Railroad Commission of Texas, Gas Utilities Division:

An Inventory of Gas Utilities Division Permits Screened at the Texas State Archives, 1974-1979

Agency History

The Railroad Commission of Texas regulates the exploration, production, and transportation of oil and natural gas in Texas. Its statutory role is to prevent waste of the state's natural resources, to protect the correlative rights of different interest owners, to prevent pollution, and to provide safety in matters such as hydrogen sulfide. It oversees hazardous materials pipelines and natural gas pipelines and distribution systems as well as propane, butane, compressed natural gas, and liquefied natural gas. It works to make sure a continuous, safe supply of natural gas is available to Texas consumers at the lowest reasonable price. Additionally, the Commission regulates surface mining for coal, uranium, and iron ore gravel, and conducts a program for reclaiming lands that were mined and abandoned before 1975.

The Railroad Commission of Texas had its origin in the demands of the shipping public in the late 1880s that insisted that railroads be subject to regulation based on public interest. An advocate for governmental regulation, Attorney General James Stephen Hogg ran for Governor in 1890 with the issue of railroad regulation as the focal point of the campaign. Hogg was elected Governor in the general election and the voters also approved an amendment to Article X, Section 2 of the Texas Constitution that empowered the Legislature to enact statutes creating regulatory agencies. These elections paved the way for the Legislature to enact on April 3, 1891 "An Act to Establish a Railroad Commission of the State of Texas," that later was placed in the Texas Revised Civil Statutes under article 6444 et seq. (House Bills 1, 3, and 58, 22nd Texas Legislature, Regular Session).

The Commission originally consisted of three members appointed by the Governor for three-year terms. Governor Hogg appointed the first three Commissioners in 1891 including John H. Reagan, who resigned as U.S. Senator from Texas to serve as the first Chairman. The Texas Constitution, Article XIX, Section 30 was amended in 1894 to provide for elective six-year overlapping terms for the Commissioners. That same year John H. Reagan was elected and served until his retirement in 1903.

The Texas Railroad Commission was the first regulatory agency created in the State of Texas and originally had jurisdiction over the rates and operations of railroads, terminals, wharves and express companies. The legal focus was on intrastate passenger and freight activities. Interstate jurisdiction fell under the U.S. Interstate Commerce Commission. For the first twenty-five years of its existence, the Railroad Commission was largely concerned with regulating railroads, setting rates, receiving complaints, and making investigations. As other controversies arose where the Legislature deemed that the public interest could best be served by regulation, additional duties were assigned to the Railroad Commission.

The Railroad Commission's authority was broadened beginning in 1917 with the passage of the Pipeline Petroleum Law (Senate Bill 68, 35th Legislature, Regular Session) that declared pipelines to be common carriers like railroads and placed them under the Commission's jurisdiction. This was the first act to designate the Railroad Commission as the agency to administer conservation laws relating to oil and gas. The Commission's regulatory and enforcement powers in oil and gas were increased by the Oil and Gas Conservation Law (Senate Bill 350 of the 36th Legislature, Regular Session), effective June 18, 1919. This act gave the Railroad Commission jurisdiction to regulate the production of oil and gas. Acting upon this legislation, the Commission adopted in 1919 the first statewide rules regulating the oil and gas industry to promote conservation and safety, including Rule 37. This rule requires minimum distances between wells at drilling sites in order to protect field pressure and correlative rights.

The Gas Utilities Act of 1920 (House Bill 11, 36th Legislature, 3rd Called Session) gave the Commission regulatory and rate authority over individuals and businesses producing, transporting, or distributing natural gas in Texas. In 1937, following a large natural gas explosion in a school in New London, Texas, the 45th Legislature passed legislation giving the Railroad Commission the authority to adopt rules and regulations pertaining to the odorization of natural gas or liquefied petroleum gases (House Bill 1017, Regular Session).

The passage of the Public Regulatory Act of 1975 (PURA) (House Bill 819, 64th Legislature, Regular Session) required certain state regulatory agencies, including the Commission, to set the overall revenues of a utility based on its "cost of service." Regulation of liquefied petroleum was added to the Commission's responsibilities in 1939 by the 46th Legislature (House Bill 792, Regular Session). The legislation authorized the Commission to adopt and enforce safety rules and standards in the storage, handling, transportation, and odorization of butane or LP-gases. Regulation of compressed natural gas was added to the Railroad Commission's responsibilities in 1983 (Senate Bill 617, 68th Legislature, Regular Session).

In 2005, the Rail Division and its remaining function, rail safety regulation, were transferred to the Texas Department of Transportation (House Bill 2702, 79th Legislature, Regular Session). The Railroad Commission no longer has any railroad-related functions.

Three divisions with the agency have regulatory functions: the Gas Services Division, the Oil and Gas Division, and the Surface Mining and Reclamation Division. The Office of the General Counsel's Enforcement Section has enforcement powers, the Safety Division is responsible for the safe transportation of products through pipelines, installation of LP-Gas (propane), and the reporting of damage to pipelines through third-party damage reporting, and the Alternative Fuels Research and Education Division has research and education functions. Support divisions include the Public Information Office, Personnel, Finance and Administration, Information Technology Services, Intergovernmental Affairs, and the Office of Internal Audit. Three elected Commissioners direct the operations of the agency.

The Gas Services Division works to ensure that a continuous safe supply of gas is available to Texas consumers at the lowest reasonable rates. The division establishes rates and services that are fair and reasonable for gas utilities and their customers; enforces those rates; maintains safety standards in the gas and hazardous liquids pipeline systems throughout the state by inspection and investigation of any hazards or accidents; oversees intrastate gathering and storage services; and adopts and maintains adequate safety rules and standards in the handling, transportation, and odorization of LP-gases (liquefied petroleum gases) for dealers, handlers, and consumers. It further regulates propane and compressed natural gas by requiring anyone working with these gases to pass a written qualifying exam administered by the Commission. The division also focuses on regulatory policy and analysis as well as identifying and eliminating natural gas transportation problems. There are four main sections in this division - Audit, Liquefied Petroleum Gas, Pipeline Safety, and Regulatory and Analysis.

(Sources: Guide to Texas State Agencies, various editions; general laws and statutes; the Railroad Commission website, accessed on August 24, 2008; and the records themselves.)

Return to the Table of Contents

Scope and Contents of the Records

The Gas Services Division of the Railroad Commission of Texas (RRC) establishes rates and services for gas utilities and their customers and enforces those rates. It also maintains safety standards for gas and hazardous liquids pipeline systems; oversees intrastate gathering and storage services; and adopts and maintains adequate safety rules and standards in the handling, transportation, and odorization of LP-gases. This series consists of permit forms and correspondence, dating 1974-1979. The Gas Utilities Division (GUD) (later called the Gas Services Division) of the Railroad Commission of Texas screens a permit application to operate natural gas pipelines to determine if the operator is classified as a gas company or as a gas utility. This designation has important ramifications concerning safety regulation, rates, auditing, and taxes. A gas utility pays a gross receipts tax on its pipeline revenues, has its rates set by the Commission, must follow strict safety regulations, and is regularly audited by the GUD. A gas company is still held to minimum safety standards, such as odorization of gas, but in general, is not as strictly regulated as a gas utility and pays no gross receipts tax or has regular audits.

Natural gas operators filled out two forms to help the RRC determine their status; form T4, "Application for Permit to Operate Pipeline or Pipelines in Texas," submitted to the Administrative Services Division, and form PS-18, "Operations Information Form," submitted to the GUD. Based on the information in the forms, the GUD determined if a pipeline operation was subject to its rules and regulations.

Usually, both types of forms and some correspondence are in any one company's permit file, but sometimes one or both of the forms are missing. The correspondence in these records is routine. There are internal division memos discussing the status of individual companies, outgoing correspondence informing the company of its designation, and incoming correspondence asking questions and sometimes protesting the GUD's decision. If such a dispute became prolonged or formal the matter was transferred to the Legal Section.

This finding aid describes one series of the Railroad Commission of Texas records. See Railroad Commission of Texas: An Overview of Records for more records series.

To prepare this inventory, the described materials were cursorily reviewed to delineate series, to confirm the accuracy of contents lists, to provide an estimate of dates covered, and to determine record types.

Return to the Table of Contents

Return to the Table of Contents

Restrictions

Restrictions on Access

Materials housed in the State Archives do not circulate, but may be used in the State Archives search room. Materials will be retrieved from and returned to storage areas by staff members.

Restrictions on Use

Most records created by Texas state agencies are not copyrighted and may be freely used in any way. State records also include materials received by, not created by, state agencies. Copyright remains with the creator. The researcher is responsible for complying with U.S. Copyright Law (Title 17 U.S.C.).

Technical Requirements

Microfilm readers are available in the Geneology and Reference reading rooms at the Texas State Library and Archives.

Return to the Table of Contents

Return to the Table of Contents

Related Material

Return to the Table of Contents

Administrative Information

Preferred Citation

(Identify the item), Gas Utilities Division permits screened, Railroad Commission of Texas. Archives and Information Services Division, Texas State Library and Archives Commission.

Accession Information

Accession number: 1981/120

These records were transferred to the Archives and Information Services Division of the Texas State Library and Archives Commission by the Railroad Commission of Texas on February 12, 1981.

Processing Information

Inventoried by Laura K. Saegert, 1981

Described by Paul Beck, January 1987

DACS compliance by Laura K. Saegert, September 2008.

Return to the Table of Contents

Detailed Description of the Records

Return to the Table of Contents