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A BILL TO BE ENTITLED
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AN ACT
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relating to the financial security requirements for operators of |
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oil and gas wells. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 91.104(c), Natural Resources Code, is |
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amended to read as follows: |
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(c) A person required to file a bond, letter of credit, or |
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cash deposit under Section 91.103 who operates one or more wells is |
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considered to have met that requirement for a well if the well bore |
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is included in a well-specific plugging insurance policy that: |
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(1) is approved by the Texas Department of Insurance; |
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(2) names this state as the owner and contingent |
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beneficiary of the policy; |
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(3) names a primary beneficiary who agrees to plug the |
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specified well bore; |
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(4) is fully prepaid and cannot be canceled or |
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surrendered; |
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(5) provides that the policy continues in effect until |
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the specified well bore has been plugged; |
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(6) provides that benefits will be paid when, but not |
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before, the specified well bore has been plugged in accordance with |
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commission rules in effect at the time of plugging; and |
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(7) provides benefits that equal the greatest of: |
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(A) an amount equal to the amount determined by |
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the commission under Section 91.1043 for the oil and gas division |
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district in which the specified well is located multiplied by the |
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number of feet [$2 for each foot] of well depth, as determined in |
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the manner specified by the commission, for the [specified] well; |
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(B) if the specified well is a bay well and |
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regardless of whether the well is producing oil or gas, the amount |
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required under commission rules for a bay well that is not producing |
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oil or gas; |
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(C) if the specified well is an offshore well and |
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regardless of whether the well is producing oil or gas, the amount |
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required under commission rules for an offshore well that is not |
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producing oil or gas; or |
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(D) the payment otherwise due under the policy |
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for plugging the well bore. |
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SECTION 2. Section 91.1041(a), Natural Resources Code, is |
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amended to read as follows: |
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(a) A person required to file a bond, letter of credit, or |
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cash deposit under Section 91.103 who operates one or more wells may |
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file a bond in an amount equal to the amount determined by the |
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commission under Section 91.1043 for the oil and gas division |
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district in which each well is located multiplied by the number of |
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feet [$2 for each foot] of well depth for each well. |
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SECTION 3. Sections 91.1042(a) and (b), Natural Resources |
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Code, are amended to read as follows: |
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(a) A person required to file a bond, letter of credit, or |
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cash deposit under Section 91.103 may file a blanket bond to cover |
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all wells for which a bond, letter of credit, or cash deposit is |
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required as follows: |
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(1) a person who operates 10 or fewer wells shall file |
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a $35,000 [$25,000] blanket bond; |
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(2) a person who operates more than 10 but not more |
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[fewer] than 20 [100] wells shall file a $50,000 blanket bond; |
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(3) a person who operates more than 20 but not more |
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than 35 wells shall file a $75,000 blanket bond; |
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(4) a person who operates more than 35 but not more |
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than 60 wells shall file a $130,000 blanket bond; |
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(5) a person who operates more than 60 but fewer than |
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100 wells shall file a $215,000 blanket bond; and |
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(6) [(3)] a person who operates 100 or more wells |
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shall file a $250,000 blanket bond. |
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(b) Notwithstanding Subsection (a), the commission by rule |
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shall set the amount of the bond for an operator of bay or offshore |
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wells at a reasonable amount that exceeds the amount provided by |
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Subsection (a)(1), (2), [or] (3), (4), (5), or (6), as applicable. |
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SECTION 4. Subchapter D, Chapter 91, Natural Resources |
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Code, is amended by adding Section 91.1043 to read as follows: |
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Sec. 91.1043. DETERMINATION OF AVERAGE PLUGGING COSTS. At |
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the beginning of each state fiscal year, the commission shall |
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determine the average cost for each foot of well depth of plugging a |
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well located in each oil and gas division district during the |
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preceding state fiscal year. |
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SECTION 5. (a) The changes in law made by this Act apply |
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only to a person required to file a bond, letter of credit, or cash |
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deposit under Section 91.103, Natural Resources Code, on or after |
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the effective date of this Act. A person required to file a bond, |
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letter of credit, or cash deposit under Section 91.103, Natural |
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Resources Code, before the effective date of this Act is governed by |
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the law as it existed immediately before the effective date of this |
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Act, and that law is continued in effect for that purpose. |
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(b) The changes in law made by this Act apply to each well |
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for which a person is required to file a bond, letter of credit, or |
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cash deposit under Section 91.103, Natural Resources Code, on or |
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after the effective date of this Act regardless of whether the |
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person was required to file a bond, letter of credit, or cash |
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deposit under that section for the well before the effective date of |
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this Act. |
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SECTION 6. This Act takes effect September 1, 2021. |