By Craddick H.B. No. 2731
Substitute the following for H.B. No. 2731:
By Jackson C.S.H.B. No. 2731
A BILL TO BE ENTITLED
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 to 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)(7);
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 interest existing at the time an
8-9 agreement under Section 93.011 is executed is not affected by the
8-10 agreement unless the owner of the mineral interest:
8-11 (1) is a party to the agreement;
8-12 (2) ratifies the agreement; or
8-13 (3) consents to the agreement.
8-14 (d) A mineral interest in a tract on which a wellbore
8-15 covered by an agreement is located that is acquired by a person
8-16 after the person has signed an agreement covering the wellbore is
8-17 bound by the agreement.
8-18 Sec. 93.013. ACCEPTANCE OF WELLBORES INTO TERRA. (a) The
8-19 commission may accept an inactive wellbore used in connection with
8-20 the exploration for or production of hydrocarbons into TERRA only
8-21 if:
8-22 (1) the commission finds the wellbore useful to the
8-23 accomplishment of the purposes of this chapter;
8-24 (2) for mineral interests:
8-25 (A) owned by the state, a state agency, or a
9-1 political subdivision of the state, the person authorized by law to
9-2 lease the mineral interest, the person authorized by law to approve
9-3 a lease of the mineral interest, and the lessee, if the land is
9-4 leased, sign an agreement under Section 93.011 covering the
9-5 wellbore; or
9-6 (B) owned by a private individual or entity, the
9-7 owners of at least 50 percent of the present possessory mineral
9-8 interest in all horizons originally penetrated by the wellbore and
9-9 the owners of any other mineral interest required by the commission
9-10 have signed an agreement under Section 93.011 covering the
9-11 wellbore;
9-12 (3) the wellbore and wellsite are in compliance with
9-13 state law and commission rules;
9-14 (4) the wellbore is free of obstructions and
9-15 mechanically sound as shown:
9-16 (A) by a current fluid level test; or
9-17 (B) if the wellbore is at least 25 years old and
9-18 has been inactive at least 10 years or when the commission may
9-19 otherwise require, by a current mechanical integrity test
9-20 prescribed by the commission;
9-21 (5) the commission is provided with documentation
9-22 that, other than the liens created under Chapter 89, there are no
9-23 outstanding charges, liens, or obligations of any kind secured
9-24 wholly or in part by the leasehold estate or by any wellsite
9-25 equipment;
10-1 (6) the mineral interest owner or last operator
10-2 provides the commission with a copy of all logs and each item of
10-3 wellbore documentation in its possession or control; and
10-4 (7) the commission receives from the mineral interest
10-5 owner payment in an amount to be set by the commission, depending
10-6 on the age and condition of the wellbore, not to exceed 75 percent
10-7 of the commission's estimated costs of plugging the wellbore.
10-8 (b) If the wellbore is not accepted into TERRA, the
10-9 commission shall return the payment under Subsection (a)(7).
10-10 (c) The commission may place an abandoned wellbore scheduled
10-11 for plugging with state money under Chapter 89 in TERRA if it meets
10-12 the requirements of Subsections (a)(1)-(4). On placement of the
10-13 wellbore in TERRA, the commission shall transfer from the oil-field
10-14 cleanup fund to the TERRA fund the amount of money equal to the
10-15 commission's estimated plugging costs. After the transfer of money
10-16 and while the wellbore remains in TERRA, the wellbore may be
10-17 plugged only with money from the TERRA fund. The oil-field cleanup
10-18 fund may not be used to plug a TERRA wellbore.
10-19 (d) If a wellbore transferred to TERRA under Subsection (c)
10-20 is subsequently released under Subchapter D, the amount of money
10-21 received into the TERRA fund under Subsection (c) shall be
10-22 transferred back to the oil-field cleanup fund.
10-23 (e) The offer of a wellbore to TERRA or its acceptance by
10-24 the commission is not an abandonment of the wellbore or of the
10-25 lease or the lease purposes by the mineral interest owner.
11-1 (f) After September 1, 1999, the commission may not accept a
11-2 wellbore into TERRA under Subsection (a)(7) unless the TERRA fund
11-3 balance exceeds the total estimated plugging cost of all TERRA
11-4 wells.
11-5 Sec. 93.014. EFFECT OF ACCEPTANCE OF WELLBORE INTO TERRA.
11-6 (a) On acceptance of a wellbore into TERRA, the commission shall
11-7 assume the well-plugging duties imposed on the last operator by
11-8 Chapter 89 until the wellbore is released from TERRA under
11-9 Subchapter D.
11-10 (b) A license holder or the commission is not responsible
11-11 for any discharge of oil and gas waste or other substances or
11-12 materials regulated by the commission under Section 91.101
11-13 occurring before the wellbore was accepted into TERRA.
11-14 (c) If a mineral interest owner has materially misstated the
11-15 condition of a wellbore or wellsite and its compliance with Section
11-16 93.013(a)(3), (4), or (5) in connection with the acceptance of the
11-17 wellbore into TERRA, the commission, after notice and opportunity
11-18 for a hearing, may:
11-19 (1) order restoration of all plugging and cleanup
11-20 responsibility to the mineral interest owner and require the
11-21 mineral interest owner to plug the wellbore and to clean up the
11-22 wellsite; or
11-23 (2) plug the wellbore and clean up the wellsite.
11-24 (d) In an action under Subsection (c), the commission may
11-25 retain as an administrative penalty the payment made under Section
12-1 93.013(a)(7) and order reimbursement of any plugging or cleanup
12-2 costs incurred by the commission.
12-3 (e) Acceptance of a wellbore into TERRA or transfer of money
12-4 from the oil-field cleanup fund to the TERRA fund does not bar the
12-5 commencement or continuation of an administrative or judicial
12-6 proceeding, including a collection suit, against an operator or
12-7 other responsible person for a violation of a commission rule or
12-8 order or state law.
12-9 (f) Acceptance by the commission of a wellbore into TERRA
12-10 creates a rebuttable presumption that the well was in compliance
12-11 with commission rules at the time of acceptance.
12-12 (g) For the purposes of this section, a mineral interest
12-13 owner who has signed an agreement under Section 93.011 and who is
12-14 not a license holder is not a responsible person for a well covered
12-15 by the agreement and, except as provided by Subsection (c), is not
12-16 responsible under commission rules for plugging, cleaning up, or
12-17 remediating a TERRA wellbore or TERRA wellsite.
12-18 (h) The commission or a license holder may not be held to
12-19 exercise any fiduciary or similar duty for the benefit of a mineral
12-20 interest owner in the tract on which a TERRA wellbore is located.
12-21 An express or implied lease covenant does not apply to the
12-22 commission or a license holder in the use or nonuse of a TERRA
12-23 wellbore.
12-24 (Sections 93.015-93.030 reserved for expansion
12-25 SUBCHAPTER C. LICENSES FOR TERRA WELLBORES
13-1 Sec. 93.031. LICENSE REQUIRED. A person must have a license
13-2 before a person may use a wellbore as provided by this subchapter.
13-3 Sec. 93.032. APPLICATION FOR LICENSE. (a) An applicant
13-4 for a license shall comply with Subchapters D and E, Chapter 91,
13-5 before the commission may issue a license.
13-6 (b) A separate application must be submitted for each oil
13-7 lease and each gas wellbore.
13-8 (c) An application for a license must be on a form
13-9 prescribed by the commission.
13-10 (d) The commission may require an applicant to provide any
13-11 information relating to a tract that is the subject of a license,
13-12 including a legal description of the mineral ownership of the tract
13-13 and identification and location of wells.
13-14 (e) The commission may require an applicant to provide the
13-15 commission with agreements under Subchapter B executed by owners of
13-16 reversionary and other mineral interests before the license may be
13-17 issued.
13-18 (f) If an applicant intends to claim that any of the
13-19 information submitted is confidential under Section 552.110,
13-20 Government Code, relating to trade secrets or Section 552.113,
13-21 Government Code, relating to geological or geophysical information,
13-22 the applicant must request in writing confidential treatment and
13-23 clearly mark the documents as confidential.
13-24 (g) A license must be approved by the commission by adoption
13-25 of a final order and may be in the form of a commission order or in
14-1 some other form prescribed by the commission.
14-2 (h) The commission may hold a hearing on an application for
14-3 a license and a proposed use in accordance with commission rules.
14-4 Sec. 93.033. LICENSE FEE. With each application for a
14-5 license, an applicant shall submit to the commission an
14-6 administrative fee equal to the lesser of $50 for each wellbore or
14-7 $500 for each tract. The fee is not refundable.
14-8 Sec. 93.034. LICENSES UNDER TERRA. (a) A license entitles
14-9 the license holder to use the wellbore named in the license for the
14-10 duration of the license solely for the purposes of TERRA and in
14-11 accordance with the license, this chapter, and other applicable
14-12 state law.
14-13 (b) A license holder shall comply with all commission rules
14-14 governing the licensed use, including rules that require a permit
14-15 to be issued or an exception to a commission rule to be granted.
14-16 (c) A license holder is the responsible person for the
14-17 licensed wellbores for the duration of the license and until any
14-18 violations of commission rules or orders committed by the license
14-19 holder have been corrected.
14-20 (d) A license must state:
14-21 (1) its duration;
14-22 (2) the specific uses to which the listed wellbore may
14-23 be put; and
14-24 (3) any conditions imposed by the commission.
14-25 Sec. 93.035. LICENSE AMENDMENT AND RENEWAL; PRIORITY. (a)
15-1 A license may be renewed or amended as provided by commission
15-2 rules.
15-3 (b) An application for release of a TERRA wellbore submitted
15-4 to the commission under Section 93.052 or 93.053 has priority over
15-5 a new license for a TERRA wellbore or an amendment or renewal of an
15-6 existing license.
15-7 Sec. 93.036. VIOLATION OF LICENSE. (a) The commission may
15-8 revoke the license of a license holder who violates the license or
15-9 a commission rule or order.
15-10 (b) If the violation is of a license condition, rule, or
15-11 order pertaining to safety or the prevention or control of
15-12 pollution, the commission may seek reimbursement of its costs and
15-13 administrative penalties under Chapter 81 or 85, proceed against a
15-14 bond or letter of credit, or pursue both remedies.
15-15 Sec. 93.037. LICENSED USES. (a) TERRA wellbores may be
15-16 licensed for the collection of data, for production testing, or for
15-17 developmental research on recovery techniques, each of which must
15-18 have a reasonable potential to increase the recovery of
15-19 hydrocarbons from the tract on which the wellbores are located.
15-20 (b) The commission may by rule or as a part of the license
15-21 establish terms for licensed uses.
15-22 Sec. 93.038. EXPIRATION OF LICENSE. At the end of the term
15-23 of a license, the commission may, if the license is not renewed:
15-24 (1) release a wellbore under the license as provided
15-25 by Subchapter D;
16-1 (2) maintain the wellbore in TERRA; or
16-2 (3) license the wellbore to another person.
16-3 Sec. 93.039. WELLSITE EQUIPMENT. (a) A license holder may
16-4 use, or may remove and safeguard, wellsite equipment in which it
16-5 does not have a legal interest. A license holder shall return and
16-6 properly reinstall all equipment removed not later than the 30th
16-7 day after the date the license of the license holder expires
16-8 unless:
16-9 (1) the equipment has been lawfully claimed by a
16-10 person with an ownership or security interest in the equipment; or
16-11 (2) a mineral interest owner or the owner of the
16-12 equipment has requested otherwise.
16-13 (b) If the wellbore has been plugged, the license holder is
16-14 not required to reinstall any wellsite equipment taken from the
16-15 wellbore or wellhead.
16-16 (c) A person who removes wellsite or production equipment
16-17 from a licensed or unlicensed TERRA wellbore is subject to the
16-18 regulatory jurisdiction of the commission under Subchapter C,
16-19 Chapter 81. Any reimbursement of commission costs or
16-20 administrative penalties assessed or civil penalties adjudged in an
16-21 action against the person for violation of commission rules shall
16-22 be deposited into the TERRA fund.
16-23 Sec. 93.040. RESTORATION OF LAND SURFACE. (a) Not later
16-24 than the 30th day after the date a license expires, the license
16-25 holder shall restore the surface of the land, as nearly as
17-1 reasonably possible, to the condition of the land when the licensed
17-2 use commenced.
17-3 (b) This section does not apply if, before the 30th day
17-4 after the date the license expires, the license holder, acting
17-5 under a lease, obtains release of the wellbore from TERRA and
17-6 assumes responsibility for the wellbore under state law and
17-7 commission rules.
17-8 Sec. 93.041. PRODUCED HYDROCARBONS. (a) The license holder
17-9 may sell hydrocarbons produced during a production test from a
17-10 TERRA wellbore approved by the commission without complying with
17-11 Subchapter E, Chapter 85. An allowable is not required to produce
17-12 hydrocarbons, but the license holder shall report all production in
17-13 accordance with commission rules.
17-14 (b) Unless otherwise provided by a lease or other legal
17-15 document, proceeds of any hydrocarbons sold by a license holder
17-16 that are produced during production from a TERRA wellbore approved
17-17 by the commission shall be paid as follows:
17-18 (1) on Relinquishment Act lands, one-half to be
17-19 apportioned between the owner of the soil and the state, and
17-20 one-half to the license holder;
17-21 (2) on other lands in which the state owns the
17-22 minerals, one-half to the state fund into which royalties from the
17-23 well would be deposited and one-half to the license holder;
17-24 (3) on lands in which the mineral interest is
17-25 privately held, one-half to the mineral interest owners according
18-1 to their interests and one-half to the license holder; and
18-2 (4) on lands in which the mineral interest falls into
18-3 more than one of the preceding categories, ratably according to the
18-4 percentage of the interest in each category.
18-5 (c) Unless otherwise provided by a lease or other legal
18-6 document, the license holder shall make prompt payment in
18-7 accordance with Subchapter J, Chapter 91.
18-8 (d) A mineral interest owner accepting payment of a share of
18-9 the proceeds under this section ratifies and consents to the terms
18-10 of and becomes bound by the agreement under Subchapter B that
18-11 covers the proceeds.
18-12 (e) The production of a reasonable amount of hydrocarbons,
18-13 to be determined by the commission, from a TERRA wellbore during a
18-14 production test approved by the commission is not waste of the
18-15 corpus or remainder of a mineral estate, and Section 64.092, Civil
18-16 Practice and Remedies Code, does not apply to the production.
18-17 (f) Hydrocarbons produced from a TERRA wellbore during a
18-18 production test approved by the commission are ordinary production
18-19 for purposes of determining whether a lease requirement that
18-20 production be continued in paying quantities has been met.
18-21 Sec. 93.042. PREVENTION OF POLLUTION. This chapter does not
18-22 limit the commission's authority under this title to prevent
18-23 pollution, plug wells, or control or clean up oil and gas wastes or
18-24 other substances or material.
18-25 (Sections 93.043-93.050 reserved for expansion
19-1 SUBCHAPTER D. RELEASE OF WELLBORES FROM TERRA
19-2 Sec. 93.051. PLUGGING OF WELLBORE. (a) A wellbore may be
19-3 released from TERRA when it is plugged and abandoned in accordance
19-4 with commission rules.
19-5 (b) A person may not plug a TERRA wellbore without
19-6 permission of the commission.
19-7 Sec. 93.052. REQUEST FOR RELEASE BY MINERAL INTEREST OWNER
19-8 BOUND BY TERRA AGREEMENT. (a) An owner of a present possessory
19-9 mineral interest in the tract on which the wellbore is located who
19-10 is bound by an agreement under Subchapter B relating to the
19-11 wellbore may file an application to release the wellbore from
19-12 TERRA.
19-13 (b) The commission may not approve an application or release
19-14 a wellbore under this section until the mineral interest owner:
19-15 (1) fully complies with all applicable state laws and
19-16 commission rules relating to oil and gas, including obtaining all
19-17 permits or other authorizations required under commission rules
19-18 before the wellbore may be operated or plugged; and
19-19 (2) submits to the commission an amount of money that
19-20 the commission may set, not to exceed twice the reasonable plugging
19-21 cost on the date of release and as estimated by the commission.
19-22 (c) If the wellbore to be released has been in TERRA for one
19-23 year or less, the payment required under Subsection (b)(2) may not
19-24 exceed the reasonable plugging costs on the date of release and as
19-25 estimated by the commission.
20-1 (d) The commission shall reduce any payment required under
20-2 Subsections (b)(2) and (c) by the amount of payment by a person
20-3 under Section 93.013(a)(7) if:
20-4 (1) the wellbore is released to the person, or to a
20-5 lessee or assignee of the person;
20-6 (2) the person owned at least 50 percent of the
20-7 present possessory mineral interest in the tract on which the
20-8 wellbore is located when the wellbore was last accepted into TERRA;
20-9 and
20-10 (3) an agreement under Subchapter B executed at that
20-11 time by the person remains in effect at the time of release of the
20-12 wellbore.
20-13 (e) The commission may not require a payment under this
20-14 section if the applicant agrees to plug the wellbore and complies
20-15 with all commission plugging rules.
20-16 (f) If the license on a wellbore sought to be released under
20-17 this section has not expired, the commission may approve the
20-18 application for release, effective not earlier than the day after
20-19 the date the license expires unless the applicant submits a written
20-20 release from the license holder that allows for an earlier release
20-21 date.
20-22 (g) The person to whom a wellbore is released assumes
20-23 responsibility for plugging of the wellbore and cleanup of the
20-24 site, including all associated costs in accordance with state law
20-25 and commission rules, but the license holder must comply with
21-1 Sections 93.039 and 93.040.
21-2 Sec. 93.053. REQUEST FOR RELEASE BY MINERAL INTEREST OWNER
21-3 NOT BOUND BY TERRA AGREEMENT. (a) An owner of a present
21-4 possessory mineral interest in the tract on which the wellbore is
21-5 located who is not bound by an agreement under Subchapter B on the
21-6 wellbore may request that the wellbore be released from TERRA.
21-7 (b) The commission may not release a wellbore under this
21-8 section until the mineral interest owner is in full compliance with
21-9 all applicable state laws and commission rules relating to oil and
21-10 gas and has obtained all permits or other authorization required
21-11 under commission rules before the wellbore may be operated or
21-12 plugged.
21-13 (c) If the license for a wellbore sought to be released
21-14 under this section has not expired, the commission may approve the
21-15 application for release, effective not earlier than the day after
21-16 the date the license expires unless the applicant submits a written
21-17 release from the license holder that allows for an earlier release
21-18 date.
21-19 (d) The person to whom a wellbore is released assumes
21-20 responsibility for plugging of the wellbore and cleanup of the
21-21 site, including all associated costs in accordance with state law
21-22 and commission rules, but the license holder must comply with
21-23 Sections 93.039 and 93.040.
21-24 Sec. 93.054. RELEASE OF TERRA EASEMENTS. (a) When the last
21-25 TERRA wellbore on a tract has been released, the commission shall
22-1 file a release of all TERRA easements on the tract in the office of
22-2 the clerk of the county in which the tract is located.
22-3 (b) The release must contain:
22-4 (1) the section, block, survey, and abstract number of
22-5 the tract on which a subject wellbore is located;
22-6 (2) the API number for the subject wellbore and the
22-7 commission district and lease number or the commission gas
22-8 identification number for each well in the wellbore; and
22-9 (3) the volume and page number in the county real
22-10 property records at which each TERRA agreement relating to the
22-11 tract may be found.
22-12 (c) The release does not have to be acknowledged.
22-13 (d) The clerk shall record the release in the real property
22-14 records without collecting a fee.
22-15 (Sections 93.055-93.070 reserved for expansion
22-16 SUBCHAPTER E. ADMINISTRATIVE PROCEDURE; LIABILITY
22-17 Sec. 93.071. APPLICABILITY OF ADMINISTRATIVE PROCEDURE ACT.
22-18 (a) Chapter 2001, Government Code, applies to:
22-19 (1) a proceeding to revoke a TERRA license and to
22-20 assess an administrative penalty against or require reimbursement
22-21 from a license holder;
22-22 (2) a proceeding under Section 93.014(c); and
22-23 (3) a hearing required by commission rules on proposed
22-24 uses.
22-25 (b) Chapter 2001, Government Code, does not apply to a
23-1 decision by the commission under this chapter:
23-2 (1) on acceptance or refusal to accept a wellbore into
23-3 TERRA;
23-4 (2) on the amount of payment required under Section
23-5 93.013(a)(7);
23-6 (3) on the issuance of a license under this chapter;
23-7 and
23-8 (4) on the conditions of a license.
23-9 Sec. 93.072. JUDICIAL REVIEW. A commission decision
23-10 described by Section 93.071(b) is not subject to judicial review.
23-11 Sec. 93.073. LIABILITY OF STATE, COMMISSION, AND LICENSE
23-12 HOLDERS. (a) Notwithstanding any other law, the commission, an
23-13 employee or agent of the commission, a license holder, and the
23-14 state are immune from suit and from liability under any cause of
23-15 action alleging:
23-16 (1) that a wellbore plugged under this chapter should
23-17 not have been plugged; or
23-18 (2) that a TERRA wellbore used in compliance with
23-19 license conditions and commission rules has decreased the value of
23-20 the mineral estate in the tract on which the wellbore is located.
23-21 (b) Notwithstanding any other law, the commission and an
23-22 employee or agent of the commission are immune from suit and from
23-23 liability under any cause of action arising from the participation
23-24 of a wellbore in TERRA and alleging wrongful death or injury or
23-25 harm to persons, property, or interests caused by or suffered by a
24-1 license holder.
24-2 SECTION 3. Subchapter B, Chapter 201, Tax Code, is amended
24-3 by adding Section 201.058 to read as follows:
24-4 Sec. 201.058. TAX EXEMPTIONS. The exemptions described by
24-5 Sections 202.056 and 202.059 apply to the taxes imposed by this
24-6 chapter as authorized by and subject to the certifications and
24-7 approvals required by those sections.
24-8 SECTION 4. Section 202.052(c), Tax Code, is amended to read
24-9 as follows:
24-10 (c) The exemptions described by Sections 202.056 and 202.059
24-11 apply to <For> oil produced in this state from a well that
24-12 qualifies under Section 202.056 or 202.059, subject to the
24-13 certifications and approvals required by those sections <the rate
24-14 of tax imposed by this chapter shall be reduced to zero>.
24-15 SECTION 5. Subchapter B, Chapter 202, Tax Code, is amended
24-16 by adding Section 202.059 to read as follows:
24-17 Sec. 202.059. EXEMPTION FOR HYDROCARBONS FROM TERRA WELLS.
24-18 (a) Hydrocarbons produced from a well subject to an agreement
24-19 under Chapter 93, Natural Resources Code, and under a license
24-20 issued under that chapter qualify for an exemption from the taxes
24-21 imposed by this chapter and Chapter 201 if the comptroller approves
24-22 the tax exemption under Subsection (g).
24-23 (b) Hydrocarbons produced from a well formerly subject to an
24-24 agreement under Chapter 93, Natural Resources Code, and a license
24-25 issued under that chapter resuming production after participation
25-1 in TERRA for two years qualify for an exemption from the taxes
25-2 imposed by this chapter and Chapter 201 if the comptroller approves
25-3 the tax exemption under Subsection (g).
25-4 (c) The commission may certify a well eligible for a tax
25-5 exemption or an application may be made to the commission for
25-6 certification under this section. The commission may require an
25-7 applicant to provide the commission with any relevant information
25-8 required to administer this section. The commission shall issue a
25-9 certificate to each operator of the well. The certificate must:
25-10 (1) include identification of the well; and
25-11 (2) state the date on which the tax exemption takes
25-12 effect, subject to the comptroller's approval of the exemption
25-13 under Subsection (g).
25-14 (d) The commission shall furnish to the comptroller a copy
25-15 of a certificate of exemption for each well qualifying under this
25-16 section.
25-17 (e) The commission may revoke a certificate for a tax
25-18 exemption if information indicates that a well was not eligible for
25-19 that designation at the time of certification or if a license
25-20 issued under Chapter 93, Natural Resources Code, is revoked by the
25-21 commission. The commission shall notify the operator and the
25-22 comptroller that a certificate has been revoked. A tax exemption
25-23 granted under this section is automatically revoked on the date the
25-24 certificate is revoked, and hydrocarbons produced from the well
25-25 after the date of revocation are not eligible for the tax
26-1 exemption.
26-2 (f) The commission may adopt and enforce any rules or orders
26-3 that the commission finds necessary to administer this section.
26-4 (g) To qualify for the tax exemption, the person responsible
26-5 for paying the tax must apply to the comptroller for the exemption
26-6 and include with the application the certificate issued by the
26-7 commission under Subsection (c). The comptroller shall approve the
26-8 application of a person if the hydrocarbons are eligible for the
26-9 tax exemption. The comptroller may require a person applying for
26-10 the tax exemption to provide any relevant information necessary to
26-11 administer this section. The comptroller may establish procedures
26-12 to comply with this subsection and Subsection (h).
26-13 (h) If the tax is paid at the full rate provided by this
26-14 chapter and Chapter 201 on hydrocarbons produced on or after the
26-15 effective date of the tax exemption but before the date the
26-16 comptroller approves an application for the tax exemption, the
26-17 operator is entitled to a credit on taxes due under Chapter 201 or
26-18 this chapter in the amount equal to the tax paid during that
26-19 period. To receive a credit, the operator must apply to the
26-20 comptroller for the credit not later than one year after the date
26-21 the commission certifies the well for a tax exemption.
26-22 (i) A person is subject to the penalties that may be imposed
26-23 under Chapters 85 and 91, Natural Resources Code, if the person
26-24 makes and submits to the commission or comptroller an application,
26-25 report, or other document used or intended to be used for a
27-1 certification, tax exemption, or tax credit under this section and
27-2 the person knows that the application, report, or other document
27-3 contains a false or untrue material fact.
27-4 (j) A person is liable to the state for a civil penalty if
27-5 the person, after receiving notice from the commission that the
27-6 person's tax exemption certificate for a TERRA well or a former
27-7 TERRA well has been revoked, applies or attempts to apply for a tax
27-8 exemption for hydrocarbons produced from the well under the revoked
27-9 certificate. The amount of the penalty may not exceed the sum of:
27-10 (1) $10,000; and
27-11 (2) the difference between the amount of taxes paid or
27-12 attempted to be paid and the amount of taxes due.
27-13 (k) The attorney general may recover a penalty under
27-14 Subsection (j) in a suit brought on behalf of the state. Venue for
27-15 the suit is in Travis County.
27-16 (l) In this section:
27-17 (1) "Commission" means the Railroad Commission of
27-18 Texas.
27-19 (2) "Hydrocarbons" means any oil, gas, condensate, and
27-20 other liquid hydrocarbons produced from a well.
27-21 (3) "TERRA" means the Texas Experimental Research and
27-22 Recovery Activity under Chapter 93, Natural Resources Code.
27-23 SECTION 6. This Act takes effect January 1, 1996.
27-24 SECTION 7. The importance of this legislation and the
27-25 crowded condition of the calendars in both houses create an
28-1 emergency and an imperative public necessity that the
28-2 constitutional rule requiring bills to be read on three several
28-3 days in each house be suspended, and this rule is hereby suspended.