By Craddick                                           H.B. No. 2731
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the Texas Experimental Research and Recovery Activity
    1-3  for oil and gas production research.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  The legislature finds that current oil and gas
    1-6  production practices will leave unrecovered much of the
    1-7  hydrocarbons originally in place under public and private land, and
    1-8  that the economic activity flowing from the recovery of a
    1-9  significant portion of these hydrocarbons would be of great benefit
   1-10  to the future well-being of the people of the state.  The
   1-11  legislature also finds that the incentives and opportunities
   1-12  provided in this act will enhance and encourage development of new
   1-13  technologies needed to identify and recover these hydrocarbons.
   1-14  The development of these technologies within the state would be of
   1-15  benefit to the state's economy.  The legislature further finds that
   1-16  mechanically sound, non-polluting wells which would otherwise be
   1-17  plugged and abandoned are a valuable asset, useful in the
   1-18  development of previously overlooked hydrocarbon deposits and new
   1-19  recovery technologies, which may lead to a return of the wells to
   1-20  commercial production.  Mineral interest owners should be
   1-21  encouraged voluntarily to preserve and utilize wells toward those
   1-22  ends by agreement with the state under this act.  The legislature
   1-23  finds that the activities provided by this act serve a governmental
    2-1  purpose and benefit to the people of this state.
    2-2        SECTION 2.  Title 3, Natural Resources Code, is amended by
    2-3  adding Chapter 93 to read as follows:
    2-4   CHAPTER 93.  TEXAS EXPERIMENTAL RESEARCH AND RECOVERY ACTIVITY. 
    2-5                   SUBCHAPTER A.  GENERAL PROVISIONS
    2-6        Sec. 93.001.  Definitions.  In this subchapter:
    2-7              (1)  "Terra Fund" means the fund created under Section
    2-8  93.003 of this chapter.
    2-9              (2)  "Licensee" means a person licensed by the
   2-10  commission to use a TERRA wellbore.
   2-11              (3)  "Mineral Interest Owner" means an owner of a
   2-12  present possessory mineral interest or vested mineral interest that
   2-13  may become present and possessory.
   2-14              (4)  "Operator" means the person legally responsible
   2-15  under law or commission rules for the physical operation of a
   2-16  wellbore or lease;
   2-17              (5)  "Present possessory mineral interest" means a
   2-18  mineral interest that includes the present right to use the land
   2-19  surface for exploration and production of minerals;
   2-20              (6)  "Production test" means a test to determine
   2-21  whether a given recovery technique will yield production in paying
   2-22  quantities.
   2-23              (7)  "Responsible person" has the meaning given in
   2-24  Section 91.113(b) of this code and includes a licensee;
   2-25              (8)  "Tract" means an oil lease or a gas proration unit
    3-1  established under commission rules;
    3-2              (9)  "Wellbore" means a hole in the ground drilled in
    3-3  connection with the exploration, development or production of oil,
    3-4  gas, or geothermal resources and includes any tubular goods
    3-5  cemented in the hole;
    3-6              (10)  "Wellsite equipment" means any production-related
    3-7  equipment or materials specific to a wellbore including motors,
    3-8  pumps, pump jacks, tanks, tank batteries, separators, compressors,
    3-9  casing, tubing, and rods.
   3-10        Sec. 93.002.  Texas Experimental Research and Recovery
   3-11  Activity.  (a)  The Texas Experimental Research and Recovery
   3-12  Activity (TERRA) is established within the Railroad Commission of
   3-13  Texas.
   3-14        (b)  The purpose of TERRA is:
   3-15              (1)  to assemble and hold an inventory of mechanically
   3-16  sound and non-polluting wellbores, to be licensed by the commission
   3-17  for use in gathering data, performing production tests, and
   3-18  developing and testing enhanced or advanced recovery techniques;
   3-19              (2)  to enable mineral interest owners to realize any
   3-20  commercial potential which may be found in such wellbores as
   3-21  technology and circumstances change; and
   3-22              (3)  to protect the environment by ensuring that TERRA
   3-23  wellbores posing a pollution threat or determined to be without
   3-24  economic value are properly plugged in accordance with state law
   3-25  and rules of the commission.
    4-1        (c)  The commission has broad discretion in administering
    4-2  this chapter and may adopt and enforce any appropriate rules or
    4-3  orders that the commission finds necessary to administer this
    4-4  chapter.
    4-5        Sec. 93.003.  TERRA Fund.  (a)  The TERRA Fund is created as
    4-6  a special fund in the state treasury dedicated to TERRA purposes.
    4-7        (b)  The TERRA fund consists of:
    4-8              (1)  license fees collected under Section 93.030(e) of
    4-9  this code;
   4-10              (2)  monies from the oil-field cleanup fund as provided
   4-11  by Section 93.013(b) of this code:
   4-12              (3)  payments received under Section 93.013(a)(6) of
   4-13  this code;
   4-14              (4)  payments received under Sections 93.032 and 93.052
   4-15  of this code;
   4-16              (5)  interest earned on the funds deposited in the
   4-17  TERRA fund;
   4-18              (6)  an amount which shall be transferred from the
   4-19  oil-field cleanup fund to the TERRA fund annually on the first day
   4-20  of January equal to the total money received by the oil-field
   4-21  cleanup fund as proceeds from the sale of salvaged equipment under
   4-22  Sections 89.085(d) and 91.115(f) of this code, less the total money
   4-23  paid out to claimants under Section 89.086 of this code, during the
   4-24  previous fiscal year; and
   4-25              (7)  private contributions or grant monies.
    5-1        (c)  Money in the TERRA fund may be used by the commission
    5-2  for:
    5-3              (1)  the purposes of TERRA, including administrative
    5-4  costs; and
    5-5              (2)  administrative and program costs of the commission
    5-6  relating to its oil and gas activities, including those under
    5-7  Subchapter M of Chapter 91 of this code, except that the commission
    5-8  may use only 75 percent of the annual interest earned on the funds
    5-9  for this purpose.
   5-10        (d)  Money in the TERRA fund may not be obligated for the
   5-11  purposes described in Subsection (c)(2) of this section unless the
   5-12  TERRA fund balance exceeds the total estimated plugging cost of all
   5-13  TERRA wells.
   5-14        (e)  After September 1, 1999, the commission may not accept a
   5-15  well into TERRA under Section 93.013(a)(6) unless the TERRA fund
   5-16  balance exceeds the total estimated plugging cost of all TERRA
   5-17  wells.
   5-18        Sec. 93.004.  Use of Oil-field Cleanup Fund.  Except as
   5-19  provided in Section 93.013(b), a well in the TERRA program shall
   5-20  not be plugged with funds from the oil-field cleanup fund.
   5-21                    SUBCHAPTER B.  TERRA AGREEMENT
   5-22        Sec. 93.011.  Agreement between Commission and Mineral
   5-23  Interest Owners.  (a)  A mineral interest owner may designate the
   5-24  commission as its agent and grant to the commission an easement for
   5-25  the sole purpose of maintaining and licensing a wellbore in TERRA.
    6-1        (b)  The commission may accept grants of easements from, and
    6-2  become the agent of, a mineral interest owner.  Easements granted
    6-3  to the commission under this chapter are public property held and
    6-4  used on behalf of the public solely for the purposes of TERRA as
    6-5  provided in this chapter and shall not be subject to taxation.
    6-6        (c)  The commission shall prepare a form for the "TERRA"
    6-7  agreement.  The agreement shall include the following provisions,
    6-8  which when executed by a mineral interest owner:
    6-9              (1)  grant the commission an easement for access to the
   6-10  wellbore solely for TERRA purposes;
   6-11              (2)  designate the commission as the mineral interest
   6-12  owner's agent for maintaining the wellbore in TERRA and licensing
   6-13  the wellbore solely for the uses specified in this subchapter; and
   6-14              (3)  allow the use of wellsite equipment found at or in
   6-15  the wellbore by a licensee for the term of the license.
   6-16        (d)  The TERRA agreement may incorporate by reference any
   6-17  provisions of this chapter.
   6-18        (e)  The TERRA agreement shall also contain:
   6-19              (1)  the section, block, survey, and abstract number of
   6-20  the land on which a subject wellbore is located;
   6-21              (2)  the API number for the subject wellbore and the
   6-22  commission district and lease number or the commission gas
   6-23  identification number for each well in the wellbore;
   6-24              (3)  the name of the lease as shown on commission
   6-25  records; and
    7-1              (4)  any other provisions deemed necessary by the
    7-2  commission.
    7-3        (f)  The consideration for the granting of the easement and
    7-4  the use of any wellsite equipment shall be the forbearance by the
    7-5  commission from requiring the mineral interest owners' compliance
    7-6  with otherwise applicable rules regarding maintenance and plugging
    7-7  of inactive wells, as well as the possibility that participation in
    7-8  TERRA may lead to the recovery of hydrocarbons, which otherwise
    7-9  would not have been recovered, for the mineral interest owner.
   7-10        (g)  The commission shall file the agreement in the office of
   7-11  the clerk of the county in which the wellbore is located, and the
   7-12  clerk shall record it in the real property records without
   7-13  collecting a fee.
   7-14        Sec. 93.012.  Validity of Terra Easements.  (a)  Easements
   7-15  granted in the TERRA agreement run with the land and are valid
   7-16  notwithstanding:
   7-17              (1)  they are not appurtenant to an interest or estate
   7-18  in real property;
   7-19              (2)  they are not of a character traditionally
   7-20  recognized under the common law;
   7-21              (3)  they do not touch and concern the land; and
   7-22              (4)  there is no privity of estate between the grantor
   7-23  and the commission.
   7-24        (b)  The TERRA agreement, including the designation of the
   7-25  commission as agent of the grantor, binds all
    8-1  successors-in-interest of the mineral interest owner even though
    8-2  the commission does not have a beneficial interest in the mineral
    8-3  estate or the wellbores made the subject of a TERRA agreement.
    8-4        (c)  A vested mineral interest existing at the time a TERRA
    8-5  agreement is executed is not affected by the TERRA agreement unless
    8-6  the owner of the mineral interest is a party to the agreement or
    8-7  ratifies or consents to it.
    8-8        (d)  A mineral interest in a tract on which a TERRA wellbore
    8-9  is located which is acquired by a person after the person has
   8-10  signed a TERRA agreement pertaining to the wellbore is bound by the
   8-11  TERRA agreement.
   8-12        Sec. 93.013.  Acceptance of Wellbores into TERRA.  (a)  An
   8-13  inactive wellbore used in connection with the exploration for or
   8-14  production of hydrocarbons may, at the discretion of the
   8-15  commission, be accepted into TERRA if the commission finds the
   8-16  wellbore useful to the accomplishment of the purposes of this
   8-17  chapter and if:
   8-18              (1)  in the case of mineral interests owned by the
   8-19  state or by a state agency, or political subdivision of the state,
   8-20  the person or governing body authorized by law to lease the mineral
   8-21  interest, the person or governing body authorized by law to approve
   8-22  a lease of the mineral interest, and the lessee, if the land is
   8-23  leased, have signed the TERRA agreement covering the wellbore;
   8-24              (2)  in the case of mineral interests privately owned,
   8-25  the owners of at least fifty percent of the present possessory
    9-1  mineral interest in all horizons originally penetrated by the
    9-2  wellbore, along with the owners of any other mineral interest
    9-3  required by the commission, have signed the TERRA agreement
    9-4  covering the wellbore;
    9-5              (3)  the wellbore and wellsite are in compliance with
    9-6  state laws and commission rules, and the wellbore is free of
    9-7  obstructions and mechanically sound as shown by a current fluid
    9-8  level test or, if the wellbore is at least 25 years old and has
    9-9  been inactive at least ten years, or when otherwise required by the
   9-10  commission at its discretion, by a current mechanical integrity
   9-11  test prescribed by the commission;
   9-12              (4)  the commission is provided with documentation that
   9-13  other than the liens created under Chapter 89 of this code, there
   9-14  are no outstanding charges, liens, or obligations of any kind
   9-15  secured wholly or in part by the leasehold estate or by any
   9-16  wellsite equipment;
   9-17              (5)  the possessory mineral interest owner or last
   9-18  operator provides the commission with a copy of all logs and each
   9-19  item of wellbore documentation in its possession or control; and
   9-20              (6)  the commission receives from the mineral interest
   9-21  owner, for deposit into the TERRA fund, payment in an amount to be
   9-22  set by the commission, depending on the age and condition of the
   9-23  wellbore, not to exceed 75 percent of the commission's estimated
   9-24  costs of plugging the wellbore.  If the wellbore is not accepted
   9-25  into TERRA, the payment shall be returned.
   10-1        (b)  The commission, at its discretion, may place an
   10-2  abandoned wellbore scheduled for plugging with state funds under
   10-3  Chapter 89 of this code in TERRA if it meets the requirements of
   10-4  Subdivisions (1) through (4) of this section.  Upon placement of
   10-5  the wellbore in TERRA, the commission shall transfer from the
   10-6  oil-field cleanup fund to the TERRA fund an amount equal to 100
   10-7  percent of the commission's estimated plugging costs.  If, after
   10-8  such a transfer of funds, the well must be plugged with state funds
   10-9  while it remains in TERRA, it shall be plugged with money from the
  10-10  TERRA fund; the oil-field cleanup fund may not be used to plug a
  10-11  TERRA well.
  10-12        (c)  If a well transferred to the TERRA program under
  10-13  Subsection (b) of this section is subsequently released under
  10-14  Subchapter D of this chapter, the amount received into the TERRA
  10-15  fund under Subsection (b) shall be transferred back to the
  10-16  oil-field cleanup fund.
  10-17        (d)  The offer of a wellbore into TERRA or its acceptance by
  10-18  the commission is not to be construed as an abandonment of the
  10-19  wellbore or of the lease or the lease purposes by the mineral
  10-20  interest owner.
  10-21        Sec. 93.014.  Effect of Acceptance of Wellbore into TERRA.
  10-22  (a)  Upon acceptance of a wellbore into TERRA, the commission shall
  10-23  assume the well plugging duties imposed on the last operator by
  10-24  Chapter 89 of this code until the wellbore is released from TERRA
  10-25  under Subchapter D of this chapter.
   11-1        (b)  A licensee or the commission is not responsible for any
   11-2  discharge of oil and gas waste or other substances or materials
   11-3  regulated by the commission under Section 91.101 of this code
   11-4  occurring before the wellbore was accepted into TERRA.
   11-5        (c)  If a mineral interest owner has materially misstated the
   11-6  condition of a wellbore or wellsite and its compliance with
   11-7  Subsections (a)(3) or (a)(4) of Section 93.013 in connection with
   11-8  the acceptance of the wellbore into TERRA, the commission, after
   11-9  notice and opportunity for a hearing, may:
  11-10              (1)  order restoration of all plugging and cleanup
  11-11  responsibility to the mineral interest owner and require the
  11-12  mineral interest owner to plug the wellbore and to cleanup the
  11-13  wellsite; or
  11-14              (2)  plug the wellbore and cleanup the wellsite.
  11-15        (d)  In an action under Subsection (c) of this section, the
  11-16  commission may retain, as an administrative penalty or a portion
  11-17  thereof, the payment made under Section 93.013(a)(6) and order
  11-18  reimbursement of any plugging or cleanup costs incurred by the
  11-19  commission.
  11-20        (e)  Acceptance of a wellbore into TERRA or transfer of funds
  11-21  from the oil-field cleanup fund to the TERRA fund does not bar the
  11-22  commencement or continuation of administrative or judicial
  11-23  proceedings, including collection suits, against an operator or
  11-24  other responsible person for violations of commission rules or
  11-25  orders or state law.
   12-1        (f)  Acceptance by the commission of a wellbore into TERRA
   12-2  creates a rebuttable presumption that the well was in compliance
   12-3  with commission rules at the time of acceptance.
   12-4        (g)  For the purposes of this section, mineral interest
   12-5  owners who have signed a TERRA agreement and who are not licensees
   12-6  are not "responsible persons" as defined in Section 91.113(b) of
   12-7  this code for a well covered by the agreement and, except as
   12-8  provided by Subsection (c) of this section, shall not be
   12-9  responsible under commission rules for plugging, cleaning up, or
  12-10  remediating a TERRA well or TERRA wellsite.
  12-11        (h)  Neither the commission nor a licensee shall be held to
  12-12  exercise any fiduciary or similar duties for the benefit of a
  12-13  mineral interest owner in the tract on which a TERRA wellbore is
  12-14  located, and no express or implied lease covenants shall apply to
  12-15  the commission or a licensee in the use or non-use of a TERRA
  12-16  wellbore.
  12-17              SUBCHAPTER C.  LICENSES FOR TERRA WELLBORES
  12-18        Sec. 93.030.  Application for License and Fees.  (a)  An
  12-19  applicant for a license shall comply with Subchapters D and E of
  12-20  Chapter 91 before the commission may issue a license.
  12-21        (b)  A separate application must be submitted for each oil
  12-22  lease and each gas wellbore.
  12-23        (c)  An application for a license shall be on a form
  12-24  prescribed by the commission.
  12-25        (d)  The commission may require an applicant for a license to
   13-1  provide any information relating to a tract that is the subject of
   13-2  a license, including a legal description of the mineral ownership
   13-3  of the tract and identification and location of wells.  If an
   13-4  applicant intends to claim that any of the information submitted is
   13-5  confidential under Section 552.110, Government Code, relating to
   13-6  trade secrets or Section 552.113, Government Code, relating to
   13-7  geological or geophysical information, the applicant must request,
   13-8  in writing, confidential treatment and clearly mark such documents
   13-9  as confidential.
  13-10        (e)  With each application for a license, an applicant shall
  13-11  submit to the commission a non-refundable administrative fee equal
  13-12  to the lesser of $50.00 per well or $500.00 per tract.  All fees
  13-13  collected under this section shall be deposited in the TERRA fund.
  13-14        (f)  The commission may require an applicant to provide the
  13-15  commission with TERRA agreements executed by owners of reversionary
  13-16  and other mineral interests before the license may be issued.
  13-17        (g)  A license may be renewed or amended as provided by
  13-18  commission rules.  An application for release of a TERRA wellbore
  13-19  submitted to the commission under Section 93.052 or Section 93.053
  13-20  has priority over a new license for a TERRA wellbore or an
  13-21  amendment or renewal of an existing license.
  13-22        Sec. 93.031.  Licenses under TERRA.  (a)  A license entitles
  13-23  the licensee to use the wellbore named in the license for the
  13-24  duration of the license, solely for the purposes of TERRA and in
  13-25  accordance with the license, this chapter and other applicable
   14-1  state law.  A licensee shall comply with all commission rules
   14-2  governing the licensed use, including rules that require a permit
   14-3  be issued or an exception to a commission rule be granted.  A
   14-4  licensee is the "responsible person" as defined in Section
   14-5  91.113(b) of this code for the licensed wellbores for the duration
   14-6  of the license, and until any violations of commission rules or
   14-7  orders committed by the licensee have been corrected.
   14-8        (b)  A license shall state its duration, the specific uses to
   14-9  which the listed wellbore may be put, and any conditions imposed by
  14-10  the commission.
  14-11        (c)  All licenses must be approved by the commission by
  14-12  adoption of a final order and may be in the form of a commission
  14-13  order or in some other form prescribed by the commission.
  14-14        (d)  The commission may hold a hearing on an application for
  14-15  a license and a proposed use in accordance with commission rules.
  14-16        Sec. 93.032.  Violation of License.  If a licensee violates a
  14-17  license or a commission rule or order, the commission may revoke
  14-18  the license.  If the violation is of a license condition, rule or
  14-19  order pertaining to safety or the prevention or control of
  14-20  pollution, the commission may seek reimbursement of its costs and
  14-21  administrative penalties under Chapters 81 or 85 of this code or
  14-22  proceed against a bond or letter of credit, or both.  Any penalties
  14-23  or reimbursement shall be deposited into the TERRA fund.
  14-24        Sec. 93.033.  Licensed Uses.  TERRA wellbores may be licensed
  14-25  for the collection of data, for production testing, or for
   15-1  developmental research on recovery techniques, each of which must
   15-2  have a reasonable potential to increase the recovery of
   15-3  hydrocarbons from the tract on which the wellbores are located.
   15-4  The commission may by rule or as a part of the license establish
   15-5  terms and conditions for licensed uses.
   15-6        Sec. 93.034.  Expiration of License.  At the end of a
   15-7  license, if not renewed, the commission may release a wellbore
   15-8  under the license as provided in Subchapter D of this chapter,
   15-9  maintain the wellbore in TERRA, or license the wellbore to another
  15-10  person.
  15-11        Sec. 93.035.  Wellsite Equipment.  (a)  A licensee may use,
  15-12  or may remove and safeguard, wellsite equipment in which it has no
  15-13  legal interest.  A licensee shall return and properly reinstall all
  15-14  equipment removed, no later than 30 days after the license expires
  15-15  unless:
  15-16              (1)  the equipment has been lawfully claimed by a
  15-17  person with an ownership or security interest in the equipment; or
  15-18              (2)  a possessory mineral interest owner or the owner
  15-19  of the equipment has requested otherwise.
  15-20        (b)  If the wellbore has been plugged, the licensee is not
  15-21  required to reinstall any wellsite equipment taken from the
  15-22  wellbore or wellhead.
  15-23        (c)  Any person who removes wellsite or production equipment
  15-24  from a licensed or unlicensed TERRA wellbore is subject to the
  15-25  regulatory jurisdiction of the commission under Subchapter C,
   16-1  Chapter 81 of this code.  Any reimbursement of commission costs or
   16-2  administrative penalties assessed or civil penalties adjudged in an
   16-3  action against such person for violation of commission rules shall
   16-4  be deposited into the TERRA fund.
   16-5        Sec. 93.036.  Restoration of Land Surface.  Within a
   16-6  reasonable time not to exceed 30 days after the end of a licensed
   16-7  use, a licensee shall restore the surface of the land, as nearly as
   16-8  reasonably possible, to the condition of the land when the licensed
   16-9  use commenced.  This section shall not apply if, before the end of
  16-10  the 30-day period, the licensee, acting under a lease, obtains
  16-11  release of the wellbore from TERRA and assumes responsibility for
  16-12  the wellbore under state law and commission rules.
  16-13        Sec. 93.037.  Produced Hydrocarbons.  (a)  Hydrocarbons
  16-14  produced during a commission-approved production test from a TERRA
  16-15  wellbore may be sold by the licensee without complying with
  16-16  Subchapter E, Chapter 85 of this code.  No allowable is required in
  16-17  order to produce hydrocarbons except that the licensee shall report
  16-18  all production in accordance with commission rules.
  16-19        (b)  Unless otherwise provided in a lease or other legal
  16-20  document, proceeds of any hydrocarbons produced during a
  16-21  commission-approved production from a TERRA wellbore and sold by a
  16-22  licensee shall be paid as follows:
  16-23              (1)  on Relinquishment Act lands, one-half of the
  16-24  proceeds shall be paid as royalty as required by law, to be
  16-25  apportioned between the owner of the soil and the state, and
   17-1  one-half to the licensee;
   17-2              (2)  on other lands in which the state owns the
   17-3  minerals, one-half to the state fund into which royalties from the
   17-4  well would be deposited, and one half to the licensee;
   17-5              (3)  on lands in which the mineral interest is
   17-6  privately held, one-half to the mineral owners according to their
   17-7  interests and one-half to the licensee; and
   17-8              (4)  on lands in which the mineral interest falls into
   17-9  more than one of the preceding categories, paid ratably according
  17-10  to the percentage of the interest in each category.
  17-11        (c)  Unless otherwise provided in a lease or other legal
  17-12  document, prompt payment shall be made by the licensee in
  17-13  accordance with Subchapter J, Chapter 91 of this code.
  17-14        (d)  A mineral interest owner accepting payment of a share of
  17-15  the proceeds under this section ratifies and consents to the terms
  17-16  of and becomes bound by the TERRA agreement which covers such
  17-17  proceeds.
  17-18        (e)  The production of a reasonable amount of hydrocarbons,
  17-19  to be determined by the commission, from a TERRA wellbore during a
  17-20  commission-approved production test shall not be considered waste
  17-21  of the corpus or remainder of a mineral estate, and Section 64.092,
  17-22  Civil Practice and Remedies Code, shall not apply.
  17-23        (f)  Hydrocarbons produced from a TERRA wellbore during a
  17-24  commission-approved production test shall be treated as ordinary
  17-25  production in any determination that a lease requirement for
   18-1  production to be continued in paying quantities has or has not been
   18-2  met.
   18-3        Sec. 93.038.  Tax Exemption for TERRA Production.  Production
   18-4  from a TERRA wellbore and production from a former TERRA wellbore
   18-5  that resumes production after at least two years' participation in
   18-6  TERRA shall be exempt from severance taxes.
   18-7        Sec. 93.039.  Prevention of Pollution.  Nothing in this
   18-8  subchapter is to be construed to limit the commission's authority
   18-9  under this title to prevent pollution, to plug wells, and to
  18-10  control or cleanup oil and gas wastes or other substances or
  18-11  material.
  18-12            SUBCHAPTER D.  RELEASE OF WELLBORES FROM TERRA
  18-13        Sec. 93.051.  Plugging of Wellbore.  A wellbore may be
  18-14  released from TERRA when it is plugged and abandoned in accordance
  18-15  with commission rules.  A person may not plug a TERRA wellbore
  18-16  without permission of the commission.
  18-17        Sec. 93.052.  Request by Possessory Mineral Interest Owners
  18-18  Bound by TERRA Agreement.  (a)  An owner of a present possessory
  18-19  mineral interest in the tract on which the wellbore is located who
  18-20  is bound by the TERRA agreement on the wellbore may file an
  18-21  application to release the wellbore from TERRA.
  18-22        (b)  The commission shall not approve an application or
  18-23  release a wellbore under this section until the mineral interest
  18-24  owner:
  18-25              (1)  is in full compliance with all applicable state
   19-1  laws and commission rules relating to oil and gas, including
   19-2  obtaining all permits or other authorization required under
   19-3  commission rules before the wellbore may be operated or plugged;
   19-4  and
   19-5              (2)  submits to the commission an amount to be set by
   19-6  the commission not greater than twice the reasonable plugging cost
   19-7  estimated by the commission as of the date of release.
   19-8        (c)  If the wellbore to be released has been in TERRA for one
   19-9  year or less, the payment required under Subsection (b)(2) shall be
  19-10  no greater than the reasonable plugging costs estimated by the
  19-11  commission as of the date of release.  No payment shall be required
  19-12  under this section if the applicant agrees to plug the wellbore and
  19-13  complies with all commission plugging rules.
  19-14        (d)  Any payments required under Subsections (b)(2) and (c)
  19-15  shall be reduced by the amount of payments by a person under
  19-16  Section 93.013(a)(6) if:
  19-17              (1)  the wellbore is released to the person, or to a
  19-18  lessee or assignee of the person;
  19-19              (2)  the person owned at least fifty percent of the
  19-20  present possessory mineral interest in the tract on which the
  19-21  wellbore is located when the wellbore was last accepted into TERRA;
  19-22  and
  19-23              (3)  if the TERRA agreement executed at that time by
  19-24  the person remains in effect as of the date of release of the
  19-25  wellbore.
   20-1        (e)  If the license on a wellbore sought to be released under
   20-2  this section has not expired, the commission may approve the
   20-3  application for release, effective no earlier than the day after
   20-4  the expiration date of the license unless the applicant submits a
   20-5  written release from the licensee which allows for an earlier
   20-6  release date.
   20-7        (f)  The person to whom a wellbore is released assumes
   20-8  responsibility for plugging of the wellbore and cleanup of the
   20-9  site, including all associated costs in accordance with state law
  20-10  and commission rules, except that the licensee must still comply
  20-11  with Sections 93.035 and 93.036.
  20-12        Sec. 93.053.  Request by Possessory Mineral Interest Owner
  20-13  Not Bound by TERRA Agreement.  (a)  An owner of a present
  20-14  possessory mineral interest in the tract on which the wellbore is
  20-15  located who is not bound by the TERRA agreement on the wellbore may
  20-16  request that the wellbore be released from TERRA.
  20-17        (b)  The commission shall not release a wellbore under this
  20-18  section until the mineral interest owner is in full compliance with
  20-19  all applicable state laws and commission rules relating to oil and
  20-20  gas, including obtaining all permits or other authorization
  20-21  required under commission rules before the wellbore may be operated
  20-22  or plugged.
  20-23        (c)  If the license on a wellbore sought to be released under
  20-24  this section has not expired, the commission may approve the
  20-25  application for release, effective no earlier than the day after
   21-1  the expiration date of the license unless the applicant submits a
   21-2  written release from the licensee which allows for an earlier
   21-3  release date.
   21-4        (d)  The person to whom a wellbore is released assumes
   21-5  responsibility for plugging of the wellbore and cleanup of the
   21-6  site, including all associated costs in accordance with state law
   21-7  and commission rules, except that licensee must still comply with
   21-8  Sections 93.035 and 93.036.
   21-9        Sec. 93.054.  Release of TERRA Easements.  (a)  When the last
  21-10  TERRA wellbore on a tract has been released, the commission shall
  21-11  file a release of all TERRA easements on the tract in the office of
  21-12  the clerk of the county in which the tract is located.
  21-13        (b)  The release need not be acknowledged, and shall contain:
  21-14              (1)  the section, block, survey, and abstract number of
  21-15  the tract on which a subject wellbore is located;
  21-16              (2)  the API number for the subject wellbore and the
  21-17  commission district and lease number or the commission gas
  21-18  identification number for each well in the wellbore;
  21-19              (3)  the volume and page number in the county real
  21-20  property records at which each TERRA agreement relating to the
  21-21  tract may be found.
  21-22        (c)  The clerk shall record the release in the real property
  21-23  records without collecting a fee.
  21-24        Sec. 93.055.  Liability of Commission and TERRA Licensees;
  21-25  Judicial Review.  (a)  Notwithstanding any other provision of law,
   22-1  the commission, its employees, agents, and TERRA licensees, and the
   22-2  State of Texas are immune from suit and from liability under any
   22-3  cause of action alleging:
   22-4              (1)  that a wellbore plugged under this chapter should
   22-5  not have been plugged; or
   22-6              (2)  that a TERRA wellbore used in compliance with
   22-7  license conditions and commission rules has decreased the value of
   22-8  the mineral estate in the tract on which the wellbore is located.
   22-9        (b)  Notwithstanding any other provision of law, the
  22-10  commission and its employees and agents are immune from suit and
  22-11  from liability under any cause of action arising from the
  22-12  participation of a wellbore in TERRA and alleging wrongful death or
  22-13  injury or harm to persons, property or interests caused by or
  22-14  suffered by a TERRA licensee.
  22-15        (c)  Under this chapter, a decision by the commission to
  22-16  accept or to decline to accept a wellbore into TERRA, on the amount
  22-17  of payment required under Section 93.013(a)(6), on the issuance of
  22-18  a TERRA license, and on license conditions, is not subject to
  22-19  judicial review, and the provisions of Chapter 2001, Government
  22-20  Code, do not apply.
  22-21        (d)  Proceedings to revoke TERRA licenses and to assess
  22-22  administrative penalties against or require reimbursement from
  22-23  TERRA licensees, proceedings under Section 93.014(c), and hearings
  22-24  required by commission rules on proposed uses shall be governed by
  22-25  Chapters 2001, Government Code.
   23-1        SECTION 3.  Subchapter B, 201, Tax Code, is amended by adding
   23-2  Section 201.056 to read as follows:
   23-3        Sec. 201.056.  TAX EXEMPTIONS.  The exemptions described by
   23-4  Sections 202.056 and Section 202.059 apply to the taxes imposed by
   23-5  this chapter as authorized by and subject to the certifications and
   23-6  approvals required by those sections.
   23-7        SECTION 4.  Section 202.052(c), Tax Code, is amended to read
   23-8  as follows:
   23-9        (c)  The exemptions described by Sections 202.056 and 202.059
  23-10  apply to <For> oil produced in this state from a well that
  23-11  qualifies under Section 202.056 or Section 202.059, subject to the
  23-12  certifications and approvals required by those sections.  <the rate
  23-13  of tax imposed by this chapter shall be reduced to zero>.
  23-14        SECTION 5.  Subchapter B, Chapter 202, Tax Code is amended by
  23-15  adding Section 202.059 to read as follows:
  23-16        Section 202.059.  Exemption for Hydrocarbons from Terra
  23-17  Wells.  (a)  In this section:
  23-18              (1)  "Commission" means the Railroad Commission of
  23-19  Texas;
  23-20              (2)  "Hydrocarbon" means any oil, gas, condensate, and
  23-21  other liquid hydrocarbons produced from a well; and
  23-22              (3)  "TERRA" means the Texas Experimental Research and
  23-23  Recovery Activity under Chapter 93, Natural Resources Code.
  23-24        (b)  Hydrocarbons produced from a TERRA well under a TERRA
  23-25  license qualify for an exemption from the taxes imposed by this
   24-1  chapter and Chapter 201 if the comptroller has approved the tax
   24-2  exemption under Subsection (h).
   24-3        (c)  Hydrocarbons produced from a former TERRA well resuming
   24-4  production after two years' participation in TERRA qualify for an
   24-5  exemption from the taxes imposed by this chapter and Chapter 201 if
   24-6  the comptroller has approved the tax exemption under Subsection
   24-7  (h).
   24-8        (d)  The commission may certify a well eligible for a tax
   24-9  exemption or an application may be made to the commission for
  24-10  certification under this section.  The commission may require an
  24-11  applicant to provide the commission with any relevant information
  24-12  required to administer this section.  The commission shall issue a
  24-13  certificate to each operator of such well.  The certificate must:
  24-14              (1)  include identification of the well; and
  24-15              (2)  state the date on which the tax exemption takes
  24-16  effect subject to the comptroller's approval of the exemption under
  24-17  Subsection (h).
  24-18        (e)  The commission shall furnish to the comptroller a copy
  24-19  of a certificate of exemption for each well qualifying under this
  24-20  section.
  24-21        (f)  The commission may revoke a certificate for a tax
  24-22  exemption if information indicates that a well was not eligible for
  24-23  that designation at the time of certification or if a TERRA license
  24-24  in revoked by the commission.  The commission shall notify the
  24-25  operator and the comptroller that a certificate has been revoked.
   25-1  A tax exemption granted under this section is automatically revoked
   25-2  on the date the certificate is revoked and hydrocarbons produced
   25-3  from such well after the date of revocation are not eligible for
   25-4  the tax exemption.
   25-5        (g)  The commission has broad discretion in administering
   25-6  this section and may adopt and enforce any appropriate rules or
   25-7  orders that the commission finds necessary to administer this
   25-8  section.
   25-9        (h)  To qualify for the tax exemption, the person responsible
  25-10  for paying the tax must apply to the comptroller for the exemption
  25-11  and include with the application the certificate issued by the
  25-12  commission under Subsection (d).  The comptroller shall approve the
  25-13  application of a person if the hydrocarbons are eligible for the
  25-14  tax exemption.  The comptroller may require a person applying for
  25-15  the tax exemption to provide any relevant information necessary to
  25-16  administer this section.  The comptroller may establish procedures
  25-17  as necessary to comply with this subsection and Subsection (i).
  25-18        (i)  If the tax is paid at the full rate provided by this
  25-19  chapter and Chapter 201 on hydrocarbons produced on or after the
  25-20  effective date of the tax exemption but before the date the
  25-21  comptroller approves an application for the tax exemption, the
  25-22  operator is entitled to a credit on taxes due under Chapter 201 or
  25-23  this chapter in the amount equal to the tax paid during that
  25-24  period.  To receive a credit, the operator must apply to the
  25-25  comptroller for the credit not later than one year after the date
   26-1  the commission certifies the well for a tax exemption.
   26-2        (j)  A person is subject to the penalties that may be imposed
   26-3  under Chapters 85 and 91, Natural Resources Code, if the person
   26-4  makes and submits to the commission or comptroller an application,
   26-5  report, or other document used or intended to be used for a
   26-6  certification, tax exemption or a tax credit under this section and
   26-7  the person knows that the application, report, or other document
   26-8  contains a false or untrue material fact.
   26-9        (k)  A person is liable to the state for a civil penalty if
  26-10  the person, after receiving notice from the commission that the
  26-11  person's tax exemption certificate for a TERRA well or a former
  26-12  TERRA well has been revoked, applies or attempts to apply for a tax
  26-13  exemption for hydrocarbons produced from such well under the
  26-14  revoked certificate.  The amount of the penalty may not exceed the
  26-15  sum of:
  26-16                    (A)  $10,000; and
  26-17                    (B)  the difference between the amount of taxes
  26-18  paid or attempted to be paid and the amount of taxes due.
  26-19        (l)  The attorney general may recover a penalty under
  26-20  Subdivision (k) in a suit brought on behalf of the state.  Venue
  26-21  for the suit is in Travis County.
  26-22        SECTION 6.  Subchapter M, Chapter 91, Natural Resources Code
  26-23  is amended to read as follows:
  26-24                          SUBCHAPTER M.  LOGS
  26-25        Sec. 91.551.  Definitions.  In this subchapter:
   27-1              (1)  "Well" means a well being drilled for oil or gas
   27-2  or both oil and gas.
   27-3              (2)  "Log" means any conventional, commercially
   27-4  available lithology or porosity wireline survey, including
   27-5  electrical, acoustic, and nuclear surveys.
   27-6        Sec. 91.552.  Logs Required to be Filed.  (a)  An operator
   27-7  shall file one copy of every log that is run on a well between the
   27-8  date of the permit to drill or deepen and the completion date of
   27-9  such well or date of plugging of such well if the well is a dry
  27-10  hole.
  27-11        (b)  A log required to be filed under this section must be
  27-12  filed not later than the 30th day after the completion or plugging
  27-13  date for the well.
  27-14        (c)  A log may be filed in digital or paper format.  If filed
  27-15  in paper format, the copy must legible and in unaltered final form.
  27-16        (d)  This section shall not be construed to require that a
  27-17  log be run on any well.
  27-18        (e)  Prototype, experimental or research logs are not subject
  27-19  to this subchapter.
  27-20        (f)  The commission by rule shall define the types and kinds
  27-21  of logs required to filed under this subchapter.
  27-22        Sec. 991.553.  Availability of Logs.  (a)  Except as
  27-23  specifically provided by this section, each log filed with the
  27-24  commission under this subchapter is not confidential and is public
  27-25  information under Chapter 552, Government Code.
   28-1        (b)  At the time a log is required to be filed with the
   28-2  commission under Section 91.552 of this code, the operator may file
   28-3  a written request with the commission asking that the log remain
   28-4  confidential and not be made available as public information.  The
   28-5  operator shall request that the log remain confidential for a
   28-6  specific period of time, not to exceed four years from the date of
   28-7  filing the log.
   28-8        (c)  On filing of the request for confidentiality, the log
   28-9  becomes confidential and remains confidential for the period
  28-10  requested, unless the operator file a written release of
  28-11  confidentiality with the commission.
  28-12        Sec. 91.554.  Availability of Confidential Logs.  The
  28-13  commission shall make a confidential log available for inspection
  28-14  during the period of confidentiality only to:
  28-15              (1)  a person authorized in writing by the operator who
  28-16  filed the log with the commission; and
  28-17              (2)  members of the commission and its employees in the
  28-18  exercise of their powers and duties under this code if authorized
  28-19  in writing by the operator who filed the log with the commission.
  28-20        Sec. 91.555.  Management and Storage of Logs.  The commission
  28-21  may contract with any person for the management and storage of the
  28-22  logs filed with the commission.  The commission may accept gifts of
  28-23  money or grants from any source for use in administering this
  28-24  subchapter.
  28-25        Sec. 91.556.  Denial of Allowable.  If an operator fails to
   29-1  file a log as required by this subchapter, the commission may
   29-2  refuse to assign an allowable or a change in allowable for
   29-3  production from the well for which the log is required until that
   29-4  operator files the log with the commission.
   29-5        Sec. 91.557.  Records; Adoption of Rules.  The commission
   29-6  shall establish and maintain a record of each log filed with the
   29-7  commission, dates of confidentiality and release dates.  The
   29-8  commission may adopt and enforce any appropriate rules or orders
   29-9  that the commission finds necessary to administer this subchapter.
  29-10        Sec. 91.558.  Gifts of Logs.  At its discretion, the
  29-11  commission may accept other logs from any person.  Logs accepted by
  29-12  the commission under this section are subject to Section 91.552(c),
  29-13  Section 91.553 and Section 91.554 of this code and rules of the
  29-14  commission adopted under these sections.
  29-15                     <SUBCHAPTER M. ELECTRIC LOGS>
  29-16        <Sec. 91.551.  Definitions.  (a)  In this subchapter:>
  29-17              <(1)  "Well" means a well being drilled for exploration
  29-18  for oil or gas or both oil and gas.>
  29-19              <(2)  "Electric log" means a wireline survey, except
  29-20  dipmeter surveys and seismic wireline surveys, run in an open hole
  29-21  or a cased hole of a well for purposes of obtaining geological
  29-22  information.>
  29-23        <(b)  In this subchapter, "person" includes a successor in
  29-24  interest.>
  29-25        <Sec. 91.552.  Electric Logs Required to be Filed; Criteria>
   30-1        <(a)  Except as otherwise provided by this subchapter, at the
   30-2  time a person files with the commission a completion report for a
   30-3  well or, in the case of a dry hole, an application to plug a well,
   30-4  the person shall also file with the commission a copy of a basic
   30-5  electric log made after September 1, 1985, in conjunction with the
   30-6  drilling of the well that meets basic criteria established by the
   30-7  commission.>
   30-8        <(b)  The commission by rule shall establish criteria for
   30-9  basic electric logs to be filed with the commission.>
  30-10        <Sec. 91.553.  Availability of Electric Logs.  (a)  Except as
  30-11  specifically provided by this section, each electric log filed with
  30-12  the commission under this subchapter is not confidential and is
  30-13  public information under Chapter 424, Acts of the 63rd Legislature,
  30-14  Regular Session, 1973 (Article 6252-17a, Vernon's Texas Civil
  30-15  Statutes).>
  30-16        <(b)  At the time an electric log is required to be filed
  30-17  with the commission under Section 91.552 of this code, the person
  30-18  required to file the electric log may file a written request with
  30-19  the commission asking that the electric log remain confidential and
  30-20  not be made available as public information.  On filing this
  30-21  request, the electric log or copy of the electric log required to
  30-22  be filed with the commission may be retained by the person required
  30-23  to file the electric log, and the electric log may remain in the
  30-24  possession of the person for the period of confidentiality and any
  30-25  extensions of that period.  On filing of the request for
   31-1  confidentiality, the electric log becomes confidential and remains
   31-2  confidential for a period of one year after the date that the
   31-3  electric log is required to be filed with the commission.>
   31-4        <(c)  If an electric log is made confidential under
   31-5  Subsection (b) of this section, the person who is required to file
   31-6  the electric log is entitled to have the period of confidentiality
   31-7  extended once for an additional period of two years.  The
   31-8  commission shall grant the two-year extension on written request of
   31-9  the person who is required to filed the electric log.  The written
  31-10  request must be made to the commission before the one-year period
  31-11  of confidentiality under Subsection (b) of this section expires.>
  31-12        <(d)  If an electric log is made confidential under
  31-13  Subsection (b) of this section and the log was run in a well
  31-14  drilled on land submerged in state water, the person who is
  31-15  required to file the electric log is entitled to have the period of
  31-16  confidentiality extended for not more than two additional periods
  31-17  of two years each.  The commission shall grant the extension or
  31-18  extensions on written request of the person who is required to file
  31-19  the electric log.  The written request must be made to the
  31-20  commission before the expiration of the one-year period of
  31-21  confidentiality under Subsection (b) of this section or the
  31-22  expiration of the first extension granted under this subsection.>
  31-23        <(e)  A person required to file an electric log under this
  31-24  section who has held the log during a period of confidentiality or
  31-25  any extensions of that period shall file the log with the
   32-1  commission within 30 days after the conclusion of the period of
   32-2  confidentiality or the period of the last extension.>
   32-3        <Sec. 91.554.  Availability of Confidential Electric Logs.
   32-4  If the commission requires an electric log to be filed before the
   32-5  expiration of a period of confidentiality, the commission shall
   32-6  make that electric log available for inspection during the period
   32-7  of confidentiality only to:>
   32-8        <(a)  a person authorized in writing by the person who filed
   32-9  the electric log with the commission; and>
  32-10        <(b)  members of the commission and its employees in the
  32-11  exercise of their powers and duties under this code.>
  32-12        <Sec. 91.555.  Management and Storage of Electric Logs.  The
  32-13  commission may contract with any person for the management and
  32-14  storage of the electric logs filed with the commission.>
  32-15        <Sec. 91.556.  Denial of Allowable.  If a person fails to
  32-16  file an electric log as required by this subchapter, the commission
  32-17  may refuse to assign an allowable or a change in allowable for
  32-18  production from the well for which the electric log is required
  32-19  until that person files the electric log with the commission.>
  32-20        SECTION 7.  This Act takes effect January 1, 1996, except
  32-21  that SECTION 6 of this Act takes effect September 1, 1995.
  32-22        SECTION 8.  Section 6 of this Act applies to logs made on or
  32-23  after the effective date of this Act.  Logs made before the
  32-24  effective date of this Act are governed by the law under which they
  32-25  were made, and that law is continued in effect for that purpose.
   33-1        SECTION 9.  The importance of this legislation and the
   33-2  crowded condition of the calendars in both houses create an
   33-3  emergency and an imperative public necessity that the
   33-4  constitutional rule requiring bills to be read on three several
   33-5  days in each house be suspended, and this rule is hereby suspended.