H.B. No. 2731
    1-1                                AN ACT
    1-2  relating to oil and gas production research and information,
    1-3  including the Texas Experimental Research and Recovery Activity;
    1-4  providing administrative, civil, and criminal penalties.
    1-5        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-6        SECTION 1.  (a)  The legislature finds that current oil and
    1-7  gas production practices will leave unrecovered much of the
    1-8  hydrocarbons originally in place under public and private land and
    1-9  that the economic activity flowing from the recovery of a
   1-10  significant portion of those hydrocarbons would be of great benefit
   1-11  to the future well-being of the people of this state.
   1-12        (b)  The legislature finds that the incentives and
   1-13  opportunities provided by this Act will enhance and encourage
   1-14  development of new technologies needed to identify and recover
   1-15  those hydrocarbons.  The development of those technologies within
   1-16  the state would be of benefit to the state's economy.
   1-17        (c)  The legislature finds that mechanically sound,
   1-18  nonpolluting wells that would otherwise be plugged and abandoned
   1-19  are a valuable asset useful in the development of previously
   1-20  overlooked hydrocarbon deposits and new recovery technologies that
   1-21  may lead to a return of the wells to commercial production.
   1-22  Mineral interest owners should be encouraged voluntarily to
   1-23  preserve and use wells toward those ends by agreement with the
    2-1  state under this Act.
    2-2        (d)  The legislature finds that the activities provided by
    2-3  this Act serve a governmental purpose and benefit the people of
    2-4  this state.
    2-5        SECTION 2.  Subtitle B, Title 3, Natural Resources Code, is
    2-6  amended by adding Chapter 93 to read as follows:
    2-7    CHAPTER 93.  TEXAS EXPERIMENTAL RESEARCH AND RECOVERY ACTIVITY
    2-8                   SUBCHAPTER A.  GENERAL PROVISIONS
    2-9        Sec. 93.001.  DEFINITIONS.  In this chapter:
   2-10              (1)  "Commission" means the Railroad Commission of
   2-11  Texas.
   2-12              (2)  "License holder" means a person licensed by the
   2-13  commission to use a TERRA wellbore.
   2-14              (3)  "Mineral interest owner" means an owner of a
   2-15  present possessory mineral interest or vested mineral interest that
   2-16  may become present and possessory.
   2-17              (4)  "Operator" means the person responsible under law
   2-18  or commission rules for the physical operation of a wellbore or
   2-19  lease.
   2-20              (5)  "Present possessory mineral interest" means a
   2-21  mineral interest that includes the present right to use the land
   2-22  surface for exploration and production of minerals.
   2-23              (6)  "Production test" means a test to determine
   2-24  whether a recovery technique will yield production in paying
   2-25  quantities.
    3-1              (7)  "Responsible person" means a person who is
    3-2  described by Section 91.113(b) or a license holder.
    3-3              (8)  "TERRA" means the Texas Experimental Research and
    3-4  Recovery Activity.
    3-5              (9)  "Tract" means the area covered by an oil lease or
    3-6  a gas proration unit established under commission rules.
    3-7              (10)  "Wellbore" means a hole in the ground drilled in
    3-8  connection with the exploration, development, or production of oil,
    3-9  gas, or geothermal resources and includes any tubular goods
   3-10  cemented in the hole.
   3-11              (11)  "Wellsite equipment" means any production-related
   3-12  equipment or materials specific to a wellbore, including motors,
   3-13  pumps, pump jacks, tanks, tank batteries, separators, compressors,
   3-14  casing, tubing, and rods.
   3-15        Sec. 93.002.  TEXAS EXPERIMENTAL RESEARCH AND RECOVERY
   3-16  ACTIVITY.  (a)  The Texas Experimental Research and Recovery
   3-17  Activity is established in the commission.
   3-18        (b)  The purpose of TERRA is:
   3-19              (1)  to acquire and hold an inventory of mechanically
   3-20  sound and nonpolluting wellbores to be licensed by the commission
   3-21  for use in gathering data, performing production tests, and
   3-22  developing and testing enhanced or advanced recovery techniques;
   3-23              (2)  to enable mineral interest owners to realize any
   3-24  commercial potential that may be found in the wellbores as
   3-25  technology and circumstances change; and
    4-1              (3)  to protect the environment by ensuring that TERRA
    4-2  wellbores posing a pollution threat or determined to be without
    4-3  economic value are properly plugged in accordance with state law
    4-4  and rules of the commission.
    4-5        Sec. 93.003.  COMMISSION POWERS.  The commission may adopt
    4-6  and enforce any appropriate rules or orders that the commission
    4-7  finds necessary to administer this chapter.
    4-8        Sec. 93.004.  TERRA FUND; CERTIFICATION.  (a)  The TERRA fund
    4-9  is created in the state treasury.
   4-10        (b)  The commission shall send to the comptroller, or notify
   4-11  the comptroller of the amounts of money to be transferred, for
   4-12  credit to the TERRA fund:
   4-13              (1)  license fees collected under Section 93.033;
   4-14              (2)  money from the oil-field cleanup fund as provided
   4-15  by Section 93.013(c);
   4-16              (3)  payments received under Section 93.013(a)(8);
   4-17              (4)  payments received under Sections 93.036 and
   4-18  93.052;
   4-19              (5)  on January 1 of each year, an amount from the
   4-20  oil-field cleanup fund equal to the total money received by that
   4-21  fund from the sale of salvaged equipment under Sections 89.085(d)
   4-22  and 91.115(f), less the total money paid out to claimants under
   4-23  Section 89.086, during the previous fiscal year;
   4-24              (6)  private contributions or grants; and
   4-25              (7)  any other money as provided by this chapter.
    5-1        (c)  Interest earned on the TERRA fund shall be credited to
    5-2  the fund.
    5-3        (d)  Money in the TERRA fund may be used by the commission
    5-4  only for:
    5-5              (1)  the purposes of TERRA, including administrative
    5-6  costs; and
    5-7              (2)  administrative and program costs of the commission
    5-8  relating to its oil and gas activities, including those under
    5-9  Subchapter M, Chapter 91, except that the commission may use not
   5-10  more than 75 percent of the annual interest earned on the money in
   5-11  the fund for these purposes.
   5-12        (e)  Money in the TERRA fund may not be used or pledged for a
   5-13  purpose described by Subsection (d)(2) unless the unobligated money
   5-14  in the TERRA fund exceeds the total estimated plugging cost of all
   5-15  unplugged TERRA wellbores.
   5-16        Sec. 93.005.  USE OF OIL-FIELD CLEANUP FUND.  Except as
   5-17  provided by Section 93.013(c), a TERRA wellbore may not be plugged
   5-18  with money from the oil-field cleanup fund.
   5-19            (Sections 93.006-93.010 reserved for expansion
   5-20                    SUBCHAPTER B.  TERRA AGREEMENT
   5-21        Sec. 93.011.  AGREEMENT BETWEEN COMMISSION AND MINERAL
   5-22  INTEREST OWNERS.  (a)  A mineral interest owner may by agreement
   5-23  designate the commission as its agent and grant to the commission
   5-24  an easement for the sole purpose of maintaining and licensing a
   5-25  wellbore in TERRA.
    6-1        (b)  The commission may accept a grant of an easement from,
    6-2  and become the agent of, a mineral interest owner.
    6-3        (c)  An easement granted to the commission under this chapter
    6-4  is public property held and used on behalf of the public solely for
    6-5  the purposes of TERRA as provided by this chapter and is not
    6-6  subject to taxation.
    6-7        (d)  The commission shall prepare a form for the agreement.
    6-8  The agreement must:
    6-9              (1)  be executed by the mineral interest owner of the
   6-10  tract on which the wellbore is located;
   6-11              (2)  grant the commission an easement for access to the
   6-12  wellbore solely for TERRA purposes;
   6-13              (3)  designate the commission as the mineral interest
   6-14  owner's agent for maintaining the wellbore in TERRA and licensing
   6-15  the wellbore solely for the uses specified by this chapter; and
   6-16              (4)  allow the use of wellsite equipment found at or in
   6-17  the wellbore by a license holder for the term of the license.
   6-18        (e)  The agreement may incorporate by reference any provision
   6-19  of this chapter.
   6-20        (f)  The agreement must also contain:
   6-21              (1)  the section, block, survey, and abstract number of
   6-22  the land on which a wellbore covered by the agreement is located;
   6-23              (2)  the API number for the wellbore and the commission
   6-24  district and lease number or the commission gas identification
   6-25  number for each well in the wellbore;
    7-1              (3)  the name of the lease as shown on commission
    7-2  records; and
    7-3              (4)  any other provision the commission considers
    7-4  necessary.
    7-5        (g)  The consideration for the granting of the easement and
    7-6  the use of any wellsite equipment is:
    7-7              (1)  forbearance by the commission in requiring the
    7-8  mineral interest owner's compliance with otherwise applicable rules
    7-9  regarding maintenance and plugging of inactive wells; and
   7-10              (2)  the possibility that participation in TERRA may
   7-11  lead to the recovery of hydrocarbons that otherwise would not have
   7-12  been recovered for the benefit of the mineral interest owner.
   7-13        (h)  The commission shall file the agreement in the office of
   7-14  the clerk of the county in which the wellbore is located.  The
   7-15  clerk shall record it in the real property records without
   7-16  collecting a fee.
   7-17        Sec. 93.012.  TERRA EASEMENTS: EFFECT AND CONDITIONS.  (a)
   7-18  An easement granted in an agreement under Section 93.011 runs with
   7-19  the land and is valid even if:
   7-20              (1)  the agreement:
   7-21                    (A)  is not appurtenant to an interest or estate
   7-22  in real property;
   7-23                    (B)  is not of a character traditionally
   7-24  recognized under the common law; or
   7-25                    (C)  does not touch and concern the land; or
    8-1              (2)  privity of estate between the grantor and the
    8-2  commission is absent.
    8-3        (b)  The agreement, including the designation of the
    8-4  commission as agent of the mineral interest owner, binds all
    8-5  successors in interest of the mineral interest owner even though
    8-6  the commission does not have a beneficial interest in the mineral
    8-7  estate or the wellbores covered by the agreement.
    8-8        (c)  A vested mineral or surface interest existing at the
    8-9  time an agreement under Section 93.011 is executed is not affected
   8-10  by the agreement unless the owner of the mineral or surface
   8-11  interest:
   8-12              (1)  is a party to the agreement;
   8-13              (2)  ratifies the agreement; or
   8-14              (3)  consents to the agreement.
   8-15        (d)  A mineral interest in a tract on which a wellbore
   8-16  covered by an agreement is located that is acquired by a person
   8-17  after the person has signed an agreement covering the wellbore is
   8-18  bound by the agreement.
   8-19        Sec. 93.013.  ACCEPTANCE OF WELLBORES INTO TERRA.  (a)  The
   8-20  commission may accept an inactive wellbore used in connection with
   8-21  the exploration for or production of hydrocarbons into TERRA only
   8-22  if:
   8-23              (1)  the commission finds the wellbore useful to the
   8-24  accomplishment of the purposes of this chapter;
   8-25              (2)  written notice of the possible acceptance of the
    9-1  wellbore into TERRA has been provided to all present possessory
    9-2  mineral interest owners in the tract on which the wellbore is
    9-3  located;
    9-4              (3)  for mineral interests:
    9-5                    (A)  owned by the state, a state agency, or a
    9-6  political subdivision of the state, the person authorized by law to
    9-7  lease the mineral interest, the person authorized by law to approve
    9-8  a lease of the mineral interest, and the lessee, if the land is
    9-9  leased, sign an agreement under Section 93.011 covering the
   9-10  wellbore; or
   9-11                    (B)  owned by a private individual or entity, the
   9-12  owners of at least 50 percent of the present possessory mineral
   9-13  interest in all horizons originally penetrated by the wellbore and
   9-14  the owners of any other mineral interest required by the commission
   9-15  have signed an agreement under Section 93.011 covering the
   9-16  wellbore;
   9-17              (4)  the wellbore and wellsite are in compliance with
   9-18  state law and commission rules;
   9-19              (5)  the wellbore is free of obstructions and
   9-20  mechanically sound as shown:
   9-21                    (A)  by a current fluid level test; or
   9-22                    (B)  if the wellbore is at least 25 years old and
   9-23  has been inactive at least 10 years or when the commission may
   9-24  otherwise require, by a current mechanical integrity test
   9-25  prescribed by the commission;
   10-1              (6)  the commission is provided with documentation
   10-2  that, other than the liens created under Chapter 89, there are no
   10-3  outstanding charges, liens, or obligations of any kind secured
   10-4  wholly or in part by the leasehold estate or by any wellsite
   10-5  equipment;
   10-6              (7)  the mineral interest owner or last operator
   10-7  provides the commission with a copy of all logs and each item of
   10-8  wellbore documentation in its possession or control; and
   10-9              (8)  the commission receives from the mineral interest
  10-10  owner payment in an amount to be set by the commission, depending
  10-11  on the age and condition of the wellbore, not to exceed 75 percent
  10-12  of the commission's estimated costs of plugging the wellbore.
  10-13        (b)  If the wellbore is not accepted into TERRA, the
  10-14  commission shall return the payment under Subsection (a)(8).
  10-15        (c)  The commission may place an abandoned wellbore scheduled
  10-16  for plugging with state money under Chapter 89 in TERRA if it meets
  10-17  the requirements of Subsections (a)(1)-(5).  On placement of the
  10-18  wellbore in TERRA, the commission shall transfer from the oil-field
  10-19  cleanup fund to the TERRA fund the amount of money equal to the
  10-20  commission's estimated plugging costs.  After the transfer of money
  10-21  and while the wellbore remains in TERRA, the wellbore may be
  10-22  plugged only with money from the TERRA fund.  The oil-field cleanup
  10-23  fund may not be used to plug a TERRA wellbore.
  10-24        (d)  If a wellbore transferred to TERRA under Subsection (c)
  10-25  is subsequently released under Subchapter D, the amount of money
   11-1  received into the TERRA fund under Subsection (c) shall be
   11-2  transferred back to the oil-field cleanup fund.
   11-3        (e)  The offer of a wellbore to TERRA or its acceptance by
   11-4  the commission is not an abandonment of the wellbore or of the
   11-5  lease or the lease purposes by the mineral interest owner.
   11-6        (f)  After September 1, 1999, the commission may not accept a
   11-7  wellbore into TERRA under Subsection (a)(8) unless the TERRA fund
   11-8  balance exceeds the total estimated plugging cost of all TERRA
   11-9  wells.
  11-10        Sec. 93.014.  EFFECT OF ACCEPTANCE OF WELLBORE INTO TERRA.
  11-11  (a)  On acceptance of a wellbore into TERRA, the commission shall
  11-12  assume the well-plugging duties imposed on the last operator by
  11-13  Chapter 89 until the wellbore is released from TERRA under
  11-14  Subchapter D.
  11-15        (b)  A license holder or the commission is not responsible
  11-16  for any discharge of oil and gas waste or other substances or
  11-17  materials regulated by the commission under Section 91.101
  11-18  occurring before the wellbore was accepted into TERRA.
  11-19        (c)  If a mineral interest owner has materially misstated the
  11-20  condition of a wellbore or wellsite and its compliance with Section
  11-21  93.013(a)(4), (5), or (6) in connection with the acceptance of the
  11-22  wellbore into TERRA, the commission, after notice and opportunity
  11-23  for a hearing, may:
  11-24              (1)  order restoration of all plugging and cleanup
  11-25  responsibility to the mineral interest owner and require the
   12-1  mineral interest owner to plug the wellbore and to clean up the
   12-2  wellsite; or
   12-3              (2)  plug the wellbore and clean up the wellsite.
   12-4        (d)  In an action under Subsection (c), the commission may
   12-5  retain as an administrative penalty the payment made under Section
   12-6  93.013(a)(8) and order reimbursement of any plugging or cleanup
   12-7  costs incurred by the commission.
   12-8        (e)  Acceptance of a wellbore into TERRA or transfer of money
   12-9  from the oil-field cleanup fund to the TERRA fund does not bar the
  12-10  commencement or continuation of an administrative or judicial
  12-11  proceeding, including a collection suit, against an operator or
  12-12  other responsible person for a violation of a commission rule or
  12-13  order or state law.
  12-14        (f)  Acceptance by the commission of a wellbore into TERRA
  12-15  creates a rebuttable presumption that the well was in compliance
  12-16  with commission rules at the time of acceptance.
  12-17        (g)  For the purposes of this section, a mineral interest
  12-18  owner who has signed an agreement under Section 93.011 and who is
  12-19  not a license holder is not a responsible person for a well covered
  12-20  by the agreement and, except as provided by Subsection (c), is not
  12-21  responsible under commission rules for plugging, cleaning up, or
  12-22  remediating a TERRA wellbore or TERRA wellsite.
  12-23        (h)  The commission or a license holder may not be held to
  12-24  exercise any fiduciary or similar duty for the benefit of a mineral
  12-25  interest owner in the tract on which a TERRA wellbore is located.
   13-1  An express or implied lease covenant does not apply to the
   13-2  commission or a license holder in the use or nonuse of a TERRA
   13-3  wellbore.
   13-4            (Sections 93.015-93.030 reserved for expansion
   13-5             SUBCHAPTER  C.  LICENSES FOR TERRA WELLBORES
   13-6        Sec. 93.031.  LICENSE REQUIRED.  A person must have a license
   13-7  before a person may use a wellbore as provided by this subchapter.
   13-8        Sec. 93.032.  APPLICATION FOR LICENSE.  (a)  An  applicant
   13-9  for a license shall comply with Subchapters D and E, Chapter 91,
  13-10  before the commission may issue a license.
  13-11        (b)  A separate application must be submitted for each oil
  13-12  lease and each gas wellbore.
  13-13        (c)  An application for a license must be on a form
  13-14  prescribed by the commission.
  13-15        (d)  The commission may require an applicant to provide any
  13-16  information relating to a tract that is the subject of a license,
  13-17  including a legal description of the mineral ownership of the tract
  13-18  and identification and location of wells.
  13-19        (e)  The commission may require an applicant to provide the
  13-20  commission with agreements under Subchapter B executed by owners of
  13-21  reversionary and other mineral interests before the license may be
  13-22  issued.
  13-23        (f)  If an applicant intends to claim that any of the
  13-24  information submitted is confidential under Section 552.110,
  13-25  Government Code, relating to trade secrets or Section 552.113,
   14-1  Government Code, relating to geological or geophysical information,
   14-2  the applicant must request in writing confidential treatment and
   14-3  clearly mark the documents as confidential.
   14-4        (g)  A license must be approved by the commission by adoption
   14-5  of a final order and may be in the form of a commission order or in
   14-6  some other form prescribed by the commission.
   14-7        (h)  The commission may hold a hearing on an application for
   14-8  a license and a proposed use in accordance with commission rules.
   14-9        Sec. 93.033.  LICENSE FEE.  With each application for a
  14-10  license, an applicant shall submit to the commission an
  14-11  administrative fee equal to the lesser of $50 for each wellbore or
  14-12  $500 for each tract.  The fee is not refundable.
  14-13        Sec. 93.034.  LICENSES UNDER TERRA.  (a)  A license entitles
  14-14  the license holder to use the wellbore named in the license for the
  14-15  duration of the license solely for the purposes of TERRA and in
  14-16  accordance with the license, this chapter, and other applicable
  14-17  state law.
  14-18        (b)  A license holder shall comply with all commission rules
  14-19  governing the licensed use, including rules that require a permit
  14-20  to be issued or an exception to a commission rule to be granted.
  14-21        (c)  A license holder is the responsible person for the
  14-22  licensed wellbores for the duration of the license and until any
  14-23  violations of commission rules or orders committed by the license
  14-24  holder have been corrected.
  14-25        (d)  A license must state:
   15-1              (1)  its duration;
   15-2              (2)  the specific uses to which the listed wellbore may
   15-3  be put; and
   15-4              (3)  any conditions imposed by the commission.
   15-5        Sec. 93.035.  LICENSE AMENDMENT AND RENEWAL; PRIORITY.  (a)
   15-6  A license may be renewed or amended as provided by commission
   15-7  rules.
   15-8        (b)  An application for release of a TERRA wellbore submitted
   15-9  to the commission under Section 93.052 or 93.053 has priority over
  15-10  a new license for a TERRA wellbore or an amendment or renewal of an
  15-11  existing license.
  15-12        Sec. 93.036.  VIOLATION OF LICENSE.  (a)  The commission may
  15-13  revoke the license of a license holder who violates the license or
  15-14  a commission rule or order.
  15-15        (b)  If the violation is of a license condition, rule, or
  15-16  order pertaining to safety or the prevention or control of
  15-17  pollution, the commission may seek reimbursement of its costs and
  15-18  administrative penalties under Chapter 81 or 85, proceed against a
  15-19  bond or letter of credit, or pursue both remedies.
  15-20        Sec. 93.037.  LICENSED USES.  (a)  TERRA wellbores may be
  15-21  licensed for the collection of data, for production testing, or for
  15-22  developmental research on recovery techniques, each of which must
  15-23  have a reasonable potential to increase the recovery of
  15-24  hydrocarbons from the tract on which the wellbores are located.
  15-25        (b)  The commission may by rule or as a part of the license
   16-1  establish terms for licensed uses.
   16-2        Sec. 93.038.  EXPIRATION OF LICENSE.  At the end of the term
   16-3  of a license, the commission may, if the license is not renewed:
   16-4              (1)  release a wellbore under the license as provided
   16-5  by Subchapter D;
   16-6              (2)  maintain the wellbore in TERRA; or
   16-7              (3)  license the wellbore to another person.
   16-8        Sec. 93.039.  WELLSITE EQUIPMENT.  (a)  A license holder may
   16-9  use, or may remove and safeguard, wellsite equipment in which it
  16-10  does not have a legal interest.  A license holder shall return and
  16-11  properly reinstall all equipment removed not later than the 30th
  16-12  day after the date the license of the license holder expires
  16-13  unless:
  16-14              (1)  the equipment has been lawfully claimed by a
  16-15  person with an ownership or security interest in the equipment; or
  16-16              (2)  a mineral interest owner or the owner of the
  16-17  equipment has requested otherwise.
  16-18        (b)  If the wellbore has been plugged, the license holder is
  16-19  not required to reinstall any wellsite equipment taken from the
  16-20  wellbore or wellhead.
  16-21        (c)  A person who removes wellsite or production equipment
  16-22  from a licensed or unlicensed TERRA wellbore is subject to the
  16-23  regulatory jurisdiction of the commission under Subchapter C,
  16-24  Chapter 81.  Any reimbursement of commission costs or
  16-25  administrative penalties assessed or civil penalties adjudged in an
   17-1  action against the person for violation of commission rules shall
   17-2  be deposited into the TERRA fund.
   17-3        Sec. 93.040.  RESTORATION OF LAND SURFACE.  (a)  Not later
   17-4  than the 30th day after the date a license expires, the license
   17-5  holder shall restore the surface of the land, as nearly as
   17-6  reasonably possible, to the condition of the land when the licensed
   17-7  use commenced.
   17-8        (b)  This section does not apply if, before the 30th day
   17-9  after the date the license expires, the license holder, acting
  17-10  under a lease, obtains release of the wellbore from TERRA and
  17-11  assumes responsibility for the wellbore under state law and
  17-12  commission rules.
  17-13        Sec. 93.041.  PRODUCED HYDROCARBONS.  (a)  The license holder
  17-14  may sell hydrocarbons produced during a production test from a
  17-15  TERRA wellbore approved by the commission without complying with
  17-16  Subchapter E, Chapter 85.  An allowable is not required to produce
  17-17  hydrocarbons, but the license holder shall report all production in
  17-18  accordance with commission rules.
  17-19        (b)  Unless otherwise provided by a lease or other legal
  17-20  document, proceeds of any hydrocarbons sold by a license holder
  17-21  that are produced during production from a TERRA wellbore approved
  17-22  by the commission shall be paid as follows:
  17-23              (1)  on Relinquishment Act lands, one-half to be
  17-24  apportioned between the owner of the soil and the state, and
  17-25  one-half to the license holder;
   18-1              (2)  on other lands in which the state owns the
   18-2  minerals, one-half to the state fund into which royalties from the
   18-3  well would be deposited and one-half to the license holder;
   18-4              (3)  on lands in which the mineral interest is
   18-5  privately held, one-half to the mineral interest owners according
   18-6  to their interests and one-half to the license holder; and
   18-7              (4)  on lands in which the mineral interest falls into
   18-8  more than one of the preceding categories, ratably according to the
   18-9  percentage of the interest in each category.
  18-10        (c)  Unless otherwise provided by a lease or other legal
  18-11  document, the license holder shall make prompt payment in
  18-12  accordance with Subchapter J, Chapter 91.
  18-13        (d)  A mineral interest owner accepting payment of a share of
  18-14  the proceeds under this section ratifies and consents to the terms
  18-15  of and becomes bound by the agreement under Subchapter B that
  18-16  covers the proceeds.
  18-17        (e)  The production of a reasonable amount of hydrocarbons,
  18-18  to be determined by the commission, from a TERRA wellbore during a
  18-19  production test approved by the commission is not waste of the
  18-20  corpus or remainder of a mineral estate, and Section 64.092, Civil
  18-21  Practice and Remedies Code, does not apply to the production.
  18-22        (f)  Hydrocarbons produced from a TERRA wellbore during a
  18-23  production test approved by the commission are ordinary production
  18-24  for purposes of determining whether a lease requirement that
  18-25  production be continued in paying quantities has been met.
   19-1        Sec. 93.042.  PREVENTION OF POLLUTION.  This chapter does not
   19-2  limit the commission's authority under this title to prevent
   19-3  pollution, plug wells, or control or clean up oil and gas wastes or
   19-4  other substances or material.
   19-5            (Sections 93.043-93.050 reserved for expansion
   19-6            SUBCHAPTER D.  RELEASE OF WELLBORES FROM TERRA
   19-7        Sec. 93.051.  PLUGGING OF WELLBORE.  (a)  A wellbore may be
   19-8  released from TERRA when it is plugged and abandoned in accordance
   19-9  with commission rules.
  19-10        (b)  A person may not plug a TERRA wellbore without
  19-11  permission of the commission.
  19-12        Sec. 93.052.  REQUEST FOR RELEASE BY MINERAL INTEREST OWNER
  19-13  BOUND BY TERRA AGREEMENT.  (a)  An owner of a present possessory
  19-14  mineral interest in the tract on which the wellbore is located who
  19-15  is bound by an agreement under Subchapter B relating to the
  19-16  wellbore may file an application to release the wellbore from
  19-17  TERRA.
  19-18        (b)  The commission may not approve an application or release
  19-19  a wellbore under this section until the mineral interest owner:
  19-20              (1)  fully complies with all applicable state laws and
  19-21  commission rules relating to oil and gas, including obtaining all
  19-22  permits or other authorizations required under commission rules
  19-23  before the wellbore may be operated or plugged; and
  19-24              (2)  submits to the commission an amount of money that
  19-25  the commission may set, not to exceed twice the reasonable plugging
   20-1  cost on the date of release and as estimated by the commission.
   20-2        (c)  If the wellbore to be released has been in TERRA for one
   20-3  year or less, the payment required under Subsection (b)(2) may not
   20-4  exceed the reasonable plugging costs on the date of release and as
   20-5  estimated by the commission.
   20-6        (d)  The commission shall reduce any payment required under
   20-7  Subsections (b)(2) and (c) by the amount of payment by a person
   20-8  under Section 93.013(a)(8) if:
   20-9              (1)  the wellbore is released to the person, or to a
  20-10  lessee or assignee of the person;
  20-11              (2)  the person owned at least 50 percent of the
  20-12  present possessory mineral interest in the tract on which the
  20-13  wellbore is located when the wellbore was last accepted into TERRA;
  20-14  and
  20-15              (3)  an agreement under Subchapter B executed at that
  20-16  time by the person remains in effect at the time of release of the
  20-17  wellbore.
  20-18        (e)  The commission may not require a payment under this
  20-19  section if the applicant agrees to plug the wellbore and complies
  20-20  with all commission plugging rules.
  20-21        (f)  If the license on a wellbore sought to be released under
  20-22  this section has not expired, the commission may approve the
  20-23  application for release, effective not earlier than the day after
  20-24  the date the license expires unless the applicant submits a written
  20-25  release from the license holder that allows for an earlier release
   21-1  date.
   21-2        (g)  The person to whom a wellbore is released assumes
   21-3  responsibility for plugging of the wellbore and cleanup of the
   21-4  site, including all associated costs in accordance with state law
   21-5  and commission rules, but the license holder must comply with
   21-6  Sections 93.039 and 93.040.
   21-7        Sec. 93.053.  REQUEST FOR RELEASE BY MINERAL INTEREST OWNER
   21-8  NOT BOUND BY TERRA AGREEMENT.  (a)  An owner of a present
   21-9  possessory mineral interest in the tract on which the wellbore is
  21-10  located who is not bound by an agreement under Subchapter B on the
  21-11  wellbore may request that the wellbore be released from TERRA.
  21-12        (b)  The commission may not release a wellbore under this
  21-13  section until the mineral interest owner is in full compliance with
  21-14  all applicable state laws and commission rules relating to oil and
  21-15  gas and has obtained all permits or other authorization required
  21-16  under commission rules before the wellbore may be operated or
  21-17  plugged.
  21-18        (c)  If the license for a wellbore sought to be released
  21-19  under this section has not expired, the commission may approve the
  21-20  application for release, effective not earlier than the day after
  21-21  the date the license expires unless the applicant submits a written
  21-22  release from the license holder that allows for an earlier release
  21-23  date.
  21-24        (d)  The person to whom a wellbore is released assumes
  21-25  responsibility for plugging of the wellbore and cleanup of the
   22-1  site, including all associated costs in accordance with state law
   22-2  and commission rules, but the license holder must comply with
   22-3  Sections 93.039 and 93.040.
   22-4        Sec. 93.054.  RELEASE OF TERRA EASEMENTS.  (a)  When the last
   22-5  TERRA wellbore on a tract has been released, the commission shall
   22-6  file a release of all TERRA easements on the tract in the office of
   22-7  the clerk of the county in which the tract is located.
   22-8        (b)  The release must contain:
   22-9              (1)  the section, block, survey, and abstract number of
  22-10  the tract on which a subject wellbore is located;
  22-11              (2)  the API number for the subject wellbore and the
  22-12  commission district and lease number or the commission gas
  22-13  identification number for each well in the wellbore; and
  22-14              (3)  the volume and page number in the county real
  22-15  property records at which each TERRA agreement relating to the
  22-16  tract may be found.
  22-17        (c)  The release does not have to be acknowledged.
  22-18        (d)  The clerk shall record the release in the real property
  22-19  records without collecting a fee.
  22-20        Sec. 93.055.  REQUEST FOR RELEASE BY SURFACE OWNER.  (a)  The
  22-21  owner or owners of at least 50 percent of the surface interest in
  22-22  the land on which a TERRA wellbore is located may file with the
  22-23  commission a written request to plug the wellbore if it has been in
  22-24  TERRA for more than seven years.
  22-25        (b)  The commission shall notify all persons who have signed
   23-1  the TERRA agreement pertaining to the wellbore and any licensees of
   23-2  the wellbore under Section 93.037 of the request for commission
   23-3  plugging.  The notice shall also state that the wellbore will be
   23-4  plugged unless a mineral owner obtains release of the wellbore from
   23-5  TERRA under Section 93.052 or 93.053 within 90 days, or at the
   23-6  expiration of an existing TERRA license, whichever occurs later.
   23-7        (c)  If the wellbore is not released from TERRA under
   23-8  Subsection (b), the commission shall schedule the wellbore to be
   23-9  plugged at the end of any existing licensed use.
  23-10        (d)  The commission may require surface owners requesting
  23-11  plugging of a TERRA wellbore to provide a copy, certified by the
  23-12  clerk of the county in which the land is located, of the deed or
  23-13  other instrument under which they claim title to the surface
  23-14  estate.
  23-15            (Sections 93.056-93.070 reserved for expansion
  23-16          SUBCHAPTER E.  ADMINISTRATIVE PROCEDURE; LIABILITY
  23-17        Sec. 93.071.  APPLICABILITY OF ADMINISTRATIVE PROCEDURE ACT.
  23-18  (a)  Chapter 2001, Government Code, applies to:
  23-19              (1)  a proceeding to revoke a TERRA license and to
  23-20  assess an administrative penalty against or require reimbursement
  23-21  from a license holder;
  23-22              (2)  a proceeding under Section 93.014(c); and
  23-23              (3)  a hearing required by commission rules on proposed
  23-24  uses.
  23-25        (b)  Chapter 2001, Government Code, does not apply  to a
   24-1  decision by the commission under this chapter:
   24-2              (1)  on acceptance or refusal to accept a wellbore into
   24-3  TERRA;
   24-4              (2)  on the amount of payment required under Section
   24-5  93.013(a)(8);
   24-6              (3)  on the issuance of a license under this chapter;
   24-7  and
   24-8              (4)  on the conditions of a license.
   24-9        Sec. 93.072.  JUDICIAL REVIEW.  A commission decision
  24-10  described by Section 93.071(b) is not subject to judicial review.
  24-11        Sec. 93.073.  LIABILITY OF STATE, COMMISSION, AND LICENSE
  24-12  HOLDERS.  (a)  Notwithstanding any other law, the commission, an
  24-13  employee or agent of the commission, a license holder, and the
  24-14  state are immune from suit and from liability under any cause of
  24-15  action alleging:
  24-16              (1)  that a wellbore plugged under this chapter should
  24-17  not have been plugged; or
  24-18              (2)  that a TERRA wellbore used in compliance with
  24-19  license conditions and commission rules has decreased the value of
  24-20  the mineral estate in the tract on which the wellbore is located.
  24-21        (b)  Notwithstanding any other law, the commission and an
  24-22  employee or agent of the commission are immune from suit and from
  24-23  liability under any cause of action arising from the participation
  24-24  of a wellbore in TERRA and alleging wrongful death or injury or
  24-25  harm to persons, property, or interests caused by or suffered by a
   25-1  license holder.
   25-2        SECTION 3.  Subchapter B, Chapter 201, Tax Code, is amended
   25-3  by adding Section 201.058 to read as follows:
   25-4        Sec. 201.058.  TAX EXEMPTIONS.  The exemptions described by
   25-5  Sections 202.056 and 202.059 apply to the taxes imposed by this
   25-6  chapter as authorized by and subject to the certifications and
   25-7  approvals required by those sections.
   25-8        SECTION 4.  Section 202.052(c), Tax Code, is amended to read
   25-9  as follows:
  25-10        (c)  The exemptions described by Sections 202.056 and 202.059
  25-11  apply to <For> oil produced in this state from a well that
  25-12  qualifies under Section 202.056 or 202.059, subject to the
  25-13  certifications and approvals required by those sections <the rate
  25-14  of tax imposed by this chapter shall be reduced to zero>.
  25-15        SECTION 5.  Subchapter B, Chapter 202, Tax Code, is amended
  25-16  by adding Section 202.059 to read as follows:
  25-17        Sec. 202.059.  EXEMPTION FOR HYDROCARBONS FROM TERRA WELLS.
  25-18  (a)  Hydrocarbons produced from a well subject to an agreement
  25-19  under Chapter 93, Natural Resources Code, and under a license
  25-20  issued under that chapter qualify for an exemption from the taxes
  25-21  imposed by this chapter and Chapter 201 if the comptroller approves
  25-22  the tax exemption under Subsection (g).
  25-23        (b)  Hydrocarbons produced from a well formerly subject to an
  25-24  agreement under Chapter 93, Natural Resources Code, and a license
  25-25  issued under that chapter resuming production after participation
   26-1  in TERRA for two years qualify for an exemption from the taxes
   26-2  imposed by this chapter and Chapter 201 if the comptroller approves
   26-3  the tax exemption under Subsection (g).
   26-4        (c)  The commission may certify a well eligible for a tax
   26-5  exemption or an application may be made to the commission for
   26-6  certification under this section.  The commission may require an
   26-7  applicant to provide the commission with any relevant information
   26-8  required to administer this section.  The commission shall issue a
   26-9  certificate to each operator of the well.  The certificate must:
  26-10              (1)  include identification of the well; and
  26-11              (2)  state the date on which the tax exemption takes
  26-12  effect, subject to the comptroller's approval of the exemption
  26-13  under Subsection (g).
  26-14        (d)  The commission shall furnish to the comptroller a copy
  26-15  of a certificate of exemption for each well qualifying under this
  26-16  section.
  26-17        (e)  The commission may revoke a certificate for a tax
  26-18  exemption if information indicates that a well was not eligible for
  26-19  that designation at the time of certification or if a  license
  26-20  issued under Chapter 93, Natural Resources Code, is revoked by the
  26-21  commission.  The commission shall notify the operator and the
  26-22  comptroller that a certificate has been revoked.  A tax exemption
  26-23  granted under this section is automatically revoked on the date the
  26-24  certificate is revoked, and hydrocarbons produced from the well
  26-25  after the date of revocation are not eligible for the tax
   27-1  exemption.
   27-2        (f)  The commission may adopt and enforce any rules or orders
   27-3  that the commission finds necessary to administer this section.
   27-4        (g)  To qualify for the tax exemption, the person responsible
   27-5  for paying the tax must apply to the comptroller for the exemption
   27-6  and include with the application the certificate issued by the
   27-7  commission under Subsection (c).  The comptroller shall approve the
   27-8  application of a person if the hydrocarbons are eligible for the
   27-9  tax exemption.  The comptroller may require a person applying for
  27-10  the tax exemption to provide any relevant information necessary to
  27-11  administer this section.  The comptroller may establish procedures
  27-12  to comply with this subsection and Subsection (h).
  27-13        (h)  If the tax is paid at the full rate provided by this
  27-14  chapter and Chapter 201 on hydrocarbons produced on or after the
  27-15  effective date of the tax exemption but before the date the
  27-16  comptroller approves an application for the tax exemption, the
  27-17  operator is entitled to a credit on taxes due under Chapter 201 or
  27-18  this chapter in the amount equal to the tax paid during that
  27-19  period.  To receive a credit, the operator must apply to the
  27-20  comptroller for the credit not later than one year after the date
  27-21  the commission certifies the well for a tax exemption.
  27-22        (i)  A person is subject to the penalties that may be imposed
  27-23  under Chapters 85 and 91, Natural Resources Code, if the person
  27-24  makes and submits to the commission or comptroller an application,
  27-25  report, or other document used or intended to be used for a
   28-1  certification, tax exemption, or tax credit under this section and
   28-2  the person knows that the application, report, or other document
   28-3  contains a false or untrue material fact.
   28-4        (j)  A person is liable to the state for a civil penalty if
   28-5  the person, after receiving notice from the commission that the
   28-6  person's tax exemption certificate for a TERRA well or a former
   28-7  TERRA well has been revoked, applies or attempts to apply for a tax
   28-8  exemption for hydrocarbons produced from the well under the revoked
   28-9  certificate.  The amount of the penalty may not exceed the sum of:
  28-10              (1)  $10,000; and
  28-11              (2)  the difference between the amount of taxes paid or
  28-12  attempted to be paid and the amount of taxes due.
  28-13        (k)  The attorney general may recover a penalty under
  28-14  Subsection (j) in a suit brought on behalf of the state.  Venue for
  28-15  the suit is in Travis County.
  28-16        (l)  In this section:
  28-17              (1)  "Commission" means the Railroad Commission of
  28-18  Texas.
  28-19              (2)  "Hydrocarbons" means any oil, gas, condensate, and
  28-20  other liquid hydrocarbons produced from a well.
  28-21              (3)  "TERRA" means the Texas Experimental Research and
  28-22  Recovery Activity under Chapter 93, Natural Resources Code.
  28-23        SECTION 6.  This Act takes effect January 1, 1996.
  28-24        SECTION 7.  The importance of this legislation and the
  28-25  crowded condition of the calendars in both houses create an
   29-1  emergency and an imperative public necessity that the
   29-2  constitutional rule requiring bills to be read on three several
   29-3  days in each house be suspended, and this rule is hereby suspended.