Oklahoma 2025 Regular Session

Oklahoma House Bill HB1369 Compare Versions

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3		-	SENATE FLOOR VERSION - HB1369 SFLR Page 1
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	3	+	ENGR. H. B. NO. 1369 Page 1 1
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29		-	SENATE FLOOR VERSION
30		-	April 17, 2025
31		-
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33	28		ENGROSSED HOUSE
34		-	BILL NO. 1369 By: Boles and Waldron of the
35		-	House
	29	+	BILL NO. 1369 By: Boles of the House
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37	31		and
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39	33		Green of the Senate
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45	40		An Act relating to oil and gas; amending 52 O.S.
46	41		2021, Section 318.1, which relates to evidence of
47	42		financial ability for drilling and operating wells;
48	43		phasing out category A surety; modifying surety
49	44		amounts; providing for tiered surety amount based on
50	45		number of operating wells; and providing an effective
51	46		date.
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57	52		BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
58	53		SECTION 1. AMENDATORY 52 O.S. 2021, Section 318.1, is
59	54		amended to read as follows:
60	55		Section 318.1. A. Any person who drills or operates any well
61	56		for the exploration, development or production of oil or gas, or as
62	57		an injection or disposal well, within this state, shall furnish in
63	58		writing, on forms approved by the Corporation Commission, his or her
64	59		agreement to drill, operate and plug wells in compliance with the
65	60		rules of the Commission and the laws of this state, together with
66	61		evidence of financial ability to comply with the requir ements for
	62	+	plugging, closure of surface impoundments, removal of trash and
	63	+	equipment as established by the rules of the Commission and by law.
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	65	+	ENGR. H. B. NO. 1369 Page 2 1
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94		-	plugging, closure of surface impoundments, removal of trash and
95		-	equipment as established by the rules of the Commission and by law.
96	90		To establish evidence of financial ability, the Commission shall
97	91		require:
98	92		1. Category A surety which shall incl ude a financial statement
99	93		listing assets and liabilities and including a general release that
100	94		the information may be verified with banks and other financial
101	95		institutions. The statement shall prove a net worth of not less
102	96		than Fifty Thousand Dollars ($50,0 00.00). Category A surety will no
103	97		longer be accepted as valid form of surety for new operators to
104	98		select beginning November 1, 2025. All current operators who have
105	99		valid Category A surety and are in good standing with the Commission
106	100		will be able to retai n their Category A surety for the time they are
107	101		a valid operator in the State of Oklahoma ; or
108	102		2. Category B surety which shall include an irrevoc able
109	103		commercial letter of credit, cash, a cashier's check, a Certificate
110	104		of Deposit, Bank Joint Custody Receip t, other negotiable instrument ,
111	105		or, a blanket surety bond. Except as provided in paragraph 3 1 of
112	106		subsection A B or subsection C of this section, amount of such
113	107		letter of credit, cash, cashier's check, certificate, bond, receipt
114	108		or other negotiable instru ment shall be in the amount of Twenty -five
115	109		Thousand Dollars ($25,000.00) but may be set higher at the
116	110		discretion of the Director of the Oil and Ga s Conservation Division
117	111		based on the number of wells that the person operates as follows:
	112	+	a. for one to ten wells, Twenty-five Thousand Dollars
	113	+	($25,000.00),
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	115	+	ENGR. H. B. NO. 1369 Page 3 1
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145		-	a. for one to ten wells, Twenty -five Thousand Dollars
146		-	($25,000.00),
147	140		b. for eleven to fifty wells, Fifty Thousand Dollars
148	141		($50,000.00),
149	142		c. for fifty-one to one hundred wells, One Hundred
150	143		Thousand Dollars ($100,000.00), and
151	144		d. for more than one hundred wells, One Hundred Fifty
152	145		Thousand Dollars ($150,000.00) .
153	146		The Commission is authorized to determine the a higher amount of
154	147		Category B surety based upon the past performance of the operator
155	148		and its insiders and affiliates regarding compliance with the laws
156	149		of this state, and any rul es promulgated thereto including but not
157	150		limited to the drilling, operation and plugging of wells, closure of
158	151		surface impoundments or removal of trash and equipment , provided
159	152		that such higher amount shall not exceed One Hundred Fifty Thousand
160	153		Dollars ($150,000.00). Any instrument shall constitute an
161	154		unconditional promise to pay and be in a form negotiable by the
162	155		Commission.
163	156		3. B. 1. The Commission upon certification by any operator
164	157		subject to Category B surety that its plugging liability statewide
165	158		is less than the twenty-five-thousand-dollar standard amount based
166	159		on the number of wells operated as specified in this section may
167	160		allow said operator to provide Category B type surety in an amount
168	161		less than the amount required Twenty-five Thousand Dollars
	162	+	($25,000.00) by this section, but at least sufficient to cover the
	163	+	estimated cost of all plugging, closure, and removal operations
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	165	+	ENGR. H. B. NO. 1369 Page 4 1
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196		-	($25,000.00) by this section, but at least sufficient to cover the
197		-	estimated cost of all plugging, closure, and removal operations
198	190		currently the responsibility of that operator. The liability
199	191		certification referred to in this paragraph subsection shall take
200	192		the form of an affidavit from a licensed well plugger estimating the
201	193		costs of all plugging, closure, and removal operations of the
202	194		operator requesting such relief. This alternative amount shall be
203	195		modified upward upon the assumption of additional operation s by such
204	196		operator, the maximum amount of Category B surety to be posted not
205	197		to exceed the twenty-five-thousand-dollar total unless as provided
206	198		previously One Hundred Fifty Thousand Dollars ($150,000.00) .
207	199		B. Operators of record as of June 7, 1989, who do not have any
208	200		outstanding contempt citations or fines and whose insiders or
209	201		affiliates have no outstanding contempt citations or fines may post
210	202		Category A surety.
211	203		2. New operators, operators who have outstanding fines or
212	204		contempt citations and operators wh ose insiders or affiliates have
213	205		outstanding contempt citations or fines as of June 7, 1989, shall be
214	206		required to post Category B surety. Operators who have posted
215	207		Category B surety and have operated under this type surety and have
216	208		no outstanding fines at the end of three (3) years may post Category
217	209		A surety.
218	210		3. Operators using Category A surety who are assessed a fine of
219	211		Two Thousand Dollars ($2,000.00) or more and who do not pay the fine
	212	+	within the specified time shall be required to post a Category B
	213	+	surety within thirty (30) days of notification by the Commission.
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	215	+	ENGR. H. B. NO. 1369 Page 5 1
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247		-	within the specified time shall be required to post a Category B
248		-	surety within thirty (30) days of notification by the Commission.
249	240		C. For good cause shown concerning pollution or improper
250	241		plugging of wells by the operator posting either Category A or B
251	242		surety or by an insider or affiliate of such operator, the
252	243		Commission, upon application of the Director of the Oil and Gas
253	244		Conservation Division, after notice and hearing, may require the
254	245		filing of additional Category B surety in an amount greater than
255	246		Twenty-five Thousand Dollars ($25,000.00) but not to exceed One
256	247		Hundred Thousand Dollars ($100,000.00) One Hundred Fifty Thousand
257	248		Dollars ($150,000.00) .
258	249		D. If the Commission determines that a blanket surety bond is
259	250		required, the bond shall be conditioned on the fact that the
260	251		operator shall cause the wells to be plugged and ab andoned surface
261	252		impoundments to be closed, and trash and equipment to be removed in
262	253		accordance with the laws of this state and the rules of the
263	254		Commission. Each bond shall be executed by a corporate surety
264	255		authorized to do business in this state and shall be renewed and
265	256		continued in effect until the conditions have been met or release of
266	257		the bond is authorized by the Commission.
267	258		E. The agreement provided for in subsection A of this section
268	259		shall provide that if the Commission determines that the person
269	260		furnishing the agreement has neglected, failed, or refused to plug
270	261		and abandon, or cause to be plugged and abandoned, or replug any
	262	+	well or has neglected, failed or refused to close any surface
	263	+	impoundment or removed or cause to be removed trash and equipmen t in
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	265	+	ENGR. H. B. NO. 1369 Page 6 1
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298		-	well or has neglected, failed or refused to close any surface
299		-	impoundment or removed or cause to be removed trash and equipment in
300	290		compliance with the rules of the Commission, then the person shall
301	291		forfeit from his or her bond, letter of credit or negotiable
302	292		instrument or shall pay to this state, through the Commission, for
303	293		deposit in the State Treasury, a sum equal to the cost o f plugging
304	294		the well, closure of any surface impoundment or removal of trash and
305	295		equipment. The Commission may cause the remedial work to be done,
306	296		issuing a warrant in payment of the cost thereof drawn against the
307	297		monies accruing in the State Treasury from the forfeiture or
308	298		payment. Any monies accruing in the State Treasury by reason of a
309	299		determination that there has been a noncompliance with the
310	300		provisions of the agreement or the rules of the Commission, in
311	301		excess of the cost of remedial action ordered by the Commission,
312	302		shall be credited to the Oil and Gas Revolving Fund. The Commission
313	303		shall also recover any costs arising from litigation to enforce this
314	304		provision. Provided, before a person is required to forfeit or pay
315	305		any monies to the state pursuant to this section, the Commission
316	306		shall notify the person at his or her last -known address of the
317	307		determination of neglect, failure or refusal to pl ug or replug any
318	308		well, or close any surface impoundment or remove trash and equipment
319	309		and said person shall ha ve ten (10) days from the date of
320	310		notification within which to commence remedial operations. Failure
	311	+	to commence remedial operations shall result in forfeiture or
	312	+	payment as provided in this subsection.
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	314	+	ENGR. H. B. NO. 1369 Page 7 1
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348		-	to commence remedial operations shall result in forfeiture or
349		-	payment as provided in this subsection.
350	339		F. It shall be unlawful for any person to drill or operate any
351	340		oil or gas well subject to the provisions of this section, without
352	341		the evidence of financial ability required by this section. The
353	342		Commission shall shut in, without notice, hearing or order of the
354	343		Commission, the wells of any such person viola ting the provisions of
355	344		this subsection and such wells shall remain shut in for
356	345		noncompliance until the required evidence of Category B surety is
357	346		obtained and verified by the Commission.
358	347		G. If title to property or a well is transferred, the
359	348		transferee shall furnish the evidence of financial ability to plug
360	349		the well and close surface impoundments required by the provisions
361	350		of this section, prior to t he transfer.
362	351		H. As used in this section:
363	352		1. "Affiliate" means an entity that owns twenty percent (20%)
364	353		or more of the operator, or an entity of which twenty percent (20%)
365	354		or more is owned by the operator; and
366	355		2. "Insider" means officer, director, or person in control of
367	356		the operator; general partners of or in the operator; general or
368	357		limited partnership in whic h the operator is a general partner;
369	358		spouse of an officer, director, or person in control of the
370	359		operator; spouse of a general partner of or in th e operator;
371	360		corporation of which the operator is a director, officer, or person
	361	+	in control; affiliate, or insi der of an affiliate as if such
	362	+	affiliate were the operator; or managing agent of the operator.
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	364	+	ENGR. H. B. NO. 1369 Page 8 1
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399		-	in control; affiliate, or insider of an affiliate as if such
400		-	affiliate were the operator; or managing agent of the operator.
401	389		SECTION 2. This act shall become effective November 1, 2025.
402		-	COMMITTEE REPORT BY: COMMITTEE ON E NERGY
403		-	April 17, 2025 - DO PASS
	390	+	Passed the House of Representatives the 5th day of March, 2025.
	391	+
	392	+
	393	+
	394	+
	395	+	Presiding Officer of the House
	396	+	of Representatives
	397	+
	398	+
	399	+	Passed the Senate the _____ day of __________, 2025.
	400	+
	401	+
	402	+
	403	+
	404	+	Presiding Officer of the Senate