By:  Brown                                             S.B. No. 946
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the statutory lien that arises when an abandoned well
 1-3     has not been timely plugged.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subsection (c), Section 89.043, Natural Resources
 1-6     Code, is amended to read as follows:
 1-7           (c)  Not later than [On or before] the 30th day before the
 1-8     date the commission enters into a contract to plug a delinquent
 1-9     inactive well, the commission shall send a notice by certified mail
1-10     to the operator of the well at the address last reported to the
1-11     commission as required by Section 91.142 and commission rules.  The
1-12     notice shall direct the operator to plug the well and shall state
1-13     that:
1-14                 (1)  the commission may plug the well and foreclose its
1-15     statutory lien under Section 89.083 unless the operator requests a
1-16     hearing not later than the 10th day after the date the operator
1-17     receives the notice;
1-18                 (2)  if the commission forecloses its statutory lien
1-19     under Section 89.083 [plugs the well], all well-site equipment will
1-20     be presumed to have been abandoned and the commission may dispose
1-21     of the equipment and hydrocarbons from the well as provided by
1-22     Section 89.085;
1-23                 (3)  if the commission plugs the well, the commission:
1-24                       (A)  by order may require the operator to
1-25     reimburse the commission for the plugging costs; or
 2-1                       (B)  may request the attorney general to file
 2-2     suit against the operator to recover those costs; [and]
 2-3                 (4)  the commission has a statutory lien on all
 2-4     well-site equipment under Section 89.083; and
 2-5                 (5)  the lien described by Subdivision (4) is
 2-6     foreclosed by operation of law if the commission does not receive a
 2-7     valid and timely request for a hearing before the 15th day after
 2-8     the date the notice is mailed.
 2-9           SECTION 2.  Subsection (c), Section 89.083, Natural Resources
2-10     Code, is amended to read as follows:
2-11           (c)  The lien may be foreclosed by judicial action or
2-12     commission order at any time after notice and an opportunity for a
2-13     hearing.  If notice is mailed under Section 89.043 and if the lien
2-14     is not previously foreclosed, the lien is foreclosed by operation
2-15     of law on the 15th day after the date the notice is mailed unless
2-16     the commission has received a valid and timely request for a
2-17     hearing before that date.  [The commission may foreclose on the
2-18     lien by entering into a plugging contract.]  The commission is not
2-19     required to give notice or an opportunity for a hearing to
2-20     subordinate lienholders or nonoperators before foreclosing the lien
2-21     [entering into a plugging contract].
2-22           SECTION 3.  Subsections (a), (g), and (h), Section 89.085,
2-23     Natural Resources Code, are amended to read as follows:
2-24           (a)  When the commission forecloses its lien under Section
2-25     89.083 on [enters into a contract to plug] a delinquent inactive
2-26     well, well-site equipment and any amount of hydrocarbons from the
 3-1     well that is stored on the lease are presumed to have been
 3-2     abandoned and may be disposed of by the commission in a
 3-3     commercially reasonable manner by either or both of the following
 3-4     methods:
 3-5                 (1)  entering into a plugging contract that provides
 3-6     [may provide] that the person plugging or cleaning up pollution, or
 3-7     both, will take title to well-site equipment, hydrocarbons from the
 3-8     well that are stored on the lease, or hydrocarbons recovered during
 3-9     the plugging operation in exchange for a sum of money deducted as a
3-10     credit from the contract price; or
3-11                 (2)  selling the well-site equipment, hydrocarbons from
3-12     the well that are stored on the lease, or hydrocarbons recovered
3-13     during the plugging operation [may be sold] at a public auction or
3-14     a public or private sale.
3-15           (g)  The notice required by Subsection (f) of this section
3-16     must include [shall state]:
3-17                 (1)  the lease name;
3-18                 (2)  the well number;
3-19                 (3)  the county in which the well is located;
3-20                 (4)  the abstract number of the property on which the
3-21     lease is situated;
3-22                 (5)  the commission lease or gas well identification
3-23     number or drilling permit number;
3-24                 (6)  a list of the property disposed of under this
3-25     section; and
3-26                 (7)  a statement that any person who has a legal or
 4-1     equitable ownership or security interest in the equipment or
 4-2     hydrocarbons that was in existence on the date the commission
 4-3     foreclosed its statutory lien [entered into a contract to plug or
 4-4     clean up the well] may file a claim with the commission.
 4-5           (h)  Not later than the 180th day after the date the
 4-6     well-site equipment or hydrocarbons are disposed of under this
 4-7     section, the commission shall publish a notice that states:
 4-8                 (1)  the lease name;
 4-9                 (2)  the well number;
4-10                 (3)  the county in which the well is located;
4-11                 (4)  the commission lease or gas well identification
4-12     number or drilling permit number; and
4-13                 (5)  that equipment or hydrocarbons if applicable from
4-14     the well and lease were disposed of under this section and that any
4-15     person who has a legal or equitable ownership or security interest
4-16     in the equipment or hydrocarbons that was in existence on the date
4-17     the commission foreclosed its statutory lien [entered into a
4-18     contract to plug or clean up the well] may file a claim with the
4-19     commission.
4-20           SECTION 4.  Subsections (a) and (c), Section 89.086, Natural
4-21     Resources Code, are amended to read as follows:
4-22           (a)  A person with a legal or equitable ownership or security
4-23     interest in well-site equipment or hydrocarbons disposed of under
4-24     Section 89.085 of this code may make a claim against the oil-field
4-25     cleanup fund unless an element of the transaction giving rise to
4-26     the interest occurs after the commission forecloses its statutory
 5-1     lien under Section 89.083 [enters into a plugging contract].
 5-2           (c)  A claimant must identify the well-site equipment or
 5-3     hydrocarbons in which the claimant has an interest and state the
 5-4     amount of the property interest as of the date the commission
 5-5     foreclosed its statutory lien under Section 89.083 [entered into
 5-6     the plugging contract].
 5-7           SECTION 5.  The changes in law made by this Act apply only to
 5-8     liens on wells for which the Railroad Commission of Texas sends a
 5-9     notice under Section 89.043, Natural Resources Code, on or after
5-10     the effective date of this Act.  Liens on wells for which notice is
5-11     sent before the effective date of this Act are covered by the law
5-12     as it existed when the notice was sent, and that law is continued
5-13     in effect for that purpose.
5-14           SECTION 6.  This Act takes effect immediately if it receives
5-15     a vote of two-thirds of all the members elected to each house, as
5-16     provided by Section 39, Article III, Texas Constitution.  If this
5-17     Act does not receive the vote necessary for immediate effect, this
5-18     Act takes effect September 1, 2001.