Environmental Alert: Compressed Natural Gas Ignites Regulations (part 3 of 3)

Compressed Natural Gas Ignites Regulations (part 3 of 3)

Authors:

Bruce M. Flowers

Sanjay K. Minocha

Texas' Regulation of Compressed Natural Gas Dispensers Reaches Outside of Texas

In the prior Environmental Alert (2 of 3), we discussed Compressed Natural Gas ("CNG") regulations specific to Texas certification requirements and state-collected fees for licensing and permitting related to CNG installations and servicing.  In this Environmental Alert (3 of 3), we focus on Texas' CNG regulations that impact out-of-state entities or persons manufacturing, handling installing, selling and repairing CNG equipment for use in Texas.  As discussed in earlier Alerts, Chapter 13 of the Texas Administrative Code, titled "Regulations for Compressed Natural Gas," sets forth the framework for CNG regulation in Texas and is administered by the Texas Railroad Commission.  More specifically, Section 13.25 details the licenses and application process for CNG dispensing installations in Texas, and Section 13.61 requires each party in the chain of implementing a fuel dispensing station to obtain a license. Section 13.61(b) provides six categories of licenses for the various functions related to CNG equipment manufacture, handling, installation, sale, and repair.[1] Under the statute, each entity in the process—such as the cylinder manufacturer,[2] wholesale retailer,[3] installation contractor,[4] any servicers,[5] or a CNG service station owner[6]—requires a specific license depending on its role. Even if an entity only seeks to sell CNG fuel dispensers without installing or servicing the dispensers, it will still require a Category 6 “equipment dealer” license for the sale of CNG systems. The remaining categories of licenses relate to operational issues, like those described above.[7] Texas appears to be the only state surveyed to require statewide licensing for CNG sales. All CNG-related licenses must be renewed yearly.[8]

Under 13.61(e), “[a] license obtained by an individual, partnership, corporation, or other legal entity shall extend to the entity’s employees who are performing CNG work, provided that each employee is properly certified as required by this chapter.”[9] Section 13.70 sets forth the examinations required to obtain a certification (and certain exemptions), the number of which depend upon the license under which the employee will be performing CNG work.[10] The initial testing requires a fee for each employee, who must also pay annual fees to renew his or her certificate.[11] Per Section 13.80, the Alternative Energy Division of the Railroad Commission (ALRED) makes available certification courses and material, which can be found online at http://www.propane.tx.gov/Training_and_Examinations.[12]

Texas does not incorporate either the NFPA 52 or the IFC statewide. However, Texas Local Government Code Section 233.06 authorizes counties to adopt either the 2006 International Fire Code (or later) or NFPA 1, Uniform Fire Code, but only as the codes relate to “buildings,” which is discussed in greater depth below.[13] Because Texas has made no statewide adoption, one must look to each county to determine whether it has adopted the IFC or NFPA 1, if either. Fortunately, the ICC has made a quick reference chart for whether a county has adopted its codes, which is available online.[14]

Whether the Texas legislature intended for county-adopted fire codes to apply to gas fuel dispensers is unclear, but the plain meaning of the statute suggests fire codes would apply to CNG operations. The term “buildings” is defined in the statute to specifically include “an establishment or multifamily dwelling.”[15] However, “establishment” is not defined in the statute. Merriam Webster defines establishment as “a place of business or residence with its furnishings and staff,”[16] suggesting a broader definition than the common definition of a building. As such, “establishment” in this context likely includes the entire grounds of a service station, including CNG fuel dispensers. Unfortunately, it appears no court has interpreted these terms. Therefore, rather than relying on an argument for why the statute does or does not apply to CNG fuel dispensers, the safer course at the time of installation will be to either (1) inquire with the county fire marshal regarding whether the office regulates fuel dispensers under the fire code or (2) comply with the county’s adopted fire code.

Additionally, Texas regulations incorporate and require CNG dispensers to comply with[17] National Institute for Standards and Technology ("NIST") Handbook 44, which provides standards for weights and measurements for various industries, as developed by the National Conference on Weights and Measures ("NCWM").[18] Section 3.37 of HB-44 regarding Mass Flow Meters, includes specifications regarding CNG dispensers.[19]

As you have read, CNG storage and distribution are heavily regulated activities in Texas. Anyone undertaking to establish a business related to the storage and distribution of CNG in Texas must be or associated with an entity or individual that is familiar with the applicable state regulations and the actions necessary to ensure compliance.

[1] 16 Tex. Admin. Code § 13.61(b).

[2] 16 Tex. Admin. Code § 13.61(b)(1).

[3] 16 Tex. Admin. Code § 13.61(b)(3).

[4] 16 Tex. Admin. Code 13.61(b)(2), (6).

[5] 16 Tex. Admin. Code § 13.61(b)(2).

[6] 16 Tex. Admin. Code § 13.61(b)(5).

[7] 16 Tex. Admin. Code § 13.61(b).

[8] 16 Tex. Admin. Code § 13.61(h).

[9] 16 Tex. Admin. Code § 13.61(e) (emphasis added).

[10] 16 Tex. Admin. Code § 13.70.

[11] 16 Tex. Admin. Code § 13.70(a), (d).

[12] See 16 Tex. Admin. Code § 13.80.

[13] Tex. Loc. Gov’t Code § 233.062(a).

[14] See Charts of International Codes, as adopted by State or Local Jurisdiction, available at http://www.iccsafe.org/gr/Documents/stateadoptions.pdf and http://www.iccsafe.org/gr/Documents/jurisdictionadoptions.pdf.

[15] Tex. Loc. Gov’t Code § 233.0615(a)(1).

[16] Available at http://www.merriam-webster.com/dictionary/establishment.

[17] As specifically related to CNG dispensers, 16 Tex. Admin. Code § 13.107 incorporates 4 Tex. Admin. Code § 12.10, which in turn incorporates NIST HB-44.

[18] NCWM has a program, National Type Evaluation Program ("NTEP"), which it explains on its website “provides manufacturers the ability to be evaluated and certified one time with acceptance throughout the United States. States and manufacturers alike benefit from NTEP’s service. NTEP is an efficient and cost effective means of ensuring national requirements are met before any equipment is allowed in the market place.” (http://ncwm.net/content/ntep). The program uses NIST HB-44 as the standard.

[19] NIST HB-44 is available at the NIST website at http://www.nist.gov/pml/wmd/pubs/upload/2012-hb44-final.pdf.

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This Environmental Alert is a summary of recent developments in the law and is provided for informational purposes only. It is not intended to constitute legal advice or to create an attorney-client relationship. Readers should obtain legal advice specific to their situation in connection with topics discussed.

Copyright © 2013 Kane Russell Coleman & Logan PC.All rights reserved.Unless otherwise indicated, the authors are not certified by the Texas Board of Legal Specialization.

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