The Texas Railroad Commission has published a proposed rule that would change the process for classifying a pipeline as a “common carrier” or a “gas utility.”  Common carrier and gas utility status is significant as pipelines that are common carriers or gas utility have the power of eminent domain, allowing them to take private property upon which to place their pipeline.  To read a prior post on common carrier pipelines, click here.

Currently, in order to achieve common carrier status, a pipeline company need only indicate that they are a common carrier when filling out a T-4 form.  To review the existing rule, click here.  Landowners may, at a later stage once a condemnation action has been filed, challenge the classification and the pipeline’s power of eminent domain.  Both the oil and gas industry and private landowner groups across Texas generally agree that there need to be modifications to the rule, but disagree about the form that such modifications should take.  The industry seeks a way to determine eminent domain status for each line, rather than having to litigate the issue with multiple landowners on each project.  Landowners want applicants to do more than merely check a box on a form before being granted the power to condemn property.

The proposed rule would amend the Texas Administrative Code Section 3.70 “in order to clarify and more specifically prescribe the procedure by which a pipeline operator may identify itself as a common carrier, gas  utility, or private line operator when applying for a new T-4 permit to operate a pipeline or when renewing, amending, or cancelling an existing T-4 permit.”  To review the text of the proposed rule, click here.

Specifically, the proposed rule would require the operator requesting a pipeline permit to provide the following information to the RRC:  (1) contact info to the persons who can respond to any questions concerning the pipeline; (2) the requested classification and purpose of the pipeline or pipeline system as a common carrier, a gas utility, or a private line; (3) a sworn statement by the applicant providing the operator’s factual basis supporting the classification and the purpose for which the line is constructed; and (4) documentation t provide support for the classification and purpose.  Similar information would be required for pipelines seeking to renew, amend, or cancel existing permits.  Once the RRC receives the application and confirms completeness, it will determine whether to grant the application within 45 days.

Importantly, the rule contains no provision for public notice to landowners and no provision for comment, protest, or a hearing on common carrier or gas utility status prior to the application being considered.  Presumably, however, landowners could still challenge this designation in court.

The proposed rule is currently open for public comment through noon on August 25.  Comments may be submitted online at www.rrc.state.tx.us/legal/rules/comment-form-for-proposed-rulemakings; by email to rulescoordinator@rrc.state.tx.us; or mailed to the following address:

Rules Coordinator
Office of the General Counsel
Railroad Commission of Texas
PO Box 12967
Austin, TX 78711

To read more on this issue, click here.