SRC-TAG C.S.H.B. 942 78(R)BILL ANALYSIS


Senate Research CenterC.S.H.B. 942
By: Chisum (Hinojosa)
Natural Resources
5/24/2003
Committee Report (Substituted)


DIGEST AND PURPOSE 

In an effort to reduce the number of orphan oil and gas wells (inactive
wells that will likely have to be plugged by the state) the 77th
Legislature enacted a series of changes, establishing that any company
that conducts operations within the Railroad Commission's jurisdiction
would have to post a bond, letter of credit, or cash deposit as part of
the annual registration with the commission.  If a company fails to
provide the requisite financial assurance it cannot conduct operations.
The purpose of those changes was to provide the state with a source of
funds to clean up pollution or plug abandoned wells if the responsible
operator was unable or unwilling to do so.   C.S.H.B. 942 establishes
financial security requirements for certain persons engaged in activities
regulated by the Texas Railroad Commission other than the ownership or
operation of wells. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 91.104(b), Natural Resources Code, as effective
September 1, 2004, to delete text regarding a person required to file a
bond who is not involved in any other activities that require the filing
of a bond, letter of credit, or cash deposit. 

SECTION 2.  Amends Section 91.109, Natural Resources Code, as effective
until September 1, 2004, as follows: 

Sec.  91.109.  New heading:  FINANCIAL SECURITY FOR PERSONS INVOLVED IN
ACTIVITIES OTHER THAN OPERATION OF WELLS.  (a)  Created from existing
text.   

(b)  Requires a person required to file a bond or alternate form of
financial security under Section 91.103 who is involved in activities
other than the ownership or operation of wells, in addition to the
financial security requirements of Subsection (a), to file the bond or
alternate form of financial security at the time of filing or renewing an
organization report required by Section 91.142 according to a certain
schedule. 

(c)  Provides that a person who engages in more than one activity or
operation, including well operation, for which a bond or alternate form of
financial security is required under this subchapter is not required to
file a separate bond or alternate form of financial security for each
activity or operation in which the person is engaged.  Provides that the
person is required to file a bond or alternate form of financial security
only in the amount required for the activity or operation in which the
person engages for which a bond or alternate form of financial security in
the greatest amount is required.  Provides that the bond or alternate form
of financial security filed covers all of the activities and operations
for which a bond or alternate form of financial security is required under
this subchapter. 

 SECTION 3.  Amends Section 91.109, Natural Resources Code, as effective
September 1, 2004, by amending Subsection (b) and adding Subsection (c),
as follows:  

(b)  Provides that in addition to the financial security requirements of
Subsection (a), but not Section 91.104(b), a person required to file a
bond, letter of credit, or cash deposit under Section 91.103 who is
involved in activities other than the ownership or operation of wells must
file the bond, letter of credit, or cash deposit at the time of filing or
renewing an organization report required by Section 91.142 according to
certain schedules.  Deletes text providing for an amount of $250,000 or a
lesser amount be determined by the Texas Railroad Commission if the person
is able to demonstrate the risk associated with an operation warrants a
lesser amount.  

(c)  Provides that a person who engages in more than one activity or
operation, including well operation, for which a bond, letter of credit,
or cash deposit is required under this subchapter is not required to file
a separate bond, letter of credit, or cash deposit for each activity or
operation in which the person is engaged.  Provides that the person is
required to file a bond, letter of credit, or cash deposit only in the
amount required for the activity or operation in which the person engages
for which a bond, letter of credit, or cash deposit in the greatest amount
is required.  Provides that the bond, letter of credit, or cash deposit
filed covers all of the activities and operations for which a bond, letter
of credit, or cash deposit is required under this subchapter. 

SECTION 4.  Amends Section 91.142(g), Natural Resources Code, to require
an organization report filed under this section to be accompanied by a
certain fee. 

SECTION 5.  Effective date: September 1, 2004.