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                               * * * * *