77R13813 E
By Farabee H.B. No. 1317
Substitute the following for H.B. No. 1317:
By Hawley C.S.H.B. No. 1317
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to financial security requirements for certain oil well
1-3 operators.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 91.104, Natural Resources Code, is
1-6 amended to read as follows:
1-7 Sec. 91.104. FINANCIAL SECURITY REQUIRED FOR INACTIVE
1-8 OPERATORS AND CERTAIN ACTIVE OPERATORS. (a) A person required to
1-9 file a bond or alternate form of financial security under Section
1-10 91.103 who is an inactive operator or who operates one or more land
1-11 wells and is not involved in any other activities that require the
1-12 filing of a bond or alternate form of financial security must file
1-13 a bond, a letter of credit, or a cash deposit at the time of filing
1-14 or renewing an organization report required by Section 91.142 in an
1-15 amount equal to:
1-16 (1) $25,000, if the person operates not more than 10
1-17 wells;
1-18 (2) $50,000, if the person operates at least 11 but
1-19 not more than 100 wells; or
1-20 (3) $250,000, if the person operates more than 100
1-21 wells.
1-22 (b) In addition to the financial security requirements of
1-23 Subsection (a), a person required to file a bond or alternate form
1-24 of financial security under Section 91.103 who operates one or more
2-1 bay or offshore wells must file the bond, letter of credit, or cash
2-2 deposit at the time of filing or renewing an organization report
2-3 required by Section 91.142 in a reasonable amount established by
2-4 commission rule that exceeds the amount provided by Subsection
2-5 (a)(1), (2), or (3), as applicable.
2-6 (c) An operator seeking to assume operatorship of an active
2-7 or inactive well must file a bond, letter of credit, or cash
2-8 deposit in the appropriate amount under this section before the
2-9 commission may approve the transfer of operatorship. A transfer of
2-10 a well from one entity to another entity under common operatorship
2-11 is a transfer for purposes of this subsection.
2-12 (d) The bond, letter of credit, or cash deposit amounts
2-13 prescribed by this section may be used only for actual well
2-14 plugging and surface remediation. [BONDS AND ALTERNATE FORMS OF
2-15 FINANCIAL SECURITY. (a) The commission shall require a bond or an
2-16 alternate form of financial security to be filed with the
2-17 commission as provided by Subsection (b) of this section.]
2-18 [(b) A person required to file a bond under Section 91.103
2-19 may choose to file:]
2-20 [(1) an individual bond as provided under Section
2-21 91.1041;]
2-22 [(2) a blanket bond as provided under Section 91.1042;]
2-23 [(3) a nonrefundable annual fee of $100, if the person
2-24 can demonstrate to the commission an acceptable record of
2-25 compliance with all commission rules, orders, licenses, permits, or
2-26 certificates that relate to safety or the prevention or control of
2-27 pollution for the previous 48 months and the person and, if a firm,
3-1 partnership, joint stock association, corporation, or other
3-2 organization, its officers, directors, general partners, or owners
3-3 of more than 25 percent ownership interest or any trustee:]
3-4 [(A) has no outstanding violations of such
3-5 commission rules, orders, licenses, permits, or certificates;]
3-6 [(B) has paid all administrative, civil, and
3-7 criminal penalties, if any, relating to any violation of such
3-8 commission rules, orders, licenses, permits, or certificates; and]
3-9 [(C) has paid all reimbursements of any costs
3-10 and expenses incurred by the commission in relation to any
3-11 violation of such commission rules, orders, licenses, permits, or
3-12 certificates;]
3-13 [(4) a nonrefundable annual fee equal to three percent
3-14 of the bond that otherwise would be required; or]
3-15 [(5) to give a first lien on tangible personal
3-16 property associated with oil and gas production whose salvage value
3-17 equals the value of an individual bond under Section 91.1041 or the
3-18 value of a blanket bond under Section 91.1042 that otherwise would
3-19 be required.]
3-20 [(c) A person who chooses to file a form of financial
3-21 security other than a bond shall also submit a fee of $100 for each
3-22 application to extend the time to plug a well in accordance with
3-23 Section 85.2021 of this code.]
3-24 SECTION 2. Section 91.109, Natural Resources Code, is
3-25 amended to read as follows:
3-26 Sec. 91.109. FINANCIAL SECURITY FOR PERSONS INVOLVED IN
3-27 ACTIVITIES OTHER THAN OPERATION OF WELLS [DISPOSAL SITE BOND]. (a)
4-1 A person applying for or acting under a commission permit to store,
4-2 handle, treat, reclaim, or dispose of oil and gas waste may be
4-3 required by the commission to maintain a performance bond or other
4-4 form of financial security conditioned that the permittee will
4-5 operate and close the storage, handling, treatment, reclamation, or
4-6 disposal site in accordance with state law, commission rules, and
4-7 the permit to operate the site. However, this section does not
4-8 authorize the commission to require a bond or other form of
4-9 financial security for saltwater disposal pits, emergency saltwater
4-10 storage pits (including blow-down pits), collecting pits, or
4-11 skimming pits provided that such pits are used in conjunction with
4-12 the operation of an individual oil or gas lease. Subject to the
4-13 refund provisions of Section 91.1091 of this code, proceeds from
4-14 any bond or other form of financial security required by this
4-15 section shall be placed in the oil-field cleanup fund. Each bond
4-16 or other form of financial security shall be renewed and continued
4-17 in effect until the conditions have been met or release is
4-18 authorized by the commission.
4-19 (b) In addition to the financial security requirements of
4-20 Subsection (a) and Section 91.104(b), a person required to file a
4-21 bond or alternate form of financial security under Section 91.103
4-22 who is involved in activities other than the operation of wells
4-23 must file the bond, letter of credit, or cash deposit at the time
4-24 of filing or renewing an organization report required by Section
4-25 91.142 in an amount equal to:
4-26 (1) $250,000; or
4-27 (2) a lesser amount determined by the commission if
5-1 the person is able to demonstrate that the risk associated with an
5-2 operation or group of operations warrants a lesser amount.
5-3 SECTION 3. (a) This Act takes effect immediately if it
5-4 receives a vote of two-thirds of all the members elected to each
5-5 house, as provided by Section 39, Article III, Texas Constitution.
5-6 If this Act does not receive the vote necessary for immediate
5-7 effect, this Act takes effect September 1, 2001.
5-8 (b) The changes in law made by Sections 91.104(a) and (b)
5-9 and 91.109, Natural Resources Code, as amended by this Act, apply
5-10 only to a person required on or after September 1, 2004, to file a
5-11 bond or alternate financial security under Section 91.103, Natural
5-12 Resources Code. The changes made by Section 91.104(c), Natural
5-13 Resources Code, as added by this Act, apply on or after the
5-14 effective date of this Act to a person required by that section to
5-15 file a bond, letter of credit, or cash deposit.