§ 40-234. Conditions of permit ordinance.

(a)

Term. The term of the permit ordinance, subject to the termination provisions, shall be for a period of a maximum of 30 years from and after its effective date.

(b)

Material transported. Permittee may operate pipelines authorized under the permit ordinance for the purpose of transporting the material or materials indicated in the application or in accordance with any notice filed with the director pursuant to subsection (d) below. If permittee changes the material transported in a pipeline, the permittee shall notify the director in accordance with subsection (d) below.

(c)

Permit for new pipeline.

(1)

Application requirements. From time to time during the term of a permit ordinance, permittee may file an application to construct a new pipeline (including an extension of a previously constructed pipeline) in a street. To apply, permittee shall submit to the director the information set forth in section 40-232(a)(1) of this Code. Notwithstanding anything contained in this article or in any permit ordinance to the contrary, the director shall not approve any application for a new pipeline (other than a replacement pipeline) which is intended to be constructed so as to run within and parallel to the right of way of a street for a distance of 5,000 or more consecutive feet, unless expressly authorized by the city council.

(2)

Permit approval process. If permittee has supplied the required information to the director, and the director determines that the new pipeline will not unduly interfere with the construction, maintenance, or use of any existing or planned public work or utility in the affected streets, the director shall permit the new pipeline by issuing an addendum to the existing permit ordinance. If the director does not approve the application, the director will notify permittee in writing of the basis of the failure to approve, and permittee may re-file its application to cure any deficiency capable of cure by permittee. The director shall endeavor to process applications within 120 days after their submittal, or refiling.

(3)

Construction permit required. Permittee shall not construct or cause to be constructed a new pipeline in a street without obtaining a permit for such construction from the director in accordance with this subsection.

(d)

Updating information. Permittee shall update permit information within 30 days after changes occur. Permittee shall not transport in a pipeline any material other than materials set forth in its application and prior notices, or operate pipelines in excess of their maximum operating pressure or disable any shutoff valve, without notifying the director of such change ten days or more prior to such change. Upon request by the director, made no more frequently than annually, permittee shall certify in writing to the director that permittee's information filed with the city is true, correct and complete.

(e)

Abandoned pipeline.

(1)

Permittee shall notify the director of the location of each abandoned pipeline owned by permittee in the street as of the effective date and, on request, notify the director of the manner in which such pipeline has been retired from service, to the extent such information is available.

(2)

In the event a pipeline that is permitted under a permit ordinance becomes an abandoned pipeline, permittee shall notify the director as soon as practicable. The director may request the permittee to remove such abandoned pipeline from the street (and if objected to by permittee, only if city council so directs), and in such instance, permittee shall obtain all building permits and street-cut permits, and effect such removal within 120 days.

(3)

Permittee shall not be required to pay any fees under its permit ordinance for an abandoned pipeline following the date of its abandonment, however, permittee shall not be allowed any credit or rebate for any fees previously paid for an abandoned pipeline.

(f)

Fees. Permittee shall pay the applicable fees stated for this provision in the city fee schedule to the city on or before the stated due date.

For purposes of this subsection, a permittee and its permitted affiliates shall be considered to be one person. The foregoing fees are commensurate with the city's expenses in administering, supervising, inspecting, and regulating pipelines in streets. The city does not waive by assessing the foregoing fees and expressly reserves its right (i) under Texas Tax Code § 182.025 to make a reasonable lawful charge for the use of a street in the city by a public utility, as defined therein, to distribute gas, and (ii) to assess any other lawful fees or charges.

(g)

Miscellaneous. All costs and expenses connected with a pipeline, including without limitation costs and expenses for the operation, maintenance, repair, and insurance of the pipeline, shall be permittee's sole responsibility. The pipeline and the internal or external, structural, electrical or mechanical apparatus and hardware included therein shall at all times during the term of the permit ordinance be the sole property of permittee or the person for whom permittee operates the pipeline. Furthermore, throughout the term of a permit ordinance, permittee shall at all times, maintain, operate and repair the pipeline in accordance with all applicable laws. The city retains the right to make visual, non-invasive inspections of the pipeline and on request of the director from time to time, to require permittee to provide available records or data to demonstrate its current compliance with the terms of this article.

(h)

Restoring streets. In installing, maintaining, repairing or removing a pipeline, permittee shall not disturb water mains or sanitary or storm sewers without the approval of the director, except during an emergency. Permittee shall, at its sole cost and expense, refill and repair (including by repaving any cut in any pavement or sidewalk) all excavations made by permittee in the street or any adjacent public right-of-way or other city property and all damage to water mains and sanitary and storm sewers in connection with the maintenance, operation, repair or removal of any pipeline.

In the event that permittee fails to commence or thereafter to diligently prosecute any required repair, refilling or other work so required to be done by the permittee, following notice and opportunity to cure as provided for in this article, then the city may cause such work to be done and may recover all costs thereof from permittee together with all court costs and reasonable attorney's fees.

(i)

Removal. The city council reserves the right, subject to the terms of this article, to require permittee to remove a pipeline from the street and cause the street to be restored to the same condition, or in as good a state of repair or condition, as said street was in prior to placement or removal of the pipeline, whenever required to maintain the safe condition of the city's use of the street or for the construction of public works.

(j)

Other ordinances. Permit ordinances issued under this article are in all respects subject to the charter and ordinances of the city, including but not limited to section 40-4 of this Code, article V of this chapter, the regulations issued pursuant to section 40-128 of this Code, the Construction Code, the Fire Code, and such future charter provisions and ordinances as may be hereafter passed and adopted by the city, except that (i) the insurance and indemnity provisions of this section shall pre-empt the requirements of sections 40-136(b)(8) and 40-147 of this Code and (ii) sections 40-143 and 40-145 of this Code shall not apply to pipelines within the scope of this article.

(k)

Relocations. When found necessary by the director to facilitate the construction of public works, permittee shall lower, adjust or remove a pipeline in a street. It is the purpose of this subsection that improvements, changes and alterations in existing streets covered by this article, including right-of-way and water, sanitary sewer or storm sewer lines, shall in no wise be hampered by permittee's pipeline. All work incident to the lowering and/or relocation of permittee's pipeline, or of removing a permittee's pipeline pursuant to subsection (i) of this section, shall be done at the sole expense of permittee, unless there was no street, street easement or public way at such location prior to the installation of the pipeline or pipeline easement, in which case the city shall bear the expense of relocation or removal. In the event of a dispute, permittee shall bear the burden of proving no prior street or street easement.

(l)

Successors. The permit ordinance and all limitations and obligations imposed thereby and under this article shall inure to the benefit of and be binding upon the successors, in law or otherwise, of permittee.

(m)

Acceptance of permit ordinance. Permittee shall file a written acceptance of the permit ordinance with the city secretary within 30 days after the date of passage thereof and shall thereupon be bound by all of the terms and conditions hereof. Such written acceptance shall constitute, whether or not expressly stated therein, an acceptance of and agreement to observe and perform all limitations and obligations contained in this article. A permit ordinance shall commence and inure to the benefit of permittee, effective immediately upon the filing of such written acceptance by permittee. An acceptance by permittee or a permitted affiliate satisfies the requirements of this subsection if it is in writing, signed in the name of such person by an authorized officer, addressed to the city, and provides substantially as follows:

'[ Name of permittee or permitted affiliate ] [, on behalf of itself and each permitted affiliate named therein,] hereby fully accepts City of Houston Ordinance No. [ number of permit ordinance ] and expressly agrees to fully observe and fully perform all limitations and obligations contained in chapter 40, article IX, Code of Ordinances, City of Houston, and further certifies to the city all of permittee's information filed with the city in connection with the issuance of such permit ordinance is true, correct and complete.'

If permittee or a permitted affiliate is an entity other than a natural person, such entity shall file with such acceptance a copy of its corporate resolution or other document ("authorization") appropriate to demonstrate that such entity is duly authorized to accept the permit.

(n)

Enforcement. The city attorney or his designee shall have the right to enforce all legal rights and obligations under the permit ordinance without further authorization. Permittee shall provide to the director, director of administration and regulatory affairs and city attorney documents and records that the director, director of administration and regulatory affairs and city attorney deems reasonably necessary to determine permittee's compliance with the permit, with the exception of those documents made privileged and/or confidential by federal or state law or regulation or any documents that would be privileged under the Texas Rules of Civil Procedure.

(o)

Indemnity; release. Permittee shall release, protect, defend, and hold harmless the city, its employees, officers, and legal representatives (collectively in this section, the "city") from any and all permittee and/or third party claims, demands, and liability, including defense costs, relating in any way to damages, claims, or fines (collectively, "claims") arising by reason of or in connection with: (1) the city's actual or alleged negligence arising solely from the grant of, administration of, or operations under a permit ordinance, including but not limited to the city's approval of work plans, city inspection of the permittee's pipelines or the repair or maintenance thereof, the city's receipt or failure to receive insurance policies, or similar acts or omissions of the city in connection with its rights, duties, or obligations under the permit ordinance together with (2) permittee's actual or alleged negligence in the construction, maintenance, or operation of its pipelines in the rights of way under the permit ordinance, provided, however, that the permittee shall not be required to indemnify or pay the defense costs of the city where: (1) the claims arise in whole or in part out of permittee's compliance with the city's directives (other than those ordering compliance with applicable laws, ordinances, rules, or regulations) relating to the time, place, or manner of the activities of permittee alleged or found to be negligent; and additionally (2) there is a finding in a final, nonappealable order or judgment that the city is 51 percent or more at fault.

(p)

Insurance. Permittee shall provide and maintain in full force and effect during the term of its permit ordinance at least the following insurance:

(1)

Worker's compensation at statutory limits;

(2)

Employer's liability, including bodily injury by accident and by disease, for $500,000.00 combined single limit per occurrence and a 12-month aggregate policy limit of $1,000,000.00;

(3)

Commercial general liability coverage, including blanket contractual liability, products and completed operations, personal injury, bodily injury, broad form property damage, operations hazard, pollution, explosion, collapse and underground hazards for $5,000,000.00 per occurrence and a 12-month aggregate policy limit of $10,000,000.00; and

(4)

Automobile liability insurance (for automobiles used by the permittee in the course of its performance under the permit, including employer's non-ownership and hired auto coverage) for $2,000,000.00 combined single limit per occurrence.

The director of administration and regulatory affairs shall adjust the above minimum liability limits every five years during the term to compensate for the effects of inflation and with the objective to reestablish the value of coverage required as of the effective date.

Each policy or an endorsement thereto, except those for worker's compensation and employer's liability, shall name the city and its officers, employees and agents as additional insured parties, but limited to risks indemnified pursuant to subsection (o) of this section. If any such policy is written as "claims made" coverage and the city is required to be carried as an additional insured, then permittee shall purchase policy period extensions so as to provide coverage to the city for a period of at least two years after the last date that the permit ordinance is in effect. No deductible shall exceed ten percent of the minimum limits of liability or one percent of the consolidated net worth of permittee and its permitted affiliates, whichever is greater.

Permittee shall assume and bear any claims or losses to the extent of deductible amounts and waives any claim it may ever have for the same against the city and its officers, agents or employees in respect of any covered event.

All such policies and certificates shall contain an agreement that the insurer shall notify the director of administration and regulatory affairs in writing not less than 30 days before any material change, reduction in coverage or cancellation of any policy. Permittee shall give written notice to the director of administration and regulatory affairs within five days of the date upon which total claims by any party against permittee reduce the aggregate amount of coverage below the amounts required by the permit.

Each policy must contain an endorsement to the effect that the issuer waives any claim or right in the nature of subrogation to recover against the city, its officers, agents or employees.

Each policy must contain an endorsement that such policy is primary insurance to any other insurance available to the city as an additional insured with respect to claims arising thereunder.

Permittee shall be entitled to purchase and maintain the insurance required under this subsection under so-called "blanket policies," provided the coverage thereunder is at least at the levels contained herein and is otherwise adequate in keeping with prudent underwriting standards.

At the time of application, and at the director of administration and regulatory affairs' request, permittee shall provide certificates of insurance reflecting that the terms of this subsection have been met. Notwithstanding the proof of insurance requirements set forth in this subsection, permittee, throughout the term of its permit, continuously and without interruption, shall maintain in force the required insurance coverages set forth in this subsection.

In lieu of maintaining policies of insurance described in this subsection, permittee may elect to self-insure against the risks described in this subsection, provided that permittee submits to the director documents showing either (i) self-insurance reserves or other assets sufficient to pay judgments equal to the minimum limits of liability set forth in this subsection, or (ii) a net worth that exceeds ten times the aggregate minimum limits of liability set forth in this subsection. If, during the term of a permit ordinance, any such self-insurance program ceases or the self-insured's assets, reserves or net worth are no longer adequate to provide the above coverages, permittee shall immediately notify the city of such lapse of coverage and obtain or cause to be obtained commercial insurance in accordance with the requirements of this subsection within 30 days. If permittee self-insures, permittee has a duty to defend the city in the same manner as a permittee with insurance in any suit seeking damages against the city in connection with permittee's pipeline, and permittee will pay all costs and expenses of such defense or reimburse the city for all costs and expenses incurred by the city for such defense."

(q)

Events of termination. A permit ordinance issued under this article shall, at the option of the city council, terminate (as to the affected pipeline or portion thereof only in the event of an occurrence under items (1), (5) or (6) of this subsection) upon the occurrence of any one or more of the events described below (collectively referred to herein as 'events of termination'). Each event of termination is a separate and independent basis for termination of the permit (or application thereof to the affected pipeline or portion thereof, as applicable). The events of termination are as follows:

(1)

The city council, in its legislative discretion, determines that the existence or operation of a pipeline, or any part thereof, constitutes a hazard, nuisance or other threat to the public health, safety or welfare or that the existence or continued operation of the pipeline, or any part thereof, interferes with the current or prospective use of a street. Termination under this subsection shall be by ordinance and become effective after permittee has been given 180 days' notice of such termination, unless circumstances comprising a bona fide emergency and an imperative public necessity warrant more immediate termination.

(2)

Expiration of the term of the permit ordinance.

(3)

Permittee fails to timely pay any of the fees herein provided for or is delinquent in the payment of any charges due under the permit ordinance.

(4)

Permittee fails to maintain at any time the insurance as required in this article.

(5)

Permittee fails to commence or thereafter to diligently prosecute to completion any required maintenance, repair or other work required by this article to be done by permittee within 30 days after being notified of such required action by the director. In the event of an emergency, notice shall be deemed given and received after telephone contact with an authorized officer or director of permittee, and permittee shall commence the requested repairs within 24 hours.

(6)

Permittee abandons the pipeline.

(7)

Permittee fails to file a written acceptance of the permit ordinance within the time and in the manner prescribed in this article.

(8)

Permittee fails to comply with any of the terms, conditions or provisions of the permit ordinance or this article.

(9)

Permittee commences dissolution or some other similar proceeding that would impair, modify, alter, extinguish or significantly change permittee's ability to perform permittee's obligations under the permit ordinance.

Upon the occurrence of an event of termination described in item (1) or (2) of this subsection, such an event of termination may not be cured by permittee and the permit ordinance shall terminate (only as to the affected pipeline in the event of termination pursuant to item (1), (5), or (6) of this subsection) in the manner and in accordance with the applicable provisions of said subsections and the permit ordinance. Upon the occurrence of one or more of the events of termination other than in item (1) or (2) of this subsection, the director or director of administration and regulatory affairs shall so notify permittee in the manner provided in the permit ordinance. After such notice, permittee shall have 30 days in which to cure the event of termination. Should permittee fail or refuse to cure the event of termination within the 30-day time period prescribed, city council may terminate the permit ordinance (only as to the affected pipeline or portion thereof in the event of termination pursuant to item (5) or (6) of this subsection; provided that if permittee commences efforts to cure such event of termination within 30 days after receipt of such written notice and thereafter prosecutes such efforts with reasonable diligence in the sole determination of city council until such event of termination is cured, then such event of termination shall cease to exist and no action to terminate the permit ordinance or an application thereof will be taken. Failure of the city to enforce its rights and remedies under this section with respect to one event of termination shall not operate as a waiver of the city's right to thereafter enforce its rights and remedies with respect to any such continuing event of termination or another event of termination. Termination of the permit ordinance or an application thereof shall not waive, release or satisfy any duty, covenant or obligation of permittee under this article or the permit ordinance which permittee has not fully performed as of the time of termination.

(r)

Transfer of authority.

(1)

Notice. A person may acquire and own pipeline prior to being permitted pursuant to this article if (i) the permittee notifies the city within ten days of the transfer of ownership, and (ii) permittee retains all responsibilities associated with the permit until the city approves the transfer of the permit.

(2)

Prohibition. Neither the permit ordinance nor the permit granted thereby may be assigned, in whole or in part, without the prior consent of the city council expressed by resolution or ordinance, and then only under such conditions as may therein be prescribed. No assignment in law or otherwise shall be effective until the assignee has filed with the director an instrument, duly executed, reciting the fact of such assignment, accepting the terms of this article, and agreeing to comply with all of the provisions of the permit ordinance. A mortgage or other pledge of assets in a bona fide lending transaction shall not be considered an assignment for the purposes of this section.

(3)

Process. Upon receipt of a request for consent to an assignment, the director shall diligently investigate the request in a timely manner and recommend placement of the request on the city council agenda at the earliest practicable time. The city council shall proceed to act on the request within a reasonable period of time.

(4)

Scope of review. In reviewing a request for consent to an assignment, the city may inquire into the technical and financial qualifications of the prospective assignee, and permittee shall assist the city in so inquiring.

(5)

Assignments not requiring approval. Notwithstanding anything to the contrary contained in this section, the approval of the city shall not be required for any assignment (1) to any permitted affiliate; (2) to any entity with which permittee or an affiliate of permittee shares joint ownership of the pipeline, as long as permittee is retained as the manager of day-to-day pipeline operations; or (3) to any entity that is a holder of a then current permit ordinance enacted by the city on or after the effective date. Permittee shall give written notice of such assignment to the director.

(6)

Release. Upon receiving the director's consent to an assignment or, in the event of an assignment qualifying under subsection (r)(5), upon giving notice under subsection (r)(5), the assigning permittee shall be relieved of all conditions, obligations, and liabilities arising or which might arise under the assigned permit, from and after the date of assignment.

(s)

Cathodic protection. Any cathodic protection system used with permittee's pipelines shall not cause any existing public facilities in the vicinity of the pipeline and known to permittee to be sacrificed or experience materially accelerated corrosion as a result of the operation of such cathodic protection system.

(Ord. No. 01-1078, § 2, 12-5-01; Ord. No. 02-399, § 84, 5-15-02; Ord. No. 08-52, §§ 68, 69, 1-16-08, eff. 1-26-08; Ord. No. 2011-1168, § 13, 12-14-2011)