The Railroad Commission of Texas (“RRC”)—the state agency with primary regulatory jurisdiction over the oil and gas industry in the State of Texas—is in the process of significantly revising its rules regulating oil and gas waste management and other water protection issues.

In November 2023, the RRC closed the informal comment period for proposed changes to Statewide Rule 8, entitled “Water Protection,” 16 Tex. Admin. Code § 3.8 (“Rule 8”), which has been in place with only minor modifications since 1984. Expectations for groundwater protection have evolved substantially since Rule 8 was last updated four decades ago. For this reason, the RRC has signaled its intent to overhaul Rule 8 to bring it up to date with current industry standards and regulations related to environmental protection. A formal rulemaking proposal is expected later this year.

At the turn of the 21st century, more than a decade after Rule 8’s last substantive update, the Texas shale boom revolutionized disposal practices due to technological advances in hydraulic fracturing, or “fracing,” and horizontal drilling. Fracing involves perforating rock and injecting a mix of water, frac sand, and chemicals deep underground to obtain hydrocarbons from cracks in rock formations. This process allows oil and gas trapped in the pore space to flow to the receiving well along with flowback fluid and other substances entrained in the production stream.

The components of the production stream are separated by mechanical and chemical means once they reach the surface, with the oil and gas being separated from the waste byproducts generated through the production process. While greatly expanding the potential for oil and gas production, fracing also increases the amount of waste byproducts generated due to the fluid being pumped into the ground that ultimately flows back to the surface with the production stream. These waste byproducts must be handled and disposed of in accordance with State law, including Rule 8.

Rule 8 regulates pits, including saltwater disposal pits, oilfield waste recycling, and oil and gas waste disposal for the purpose of protecting against pollution of soil and useable quality groundwater. The proposed changes to Rule 8 released by the RRC in October 2023 include updating requirements on the design, construction, operation, monitoring, and closure of pits by creating a new subchapter entitled “Oil and Gas Waste Management,” under the RRC’s existing Chapter 4 regulations concerning environmental protection.

Key among the proposed changes to Rule 8 are the following:

• Under the current rule, Section 3.8(d)(2) prohibits pits for storage of “oil or oil products.” The proposed rule would expand this prohibition to also include pits used for the storage of “oil by-products,” which would include the waste byproducts discussed above that are generated through fracing and flowback operations.
  
  
• Section 3.8(a)(44) presently states that treated fluid “is not a waste but may become a waste if it is abandoned or disposed of rather than reused or recycled.” The proposed rule changes would clarify that treated fluid is unequivocally waste when abandoned or disposed and thus subject to associated regulatory obligations for proper handling of waste.  The amended Section 3.8(a)(44) would read in relevant part as follows: “Treated fluid that is abandoned or disposed of is classified as waste.”
  
  
• New provisions could require oil and gas operators to perform studies of groundwater near authorized pits where: (i) a water well exists within a one-mile radius of the authorized pit; or (ii) groundwater is likely to be present within 100 feet of the surface. The RRC has not yet clarified how it intends for this groundwater testing to occur or be utilized in practice. For example, uncertainties remain regarding whether an authorized pit could be constructed within 100 feet of groundwater at all, and if so, whether extra precautions could be necessary, such as drilling and sampling of monitoring water wells, or if any penalties could result from placing a pit in near proximity to water sources.

While the proposed changes to Rule 8 have not taken effect, operators should consider how these changes, if implemented, could impact their waste handling and disposal practices in connection with exploration and production activities. Based on the significant number of comments received during the preliminary phase of this rule making process, the energy industry appears to be keeping a close watch on any amendments to Rule 8 and there will likely continue to be a lot of public focus throughout the year on the proposed changes. The RRC is in the process of reviewing the input received during the public comment period, which could lead to additional changes in the formal rulemaking proposal anticipated before the fall of 2024. At that time, the public will have a second opportunity for comment.

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