Oklahoma 2024 Regular Session

Oklahoma House Bill HB3534 Compare Versions

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3		-	SENATE FLOOR VERSION - HB3534 SFLR Page 1
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	3	+	ENGR. H. B. NO. 3534 Page 1 1
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29		-	SENATE FLOOR VERSION
30		-	March 28, 2024
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33	28		ENGROSSED HOUSE
34	29		BILL NO. 3534 By: Boles and Williams of the
35	30		House
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37	32		and
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39	34		Paxton of the Senate
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43	40		An Act relating to oil and gas; amending 52 O.S.
44	41		2021, Section 318.1, which relates to evidence of
45	42		financial ability for drilling and oper ating wells;
46	43		phasing out category A surety; modifying surety
47	44		amounts; providing for tiered surety amount based on
48	45		number of operating wel ls; and providing an effective
49	46		date.
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53	52		BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
54	53		SECTION 1. AMENDATORY 52 O.S. 2021, Section 318.1, is
55	54		amended to read as follows:
56	55		Section 318.1 A. Any person who drills or operates any well
57	56		for the exploration, development or production of oil or gas, or as
58	57		an injection or disposal well, within this state, shall furnish in
59	58		writing, on forms approved by the Corporation Commission, h is or her
60	59		agreement to drill, operate and plug wells in compliance with the
61	60		rules of the Commission and the laws of this state, together with
62	61		evidence of financial abi lity to comply with the requirements for
63	62		plugging, closure of surface impoundments, remov al of trash and
64	63		equipment as established by the rules of the Commission and by law.
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	65	+	ENGR. H. B. NO. 3534 Page 2 1
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92	90		To establish evidence of financial ability, the Commission sh all
93	91		require:
94	92		1. Category A surety which shall include a financial statement
95	93		listing assets and liabilities an d including a general release that
96	94		the information may be verified with banks a nd other financial
97	95		institutions. The statement shall prove a net w orth of not less
98	96		than Fifty Thousand Dollars ($50,000.00). Category A surety wil l no
99	97		longer be accepted as va lid form of surety for new operators to
100	98		select beginning November 1, 2024. All current operators who have
101	99		valid Category A sure ty and are in good s tanding with the Commission
102	100		will be able to retain their Category A surety for t he time they are
103	101		a valid operator in the State of Oklahoma ; or
104	102		2. Category B surety which shall include an irrevocable
105	103		commercial letter of credit, cash, a cashier's check, a Certificate
106	104		of Deposit, Bank Joint Custody Receipt, other negotiable instrument ,
107	105		or, a blanket surety bond. Except as provided in paragraph 3 1 of
108	106		subsection A B or subsection C of this section, amount of such
109	107		letter of credit, cash, cashier's check, certificate, bond, receipt
110	108		or other negotiable instrument shall be in the amount of Twenty -five
111	109		Thousand Dollars ($25,000.00) but may be set higher at the
112	110		discretion of the Director of the Oi l and Gas Conservation Division
113	111		based on the number of wells that the person operates as follows:
114	112		a. for one to ten wells, Twenty-five Thousand Dollars
115	113		($25,000.00),
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143	140		b. for eleven to fifty wells, Fifty Thousand Dollars
144	141		($50,000.00),
145	142		c. for fifty-one to one hundred wells, One Hundred
146	143		Thousand Dollars ($100,000.00), and
147	144		d. for more than one hundred wells, One Hundred Fifty
148	145		Thousand Dollars ($150,000.00).
149	146		The Commission is authorize d to determine the amount of Category B
150	147		surety based upon the past performance of the operator and its
151	148		insiders and affiliates regarding compliance wi th the laws of this
152	149		state, and any rules promulgated thereto including but not l imited
153	150		to the drilling, operation and plugging of wells, closure of surface
154	151		impoundments or removal of tr ash and equipment. Any instrument
155	152		shall constitute an unconditional pr omise to pay and be in a form
156	153		negotiable by the Commission.
157	154		3. B. 1. The Commission upon certification b y any operator
158	155		subject to Category B surety that its plugging liab ility statewide
159	156		is less than the twenty-five-thousand-dollar standard amount based
160	157		on the number of wells operated as specified in this section may
161	158		allow said operator to provide Category B type surety in an amount
162	159		less than the amount required Twenty-five Thousand Dollars
163	160		($25,000.00) by this section, but at least sufficient to cover the
164	161		estimated cost of all plugging, closure, and removal operations
165	162		currently the responsibility of that oper ator. The liability
166	163		certification referred to in this paragraph subsection shall take
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194	190		the form of an affidavit from a licensed well plugger estimat ing the
195	191		costs of all plugging, closure, and removal operations of the
196	192		operator requesting such relief. This alternative amount shall be
197	193		modified upward upon the assumption of additional operations by such
198	194		operator, the maximum amount of Category B surety to be posted not
199	195		to exceed the twenty-five-thousand-dollar total unless as provide d
200	196		previously One Hundred Fifty Thousand Dollars ($150,000.00) .
201	197		B. Operators of record as of June 7, 1989 , who do not have any
202	198		outstanding contempt citations or fines and whose insiders or
203	199		affiliates have no outstanding contempt citations or fines may post
204	200		Category A surety.
205	201		2. New operators, operators who have outstanding fines or
206	202		contempt citations and ope rators whose insiders or affiliates have
207	203		outstanding contempt citations or fines as of June 7, 1989, shall be
208	204		required to post Category B surety. Operators who have posted
209	205		Category B surety and have operated under this type surety and have
210	206		no outstanding fines at the end of three (3) years may post Category
211	207		A surety.
212	208		3. Operators using Category A surety who are assessed a fine of
213	209		Two Thousand Dollars ( $2,000.00) or more and who do not pay the fine
214	210		within the specified time shall be required to post a Cate gory B
215	211		surety within thirty (30) days of notification by the Commission .
216	212		C. For good cause shown concerning pollution or impr oper
217	213		plugging of wells by the operator posting eith er Category A or B
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245	240		surety or by an insider or affiliate of such operator, the
246	241		Commission, upon application of the Director of the Oil and Gas
247	242		Conservation Division, af ter notice and hearing, may require th e
248	243		filing of additional Category B surety in an amou nt greater than
249	244		Twenty-five Thousand Dollars ($25,000.00) but not to exceed One
250	245		Hundred Thousand Dollars ($100,000.00) One Hundred Fifty Thousand
251	246		Dollars ($150,000.00).
252	247		D. If the Commission determines that a blanket su rety bond is
253	248		required, the bond shall be conditioned on the fact that the
254	249		operator shall cause the wells to be plugg ed and abandoned surface
255	250		impoundments to be closed, and tras h and equipment to be remove d in
256	251		accordance with the laws of this state and the rules of the
257	252		Commission. Each bond shall be executed by a corporate surety
258	253		authorized to do business in this state and shall be renewed and
259	254		continued in effect until the condi tions have been met or relea se of
260	255		the bond is authorized by the Commission.
261	256		E. The agreement provided for i n subsection A of this section
262	257		shall provide that if the Commission determines that the person
263	258		furnishing the agreement has neglected, failed, or refused to plug
264	259		and abandon, or cause to be plugged and abandoned, or replug an y
265	260		well or has neglected, failed or refused to close any surface
266	261		impoundment or removed or cause to be removed trash and equipment in
267	262		compliance with the rules of the Commission , then the person shall
268	263		forfeit from his or her bond, letter of credit or negoti able
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296	290		instrument or shall pay to this state, through the Commission, for
297	291		deposit in the State Treasury, a sum equal to t he cost of plugging
298	292		the well, closure of any surface impo undment or removal of trash and
299	293		equipment. The Commission may cause the remedia l work to be done,
300	294		issuing a warrant in payment of the cost thereof drawn against the
301	295		monies accruing in the State Trea sury from the forfeiture or
302	296		payment. Any monies accruing in the State Treasury by reaso n of a
303	297		determination that there has been a noncom pliance with the
304	298		provisions of the agreement or the rules of the Commission, in
305	299		excess of the cost of remedial action o rdered by the Commission,
306	300		shall be credited to the Oil an d Gas Revolving Fund. The Comm ission
307	301		shall also recover any costs arising from litigation to enforce this
308	302		provision. Provided, before a person is required to forfeit or pay
309	303		any monies to the state pursuant to this section, the Commission
310	304		shall notify the person at his or her last -known address of the
311	305		determination of neglect, failur e or refusal to plug or replug any
312	306		well, or close any surface impoundment or remove trash and equipment
313	307		and said person shall have ten (10) days from the date of
314	308		notification within which to commence remedia l operations. Failure
315	309		to commence remedial opera tions shall result in forfeitur e or
316	310		payment as provided in this subsection.
317	311		F. It shall be unlawful for any person to drill or operate any
318	312		oil or gas well subject to the pr ovisions of this section, without
319	313		the evidence of financial ability required by this section. The
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347	340		Commission shall shut in, without notice, hearing or order of the
348	341		Commission, the wells of any such per son violating the provisions of
349	342		this subsection and su ch wells shall remain shut in for
350	343		noncompliance until the required evidence of C ategory B surety is
351	344		obtained and verified by the Commission.
352	345		G. If title to property or a well is transferred, the
353	346		transferee shall furnish the evidence of financial abilit y to plug
354	347		the well and close surface impoundments required by the provisions
355	348		of this section, prior to the tran sfer.
356	349		H. As used in this section:
357	350		1. "Affiliate" means an entity that owns twenty percent (2 0%)
358	351		or more of the operator, or an entity of whi ch twenty percent (20%)
359	352		or more is owned by the operator; and
360	353		2. "Insider" means officer, director, or person in control of
361	354		the operator; general partners of or in the operator; general or
362	355		limited partnership in which the operator is a general partner;
363	356		spouse of an officer, director, or person in control of the
364	357		operator; spouse of a general partner of or in the op erator;
365	358		corporation of which the operator is a director, officer, or person
366	359		in control; affiliate , or insider of an affiliate as if such
367	360		affiliate were the operator; or managing agent o f the operator.
368	361		SECTION 2. This act shall become effec tive November 1, 2024.
369		-	COMMITTEE REPORT BY: COMMITTEE ON ENERGY AND TELECOMMUNICATIONS
370		-	March 28, 2024 - DO PASS
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	388	+	Passed the House of Representatives the 4th day of March, 2024.
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	393	+	Presiding Officer of the House
	394	+	of Representatives
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	398	+	Passed the Senate the ___ day of __________, 2024.
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	403	+	Presiding Officer of the Senate
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