SECTION 3.73. Pipeline Connection; Cancellation of Certificate of Compliance; Severance

(a) No pipeline or other carrier shall be connected with any well subject to the jurisdiction of the Commission until the operator of the well provides the pipeline or other carrier with a certificate from the Commission that the rules in this title have been complied with. This section shall not prevent a temporary connection with any well in order to take care of production and prevent waste until the operator has a reasonable time, not to exceed 30 days from the date of such connection, within which to obtain such certificate. For purposes of this section, the term "Commission" means the Railroad Commission of Texas, the Director of the Oil and Gas Division, or the Director's delegate.

(b) No pipeline operator shall physically disconnect its facilities from or cease providing pipeline services to any well or lease without first obtaining:

(1) written consent of the well or lease operator for the proposed disconnect or termination; or

(2) written permission from the Commission. This section does not apply to temporary suspensions of service authorized under other rules in this title or attributable to maintenance, safety, or product quality issues.

(c) If the pipeline operator is unable to obtain the written consent of the well or lease operator to physically disconnect from or cease providing service to the well or lease, or the well or lease operator objects to the proposed physical disconnect or termination of service, and the pipeline operator still desires to physically disconnect from or cease providing service to the well or lease, the pipeline operator shall file an application with the Commission requesting permission to physically disconnect its facilities from or cease providing service to the well or lease. An affected well or lease operator may object to physical disconnection or cessation of service and file a complaint with the Commission under this subsection.

(1) The pipeline operator shall file its application with the Commission at least 30 days prior to the date on which the pipeline operator desires to make the physical disconnection or cease providing service. On the same date as the pipeline operator files its application with the Commission, the pipeline operator shall send a copy of the application to the operator of the well or lease affected by the application by certified mail, return receipt requested. The application shall identify the well operator and pipeline operator, identify each lease or well involved, and provide sufficient information to allow the Commission to make a determination pursuant to paragraph (4) of this subsection.

(2) If the operator of the well or lease does not file with the Commission a written objection to the application within 28 days following the filing of the application, the Commission shall administratively approve or deny the application and shall notify the pipeline operator and the well or lease operator of the decision by certified mail, return receipt requested. Following such notification, either party shall have 21 days to file a written request for hearing. If neither party files a timely request for hearing, the administrative approval or denial shall be deemed final.

(3) If either party files a timely request for hearing, the Commission shall refer the application to the Office of General Counsel docket services to be set for hearing within 60 days following the date of referral.

(4) In determining whether or not to approve a request to physically disconnect from or cease providing service to a well or lease, the Commission may consider relevant factors, including but not limited to:

(A) operational integrity of the pipeline facilities;

(B) operational integrity of the equipment on the well or lease;

(C) cost of continued operation of the physical connection or service;

(D) risk to public safety, human health and the environment;

(E) availability of alternative transportation;

(F) protection of correlative rights; and

(G) prevention of waste.

(d) The Commission may shut in and seal any well, and cancel any certificate of compliance if it appears that the operator of a well has violated or is violating, in connection with the operation of the well, any statutes, rules in this title, permits, or orders of the Commission. Upon receipt of information that indicates operations are being conducted in violation of statutes, rules in this title, or a Commission permit or order, the Commission shall send a notice letter to the operator directing the operator to correct the violation. The letter shall state the facts or conduct alleged to warrant the shut-in and sealing of the well, and cancellation of the certificate of compliance. The letter shall give the operator an opportunity to show compliance with the statutes, rules in this title, or Commission permits or orders. The letter shall be sent by registered or certified mail, and shall indicate the time within which compliance shall be demonstrated or achieved. The time period allowed for the operator to achieve compliance shall not be less than 10 days from the date the notice letter is sent.

(e) Within the time period set out in the notice letter, the operator shall either demonstrate compliance or correct the violation, and notify the Commission of its action.

(f) If the violation is not corrected within the time period set out in the notice letter, the Commission may shut in and seal the well, and cancel the certificate of compliance.

(g) If a certificate of compliance has been cancelled, the Commission may not issue a new certificate of compliance until the owner or operator of the property covered by the certificate of compliance submits to the Commission a reissuance fee as required by §3.78 of this title (relating to Fees and Financial Security Requirements) (Statewide Rule 78); and

(1) the property covered by the certificate is brought into compliance with the statutes, rules in this title, and Commission permits and orders; or

(2) the Commission determines that there are just and equitable grounds for reissuing the certificate.

(h) Pursuant to Texas Natural Resources Code, §91.705, upon notice from the Commission to any operator of a pipeline or other carrier connected to any well subject to the jurisdiction of the Commission that the certificate of compliance applicable to the well has been canceled by the Commission, the operator of the pipeline or other carrier shall disconnect from or suspend service to the well and shall not reconnect to or resume service to that well until a new certificate of compliance has been issued by the Commission. Pursuant to Texas Natural Resources Code, §85.3855, failure to comply with this subsection may subject a person to a penalty of up to $10,000 per violation.

(i) Pursuant to Texas Natural Resources Code, §91.706(a), upon notice from the Commission that a certificate of compliance as to any well has been canceled as provided in this section, the operator of such well shall not use that well for production, injection, or disposal until a new certificate of compliance with respect to the well has been issued by the Commission as provided in this section. Pursuant to Texas Natural Resources Code, §85.3855, failure to comply with this subsection may subject a person to a penalty of up to $10,000 per violation.

(j) Pursuant to Texas Natural Resources Code, §91.706(b), if an operator uses or reports use of a well for production, injection, or disposal for which the operator's certificate of compliance has been canceled, the Commission may refuse to renew the operator's organization report required by Texas Natural Resources Code, §91.142, until the operator pays the fee required pursuant to §3.78(b)(9) of this title (relating to Fees and Financial Security Requirements) and the Commission issues the certificate of compliance required for that well.

(k) The provisions of this section shall be cumulative of other Commission actions and procedures relating to violations of state statutes or Commission permits, rules, and orders, including the authority of the Commission to immediately shut in a well or lease, or to direct the operator to shut in a well or lease, when an emergency exists due to pollution or an imminent threat of harm to people or property.

Source Note: The provisions of this §3.73 adopted to be effective October 28, 2003, 28 TexReg 9241; amended to be effective September 1, 2004, 29 TexReg 8271; amended to be effective November 26, 2007, 32 TexReg 8452