SRC-TAG S.B. 1386 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 1386
78R8463 TBy: Armbrister
Natural Resources
4/10/2003
As Filed


DIGEST AND PURPOSE 

As proposed, S.B. 1386 eliminates financial security requirements for
operators who are not responsible for physical management of oil and gas
production, waste or associated materials and allows the Railroad
Commission by rule to establish lower bonding requirements for activities
considered "low risk."   

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Railroad Commission in
SECTION 3 of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 91.103, Natural Resources Code, as follows:

(a)  Provides that Subsection (b) is an exception to the provisions of
this section requiring any person, including any firm, partnership, joint
stock association, corporation, or other organization required to file an
organization report under Section 91.142 of this code to execute and file
with the Railroad Commission (commission) a bond or alternate form of
financial security.  
 
(b)  Provides that an entity that is required to file an organization
report under Section 91.142 of this code is not required to file a bond or
alternate form of financial security if the entity meets certain
standards. 

(c)  Prohibits the commission from granting authority to operators to
conduct operations under the jurisdiction of the commission unless
appropriate financial assurance is filed pursuant to this section prior to
commencement of any regulated activities. 

SECTION 2.  Amends Section 91.103, Natural Resources Code, as enacted to
be effective September 1, 2004, as follows: 

 (a)  Makes a conforming change.

(b)  Provides that an entity that is required to file an organization
report under Section 91.142 of this code is not required to file a bond or
alternate form of financial security if the entity meets certain
requirements.  

(c)  Prohibits a commission from granting authority to operators to
conduct operations under the jurisdiction unless appropriate financial
assurance is pursuant to this section prior to commencement of any
regulated activities.  

SECTION 3.  Amends Section 91.109(b), Natural Resources Code, as enacted
to be effective September 1, 2004, by adding sub-part (3), to provide that
a person who is involved in activities other than the operation of wells
may file a bond, letter of credit, or cash deposit determined by the
commission by rule to be sufficient to cover the risk for any person
engaging in a specific class of activities that does not involve the
operation of wells.  
 
SECTION 4.  Effective date: upon passage or September 1, 2003.