American Oil and Gas Reporter - January 2015 - 224

Pipeline Permitting

Alliance Questions Rule Amendments
By Danny Boyd
Special Correspondent

the eminent domain provisions in the
Texas Landowner's Bill of Rights.

AUSTIN, TX.-Newly adopted amendments to Texas Railroad Commission
rules could delay pipeline permitting and
construction, and do little to clear up concerns of smaller independents over nondiscriminatory access to intrastate transporters, according to the Texas Alliance of
Energy Producers.
The Railroad Commission announced
Dec. 3 that the three commissioners unanimously adopted amendments to Rule
70, which are designed to clarify how a
pipeline operator may be classified by the
commission as a common carrier contracting to transport crude oil, natural gas or
carbon dioxide for hire.
But with Texas operators often being
forced to flare gas because of a lack of
pipeline capacity, the amendments could
inject further delays in the permitting
process that will cost the entire industry
more time and money, worries Bill
Stevens, Alliance government relations
consultant.
"We want to expedite the permitting
process and pipeline construction as much
as possible, and not introduce new delays,"
Stevens stresses.
The rule amendments take effect on
March 1. They require a pipeline operator to verify its claim to be a common carrier when applying for a T-4 permit to operate a pipeline, or when renewing, amending or cancelling an existing permit, according to an RRC summary.
Permit applications now must contain
additional information, including the classification requested and purpose of the
pipeline or pipeline system as a common
carrier, a gas utility or private line operator, according to the RRC.
Permit applications also must be accompanied by a sworn statement from the
pipeline applicant detailing the facts supporting the classification requested and the
purpose for the pipeline, the commission
says. If applicable, the pipeline operator
must submit documentation such as a contract or tariff for third-party transportation,
along with any other information requested by the RRC, the summary states.
The pipeline T-4 permit, if granted, may
be revoked at any time after a hearing, if
the commission finds the pipeline is not
being operated in accordance with state
laws, and commission rules and regulations, the RRC delineates.
The applicant also must acknowledge

Obligation To Shippers
"The commission's new permitting
procedures for common carrier pipelines
certify a more vibrant, transparent permitting process," RRC Chairwoman Christi
Craddick maintains in a statement.
But the additions do little to provide additional transparency sought by some
smaller independents vying for pipeline
space, Stevens counters. Attempts at legislative remedies have been unsuccessful
thus far, he points out.
"We don't want this to cause delays in
building pipelines," he emphasizes. "We
simply are saying that needs from both
sides of the ledger need to be recognized-from the landowner and the producer/shipper. That is transparency.
"We have called for transparency on
pipeline regulations, tariffs, and entry
and exit points, and have (lobbied) for that
legislatively for years," Stevens adds. "I
don't think we are any further along today.
This really doesn't open that to our satisfaction."
Changes to Rule 70 follow the Texas
Supreme Court's August 2011 decision in
Texas Rice Land Partners v. Denbury
Green Pipeline-Texas LLC, which overturned Texas' legislatively directed procedure for designating common carrier
pipelines, Stevens reviews. He says the Alliance believes the court made it clear that
the critical public use determination required
to exercise eminent domain was a matter for
the courts to decide, and not the RRC.
"The Denbury case was decided strictly on the eminent domain question for the
landowner," Stevens says. "We understand
that. However, if you are going to put a
process in place, whether it be statutory
and legislative or a rule making at the Railroad Commission, pipelines have obligations not only to the landowner on the procedural process to exercise eminent domain, but they also have responsibilities
to the shippers and producers that they
have equal, nondiscriminatory access, if
(the pipeline) is going to be a common carrier.
"We suggest those rules and regulations
should be reiterated by the RRC to the
pipeline when the pipeline indicates it is
a common carrier," he states. "It's a
recognition that the pipeline has this dual
obligation."
Stevens says the amendments could introduce delays in permitting at a time when

224 THE AMERICAN OIL & GAS REPORTER

Texas producers in the Permian Basin and
Eagle Ford plays are being forced to
flare associated gas because they lack
pipeline take-away capacity.
"If the commission was to request additional information from a pipeline, I believe it has 45 days to begin answering,"
Stevens points out. "How long then does
the RRC have to make a decision after
that? We have 30 days initially, then 45
days added to it. How long will it be before the final decision is made?
"We are extending the process instead
of simply requiring an administrative
check of a box, which the commission has
had in the past," he reflects. "We now have
an undetermined amount of time before a
statement of acceptance is issued, perhaps
extending 120 or 150 days. That is a substantial delay."
Unanswered Questions
Additional delays could occur if interested parties-landowners, producers or environmentalists-contest an application,
Stevens muses.
While the RRC may have answers to
the Alliance's concerns, he says uncertainty nevertheless remains about how the
commission will address those issues internally.
The amendments include an openended requirement for pipelines to submit
information to support the classifications
they request, but in comments it filed in
August, the Alliance questioned what
standards or guidelines would be used to
determine what detailed information needed to be submitted, what guidelines the
RRC staff would use to decide whether the
information submitted was sufficient,
whether guidelines would be published as
a rule making, or whether a rule making
was even appropriate, Stevens reviews.
The association also questioned
whether pipelines would have to submit
specific information on how they planned
to comply, including the terms of access
for the public to ship oil, gas, or products,
and the availability of access, he continues. The Alliance questioned how the information would be made known to the
public, the rates and other tariff conditions
that would apply, and the available receipt
and delivery points.
The Alliance also queried whether a
pipeline's implementation would be reviewed at the time of its annual T-4 permit
renewal to determine whether it complied with the statutory requirements, and
whether producers would be given an op-

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