| (a) Policy. Improved safety and environmental protection
are the desired outcomes of any enforcement action. Encouraging operators
to take appropriate voluntary corrective and future protective actions
once a violation has occurred is an effective component of the enforcement
process. Deterrence of violations through penalty assessments is also
a necessary and effective component of the enforcement process. A
rule-based enforcement penalty guideline to evaluate and rank oil-
and natural gas-related violations is consistent with the central
goal of the Commission's enforcement efforts to promote compliance.
Penalty guidelines set forth in this section will provide a framework
for more uniform and equitable assessment of penalties throughout
the state, while also enhancing the integrity of the Commission's
enforcement program.
(b) Only guidelines. This section complies with the
requirements of Texas Natural Resources Code, §81.0531 and §91.101,
which provides the Commission with the authority to adopt rules, enforce
rules, and issue permits relating to the prevention of pollution.
The penalty amounts shown in the tables in this section are provided
solely as guidelines to be considered by the Commission in determining
the amount of administrative penalties for violations of provisions
of Texas Natural Resources Code, Title 3; Texas Water Code, Chapters
26, 27, and 29, that are administered and enforced by the Commission;
or the provisions of a rule adopted or order, license, permit, or
certificate issued under Texas Natural Resources Code, Title 3, or
Texas Water Code, Chapters 26, 27, and 29. This rule does not contemplate
automatic enforcement. Violations can be corrected by operators before
being referred to legal enforcement.
(c) Commission authority. The establishment of these
penalty guidelines shall in no way limit the Commission's authority
and discretion to cite violations and assess administrative penalties.
The guideline minimum penalties listed in this section are for the
most common violations cited; however, this is neither an exclusive
nor an exhaustive list of violations that the Commission may cite.
The Commission retains full authority and discretion to cite violations
of Texas Natural Resources Code, Title 3; including Nat. Res. Code §91.101,
which provides the Commission with the authority to adopt rules, enforce
rules, and issue permits relating to the prevention of pollution;
the provisions of Texas Water Code, Chapters 26, 27, and 29, that
are administered and enforced by the Commission; and the provisions
of a rule adopted or an order, license, permit, or certificate issued
under Texas Natural Resources Code, Title 3, or Texas Water Code,
Chapters 26, 27, and 29, and to assess administrative penalties in
any amount up to the statutory maximum when warranted by the facts
in any case, regardless of inclusion in or omission from this section.
(d) Factors considered. The amount of any penalty requested,
recommended, or finally assessed in an enforcement action will be
determined on an individual case-by-case basis for each violation,
taking into consideration the following factors:
(1) the person's history of previous violations;
(2) the seriousness of the violation;
(3) any hazard to the health or safety of the public;
and
(4) the demonstrated good faith of the person charged.
(e) Typical penalties. Regardless of the method by
which the guideline typical penalty amount is calculated, the total
penalty amount will be within the statutory limit.
(1) A guideline of typical penalties for violations
of Texas Natural Resources Code, Title 3; the provisions of Texas
Water Code, Chapters 26, 27, and 29, that are administered and enforced
by the Commission; and the provisions of a rule adopted or an order,
license, permit, or certificate issued under Texas Natural Resources
Code, Title 3, or Texas Water Code, Chapters 26, 27, and 29, are set
forth in Table 1.
Attached Graphic
(2) Guideline penalties for violations of §3.73
of this title, relating to Pipeline Connection; Cancellation of Certificate
of Compliance; Severance, include additional penalty amounts that
are based on four components. In combination, these four components
yield the factor by which an additional penalty amount of $1,000 is
multiplied. The various combinations of the components are set forth
in Table 1A.
(A) The first component is the length of the violation.
A low rating means the violation has been in existence less than three
months. A medium rating means the violation has been outstanding for
more than three months and up to one year. A high rating means the
violation has been outstanding for more than one year.
(B) The second component is production value. A low
rating means the value of the production is less than $5,000. A medium
rating means the value of the production is more than $5,000 and up
to $100,000. A high rating means the value of the production is more
than $100,000.
(C) The third component is the number of unresolved
severances. A low rating means there are fewer than two unresolved
severances. A medium rating means there are more than two and up to
six unresolved severances. A high rating means there are more than
six unresolved severances.
(D) The fourth component is the basis of the severance.
The letter "N" indicates that the severance is not pollution related.
The letter "Y" indicates that the severance is pollution related.
Attached Graphic
(f) Penalty enhancements for certain violations. For
violations that involve threatened or actual pollution; result in
threatened or actual safety hazards; or result from the reckless or
intentional conduct of the person charged, the Commission may assess
an enhancement of the guideline penalty amount. The enhancement may
be in any amount in the range shown for each type of violation as
shown in Table 2.
Attached Graphic
(g) Penalty enhancements for certain violators. For
violations in which the person charged has a history of prior violations
within seven years of the current enforcement action, the Commission
may assess an enhancement based on either the number of prior violations
or the total amount of previous administrative penalties, but not
both. The actual amount of any penalty enhancement will be determined
on an individual case-by-case basis for each violation. The guidelines
in Tables 3 and 4 are intended to be used separately. Either guideline
may be used where applicable, but not both.
Attached Graphic
Attached Graphic
(h) Penalty reduction for accelerated settlement before
hearing. The recommended monetary penalty for a violation may be reduced
by up to 50% if the person charged agrees to an accelerated settlement
before the Commission conducts an administrative hearing to prosecute
a violation. Once the hearing is convened, the opportunity for the
person charged to reduce the basic monetary penalty is no longer available.
The reduction applies to the basic penalty amount requested and not
to any requested enhancements.
(i) Demonstrated good faith. In determining the total
amount of any monetary penalty requested, recommended, or finally
assessed in an enforcement action, the Commission may consider, on
an individual case-by-case basis for each violation, the demonstrated
good faith of the person charged. Demonstrated good faith includes,
but is not limited to, actions taken by the person charged before
the filing of an enforcement action to remedy, in whole or in part,
a violation or to mitigate the consequences of a violation.
(j) Penalty calculation worksheet. The penalty calculation
worksheet shown in Table 5 lists the guideline minimum penalty amounts
for certain violations; the circumstances justifying enhancements
of a penalty and the amount of the enhancement; and the circumstances
justifying a reduction in a penalty and the amount of the reduction.
Attached Graphic
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