1-1  By:  Cook (Senate Sponsor - Sims)                     H.B. No. 2705
    1-2        (In the Senate - Received from the House May 3, 1993;
    1-3  May 4, 1993, read first time and referred to Committee on Natural
    1-4  Resources; May 11, 1993, reported favorably by the following vote:
    1-5  Yeas 8, Nays 0; May 11, 1993, sent to printer.)
    1-6                            COMMITTEE VOTE
    1-7                          Yea     Nay      PNV      Absent 
    1-8        Sims               x                               
    1-9        Truan              x                               
   1-10        Armbrister                                    x    
   1-11        Barrientos         x                               
   1-12        Bivins             x                               
   1-13        Brown              x                               
   1-14        Carriker           x                               
   1-15        Lucio              x                               
   1-16        Montford                                      x    
   1-17        Ratliff                                       x    
   1-18        Shelley            x                               
   1-19                         A BILL TO BE ENTITLED
   1-20                                AN ACT
   1-21  relating to the salvage and disposition of oil and gas well-site or
   1-22  other facility equipment or hydrocarbons on plugging or cleanup by
   1-23  the state and to the oil-field cleanup fund.
   1-24        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-25        SECTION 1.  Section 89.002(a), Natural Resources Code, is
   1-26  amended by adding Subdivisions (5), (6), (7), and (8) to read as
   1-27  follows:
   1-28              (5)  "Well-site equipment" means any production-related
   1-29  equipment or materials specific to the well being plugged,
   1-30  including motors, pumps, pump jacks, tanks, tank batteries,
   1-31  separators, compressors, casing, tubing, and rods.
   1-32              (6)  "Lease" means the lease on which a well made the
   1-33  subject of a plugging contract is located.
   1-34              (7)  "Delinquent inactive well" means an unplugged well
   1-35  that has had no reported production, disposal, injection, or other
   1-36  permitted activity for a period of greater than 12 months and for
   1-37  which, after notice and opportunity for a hearing, the commission
   1-38  has not extended the plugging deadline.
   1-39              (8)  "Plugging" includes replugging.
   1-40        SECTION 2.  Section 89.043, Natural Resources Code, is
   1-41  amended by amending Subsection (b) and adding Subsections (c), (d),
   1-42  and (e) to read as follows:
   1-43        (b)  If a well is leaking salt water, oil, or gas or is
   1-44  likely to leak salt water, oil, or gas, and the leakage will cause
   1-45  or is likely to cause a serious threat of pollution or injury to
   1-46  the public health, the commission, through its employees or agents,
   1-47  may direct the operator to take remedial action or to plug the well
   1-48  or may plug or replug the well without holding a hearing under
   1-49  Section 89.041 of this code or giving notice under Subsection (c)
   1-50  of this section.
   1-51        (c)  On or before the 30th day before the date the commission
   1-52  enters into a contract to plug a delinquent inactive well, the
   1-53  commission shall send a notice by certified mail to the operator of
   1-54  the well at the address last reported to the commission as required
   1-55  by Section 91.142 of this code and commission rules.  The notice
   1-56  shall direct the operator to plug the well and shall state that:
   1-57              (1)  the commission may plug the well unless the
   1-58  operator requests a hearing not later than the 10th day after the
   1-59  date the operator receives the notice;
   1-60              (2)  if the commission plugs the well, all well-site
   1-61  equipment will be presumed to have been abandoned and the
   1-62  commission may dispose of the equipment and hydrocarbons from the
   1-63  well as provided by Section 89.085 of this code; and
   1-64              (3)  the attorney general may file suit against the
   1-65  operator to recover the plugging costs if the commission plugs the
   1-66  well and the operator fails to reimburse the commission for the
   1-67  plugging costs.
   1-68        (d)  The operator of a well made the subject of a prior
    2-1  commission final order directing that it be plugged is not entitled
    2-2  to a second hearing under this section.
    2-3        (e)  The commission shall file for record a copy of the
    2-4  notice in the office of the county clerk of the county in which the
    2-5  well is located.  The copy of the notice filed in the office of the
    2-6  county clerk must contain the section, block, survey, and abstract
    2-7  number, when available to the commission, of the land on which the
    2-8  well is located.  The clerk shall record the notice in the real
    2-9  property records of the county.  The commission shall furnish a
   2-10  copy of the notice to a holder of a lien on the well or a
   2-11  nonoperator on that person's request.  For purposes of title
   2-12  insurance policies issued under authority of Chapter 9, Insurance
   2-13  Code, this notice is not a notice of enforcement or violation of
   2-14  law, ordinance, or governmental regulation unless the notice
   2-15  contains a legally sufficient description of the specific land on
   2-16  which the well is located.
   2-17        SECTION 3.  Section 89.083, Natural Resources Code, is
   2-18  amended to read as follows:
   2-19        Sec. 89.083.  FIRST LIEN ON EQUIPMENT; CAUSE OF ACTION IF
   2-20  COMMISSION PLUGS.  (a)  If a well has not been plugged by the
   2-21  deadline for plugging established by commission rules, the state
   2-22  has a first lien, superior to all other preexisting and subsequent
   2-23  liens and security interests, on the operator's and nonoperator's
   2-24  interests in well-site equipment, in the amount of the total costs
   2-25  of removing well-site equipment from the well, plugging the well,
   2-26  and transporting, storing, and disposing of the well-site
   2-27  equipment.
   2-28        (b)  The lien arises on the date by which the well is
   2-29  required to be plugged under commission rules.
   2-30        (c)  The commission may foreclose on the lien by entering
   2-31  into a plugging contract.  The commission is not required to give
   2-32  notice or an opportunity for a hearing to subordinate lienholders
   2-33  or nonoperators before entering into a plugging contract.
   2-34        (d)  The lien is extinguished if the well is plugged or
   2-35  otherwise brought into compliance in accordance with commission
   2-36  rules by any person authorized to do so before the commission
   2-37  enters into a plugging contract.
   2-38        (e)  The lien is extinguished as to any item of well-site
   2-39  equipment that is lawfully removed by any person other than the
   2-40  operator or a nonoperator pursuant to a lien, lease, judgment,
   2-41  written contract, or security agreement before the commission
   2-42  enters into a plugging contract.  Equipment necessary to prevent
   2-43  the well from serving as a conduit for the passage of oil, gas,
   2-44  saltwater, oil and gas wastes, or freshwater from one stratum or
   2-45  formation to another or to the surface or from the surface downward
   2-46  may not be removed from an inactive well site except in the course
   2-47  of plugging in accordance with commission rules.
   2-48        (f)  If the commission plugs a well under Sections 89.043
   2-49  through 89.044 of this code, the state has a cause of action for
   2-50  all reasonable expenses incurred in plugging or replugging the well
   2-51  and not recovered under Section 89.085 of this code or through
   2-52  reimbursement to the commission <according to the rules of the
   2-53  commission in effect at the time the well is plugged or replugged>.
   2-54        (g) <(b)>  The cause of action is:
   2-55              (1)  first, against the operator, to be secured by a
   2-56  first lien, superior to all preexisting and subsequent liens and
   2-57  security interests, on the operator's <his> interest in the oil and
   2-58  gas in the land and the <his> fixtures, machinery, and equipment
   2-59  found or used on the land where the well is located; and
   2-60              (2)  second, against a <the> nonoperator at the time
   2-61  the well should have been plugged, to be secured by a lien on the
   2-62  nonoperator's <his> interest in the oil and gas in the land.  A
   2-63  nonoperator may be made a party defendant in the suit against the
   2-64  operator.
   2-65        (h) <(c)>  The commission shall seek reimbursement for all
   2-66  reasonable expenses incurred in plugging any well through an action
   2-67  instituted by the attorney general.
   2-68        (i) <(d)>  Money collected in a suit under this section shall
   2-69  be deposited in the state oil-field cleanup fund.
   2-70        (j) <(e)>  A civil action for reimbursement under this
    3-1  section may be brought in Travis County, the county in which the
    3-2  plugged well is located, or the county in which any defendant
    3-3  resides.
    3-4        SECTION 4.  Section 89.085, Natural Resources Code, is
    3-5  amended to read as follows:
    3-6        Sec. 89.085.  POSSESSION AND SALE OF EQUIPMENT TO COVER
    3-7  PLUGGING COSTS<; CRIMINAL PENALTY>.  (a)  When the commission
    3-8  enters into a contract to plug a delinquent inactive well,
    3-9  well-site equipment and any amount of hydrocarbons from the well
   3-10  that is stored on the lease are presumed to have been abandoned and
   3-11  may be disposed of by the commission in a commercially reasonable
   3-12  manner by either or both of the following methods:
   3-13              (1)  a plugging contract may provide that the person
   3-14  plugging or cleaning up pollution, or both, will take title to
   3-15  well-site equipment, hydrocarbons from the well that are stored on
   3-16  the lease, or hydrocarbons recovered during the plugging operation
   3-17  in exchange for a sum of money deducted as a credit from the
   3-18  contract price; or
   3-19              (2)  the well-site equipment, hydrocarbons from the
   3-20  well that are stored on the lease, or hydrocarbons recovered during
   3-21  the plugging operation may be sold at a public auction or a public
   3-22  or private sale.
   3-23        (b)  The commission shall assign separate costs to:
   3-24              (1)  removing well-site equipment;
   3-25              (2)  plugging the well; and
   3-26              (3)  transporting, storing, and disposing of the
   3-27  well-site equipment.
   3-28        (c)  The commission shall dispose of well-site equipment or
   3-29  hydrocarbons under this section at a price or value that reflects
   3-30  the generally recognized market value of the equipment or
   3-31  hydrocarbons, with allowances for physical condition.
   3-32        (d)  The commission shall deposit money received from the
   3-33  sale of well-site equipment or hydrocarbons under this section to
   3-34  the credit of the oil-field cleanup fund.  The commission shall
   3-35  separately account for money and credit received for each well.
   3-36        (e)  A person who acquires well-site equipment or
   3-37  hydrocarbons under this section by sale or contract receives a
   3-38  clear title, free of all prior legal or equitable claims of
   3-39  whatever nature, whether perfected or inchoate.
   3-40        (f)  Not later than the 30th day after the date well-site
   3-41  equipment or hydrocarbons are disposed of under this section, the
   3-42  commission shall mail a notice by first class mail to the operator
   3-43  of the well at the address last reported to the commission as
   3-44  required by Section 91.142 of this code and commission rules and,
   3-45  on request, to any lienholder or nonoperator.
   3-46        (g)  The notice required by Subsection (f) of this section
   3-47  shall state:
   3-48              (1)  the lease name;
   3-49              (2)  the well number;
   3-50              (3)  the county in which the well is located;
   3-51              (4)  the abstract number of the property on which the
   3-52  lease is situated;
   3-53              (5)  the commission lease or gas well identification
   3-54  number or drilling permit number;
   3-55              (6)  a list of the property disposed of under this
   3-56  section; and
   3-57              (7)  a statement that any person who has a legal or
   3-58  equitable ownership or security interest in the equipment or
   3-59  hydrocarbons that was in existence on the date the commission
   3-60  entered into a contract to plug or clean up the well may file a
   3-61  claim with the commission.
   3-62        (h)  Not later than the 180th day after the date the
   3-63  well-site equipment or hydrocarbons are disposed of under this
   3-64  section, the commission shall publish a notice that states:
   3-65              (1)  the lease name;
   3-66              (2)  the well number;
   3-67              (3)  the county in which the well is located;
   3-68              (4)  the commission lease or gas well identification
   3-69  number or drilling permit number; and
   3-70              (5)  that equipment or hydrocarbons if applicable from
    4-1  the well and lease were disposed of under this section and that any
    4-2  person who has a legal or equitable ownership or security interest
    4-3  in the equipment or hydrocarbons that was in existence on the date
    4-4  the commission entered into a contract to plug or clean up the well
    4-5  may file a claim with the commission.
    4-6        (i)  The commission shall publish the notice required under
    4-7  Subsection (h) of this section in a newspaper of general
    4-8  circulation in the county in which the lease is located.  A single
    4-9  notice may contain the information required for more than one well
   4-10  and lease.  A notice given under this section following the
   4-11  plugging of a well may be combined with a notice given under
   4-12  Section 91.115 of this code following the cleanup of a site or
   4-13  facility.  <Well-site equipment is presumed abandoned if, for
   4-14  longer than one year, the well has shown no activity in terms of
   4-15  production, injection, disposal, testing, allowables, and has not
   4-16  otherwise been maintained in compliance with plugging rules and
   4-17  regulations.>
   4-18        <(b)  Before state funds are expended to plug or replug a
   4-19  well that is not actively polluting but that is likely to pollute
   4-20  fresh water above or below the ground, the attorney general shall
   4-21  bring a suit within 30 days of the request of the commission
   4-22  seeking a declaratory judgment that well-site equipment is
   4-23  abandoned and that the commission has the right to possession of
   4-24  the equipment and the authority to sell it or otherwise dispose of
   4-25  it for the purpose of wholly or partially compensating the person
   4-26  acting as agent for the commission for plugging or replugging the
   4-27  well if the commission has determined that the equipment has a
   4-28  salvageable value greater than the cost of suit.>
   4-29        <(c)  After state funds have been expended to plug or replug
   4-30  a polluting well, the attorney general shall bring a suit within 30
   4-31  days of the request of the commission seeking a declaratory
   4-32  judgment that well-site equipment is abandoned and that the
   4-33  commission has the right to possession of the equipment and the
   4-34  authority to sell it or otherwise dispose of it for the purpose of
   4-35  wholly or partially reimbursing the commission for plugging or
   4-36  replugging the well if the commission has determined that the
   4-37  equipment has a salvageable value greater than the cost of suit.>
   4-38        <(d)  Before a suit is filed as provided for in Subsections
   4-39  (b) and (c) of this section, the commission shall give notice as
   4-40  provided by the rules of civil procedure to the operator, lessor,
   4-41  landowner, lienholders who have recorded a security interest in the
   4-42  county in which the property is situated, or any other known
   4-43  interested party that the commission intends to seek a court order
   4-44  authorizing the reduction to possession and sale or disposal of the
   4-45  well-site equipment.  The notice shall provide a description of the
   4-46  equipment and a statement that any claim thereto shall be made in
   4-47  writing to the commission within 30 days after the date that notice
   4-48  is given.  Failure of the operator, lessor, landowner, lienholders,
   4-49  or other known interested party to make such claim to the equipment
   4-50  within the time provided shall be presumed a waiver of all right,
   4-51  title, and interest in the well-site equipment and their consent to
   4-52  entry of a judgment for possession and sale or disposal of the
   4-53  equipment.>
   4-54        <(e)  If the court enters the declaratory judgment, the
   4-55  commission may authorize its agent to take possession of the
   4-56  equipment recovered following completion of plugging operations as
   4-57  whole or partial compensation.>
   4-58        <(f)  Hydrocarbons contained in storage facilities located at
   4-59  the abandoned well site or recovered during plugging operations are
   4-60  presumed abandoned, and the commission's right to possession and
   4-61  authority to sell the hydrocarbons shall be included in the suit
   4-62  for declaratory judgment provided for in Subsections (b) and (c) of
   4-63  this section.>
   4-64        <(g)  A suit for declaratory judgment under this section
   4-65  shall be brought in Travis County, Texas.  Upon request of the
   4-66  attorney general, the court may appoint an attorney ad litem to
   4-67  represent any interests not otherwise represented before the court.>
   4-68        <(h)  A suit under this section has priority on the court
   4-69  calendar as provided by Section 23.101(a), Government Code.>
   4-70        <(i)  A person not authorized by the commission or its
    5-1  authorized agent who knowingly removes well-site equipment after a
    5-2  declaratory judgment has been obtained granting the commission
    5-3  possession of the equipment commits a felony of the third degree.>
    5-4        SECTION 5.  Subchapter D, Chapter 89, Natural Resources Code,
    5-5  is amended by adding Sections 89.086, 89.087, and 89.088 to read as
    5-6  follows:
    5-7        Sec. 89.086.  CLAIMS AGAINST THE OIL-FIELD CLEANUP FUND.
    5-8  (a)  A person with a legal or equitable ownership or security
    5-9  interest in well-site equipment or hydrocarbons disposed of under
   5-10  Section 89.085 of this code may make a claim against the oil-field
   5-11  cleanup fund unless an element of the transaction giving rise to
   5-12  the interest occurs after the commission enters into a plugging
   5-13  contract.
   5-14        (b)  The commission shall adopt a form on which a person may
   5-15  file a sworn claim with the commission.
   5-16        (c)  A claimant must identify the well-site equipment or
   5-17  hydrocarbons in which the claimant has an interest and state the
   5-18  amount of the property interest as of the date the commission
   5-19  entered into the plugging contract.
   5-20        (d)  The commission may require a person to include with a
   5-21  claim documentation that substantiates the claim or to disclose
   5-22  whether the claimant was an operator or nonoperator of the well.
   5-23        (e)  The commission may set a hearing to receive evidence on
   5-24  a claim filed under this section.  The commission shall notify the
   5-25  claimant of the date, time, and place of a hearing.
   5-26        (f)  If the commission holds a hearing, the commission shall
   5-27  issue:
   5-28              (1)  a decision on the claim;
   5-29              (2)  a statement of findings of fact that includes the
   5-30  substance of the evidence heard; and
   5-31              (3)  the conclusions of law that support the decision.
   5-32        (g)  The commission shall consider the validity of claims in
   5-33  the order in which the claims are filed.
   5-34        (h)  The commission shall suspend an amount of money in the
   5-35  oil-field cleanup fund equal to the amount of the claim until the
   5-36  claim is finally resolved.  If the provisions of Subsection (k) of
   5-37  this section prevent suspension of the full amount of the claim,
   5-38  the commission shall treat the claim as two consecutively filed
   5-39  claims, one in the amount of funds available for suspension and the
   5-40  other in the remaining amount of the claim.
   5-41        (i)  A claim made by or on behalf of the operator or a
   5-42  nonoperator of a well or a successor to the rights of the operator
   5-43  or nonoperator is subject to a ratable deduction from the proceeds
   5-44  or credit received for the well-site equipment to cover the costs
   5-45  incurred by the commission in removing the equipment or
   5-46  hydrocarbons from the well or in transporting, storing, or
   5-47  disposing of the equipment or hydrocarbons.  A claim made by a
   5-48  person who is not an operator or nonoperator is subject to a
   5-49  ratable deduction for the costs incurred by the commission in
   5-50  removing the equipment from the well.  If a claimant is a person
   5-51  who is responsible under law or commission rules for plugging the
   5-52  well or cleaning up pollution originating on the lease or if the
   5-53  claimant owes a penalty assessed by the commission or a court for a
   5-54  violation of a commission rule or order, the commission may recoup
   5-55  from or offset against a valid claim an expense incurred by the
   5-56  oil-field cleanup fund that is not otherwise reimbursed or any
   5-57  penalties owed.  An amount recouped from, deducted from, or offset
   5-58  against a claim under this subsection shall be treated as an
   5-59  invalid portion of the claim and shall remain suspended in the
   5-60  oil-field cleanup fund in the manner provided by Subsection (j) of
   5-61  this section.
   5-62        (j)  If the commission finds that a claim is valid in whole
   5-63  or in part, the commission shall pay the valid portion of the claim
   5-64  from the suspended amount in the oil-field cleanup fund not later
   5-65  than the 30th day after the date of the commission's decision.  If
   5-66  the commission finds that a claim is invalid in whole or in part,
   5-67  the commission shall continue to suspend in the oil-field cleanup
   5-68  fund an amount equal to the invalid portion of the claim until the
   5-69  period during which the commission's decision may be appealed has
   5-70  expired or, if appealed, during the period the case is under
    6-1  judicial review.  If on appeal the district court finds the claim
    6-2  valid in whole or in part, the commission shall pay the valid
    6-3  portion of the claim from the suspended amount in the oil-field
    6-4  cleanup fund not later than 30 days after the date the court's
    6-5  judgment becomes unappealable.  On the date the commission's
    6-6  decision is not subject to judicial review, the commission shall
    6-7  release from the suspended amount in the oil-field cleanup fund the
    6-8  amount of the claim held to be invalid.
    6-9        (k)  If the aggregate of claims paid and money suspended that
   6-10  relates to well-site equipment or hydrocarbons from a particular
   6-11  well equals the total of the actual proceeds and credit realized
   6-12  from the disposition of that equipment or those hydrocarbons, the
   6-13  oil-field cleanup fund is not liable for any subsequently filed
   6-14  claims that relate to the same equipment or hydrocarbons unless and
   6-15  until the commission releases from the suspended amount money
   6-16  derived from the disposition of that equipment or those
   6-17  hydrocarbons.  If the commission releases money, then the
   6-18  commission shall suspend money in the amount of subsequently filed
   6-19  claims in the order of filing.
   6-20        (l)  A person who informs a potential claimant that the
   6-21  potential claimant may be entitled to file a claim under this
   6-22  section or who files a claim on behalf of a claimant may not
   6-23  contract for or receive from the claimant for services an amount
   6-24  greater than 10 percent of the paid claim.
   6-25        Sec. 89.087.  JUDICIAL REVIEW OF COMMISSION DECISIONS;
   6-26  IMMUNITY FROM SUIT AND LIABILITY.  (a)  A claimant aggrieved by the
   6-27  commission's decision on a claim may appeal the decision in a
   6-28  district court of Travis County on or before the 60th day after the
   6-29  date the decision was issued.  If the commission does not decide a
   6-30  claim by the 90th day after the date it was filed, the claimant may
   6-31  appeal within the 60-day period beginning on the 91st day after the
   6-32  date of filing.
   6-33        (b)  Judicial review under this section is by trial de novo.
   6-34        (c)  No interest accrues on a claim before an appeal is filed
   6-35  under this section.
   6-36        (d)  Except to the extent permitted by this chapter, and
   6-37  notwithstanding any other provision of law, the commission, its
   6-38  employees or agents, and the State of Texas are immune from suit
   6-39  and from liability based on the disposition of well-site equipment
   6-40  or hydrocarbons in accordance with this chapter.
   6-41        Sec. 89.088.  RECORD OF REQUEST FOR NOTICE BY LIENHOLDER OR
   6-42  NONOPERATOR; FORM; FEE.    (a)  The commission shall maintain a
   6-43  record of a request for notice by a lienholder or nonoperator under
   6-44  Section 89.043(e) or 89.085(f) of this code for five years after
   6-45  the date on which the commission receives the request.
   6-46        (b)  The commission shall prepare a form for a request for
   6-47  notice.  The commission shall require a person who requests notice
   6-48  to include on the form information that identifies the lease
   6-49  covered by the request.
   6-50        (c)  The commission may charge a filing fee for a request for
   6-51  notice not to exceed $10 for each lease covered by the request.
   6-52        SECTION 6.  Section 91.111, Natural Resources Code, is
   6-53  amended by amending Subsection (c) and adding Subsection (d) to
   6-54  read as follows:
   6-55        (c)  The fund consists of:
   6-56              (1)  penalties imposed under Section 85.381 of this
   6-57  code for violation of a law, order, or rule relating to well
   6-58  plugging requirements;
   6-59              (2)  proceeds from bonds and other financial assurances
   6-60  required by this chapter, subject to the refund provisions of
   6-61  Section 91.1091 of this code;
   6-62              (3)  private contributions, including contributions
   6-63  made under Section 89.084 of this code;
   6-64              (4)  expenses collected under Section 89.083 of this
   6-65  code;
   6-66              (5)  drilling permit fees imposed under Subsections (a)
   6-67  and (c) of Section 85.2021 of this code;
   6-68              (6)  civil penalties collected for violations of
   6-69  Chapter 89 of this code or of rules or orders relating to plugging
   6-70  that are adopted under this code;
    7-1              (7)  proceeds collected under Sections <Section> 89.085
    7-2  and 91.115 of this code;
    7-3              (8)  interest earned on the funds deposited in the
    7-4  fund;
    7-5              (9)  fees collected under Section 91.104 of this code;
    7-6              (10)  civil penalties or costs recovered under Section
    7-7  91.457 or Section 91.459 of this code;
    7-8              (11)  oil and gas waste hauler permit application fees
    7-9  collected under Section 29.015, Water Code;
   7-10              (12)  costs recovered under Subsection (f) of Section
   7-11  91.113 of this code;
   7-12              (13)  hazardous oil and gas waste generation fees
   7-13  collected under Section 91.605 of this code;
   7-14              (14)  oil-field cleanup regulatory fees on oil
   7-15  collected under Section 81.116 of this code;
   7-16              (15)  oil-field cleanup regulatory fees on gas
   7-17  collected under Section 81.117 of this code;
   7-18              (16)  fees for a reissued certificate collected under
   7-19  Section 85.167 of this code;
   7-20              (17)  fees collected under Subsection (b) of Section
   7-21  91.1013 of this code; <and>
   7-22              (18)  fees collected under Section 89.088 of this code;
   7-23  and
   7-24              (19)  legislative appropriations.
   7-25        (d)  All revenues and balances in the oil-field cleanup fund
   7-26  created in this section are exempt from Section 403.094(h) and
   7-27  Section 403.095(b), Government Code.
   7-28        SECTION 7.  Subchapter D, Chapter 91, Natural Resources Code,
   7-29  is amended by adding Section 91.115 to read as follows:
   7-30        Sec. 91.115.  FIRST LIEN ON EQUIPMENT.  (a)  If a responsible
   7-31  person fails to clean up a site or facility that has ceased oil and
   7-32  gas operations under the commission's jurisdiction on or before the
   7-33  date the site or facility is required to be cleaned up by law or by
   7-34  a rule adopted or order issued by the commission, the state has a
   7-35  first lien, superior to all preexisting and subsequent liens and
   7-36  security interests, on the responsible person's interest in
   7-37  equipment that is:
   7-38              (1)  located at the site or facility; and
   7-39              (2)  used by the responsible person in connection with
   7-40  the activity that generated the pollution.
   7-41        (b)  The lien is in the amount of the total costs of cleaning
   7-42  up the oil and gas wastes or other substances from the site or
   7-43  facility and arises on the date the site or facility is required by
   7-44  law or by a rule or order of the commission to be cleaned up.
   7-45        (c)  The commission may foreclose on the lien by entering
   7-46  into a contract to clean up the site or facility.  The commission
   7-47  is not required to give notice or an opportunity for a hearing to
   7-48  subordinate lienholders before entering into a contract to clean up
   7-49  the site or facility.
   7-50        (d)  The lien is extinguished if the site or facility is
   7-51  cleaned up in accordance with commission rules by any person before
   7-52  the commission enters into a contract to clean up the site or
   7-53  facility.
   7-54        (e)  The lien is extinguished as to any item of equipment
   7-55  that is lawfully removed by any person other than the operator or a
   7-56  nonoperator according to a lien, lease, judgment, written contract,
   7-57  or security agreement before the commission enters into a cleanup
   7-58  contract.  An item of equipment may not be removed from an
   7-59  abandoned site or facility if the removal will cause the release of
   7-60  a substance that may cause pollution unless the substance is
   7-61  lawfully disposed of.
   7-62        (f)  Equipment subject to a lien under this section is
   7-63  presumed to have been abandoned on the date the commission enters
   7-64  into a contract to clean up the site or facility on which the
   7-65  equipment is located.  The commission may dispose of the equipment
   7-66  in accordance with the provisions of Sections 89.085, 89.086, and
   7-67  89.087 of this code for the disposition of well-site equipment.
   7-68        (g)  In this section "responsible person" has the meaning
   7-69  assigned by Section 91.113 of this code.
   7-70        SECTION 8.  (a)  This Act does not apply to a suit filed or
    8-1  an administrative proceeding begun before the effective date of
    8-2  this Act.  A suit filed or an administrative proceeding begun
    8-3  before the effective date of this Act is governed by the law in
    8-4  effect at the time the suit was filed or the administrative
    8-5  proceeding was begun, and the former law is continued in effect for
    8-6  that purpose.
    8-7        (b)  The lien provided by Section 89.083, Natural Resources
    8-8  Code, as amended by this Act, arises on the later of the effective
    8-9  date of this Act or the date by which the well is required to be
   8-10  plugged under the rules of the Railroad Commission of Texas.
   8-11        (c)  The lien provided by Section 91.115, Natural Resources
   8-12  Code, as added by this Act, arises on the later of the effective
   8-13  date of this Act or the date the site or facility is required by
   8-14  law or by a rule or order of the commission to be cleaned up after
   8-15  oil and gas operations under the jurisdiction of the commission
   8-16  have ceased.
   8-17        SECTION 9.  This Act takes effect January 1, 1994.
   8-18        SECTION 10.  The importance of this legislation and the
   8-19  crowded condition of the calendars in both houses create an
   8-20  emergency and an imperative public necessity that the
   8-21  constitutional rule requiring bills to be read on three several
   8-22  days in each house be suspended, and this rule is hereby suspended.
   8-23                               * * * * *
   8-24                                                         Austin,
   8-25  Texas
   8-26                                                         May 11, 1993
   8-27  Hon. Bob Bullock
   8-28  President of the Senate
   8-29  Sir:
   8-30  We, your Committee on Natural Resources to which was referred H.B.
   8-31  No. 2705, have had the same under consideration, and I am
   8-32  instructed to report it back to the Senate with the recommendation
   8-33  that it do pass and be printed.
   8-34                                                         Sims,
   8-35  Chairman
   8-36                               * * * * *
   8-37                               WITNESSES
   8-38                                                  FOR   AGAINST  ON
   8-39  ___________________________________________________________________
   8-40  Name:  Floyd Bowen, Jr.                          x
   8-41  Representing:  Exxon Corporation
   8-42  City:  Austin
   8-43  -------------------------------------------------------------------
   8-44  Name:  Steve Perry                               x
   8-45  Representing:  Texaco
   8-46  City:  Austin
   8-47  -------------------------------------------------------------------
   8-48  Name:  Eileen Campbell                           x
   8-49  Representing:  Marathon Oil Company
   8-50  City:  Houston
   8-51  -------------------------------------------------------------------
   8-52  Name:  Brenda Loudermilk                                       x
   8-53  Representing:  Railroad Commission
   8-54  City:  Austin
   8-55  -------------------------------------------------------------------