Recent reports have highlighted Texas's numerous strengths that enable the state to be a leader in hydrogen market development, including accessible low-cost renewable energy and natural gas, a welcoming climate for infrastructure investment and development, and a well-developed industrial sector.1Additionally, Texas already has an established hydrogen market and the largest hydrogen pipeline network in the United States.2In December 2022, Texas's leadership in the hydrogen market attracted the largest green hydrogen facility in the United States to Wilbarger County, Texas.3
As the Texas hydrogen market grows, hydrogen facility operators will require additional intrastate pipelines to transport hydrogen between production plants, storage facilities, refineries, and customers. The Railroad Commission of Texas ("RRC") has regulatory authority over intrastate hydrogen pipelines in Texas. This article provides an overview of the applicable common-carrier statutes and RRC regulations for intrastate hydrogen pipelines.
Hydrogen Common Carrier Requirements
The Texas Natural Resources Code's definition of a common carrier includes a person who "owns, operates, or manages, wholly or partially, pipelines for the transportation of carbon dioxide or hydrogen in whatever form to or for the public for hire."4To be a common carrier, a hydrogen pipeline operator must "file[] with the [RRC] a written acceptance of the [common-carrier provisions] expressly agreeing that, in consideration of the rights acquired, it becomes a common carrier subject to the duties and obligations conferred or imposed [on common carriers]."5Further, "[a] pipeline subject to the provisions of [the common-carrier statute], . . . which is . . . in the business of transporting . . . hydrogen . . . in whatever form by pipeline for hire in Texas, shall be operated as a common carrier and shall be subject to the jurisdiction of the [RRC]."6
Importantly, as a common carrier, a hydrogen pipeline must (1) make and publish tariffs7and (2) receive and transport pipeline products without discrimination.8In exchange, common-carrier hydrogen pipelines (1) "have the right and power of eminent domain;"9(2) "are entitled to lay, maintain, and operate [pipelines] along, across, or under a public stream or highway in this state;"10and (3) are "entitled to lay . . . pipe or pipeline under any railroad, railroad right-of-way, street railroad, or canal in this state."11
Hydrogen Pipeline Permit Requirements12
All hydrogen pipelines, whether common carriers or not, "shall obtain a pipeline permit, to be renewed annually, from the [RRC]."13To obtain this permit, hydrogen pipeline operators must first register with the RRC by filing Form P-5 (Organization Report).14Next, operators must complete and submit Form T-4 (Application for Permit to Operate a Pipeline in Texas). All Form T-4s must be completed and submitted online using the RRC's Pipeline Online Permitting System.15Although Form T-4 does not list hydrogen as a "commodity transported" option for applicants to select, applicants should select "gas" and specify that the gas is hydrogen. Similarly, applicants for ammonia pipelines should select "other" and specify that the other product is ammonia.
Further, a hydrogen pipeline operator "who operates a pipeline without a permit, with an expired permit, or who otherwise fails to comply with [pipeline permitting requirements], may be assessed a penalty" by the RRC.16For the gas T-4 permits issued in the fourth quarter of 2022, the RRC issued the permit within an average of 45 days of receiving the application. For the gas T-4 permits issued in January 2023, the RRC averaged 15 days from application receipt to permit issuance.
In addition to filing Form P-5 and Form T-4, operators of hydrogen pipelines must notify the RRC before beginning construction of a hydrogen pipeline by filing Form PS-48 (New Construction Report).17Generally, operators must file Form PS-48 30 days before construction.18However, if the construction is for "a new, relocated, or replacement pipeline 10 miles in length or longer," operators must file the form 60 days before construction.19
Looking Forward
Texas already has around 550 miles of intrastate hydrogen pipelines in operation.20The recent passage of hydrogen incentives in the Infrastructure Investment and Jobs Act and the Inflation Reduction Act21will likely encourage additional hydrogen development in Texas. Effectively managing this expanded hydrogen activity will require new intrastate hydrogen pipelines. Please contact the Baker Botts Energy Regulatory team listed below with any questions about Texas intrastate hydrogen pipeline regulations.
Footnotes
>1 Kenneth B. Medlock III & Shih Yu Hung, Developing a Robust Hydrogen Market in Texas 5 (Feb. 2023), https://www.bakerinstitute.org/research/developing-robust-hydrogen-market-texas; Ctr. for Hous.'s. Future, Houston as the Epicenter of a Global Clean Hydrogen Hub 5 (May 2022),https://issuu.com/futurehouston/docs/houston_hydrogen_hub_final.
2 Id.
3 Off. of the Tex. Governor, Governor Abbott Celebrates Construction of Nation's Largest Green Hydrogen Facility in Texas (Dec. 8, 2022), https://gov.texas.gov/news/post/governor-abbott-celebrates-construction-of-nations-largest-green-hydrogen-facility-in-texas.
4 Tex. Nat. Res. Code § 111.002(6) (emphasis added).
5 Id.
6 Id. § 111.013 (emphasis added).
7 Id. § 111.014.
8 Id. §§ 111.015-.017; Westlake Ethylene Pipeline Corp. v. R.R. Comm'n of Tex., 506 S.W.3d 676, 687 (Tex. App.-Austin 2016, pet. denied).
9 Id. § 111.019(a).
10 Id. § 111.020(a).
11 Id. § 111.021.
12 Ammonia is increasingly viewed as an advantageous hydrogen carrier. If ammonia is used as a hydrogen carrier, the same RRC pipeline-permit requirements discussed here apply to those intrastate ammonia pipelines.
13 16 Tex. Admin. Code § 3.70(a) (R.R. Comm'n of Tex., Pipeline Permits Required).
14 Id. § 8.51(a) (R.R. Comm'n of Tex., Organizations Report).
15 Id. § 3.70(b) (R.R. Comm'n of Tex., Pipeline Permits Required).
16 Id. § 3.70(p).
17 Id. § 8.115(a) (R.R. Comm'n of Tex., New Construction Commencement Report).
18 Id.
19 Id. § 8.115(a)(1).
20 Kenneth B. Medlock III & Shih Yu Hung, Developing a Robust Hydrogen Market in Texas 45 (Feb. 2023).
21 Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 Stat. 427 (2021); Inflation Reduction Act of 2022, Pub. L. No. 117-169, 136 Stat. 4382 (2022).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.