88R8013 JAM-F

By: Longoria H.B. No. 4278

A BILL TO BE ENTITLED

AN ACT

relating to the establishment by the Railroad Commission of Texas of the orphaned well Bitcoin mining partnership program.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 89, Natural Resources Code, is amended by adding Subchapter D-1 to read as follows:

SUBCHAPTER D-1. ORPHANED WELL BITCOIN MINING PARTNERSHIP PROGRAM

Sec. 89.101. DEFINITIONS. In this subchapter:

(1) "Fund" means the orphaned well Bitcoin mining partnership program fund.

(2) "Orphaned well" has the meaning assigned by Section 89.047.

(3) "Program" means the orphaned well Bitcoin mining partnership program established under this subchapter.

(4) "Program participant" means a Bitcoin miner who assumes operation and regulatory responsibility for an orphaned well through the program.

Sec. 89.102. PROGRAM. The commission shall establish the orphaned well Bitcoin mining partnership program through which:

(1) a program participant will assume operation and regulatory responsibility for an orphaned well, including:

(A) liability for plugging, remediating, or reclaiming the well to commission standards; and

(B) temporary control of:

(i) the energy produced from the well for which liability is assumed in a manner established by commission rule; and

(ii) a portion of the surface estate at the well location necessary to mine Bitcoin at the location, as determined by the commission; and

(2) the commission may loan money from the fund to a program participant to facilitate Bitcoin mining at the location of the well.

Sec. 89.103. FUND. (a) The orphaned well Bitcoin mining partnership program fund is a special account in the general revenue fund created for the purpose of providing loans to program participants and the payment of costs associated with plugging orphaned wells under Section 89.109(c).

(b) The fund consists of:

(1) money received from the federal government under:

(A) the Infrastructure Investment and Jobs Act (Pub. L. No. 117-58); or

(B) Pub. L. No. 117-169, commonly cited as the Inflation Reduction Act;

(2) deposits to the fund made under Section 89.111;

(3) money from any source transferred or deposited to the credit of the fund at the commission's discretion as authorized by law;

(4) any other revenue that the legislature by statute dedicates for deposit to the credit of the fund;

(5) money from gifts, grants, or donations to the fund; and

(6) investment earnings and interest earned on amounts credited to the fund.

Sec. 89.104. IDENTIFICATION OF ORPHANED WELLS. The commission shall identify orphaned wells appropriate for inclusion in the program.

Sec. 89.105. PUBLICATION OF CERTAIN INFORMATION REGARDING ORPHANED WELLS. The commission shall make publicly accessible on the commission's Internet website:

(1) any information required as a condition of the receipt or use of money described by Section 89.103(b)(1); and

(2) information on each well identified under Section 89.104, including:

(A) the amount of methane or any other natural gas reasonably expected to be produced from the well;

(B) the location of the well;

(C) how long the well has been abandoned;

(D) an estimate of expenses required to plug, remediate, or reclaim the well to commission standards;

(E) whether the well is on state-owned or private land;

(F) information on the last known operator of the well;

(G) any information regarding the integrity of the well or well casing; and

(H) any other information the commission considers relevant to the program.

Sec. 89.106. SOLICITATION OF BIDS. (a) At the commission's discretion, but not less than once per year, the commission shall solicit bids through the commission's Internet website from potential program participants to assume liability for an orphaned well for which information is published under Section 89.105.

(b) A bid submission under Subsection (a) must contain:

(1) legal documents showing the structure of the Bitcoin mining company;

(2) documents demonstrating the company's ability to successfully mine Bitcoin;

(3) a reasonable estimate of:

(A) when Bitcoin mining would begin at the location;

(B) how long the Bitcoin mining would occur at the location;

(C) the initial investment from the fund the company would require to begin Bitcoin mining at the location;

(D) how much Bitcoin would be mined at the location through participation in the program;

(E) conditions necessary for Bitcoin mining to be profitable at the location; and

(F) the money the company will contribute to the fund in the form of Bitcoin during participation in the program;

(4) proof of financial responsibility for the company's ability to ensure proper plugging of the well and cleanup of the location regardless of the success of the mining operation at the location; and

(5) any other information the commission considers relevant.

(c) Information submitted to the commission under Subsection (b) may not be publicly disclosed. The commission may provide summary statistics regarding information received in the bids.

Sec. 89.107. SELECTION OF BIDS; ASSESSMENT PERIOD. (a) After the close of a bidding period as determined by the commission, the commission shall select bids based on:

(1) the ability of the potential program participant to successfully and safely mine at the location;

(2) the time frame over which the potential program participant will mine on the well; and

(3) the initial cost and return on investment for the program.

(b) The commission shall announce the selection of bids on the commission's Internet website and must include for a bid selected a redacted version of the bidder's proposal that removes sensitive business information of the bidder.

(c) The commission shall allow a potential program participant whose bid was selected under this section not more than 60 days from the date the bid is awarded to perform an assessment of the orphaned well for which the bid was awarded. The assessment must include the ability to:

(1) perform tests for mechanical integrity;

(2) perform tests for surface integrity; and

(3) determine the amount of natural gas and or oil the well can produce.

(d) Subject to Subsection (e), not later than the 60th day after the date a bid is selected under Subsection (a), a potential program participant whose bid was selected shall give notice to the commission as to whether the potential program participant will participate in the program. A potential program participant required to give notice under this section assumes responsibility for plugging, remediating, or reclaiming the orphaned well for which the potential program participant's bid was selected if the potential program participant does not give notice as required by this subsection.

(e) The assessment period described by Subsection (c) may be extended by the commission for an additional 60 days on application of the potential program participant whose bid was selected.

(f) Subject to an extension provided under Subsection (e), information collected under Subsection (c) must be reported to the commission not later than the 60th day after the end of the assessment period described by Subsection (c).

(g) A person who notifies the commission under Subsection (d) that the person will not participate in the program must provide to the commission a reason for that decision.

Sec. 89.108. BITCOIN MINING AT LOCATION OF ORPHANED WELL. (a) Before beginning Bitcoin mining, a program participant must:

(1) use a third-party organization to report to the commission the amount of natural gas emissions currently being emitted from the well;

(2) post a bond to the state in an amount determined by the commission to ensure that the orphaned well will be plugged, remediated, or reclaimed to commission standards; and

(3) if the owner of the mineral rights of the orphaned well is known, negotiate with that owner for royalty payments for oil or gas produced from the well.

(b) A program participant who assumes control over an orphaned well assumes all liability for plugging, remediating, or reclaiming the well to commission standards.

(c) The commission shall remove from any required plugging schedule a well for which a program participant has assumed liability under this section.

Sec. 89.109. COSTS. (a) Subject to Subsection (b), the financial responsibility of a program participant to plug, remediate, or reclaim an orphaned well is limited to three times the initial estimate by the commission if the program participant uses a third party to provide to the commission:

(1) information about the well integrity;

(2) data on natural gas emissions from the well;

(3) information related to any potential groundwater contamination; and

(4) information demonstrating that Bitcoin mining at the location did not significantly cause the cost of plugging, remediating, or reclaiming the well to increase.

(b) The limitation on the financial responsibility of a program participant described by Subsection (a) does not apply to additional costs attributable to actions of the program participant.

(c) The commission shall pay from the fund the costs associated with the plugging, remediation, or reclamation of an orphaned well that exceed the limitation described by Subsection (a), other than costs described by Subsection (b).

Sec. 89.110. LIABILITY. A program participant does not incur any liability through participation in the program other than:

(1) the duty to plug, remediate, or reclaim to commission standards an orphaned well they have taken control of through the program; and

(2) the repayment of a loan provided through the program.

Sec. 89.111. REPAYMENT OF LOAN; FORM OF PAYMENT. (a) The commission shall establish the terms and conditions of the repayment of any money from the fund loaned to a program participant.

(b) A program participant may pay any money owed to the commission in Bitcoin.

Sec. 89.112. ANNUAL REPORT. A program participant shall submit to the commission an annual report documenting progress on the plugging, remediation, or reclamation of the orphaned well that was the subject of the participant's selected bid.

Sec. 89.113. DUTY TO PLUG. After the termination of the period established in the bid, a program participant shall plug, remediate, or reclaim the orphaned well using a service approved by the commission.

Sec. 89.114. THIRD-PARTY AGREEMENTS. A program participant may enter into an agreement with a third party to facilitate the transfer of oil from an orphaned well to market.

Sec. 89.115. ASSUMPTION OF OWNERSHIP. (a) At the end of the agreed-upon mining period, a program participant may take legal ownership of the orphaned well as otherwise provided by law.

(b) A program participant who intends to take ownership of an orphaned well that is part of the program shall send notice to the commission not later than 12 months before the well is scheduled to be plugged, remediated, or reclaimed.

(c) Assumption of ownership under this section does not remove the responsibility of a program participant to plug, remediate, or reclaim the orphaned well.

Sec. 89.116. CONFLICT WITH OTHER LAW. This subchapter prevails to the extent of any conflict with another provision of this chapter.

SECTION 2. This Act takes effect September 1, 2023.