SLS 16RS-637 ENGROSSED
2016 Regular Session
SENATE BILL NO. 428
BY SENATOR ALLAIN
TAX/ENERGY. Dedicates certain funds to oilfield site-specific trust accounts in order to
provide for oilfield site restoration. (gov sig)
1 AN ACT
2 To amend and reenact R.S. 47:645(B) and to enact R.S. 30:88.1, relative to site-specific
3 oilfield trust accounts; to provide for the use of certain funds in the state treasury
4 derived from orphan wells for oilfield site restoration; to provide for an effective
5 date; and to provide for related matters.
6 Be it enacted by the Legislature of Louisiana:
7 Section 1. R.S. 30:88.1 is hereby enacted to read as follows:
8 §88.1. Oilfield site trust accounts for orphaned wells
9 A. Orphan Wells. (1) For purposes of this Section, an orphan well shall
10 mean an oil or gas well that is designated as part of an orphaned oilfield site as
11 of August 1, 2016, and thereafter, and that has had no reported production for
12 a period of greater than two years immediately prior to the production of oil,
13 gas, or condensate to which this Section applies.
14 (2) After satisfying the provisions of Article VII, Sections 4, 9(B), 10-A,
15 and 10.2 of the Constitution of Louisiana relative to the allocation and
16 distribution of severance tax proceeds and as further provided in R.S.
17 47:645(B), the remaining portion of the monies credited to the state treasury
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1 originally derived from the severance tax levied on oil, gas, and condensate from
2 an orphaned well as defined in this Subsection shall be credited to the associated
3 site-specific trust account in accordance herein.
4 (3) Upon full funding of the associated site-specific trust account in
5 accordance with a plan approved by the assistant secretary as provided in this
6 Section, all monies remaining in the account shall be credited in full to the state
7 treasury as provided by R.S. 47:645(B).
8 (4) When the conditions of this Subsection are met relative to the funding
9 of the site-specific trust account, the assistant secretary shall not require
10 additional financial security for the well associated with that site-specific trust
11 account.
12 B. New Production. In the event of new production from a formerly
13 orphaned well, a site-specific trust account shall be established to separately
14 account for each such site for the purpose of providing a source of funds for site
15 restoration of that oilfield site at such time in the future when restoration of that
16 oilfield site is required. Once established, the site-specific trust account shall
17 remain in effect until completion of site restoration of the associated oilfield site.
18 C. Site Restoration Assessment. When establishing a site-specific trust
19 account under this Section, the assistant secretary shall require an oilfield site
20 restoration assessment to be made to determine the site restoration
21 requirements existing at the time the site-specific trust account is established.
22 The oilfield site restoration assessment shall be conducted by approved site
23 assessment contractors appearing on a list approved by the commission or
24 acceptable to the commission. The oilfield site restoration assessment shall
25 specifically detail the site's restoration needs and shall provide an estimate of
26 the restoration costs needed to restore the oilfield site based on the conditions
27 existing at the time the site-specific trust account is established.
28 D. Trust Account Monitoring. The assistant secretary shall monitor each
29 trust account to assure that it is being properly funded. The funds in each trust
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1 account shall remain the property of the commission. In the event that the
2 site-specific trust account is not funded through the payment of the severance
3 tax due the state for a period of greater than six months, the assistant secretary
4 shall require financial security in accordance with the office of conservation's
5 rules and regulations.
6 E. Transfers of Oilfield Sites. When transfers of oilfield sites occur
7 subsequent to the formation of site-specific trust accounts pursuant to this
8 Section but prior to the end of the oilfield site's economic life, the assistant
9 secretary and the acquiring party shall, in the manner provided in this Section,
10 redetermine cost. The balance of any site-specific trust account at the time of
11 transfer shall remain associated with the oilfield site and shall be a factor in the
12 redetermination.
13 F. Good Faith Disclosure. The failure of a transferring party to make a
14 good faith disclosure of all oilfield site conditions existing at the time of the
15 transfer may render that party liable for the costs of restoration of such
16 undisclosed conditions in excess of the balance of the site-specific trust account.
17 G. Unusable Oilfield Sites. For unusable oilfield sites, after site
18 restoration has been completed and approved by the assistant secretary, funds
19 from a site-specific trust account shall be disbursed as follows:
20 (1) The balance of the funds existing in the site-specific trust account will
21 be remitted to the responsible party.
22 (2) Such account shall thereafter be closed.
23 H. The assistant secretary shall make, after notice and public hearings
24 as provided in this Chapter, any reasonable rules, regulations, and orders that
25 are necessary to implement this Section.
26 Section 2. R.S. 47:645(B) is hereby amended and reenacted to read as follows:
27 §645. Disposition of collections
28 * * *
29 B. One-third of the sulphur severance tax but not to exceed one hundred
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1 thousand dollars, one-fifth of the severance tax on all natural resources other than
2 sulphur or timber but not to exceed five hundred thousand dollars, and three-fourths
3 of the timber severance tax shall be allocated to the governing authority of the parish
4 within which severance or production occurs and shall be credited to such parish by
5 the treasurer for allocation to the governing authority of the parish in which
6 severance or production occurs as provided in Article VII, Section 4 of the
7 Constitution of 1974. When these limits have been reached, there shall be no further
8 allocation, and all additional collections for the year shall be credited in full to the
9 state treasury except as provided in R.S. 30:88.1.
10 * * *
11 Section 3. This Act shall become effective upon signature by the governor or, if not
12 signed by the governor, upon expiration of the time for bills to become law without signature
13 by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
14 vetoed by the governor and subsequently approved by the legislature, this Act shall become
15 effective on the day following such approval.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Jay R. Lueckel.
DIGEST
SB 428 Engrossed 2016 Regular Session Allain
Proposed law creates oilfield site trust accounts for certain orphaned well sites.
Proposed law provides that an orphan well shall mean an oil or gas well that is designated
as part of an orphaned oilfield site as of August 1, 2016, and thereafter and that has had no
reported production for a period of greater than two years immediately prior to the
production of oil, gas, or condensate.
Proposed law provides that after satisfying the provisions of the Constitution of Louisiana
relative to the allocation and distribution of severance tax proceeds and as further provided
in statute, the remaining portion of the monies credited to the state treasury originally
derived from the severance tax levied on oil, gas, and condensate from an orphaned well as
defined in proposed law shall be credited to the associated site-specific trust account.
Proposed law provides that upon full funding of the associated site-specific trust account in
accordance with a plan approved by the assistant secretary as provided in proposed law, all
monies remaining in the account shall again be credited in full to the state treasury. Also
provides that so long as the conditions are met relative to the funding of the site-specific
trust account, the assistant secretary shall not require additional financial security for the
well.
Proposed law provides that in the event of new production from a formerly orphaned well,
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a site-specific trust account shall be established to separately account for each such site for
the purpose of providing a source of funds for site restoration of that oilfield site at such time
in the future when restoration of that oilfield site is required. Once established, the site-
specific trust account shall survive until completion of site restoration of the associated
oilfield site.
Proposed law provides that when establishing a site-specific trust account, the assistant
secretary shall require an oilfield site restoration assessment to be made to determine the site
restoration requirements existing at the time the site-specific trust account is established. The
oilfield site restoration assessment shall be conducted by approved site assessment
contractors appearing on a list approved by the commission or acceptable to the commission.
The oilfield restoration assessment shall specifically detail the site's restoration needs and
shall provide an estimate of the restoration costs needed to restore the oilfield site based on
the conditions existing at the time the site-specific trust account is established. The assistant
secretary shall monitor each trust account to assure that it is being properly funded and the
funds in each trust account shall remain the property of the commission. Further provides
that in the event that the site-specific trust account is not funded through the payment of the
severance tax due the state for a period of greater than six months, then the assistant
secretary shall require financial security in accordance with the office of conservation's rules
and regulations.
Proposed law provides that for transfers of oilfield sites that occur subsequent to the
formation of site-specific trust accounts pursuant to proposed law but prior to the end of their
economic life, the assistant secretary and the acquiring party shall, in the manner provided
in proposed law, again redetermine cost. The balance of any site-specific trust account at the
time of transfer shall remain associated with the oilfield site and shall be a factor in the
redetermination.
Proposed law provisions provide for the distribution of funds associated with the site for
unusable oilfield sites, after site restoration has been completed and approved by the
assistant secretary.
Proposed law provides for the distribution of certain collections of severance taxes to
site-specific oilfield site trust accounts for orphaned wells.
Proposed law directs the assistant secretary to make any necessary rules, regulations, and
orders to implement the provisions of the Act.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Amends R.S. 47:645(B); adds R.S. 30:88.1)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Finance to the original
bill
1. Deletes all provisions relative to inactive wells and limits the Act to orphan
wells.
2. Directs the assistant secretary to make any necessary rules, regulations, and
orders to implement the provisions of the Act.
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words in boldface type and underscored are additions.