SRC-AXB, JJJ H.B. 3696 76(R)   BILL ANALYSIS


Senate Research Center   H.B. 3696
By: Hawley (Lucio)
Natural Resources
5/14/1999
Engrossed


DIGEST 

Currently, a state fee lease may be transferred at any time by a lessee.
Additionally, every transferee is required to succeed to all rights and
subject to all obligations, liabilities, and penalties owed to the state by
the original lessee or any prior transferee of the lease. As it stands,
current bonding programs in place at the Railroad Commission of Texas may
not be adequate to ensure that wells on stateowned submerged lands or any
other lands are properly plugged and abandoned.   H.B. 3696 authorizes a
lessee to transfer a lease with the consent of the Commissioner of the
General Land Office (commissioner). Existing law does not require the
commissioner's consent. This bill authorizes the commissioner to require
the transferee to demonstrate that it has the financial responsibility to
discharge its obligations under the lease, including the obligations to
properly plug abandoned wells, remove platforms or pipelines, or remediate
contamination at drill sites.  H.B. 3696 also authorizes the commissioner
to require the transferee to post a bond or provide other security to
secure those obligations, if the transferee is unable to demonstrate such
financial responsibility to the commissioner's satisfaction. 

PURPOSE

As proposed, H.B. 3696 establishes conditions regarding the approval of
assignments of oil and gas leases covering certain state land. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 52.026, Natural Resources Code, by amending
Subsection (a) and adding Subsection (e), to require the liability of the
transfer to properly discharge its obligations under the lease at drill
sites to pass to the transferee upon prior written consent of the
commissioner. Prohibits the Commissioner of the General Land Office
(commissioner) from withholding the consent unreasonably.  Authorizes the
commissioner to require the transferee to demonstrate that it has  the
financial responsibility to properly discharge its obligation and may
require the transferee to post a bond or provide other security to secure
those obligations if the transferee is unable to demonstrate  such
financial responsibility to the satisfaction of the commissioner.  Provides
that this section does not relieve a person from the duty to comply with a
rule adopted or order issued by the Railroad Commission of Texas under
another provision of this code.  

SECTION 2. Effective date: September 1, 1999.

SECTION 3. Emergency clause.