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Texas to Require Pipelines 'Swear' to Common Carrier Status

Pipeline companies operating in Texas will soon have to swear that they are common carriers and provide supporting documents in order to obtain the "common carrier" classification, which confers condemnation authority, according to a rule change at the Railroad Commission of Texas (RRC).

On Tuesday the RRC adopted proposed rule amendments that raise the bar for common carrier status designation; however, the change does not go as far as some commenters on the proposal had hoped.

In the past, operators have generally been able to simply declare their pipelines common carriers by checking a box on their "T-4" application forms. The amended rule requires substantiating documents be provided by the applicant, but it does not charge the RRC with determining whether a pipeline is a common carrier. That is a job for the courts, commissioners said.

"Requiring a pipeline operator to submit a sworn statement providing the purpose of a pipeline and setting forth a factual basis in support of that purpose provides greater transparency within the limits of the commission's jurisdiction," the RRC said. "Property owners will know the basis on which a pipeline operator claims common carrier status much earlier in the permitting process."

Commenters on the proposed rule cited a three-year-old court case -- Texas Rice Land Partners Ltd. v. Denbury Green Pipeline-Texas LLC, No. 09-0901 -- in calling for the RRC to investigate and test assertions of common carrier status by pipelines (see Daily GPI, Sept. 15).

Some commenters said, among other things, that the RRC should establish standards for proof of common carrier status; provide a definition of such status that either includes or excludes company affiliates; or require annual reporting on third-party pipeline throughput. The RRC declined to do any of these and said it was not charged with determining whether assertions made by the pipeline companies are factual. A pipeline's common carrier status must be challenged in court, not at the commission.

Permit applications must now include requested classification and purpose of the pipeline or pipeline system as a common carrier, a gas utility or private line operator. And they must include a sworn statement from the applicant providing the operator's factual basis supporting the classification and purpose being sought for the pipeline.

The pipeline operator must submit documentation, such as a contract or tariff for third-party transportation in the case of a common carrier, along with any other information requested by the commission. Applicants must also acknowledge the eminent domain provisions in the "Texas Landowner's Bill of Rights."

The amendments are to be published in the Texas Register Dec. 19 and take effect March 1.

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