By Armbrister                                         S.B. No. 1019
         77R7864 QS-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to certain matters regarding oil and gas regulation,
 1-3     including fees, plugging of wells, required financial security, and
 1-4     offenses.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1. Section 81.116(a), Natural Resources Code, is
 1-7     amended to read as follows:
 1-8           (a)  An oil-field cleanup regulatory fee is imposed on crude
 1-9     petroleum produced in this state in the amount of
1-10     fifteen-sixteenths [five-sixteenths] of one cent on each barrel of
1-11     42 standard gallons.
1-12           SECTION 2. Section 81.117(a), Natural Resources Code, is
1-13     amended to read as follows:
1-14           (a)  An oil-field cleanup regulatory fee is imposed on gas
1-15     initially produced and saved in this state in the amount of
1-16     one-tenth [one-thirtieth] of one cent for each thousand cubic feet.
1-17           SECTION 3. Sections 85.2021(a) and (c), Natural Resources
1-18     Code, are amended to read as follows:
1-19           (a)  With each application or materially amended application
1-20     for a permit to drill, deepen, plug back, or reenter a well, the
1-21     applicant shall submit to the commission a nonrefundable fee of:
1-22                 (1)  $300 [$100]  if the total depth of the well is
1-23     2,000 feet or less;
1-24                 (2)  $375 [$125]  if the total depth of the well is
 2-1     greater than 2,000 feet but less than or equal to 4,000 feet;
 2-2                 (3)  $450 [$150]  if the total depth of the well is
 2-3     greater than 4,000 feet but less than or equal to 9,000 feet; or
 2-4                 (4)  $600 [$200]  if the total depth of the well is
 2-5     greater than 9,000 feet.
 2-6           (c)  With each application for an extension of time to plug a
 2-7     well pursuant to commission rules, an applicant shall submit to the
 2-8     commission a nonrefundable fee of $400 [$100, unless the applicant
 2-9     has filed a bond under Section 91.1041 or Section 91.1042 of this
2-10     code].
2-11           SECTION 4. Section 89.002(a)(2), Natural Resources Code, is
2-12     amended to read as follows:
2-13                 (2)  "Operator" means a person who assumes
2-14     responsibility for the physical operation and control of a well as
2-15     shown by a form the person files with the commission and the
2-16     commission approves.  The commission may not require a person to
2-17     assume responsibility for a well as a condition to being permitted
2-18     to assume responsibility for another well.  In the event of a sale
2-19     or conveyance of an unplugged well or the right to operate an
2-20     unplugged well, a person ceases being the operator for the purpose
2-21     of Section 89.011 only if the well was in compliance with
2-22     commission rules relating to safety or the prevention or control of
2-23     pollution at the time of sale or conveyance and once the person who
2-24     acquires the well or right to operate the well:
2-25                       (A)  specifically identifies the well as a well
2-26     for which the person assumes plugging responsibility on forms
2-27     required and approved by the commission;
 3-1                       (B)  has a commission-approved organization
 3-2     report as required by Section 91.142;
 3-3                       (C)  has a commission-approved bond as required
 3-4     by [or other form of financial security under] Sections
 3-5     91.103-91.106 [91.103-91.107] covering the well; and
 3-6                       (D)  is [places the well]  in compliance with all
 3-7     other laws and commission rules.
 3-8           SECTION 5. Sections 89.011, 91.103, 91.104, and 91.1041,
 3-9     Natural Resources Code, are amended to read as follows:
3-10           Sec. 89.011.  DUTY OF OPERATOR. (a)  The operator of a well
3-11     shall properly plug the well when required and in accordance with
3-12     the commission's rules that are in effect at the time of the
3-13     plugging.
3-14           (b)  If fresh water zones are present, the operator shall
3-15     perform a mechanical integrity test following the setting of the
3-16     plug at the base of the fresh water zones required to be protected.
3-17     A well is considered to be properly plugged only when the test
3-18     results are satisfactory and meet commission requirements.
3-19           (c)  If, for the use of the surface owner, the operator of
3-20     the well plugs the well back to produce fresh water, the duty of
3-21     the operator to properly plug the well ends only when the
3-22     commission determines the well to have been properly plugged and
3-23     tested and releases the well to the surface owner.
3-24           (d)  An operator may apply for an extension of time to plug a
3-25     well.  The operator must be in compliance with all laws and
3-26     commission rules and must demonstrate that the well and associated
3-27     facilities are not a pollution hazard.  The commission may approve
 4-1     an application for an extension of time to plug a well for a period
 4-2     of 12 months.  An operator may not receive more than two 12-month
 4-3     extensions, except that an operator who has received two 12-month
 4-4     extensions and who provides results of a mechanical integrity test
 4-5     that meets commission requirements receives not more than five
 4-6     additional 12-month extensions.  The operator may continue to
 4-7     receive 12-month extensions until the well has been properly
 4-8     plugged as long as the operator provides mechanical integrity test
 4-9     results that meet commission requirements every five years.
4-10           (e)  The duty of a person to plug an unplugged well that has
4-11     ceased operation ends only if the person's interest in the well is
4-12     sold or conveyed while the well is in compliance with rules of the
4-13     commission relating to safety or the prevention or control of
4-14     pollution and the provisions of Sections 89.002(a)(2)(A)-(D) have
4-15     been met.  The person acquiring the seller's interest through such
4-16     a sale or conveyance succeeds the seller as the operator of the
4-17     well for the purpose of plugging responsibility once the provisions
4-18     of Sections 89.002(a)(2)(A)-(D) have been met.
4-19           Sec. 91.103.  PERSONS REQUIRED TO EXECUTE BOND [OR ALTERNATE
4-20     FORM OF FINANCIAL SECURITY]. Any person, including any firm,
4-21     partnership, joint stock association, corporation, or other
4-22     organization, required to file an organization report under Section
4-23     91.142 of this code shall execute and file with the commission a
4-24     bond as required by Section 91.104 [or alternate form of financial
4-25     security].
4-26           Sec. 91.104.  BONDS [AND ALTERNATE FORMS OF FINANCIAL
4-27     SECURITY]. (a)  The commission shall require a bond [or an
 5-1     alternate form of financial security] to be filed with the
 5-2     commission as provided by Subsection (b) of this section.
 5-3           (b)  A person required to file a bond under Section 91.103
 5-4     may choose to file:
 5-5                 (1)  an individual bond as provided under Section
 5-6     91.1041; or
 5-7                 (2)  a blanket bond as provided under Section 91.1042[;]
 5-8                 [(3)  a nonrefundable annual fee of $100, if the person
 5-9     can demonstrate to the commission an acceptable record of
5-10     compliance with all commission rules, orders, licenses, permits, or
5-11     certificates that relate to safety or the prevention or control of
5-12     pollution for the previous 48 months and the person and, if a firm,
5-13     partnership, joint stock  association, corporation, or other
5-14     organization, its officers, directors, general partners, or owners
5-15     of more than 25 percent ownership interest or any trustee:]
5-16                       [(A)  has no outstanding violations of such
5-17     commission rules, orders, licenses, permits, or certificates;]
5-18                       [(B)  has paid all administrative, civil, and
5-19     criminal penalties, if any, relating to any violation of such
5-20     commission rules, orders, licenses, permits, or certificates; and]
5-21                       [(C)  has paid all reimbursements of any costs
5-22     and expenses incurred by the commission in relation to any
5-23     violation of such commission rules, orders, licenses, permits, or
5-24     certificates;]
5-25                 [(4)  a nonrefundable annual fee equal to three percent
5-26     of the bond that otherwise would be required; or]
5-27                 [(5)  to give a first lien on tangible personal
 6-1     property associated with oil and gas production whose salvage value
 6-2     equals the value of an individual bond under Section 91.1041 or the
 6-3     value of a blanket bond under Section 91.1042 that otherwise would
 6-4     be required.]
 6-5           [(c)  A person who chooses to file a form of financial
 6-6     security other than a bond shall also submit a fee of $100 for each
 6-7     application to extend the time to plug a well in accordance with
 6-8     Section 85.2021 of this code].
 6-9           Sec. 91.1041.  INDIVIDUAL BOND. A person required to file a
6-10     bond under Section 91.103 who operates one or more wells may file a
6-11     bond in an amount equal to $3 [$2] for each foot of well depth for
6-12     each well.
6-13           SECTION 6. Section 91.111(c), Natural Resources Code, is
6-14     amended to read as follows:
6-15           (c)  The fund consists of:
6-16                 (1)  penalties imposed under Section 85.381 for
6-17     violation of a law, order, or rule relating to well plugging
6-18     requirements;
6-19                 (2)  proceeds from bonds [and other financial
6-20     assurances] required by this chapter, subject to the refund
6-21     provisions of Section 91.1091;
6-22                 (3)  private contributions, including contributions
6-23     made under Section 89.084;
6-24                 (4)  expenses collected under Section 89.083;
6-25                 (5)  fees imposed under Section 85.2021;
6-26                 (6)  civil penalties collected for violations of
6-27     Chapter 89 or of rules or orders relating to plugging that are
 7-1     adopted under this code;
 7-2                 (7)  proceeds collected under Sections 89.085 and
 7-3     91.115;
 7-4                 (8)  interest earned on the funds deposited in the
 7-5     fund;
 7-6                 (9)  fees collected under Section 91.104;
 7-7                 (10)  civil penalties or costs recovered under Section
 7-8     91.457 or 91.459;
 7-9                 (11)  oil and gas waste hauler permit application fees
7-10     collected under Section 29.015, Water Code;
7-11                 (12)  costs recovered under Section 91.113(f);
7-12                 (13)  hazardous oil and gas waste generation fees
7-13     collected under Section 91.605;
7-14                 (14)  oil-field cleanup regulatory fees on oil
7-15     collected under Section 81.116;
7-16                 (15)  oil-field cleanup regulatory fees on gas
7-17     collected under Section 81.117;
7-18                 (16)  fees for a reissued certificate collected under
7-19     Section 85.167;
7-20                 (17)  fees collected under Section 91.1013;
7-21                 (18)  fees collected under Section 89.088;
7-22                 (19)  penalties collected under Section 81.0531; and
7-23                 (20)  legislative appropriations.
7-24           SECTION 7. Section 91.143(a), Natural Resources Code, is
7-25     amended to read as follows:
7-26           (a)  A person may not:
7-27                 (1)  make or subscribe any application, report, or
 8-1     other documentation required or permitted to be filed with the
 8-2     commission by the provisions of Title 102, Revised Civil Statutes
 8-3     of Texas, 1925, as amended, including provisions of this code
 8-4     formerly included in that title, knowing or negligently failing to
 8-5     ascertain whether or not [that] the application, report, or other
 8-6     document is false or untrue in a material fact;
 8-7                 (2)  aid or assist in, or procure, counsel, or advise
 8-8     the preparation or presentation of any of these applications,
 8-9     reports, or other documents that are fraudulent, false, or
8-10     incorrect in any material matter, knowing them to be fraudulent,
8-11     false, or incorrect in any material matter;
8-12                 (3)  knowingly or negligently simulate or falsely or
8-13     fraudulently execute or sign such an application, report, or other
8-14     document;
8-15                 (4)  knowingly or negligently procure these
8-16     applications, reports, or other documents to be falsely or
8-17     fraudulently executed, or advise, aid in, or connive at this
8-18     execution; or
8-19                 (5)  knowingly or negligently render inaccurate any
8-20     monitoring device required to be maintained by a commission rule,
8-21     order, or permit.
8-22           SECTION 8. Section 91.107, Natural Resources Code, is
8-23     repealed.
8-24           SECTION 9. (a)  This Act takes effect September 1, 2001.
8-25           (b)  The changes in law made by this Act to Section 85.2021,
8-26     Natural Resources Code, apply only to an application filed on or
8-27     after the effective date of this Act.  An application filed before
 9-1     the effective date of this Act is covered by the law in effect on
 9-2     the date the application was filed, and that law is continued in
 9-3     effect for that purpose.
 9-4           (c)  The changes in law made by this Act to Sections 91.103,
 9-5     91.104, and 91.1041, Natural Resources Code, apply only to a bond
 9-6     filed on or after the effective date of this Act.  A bond filed
 9-7     before the effective date of this Act is covered by the law in
 9-8     effect on the date the bond was filed, and that law is continued in
 9-9     effect for that purpose.
9-10           (d)  The changes in law made by this Act to Section 91.143,
9-11     Natural Resources Code, apply only to a violation committed on or
9-12     after the effective date of this Act.  For purposes of this
9-13     subsection, a violation is committed before the effective date of
9-14     this Act if any element of the violation occurs before that date. A
9-15     violation of Section 91.143, Natural Resources Code, committed
9-16     before the effective date of this Act is covered by the law in
9-17     effect when the violation was committed, and that law is continued
9-18     in effect for that purpose.