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A BILL TO BE ENTITLED
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AN ACT
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relating to the reduction and plugging of orphaned oil and gas |
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wells; providing for the imposition of a fee and an exemption from |
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certain taxes and fees. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 81.067(c), Natural Resources Code, is |
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amended to read as follows: |
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(c) The fund consists of: |
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(1) proceeds from bonds and other financial security |
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required by this chapter and benefits under well-specific plugging |
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insurance policies described by Section 91.104(c) that are paid to |
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the state as contingent beneficiary of the policies, subject to the |
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refund provisions of Section 91.1091, if applicable; |
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(2) private contributions, including contributions |
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made under Section 89.084; |
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(3) expenses collected under Section 89.083; |
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(4) fees imposed under Section 85.2021; |
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(5) costs recovered under Section 91.457 or 91.459; |
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(6) proceeds collected under Sections 89.085 and |
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91.115; |
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(7) interest earned on the funds deposited in the |
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fund; |
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(8) oil and gas waste hauler permit application fees |
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collected under Section 29.015, Water Code; |
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(9) costs recovered under Section 91.113(f); |
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(10) hazardous oil and gas waste generation fees |
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collected under Section 91.605; |
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(11) oil-field cleanup regulatory fees on oil |
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collected under Section 81.116; |
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(12) oil-field cleanup regulatory fees on gas |
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collected under Section 81.117; |
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(13) fees for a reissued certificate collected under |
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Section 91.707; |
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(14) fees collected under Section 91.1013; |
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(15) fees collected under Section 89.088; |
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(16) fees collected under Section 91.142; |
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(17) fees collected under Section 91.654; |
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(18) costs recovered under Sections 91.656 and 91.657; |
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(19) fees collected under Section 81.0521; |
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(20) fees collected under Sections 89.024 and 89.026; |
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(21) legislative appropriations; |
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(22) any surcharges collected under Section 81.070; |
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(23) fees collected under Section 91.0115; |
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(24) fees collected under Subchapter E, Chapter 121, |
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Utilities Code; |
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(25) fees collected under Section 27.0321, Water Code; |
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(26) fees collected under Section 81.071; [and] |
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(27) money collected under Section 81.021; and |
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(28) fees collected under Section 89.0475. |
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SECTION 2. Section 89.002(a), Natural Resources Code, is |
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amended by adding Subdivision (14) to read as follows: |
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(14) "Operator affected by an orphaned well" means: |
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(A) an operator of an oil or gas well that |
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accesses a productive horizon also accessed by an orphaned well; or |
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(B) an operator of an oil or gas well with a good |
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faith claim to access a productive horizon also accessed by an |
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orphaned well. |
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SECTION 3. Section 89.044(a), Natural Resources Code, is |
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amended to read as follows: |
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(a) The commission [or its employees or agents], the |
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operator, an operator affected by an orphaned well, [or] the |
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nonoperator, or an employee or agent of one of those persons, on |
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proper identification, may enter the land of another for the |
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purpose of plugging or replugging a well that has not been properly |
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plugged. An action to prevent the entry of land of another for the |
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purpose of plugging or replugging a well that has not been properly |
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plugged may not be sustained against a person authorized by this |
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subsection to enter the land for that purpose. |
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SECTION 4. The heading to Section 89.047, Natural Resources |
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Code, is amended to read as follows: |
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Sec. 89.047. ORPHANED WELL REDUCTION PROGRAM: OPERATORS |
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DESIGNATED IN 2006 OR 2007. |
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SECTION 5. Subchapter C, Chapter 89, Natural Resources |
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Code, is amended by adding Section 89.0475 to read as follows: |
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Sec. 89.0475. REDUCTION AND PLUGGING OF ORPHANED WELLS: |
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OPERATORS DESIGNATED BEGINNING IN 2024. (a) In this section, |
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"operator in good standing" and "orphaned well" have the meanings |
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assigned by Section 89.047. |
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(b) The commission shall designate a person who is an |
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operator in good standing as the operator of an orphaned well if the |
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person files with the commission: |
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(1) a factually supported claim based on a recognized |
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legal theory to a continuing possessory right in the mineral estate |
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accessed by the well, such as evidence of a current oil and gas |
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lease or a recorded deed conveying a fee interest in the mineral |
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estate; |
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(2) a completed certificate of compliance; and |
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(3) a nonrefundable fee in the amount of $250. |
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(c) A fee collected under Subsection (b)(3) shall be |
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deposited to the credit of the oil and gas regulation and cleanup |
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fund. |
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(d) A person who is designated as the operator of an |
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orphaned well on or after January 1, 2024, is entitled to receive: |
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(1) a nontransferable exemption from severance taxes |
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for production from the well as provided by Section 202.060, Tax |
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Code, until the fifth anniversary of the date the commission |
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designates the person as the operator of the well; |
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(2) a nontransferable exemption from the fees provided |
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by Sections 81.116 and 81.117 for production from the well until the |
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fifth anniversary of the date the commission designates the person |
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as the operator of the well; and |
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(3) a payment from the commission in the amount |
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described by Subsection (f) using money from the oil and gas |
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regulation and cleanup fund. |
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(e) A person who is designated as the operator of an |
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orphaned well is entitled to a payment under Subsection (d)(3) only |
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if: |
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(1) not later than the first anniversary of the date |
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the commission designates the person as the operator of the well: |
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(A) the person plugs the well in accordance with |
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commission rules; or |
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(B) the commission approves the application of |
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the owner of the surface estate of the tract of land on which the |
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well is located to condition the well for fresh water production and |
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the person designated as the operator of the well plugs the well in |
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accordance with commission rules up to the base of the usable |
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quality water stratum; and |
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(2) not later than the end of the state fiscal year |
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following the state fiscal year in which the person plugs the well, |
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the person submits to the commission: |
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(A) a request for reimbursement for plugging the |
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well; and |
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(B) documentation of the cost of plugging the |
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well. |
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(f) The amount to which a person is entitled under |
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Subsection (d)(3) is equal to 50 percent of the lesser of: |
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(1) the documented well-plugging costs; or |
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(2) the average cost incurred by the commission in the |
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preceding 24 months in plugging similar wells located in the same |
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county or general area. |
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(g) The commission shall make payments to persons under |
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Subsection (d)(3) annually in the same order the commission |
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determines the persons to be entitled to the payments. The |
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aggregate amount of payments in a state fiscal year under |
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Subsection (d)(3) may not exceed $500,000. The commission may, in |
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its discretion, make a payment to a person under Subsection (d)(3) |
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in the fiscal year following the fiscal year in which the well was |
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plugged. A person may not receive: |
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(1) more than one payment under Subsection (d)(3) for |
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the same well; or |
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(2) cumulative payments in an amount that exceeds the |
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amount of the bond, letter of credit, or cash deposit the person has |
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filed with the commission under Section 91.104. |
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(h) The commissioner shall include wells plugged under this |
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section in: |
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(1) the commission's well-plugging performance |
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metrics; and |
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(2) any monthly report produced by the commission |
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relating to well-plugging activity. |
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SECTION 6. The heading to Section 89.048, Natural Resources |
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Code, is amended to read as follows: |
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Sec. 89.048. PLUGGING OF WELL BY SURFACE ESTATE OWNER OR |
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AFFECTED OPERATOR. |
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SECTION 7. Section 89.048, Natural Resources Code, is |
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amended by amending Subsections (b), (c), and (d) and adding |
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Subsections (c-1) and (d-1) to read as follows: |
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(b) The owner of an interest in the surface estate of a tract |
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of land on which an orphaned well is located or an operator affected |
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by an orphaned well may contract with a commission-approved well |
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plugger to plug the well. |
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(c) If the surface estate owner or an operator affected by |
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an orphaned well enters into a contract under Subsection (b), the |
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surface estate owner, operator affected by an orphaned well, or |
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well plugger shall: |
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(1) not later than the 15th [30th] day before the date |
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the well is plugged, mail notice of its intent to plug the well to |
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the operator of the well at the operator's address as shown by the |
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records of the commission; |
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(2) assume responsibility for the physical operation |
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and control of the well as shown by a form the person files with the |
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commission and the commission approves; |
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(3) file a bond, letter of credit, or cash deposit |
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covering the well as required by Section 91.107; and |
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(4) plug the well in accordance with commission rules. |
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(c-1) On satisfaction of commission requirements, the |
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commission shall issue to a surface estate owner, operator affected |
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by an orphaned well, or well plugger, regardless of whether the |
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person has a good faith claim to the mineral estate accessed by an |
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orphaned well, a certificate of compliance and transportation |
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authority or similar authorization showing the person's assumption |
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of control of the well under Subsection (c)(2) for the purpose of |
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plugging or replugging the well. |
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(d) On successful plugging of the well by the well plugger, |
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the surface estate owner or an operator affected by an orphaned well |
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may submit documentation to the commission of the cost of the |
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well-plugging operation. The commission shall reimburse the |
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surface estate owner or an operator affected by an orphaned well |
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from money in the oil and gas regulation and cleanup fund in an |
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amount not to exceed 50 percent of the lesser of: |
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(1) the documented well-plugging costs; or |
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(2) the average cost incurred by the commission in the |
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preceding 24 months in plugging similar wells located in the same |
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county or general area. |
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(d-1) The commissioner shall include wells plugged under |
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this section in: |
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(1) the commission's well-plugging performance |
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metrics; and |
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(2) any monthly report produced by the commission |
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relating to well-plugging activity. |
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SECTION 8. Sections 202.060(b) and (c), Tax Code, are |
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amended to read as follows: |
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(b) The commission shall issue a certificate to a person who |
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is designated by the commission under Section 89.047 or 89.0475, |
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Natural Resources Code, as the operator of an orphaned well. The |
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certificate must identify the operator to whom and the well for |
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which the certificate is issued. |
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(c) Hydrocarbons produced from the well identified in the |
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certificate qualify for a severance tax exemption for the period |
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described by Section 89.047 or 89.0475, Natural Resources Code, as |
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applicable. |
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SECTION 9. This Act takes effect January 1, 2024. |