MBN C.S.S.B. 638 75(R) BILL ANALYSIS ENERGY RESOURCES C.S.S.B. 638 By: Brown (Turner, Bob) 4-17-97 Committee Report (Substituted) BACKGROUND Currently, Texas law provides that the duty of a person to plug a well that has ceased operation ends if the person's interest in the well is sold or conveyed under certain circumstances. This has led to the State of Texas having to pay the cost of plugging some wells. PURPOSE The purpose of this legislation is to make an operator responsible for the cost of plugging a well unless the operator transfers the well to an entity recognized by the Railroad Commission as an entity with sufficient financial security. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 89.002(a) (2), Natural Resources Code, to redefine "operator" to mean a person who assumes responsibility for the physical operation and control of a well as shown by a form the person files with the Railroad Commission (commission) and the commission approves. States that the commission may not require a person to assume responsibility for a well as a condition to being permitted to assume responsibility for another well. Provides that, in the event of a sale or conveyance of an unplugged well or the right to operate an unplugged well, a person ceases being the operator for the purpose of Section 89.011 only if the well was in compliance with the commission rules relating to safety or pollution prevention or control at the time of sale or conveyance and the person who acquired the well or the right to operate the well: (A) assumes responsibility for the well on forms required and approved by the commission; (B) has a commission-approved organization report as required by Section 91.142; (C) has a commission-approved bond or other form of financial security under Sections 91.103-91.107 covering the well; and (D) places the well in compliance with commission rules. SECTION 2. Amends Section 89.011(b), Natural Resources Code, to provide that the duty of a person to plug an unplugged well that has ceased operation ends only if the person's interest in the well is sold or conveyed while the well is in compliance with the rules of the commission relating to safety or pollution prevention or control applicable to wells that have ceased operation and the provisions of Sections 89.002(a) (2) (A)-(D) of this code have been met. Makes a conforming change. SECTION 3. Emergency Clause. Effective upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 1. Section 89.002 (a)(2), Natural Resources Code. The substitute adds the requirement that the commission may not require a person to assume responsibility for a well as a condition to being permitted to assume responsibility for another well. The section also clarifies that unplugged wells, for the purposes of this section, must be in compliance with commission rules relating to safety or the prevention or control of pollution. Makes conforming changes. SECTION 2. Section 89.011 (b), Natural Resources Code. The substitute clarifies that unplugged wells, for the purposes of this section, must be in compliance with commission rules relating to safety or the prevention or control of pollution. Deletes reference to wells being in compliance with commission rules applicable to wells that have ceased operation.