1-1 By: Craddick (Senate Sponsor - Bivins) H.B. No. 2731
1-2 (In the Senate - Received from the House May 1, 1995;
1-3 May 3, 1995, read first time and referred to Committee on Finance;
1-4 May 18, 1995, reported favorably by the following vote: Yeas 7,
1-5 Nays 0; May 18, 1995, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to oil and gas production research and information,
1-9 including the Texas Experimental Research and Recovery Activity;
1-10 providing administrative, civil, and criminal penalties.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. (a) The legislature finds that current oil and
1-13 gas production practices will leave unrecovered much of the
1-14 hydrocarbons originally in place under public and private land and
1-15 that the economic activity flowing from the recovery of a
1-16 significant portion of those hydrocarbons would be of great benefit
1-17 to the future well-being of the people of this state.
1-18 (b) The legislature finds that the incentives and
1-19 opportunities provided by this Act will enhance and encourage
1-20 development of new technologies needed to identify and recover
1-21 those hydrocarbons. The development of those technologies within
1-22 the state would be of benefit to the state's economy.
1-23 (c) The legislature finds that mechanically sound,
1-24 nonpolluting wells that would otherwise be plugged and abandoned
1-25 are a valuable asset useful in the development of previously
1-26 overlooked hydrocarbon deposits and new recovery technologies that
1-27 may lead to a return of the wells to commercial production.
1-28 Mineral interest owners should be encouraged voluntarily to
1-29 preserve and use wells toward those ends by agreement with the
1-30 state under this Act.
1-31 (d) The legislature finds that the activities provided by
1-32 this Act serve a governmental purpose and benefit the people of
1-33 this state.
1-34 SECTION 2. Subtitle B, Title 3, Natural Resources Code, is
1-35 amended by adding Chapter 93 to read as follows:
1-36 CHAPTER 93. TEXAS EXPERIMENTAL RESEARCH AND RECOVERY ACTIVITY
1-37 SUBCHAPTER A. GENERAL PROVISIONS
1-38 Sec. 93.001. DEFINITIONS. In this chapter:
1-39 (1) "Commission" means the Railroad Commission of
1-40 Texas.
1-41 (2) "License holder" means a person licensed by the
1-42 commission to use a TERRA wellbore.
1-43 (3) "Mineral interest owner" means an owner of a
1-44 present possessory mineral interest or vested mineral interest that
1-45 may become present and possessory.
1-46 (4) "Operator" means the person responsible under law
1-47 or commission rules for the physical operation of a wellbore or
1-48 lease.
1-49 (5) "Present possessory mineral interest" means a
1-50 mineral interest that includes the present right to use the land
1-51 surface for exploration and production of minerals.
1-52 (6) "Production test" means a test to determine
1-53 whether a recovery technique will yield production in paying
1-54 quantities.
1-55 (7) "Responsible person" means a person who is
1-56 described by Section 91.113(b) or a license holder.
1-57 (8) "TERRA" means the Texas Experimental Research and
1-58 Recovery Activity.
1-59 (9) "Tract" means the area covered by an oil lease or
1-60 a gas proration unit established under commission rules.
1-61 (10) "Wellbore" means a hole in the ground drilled in
1-62 connection with the exploration, development, or production of oil,
1-63 gas, or geothermal resources and includes any tubular goods
1-64 cemented in the hole.
1-65 (11) "Wellsite equipment" means any production-related
1-66 equipment or materials specific to a wellbore, including motors,
1-67 pumps, pump jacks, tanks, tank batteries, separators, compressors,
1-68 casing, tubing, and rods.
2-1 Sec. 93.002. TEXAS EXPERIMENTAL RESEARCH AND RECOVERY
2-2 ACTIVITY. (a) The Texas Experimental Research and Recovery
2-3 Activity is established in the commission.
2-4 (b) The purpose of TERRA is:
2-5 (1) to acquire and hold an inventory of mechanically
2-6 sound and nonpolluting wellbores to be licensed by the commission
2-7 for use in gathering data, performing production tests, and
2-8 developing and testing enhanced or advanced recovery techniques;
2-9 (2) to enable mineral interest owners to realize any
2-10 commercial potential that may be found in the wellbores as
2-11 technology and circumstances change; and
2-12 (3) to protect the environment by ensuring that TERRA
2-13 wellbores posing a pollution threat or determined to be without
2-14 economic value are properly plugged in accordance with state law
2-15 and rules of the commission.
2-16 Sec. 93.003. COMMISSION POWERS. The commission may adopt
2-17 and enforce any appropriate rules or orders that the commission
2-18 finds necessary to administer this chapter.
2-19 Sec. 93.004. TERRA FUND; CERTIFICATION. (a) The TERRA fund
2-20 is created in the state treasury.
2-21 (b) The commission shall send to the comptroller, or notify
2-22 the comptroller of the amounts of money to be transferred, for
2-23 credit to the TERRA fund:
2-24 (1) license fees collected under Section 93.033;
2-25 (2) money from the oil-field cleanup fund as provided
2-26 by Section 93.013(c);
2-27 (3) payments received under Section 93.013(a)(8);
2-28 (4) payments received under Sections 93.036 and
2-29 93.052;
2-30 (5) on January 1 of each year, an amount from the
2-31 oil-field cleanup fund equal to the total money received by that
2-32 fund from the sale of salvaged equipment under Sections 89.085(d)
2-33 and 91.115(f), less the total money paid out to claimants under
2-34 Section 89.086, during the previous fiscal year;
2-35 (6) private contributions or grants; and
2-36 (7) any other money as provided by this chapter.
2-37 (c) Interest earned on the TERRA fund shall be credited to
2-38 the fund.
2-39 (d) Money in the TERRA fund may be used by the commission
2-40 only for:
2-41 (1) the purposes of TERRA, including administrative
2-42 costs; and
2-43 (2) administrative and program costs of the commission
2-44 relating to its oil and gas activities, including those under
2-45 Subchapter M, Chapter 91, except that the commission may use not
2-46 more than 75 percent of the annual interest earned on the money in
2-47 the fund for these purposes.
2-48 (e) Money in the TERRA fund may not be used or pledged for a
2-49 purpose described by Subsection (d)(2) unless the unobligated money
2-50 in the TERRA fund exceeds the total estimated plugging cost of all
2-51 unplugged TERRA wellbores.
2-52 Sec. 93.005. USE OF OIL-FIELD CLEANUP FUND. Except as
2-53 provided by Section 93.013(c), a TERRA wellbore may not be plugged
2-54 with money from the oil-field cleanup fund.
2-55 (Sections 93.006-93.010 reserved for expansion
2-56 SUBCHAPTER B. TERRA AGREEMENT
2-57 Sec. 93.011. AGREEMENT BETWEEN COMMISSION AND MINERAL
2-58 INTEREST OWNERS. (a) A mineral interest owner may by agreement
2-59 designate the commission as its agent and grant to the commission
2-60 an easement for the sole purpose of maintaining and licensing a
2-61 wellbore in TERRA.
2-62 (b) The commission may accept a grant of an easement from,
2-63 and become the agent of, a mineral interest owner.
2-64 (c) An easement granted to the commission under this chapter
2-65 is public property held and used on behalf of the public solely for
2-66 the purposes of TERRA as provided by this chapter and is not
2-67 subject to taxation.
2-68 (d) The commission shall prepare a form for the agreement.
2-69 The agreement must:
2-70 (1) be executed by the mineral interest owner of the
3-1 tract on which the wellbore is located;
3-2 (2) grant the commission an easement for access to the
3-3 wellbore solely for TERRA purposes;
3-4 (3) designate the commission as the mineral interest
3-5 owner's agent for maintaining the wellbore in TERRA and licensing
3-6 the wellbore solely for the uses specified by this chapter; and
3-7 (4) allow the use of wellsite equipment found at or in
3-8 the wellbore by a license holder for the term of the license.
3-9 (e) The agreement may incorporate by reference any provision
3-10 of this chapter.
3-11 (f) The agreement must also contain:
3-12 (1) the section, block, survey, and abstract number of
3-13 the land on which a wellbore covered by the agreement is located;
3-14 (2) the API number for the wellbore and the commission
3-15 district and lease number or the commission gas identification
3-16 number for each well in the wellbore;
3-17 (3) the name of the lease as shown on commission
3-18 records; and
3-19 (4) any other provision the commission considers
3-20 necessary.
3-21 (g) The consideration for the granting of the easement and
3-22 the use of any wellsite equipment is:
3-23 (1) forbearance by the commission in requiring the
3-24 mineral interest owner's compliance with otherwise applicable rules
3-25 regarding maintenance and plugging of inactive wells; and
3-26 (2) the possibility that participation in TERRA may
3-27 lead to the recovery of hydrocarbons that otherwise would not have
3-28 been recovered for the benefit of the mineral interest owner.
3-29 (h) The commission shall file the agreement in the office of
3-30 the clerk of the county in which the wellbore is located. The
3-31 clerk shall record it in the real property records without
3-32 collecting a fee.
3-33 Sec. 93.012. TERRA EASEMENTS: EFFECT AND CONDITIONS. (a)
3-34 An easement granted in an agreement under Section 93.011 runs with
3-35 the land and is valid even if:
3-36 (1) the agreement:
3-37 (A) is not appurtenant to an interest or estate
3-38 in real property;
3-39 (B) is not of a character traditionally
3-40 recognized under the common law; or
3-41 (C) does not touch and concern the land; or
3-42 (2) privity of estate between the grantor and the
3-43 commission is absent.
3-44 (b) The agreement, including the designation of the
3-45 commission as agent of the mineral interest owner, binds all
3-46 successors in interest of the mineral interest owner even though
3-47 the commission does not have a beneficial interest in the mineral
3-48 estate or the wellbores covered by the agreement.
3-49 (c) A vested mineral or surface interest existing at the
3-50 time an agreement under Section 93.011 is executed is not affected
3-51 by the agreement unless the owner of the mineral or surface
3-52 interest:
3-53 (1) is a party to the agreement;
3-54 (2) ratifies the agreement; or
3-55 (3) consents to the agreement.
3-56 (d) A mineral interest in a tract on which a wellbore
3-57 covered by an agreement is located that is acquired by a person
3-58 after the person has signed an agreement covering the wellbore is
3-59 bound by the agreement.
3-60 Sec. 93.013. ACCEPTANCE OF WELLBORES INTO TERRA. (a) The
3-61 commission may accept an inactive wellbore used in connection with
3-62 the exploration for or production of hydrocarbons into TERRA only
3-63 if:
3-64 (1) the commission finds the wellbore useful to the
3-65 accomplishment of the purposes of this chapter;
3-66 (2) written notice of the possible acceptance of the
3-67 wellbore into TERRA has been provided to all present possessory
3-68 mineral interest owners in the tract on which the wellbore is
3-69 located;
3-70 (3) for mineral interests:
4-1 (A) owned by the state, a state agency, or a
4-2 political subdivision of the state, the person authorized by law to
4-3 lease the mineral interest, the person authorized by law to approve
4-4 a lease of the mineral interest, and the lessee, if the land is
4-5 leased, sign an agreement under Section 93.011 covering the
4-6 wellbore; or
4-7 (B) owned by a private individual or entity, the
4-8 owners of at least 50 percent of the present possessory mineral
4-9 interest in all horizons originally penetrated by the wellbore and
4-10 the owners of any other mineral interest required by the commission
4-11 have signed an agreement under Section 93.011 covering the
4-12 wellbore;
4-13 (4) the wellbore and wellsite are in compliance with
4-14 state law and commission rules;
4-15 (5) the wellbore is free of obstructions and
4-16 mechanically sound as shown:
4-17 (A) by a current fluid level test; or
4-18 (B) if the wellbore is at least 25 years old and
4-19 has been inactive at least 10 years or when the commission may
4-20 otherwise require, by a current mechanical integrity test
4-21 prescribed by the commission;
4-22 (6) the commission is provided with documentation
4-23 that, other than the liens created under Chapter 89, there are no
4-24 outstanding charges, liens, or obligations of any kind secured
4-25 wholly or in part by the leasehold estate or by any wellsite
4-26 equipment;
4-27 (7) the mineral interest owner or last operator
4-28 provides the commission with a copy of all logs and each item of
4-29 wellbore documentation in its possession or control; and
4-30 (8) the commission receives from the mineral interest
4-31 owner payment in an amount to be set by the commission, depending
4-32 on the age and condition of the wellbore, not to exceed 75 percent
4-33 of the commission's estimated costs of plugging the wellbore.
4-34 (b) If the wellbore is not accepted into TERRA, the
4-35 commission shall return the payment under Subsection (a)(8).
4-36 (c) The commission may place an abandoned wellbore scheduled
4-37 for plugging with state money under Chapter 89 in TERRA if it meets
4-38 the requirements of Subsections (a)(1)-(5). On placement of the
4-39 wellbore in TERRA, the commission shall transfer from the oil-field
4-40 cleanup fund to the TERRA fund the amount of money equal to the
4-41 commission's estimated plugging costs. After the transfer of money
4-42 and while the wellbore remains in TERRA, the wellbore may be
4-43 plugged only with money from the TERRA fund. The oil-field cleanup
4-44 fund may not be used to plug a TERRA wellbore.
4-45 (d) If a wellbore transferred to TERRA under Subsection (c)
4-46 is subsequently released under Subchapter D, the amount of money
4-47 received into the TERRA fund under Subsection (c) shall be
4-48 transferred back to the oil-field cleanup fund.
4-49 (e) The offer of a wellbore to TERRA or its acceptance by
4-50 the commission is not an abandonment of the wellbore or of the
4-51 lease or the lease purposes by the mineral interest owner.
4-52 (f) After September 1, 1999, the commission may not accept a
4-53 wellbore into TERRA under Subsection (a)(8) unless the TERRA fund
4-54 balance exceeds the total estimated plugging cost of all TERRA
4-55 wells.
4-56 Sec. 93.014. EFFECT OF ACCEPTANCE OF WELLBORE INTO TERRA.
4-57 (a) On acceptance of a wellbore into TERRA, the commission shall
4-58 assume the well-plugging duties imposed on the last operator by
4-59 Chapter 89 until the wellbore is released from TERRA under
4-60 Subchapter D.
4-61 (b) A license holder or the commission is not responsible
4-62 for any discharge of oil and gas waste or other substances or
4-63 materials regulated by the commission under Section 91.101
4-64 occurring before the wellbore was accepted into TERRA.
4-65 (c) If a mineral interest owner has materially misstated the
4-66 condition of a wellbore or wellsite and its compliance with Section
4-67 93.013(a)(4), (5), or (6) in connection with the acceptance of the
4-68 wellbore into TERRA, the commission, after notice and opportunity
4-69 for a hearing, may:
4-70 (1) order restoration of all plugging and cleanup
5-1 responsibility to the mineral interest owner and require the
5-2 mineral interest owner to plug the wellbore and to clean up the
5-3 wellsite; or
5-4 (2) plug the wellbore and clean up the wellsite.
5-5 (d) In an action under Subsection (c), the commission may
5-6 retain as an administrative penalty the payment made under Section
5-7 93.013(a)(8) and order reimbursement of any plugging or cleanup
5-8 costs incurred by the commission.
5-9 (e) Acceptance of a wellbore into TERRA or transfer of money
5-10 from the oil-field cleanup fund to the TERRA fund does not bar the
5-11 commencement or continuation of an administrative or judicial
5-12 proceeding, including a collection suit, against an operator or
5-13 other responsible person for a violation of a commission rule or
5-14 order or state law.
5-15 (f) Acceptance by the commission of a wellbore into TERRA
5-16 creates a rebuttable presumption that the well was in compliance
5-17 with commission rules at the time of acceptance.
5-18 (g) For the purposes of this section, a mineral interest
5-19 owner who has signed an agreement under Section 93.011 and who is
5-20 not a license holder is not a responsible person for a well covered
5-21 by the agreement and, except as provided by Subsection (c), is not
5-22 responsible under commission rules for plugging, cleaning up, or
5-23 remediating a TERRA wellbore or TERRA wellsite.
5-24 (h) The commission or a license holder may not be held to
5-25 exercise any fiduciary or similar duty for the benefit of a mineral
5-26 interest owner in the tract on which a TERRA wellbore is located.
5-27 An express or implied lease covenant does not apply to the
5-28 commission or a license holder in the use or nonuse of a TERRA
5-29 wellbore.
5-30 (Sections 93.015-93.030 reserved for expansion
5-31 SUBCHAPTER C. LICENSES FOR TERRA WELLBORES
5-32 Sec. 93.031. LICENSE REQUIRED. A person must have a license
5-33 before a person may use a wellbore as provided by this subchapter.
5-34 Sec. 93.032. APPLICATION FOR LICENSE. (a) An applicant
5-35 for a license shall comply with Subchapters D and E, Chapter 91,
5-36 before the commission may issue a license.
5-37 (b) A separate application must be submitted for each oil
5-38 lease and each gas wellbore.
5-39 (c) An application for a license must be on a form
5-40 prescribed by the commission.
5-41 (d) The commission may require an applicant to provide any
5-42 information relating to a tract that is the subject of a license,
5-43 including a legal description of the mineral ownership of the tract
5-44 and identification and location of wells.
5-45 (e) The commission may require an applicant to provide the
5-46 commission with agreements under Subchapter B executed by owners of
5-47 reversionary and other mineral interests before the license may be
5-48 issued.
5-49 (f) If an applicant intends to claim that any of the
5-50 information submitted is confidential under Section 552.110,
5-51 Government Code, relating to trade secrets or Section 552.113,
5-52 Government Code, relating to geological or geophysical information,
5-53 the applicant must request in writing confidential treatment and
5-54 clearly mark the documents as confidential.
5-55 (g) A license must be approved by the commission by adoption
5-56 of a final order and may be in the form of a commission order or in
5-57 some other form prescribed by the commission.
5-58 (h) The commission may hold a hearing on an application for
5-59 a license and a proposed use in accordance with commission rules.
5-60 Sec. 93.033. LICENSE FEE. With each application for a
5-61 license, an applicant shall submit to the commission an
5-62 administrative fee equal to the lesser of $50 for each wellbore or
5-63 $500 for each tract. The fee is not refundable.
5-64 Sec. 93.034. LICENSES UNDER TERRA. (a) A license entitles
5-65 the license holder to use the wellbore named in the license for the
5-66 duration of the license solely for the purposes of TERRA and in
5-67 accordance with the license, this chapter, and other applicable
5-68 state law.
5-69 (b) A license holder shall comply with all commission rules
5-70 governing the licensed use, including rules that require a permit
6-1 to be issued or an exception to a commission rule to be granted.
6-2 (c) A license holder is the responsible person for the
6-3 licensed wellbores for the duration of the license and until any
6-4 violations of commission rules or orders committed by the license
6-5 holder have been corrected.
6-6 (d) A license must state:
6-7 (1) its duration;
6-8 (2) the specific uses to which the listed wellbore may
6-9 be put; and
6-10 (3) any conditions imposed by the commission.
6-11 Sec. 93.035. LICENSE AMENDMENT AND RENEWAL; PRIORITY. (a)
6-12 A license may be renewed or amended as provided by commission
6-13 rules.
6-14 (b) An application for release of a TERRA wellbore submitted
6-15 to the commission under Section 93.052 or 93.053 has priority over
6-16 a new license for a TERRA wellbore or an amendment or renewal of an
6-17 existing license.
6-18 Sec. 93.036. VIOLATION OF LICENSE. (a) The commission may
6-19 revoke the license of a license holder who violates the license or
6-20 a commission rule or order.
6-21 (b) If the violation is of a license condition, rule, or
6-22 order pertaining to safety or the prevention or control of
6-23 pollution, the commission may seek reimbursement of its costs and
6-24 administrative penalties under Chapter 81 or 85, proceed against a
6-25 bond or letter of credit, or pursue both remedies.
6-26 Sec. 93.037. LICENSED USES. (a) TERRA wellbores may be
6-27 licensed for the collection of data, for production testing, or for
6-28 developmental research on recovery techniques, each of which must
6-29 have a reasonable potential to increase the recovery of
6-30 hydrocarbons from the tract on which the wellbores are located.
6-31 (b) The commission may by rule or as a part of the license
6-32 establish terms for licensed uses.
6-33 Sec. 93.038. EXPIRATION OF LICENSE. At the end of the term
6-34 of a license, the commission may, if the license is not renewed:
6-35 (1) release a wellbore under the license as provided
6-36 by Subchapter D;
6-37 (2) maintain the wellbore in TERRA; or
6-38 (3) license the wellbore to another person.
6-39 Sec. 93.039. WELLSITE EQUIPMENT. (a) A license holder may
6-40 use, or may remove and safeguard, wellsite equipment in which it
6-41 does not have a legal interest. A license holder shall return and
6-42 properly reinstall all equipment removed not later than the 30th
6-43 day after the date the license of the license holder expires
6-44 unless:
6-45 (1) the equipment has been lawfully claimed by a
6-46 person with an ownership or security interest in the equipment; or
6-47 (2) a mineral interest owner or the owner of the
6-48 equipment has requested otherwise.
6-49 (b) If the wellbore has been plugged, the license holder is
6-50 not required to reinstall any wellsite equipment taken from the
6-51 wellbore or wellhead.
6-52 (c) A person who removes wellsite or production equipment
6-53 from a licensed or unlicensed TERRA wellbore is subject to the
6-54 regulatory jurisdiction of the commission under Subchapter C,
6-55 Chapter 81. Any reimbursement of commission costs or
6-56 administrative penalties assessed or civil penalties adjudged in an
6-57 action against the person for violation of commission rules shall
6-58 be deposited into the TERRA fund.
6-59 Sec. 93.040. RESTORATION OF LAND SURFACE. (a) Not later
6-60 than the 30th day after the date a license expires, the license
6-61 holder shall restore the surface of the land, as nearly as
6-62 reasonably possible, to the condition of the land when the licensed
6-63 use commenced.
6-64 (b) This section does not apply if, before the 30th day
6-65 after the date the license expires, the license holder, acting
6-66 under a lease, obtains release of the wellbore from TERRA and
6-67 assumes responsibility for the wellbore under state law and
6-68 commission rules.
6-69 Sec. 93.041. PRODUCED HYDROCARBONS. (a) The license holder
6-70 may sell hydrocarbons produced during a production test from a
7-1 TERRA wellbore approved by the commission without complying with
7-2 Subchapter E, Chapter 85. An allowable is not required to produce
7-3 hydrocarbons, but the license holder shall report all production in
7-4 accordance with commission rules.
7-5 (b) Unless otherwise provided by a lease or other legal
7-6 document, proceeds of any hydrocarbons sold by a license holder
7-7 that are produced during production from a TERRA wellbore approved
7-8 by the commission shall be paid as follows:
7-9 (1) on Relinquishment Act lands, one-half to be
7-10 apportioned between the owner of the soil and the state, and
7-11 one-half to the license holder;
7-12 (2) on other lands in which the state owns the
7-13 minerals, one-half to the state fund into which royalties from the
7-14 well would be deposited and one-half to the license holder;
7-15 (3) on lands in which the mineral interest is
7-16 privately held, one-half to the mineral interest owners according
7-17 to their interests and one-half to the license holder; and
7-18 (4) on lands in which the mineral interest falls into
7-19 more than one of the preceding categories, ratably according to the
7-20 percentage of the interest in each category.
7-21 (c) Unless otherwise provided by a lease or other legal
7-22 document, the license holder shall make prompt payment in
7-23 accordance with Subchapter J, Chapter 91.
7-24 (d) A mineral interest owner accepting payment of a share of
7-25 the proceeds under this section ratifies and consents to the terms
7-26 of and becomes bound by the agreement under Subchapter B that
7-27 covers the proceeds.
7-28 (e) The production of a reasonable amount of hydrocarbons,
7-29 to be determined by the commission, from a TERRA wellbore during a
7-30 production test approved by the commission is not waste of the
7-31 corpus or remainder of a mineral estate, and Section 64.092, Civil
7-32 Practice and Remedies Code, does not apply to the production.
7-33 (f) Hydrocarbons produced from a TERRA wellbore during a
7-34 production test approved by the commission are ordinary production
7-35 for purposes of determining whether a lease requirement that
7-36 production be continued in paying quantities has been met.
7-37 Sec. 93.042. PREVENTION OF POLLUTION. This chapter does not
7-38 limit the commission's authority under this title to prevent
7-39 pollution, plug wells, or control or clean up oil and gas wastes or
7-40 other substances or material.
7-41 (Sections 93.043-93.050 reserved for expansion
7-42 SUBCHAPTER D. RELEASE OF WELLBORES FROM TERRA
7-43 Sec. 93.051. PLUGGING OF WELLBORE. (a) A wellbore may be
7-44 released from TERRA when it is plugged and abandoned in accordance
7-45 with commission rules.
7-46 (b) A person may not plug a TERRA wellbore without
7-47 permission of the commission.
7-48 Sec. 93.052. REQUEST FOR RELEASE BY MINERAL INTEREST OWNER
7-49 BOUND BY TERRA AGREEMENT. (a) An owner of a present possessory
7-50 mineral interest in the tract on which the wellbore is located who
7-51 is bound by an agreement under Subchapter B relating to the
7-52 wellbore may file an application to release the wellbore from
7-53 TERRA.
7-54 (b) The commission may not approve an application or release
7-55 a wellbore under this section until the mineral interest owner:
7-56 (1) fully complies with all applicable state laws and
7-57 commission rules relating to oil and gas, including obtaining all
7-58 permits or other authorizations required under commission rules
7-59 before the wellbore may be operated or plugged; and
7-60 (2) submits to the commission an amount of money that
7-61 the commission may set, not to exceed twice the reasonable plugging
7-62 cost on the date of release and as estimated by the commission.
7-63 (c) If the wellbore to be released has been in TERRA for one
7-64 year or less, the payment required under Subsection (b)(2) may not
7-65 exceed the reasonable plugging costs on the date of release and as
7-66 estimated by the commission.
7-67 (d) The commission shall reduce any payment required under
7-68 Subsections (b)(2) and (c) by the amount of payment by a person
7-69 under Section 93.013(a)(8) if:
7-70 (1) the wellbore is released to the person, or to a
8-1 lessee or assignee of the person;
8-2 (2) the person owned at least 50 percent of the
8-3 present possessory mineral interest in the tract on which the
8-4 wellbore is located when the wellbore was last accepted into TERRA;
8-5 and
8-6 (3) an agreement under Subchapter B executed at that
8-7 time by the person remains in effect at the time of release of the
8-8 wellbore.
8-9 (e) The commission may not require a payment under this
8-10 section if the applicant agrees to plug the wellbore and complies
8-11 with all commission plugging rules.
8-12 (f) If the license on a wellbore sought to be released under
8-13 this section has not expired, the commission may approve the
8-14 application for release, effective not earlier than the day after
8-15 the date the license expires unless the applicant submits a written
8-16 release from the license holder that allows for an earlier release
8-17 date.
8-18 (g) The person to whom a wellbore is released assumes
8-19 responsibility for plugging of the wellbore and cleanup of the
8-20 site, including all associated costs in accordance with state law
8-21 and commission rules, but the license holder must comply with
8-22 Sections 93.039 and 93.040.
8-23 Sec. 93.053. REQUEST FOR RELEASE BY MINERAL INTEREST OWNER
8-24 NOT BOUND BY TERRA AGREEMENT. (a) An owner of a present
8-25 possessory mineral interest in the tract on which the wellbore is
8-26 located who is not bound by an agreement under Subchapter B on the
8-27 wellbore may request that the wellbore be released from TERRA.
8-28 (b) The commission may not release a wellbore under this
8-29 section until the mineral interest owner is in full compliance with
8-30 all applicable state laws and commission rules relating to oil and
8-31 gas and has obtained all permits or other authorization required
8-32 under commission rules before the wellbore may be operated or
8-33 plugged.
8-34 (c) If the license for a wellbore sought to be released
8-35 under this section has not expired, the commission may approve the
8-36 application for release, effective not earlier than the day after
8-37 the date the license expires unless the applicant submits a written
8-38 release from the license holder that allows for an earlier release
8-39 date.
8-40 (d) The person to whom a wellbore is released assumes
8-41 responsibility for plugging of the wellbore and cleanup of the
8-42 site, including all associated costs in accordance with state law
8-43 and commission rules, but the license holder must comply with
8-44 Sections 93.039 and 93.040.
8-45 Sec. 93.054. RELEASE OF TERRA EASEMENTS. (a) When the last
8-46 TERRA wellbore on a tract has been released, the commission shall
8-47 file a release of all TERRA easements on the tract in the office of
8-48 the clerk of the county in which the tract is located.
8-49 (b) The release must contain:
8-50 (1) the section, block, survey, and abstract number of
8-51 the tract on which a subject wellbore is located;
8-52 (2) the API number for the subject wellbore and the
8-53 commission district and lease number or the commission gas
8-54 identification number for each well in the wellbore; and
8-55 (3) the volume and page number in the county real
8-56 property records at which each TERRA agreement relating to the
8-57 tract may be found.
8-58 (c) The release does not have to be acknowledged.
8-59 (d) The clerk shall record the release in the real property
8-60 records without collecting a fee.
8-61 Sec. 93.055. REQUEST FOR RELEASE BY SURFACE OWNER. (a) The
8-62 owner or owners of at least 50 percent of the surface interest in
8-63 the land on which a TERRA wellbore is located may file with the
8-64 commission a written request to plug the wellbore if it has been in
8-65 TERRA for more than seven years.
8-66 (b) The commission shall notify all persons who have signed
8-67 the TERRA agreement pertaining to the wellbore and any licensees of
8-68 the wellbore under Section 93.037 of the request for commission
8-69 plugging. The notice shall also state that the wellbore will be
8-70 plugged unless a mineral owner obtains release of the wellbore from
9-1 TERRA under Section 93.052 or 93.053 within 90 days, or at the
9-2 expiration of an existing TERRA license, whichever occurs later.
9-3 (c) If the wellbore is not released from TERRA under
9-4 Subsection (b), the commission shall schedule the wellbore to be
9-5 plugged at the end of any existing licensed use.
9-6 (d) The commission may require surface owners requesting
9-7 plugging of a TERRA wellbore to provide a copy, certified by the
9-8 clerk of the county in which the land is located, of the deed or
9-9 other instrument under which they claim title to the surface
9-10 estate.
9-11 (Sections 93.056-93.070 reserved for expansion
9-12 SUBCHAPTER E. ADMINISTRATIVE PROCEDURE; LIABILITY
9-13 Sec. 93.071. APPLICABILITY OF ADMINISTRATIVE PROCEDURE ACT.
9-14 (a) Chapter 2001, Government Code, applies to:
9-15 (1) a proceeding to revoke a TERRA license and to
9-16 assess an administrative penalty against or require reimbursement
9-17 from a license holder;
9-18 (2) a proceeding under Section 93.014(c); and
9-19 (3) a hearing required by commission rules on proposed
9-20 uses.
9-21 (b) Chapter 2001, Government Code, does not apply to a
9-22 decision by the commission under this chapter:
9-23 (1) on acceptance or refusal to accept a wellbore into
9-24 TERRA;
9-25 (2) on the amount of payment required under Section
9-26 93.013(a)(8);
9-27 (3) on the issuance of a license under this chapter;
9-28 and
9-29 (4) on the conditions of a license.
9-30 Sec. 93.072. JUDICIAL REVIEW. A commission decision
9-31 described by Section 93.071(b) is not subject to judicial review.
9-32 Sec. 93.073. LIABILITY OF STATE, COMMISSION, AND LICENSE
9-33 HOLDERS. (a) Notwithstanding any other law, the commission, an
9-34 employee or agent of the commission, a license holder, and the
9-35 state are immune from suit and from liability under any cause of
9-36 action alleging:
9-37 (1) that a wellbore plugged under this chapter should
9-38 not have been plugged; or
9-39 (2) that a TERRA wellbore used in compliance with
9-40 license conditions and commission rules has decreased the value of
9-41 the mineral estate in the tract on which the wellbore is located.
9-42 (b) Notwithstanding any other law, the commission and an
9-43 employee or agent of the commission are immune from suit and from
9-44 liability under any cause of action arising from the participation
9-45 of a wellbore in TERRA and alleging wrongful death or injury or
9-46 harm to persons, property, or interests caused by or suffered by a
9-47 license holder.
9-48 SECTION 3. Subchapter B, Chapter 201, Tax Code, is amended
9-49 by adding Section 201.058 to read as follows:
9-50 Sec. 201.058. TAX EXEMPTIONS. The exemptions described by
9-51 Sections 202.056 and 202.059 apply to the taxes imposed by this
9-52 chapter as authorized by and subject to the certifications and
9-53 approvals required by those sections.
9-54 SECTION 4. Section 202.052(c), Tax Code, is amended to read
9-55 as follows:
9-56 (c) The exemptions described by Sections 202.056 and 202.059
9-57 apply to <For> oil produced in this state from a well that
9-58 qualifies under Section 202.056 or 202.059, subject to the
9-59 certifications and approvals required by those sections <the rate
9-60 of tax imposed by this chapter shall be reduced to zero>.
9-61 SECTION 5. Subchapter B, Chapter 202, Tax Code, is amended
9-62 by adding Section 202.059 to read as follows:
9-63 Sec. 202.059. EXEMPTION FOR HYDROCARBONS FROM TERRA WELLS.
9-64 (a) Hydrocarbons produced from a well subject to an agreement
9-65 under Chapter 93, Natural Resources Code, and under a license
9-66 issued under that chapter qualify for an exemption from the taxes
9-67 imposed by this chapter and Chapter 201 if the comptroller approves
9-68 the tax exemption under Subsection (g).
9-69 (b) Hydrocarbons produced from a well formerly subject to an
9-70 agreement under Chapter 93, Natural Resources Code, and a license
10-1 issued under that chapter resuming production after participation
10-2 in TERRA for two years qualify for an exemption from the taxes
10-3 imposed by this chapter and Chapter 201 if the comptroller approves
10-4 the tax exemption under Subsection (g).
10-5 (c) The commission may certify a well eligible for a tax
10-6 exemption or an application may be made to the commission for
10-7 certification under this section. The commission may require an
10-8 applicant to provide the commission with any relevant information
10-9 required to administer this section. The commission shall issue a
10-10 certificate to each operator of the well. The certificate must:
10-11 (1) include identification of the well; and
10-12 (2) state the date on which the tax exemption takes
10-13 effect, subject to the comptroller's approval of the exemption
10-14 under Subsection (g).
10-15 (d) The commission shall furnish to the comptroller a copy
10-16 of a certificate of exemption for each well qualifying under this
10-17 section.
10-18 (e) The commission may revoke a certificate for a tax
10-19 exemption if information indicates that a well was not eligible for
10-20 that designation at the time of certification or if a license
10-21 issued under Chapter 93, Natural Resources Code, is revoked by the
10-22 commission. The commission shall notify the operator and the
10-23 comptroller that a certificate has been revoked. A tax exemption
10-24 granted under this section is automatically revoked on the date the
10-25 certificate is revoked, and hydrocarbons produced from the well
10-26 after the date of revocation are not eligible for the tax
10-27 exemption.
10-28 (f) The commission may adopt and enforce any rules or orders
10-29 that the commission finds necessary to administer this section.
10-30 (g) To qualify for the tax exemption, the person responsible
10-31 for paying the tax must apply to the comptroller for the exemption
10-32 and include with the application the certificate issued by the
10-33 commission under Subsection (c). The comptroller shall approve the
10-34 application of a person if the hydrocarbons are eligible for the
10-35 tax exemption. The comptroller may require a person applying for
10-36 the tax exemption to provide any relevant information necessary to
10-37 administer this section. The comptroller may establish procedures
10-38 to comply with this subsection and Subsection (h).
10-39 (h) If the tax is paid at the full rate provided by this
10-40 chapter and Chapter 201 on hydrocarbons produced on or after the
10-41 effective date of the tax exemption but before the date the
10-42 comptroller approves an application for the tax exemption, the
10-43 operator is entitled to a credit on taxes due under Chapter 201 or
10-44 this chapter in the amount equal to the tax paid during that
10-45 period. To receive a credit, the operator must apply to the
10-46 comptroller for the credit not later than one year after the date
10-47 the commission certifies the well for a tax exemption.
10-48 (i) A person is subject to the penalties that may be imposed
10-49 under Chapters 85 and 91, Natural Resources Code, if the person
10-50 makes and submits to the commission or comptroller an application,
10-51 report, or other document used or intended to be used for a
10-52 certification, tax exemption, or tax credit under this section and
10-53 the person knows that the application, report, or other document
10-54 contains a false or untrue material fact.
10-55 (j) A person is liable to the state for a civil penalty if
10-56 the person, after receiving notice from the commission that the
10-57 person's tax exemption certificate for a TERRA well or a former
10-58 TERRA well has been revoked, applies or attempts to apply for a tax
10-59 exemption for hydrocarbons produced from the well under the revoked
10-60 certificate. The amount of the penalty may not exceed the sum of:
10-61 (1) $10,000; and
10-62 (2) the difference between the amount of taxes paid or
10-63 attempted to be paid and the amount of taxes due.
10-64 (k) The attorney general may recover a penalty under
10-65 Subsection (j) in a suit brought on behalf of the state. Venue for
10-66 the suit is in Travis County.
10-67 (l) In this section:
10-68 (1) "Commission" means the Railroad Commission of
10-69 Texas.
10-70 (2) "Hydrocarbons" means any oil, gas, condensate, and
11-1 other liquid hydrocarbons produced from a well.
11-2 (3) "TERRA" means the Texas Experimental Research and
11-3 Recovery Activity under Chapter 93, Natural Resources Code.
11-4 SECTION 6. This Act takes effect January 1, 1996.
11-5 SECTION 7. The importance of this legislation and the
11-6 crowded condition of the calendars in both houses create an
11-7 emergency and an imperative public necessity that the
11-8 constitutional rule requiring bills to be read on three several
11-9 days in each house be suspended, and this rule is hereby suspended.
11-10 * * * * *