SRC-ARR S.B. 813 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 813
76R 6334 SMH-FBy: Brown
Natural Resources
3/7/1999
As Filed


DIGEST 

Currently, Texas law requires the Railroad Commission (RRC) to give notice
to an operator prior to the awarding of a contract to plug a delinquent
inactive oil or gas  well. A lien securing the plugging costs by RRC
attaches to the well-site equipment on the date the well is required to be
plugged; however, the RRC cannot foreclose on a lien until a contract to
plug the well is entered into. The notice letter is an invitation for less-
than-scrupulous operators to enter into agreements with third parties for
stripping a well during the minimum 30-day period before the RRC may enter
into a plugging contract. S.B. 813 would allow the lien to arise on the
date notice is given, would modify exiting RRC liens on well-site equipment
to prevent stripping of equipment by third parties after authorization to
plug with state funds, and would better protects RRC's interest in
well-site equipment and its ability to recoup state-funded plugging
expenses. 

PURPOSE

As proposed, S.B. 813 regulates a  lien of the Railroad Commission of Texas
on well-site equipment to secure the cost of plugging an oil or gas well. 

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 89.043(c), Natural Resources Code, to require the
Railroad Commission (RRC) to send a notice by certified mail to the
operator of the well at the address last reported to the RRC as required by
Section 91.142 and commission rules. Requires the notice to direct the
operator to plug the well and to state that the RRC has a lien on all
well-site equipment under Section 89.083. Makes conforming and
nonsubstantive changes. 

SECTION 2. Amends Section 89.083(e), Natural Resources Code, to provide
that the lien is extinguished as to any item of well-site equipment that is
lawfully removed by any person other than the operator or a nonoperator
pursuant to a lien, lease, judgment, written contract, or security
agreement before the RRC sends notice under Section 89.043(c), rather than
enters into a plugging contract. Prohibits a person from removing any
equipment from an inactive well site. Makes a conforming change. 

SECTION 3. Emergency clause. 
                      Effective date: upon passage.