By Hawley                                             H.B. No. 3696
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the approval of assignments of oil and gas leases
 1-3     administered by the land commissioner.
 1-5           SECTION 1.  Amend Natural Resources Code Section 52.026 to
 1-6     read as follows:
 1-7           Sec. 52.026.  LEASE TRANSFER.  (a)  A lessee of an area under
 1-8     this subchapter may transfer his lease at any time.  The liability
 1-9     of the assignor to properly plug and abandon any wells existing on
1-10     the lease, shall pass to the assignee upon prior written consent of
1-11     the commissioner.  The commissioner may require the assignee to
1-12     demonstrate that it has the financial ability to properly discharge
1-13     its obligations under the lease and may require the posting of a
1-14     bond or other security to secure these obligations if he determines
1-15     it to be in the best interest of the permanent school fund.
1-16           (b)  The transfer of the lease shall be recorded in any
1-17     county in which all or part of the leased area is located.
1-18           (c)  Within 90 days after the execution of the transfer, the
1-19     recorded transfer or a certified copy of the recorded transfer
1-20     accompanied by a filing fee set by the commissioner in an amount
1-21     not less than $5 shall be filed in the land office.
 2-1           (d)  Every transferee shall succeed to all rights and be
 2-2     subject to all obligations, liabilities, and penalties owed to the
 2-3     state by the original lessee or any prior transferee of the lease,
 2-4     including any liabilities to the state for unpaid royalties.
 2-5           SECTION 2.  Amend Natural Resources Code Section 52.172 to
 2-6     read as follows:
 2-7           Sec. 52.172.  SALE AND LEASE BY AGENT.  The owner of said
 2-8     land is hereby authorized to sell or lease to any person, firm, or
 2-9     corporation the oil and gas that may be thereon or therein upon
2-10     such terms and conditions as such owner may deem best, subject only
2-11     to the provisions hereof, and he may have a second lien thereon to
2-12     secure the payment of any sum due him.  All leases and sales so
2-13     made shall be assignable with the prior written consent of the
2-14     owner.  No oil or gas rights shall be sold or leased hereunder for
2-15     a delay rental during the primary term of less than 10 cents per
2-16     acre per year plus royalty, and in case of production, the lessee
2-17     or purchaser shall pay the state the undivided one-sixteenth of the
2-18     value of the oil and gas reserved herein, and like amounts to the
2-19     owner of the soil.
2-20           SECTION 3.  Amend Natural Resources Code 52.032 to read as
2-21     follows:
2-22           Sec. 52.032.  REGULATION OF DEVELOPMENT AND OPERATIONS.  (a)
2-23     Development and operations on areas covered by this subchapter
2-24     shall be done insofar as practicable in a manner that will prevent
2-25     the pollution of water, destruction of fish, oysters, and other
 3-1     marine life, and obstruction of navigation.
 3-2           (b)  If, in the evaluation of a proposed lease assignment,
 3-3     the commissioner decides that the assignee is financially incapable
 3-4     of properly plugging and abandoning wells, removing platforms and
 3-5     pipelines, or remediating any contamination at the drill site, then
 3-6     the commissioner may require the posting of a bond or other
 3-7     security to secure those obligations.
 3-8           (c)  The commissioner shall adopt and enforce rules that may
 3-9     be necessary for the purposes stated in [Subsection (a) of] this
3-10     section.
3-11           [(c)] (d)  Any rules and changes of rules adopted under this
3-12     section shall be submitted to the attorney general for his written
3-13     approval before the rules of their changes become effective.
3-14           SECTION 4.  The importance of this legislation and the
3-15     crowded condition of the calendars in both houses create an
3-16     emergency and an imperative public necessity that the
3-17     constitutional rule requiring bills to be read on three several
3-18     days in each house be suspended, and this rule is hereby suspended.