RAILROAD COMMISSION OF TEXAS. Barry T. Smitherman, Chairman David Porter, Commissioner Buddy Garcia, Commissioner

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1 RAILROAD COMMISSION OF TEXAS Barry T. Smitherman, Chairman David Porter, Commissioner Buddy Garcia, Commissioner

2 Oil & Gas Waste Management Railroad Commission of Texas David W. Cooney, Jr. Environmental Attorney, Railroad Commission of Texas Association of State and Territorial Solid Waste Management Officials Annual Meeting Washington D.C. October 18 19, 2012

3 19 th Century Highlights December 19, Art. X, 2 of the Texas Constitution allows state to create the Railroad Commission "Legislature...may provide and establish all requisite means and agencies invested with such powers as may be deemed adequate and advisable to regulate Railroads." April 3, 1891 Legislature establishes Railroad Commission, granting jurisdiction over rates and operations of railroads, terminals, wharves and express companies Tex. Gen. Laws, ch. 51.

4 20 th Century Highlights February 20, Legislature declares pipelines common carriers grants Railroad Commission jurisdiction over common carrier pipelines -- first act to designate the Railroad Commission as the agency to administer the conservation laws relating to oil and gas. Constitutional Amendment December 21, "...The preservation and conservation of all natural resources of the State are each and all hereby declared public rights and duties, and the Legislature shall pass all such laws as may be appropriate thereto." Adopted at August 21, 1917 election, Proclamation of December 21, 1917

5 Here s the kicker Preservation and conservation of all natural resources Are public rights and duties, Legislature [government] shall pass laws appropriate thereto.

6 Early Statutes 1899 Case oil and gas wells with steel or iron casing to keep oil and water separated so water does not ruin the oil! 1919 Establish rules to conserve oil and gas 1955 Establish rules to prevent pollution of the streams and public bodies of surface waters and any subsurface water To be protected: Groundwater water suitable for domestic or livestock use, or for irrigation of crops or for industrial use

7 Early Regulations Oil and Gas Circular 11, July 1919 Rule 20: Fresh water, whether above or below the surface, shall be protected from pollution, whether in drilling or plugging Oil and Gas Circular 16-B, 1934 Rule 20: Fresh water, whether above or below the surface, shall be protected from pollution, whether in drilling, plugging or disposing of saltwater already produced

8 Oh Those Raucous 1960s Superior Oil Co. v. Texas Water Pollution Control Board, District Court, Travis County Texas, July 27, 1965 ISSUE: Whether or not civil statute 7621d intended to give the Texas Water Pollution Control Board any jurisdiction to regulate or control the disposal of oil field brines and wastes generated as a result of oil and gas operations. JUDGEMENT: It did not. CONTROVERSY: Texas Water Pollution Control Board appealed. FIX: September 1, 1965: Legislature to the rescue.

9 The Law Today: Texas Water Code The Railroad Commission of Texas is solely responsible for the control and disposition of waste and the abatement and prevention of pollution of surface and subsurface water resulting from [oil and gas activities the subject to the commission s jurisdiction.]

10 Surface Waste Management Management of oil and gas waste at or near the surface Includes all disposal and recycling methods other than injection wells Environmental Permits group in RRC Oil and Gas Division

11 Waste Management methods Disposal in Pits Landfarming and Landtreatment Recycling Solids and Liquids Reclamation Plants Separating Solids from Liquids Discharges Waste Hauling

12 Key Rules 16 TAC 3.8 Water Protection Authorized Pits Pits Requiring Permits Commercial Facility Permitting and Notice Waste Haulers 16 TAC 3.57 Reclamation Plants 16 TAC 3.78 Financial Security 16 TAC Chapter 4, Subchapter B Commercial Recycling

13 Legal Standard I Rule 3.8(b) No person conducting activities subject to regulation by the commission may cause or allow pollution of surface or subsurface water in the state.

14 Legal Standard II Rule 3.8 (d)(6)(a) A permit to dispose of oil and gas wastes by any method may only be issued if the commission determines the disposal will not result in the waste of oil, gas, or geothermal resources or surface or subsurface water pollution.

15 Pits Authorized by Rule Reserve pit Completion/Workover pit Mud circulation pit Fresh Makeup Water Pit Authorized pits must be dewatered and backfilled in accordance with schedules found within Rule 8 Legal Standard I No pollution always applies.

16 Some Pits Require a Permit If a pit is not authorized by Rule 8, a pit permit application must be filed with Environmental Permits and a permit issued before use of the pit can begin.

17 Examples Disposal Pit Collecting Pit Emergency Saltwater Storage Pit Fracture Flowback Pit Brine Pit Washout Pit Skimming Pit Gas Plant Evaporation/Retention Pit

18 Highlights of Form H-11 Two perpendicular, sectional views of the pit If lined, information on liners Soil description Notification to surface owner Pit location Volume of pit Information on dikes Pit dimensions Depth to shallowest groundwater

19 Frac Pits What is a frac pit? Very large usually centralized pit used to store frac flowback water from several wells that pipe the water to the pit What rule applies to frac pits? Rule 8, requires a permit because it is not authorized

20 Frac Pits If the frac pit will store fluid above ground level, the design of the pit must be certified by a professional engineer licensed in the State of Texas In this scenario, the berms are essentially acting as a dam, so assurances are needed that they are structurally sound to prevent catastrophic failure and the associated pollution of spilling a large volume of high salinity water

21 Commercial Disposal Pits In addition to Form H-11, commercial disposal pits also require: Notification to offset landowners and newspaper notice Financial Security Stormwater management plan Plans for routine inspections, maintenance, and monitoring Monitor wells Closure plan Post closure monitoring plan

22 Landfarming and Landtreatment Landfarming is a method of disposal in which a thin layer of water-based oil and gas waste is applied to the land and then mixed into the receiving soil. Landtreatment is similar to landfarming, but for oil-based mud and cuttings. Both methods allow for the dilution of chlorides and metals and biodegradation of any hydrocarbons in the waste.

23 Tiers of Landfarming Rule 8 authorizes, with landowner permission, the landfarming of water-based drilling fluids with a chloride concentration of 3,000 mg/l or less to be landfarmed on the lease site on which it was generated. District Offices can issue minor permits to allow the one time off-lease landfarming of a small volume of water-based mud or cuttings. Centralized or commercial landfarm permits are processed by Environmental Permits out of Austin.

24 Limitations on Permitted Landfarms and Landtreatment Any permit issued for landfarming will limit the waste application rate to no more than 2,000 barrels per acre. Landtreatment will be limited to no more than a total of 12 inches of waste. Centralized and commercial permits will require closure sampling to demonstrate the operator met closure limits in the permit. RRC establishes closure limits for metals, total petroleum hydrocarbons, and electrical conductivity.

25 Reclamation Plant Permits 16 TAC 3.57; applicant completes Form R-9 Purpose of reclamation plant is to recover crude oil from oil and gas waste prior to its disposal Reclamation plant operators are required to post financial security and provide public notice Submit monthly report showing all incoming waste, its origins, the amount of oil recovered, and where all solid and liquid wastes were disposed of.

26 Commercial Separation Facility Commercial separation facility permits are for facilities that accept oil and gas waste, process it into its solid and liquid components, then ship the waste offsite for disposal Liquid wastes are typically injected and solids are sent to a landfill or disposal pit Operator of facility is required to provide public notice and financial security

27 Discharges Several types of discharge permits are processed by Environmental Permits: Permit to Discharge Hydrostatic Test Water Permit to Discharge Produced Water to Inland Waters Permit to Discharge Produced Water to the Gulf of Mexico Permit to Discharge Gas Plant Effluent All permits in which effluent will reach surface water require both a RRC permit and a permit from EPA. Application fee to discharge to surface water is $750.

28 Discharge to Inland Waters Limited to produced water Must comply with Texas Surface Water Quality Standards East of 98 th Meridianonly Carrizo Wilcox, Bartosh, Reklaw formations West of 98 th Meridian- Must Be For Beneficial Reuse (Wildlife or Agriculture)

29 Commercial Recycling Current commercial recycling rule is being amended Staff received direction from the Commission to look at ways to streamline the process to ensure, when possible, regulations don t discourage recycling Current rule was written mostly for solid waste recycling Amendments will also incorporate water recycling

30 Commercial Recycling Amendments Allow some on-lease recycling to be authorized under Rule 8. Treat it no different than any other service provider that the operator has come on lease. Authorize treated water storage pits as long as certain conditions are met (i.e.: lining, offsets from surface water, etc.) Add a third category of operations between the current mobile and stationary options Incorporate standard permit conditions into the rule (i.e. Testing needed to demonstrate solid recycling can meet leachability and compressive strength requirements.

31 Layout of Proposed Rule Break Rule up into Six Divisions General Requirements On-Lease Solid Waste Recycling (Mobile) Off-Lease or Centralized Solid Waste Recycling Stationary Solid Waste Recycling Off Lease or Centralized Fluid Recycling Stationary Fluid Recycling Proposed rule is substantially longer due to the divisions and repetition within them.

32 Recycling Regulations Highlights Treat cuttings to create roadbase that can then be used in the construction of lease roads, well pads, and low-traffic roads Rule establishes leachability standards for metals, chlorides, and benzene Also establishes a minimum compressive strength requirement for the roadbase Financial security limits the size of the stockpiles of waste and product. Also needed to prevent speculative accumulation

33 Water Recycling Highlights Main interest has been in treating flowback and produced water for subsequent reuse in the creation of fracturing fluid Commission does not plan on establishing minimum standards to which the water must be cleaned as the quality of the water needed for reuse varies from operator to operator All wastewater prior to treatment and treated water must be stored in lined permitted or authorized pits

34 Wastehauler Permits Third party trucking companies are required to have a wastehaulers permit to haul oil and gas waste. Application requires general information about the wastehauler (Form WH-1) and a list of all their trucks and/or trailers (Form WH-2) Disposal site operator must give waste hauler permission to use its disposal site (Form WH-3) Application fee is $250

35 Wastehauler Issues Wastehauler vehicles may not leak during transportation. In Eagle Ford, increase in incidents of waste spilling on the roads Enforcement action pursued against wastehauler in these cases No generator or receiver may knowingly utilize the services of an unpermitted carrier to transport oil and gas wastes. Commission will enforce against wastehauler, disposal site, and generator if it catches unpermitted carrier.

36 Contact Information David W. Cooney, Jr Office of General Counsel Railroad Commission of Texas P. O. Box Austin, Texas