80R9860 JJT-F
 
  By: Cook of Navarro H.B. No. 3110
 
 
 
   
 
 
A BILL TO BE ENTITLED
AN ACT
relating to indemnification requirements relating to a clean coal
project.
       BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
       SECTION 1.  Section 119.006, Natural Resources Code, is
amended to read as follows:
       Sec. 119.006.  INDEMNIFICATION. The University of Texas
System, [and] the permanent university fund, and the Texas
Department of Criminal Justice may enter into a lease with the
commission[,] or with an owner or operator of a clean coal
project[,] for the use of lands owned or controlled by the system,
the [or] fund, or the department for permanent storage of carbon
dioxide captured by a clean coal project, provided that such lease
adequately indemnifies the system, the [and] fund, and the
department against liability for personal injury or property damage
incurred by the system, the [or] fund, or the department as a result
of the escape or migration of the carbon dioxide after it is
injected into a zone or reservoir. This section does not affect the
application of Chapter 101, Civil Practice and Remedies Code, to
any activity carried out by a governmental unit, as defined by that
chapter.
       SECTION 2.  Chapter 119, Natural Resources Code, is amended
by adding Section 119.007 to read as follows:
       Sec. 119.007.  INDEMNIFICATION BY STATE AND REPRESENTATION
BY ATTORNEY GENERAL. (a) The attorney general shall represent and
defend an owner or operator of a clean coal project in a civil
proceeding brought against the owner or operator that arises from
an escape or migration of carbon dioxide captured or sequestered by
the project if, not later than the 15th day after the date the owner
or operator subject to the proceeding receives service of process,
the owner or operator mails to the attorney general:
             (1)  written notice of the proceeding; and
             (2)  the owner or operator's written:
                   (A)  authorization for the attorney general to
represent and defend the owner or operator in the proceeding;
                   (B)  agreement by the owner or operator to
cooperate with the attorney general in the defense of the action;
and
                   (C)  consent that the attorney general may conduct
the defense as the attorney general determines is advisable and in
the best interests of the owner or operator, including consent for
the attorney general to employ the attorney general's own
discretion in settlement.
       (b)  In any proceeding described by Subsection (a) in which
the attorney general represents the owner or operator, the state
shall pay the court costs and litigation expenses of defending the
action as they are incurred, to the extent approved by the attorney
general as reasonable.
       (c)  The attorney general in writing shall decline to
represent or defend the owner or operator or shall promptly take
appropriate action to withdraw as attorney for the owner or
operator if the attorney general determines that:
             (1)  representing and defending an owner or operator
under this section involves an actual or potential conflict of
interest;
             (2)  the act or omission that gave rise to the claim was
intentional, wilful, or wanton misconduct; or
             (3)  the act or omission that gave rise to the claim was
not within the scope of the escape or migration of captured or
sequestered carbon dioxide.
       (d)  If on the basis of an actual or potential conflict of
interest the attorney general declines to represent or withdraws
from representing the owner or operator and the owner or operator
employs an attorney to represent and defend the owner or operator in
the proceeding, the state shall pay the owner or operator's court
costs, litigation expenses, and attorney's fees as they are
incurred, to the extent approved by the attorney general as
reasonable.
       (e)  If the attorney general declines to represent or defend
the owner or operator or withdraws on the grounds described by
Subsection (c)(2) or (3) and a court or jury later finds that the
act or omission of the owner or operator was not intentional,
wilful, or wanton misconduct and was within the scope of the escape
or migration of captured or sequestered carbon dioxide, the state
shall:
             (1)  indemnify the owner or operator for any damages
awarded and court costs and attorney's fees assessed as part of any
final and unreversed judgment; and
             (2)  pay the owner or operator's court costs,
litigation expenses, and attorney's fees, to the extent approved by
the attorney general as reasonable.
       (f)  The attorney general may file a counterclaim on behalf
of the owner or operator if:
             (1)  the attorney general determines that the owner or
operator is entitled to representation in a civil action under this
section;
             (2)  the counterclaim arises out of any act or omission
occurring within the scope of the operation of a clean coal project
that is the subject of the civil action; and
             (3)  the owner or operator agrees in writing that if
judgment is entered in favor of the owner or operator, the amount of
the judgment will be applied to offset any judgment that may be
entered in favor of the plaintiff and then to reimburse the state
for court costs and litigation expenses required to pursue the
counterclaim.
       (g)  The state shall pay to the owner or operator any
positive balance of a collected judgment for a counterclaim that
remains after applying the amount of the judgment to offset any
judgment entered in favor of the plaintiff and to reimburse the
state for court costs and litigation expenses required to pursue
the counterclaim.
       (h)  Court costs, litigation expenses, and other costs of
providing a defense or counterclaim, including attorney's fees
obligated under this section, shall be paid from state funds on the
warrant of the comptroller out of appropriations made to the
attorney general specifically designed for the payment of costs,
fees, and expenses covered by this section.
       (i)  This section expires on the date the FutureGen
Industrial Alliance, Inc., loses its qualification as being exempt
from federal taxation under Section 501(a), Internal Revenue Code
of 1986, by being listed as an exempt entity under Section 501(c)(3)
of that code.
       SECTION 3.  This Act takes effect September 1, 2007.