Do I need pollution coverage to haul produced water?

Under the Railroad Commission's waste rules (16 Texas Administrative Code Chapter 4), "oil and gas wastes" include "salt water, brine, sludge, drilling mud, and other liquid, semiliquid, or solid waste material." Produced water is defined separately as water brought to the surface from an underground formation during oil and gas activity.

If you haul that waste for hire off the lease, the Commission requires a permit. Section 4.193(a) says a person who transports oil and gas waste for hire "by any method other than by pipeline" may not haul or dispose of it off the lease, unit, or property where it was generated without a valid hauler permit. The permit is applied for on Form WH-1, with vehicles listed on Form WH-2, and each truck must be marked on both sides and the rear with the permittee's name and permit number in characters at least three inches high.

The permit is a regulatory requirement. It does not insure anything. The spill risk still has to be covered. See water hauling insurance for the full picture.

Pollution exposure for a water hauler sits in three places, and each one is handled differently.

Standard commercial auto policies contain a pollution exclusion. The Insurance Risk Management Institute notes that a standard ISO commercial auto policy "contains a pollution exclusion that would preclude coverage for environmental restitution." The ISO endorsement CA 99 48, "Pollution Liability: Broadened Coverage for Covered Autos," modifies that exclusion. Per IRMI, with CA 99 48 attached "the pollution exclusion is modified but not totally deleted."

So the question for a produced water hauler is not "do I have auto liability," it is "what does my auto policy say about pollutants I am carrying, and what happens at the load line." Many MSAs list pollution liability as a separate requirement for exactly this reason. Our oilfield pollution liability page covers contractors pollution liability in more detail.

Federal rules in 49 CFR Part 387 require minimum financial responsibility for for-hire motor carriers in interstate commerce, and for carriers of hazardous materials, hazardous substances, or hazardous wastes in interstate or intrastate commerce (vehicles under 10,001 lbs GVWR are mostly excepted). The regulation defines "public liability" to include "liability for environmental restoration," meaning restitution for natural resource damage from the accidental release of a commodity the carrier transported, including removal costs.

Proof of that financial responsibility is often the MCS-90 endorsement. IRMI notes that the endorsement "does not actually provide insurance except on a reimbursement basis": if the insurer pays a claim the policy would not otherwise cover, it can recover that payment from you. In plain terms, MCS-90 protects the public, and you can end up paying it back. It does not fill the pollution gap in your policy.

Whether your loads and routes put you under Part 387 depends on interstate versus intrastate operation and how the material is classified. That classification question belongs with your DOT compliance contact. See oilfield auto insurance and MCS-90 and what MCS-90 is.

The Texas Oilfield Anti-Indemnity Act (Civil Practice and Remedies Code Chapter 127) does not apply to "property injury that results from pollution, including cleanup and control of the pollutant." That means the pollution indemnity in your MSA is generally governed by the contract itself, not limited by that statute. Many MSAs allocate pollution by where it starts, for example the contractor taking responsibility for spills from its own equipment above the surface. Read that clause carefully, because it tells you what your pollution coverage needs to pay for. See Texas oilfield anti-indemnity act.