ATTORNEY GENERAL                  OF    TEXAS
                                          GREG        ABBOTT




                                             January 19,200s



The Honorable G. E. “Buddy” West                       Opinion No. GA-0294
Chair, Committee on Energy Resources
Texas House of Representatives                         Re: Authority of the Railroad Commission to use
Post Office Box 2910                                   monies from the Oil Field Cleanup Fund to plug
Austin, Texas 78768-2910                               oil and gas wells and perform other activities
                                                       (RQ-02%GA)


Dear Representative    West:

        You inquire about the authority ofthe Texas Railroad Commission (“Commission”) to make
certain expenditures from the Oil Field Cleanup Fund.’ By way of background, you state only that
questions have arisen “as to the Railroad Commission’s authority to use funds from the Oil Field
Cleanup Fund to plug oil and gas wells, to remediate surface sites associated with oil and gas
operations, and to provide for managerial overhead.” See Request Letter, supra note 1, at 1.
Specifically, you pose three questions:

                 1.   Under what terms and conditions does the Railroad Commission
                      have the authority to use funds from the Oil Field Cleanup Fund
                      to plug an oil or gas well?

                 2.   Under what terms and conditions does the Railroad Commission
                      have the authority to use funds from the Oil Field Cleanup Fund
                      to clean up or remediate a well-site or lease-site surface location
                      associated with oil or gas operations?

                 3.   Under what terms and conditions does the Railroad Commission
                      have the authority to use funds from the Oil Field Cleanup Fund
                      to clean-up or remediate what has been commonly referred to as
                      a “commercial disposal site,” not associated with a particular
                      well or lease site?

See id.



          ‘SeeLetter fromHonorable G. E. ‘Buddy” West, Chair, Committee on Energy Resources,to Honorable Greg
Abbott,Texas Attorney General (Aug. 6,2004) (on file with Opinion Committee,also available nthttp:/lwww.oag.state
.tx.us) [hereinafter Request Letter].
The Honorable G. E. “Buddy” West - Page 2                    (GA-0294)




I.       Chapter 91. Natural Resources Code

         We begin by briefly reviewing the relevant provisions of the Natural Resources Code. The
Commission has jurisdiction over all oil and gas wells in Texas. See TEX. NAT. I&S. CODEANN.
4 81.051(a)(2) (Vernon 2001). Chapter 91, subchapter D, pertaining to the prevention ofpollution
associated with oil and gas production, authorizes the Commission to adopt and enforce rules and
orders to “prevent pollution of surface water or subsurface water in the state.” Id. 5 91.101(a) (text
effective until delegation of Resource Conservation and Recovery Act (“RCRA”) authority to the
Commission)?     SubchapterD also establishes the Oil Field Cleanup Fund. See id. 5 91.111 (Vernon
Supp. 2004-05). The Oil Field Cleanup Fund (“fund”) is to be used by the Commission (and its
employees or agents) to:

                  (1) conduct[]     a site investigation     or environmental      assessment    to
                  determine:

                        (A) the nature and extent of contamination caused by oil
                        and gas wastes or other substances or materials regulated by
                        the commission under Section 91.101; and

                        (B) the measures that should be taken to control or clean
                        up the wastes, substances, or materials described in
                        Paragraph (A);

                  (2) control[] or clean[] up oil and gas wastes or other substances or
                  materials regulated by the commission under Section 91.101 that are
                  causing or are likely to cause the pollution of surface or subsurface
                  water, consistent with Section 91 .l 13;3

                  (3) plug[] abandoned wells and administer[] or enforc[e] permits,
                  orders, and rules relating to the commission’s authority to prevent




         %me are two sections in the Natural Resources Code enumerated 91.101, and they are practically identical.
The two w&m differ only in the delegation of jurisdiction over hazardous waste. Certain hazardous wastes are
currently subject to the jurisdiction of the Texas Commission on EnvironmentalQuality. See 16 TEX.ADMIN.  CODE 5
3.30(b)(2)(B)(2004). Once the Environmental Protection Agency (“EPA”)authorizes the Railroad Commission to
administerRCRA, “‘jurisdictionover such hazardous wastes will transfer from the TCEQ” to the Commission. Id.

         The version cited here is effective untilthe EPA so authorizesthe Commission. The other version is effective
upon EPA’s authorization of the Commission. However, the language cited in this opinion is the same in both versions
of section 91.101 so that the issue of EPA authorizationof the Commissiondoes not impact the analysis in this opinion.

        ‘Section 91.113 is entitled “Investigation,Assessment, or Cleanup by Commission.”
The Honorable G. E. “Buddy” West - Page 3                    (GA-0294)




                 pollution under this chapter, Chapter 89: or any other                        law
                 administered or enforced by the commission under Title 3;’

                       .


                 (6) prepar[e] the report required under subsection (b).

Id. 3 91.112(a) (footnotes added). Where “oil and gas wastes or other substances or materials
regulated” by the Commission cause or are likely to cause pollution of surface or subsurface water,
section 91.113 expressly authorizes the Commission to

                 use money in the oil-field cleanup fund to conduct a site investigation
                 or environmental assessment or control or clean up the oil and gas
                 wastes or other substances or materials if:

                       (1) the responsible persod has failed or refused to control
                       or clean up the oil and gas wastes or other substances or
                       materials after notice and opportunity for hearing;

                       (2) the responsible person is unknown, cannot be found,
                       or has no assets with which to control or clean up the oil
                       and gas wastes or other substances or materials; or

                       (3) the oil and gas wastes or other substances or materials
                       are causing the pollution of surface or subsurface water.

Id. 5 91.113(a) (Vernon 2001) (footnote added).

         The Commission is directed to establish specific performance goals for the fund, including
the number of site investigations and environmental assessments to be conducted, the number
of abandoned wells to be plugged, and the number of surface locations to be remediated. See id.
3 91.11 l(e)(l)-(3) (Vernon Supp. 2004-05). The Commission is further directed to report to the
legislature on “the extent to which [the fund] has enabled the commission to better protect the
environment and enhance the income of the [fund].” Id. § 91.112(b). The report is to include
information on, among other things, the number of wells abandoned, the number of wells plugged,
and the number of surface locations remediated. See id.




        ‘Chapter 89, Natural Resources Code, pertains to abandoned wells.

         ‘Title 3, Natural Resources Code, contains the provisions relating to oil and gas

          6“‘Responsibleperson’means any operator or other person required by law, rules adopted by the commission,
or a valid order of the commission to control OIclean up the oil and gas wastes or other substances OImaterials.” Tu(.
NAT.RES.CODEANN.5 91.113(b) (Vemon 2001).
The Honorable       G. E. “Buddy” West - Page 4                  (GA-0294)




II.       Use of the Oil Field CleanuD Fund

          A.       Plugging of Oil and Gas Wells

                 You first inquire about the terms and conditions under which the Commission has
authority to use the fund to plug an oil or gas well. See Request Letter, supru note 1, at 1. The
answer to this inquiry is governed by the plain language of the statute. Where language in a statute
is unambiguous, the intent of the legislature is found in the “plain and common meaning of the
words and terms used.” Monsanto Co. v. CornerstonesMun. Util. Dist., 865 S.W.2d 937,939 (Tex.
1993). Words in statutes are given their ordinary meaning unless the statute defines them or they
are connected with and used with reference to a particular trade or subject matter or are a term of art.
See TEX. GOV’T CODE ANN. 5 3 11 ,011 (Vernon 1998); see also Dallas Morning News Co. v. Bd. of
Trs. ofDallasZndep. Sch. Dist., 861 S.W.2d 532,535 (Tex. App.-Dallas 1993, writ denied). Here,
section 91.112(a)(3) expressly and unambiguously         states that the fund is to be used by the
Commission to plug abandoned’ wells. See TEX. NAT. RES. CODE ANN. 5 91.112(a)(3) (Vernon
Supp. 2004-05). Accordingly, we conclude that the Commission has authority to plug an abandoned
oil or gas well with these expenditures from the fund provided the Commission follows the plugging
procedures set forth in chapter 89.

        Chapter 89, pertaining to the Commission’s authority over abandoned wells, first requires
the Commission to determine whether an abandoned or nonoperating well that is “causing or is likely
to cause pollution.   or [where] gas or oil is escaping” was properly plugged. Id. 5 89.041 (Vernon
2001). The determination is to be made at a hearing after due notice. See id. If the Commission
determines that the well was not properly plugged, the Commission shall order the operator (or the
nonoperator in certain instances) to plug the well. See id. 5 89.042(a)-(b). The Commission may
plug or replug the well if:

                   (1) the well was properly plugged according to rules in effect at the
                   time the well was abandoned or ceased to be operated; or

                   (2) neither the operator nor nonoperator properly plugged the well,
                   and

                         (A)    neither the operator nor nonoperator           can be found; or

                         (B) neither the operator nor nonoperator               has assets with
                         which to properly plug the well.’




         ‘In the oil and gas context, the term “abandoned”means to “abandon all work upon such a well in pursuance
of the search for oil or gas.” Struss v. Stoddard, 258 S.W.2d 413,417 (Tex. Civ. App.- Fort Worth 1953,wit refd
IILL?.).

         ‘Wherethe well is leaking salt water, oil or gas, or is likely to do so, and the leakage will cause a serious threat
of pollution or injury, the Commission may direct the operator to take remedial action or to plug the well, OI the
Commission may plug the well without notice and hearing. See TEX.NAT.RES.CODEANN.5 89.043(b)(Vernon Supp.
2004.05).
The Honorable G. E. “Buddy” West - Page 5                      (GA-0294)




Id. 5 89.043(a) (Vernon Supp. 2004-05) (footnote added). Ifthe Commission        plugs the well, it may
seek to recover its costs by issuing an order to the operator for reimbursement of plugging costs
or by requesting that the attorney general tile suit against the operator to recover the costs. See id.
3 89.043(c).

         B.       Remediation       of Oil or Gas Well- or Lease-site Surface Locations

                You next inquire about the terms and conditions under which the Commission may
use the fund to remediate oil or gas well-site or lease-site surface locations. See Request Letter,
supra note 1, at 1. As with the plugging of wells, section 91.112(a) expressly authorizes the fund
to be used by the Commission, as provided by section 9 I. I 13, to control or cleanup “oil and gas
wastes or other substances or materials       that are causing or are likely to cause the pollution of
surface or subsurface water.” TEX. NAT. RES. CODEANN. 5 91 .112(a)(2) (Vernon Supp. 2004-05).
The language of section 91 ,112 is clear and unambiguous. Accordingly, we construe it by its plain
language and conclude that the Commission may utilize funds in the fund to remediate oil and gas
well sites so long as the Commission follows the provisions of section 9 1.11 3.9

         C.       Remediation       of Commercial Disposal Sites

                   Your final inquiry relates to the Commission’s ability to use the fund to clean up or
remediate     “commercial disposal sites.” Request Letter, supra note 1, at 1. Neither the Natural
Resources      Code nor the Texas Administrative Code defines the term “commercial disposal site.”
However,       the Commission, in its oil and gas regulations, has defined the term “commercial
facility””    as a



         ‘Our conclusion is bolstered by other provisions in subchapterD. Section 91.112(b) requires the Commission
to provide the legislature with an annual report on the fund. See id. 5 91.I 12(b). The repolt is to include information
on “the number of surface locations remediated, by region.” Id. § 91.112(b)(S). Section 91.111 requires that the
Commission create performance goals for the use of the fund to include surface locations to be remediated. See id. 5
91.11l(e)(3). Additionally,the Commissionmust report quarterlyon the “numberof sites remediated with money from
the fund” to the Oil-Field Cleanup Fund Advisory Committee. Id. 5 91,1135(e)(l)(E). Clearly, subchapter D
contemplates that abandoned well sites be remediated by the Commission through the fund.

          Our conclusion is also consistent with the Commission’s construction of subchapter D. It is apparent that the
Commission construes subchapterD as authority to use the fund to remediate oil and gas well and lease sites. In 2002
the Commission used the fund to conduct 355 cleanup activities, including 187 routine remediation operations. See
RAILROAD     COMMLQXON     OFTEXAS,OILFIELDCLEANUP        PROGRAM,  ANNUAL   REPORT-FISCAL   YEAR2002, OILANDGAS
DIVISION,    5 V, at 9. In 2003, the Commission conducted 326 cleanup activities, including 189 routine remediation
operations, using the fund. See RAILROAD          COMMLSSION OF TEXAS,OIL FIELDCLEANUP            PROGRAM,     ANNUAL
REPORT-FISCALYEAR        2003, OILANDGASDIVISION,       5 V, at 11. While an agency’s construction is not controlling, it
is entitled to serious consideration. See Quick”. City ofhsfin, 7 S.W.3d 109, 123 (Tex. 1998)(“Whilenot controlling,
the contemporaneous construction of a statute by the administrativeagency charged with its enforcement is entitled to
great weight.“).

         ‘@Ibeterm “commercial disposal well”is defined as a “well whose owner or operator receives compensation
t?om others for the disposal of oil field fluids or oil and gas wastes that are wholly or partially trucked or hauled to the
well, and the primary business purpose for the well is to provide these services for compensation.” 16 TEX.ADMIN.
CODE5 3.9(4) (2004) (Tex. R.R. Corn&n, Disposal Wells).
The Honorable G. E. “Buddy” West - Page 6                  (GA-0294)




                 facility whose owner or operator receives compensation from others
                 for the storage, reclamation, treatment, or disposal of oil field fluids
                 or oil and gas wastes that are wholly or partially trucked or hauled to
                 the facility and whose primary business purpose is to provide these
                 services for compensation if [the facility is permitted under sections
                 3.8, 3.9, 3.46 or 3.57 ofthis title.]

29 Tex. Reg. 6006 (2004), adopted 29 Tex. Reg. 8271 (2004) (to be codified as an amendment to
16 TEX. ADMIN. CODE 5 3.78(a)(3) at 5 3.78(a)(4)). For purposes of this opinion, we assume the
term “commercial facility” encompasses the term commercial disposal sites.

         An express purpose of the fund is the “controlling or cleaning up [of] oil and gas wastes or
other substances or materials regulated by the commission under Section 91,101 that are causing or
are likely to cause the pollution of surface or subsurface water, consistent with section 91,113.” TEX.
NAT. RES. CODE ANN. 5 91,112(a)(2) (Vernon Supp. 2004-05).                   Section 91.101 gives the
Commission authority over, among other things, the

                 discharge, storage, handling, transportation, reclamation, or disposal
                 of oil and gas waste as defined in section 91 .lOll of this subchapter,
                 or of any other substance or material associated with any operation or
                 activity regulated by the commission under subdivisions (l), (2), and
                 (3) of this section.

Id. 5 91.101(a)(4)      (Vernon 2001) (text effective until delegation of RCRA authority to the
 Commission).”       Section 91.1011 defines “oil and gas waste” as “waste that arises out of or
 incidental to the drilling for or producing of oil or gas.” Id. 5 91.1011(a) (text effective until
 delegation of RCRA authority to the Commission).‘* “Oil and gas waste” also includes “salt water,
brine, sludge, drilling mud, and other liquid, semiliquid, or solid waste material.” Id. 5 91.101 l(b).
 Pursuant to section 91.101(a)(4), the Commission also has authority over other substances and
materials “associated with any operation or activity regulated by the commission under subdivisions
 (l), (2) and (3) of [section 91.101].” Id. 5 91.101(a)(4). Subdivision (1) pertains to the drilling of
 exploratory wells; subdivision (2) relates to oil and gas production; and subdivision (3) deals with
 theoperation, abandonment, andpluggingofwells.        Id. 5 91.101(a)(l)-(3). Thus, the Commission’s
jurisdiction includes substances and materials involved with oil and gas production; drilling of
 exploratory wells; and the operation, abandonment and plugging of wells. By operation of sections
 91.112(a)(2), sections 91,101(a)(l)-(4) and 91.1011, the fund can be used to remediate oil and gas
waste and other substances and materials associated with certain oil and gas operations (collectively,
 “pollutant” or “pollutants”) where they are causing or are likely to cause pollution of surface or
 subsurface water.




          %~ere are two sections 91.1011. They are almostidenticalexcept intheirtieatment ofjurisdictionovercertain
hazardouswastes. As with section 91.101,seesupra note 2, the languageofbothoftheprovision cited here is identical
and the issue of EPA authorization does not impact our analysis.
The Honorable G. E. “Buddy” West - Page 7                    (GA-0294)




         The focus of the fond is on the pollutant (oil and gas waste or other substances or materials)
and the activity that caused it (operation or activity regulated by the Commission under subdivisions
(1), (2) and (3)), rather than on the location (commercial disposal facility) of the pollutant. While
the fund statute limits the use ofthe fund to pollutants resulting from one ofthe specified operations
or activities within the jurisdiction of the Commission, i’ it does not limit the use of the fund to oil
and gas well and lease sites. If the oil and gas waste or substance or material associated with the
specified oil and gas activity within the jurisdiction of the Commission is causing or likely to cause
pollution to surface or subsurface water, the fund may be used to clean up the pollutant. Therefore,
we are of the opinion that the Commission may use the fund to remediate commercial disposal sites
not associated with a particular well or lease site, but only to the extent that the site is contaminated
with oil and gas wastes or other substances or materials associated with oil and gas production, the
drilling of exploratory wells, and the operation, abandonment and plugging of wells.




         ‘3Juisdiction of the Railroad Commission in oil and gas matters does not attach to land if there is no oil and
gas activity in the area. R.R. Comm h of Tex v. Delhi-Taylor Oil Corp., 302 S.W.2d 273,276 (Tex. Civ. App.-Austin
1957, wit ref d n.r.e.).
The Honorable G. E. “Buddy” West - Page 8          (GA-0294)




                                      SUMMARY

                      The Texas Railroad Commission is authorized to use the Oil
               Field Cleanup Fund to plug abandoned oil and gas wells and to
               rem&ate oil and gas well sites,provided the activities are conducted
               in compliance with other provisions of the Natural Resources Code.

                       The Texas Railroad Commission is also authorized to expend
               funds from the Oil Field Cleanup Fund to remediate commercial
               disposal sites to the extent a site is contaminated with oil and gas
               wastes or other substances or materials produced from oil and
               gas production, the drilling of exploratory wells, and the operation,
               abandonment and plugging of wells.




BARRY R. MCBEE
First Assistant Attorney General

DON R. WILLETT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Charlotte M. Harper
Assistant Attorney General, Opinion Committee