The Texas Railroad Commission (RRC), working in partnership with the United States Department of Energy and the oil and gas industry it regulates, is implementing a strategy for improving efficiency in regulations and significantly reducing administrative operating costs through the Electronic Compliance and Approval Process (ECAP). The project will streamline regulatory compliance and reporting by providing the ability to electronically submit, process, and query oil and gas applications and reports through the Internet-based ECAP system. Implementation of an ECAP drilling permit pilot project began September 1999 after funding resources were secured--a $700,000 grant from the U.S. Department of Energy and an appropriation of $1.4 million from the Texas Legislature. The pilot project involves creating the ability to file, review, and approve a well's drilling permit application through a completely electronic process. The pilot project solution will ultimately provide the infrastructure, technology, and electronic modules to enable the filing of all compliance permits and performance reports through the internet from a desktop computer. The pilot project was conducted in three phases. The first phase, implemented May 2000, provided the infrastructure that allows the electronic filing and approval of simple drilling permit applications, associated fees, and attachments. The official ''roll-out'' of ECAP and the first electronically filed drilling permit application occurred on May 11, 2000 in Dallas in conjunction with an Internet Workshop sponsored by the Petroleum Technology Transfer Council. After the completion of Phase I, the ECAP team conducted an extensive review of progress to date and analyzed requirements and opportunities for future steps. The technical team identified core infrastructure modifications that would facilitate and better support future development and expansion of the ECAP system and work began on database structure modifications. The second phase of the pilot project was implemented in October 2002. Phase II was the complete rewrite of the ECAP core system and included internal workflow processing capabilities and the ability to process more complex new drill permits such as horizontal, directional, pooled acreage and non-concurrent production restrictions all with additional attachments and reports. Phase III, completed in August 2003, concluded the ECAP pilot project. It allowed the processing of all types of drilling permits and completed the integration with existing geographic information systems, mainframe and electronic document management systems as well as the state payment portal. This report contains detailed information documenting accomplishments and problems encountered during the ECAP pilot project and plans for future steps.