATURAL GAS 1-27 Sec. 1. DEFINITIONS. In this article: 1-28 (1) "Commission" means the Railroad Commission of 1-29 Texas. 1-30 (2) "Natural gas" means any gaseous material composed 1-31 primarily of methane in either its original or manufactured state. 1-32 (3) "Natural gas underground storage" means the 1-33 storage of natural gas beneath the surface in a formation, strata, 1-34 or reservoir. 1-35 (4) "Storage facility" has the meaning assigned by 1-36 Section 91.173, Natural Resources Code, and its subsequent 1-37 amendments. 1-38 Sec. 2. APPLICABILITY. This article does not apply to a 1-39 storage facility that is part of an interstate pipeline facility as 1-40 defined by the United States Department of Transportation and that 1-41 is subject to federal minimum standards adopted under the Natural 1-42 Gas Pipeline Safety Act of 1968 (49 U.S.C. Section 1671 et seq.) 1-43 and its subsequent amendments. 1-44 Sec. 3. JURISDICTION. Except as provided by Section 2 of 1-45 this article, the commission has jurisdiction over natural gas 1-46 underground storage and over surface and subsurface equipment and 1-47 facilities used for natural gas underground storage. 1-48 Sec. 4. SAFETY STANDARDS AND PRACTICES. (a) The commission 1-49 by rule shall adopt safety standards and practices for natural gas 1-50 underground storage and storage facilities. The standards and 1-51 practices must: 1-52 (1) require the installation and periodic testing of 1-53 safety devices; 1-54 (2) establish emergency notification procedures in the 1-55 event of a release of natural gas from the facility if the owner or 1-56 operator determines that the release poses a substantial risk to 1-57 the public; 1-58 (3) establish fire prevention and response procedures; 1-59 (4) require employee safety training with respect to 1-60 the operation of a storage facility for the employees of the 1-61 storage facility; and 1-62 (5) establish other safety standards and practices 1-63 that the commission finds are reasonable and necessary for 1-64 underground natural gas storage and the safe construction, 1-65 operation, and maintenance of storage facilities. 1-66 (b) The commission shall require that records of tests of a 1-67 safety device required by Subsection (a)(1) of this section be: 1-68 (1) filed with the commission; or 2-1 (2) maintained by the owner or operator and made 2-2 available for inspection by the commission. 2-3 (c) The commission may adopt different standards and 2-4 practices for different types of storage facilities and may 2-5 distinguish between natural gas underground storage in salt dome 2-6 caverns, depleted reservoirs, and embedded salt formations. 2-7 (d) The commission may grant an exception in a permit or 2-8 amended permit issued to a storage facility to standards and 2-9 practices adopted under this section if granting the exception does 2-10 not constitute an unreasonable danger to the public. The 2-11 commission may impose additional standards and practices in a 2-12 permit or amended permit issued to a storage facility. 2-13 (e) The commission may require the owner or operator of a 2-14 storage facility to prepare a safety procedure manual for each 2-15 storage facility and file a copy of the manual with the commission 2-16 or make the manual available for inspection under Section 6 of this 2-17 article. 2-18 (f) Safety standards and practices adopted by the commission 2-19 for a storage facility that is part of an intrastate pipeline 2-20 facility as defined by the United States Department of 2-21 Transportation under the Natural Gas Pipeline Safety Act of 1968 2-22 (49 U.S.C. Section 1671 et seq.) and its subsequent amendments must 2-23 be compatible with federal minimum standards. 2-24 Sec. 5. RECORDS AND REPORTS. (a) An owner or operator of a 2-25 storage facility shall: 2-26 (1) maintain records and make reports relating to 2-27 construction, operation, or maintenance of the facility as required 2-28 by commission rule; and 2-29 (2) provide any other information required by the 2-30 commission relating to construction, operation, or maintenance of 2-31 the facility. 2-32 (b) The commission may provide forms for reports required 2-33 under this section. 2-34 Sec. 6. INSPECTION AND EXAMINATION OF FACILITY AND RECORDS. 2-35 (a) The commission may inspect a storage facility for compliance 2-36 with the safety standards and practices adopted under Section 4 of 2-37 this article and the record-keeping requirements adopted under 2-38 Section 5 of this article. To conduct the inspection, a 2-39 commissioner or a designated employee or agent of the commission 2-40 may enter property on which a storage facility is located at a 2-41 reasonable time and in a reasonable manner to examine: 2-42 (1) the facility and any related buildings or 2-43 equipment; and 2-44 (2) the records required to be maintained at the 2-45 storage facility under Section 5 of this article. 2-46 (b) Before the commission or its employees or agents enter 2-47 the premises of a storage facility with on-site personnel, proper 2-48 credentials must be presented to the on-site person in charge of 2-49 the property. 2-50 Sec. 7. DAMAGE TO STORAGE FACILITY; DISABLING A SAFETY 2-51 DEVICE. A person may not intentionally damage or destroy a storage 2-52 facility and may not disable a safety device in a storage facility 2-53 except to repair, maintain, test, or replace the device or to 2-54 conduct other activities that are reasonably necessary to the safe 2-55 operation of the storage facility. 2-56 Sec. 8. INJUNCTION; CIVIL PENALTY. (a) The attorney 2-57 general, at the request of the commission, shall institute a civil 2-58 suit against a person who has violated or is violating this article 2-59 or a rule adopted or order or permit issued under this article for: 2-60 (1) injunctive relief to restrain the person from the 2-61 violation; 2-62 (2) the assessment and recovery of a civil penalty for 2-63 a violation; or 2-64 (3) both injunctive relief and a civil penalty. 2-65 (b) The penalty may not exceed $25,000 for each violation. 2-66 (c) Each day of a continuing violation may be considered a 2-67 separate violation for the purpose of penalty assessment. 2-68 (d) The maximum penalty assessed for a related series of 2-69 violations may not exceed $500,000. 2-70 Sec. 9. ADMINISTRATIVE PENALTY. (a) The commission may 3-1 assess as provided by this section an administrative penalty 3-2 against a person who violates this article or a rule adopted or 3-3 order or permit issued under this article. 3-4 (b) Except as provided by Subsection (c) of this section, 3-5 the penalty for each violation may be in an amount not to exceed 3-6 $10,000. Each day a violation continues or occurs may be 3-7 considered a separate violation for the purpose of penalty 3-8 assessment. The maximum penalty assessed for a related series of 3-9 violations under this subsection may not exceed $200,000. 3-10 (c) The penalty for each violation of Section 7 of this 3-11 article may be in an amount not to exceed $25,000. Each day a 3-12 violation continues or occurs may be considered a separate 3-13 violation for the purpose of penalty assessment. The total penalty 3-14 assessed under this subsection for a continuing violation may not 3-15 exceed $300,000. 3-16 (d) In determining the amount of the penalty, the commission 3-17 shall consider: 3-18 (1) the seriousness of the violation, including the 3-19 nature, circumstances, extent, and gravity of the prohibited acts, 3-20 and the hazard or potential hazard created to the health, safety, 3-21 or economic welfare of the public; 3-22 (2) the economic harm to property or the environment 3-23 caused by the violation; 3-24 (3) the history of previous violations; 3-25 (4) the amount necessary to deter future violations; 3-26 (5) efforts to correct the violation; and 3-27 (6) any other matter that justice may require. 3-28 (e) A civil penalty may be assessed only after the person 3-29 charged under this section has been given an opportunity for a 3-30 public hearing. 3-31 (f) If a public hearing has been held, the commission shall 3-32 make findings of fact and issue a written decision as to the 3-33 occurrence of the violation and the amount of the penalty that is 3-34 warranted, incorporating, if appropriate, an order requiring that 3-35 the penalty be paid. 3-36 (g) If appropriate, the commission shall consolidate the 3-37 hearing with other proceedings. 3-38 (h) If a person charged under this section fails to take 3-39 advantage of the opportunity for a public hearing, a civil penalty 3-40 may be assessed by the commission after it has determined that a 3-41 violation occurred and the amount of the penalty that is warranted. 3-42 (i) The commission shall then issue an order requiring the 3-43 penalty to be paid. 3-44 (j) The notice of the commission's order given to the person 3-45 under the Administrative Procedure and Texas Register Act (Article 3-46 6252-13a, Vernon's Texas Civil Statutes) and its subsequent 3-47 amendments must include a statement of the right of the person to 3-48 judicial review of the order. 3-49 (k) Not later than the 30th day after the date on which the 3-50 commission's order becomes final as provided by Section 16(c), 3-51 Administrative Procedure and Texas Register Act (Article 6252-13a, 3-52 Vernon's Texas Civil Statutes), and its subsequent amendments, the 3-53 person charged with the violation shall: 3-54 (1) pay the amount of the penalty; 3-55 (2) pay the amount of the penalty and file a petition 3-56 for judicial review contesting either the amount of the penalty or 3-57 the fact of the violation or both the amount of the penalty and the 3-58 fact of the violation; or 3-59 (3) without paying the amount of the penalty, file a 3-60 petition for judicial review contesting the amount of the penalty, 3-61 the fact of the violation, or both the amount of the penalty and 3-62 the fact of the violation. 3-63 (l) Within the 30-day period, a person who acts under 3-64 Subsection (k)(3) of this section may: 3-65 (1) stay the enforcement of the penalty by: 3-66 (A) paying the amount of the penalty to the 3-67 court for placement in an escrow account; or 3-68 (B) giving to the court a supersedeas bond in a 3-69 form approved by the court that is effective until all judicial 3-70 review of the order or decision is final; or 4-1 (2) request the court to stay enforcement of the 4-2 penalty by: 4-3 (A) filing with the court a sworn affidavit of 4-4 the person stating that the person is financially unable to pay the 4-5 amount of the penalty and is financially unable to give the 4-6 supersedeas bond; and 4-7 (B) delivering a copy of the affidavit to the 4-8 commission. 4-9 (m) If the commission receives a copy of an affidavit under 4-10 Subsection (l) of this section the commission may file with the 4-11 court not later than the fifth day after the date the copy is 4-12 received a contest to the affidavit. The court shall hold a 4-13 hearing on the facts alleged in the affidavit as soon as 4-14 practicable. The person who files an affidavit has the burden of 4-15 proving that the person is financially unable to pay the amount of 4-16 the penalty and to give a supersedeas bond. 4-17 (n) If the person does not pay the amount of the penalty and 4-18 the penalty is not stayed, the commission may refer the matter to 4-19 the attorney general for enforcement. 4-20 (o) Judicial review of the order of the commission is: 4-21 (1) instituted by filing a petition as provided by 4-22 Section 19, Administrative Procedure and Texas Register Act 4-23 (Article 6252-13a, Vernon's Texas Civil Statutes), and its 4-24 subsequent amendments; and 4-25 (2) under the substantial evidence rule. 4-26 (p) If the person paid the amount of the penalty and if that 4-27 amount is reduced or is not assessed by the court, the court shall 4-28 order that the appropriate amount plus accrued interest be remitted 4-29 to the person. The rate of interest is the rate charged on loans 4-30 to depository institutions by the New York Federal Reserve Bank and 4-31 shall be paid for the period beginning on the date the penalty is 4-32 paid and ending on the date the penalty is remitted. If the person 4-33 gave a supersedeas bond, the court shall order the release of the 4-34 bond: 4-35 (1) without further action by the person if the 4-36 penalty is not assessed by the court; or 4-37 (2) on payment of the penalty in the amount determined 4-38 by the court. 4-39 (q) A penalty collected under this section shall be 4-40 deposited to the credit of the oil-field cleanup fund. 4-41 Sec. 10. NOTICE OF NONCOMPLIANCE. In addition to other 4-42 authority specifically granted to the commission under this 4-43 article, the commission may enforce this article or any rule 4-44 adopted or order or permit issued under this article as provided by 4-45 Section 91.207, Natural Resources Code. 4-46 Sec. 11. LIMITATION ON POWERS OF MUNICIPALITIES AND 4-47 COUNTIES. A municipality or county may not adopt or enforce an 4-48 ordinance that establishes safety standards or practices applicable 4-49 to storage facilities that are subject to regulation under this 4-50 article or another state or federal law. 4-51 SECTION 2. (a) This Act takes effect September 1, 1993. 4-52 (b) Not later than January 1, 1994, the Railroad Commission 4-53 of Texas shall adopt rules and safety standards and practices 4-54 required by Article 6053-3, Revised Statutes, as added by this Act. 4-55 (c) This Act applies only to natural gas underground storage 4-56 in storage facilities on or after January 1, 1994, including 4-57 storage in facilities that commenced before January 1, 1994. 4-58 Natural gas underground storage in storage facilities before 4-59 January 1, 1994, is governed by the law as it existed immediately 4-60 before the effective date of this Act, and that law is continued in 4-61 effect for that purpose. 4-62 SECTION 3. The importance of this legislation and the 4-63 crowded condition of the calendars in both houses create an 4-64 emergency and an imperative public necessity that the 4-65 constitutional rule requiring bills to be read on three several 4-66 days in each house be suspended, and this rule is hereby suspended. 4-67 * * * * * 4-68 Austin, 4-69 Texas 4-70 May 21, 1993 5-1 Hon. Bob Bullock 5-2 President of the Senate 5-3 Sir: 5-4 We, your Committee on Natural Resources to which was referred H.B. 5-5 No. 2622, have had the same under consideration, and I am 5-6 instructed to report it back to the Senate with the recommendation 5-7 that it do pass and be printed. 5-8 Sims, 5-9 Chairman 5-10 * * * * * 5-11 WITNESSES 5-12 FOR AGAINST ON 5-13 ___________________________________________________________________ 5-14 Name: Dennis Hartnett x 5-15 Representing: Valero Natural Gas L.P. 5-16 City: San Antonio 5-17 ------------------------------------------------------------------- 5-18 Name: James Mann x 5-19 Representing: TX Natural Gas Pipeline Assn 5-20 City: Austin 5-21 ------------------------------------------------------------------- 5-22 Name: Brenda Loudermilk x 5-23 Representing: Railroad Commission 5-24 City: Austin 5-25 -------------------------------------------------------------------