A T-4 Permit is a permit to operate a pipeline in Texas; it is not a determination of whether a pipeline is or is not a common carrier. A T-4 Permit is essentially a registration process to provide the Railroad Commission (RRC) with information about a pipeline, such as the material it is carrying and whether the pipeline is jurisdictional to the RRC. There is no hearing at the Railroad Commission for T-4 Permits.
An application for a T-4 Permit must be filed by an operator with an approved P-5 Organization Report on file with the Commission, and must include a digitized map of the pipeline(s) to be covered by that T-4 Permit. A P-5 Organization Report and financial security (bond, letter of credit, cash deposit, or, for wells, a well-specific plugging insurance policy) are required of all companies performing operations within the jurisdiction of the Commission, including pipeline companies.
Common carriers are not the only pipelines required to have a T-4 Permit. Common carriers, gas utilities and private lines must have a T-4 Permit, with two exceptions. Pipelines that never leave an oil or gas production lease (production and flow lines) and distribution lines that are part of a natural gas or LP-gas distribution system are not required to have a T-4 Permit.
The T-4 Permit collects a variety of information including: who is operating the pipeline; what is being transported in the pipeline; where the pipeline is located (the counties, mileage, offshore or onshore); how the pipeline will be operated (gas utility, common carrier or private line); and the pipeline’s physical characteristics (diameter, wall thickness, pipe grade and operating pressure).
Information provided by the pipeline companies in the T-4 Permit identifies pipelines as common carriers, gas utilities or private lines to ensure that all pipelines, including common carriers, comply with RRC's regulations over pipeline safety and rate regulation. For interstate pipelines, a T-4 Permit allows the Commission to know what entity operates the pipeline and to determine whether the pipeline is jurisdictional to the Railroad Commission. Companies that identify themselves to the Railroad Commission as intrastate crude oil common carriers on the T-4 Permit must file tariffs or rate schedules with the Commission on what they are charging to transport that commodity in their pipelines. In the case of intrastate common carriers, the T-4 Permit ensures common carriers comply with RRC’s regulations over pipeline safety and rate regulation. The status indicated on the T-4 Permit stands unless challenged in court, and the ultimate authority to make the determination of which pipelines qualify for common carrier status is with the courts.
The Supreme Court opinion in Texas Rice Partners, Ltd. v. Denbury Green Pipeline, 363 S.W.3d 192 (Tex. 2012) accurately described the Commission's T-4 Permit process as one of registration, not of application, and that in accepting an entity's paperwork, the Commission performs a clerical rather than judicial-type act. The Court held that the T-4 Permit granted to Denbury by the Commission, standing alone, did not conclusively establish Denbury’s status as a common carrier and confer the power of eminent domain. Further, the Court stated, "the parties point to no regulation or enabling legislation directing the Commission to investigate and determine whether a pipeline will in fact serve the public."