ARTICLE 4.700 GAS WELL REGULATIONS

Staff Procedure.

All completed applications for a gas well permit shall be submitted to the city staff for review. Staff may issue a gas well permit provided:

the application meets the technical requirements of this article;

no waivers are being requested to the technical requirements; and

staff has been given the authority by the city council to issue the gas well permit without council action. In any case, however, staff shall have the option of deferring the approval of any complete gas well permit application to the city council. Should city council approval be necessary for gas well permit issuance as set forth herein, the city secretary shall place the completed gas well permit application on the city council agenda for approval.

Well Setbacks.

It shall be unlawful to drill any well in the thickly settled part of the city, in the sole determination of the city council, or within three hundred feet (300') from any residence, religious institution, building, hospital, school or public park.

It shall be unlawful to drill any well within five hundred feet (500') of any fresh water well.

Floodways.

No gas well permit shall be issued for any well to be drilled within any floodway. Gas drilling companies are encouraged to develop wells within the floodplain, but wells so located shall be developed in accordance with the city's current floodplain ordinance.

City Property.

No gas well permit may be issued by staff for any well proposed to be drilled on city property. Proposed wells on city property require the approval of the city council. The city council shall review the insurance and security requirements on an individual basis prior to issuing the gas well permit.

Platted Property.

No gas well permit may be issued by staff for any well proposed to be drilled on property that has had a final plat approved by the city council. Proposed wells on property with an approved final plat require the approval of the city council. The city council shall review the insurance and security requirements on an individual basis prior to issuing the gas well permit.

Existing Wells.

A property owner may petition the city council to locate a building on his property within three hundred feet (300') from an existing gas well. Such petition shall be considered at a public hearing called on the matter; however, no person shall be allowed to locate a building closer than two hundred feet (200') from any existing gas well. For the protection of the health, safety and welfare of the public, the council may impose additional requirements on such property owner for a reduction of the 300' distance.

(Ordinance 1055 adopted 5/13/03)

§ 4.705 Application and Filing Fees.

Every application for a gas well permit shall be in writing signed by the operator or a person duly authorized to sign on his behalf and filed with the city.

Every application shall be accompanied by a gas well permit fee as provided for in the fee schedule in the appendix of this code. No gas well permit shall be accepted by city staff in the absence of the entire gas well permit fee.

The application shall include the following information:

The date of the application and type of gas well permit requested.

An accurate legal description of the operation site to be used for the gas operation, the parcel and the production unit and name of the geologic formation as used by the commission. Property recorded by plat should reference subdivision, block and lot numbers.

A map showing the proposed transportation route and road for equipment, chemicals or waste products used or produced by the gas operation.

Proposed well name.

§ 4.706 Gas Well Permit Administration.

Surface owner names(s) and address(es).

(6)

Mineral lessee name and address.

(7)

Operator/applicant name and address and if the operator is a corporation, the state of incorporation, and if the operator is a partnership, the names and addresses of the general partners.

(8)

Name and address of an individual designated to receive notice.

(9)

Name of representative with supervisory authority over all gas operation site activities and a 24-hour phone number.

(10)

A site plan of the proposed operation site showing the location of all improvements, equipment and other facilities, including but not limited to tanks, pipelines, compressors, separators and storage sheds. The site plan shall also depict the proposed location(s) of any well(s), and all structures within three hundred feet (300') of the operation site.

(11)

The location of all fresh water wells within one thousand feet (1000') of the operation site.

(12)

The name, address and 24-hour phone number of the person to be notified in case of an emergency.

(13)

Copies of all reports required by the railroad commission and the approved permit from the railroad commission.

(14)

A signed road maintenance agreement supplied by the city that provides that the operator shall repair, at his own expense, any damage to roads, streets, or highways caused by the use of heavy vehicles for any activity associated with the preparation, drilling, production, and operation of gas wells.

(15)

A description of public utilities required during drilling and operation.

(16)

A description of the water source to be used during drilling.

(17)

A copy of the storm water pollution prevention plan as required by the Environmental Protection Agency.

(18)

A copy of the determination by the Texas Commission on Environmental Quality of the depth of useable quality ground water.

(19)

Evidence of insurance and security requirements under this article.

(20)

A statement, signed under oath by the operator or designated representative, that the information submitted with the application is, to the best knowledge and belief of the operator or designated representative, true and correct.

(21)

All required application and gas well permit fees.

(Ordinance 1055 adopted 5/13/03)

Any person or corporation wanting to engage in and operate gas production activities shall apply for and obtain a gas well permit. It shall be unlawful for any person acting either for himself or acting as agent, employee, independent contractor, or servant for any person to drill any well, to assist in any way in the site preparation or operation of any such well, or to conduct any activity related to the production of gas without first obtaining a gas well permit issued by the city. Such activities include, but are not limited to initial site preparation, drilling, redrilling, deepening, re-working, re-entering, activating, converting, operating, constructing rigs or tank batteries, fracturing and pressurizing.

A gas well permit shall not be required for the sole purpose of conducting seismic surveys.

A gas well permit shall not constitute authority for the re-entering and drilling of an abandoned well. An operator shall obtain a new gas well permit in accordance with the provisions of this article if the operator is re-entering and drilling an abandoned well.

When a gas well permit has been issued to the operator, such gas well permit shall constitute sufficient authority for drilling, operation, production gathering or production maintenance, repair, re-working, testing, plugging and abandonment of the well and/or any other activity associated with mineral exploration at the site of such well. However, a new or supplemental gas well permit shall be obtained before such permitted well may be reworked for purposes of re-drilling, deepening or converting such well to a depth or use other than that set forth in the then current gas well permit for such well.

Any person who intends to re-work a well with a gas well permit using a drilling rig, to fracture stimulate a permitted well after initial completion or to conduct seismic surveys or other exploration activities shall give written notice to the city no less than ten (10) days before the activities begin. The notice must identify where the activities will be conducted and must describe the activities in detail, including whether explosive charges will be used, the duration of the activities and the time the activities will be conducted. The notice must also provide the address and 24-hour phone number of the person conducting the activities. If requested by the city, the person conducting the activities will post a sign on the property giving the public notice of the activities, including the name, address and 24-hour phone number of the person conducting the activities. If the city determines that an inspection by an independent gas inspector is necessary, the operator will pay the city for the inspection. The following requirements shall apply to all fracture stimulation operations performed on a well within five hundred (500) feet of an occupied residence:

at least 48 hours before operations are commenced, the operator shall post a sign at the entrance of the well site advising the public of the date the operations will commence;

"flow back" operations to recover fluids used during fracture stimulation shall be performed during daylight hours only unless the city approves such operations during nondaylight hours;

a watchman shall be required at all times during such operations; and

at no time shall the well be allowed to flow or vent directly to the atmosphere without first directing the flow through separation equipment or into a portable tank.

A gas well permit shall automatically terminate, unless extended with permission from the city, if drilling is not commenced within one hundred eighty (180) days from the date of the permit issuance. A gas well permit may be extended by the city for an additional one hundred eighty (180) days upon request by the operator and proof that the classification of the requested gas well permit for such location has not changed.

(g)

The gas well permit required by this article is in addition to and is not in lieu of any gas well permit which may be required by any other ordinances of the city or by any other governmental agency.

(h)

No additional gas well permit or filing fees shall be required for:

any existing wells, previously permitted or approved by the city, within the corporate limits of the city on the effective date of this article; or

any wells which drilling has commenced on the effective date of this article; or

any wells in existence or on any wells on which drilling has commenced on land annexed into the city after the effective date of this article; or

any well that was planned for the land before the 90th day before the effective date of its annexation and for which the operator can provide documentation of a completed application for an authorization from a governmental entity for one or more licenses, certificates, gas well permits, approvals, or other forms of authorization required by law for gas well drilling, filed before the date of the institution of city annexation proceedings.

A person shall have forty-five (45) days after the enactment of this article or annexation into the city to designate a gas operation as a preexisting operation by filing a site plan drawn to scale that shows the proposed location of the well with respect to survey lines and the proposed associated production facilities, if any, with the city.

(i)

By acceptance of any gas well permit issued pursuant to this article, the operator expressly stipulates and agrees to be bound by and comply with the provisions of this article. The terms of this article shall be deemed to be incorporated in any gas well permit issued pursuant to this article with the same force and effect as if this article was set forth verbatim in such gas well permit.

(Ordinance 1055 adopted 5/13/03)

§ 4.707 Amended Gas Well Permits.

An operator may submit an application to the city administrator to amend an existing gas well permit in order to:

commence drilling from a new drill site that is not shown on (or incorporated by reference as part of) the existing gas well permit;

relocate a drill site or operation site that is shown on (or incorporated by reference as part of) the existing gas well permit; or

otherwise amend the existing gas well permit.

Applications for amended gas well permits shall be in writing, shall be signed by the operator, and shall include the following:

A description of the proposed amendments;

Any changes to the information submitted with the application for the existing gas well permit (if such information has not previously been provided to the city);

Such additional information as is reasonably required by the city to demonstrate compliance; and

Such additional information as is reasonably required by the city to prevent imminent destruction of property or injury to persons.

All applications for amended gas well permits shall be filed with the city administrator for review. Incomplete applications may be returned to the applicant, in which case the city staff shall provide a written explanation of the deficiencies; however, the city shall retain the application fee. The city staff may return any application as incomplete if there is a dispute pending before the commission regarding the determination of the operator.

If the activities proposed by the amendment are not materially different from the activities covered by the existing gas well permit, and if the proposed activities are in conformance with the applicable gas well permit, then the city staff shall approve the amendment after the application is filed. If, however, the activities proposed by the amendment are materially different and, in the judgment of the city staff, might create a risk of imminent destruction of property or injury to persons that was not associated with the activities covered by the existing gas well permit or that was not otherwise taken into consideration by the existing gas well permit, the city staff may require the amendment to be processed as a new gas well permit application.

The failure of the city staff to review and issue an amended gas well permit shall not cause the application for the amended gas well permit to be deemed approved.

§ 4.708 Suspension or Revocation of Gas Well Permit.

The decision of the city staff to deny an amendment to a gas well permit shall be provided to the operator in writing within 10 days after the decision, including an explanation of the basis for the decision. The operator may appeal any such denial to the city council.

(Ordinance 1055 adopted 5/13/03)

If an operator or its officers, employees, agents, contractors, or representatives fails to comply with any requirement of a gas well permit (including any requirement incorporated by reference as part of the gas well permit), the city administrator shall give written notice to the operator specifying the nature of the failure. The notice shall give the operator a reasonable time to cure, taking into consideration the nature and extent of the failure, the extent of the efforts required to cure, and the potential impact on the health, safety, and welfare of the community. The cure period shall not be less than thirty (30) days unless the failure:

involves a failure to obtain a gas well permit as required by the city;

presents a risk of imminent destruction of property or injury to persons; or

involves the operator's failure to provide periodic reports as required by this article.

In any of the foregoing instances, the cure shall be effected immediately.

If the operator fails to correct the noncompliance within thirty (30) days from the date of the notice, the city council may suspend the gas well permit while the operator pursues a cure, or revoke the gas well permit if the operator fails to initiate and diligently pursue a cure. The city council may also direct the city secretary upon written notice to the operator, to notify the commission and request that the commission take any appropriate action, and the city may pursue any other remedy available under this article or other applicable city ordinances.

The city shall have all rights and remedies available under Chapter 54 of the Texas Local Government Code and any other applicable statute to ensure compliance with this article, including the right to enjoin an operator from gas production activities during such time of noncompliance with the terms of this article.

No person shall carry on any operations performed under the terms of the gas well permit issued under this article during any period of any gas well permit suspension or revocation or pending a review of the decision or order of the city in suspending or revoking the gas well permit. Nothing contained herein shall be construed to prevent the necessary, diligent and bona fide efforts to cure and remedy the default or violation for which the suspension or revocation of the gas well permit was ordered for the safety of persons or as required by the commission.

Operator may, within thirty (30) days of the date of the written decision of the city administrator in writing to suspend or revoke a gas well permit, file an appeal to the city council under the provisions outlined in this article.

(Ordinance 1055 adopted 5/13/03)

§ 4.709 Periodic Reports.

The operator shall notify the city administrator of any changes to the following information within one business week after the change occurs:

The name, address, and phone number of the operator;

The name, address, and phone number of the person designated to receive notices from the city (which person must a resident of Texas that can be served in person or by registered or certified mail); and

The operator's Emergency Action Response Plan (including "drive-to maps" from public rights-of-way to each drill site).

The operator shall notify the city secretary of any change to the name, address, and 24-hour phone number of the person(s) with supervisory authority over drilling or operations activities within one business day.

The operator shall provide a copy of any "incident reports" or written complaints submitted to the railroad commission within 30 days after the operator has notice of the existence of such reports or complaints.

§ 4.710 Bond, Letters of Credit, Indemnity, Insurance.

Beginning on December 31st after each well is completed, and continuing on each December 31st thereafter until the operator notifies the city administrator that the well has been abandoned and the site restored, the operator shall submit a written report to the city administrator identifying any changes to the information that was included in the application for the applicable gas well permit that have not been previously reported to the city.

(Ordinance 1055 adopted 5/13/03)

General Requirements.

The operator shall be required to:

Comply with the terms and conditions of this article and the gas well permit issued hereunder.

Promptly clear drill and operation sites of all litter, trash, waste and other substances used, allowed, or occurring in the operations, and after abandonment or completion grade, level and restore such property to the same surface conditions as nearly as possible as existed before operations.

Indemnify and hold harmless the city, its officers, agents, and employees from and against any and all claims, losses, damages, causes of action, suits and liability of every kind, including all expenses of litigation, court costs, and attorney's fees, for injury to or death of any person or for damage to any property arising out of or in connection with the work done by operator under a gas well permit:

where such injuries, death or damages are caused by operator's sole negligence or the joint negligence of operator and any other person or entity; and

regardless of whether such injuries, death or damages are caused in whole or in part by the negligence of operator.

Promptly pay all fines, penalties and other assessments imposed due to breach of any terms of the gas well permit.

Promptly restore to its former condition any public or private property damaged by the gas operation.

Bond, Irrevocable Letter of Credit.

Prior to the issuance of a gas well permit, the operator shall provide the city administrator with a security instrument in the form of a bond or an irrevocable letter of credit as follows:

Bond.

A bond shall be executed by a reliable bonding or insurance institution authorized to do business in Texas, acceptable to the city. The bond shall become effective on or before the date the gas well permit is issued and shall remain in force and effect for at least a period of six (6) months after the expiration of the gas well permit term or until the well is plugged and abandoned and the site is restored, whichever occurs first. The operator shall be listed as principal and the instrument shall run to the city, as obligee, and shall be conditioned that the operator will comply with the terms and regulations of this article and the city. The original bond shall be submitted to the city.

Letter of Credit.

A letter of credit shall be issued by a reliable bank authorized to do business in Texas and shall become effective on or before the date the gas well permit is issued. The letter of credit shall remain in force and effect for at least a period of six (6) months after the expiration of the gas well permit term. The city shall be authorized to draw upon such letter of credit to recover any fines or penalties assessed under this article. Evidence of the execution of a letter of credit shall be submitted to the city administrator by submitting an original signed letter of credit from the banking institution.

The principal amount of any bond or letter of credit, hereinafter called a "security instrument," shall be fifty thousand dollars ($50,000.00) for any single well. If, after completion of a well, the applicant/operator, who initially posted a fifty thousand dollars ($50,000.00) security instrument, has complied with all of the provisions of this article and whose well is in the producing stage and all drilling operations have ceased, may submit a request to the city secretary to reduce the existing security instrument to ten thousand dollars ($10,000.00) for the remainder of the time the well produces without reworking. During reworking operations, the amount of the security instrument shall be maintained at fifty thousand dollars ($50,000.00).

If at any time after not less than a fifteen (15) day written notice to the operator and a public hearing, the city council shall deem any operator's security instrument to be insufficient, it may require the operator to increase the amount of the security instrument up to a maximum of two hundred and fifty thousand dollars ($250,000) per well.

Whenever the mayor or designee finds that a default has occurred in the performance of any requirement or condition imposed by this article, a written notice shall be given to the operator. Such notice shall specify the work to be done, the estimated cost and the period of time deemed by the mayor or designee to be reasonably necessary for the completion of such work. After receipt of such notice, the operator shall, within the time therein specified, either cause or require the work to be performed, or failing to do so, shall pay over to the city one hundred twenty-five (125%) percent of the estimated cost of the work as set forth in the notice. The city shall be authorized to draw against any security instrument to recover such amount due from the operator. Upon receipt of such monies, the city shall proceed by such mode as deemed convenient to cause the required work to be performed and completed, but no liability shall be incurred other than for the expenditure of said sum in hand. In the event that the well has not been properly abandoned under the regulations of the commission, such additional money may be demanded from the operator as is necessary to properly plug and abandon the well and restore the operations site in conformity with the regulations of this article.

In the event the operator does not perform or cause the work to be performed and fails or refuses to pay over to the city the estimated cost of the work to be done as set forth in the notice, or the issuer of the security instrument refuses to honor any draft by the city against the applicable security instrument, the city may proceed to obtain compliance and abate the default by way of civil action against the operator, or by criminal action against the operator, or by both such methods.

(F)

When the well or wells covered by said security instrument been properly abandoned in conformity with all regulations of this article, and in conformity with all regulations of the commission and notice to that effect has been received by the city, or upon receipt of a satisfactory substitute, the security instrument issued in compliance with these regulations shall be terminated and cancelled six months from receipt of notice.

Insurance.

In addition to the security instrument required pursuant to this article, the operator shall carry a policy or policies of insurance issued by an insurance company or companies authorized to do business in Texas. In the event such insurance policy or policies are cancelled, the gas well permit shall be suspended on such date of cancellation and the operator's right to operate under such gas well permit shall immediately cease until the operator files additional insurance as provided herein.

General requirements applicable to all policies.

The city, its officials, employees, agents and officers shall be endorsed as an "Additional Insured" to all policies except employers liability coverage under the operator's workers compensation policy.

All policies shall be written on an occurrence basis except for environmental pollution liability (seepage and pollution coverage) and excess or umbrella liability, which may be on a claims-made basis.

All policies shall be written by an insurer with an A-: VIII or better rating by the most current version of the A. M. Best Key Rating Guide or with such other financially sound insurance carriers acceptable to the city.

Deductibles shall be listed on the certificate of insurance and shall be on a "per occurrence" basis unless otherwise stipulated herein.

Certificates of insurance shall be delivered to the City of Pottsboro, evidencing all the required coverage, including endorsements, prior to the issuance of a gas well permit.

(F)

All policies shall be endorsed with a waiver of subrogation providing rights of recovery in favor of the city.

(G)

Any failure on part of the city to request required insurance documentation shall not constitute a waiver of the insurance requirement specified herein.

(H)

Each policy shall be endorsed to provide the city a minimum thirty day notice of cancellation, non-renewal, and/or material change in policy terms or coverage. A ten days notice shall be acceptable in the event of non-payment of premium.

(I)

During the term of the gas well permit, the operator shall report, in a timely manner, to the city administrator any known loss occurrence which could give rise to a liability claim or lawsuit or which could result in a property loss.

(J)

Upon request, certified copies of all insurance policies shall be furnished to the city.

Standard Commercial General Liability Policy.

This coverage must include premises, operations, blowout or explosion, products, completed operations, sudden and accidental pollution, blanket contractual liability, underground resources damage, broad form property damage, independent contractors protective liability and personal injury. This coverage shall be a minimum combined single limit of $1,000,000.00 per occurrence for bodily injury and property damage.

Excess or Umbrella Liability.

$5,000,000.00	Excess, if the operator has a stand-alone Environmental Pollution Liability (EPL) policy.
$10,000,000.00	Excess, if the operator does not have a stand-alone EPL policy.

Coverage must include an endorsement for sudden or accidental pollution. If seepage and pollution coverage is written on a "claims made" basis, the operator must maintain continuous coverage and purchase extended coverage period insurance when necessary.

Environmental Pollution Liability Coverage.

Operator shall purchase and maintain in force for the duration of the gas well permit, insurance for environmental pollution liability applicable to bodily injury, property damage, including loss of use of damaged property or of property that has not been physically injured or destroyed; cleanup costs; and defense, including costs and expenses incurred in the investigation, defense or settlement of claims; all in connection with any loss arising from the insured site. Coverage shall be maintained in an amount of at least $1,000,000.00 per loss, with an annual aggregate of at least $10,000,000.00.

Coverage shall apply to sudden and accidental pollution conditions resulting from the escape or release of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste material or other irritants, contaminants or pollutants.

Operator shall maintain continuous coverage and shall purchase extended coverage period insurance when necessary. The extended coverage period insurance must provide that any retroactive date applicable to coverage under the policy precedes the effective date of the issuance of the gas well permit by the city.

Control of Well.

The policy should cover the cost of controlling a well that is out of control, re-drilling or restoration expenses, seepage and pollution damage as first party recovery for the operator and related expenses, including, but not limited to, loss of equipment, experts and evacuation of residents.

$5,000,000.00	Per occurrence/no aggregate, if available, otherwise and aggregate of $10,000,000.00
$500,000,000.00	Sub-limit endorsement may be added for damage to property for which the operator has car, custody and control.

(6)

Workers Compensation and Employers Liability Insurance.

Workers compensation benefits shall be Texas Statutory Limits. Employers liability shall be a minimum of $500,000.00 per accident. Such coverage shall include a waiver of subrogation in favor of the city and provide coverage in accordance with applicable state and federal laws.

(7)

Automobile Liability Insurance.

Combined single limit of $1,000,000.00 per occurrence for bodily injury and property damage.

Coverage must include all owned, hired and not owned automobiles.

(8)

Certificates of Insurance.

The company must be admitted or approved to do business in the State of Texas, unless the coverage is written by a surplus lines insurer.

The insurance set forth by the insurance company must be underwritten on forms that have been approved by the Texas State Board of Insurance or ISO, or an equivalent policy form acceptable to the city, with the exception of environmental pollution liability and control of well coverage.

Sets forth all endorsements and insurance coverage according to requirements and instructions contained herein.

Shall specifically set forth the notice of cancellation, termination, or change in coverage provisions to the city. All policies shall be endorsed to read "THIS POLICY WILL NOT BE CANCELLED OR NON-RENEWED WITHOUT 30 DAYS ADVANCED WRITTEN NOTICE TO THE OWNER AND THE CITY EXCEPT WHEN THIS POLICY IS BEING CANCELLED FOR NONPAYMENT OF PREMIUM, IN WHICH CASE 10 DAYS ADVANCE WRITTEN NOTICE IS REQUIRED."

Original endorsements affecting coverage required by this section shall be furnished with the certificates of insurance.

Indemnification and Express Negligence Provisions.

Each gas well permit issued by the city shall include the following language: Operator does hereby expressly release and discharge, all claims, demands, actions, judgments, and executions which it ever had, or now has or may have, or assigns may have, or claim to have, against the City of Pottsboro and/or its departments, agents, officers, servants, successors, assigns, sponsors, volunteers, or employees, created by, or arising out of personal injuries, known or unknown, and injuries to property, real or personal, or in any way incidental to or in connection with the performance of the work performed by the operator under a gas well permit. The operator shall fully defend, protect, indemnify, and hold harmless the City of Pottsboro, Texas, its departments, agents, officers, servants, employees, successors, assigns, sponsors, or volunteers from and against each and every claim, demand, or cause of action and any and all liability, damages, obligations, judgments, losses, fines, penalties, costs, fees, and expenses incurred in defense of the City of Pottsboro, Texas, its departments, agents, officers, servants, or employees, including, without limitation, personal injuries and death in connection therewith which may be made or asserted by operator, its agents, assigns, or any third parties on account of, arising out of, or in any way incidental to or in connection with the performance of the work performed by the operator under a gas well permit. The operator agrees to indemnify and hold harmless the City of Pottsboro, Texas, its departments, its officers, agents, servants, employees, successors, assigns, sponsors, or volunteers from any liabilities or damages suffered as a result of claims, demands, costs, or judgments against the city, its departments, its officers, agents, servants, or employees, created by, or arising out of the acts or omissions of the City of Pottsboro occurring on the drill site or operation site in the course and scope of inspecting and gas well permitting the gas wells including, but not limited to, claims and damages arising in whole or in part from the negligence of the City of Pottsboro occurring on the drill site or operation site in the course and scope of inspecting and gas well permitting the gas wells. It is understood and agreed that the indemnity provided for in this section is an indemnity extended by the operator to indemnify and protect the City of Pottsboro, Texas and/or its departments, agents, officers, servants, or employees from the consequences of the negligence of the City of Pottsboro, Texas and/or its departments, agents, officers, servants, or employees, whether that negligence is the sole or contributing cause of the resultant injury, death, and/or damage.

Notice.

The individual designated to receive notice shall be a resident of Texas upon whom all orders and notices provided in this article may be served in person or by registered or certified mail. Every operator shall within five (5) business days notify the city secretary in writing of any change in such agent or mailing address unless operations in the city are discontinued and abandonment is complete.

Acceptance and Indemnity Agreement.

An operator who has a net worth of not less than twenty-five million dollars ($25,000,000.00), as shown in such owner's or operator's most recent audited financial statements, may substitute an acceptance and indemnity agreement in lieu of the bond or irrevocable letter of credit and insurance requirements set forth in this article, provided that such acceptance and indemnity agreement shall be in a form acceptable to and approved by the city attorney. The city administrator may request an annual review of the operator's most recent audited financial statements to assure compliance with this section.

(Ordinance 1055 adopted 5/13/03)

§ 4.711 Technical Regulations.

Site Requirements.

Fencing Requirements.

A chain link fence at least (8) feet but not to exceed ten (10) feet in height shall enclose all completed wells and tanks located within an operation site. Fences shall not be required on drill sites during initial drilling, completion or re-working operations as long as 24-hour on-site supervision is provided. A secured entrance gate shall be required. All gates are to be kept locked when the operator or his employees are not within the enclosure.

Landscaping.

Landscaping and irrigation shall be required along all street frontages of an operation site with suitable screening shrubs that complement the architectural character of the surrounding neighborhood. Opaque vinyl slats in chain link fencing may be an approved alternate. The vegetation or berms shall be kept in an attractive state and in good condition at all times by the applicant or operator. All landscape and irrigation plans shall be submitted to the planning and zoning director for approval.

Vehicle Routes.

Drilling and/or production vehicles in excess of twenty-five (25) tons shall be restricted to such streets designated as truck routes by the city Code wherever capable of being used. Only when it is not possible to use a truck route to fulfill the purpose for which such vehicle is then being operated, said vehicles shall be operated on a commercial delivery route. Commercial delivery route means any street or highway so designated by the city council for the use by any commercial motor vehicle, truck-tractor, trailer, semi-trailer, or any combination thereof.

Work Hours.

Truck deliveries of equipment and materials associated with drilling and/or production, well servicing, site preparation and other related work conducted on the well site shall be limited to between the hours of 6 a.m. to 7 p.m. except in cases of fires, blowouts, explosions and any other emergencies or where the delivery of equipment is necessary to prevent the cessation of drilling or production.

Noise Restrictions.

No drilling producing or other operations shall produce a sound level greater than 85dB(a) when measured at a distance of three hundred (300) feet from the production equipment in question. A maximum sound level of 90dB(a) shall apply to formation fracturing when measured at a distance of three hundred (300) feet from the production equipment in question.

No person shall operate, or cause to be operated in connection with the operation of a producing well, any engine, compressor or motor-driven machinery of any type which creates a sound level greater than 65dB(a) when measured at a distance of three hundred (300) feet from the well site.

If sound levels exceed the dB(a) levels cited in (A) and (B) of this subsection, the city may require sound reducing mufflers

No air, gas or pneumatic drilling shall be allowed.

Sound level measurements shall be made with a sound level meter conforming, at a minimum, to the requirements of the American National Standards Institute. The noise level shall be the average of sound level meter readings taken consecutively at any given time from four (4) or more diametrically opposed positions, four (4) feet above ground level, within an area of not more than 300 feet (300') from the production equipment in question.

Operational Requirements.

Abandoned Wells.

All wells shall be abandoned in accordance with the rules of the railroad commission; however, all well casings shall be cut and removed to a depth of at least three (3) feet below the surface unless the surface owner submits a written agreement otherwise. Three feet (3') shall be the minimum depth. No structures shall be built over an abandoned well.

Blowout Prevention.

In all cases, blowout prevention equipment shall be used on all wells being drilled, worked-over or in which tubing is being changed. Protection shall be provided to prevent blowout during gas operations as required by and in conformance with the requirements of the commission and the recommendations of the American Petroleum Institute. The operator must equip all drilling wells with adequate blowout preventors, flow lines and valves commensurate with the working pressures involved as required by the commission.

Discharge.

No person shall place, deposit, discharge, or cause or permit to be placed, deposited or discharged, any oil, naphtha, petroleum, asphalt, tar, hydrocarbon substances or any refuse including wastewater or brine from any gas operation or the contents of any container used in connection with any gas operation in, into, or upon any public right-of-way, alleys, streets, lots, storm drain, ditch or sewer, sanitary drain or any body of water or any private property in the city.

Drill Stem Testing.

All open hole formation or drill stem testing shall be done during daylight hours. Drill stem tests may be conducted only if the well effluent during the test is produced through an adequate gas separator to storage tanks and the effluent remaining in the drill pipe at the time the tool is closed and flushed to the surface by circulating drilling fluid down the annulus and up the drill pipe.

Dust, Vibration, Odors.

All drilling and production operations shall be conducted in such a manner as to minimize, so far as practicable, dust, vibration, or noxious odors, and shall be in accordance with the best accepted practices incident to drilling for the production of gas and other hydrocarbon substances in urban areas. All equipment used shall be so constructed and operated so that, vibrations, dust, odor or other harmful or annoying substances or effect will be minimized by the operations carried on at any drilling or production site or from anything incident thereto, to the injury or annoyance of persons living in the vicinity; nor shall the site or structures thereon be permitted to become dilapidated, unsightly or unsafe. Proven technological improvements in industry standards of drilling and production in this area shall be adopted as they become available if capable of reducing factors of dust, vibration and odor.

(6)

Electric Lines.

All electric lines to production facilities shall be located in a manner compatible to those already installed in the surrounding area or subdivision.

(7)

Electric Motors.

Only electric prime movers or motors shall be permitted for the purpose of pumping wells. All electrical installations and equipment shall conform to the city ordinances and the appropriate national codes.

(8)

Emergency Response Plan.

Prior to the commencement of any gas or other hydrocarbons production activities, operator shall submit to the city secretary an emergency response plan establishing written procedures to minimize any hazard resulting from drilling, completion or producing of gas wells. Said plan shall use existing guidelines established by the commission, Texas Natural Resource Conservation Commission, Department of Transportation and/or the Environmental Protection Agency.

(9)

Equipment Painted.

All production equipment on the site shall be painted and maintained at all times, including pumping units, storage tanks, buildings and structures.

(10)

Fire Prevention; Sources of Ignition.

Firefighting apparatus and supplies required by any applicable federal, state, or local law shall be provided by the operator, at the operator's cost, and shall be maintained on the drilling site at all times during drilling and production operations. The operator shall be responsible for the maintenance and upkeep of such equipment. Each well shall be equipped with an automated valve that closes the well in the event of an abnormal change in operating pressure. All well heads shall contain an emergency shut off valve to the well distribution line.

(11)

Fresh Water Wells.

It shall be unlawful to drill any well, the center of which, at the surface of the ground, is located within five hundred (500) feet of any fresh water well. The measurement shall be in a direct line from the closest well bore to the fresh water well bore. The operator of a gas well shall provide the director of public works with a "pre-drilling" and "post-drilling" water analysis from any fresh water well within one-thousand (1000) feet of the gas well. Within 180 days of its completion date, each gas well shall be equipped with a cathodic protection system to protect the production casing from external corrosion. The city engineer may approve an alternative method of protecting the production casing from external corrosion.

(12)

Gas Emission or Burning Restricted.

No person shall allow, cause or permit gases to be vented into the atmosphere or to be burned by open flame except as provided by law or as permitted by the commission. Such vent or open flame shall be screened in such a way as to minimize detrimental effects to adjacent property owners.

(13)

Grass, Weeds, Trash.

All drill and operation sites shall be kept clear of high grass, weeds, and combustible trash within a radius of one hundred (100) feet around any gas tank or tanks or producing wells.

(14)

Hazardous Plan.

Hazardous materials management plan shall be on file with the fire chief and the city engineer.

(15)

Lights.

No person shall permit any lights located on any drill or operation site to be directed in such a manner so that they shine directly on public roads, adjacent property or property in the general vicinity of the operation site. To the extent practicable, and taking into account safety considerations, site lighting shall be directed downward and internally so as to avoid glare on public roads and adjacent dwellings and buildings within three hundred (300) feet.

(16)

Muffling Exhaust.

Exhaust from any internal combustion engine, stationary or mounted on wheels, used in connection with the drilling of any well or for use on any production equipment shall not be discharged into the open air unless it is equipped with an exhaust muffler, or mufflers or an exhaust muffler box constructed of noncombustible materials sufficient to suppress noise and prevent the escape of obnoxious gases, fumes or ignited carbon or soot.

(17)

Fracturing Operations.

All formation fracturing operations shall be conducted during daylight hours unless the operator has notified the city engineer that fracing will occur before or after daylight hours to meet safety requirements.

(18)

Pits.

Lined earthen mud or circulating pits shall be used. Such pits and contents shall be removed from the premises and the drilling site within 180 days after completion of the well.

(19)

Private Roads and Drill Sites.

Prior to the commencement of any drilling operations, all private roads used for access to the drill site and the operation site itself shall be at least ten (10) feet wide and shall be surfaced with crushed rock, gravel or ore and maintained to prevent dust and mud. Overhead clearance shall be arranged with the property owner when any trees need to be cut in order for trucks to pass. In particular cases these requirements governing surfacing of private roads may be altered at the discretion of the director of public works after consideration of all circumstances including, but not limited to, the following: distances from public streets and highways; distances from adjoining and nearby property owners whose surface rights are not leased by the operation; the purpose for which the property of such owners is or may be used; topographical features; nature of the soil; and exposure to wind.

(20)

Salt Water Wells.

No salt water disposal wells shall be located within the city.

(21)

Signs.

A sign shall be immediately and prominently displayed at the gate on the temporary and permanent site fencing erected pursuant to this article. Such sign shall be durable material, maintained in good condition and, unless otherwise required by the commission, shall have a surface area of not less than two (2) square feet nor more than four (4) square feet and shall be lettered with the following:

(i)

Well name and number;

(ii)

Name of operator;

(iii)

The emergency 911 number; and

(iv)

Telephone numbers of two (2) persons responsible for the well who may be contacted in case of emergency.

Permanent weatherproof signs reading "DANGER NO SMOKING ALLOWED" shall be posted immediately upon completion of the well site fencing at the entrance of each well site and tank battery or in any other location approved or designated by the fire chief of the city. Sign lettering shall be four (4) inches in height and shall be red on a white background or white on a red background. Each sign shall include the emergency notification numbers of the fire department and the operator, well and lease designations required by the commission.

(22)

Storage of Equipment.

On-site storage is prohibited on the operation site. No equipment shall be stored on the drilling or production operation site, unless it is necessary to the operation of the well. Lumber, pipes, tubing and casing shall not be left on the operation site except when drilling or well servicing operations are being conducted on the site.

No vehicle or item of machinery shall be parked or stored on any street, right-of-way or in any driveway, alley or upon any operation site which constitutes a fire hazard or an obstruction to or interference with fighting or controlling fires except that equipment which is necessary for drilling or production operations on the site. The fire department shall be the entity that determines whether an equipment on the site shall constitute a fire hazard.

No refinery, processing, treating, dehydrating or absorption plant of any kind shall be constructed, established or maintained on the premises. This shall not be deemed to exclude a conventional gas separator or dehydrator.

(23)

All tanks and permanent structures shall conform to the American Petroleum Institute (A.P.I.) specifications unless other specifications are approved by the director of public works. All storage tanks shall be equipped with a secondary containment system including lining with an impervious material. The secondary containment system shall be designed to hold one and one-half (11/2) times the contents of the largest tank in accordance with the fire code. Drip pots shall be provided at the pump out connection to contain the liquids from the storage tank.

All tanks shall be set back pursuant to the standards of the commission and the National Fire Protection Association, but in all cases, shall be at least twenty-five (25) feet from any public right-of-way or property line. Each storage tank shall be equipped with a level control device that will automatically activate a valve to close the well in the event of excess liquid accumulation in the tank.

No meters, storage tanks, separation facilities, or other aboveground facilities, other than the well head and flow lines, shall be placed in a floodway or the 100 year floodplain.

Tanks must be at least three hundred feet (300') from any residence, religious institution, building, hospital building, school or combustible structure.

(24)

Tank Battery Facilities.

Tank battery facilities shall be equipped with a remote foam line and a lightning arrestor system.

(25)

Surface Casing.

Surface casing shall be run and set in full compliance with the applicable rules and regulations of the commission.

(26)

Valves.

Each well must have a shutoff valve to terminate the well's production.

(27)

Waste Disposal.

Unless otherwise directed by the commission, all tanks used for storage shall conform to the following: operator must use portable closed steel storage tanks for storing liquid hydrocarbons. Tanks must meet the American Petroleum Institute standards. All tanks must have a vent line, flame arrester and pressure relief valve. All tanks must be enclosed by a fence applicable to the issued permit classification. No tank battery shall be within one hundred (100) feet of any dwelling.

Drilling mud, cuttings, liquid hydrocarbons and all other field waste derived or resulting from or connected with the drilling, re-working or deepening of any well shall be discharged into an earthen pit. All disposals must be in accordance with the rules of the commission and any other appropriate local, state or federal agency.

All waste shall be disposed of in such a manner as to comply with the air and water pollution control regulations of the state, this article and any other applicable ordinance of the city.

(28)

Watchman.

The operator must keep a watchman or security personnel on site during the drilling or re-working of a well when other workmen are not on the premises.

Installation of Pipelines On, Under or Across Public Property.

The operator shall apply to the city for a franchise agreement on, over, under, along or across the city streets, sidewalks, alleys and other city property for the purpose of constructing, laying, maintaining, operating, repairing, replacing and removing pipelines so long as production or operations may be continued under any gas well permit issued pursuant to this article. operator shall:

Not interfere with or damage existing water, sewer or gas lines or the facilities of public utilities located on, under or across the course of such rights-of-way.

Furnish to the director of development of the city a plat showing the location of such pipelines.

Construct such lines of pipe in accordance with the Department of Transportation regulations.

Grade, level and restore such property to the same surface condition, as nearly as practicable, as existed when operations for the drilling of the well were first commenced.

No gas well permit shall be issued for any well to be drilled within any of the streets or alleys of the city and/or projected streets or alleys shown by the current comprehensive plan of the city, and no street or alley shall be blocked or encumbered or closed due to any exploration, drilling or production operations unless prior consent is obtained from the city engineer. Any consent from the city engineer shall be temporary in nature and state the number of hours and/or days that any street or alley may be blocked, encumbered or closed.

(Ordinance 1055 adopted 5/13/03)

§ 4.712 Clean Up and Maintenance.

Cleanup After Well Servicing.

After the well has been completed or plugged and abandoned, the operator shall clean the drill site or operation site, complete restoration activities and repair all damage to public property caused by such operations within sixty (60) days.

Clean-Up After Spills, Leaks and Malfunctions.

After any spill, leak or malfunction, the operator shall remove or cause to be removed to the satisfaction of the city fire chief and the city staff all waste materials from any public or private property affected by such spill, leak or malfunction. Clean-up operations must begin immediately. If the owner fails to begin site clean-up within twenty-four (24) hours, the city shall have the right to contact the commission in order to facilitate the removal of all waste materials from the property affected by such spill, leak or malfunction.

Free From Debris.

The property on which a well site is located shall at all times be kept free of debris, pools of water or other liquids, contaminated soil, weeds, brush, trash or other waste material within a radius of one hundred (100) feet around any separators, tanks and producing wells.

Painting.

All production equipment shall be painted and maintained at all times, including wellheads, pumping units, tanks, and buildings or structures. Paint shall be of a neutral color, compatible with surrounding uses. Neutral colors shall include sand, gray and unobtrusive shades of green, blue and brown, or other neutral colors approved by the property owners.

Blowouts.

In the event of the loss of control of any well, operator shall immediately take all reasonable steps to regain control regardless of any other provision of this article and shall notify the city staff as soon as practicable. The city staff shall certify in writing, briefly describing the same, to the city council. If the city staff, in their opinion, believes that danger to persons and property exists because of such loss of well control and that the operator is not taking or is unable to take all reasonable and necessary steps to regain control of such well, the city staff may then employ any well control expert or experts or other contractors or suppliers of special services, or may incur any other expenses for labor and material which the city staff deems necessary to regain control of such well. The city shall then have a valid lien against the interest in the well of all working interest owners to secure payment of any expenditure made by the city pursuant to such action of the city staff in gaining control of said well.

(Ordinance 1055 adopted 5/13/03)

§ 4.713 Plugged and Abandoned Wells.

Surface Requirements for Plugged and Abandoned Well.

Abandonment must be pursuant to the requirements of the railroad commission.

Abandoned Well Requirement.

The operator shall furnish the following at the discretion of the city staff:

A copy of the approval of the commission confirming compliance with all abandonment proceedings under the state law; and

A notice of intention to abandon under the provisions of this section and stating the date such work will be commenced. Abandonment may then be commenced on or subsequent to the date so stated.

Abandonment Requirements Prior to New Construction.

All abandoned or deserted wells or drill sites shall meet the most current abandonment requirements of the commission prior to the issuance of any building permit for development of the property. No structure shall be built over an abandoned well.

(Ordinance 1055 adopted 5/13/03)

§ 4.714 Technical Advisor.

The city may from time to time employ a technical advisor, or advisors who are experienced and educated in the gas industry or the law as it pertains to gas matters. The function of such advisor(s) shall be to advise, counsel or represent the city on such matters relating to gas operations within the city as the city may want or require and the effect thereof, both present and future, on the health, welfare, comfort and safety of the citizens of the city. In the event such technical advisor(s) is employed for the purpose of advising, counseling or representing the city relative to an operator's unique and particular set of circumstances, case or request relating to this article, then the cost for such services of such technical advisor(s) shall be assessed against and paid for by such operator (maximum amount of $5000.00) in addition to any fees or charges assessed pursuant to this article. Prior to the employment of a technical advisor, the city shall inform the operator of the intended scope of work and the estimated costs and expenses. The employment of a technical advisor shall be approved by the city council.

(Ordinance 1055 adopted 5/13/03)

§ 4.715 Appeals.

The city council shall have and exercise the power to hear and determine appeals where it is alleged there is error or abuse of discretion regarding the issuance of a gas well permit or the revocation or suspension of any gas well permit issued as provided by this article. Any person or entity whose:

application is denied by the city staff;

whose gas well permit is suspended or revoked; or

whose well or equipment is deemed by the city staff to be abandoned, may within thirty (30) days of the date of the written decision of the city staff file an appeal to the city council in accordance with the following procedure:

An appeal shall be in writing and shall be filed with the city secretary. The error alleged and grounds for appeal must be set forth specifically by the appellant. The appellant shall provide any documentation or records regarding the appeal to be used by council in considering the appeal.

Within fifteen (15) days of receipt of the documentation, the city administrator shall place the matter on the city council agenda for hearing and transmit all documentation involved in the appeal to the council. Notice shall be given by mail of the time, place and purpose of the meeting to appellant and any other party who has requested in writing to be so notified. No other notice need be given except as in accordance with the Texas Open Meetings Act.

Appeal fees shall be required for every appeal in an amount provided for in the fee schedule in the appendix of this code

(Ordinance 1055 adopted 5/13/03)

§ 4.716 Right of Entry.

The city council or designee is authorized and directed to enforce this article and the provisions of any gas well permit. Whenever necessary to enforce any provision of this article or a gas well permit, or whenever there is reasonable cause to believe there has been a violation of this article or a gas well permit, the city may enter upon any property covered by this article or a gas well permit at any reasonable time to inspect or perform any duty imposed by this article. If entry is refused, the city shall have recourse to every remedy provided by law and equity to gain entry.

(Ordinance 1055 adopted 5/13/03)

§ 4.717 Penalty.

It shall be unlawful for any person, firm or corporation to:

engage in any activity not permitted by the terms of a gas well permit issued under this article;

fail to comply with any condition set forth in a gas well permit issued under this article;

violate any provision or requirement under this article, including the failure to obtain a gas well permit;