SECTION 3.58. Certificate of Compliance and Transportation Authority; Operator Reports

(a) Certificate of Compliance and transportation authority.

(1) Each operator who seeks to operate any well subject to the jurisdiction of the Commission shall file with the commission's Austin office a commission form P-4 (certificate of compliance and transportation authority) for each property on which the wells are located certifying that the operator has complied with Texas Natural Resources Code, Title 3; Texas Water Code, §26.131; and Texas Water Code, Chapter 27, and orders, rules, and regulations of the commission pursuant to Texas Natural Resources Code, Title 3; Texas Water Code, §26.131; and Texas Water Code, Chapter 27, in respect to the property. The Commission form P-4 establishes the operator of an oil lease, gas well, or other well; certifies responsibility for regulatory compliance, including plugging wells in accordance with §3.14 of this title (relating to plugging); and identifies gatherers, purchasers, and purchasers' commission-assigned system codes authorized for each well or lease. Operators shall file form P-4 for new oil leases, gas wells, or other wells; recompletions; reclassifications of wells from oil to gas or gas to oil; consolidation, unitization or subdivision of oil leases; or change of gatherer, gas purchaser, gas purchaser system code, operator, field name or lease name. When an operator files a form P-4, the oil and gas division shall review the form for completeness and accuracy. The Commission may require an operator who files a form P-4 for the purpose of changing the designation of an operator for a lease or well to provide to the Commission evidence that the transferee has the right to operate the lease or well. Except as otherwise authorized by the Commission, a transporter (whether the operator or someone else) shall not transport the oil, gas, or geothermal resources from such property until the Commission has approved the certificate of compliance and transportation authority. No certificate of compliance designating or changing the designation of an operator will be approved that is signed, either as transferor or transferee, by a non-employee agent of the organization unless the organization has filed with the commission, on its organization report, the name of the non-employee agent it has authorized to sign such certificates of compliance on its behalf.

(2) An approved certificate of compliance and transportation authority shall bind the operator until another operator files a subsequent certificate and the Commission has approved the subsequent certificate and transferred the property on commission records to the subsequent operator.

(3) The appropriate district office or the Austin office may grant temporary authority for an operator to use a transporter not authorized for a particular property in order to take care of production and prevent waste. The operator shall secure such temporary authority in writing from the appropriate district office or the Austin office before the oil or condensate is moved. In an emergency situation the operator may secure such temporary authority verbally but shall notify the district office in writing within 10 days after the oil or condensate is moved. An emergency situation exists when oil or condensate must be moved off a lease because it poses an imminent threat to the public health and safety, or when the threat of waste is imminent. The operator shall also furnish copies of such authorization or notification to the regular transporter and to the temporary transporter.

(4) If an applicant wishes to assume operator status for a property, but is unable to obtain the signature of the previous operator on the certificate of compliance and transportation authority, the applicant shall file with the oil and gas division in Austin a completed form P-4 signed by a designated officer or agent of the applicant, along with an explanatory letter and legal documentation of the applicant's right to operate the property. Prior to approval of such an application, the office of the general counsel will notify the last known operator of record, if such operator's address is available, affording such operator an opportunity to protest.

(b) Monthly production report (oil, natural gas and geothermal resources). For each calendar month, each operator who is a producer of crude oil, natural gas or geothermal resources shall file with the commission a report for each of the operator's producing properties. Operators shall file such reports on commission Form PR, Monthly Production Report, or commission Form GT-2 (producer's monthly report of geothermal wells). These commission forms report monthly production and disposition of oil and condensate, and casinghead gas and gas well gas (Form PR) and geothermal resources (Form GT-2). On or before the last day of the month subsequent to the period of the report, the operator shall file the original form with the Austin office, and one copy with the transporter taking the oil, gas or geothermal resources from the property if requested by the transporter.

(c) Recovered load oil.

(1) The operator of each lease from which load oil is recovered shall file the original and one copy of commission form P-3 (authority to transport recovered load or frac oil) with the district office, and another copy with the transporter prior to running the load oil. Form P-3 requires a producer to report the quantity of recovered load or frac oil to be transported from a particular lease and to identify the transporter. The form P-3 (authority to transport recovered load or frac oil) filed by the operator shall be the authority for the transporter to run the quantity of recovered load or frac oil stated in the form.

(2) The provisions of this subsection apply only to oil that has been obtained from a source other than the lease on which it is used. "Recovered load oil or frac oil," as that term is used herein, is any oil or liquid hydrocarbons used in any operation in an oil or gas well, and which has been recovered as a merchantable product.

(d) Subdivision and consolidation of oil leases.

(1) An operator seeking to subdivide or consolidate existing oil leases shall file and obtain approval of a commission form P-4 (certificate of compliance and transportation authority) and a commission form P-6 (request for permission to subdivide or consolidate oil lease(s)). Form P-6 identifies the leases to be subdivided or consolidated as well as the resulting leases. Two plats shall be filed with form P-6, one showing the boundaries of the lease(s) before and one showing the boundaries of the lease(s) after the subdivision or consolidation.

(2) An operator seeking to subdivide an existing oil lease that it operates or to assume operatorship of fewer than all of the wells on an oil lease shall file and obtain approval of a commission form P-4 (certificate of compliance and transportation authority) and a commission form P-6 (request for permission to subdivide or consolidate oil lease(s)). A request to subdivide an oil lease may be approved administratively if the commission staff determines that approval of the request will not cause waste, harm correlative rights, or result in the circumvention of commission rules.

(3) An operator seeking to consolidate two or more existing oil leases that it operates shall file and obtain approval of a commission form P-4 (certificate of compliance and transportation authority) and a commission form P-6 (request for permission to subdivide or consolidate oil lease(s)). A request to consolidate two or more oil leases may be approved administratively if the commission staff determines that approval of the request will not cause waste, harm correlative rights, or result in the circumvention of commission rules and:

(A) the mineral and royalty ownership of the leases proposed for consolidation is identical in all respects;

(B) the operator has obtained a surface commingling exception permit pursuant to §3.26 of this title (relating to separating devices, tanks, and surface commingling of oil) that authorizes commingling of production from all of the leases proposed for consolidation; or

(C) the operator has filed and obtained approval of a valid commission form P-12 (certificate of pooling authority) authorizing pooling of all of the leases proposed for consolidation.

Source Note: The provisions of this §3.58 adopted to be effective January 1, 1976; amended to be effective February 23, 1979, 4 TexReg 436; amended to be effective May 9, 1988, 13 TexReg 2026; amended to be effective May 22, 2000, 25 TexReg 4512; amended to be effective May 12, 2002, 27 TexReg 3756; amended to be effective January 30, 2007, 32 TexReg 287; amended to be effective November 26, 2007, 32 TexReg 8452