Texas Leads The Nation With Compressed Natural Gas Regulations

This alert, the second of three in this series, provides a brief introduction concerning regulations in Texas related to Compressed Natural Gas ("CNG") dispensers.  Texas is the only state that has not adopted a version of the standardized codes statewide.  Instead, Texas has promulgated its own set of regulations related to CNG, including certification requirements and state-collected fees for licensing and permitting related to CNG installations and servicing.

As authorized by Chapter 116 of the Natural Resources Code,[1] Chapter 13 of the Texas Administrative Code, titled “Regulations for Compressed Natural Gas ("CNG"),” sets forth the framework for CNG regulation in Texas and is administered by the Texas Railroad Commission. The Natural Resources Code makes clear that the state’s CNG regulations apply to the production or sale of CNG systems for use in Texas.[2]  CNG fuel dispensers are within the broad scope of the regulations, which apply to "CNG systems used for compression, storage, sale, transportation, delivery, or distribution of CNG for any purpose,” among other things.[3] A CNG fuel dispenser falls under the broad definition of “CNG system,”[4] as well as the more specific definitions of “dispensing area or dispensing installation”[5] and “automatic dispensers”available to the general public.[6]

Section 13.25 sets forth the filing requirements and procedure for stationary CNG installations. Before installing a CNG system, such as fuel dispensers, a person must apply for a license in accordance with the section and chapter.[7] An applicant seeking a license for an installation with an aggregate storage capacity in excess of 240 standard cubic feet water volume is required to submit additional paperwork, including site information.[8] Regardless of the size of the installation, the commission is required to physically inspect the CNG system as part of the approval process.[9] An applicant may be required to apply for other permits or licenses through other  state agencies depending on the nature of the installation and site.[10]

Sections 13.91 through 13.107 provide the primary safety regulations governing CNG dispensing installations, as summarized:

• Section 13.92 incorporates component equipment safety specifications—e.g., hoses, valves, and gauges—which are set forth in Sections 13.26 through 13.34.[11]
• Section 13.93 sets forth general safety requirements for the site protection of CNG fuel dispensers, including for automatic dispensers for general public use.[12]
  The Section 13.93 general safety requirements include fencing, guardrails, signage, and emergency shut-offs.[13] Section 13.93(d) specifies requirements for automatic dispensers.[14]
• Sections 13.94 through 13.103 regulate the installation of the dispensing systems, including the location of the installation,[15] the manner of installation for components,[16] and post-installation testing.[17]
• Section 13.104 regulates the operation of CNG fuel dispensing stations, and subsection (i) specifies that “[f]uel dispenser(s), including automatic dispenser(s), may be operated only by an individual who has been properly trained.[18]  Section 13.104(i) also provides for written instruction requirements for consumers using automatic dispensers.[19]

Penalties for failure to comply with these regulations can be significant and involve both criminal and civil penalties.  Penalty guidelines for safety violations are found in Section 13.15.[20] 

The next and final alert on this subject will focus on how Texas' regulations of CNG impacts companies and individuals located outside of Texas, but who are involved with the distribution of CNG or CHG equipment within the state.