(a) Applicability. This section is applicable to reclamation of tank bottoms and other hydrocarbon wastes generated through activities associated with the exploration, development, and production (including transportation) of crude oil and other waste materials containing oil, as those activities are defined in §3.8(a)(30) of this title (relating to Water Protection). The provisions of this section shall not apply where tank bottoms or other hydrocarbon-bearing materials are recycled or processed on-site by the owner/custodian and are returned to a tank or vessel at the same lease or facility. This section is not applicable to the practice of recycling or reusing drilling mud, except as to those hydrocarbons recovered from such mud recycling and sent to a permitted reclamation plant.     
      (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.      
        (1) Tank bottoms--A mixture of crude oil or lease condensate, water, and other substances that is concentrated at the bottom of producing lease tanks and pipeline storage tanks (commonly referred to as basic sediment and water or BS&W).       
        (2) Other hydrocarbon wastes--Oily waste materials, other than tank bottoms, which have been generated in connection with activities associated with the exploration, development, and production of oil or gas or geothermal resources, as those activities are defined in §3.8(a)(30) of this title (relating to Water Protection). The term "other hydrocarbon wastes" includes, but is not limited to, pit hydrocarbons, skim oil, spillage, and leakage of crude oil or condensate from producing lease or pipeline storage tanks, and crude oil or condensate associated with pipeline ruptures and other spills.       
        (3) Authorized person--A tank bottoms cleaner or transporter that is under contract for disposition of untreated tank bottoms or other hydrocarbon wastes to a person who has obtained a permit to operate a reclamation plant.       
        (4) Affected person--A person who has suffered or will suffer actual injury or economic damage other than as a member of the general public and includes surface owners of property on which a reclamation plant is located and surface owners of adjoining properties.       
        (5) Director--The director of the Oil and Gas Division or a staff delegate designated in writing by the director of the Oil and Gas Division or the commission.       
      (c) Permitting process.      
        (1) Removal of tank bottoms or other hydrocarbon wastes from any producing lease tank, pipeline storage tank, or other production facility, for reclaiming by any person, is prohibited unless such person has either obtained a permit to operate a reclamation plant, or is an authorized person. Applicants for a reclamation plant operating permit shall file the appropriate form with the commission in Austin.       
        (2) The applicant shall give notice by mailing or delivering a copy of the application to the county clerk of the county where the reclamation plant is to be located, and to the city clerk or other appropriate city official of any city where the reclamation plant is located within the corporate limits of the city, on or before the date the application is mailed to or filed with the commission.       
        (3) In order to give notice to other local governments and interested or affected persons, notice of the application shall be published once by the applicant in a newspaper of general circulation for the county where the reclamation plant is to be located, in a form approved by the commission. Publication shall occur on or before the date the application is mailed to or filed with the commission. The applicant shall file with the commission in Austin proof of publication prior to the hearing or administrative approval.       
        (4) If a protest from an affected person or local government is made to the commission within 15 days of receipt of the application or of publication, or if the commission determines that a hearing is in the public interest, then a hearing will be held on the application after the commission provides notice of hearing to all affected persons, local governments, or other persons who express an interest in writing in the application.       
        (5) If no protest from an affected person or local government is received by the commission within the allotted time, the director may administratively approve the application. If the director denies administrative approval, the applicant shall have a right to a hearing upon request. After hearing, the examiner shall recommend a final action by the commission.       
        (6) Applicants must demonstrate they are familiar with commission rules and have the proper facilities to comply with the rules.       
        (7) Except as provided in subparagraphs (A) and (B) of this paragraph, a permit to operate a reclamation plant shall remain in effect until canceled at the request of the operator. Existing permits subject to annual renewal may be renewed so as to remain in effect until canceled. Such renewal shall be subject to the requirements of paragraph (10) of this subsection. A reclamation plant permit may be canceled by the commission after notice and opportunity for hearing, if:                  (A) the permitted facility has been inactive for 12 months; or                   (B) there has been a violation, or a violation is threatened, of any provision of the permit, the conservation laws of the state, or rules or orders of the commission.         
        (8) If the operator objects to the cancellation, the operator must file, within 15 days of the date shown on the notice, a written objection and request for a hearing to determine whether the permit should be canceled. If such written request is timely filed, the cancellation will be suspended until a final order is issued pursuant to the hearing. If such request is not received within the required time period, the permit will be canceled. In the event of an emergency which presents an imminent pollution, waste, or public safety threat, the commission may suspend the permit until an order is issued pursuant to the hearing.       
        (9) A permit to operate a reclamation plant is not transferable. A new permit must be obtained by the new operator.       
        (10) Reclamation plants permitted under this section shall file financial security as required under §3.78(l) of this title (relating to Fees and Financial Security Requirements).       
      (d) Operation of a reclamation plant.      
        (1) The following provisions apply to any removal of tank bottoms or other hydrocarbon wastes from any oil producing lease tank, pipeline storage tank, or other production facility.                  (A) Notwithstanding the provisions of §3.85(a)(8) of this title (relating to Manifest To Accompany Each Transport of Liquid Hydrocarbons by Vehicle), an operator of a reclamation plant or an authorized person shall execute a manifest in accordance with §3.85 of this title (relating to Manifest To Accompany Each Transport of Liquid Hydrocarbons by Vehicle), upon each removal of tank bottoms or other hydrocarbon wastes from any oil producing lease tank, pipeline storage tank, or other production facility. In addition to the information required pursuant to §3.85 of this title (relating to Manifest To Accompany Each Transport of Liquid Hydrocarbons by Vehicle), the operator of the reclamation plant or other authorized person shall also include on the manifest:                      (i) the commission identification number of the lease or facility from which the material is removed; and                       (ii) the gross and net volume of the material as determined by the required shakeout test.                     (B) The operator of the reclamation plant or other authorized person shall fill out the manifest before leaving the lease or facility from which the liquid hydrocarbons are removed, and shall retain a copy on file for two years.                   (C) The operator of the reclamation plant or other authorized person shall leave a copy of the manifest in the vehicle transporting the material.         
        (2) The operator of a reclamation plant or other authorized person shall conduct a shakeout (centrifuge) test on all tank bottoms or other hydrocarbon wastes upon removal from any producing lease tank, pipeline storage tank, or other production facility, to determine the crude oil content and lease condensate thereof.       
        (3) The shakeout test shall be conducted in accordance with the most current American Petroleum Institute or American Society for Testing Materials method.       
      (e) Reporting of reclaimed crude oil or lease condensate on commission required report.      
        (1) For wastes taken to a reclamation plant the following provisions shall apply.                  (A) The net crude oil content or lease condensate from a producing lease's tank bottom as indicated by the shakeout test shall be used to calculate the amount of oil to be reported as a disposition on the monthly production report. The net amount of crude oil or lease condensate from tank bottoms taken from a pipeline facility shall be reported as a delivery on the monthly transporter report.                   (B) For other hydrocarbon wastes, the net crude oil content or lease condensate of the wastes removed from a tank, treater, firewall, pit, or other container at an active facility, including a pipeline facility, shall also be reported as a disposition or delivery from the facility.         
        (2) The net crude oil content or lease condensate of any tank bottoms or other hydrocarbon wastes removed from an active facility, including a pipeline facility, and disposed of on-site or delivered to a site other than a reclamation plant shall also be reported as a delivery or disposition from the facility. All such disposal shall be in accordance with §§3.8, 3.9, and 3.46 of this title (relating to Water Protection; Disposal Wells; and Fluid Injection into Productive Reservoirs). Operators may be required to obtain a minor permit for such disposal using procedures set out in §3.8(d) and (g) of this title (relating to Water Protection). Prior to approval of the minor permit, the commission may require an analysis of the disposable material to be performed.       
      (f) General provisions applicable to materials taken to a reclamation plant.      
        (1) The removal of tank bottoms or other hydrocarbon wastes from any facility for which monthly reports are not filed with the commission must be authorized in writing by the commission prior to such removal. A written request for such authorization must be sent to the commission office in Austin, and must detail the location, description, estimated volume, and specific origin of the material to be removed, as well as the name of the reclaimer and intended destination of the material. If the authorization is denied, the applicant may request a hearing.       
        (2) The receipt of any tank bottoms or other hydrocarbon wastes from outside the State of Texas must be authorized in writing by the commission prior to such receipt. However, written approval is not required if another entity will indicate, in the appropriate monthly report, a corresponding delivery of the same material. If the request is denied, the applicant may request a hearing.       
        (3) The receipt of any waste materials other than tank bottoms or other hydrocarbon wastes must be authorized in writing by the commission prior to such receipt. The commission may require the reclamation plant operator to submit an analysis of such waste materials prior to a determination of whether to authorize such receipt. If the request is denied, the applicant may request a hearing.       
        (4) The operator of a reclamation plant shall file a report on the appropriate commission form for each reclamation plant facility by the 15th day of each calendar month, covering the facility's activities for the previous month. The operator of a reclamation plant shall file a copy of the monthly report in the district office of any district in which the operator made receipts or deliveries for the month covered by the report.       
        (5) All wastes generated by reclaiming operations shall be disposed of in accordance with §§3.8, 3.9, and 3.46 of this title (relating to Water Protection; Disposal Wells; and Fluid Injection into Productive Reservoirs). No person conducting activities subject to regulation by the commission may cause or allow pollution of surface or subsurface water in the state.       
      (g) Commission review of administrative actions. Administrative actions performed by the director or commission staff pursuant to this rule are subject to review by the commissioners.     
      (h) Policy. The provisions of this rule shall be administered so as to prevent waste and protect correlative rights.     
     Source Note:        The provisions of this §3.57 adopted to be effective April 11, 1990, 15 TexReg 1693; amended to be effective June 1, 1998, 23 TexReg 5656; amended to be effective July 10, 2000, 25 TexReg 6487; amended to be effective September 1, 2004, 29 TexReg 8271