SECTION 3.65. Critical Designation of Natural Gas Infrastructure

(a) Definitions.

(1) In this section, the term "energy emergency" means any event that results in firm load shed or has the potential to result in firm load shed required by the reliability coordinator of a power region in Texas. An event that has the "potential to result in firm load shed" is when the reliability coordinator of a power region in Texas has issued an Energy Emergency Alert Level 1 or 2.

(2) In this section, the term "critical customer information" means the information required on Commission Form CI-D and any attachments.

(3) In this section, "any volume of gas indicated in Mcf/day" means the average daily production from the well's six most recently filed monthly production reports. Wells without six months of production reports shall average the production from the well's production reports on file with the Commission or use the production volume from the well's initial potential test or deliverability test if the well has not yet filed a production report.

(4) In this section, the term "electricity supply chain map" means the electricity supply chain map produced by the Texas Electricity Supply Chain Security and Mapping Committee.

(5) In this section, the term "Director" means the Director of the Critical Infrastructure Division or the director's delegate.

(6) In this section, the term "EOR project" means an enhanced oil recovery project as defined in §3.50(c)(6) of this title (relating to Enhanced Oil Recovery Projects-Approval and Certification for Tax Incentive) with at least one injection well permitted under §3.46 of this title (relating to Fluid Injection into Productive Reservoirs) whether or not the project has received Commission approval or certification under §3.50 of this title.

(b) Critical designation criteria. The following facilities are designated critical during an energy emergency:

(1) Critical Gas Supplier. The following facilities are designated a critical gas supplier:

(A) gas wells producing gas in excess of 250 Mcf/day;

(B) oil leases producing casinghead gas in excess of 500 Mcf/day, except for EOR projects provided the EOR project consumes more energy than it produces calculated by comparing the amount of electricity used to the amount of gas produced both in Million British Thermal Units (MMBTU);

(C) gas processing plants;

(D) natural gas pipelines and pipeline facilities including associated compressor stations and control centers;

(E) local distribution company pipelines and pipeline facilities including associated compressor stations and control centers;

(F) underground natural gas storage facilities;

(G) natural gas liquids transportation and storage facilities; and

(H) saltwater disposal facilities including saltwater disposal pipelines.

(2) Critical Customer. A critical customer is a critical gas supplier that requires electricity delivered by an electric entity to operate. A critical customer is required to provide critical customer information pursuant to subsection (f) of this section to the electric entities described in §25.52(h) of this title (relating to Reliability and Continuity of Service) and Texas Utilities Code §38.074(b)(1) so that those electric entities may prioritize the facilities in accordance with Texas Utilities Code §38.074(b)(2) and (b)(3). Priority for load shed purposes during an energy emergency is described by §25.52(h)(2) of this title and any guidance issued thereunder by the Public Utility Commission.

(c) Request for critical designation if not designated critical in subsection (b) of this section. A facility that is not designated critical under subsection (b) of this section may write to the Commission to apply to be designated critical if the facility's operation is required in order for another facility designated critical to operate. The applicant shall include objective evidence that the facility's operation is required for another facility designated critical in subsection (b) of this section to operate. The director will review the application and if the application is approved, the facility shall submit Form CI-D. If the request is denied, the applicant may request a hearing.

(d) Acknowledgment of critical status. Except as provided by subsection (e) of this section, an operator of a facility designated as critical under subsection (b) or (c) of this section shall acknowledge the facility's critical status by filing Form CI-D as provided in this subsection. In the year 2022, the Form CI-D acknowledgment shall be filed bi-annually by January 15, 2022, and either September 1, 2022, or 30 days from the date the map is produced by the Texas Electricity Supply Chain Security and Mapping Committee, whichever is later. Beginning in 2023, the Form CI-D acknowledgment shall be filed bi-annually by March 1 and September 1 of each year.

(e) Critical designation exception.

(1) A facility listed in subsection (b) of this section that is not included on the electricity supply chain map produced by the Texas Electricity Supply Chain Security and Mapping Committee may apply for an exception. An applicant shall demonstrate with objective evidence a reasonable basis and justification in support of the application. The Director of the Critical Infrastructure Division will administratively approve or deny a request for an exception. If the request is denied, the Division will notify the applicant and the applicant may request a hearing to challenge the denial. The party requesting the hearing shall have the burden of proof.

(2) Examples of a reasonable basis and justification for which an exception may be granted include, but are not limited to, the following:

(A) All of the natural gas produced at the facility is consumed on site;

(B) All of the natural gas produced, processed, or delivered by the facility is consumed outside of this state;

(C) The facility does not provide gas for third-party use;

(D) For saltwater disposal facilities and saltwater disposal pipelines, the facility or pipeline does not support a facility designated critical in subsection (b)(1)(A)-(G) of this section; or

(E) The electric entity delivering electricity to the facility has provided notice that the facility's request for critical designation status was rejected, denied, or otherwise disapproved by the electric utility; provided, however, that the electric utility communicated its determination in writing, and the decision was for reasons other than the lack of correct identifying information or other administrative reasons.

(3) An applicant for exception shall submit a Form CI-X exception application that identifies each facility for which an exception is requested. The Form CI-X shall be accompanied by an exception application fee. The amount of the fee is $150 as established in Chapter 81, Texas Natural Resources Code.

(A) In the year 2022, the Form CI-X exception application shall be filed bi-annually by January 15, 2022, and either September 1, 2022, or 30 days from the date the map is produced by the Texas Electricity Supply Chain Security and Mapping Committee, whichever is later. Beginning in 2023, the Form CI-X exception application shall be filed bi-annually by March 1 and September 1 of each year.

(B) Once an operator has an approved Form CI-X on file with the Commission, the operator is not required to pay the $150 exception application fee when the operator updates the facilities identified on its Form CI-X.

(f) Providing critical customer information. A critical customer shall provide the critical customer information to the electric entities described in §25.52 of this title and Texas Utilities Code §38.074(b)(1) unless the critical customer is granted an exception under subsection (e) of this section. The critical customer information shall be provided in accordance with §25.52 of this title. The operator shall certify on its Form CI-D that it has provided the critical customer information to its electric entity.

(g) Confidentiality of information filed pursuant to this section. A person filing information with the Commission that the person contends is confidential by law shall notify the Commission on the applicable form. If the Commission receives a request under the Texas Public Information Act (PIA), Texas Government Code, Chapter 552, for materials that have been designated confidential, the Commission will notify the filer of the request in accordance with the provisions of the PIA so that the filer can take action with the Office of the Attorney General to oppose release of the materials.

(h) Exceptions not transferable. Exceptions are not transferable upon a change of operatorship. When a facility is transferred, both the transferor operator and the transferee operator shall ensure the transfer is reflected on each operator's Form CI-D or Form CI-X when the applicable form update is submitted in accordance with the bi-annual filing timelines in subsections (d) and (e) of this section. If the facility has an exception under subsection (e) of this section, the exception shall remain in effect until the next bi-annual filing deadline. If the transferee operator seeks to continue the exception beyond that time period, the transferee operator shall indicate the transferred facility on the Form CI-X pursuant to subsection (e) of this section.

(i) Failure to file or provide required information. An operator who fails to comply with this section may be subject to penalties under §3.107 of this title (relating to Penalty Guidelines for Oil and Gas Violations).

Source Note: The provisions of this §3.65 adopted to be effective December 20, 2021, 46 TexReg 8688; amended to be effective November 21, 2022, 47 TexReg 7661