By Farabee H.B. No. 1317
77R4982 MI-F
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 the bond or alternate form of financial security at the time of
1-14 filing or renewing an organization report required by Section
1-15 91.142 in an amount equal to the lesser of:
1-16 (1) $25,000 if the person operates not more than five
1-17 wells, and $5,000 for each well above five; or
1-18 (2) $250,000.
1-19 (b) In addition to the financial security requirements of
1-20 Subsection (a), a person required to file a bond or alternate form
1-21 of financial security under Section 91.103 who operates one or more
1-22 bay or offshore wells must file the bond or alternate form of
1-23 financial security at the time of filing or renewing an
1-24 organization report required by Section 91.142 in an amount equal
2-1 to:
2-2 (1) $60,000 for each bay well that is under the
2-3 jurisdiction of the commission if the surface location is:
2-4 (A) in or on a lake, stream, canal, estuary,
2-5 bayou, or other inland navigable waters of the state; or
2-6 (B) on state land seaward of the mean high tide
2-7 line of the Gulf of Mexico and not within an area described by
2-8 Paragraph (A); or
2-9 (2) $250,000 for each offshore well that is subject to
2-10 the jurisdiction of the commission if the surface location is on
2-11 state land in or on the Gulf of Mexico and not within an area
2-12 described by Subdivision (1). [BONDS AND ALTERNATE FORMS OF
2-13 FINANCIAL SECURITY. (a) The commission shall require a bond or an
2-14 alternate form of financial security to be filed with the
2-15 commission as provided by Subsection (b) of this section.]
2-16 [(b) A person required to file a bond under Section 91.103
2-17 may choose to file:]
2-18 [(1) an individual bond as provided under Section
2-19 91.1041;]
2-20 [(2) a blanket bond as provided under Section 91.1042;]
2-21 [(3) a nonrefundable annual fee of $100, if the person
2-22 can demonstrate to the commission an acceptable record of
2-23 compliance with all commission rules, orders, licenses, permits, or
2-24 certificates that relate to safety or the prevention or control of
2-25 pollution for the previous 48 months and the person and, if a firm,
2-26 partnership, joint stock association, corporation, or other
2-27 organization, its officers, directors, general partners, or owners
3-1 of more than 25 percent ownership interest or any trustee:]
3-2 [(A) has no outstanding violations of such
3-3 commission rules, orders, licenses, permits, or certificates;]
3-4 [(B) has paid all administrative, civil, and
3-5 criminal penalties, if any, relating to any violation of such
3-6 commission rules, orders, licenses, permits, or certificates; and]
3-7 [(C) has paid all reimbursements of any costs
3-8 and expenses incurred by the commission in relation to any
3-9 violation of such commission rules, orders, licenses, permits, or
3-10 certificates;]
3-11 [(4) a nonrefundable annual fee equal to three percent
3-12 of the bond that otherwise would be required; or]
3-13 [(5) to give a first lien on tangible personal
3-14 property associated with oil and gas production whose salvage value
3-15 equals the value of an individual bond under Section 91.1041 or the
3-16 value of a blanket bond under Section 91.1042 that otherwise would
3-17 be required.]
3-18 [(c) A person who chooses to file a form of financial
3-19 security other than a bond shall also submit a fee of $100 for each
3-20 application to extend the time to plug a well in accordance with
3-21 Section 85.2021 of this code.]
3-22 SECTION 2. Section 91.109, Natural Resources Code, is
3-23 amended to read as follows:
3-24 Sec. 91.109. FINANCIAL SECURITY FOR PERSONS INVOLVED IN
3-25 ACTIVITIES OTHER THAN OPERATION OF WELLS. In addition to the
3-26 financial security requirements of Section 91.104(b), a person
3-27 required to file a bond or alternate form of financial security
4-1 under Section 91.103 who is involved in activities other than the
4-2 operation of wells must file the bond or alternate form of
4-3 financial security at the time of filing or renewing an
4-4 organization report required by Section 91.142 in an amount equal
4-5 to:
4-6 (1) $250,000; or
4-7 (2) a lesser amount determined by the commission if
4-8 the person requests a hearing and is able to demonstrate that the
4-9 risk associated with an operation or group of operations warrants a
4-10 lesser amount. [DISPOSAL SITE BOND. A person applying for or
4-11 acting under a commission permit to store, handle, treat, reclaim,
4-12 or dispose of oil and gas waste may be required by the commission
4-13 to maintain a performance bond or other form of financial security
4-14 conditioned that the permittee will operate and close the storage,
4-15 handling, treatment, reclamation, or disposal site in accordance
4-16 with state law, commission rules, and the permit to operate the
4-17 site. However, this section does not authorize the commission to
4-18 require a bond or other form of financial security for saltwater
4-19 disposal pits, emergency saltwater storage pits (including
4-20 blow-down pits), collecting pits, or skimming pits provided that
4-21 such pits are used in conjunction with the operation of an
4-22 individual oil or gas lease. Subject to the refund provisions of
4-23 Section 91.1091 of this code, proceeds from any bond or other form
4-24 of financial security required by this section shall be placed in
4-25 the oil-field cleanup fund. Each bond or other form of financial
4-26 security shall be renewed and continued in effect until the
4-27 conditions have been met or release is authorized by the
5-1 commission.]
5-2 SECTION 3. (a) This Act takes effect September 1, 2001.
5-3 (b) The changes in law made by Sections 91.104 and 91.109,
5-4 Natural Resources Code, as amended by this Act, apply only to a
5-5 person required on or after September 1, 2001, to file a bond or
5-6 alternate financial security under Section 91.103, Natural
5-7 Resources Code.