H.B. 2613 78(R)    BILL ANALYSIS


H.B. 2613
By: Keffer, Bill
Energy Resources
Committee Report (Amended)



BACKGROUND AND PURPOSE 

Although the statues specifically place a lien on equipment and authorize
the salvage and sale of the equipment and stored hydrocarbons to recover
costs associated with well plugging using state funds, the statute
currently does not create a lien against responsible person's interest in
the hydrocarbons on the site of facility undergoing cleanup using state
funds without plugging. 

This amendment would all the Railroad Commission, when cleaning up a site,
to salvage (or sell) valuable hydrocarbons stored at the abandoned
facility. Currently, the Railroad Commission can only salvage or sell
hydrocarbons when plugging wells at the site. The proceeds from salvage
and sale of the equipment and hydrocarbons would be placed in the Oil
Field Cleanup Fund  to help defray the costs of the cleanup activities. 

RULEMAKING AUTHORITY
 
It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

SECTION 1. Section 91.115. FIRST LIEN ON EQUIPMENT AND STORED HYDROCARBONS.

House Bill 2613 amends Section 91.115, Texas Natural Resources Code, to
include "and stored hydrocarbons" to the heading of this section. 

SECTION 2. Sections 91.115(a), (e) and (f), Texas Natural Resources Code.

House Bill 2613 amends Section 91.115, Texas Natural Resources Code, to
authorize the Commission to salvage and sell both equipment and stored
hydrocarbons located on a site or facility on which wells are to be or
have been plugged and remediation is to occur or has occurred using funds
from the Oil Field Cleanup Fund.  

SECTION 3. (a) This Act takes effect September1, 2003. (b) The changes in
law made by Section 91.115, Natural Resources Code, as amended by this
Act, apply only to an interest in hydrocarbons stored at a site or
facility the date for cleanup of which required  by law or rule or adopted
by the Railroad Commission of Texas is September 1, 2003 or later.  

EFFECTIVE DATE

(a) This Act takes effect September1, 2003.
(b) The changes in law made by Section 91.115, Natural Resources Code, as
amended by this Act, apply only to an interest in hydrocarbons stored at a
site or facility the date for cleanup of which required  by law or rule or
adopted by the Railroad Commission of Texas is September 1, 2003 or later.





 


EXPLANATION OF AMENDMENTS

SECTION 2. of the bill, page2, between lines 13 and 14 is amended by
adding Subsection(g). 

Subsection(g) is added to read as follows: The lien provided by this
section, as it relates to stored hydrocarbons, shall be subject to and
inferior to any lien in favor of the State of Texas to secure royalty
payments.  

Section 52.136, Natural Resources Code, gives the General Land Office a
first lien on all oil and gas production to secure payment of royalties.
The proposed lien in HB 2613 would be superior to that of the General Land
Office and could incur conflict in instances where the General Land Office
and another agency, both acting on behalf of the State, have filed liens.
In order to ensure that the payment of royalties owed the State is not
jeopardized, this amendment clarifies that the superior lien, as it
relates to stored hydrocarbons, is subject and inferior to any lien in
favor of the State of Texas to secure payment of royalties owed to the
State.