Texas 2021 - 87th Regular

Texas House Bill HB4367 Compare Versions

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Old	New	Differences
1	1	87R633 BRG-F
2	2	By: Guillen H.B. No. 4367
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the reduction and plugging of orphaned oil and gas
8	8	wells; providing for the imposition of a fee and an exemption from
9	9	certain taxes and fees.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 81.067(c), Natural Resources Code, is
12	12	amended to read as follows:
13	13	(c) The fund consists of:
14	14	(1) proceeds from bonds and other financial security
15	15	required by this chapter and benefits under well-specific plugging
16	16	insurance policies described by Section 91.104(c) that are paid to
17	17	the state as contingent beneficiary of the policies, subject to the
18	18	refund provisions of Section 91.1091, if applicable;
19	19	(2) private contributions, including contributions
20	20	made under Section 89.084;
21	21	(3) expenses collected under Section 89.083;
22	22	(4) fees imposed under Section 85.2021;
23	23	(5) costs recovered under Section 91.457 or 91.459;
24	24	(6) proceeds collected under Sections 89.085 and
25	25	91.115;
26	26	(7) interest earned on the funds deposited in the
27	27	fund;
28	28	(8) oil and gas waste hauler permit application fees
29	29	collected under Section 29.015, Water Code;
30	30	(9) costs recovered under Section 91.113(f);
31	31	(10) hazardous oil and gas waste generation fees
32	32	collected under Section 91.605;
33	33	(11) oil-field cleanup regulatory fees on oil
34	34	collected under Section 81.116;
35	35	(12) oil-field cleanup regulatory fees on gas
36	36	collected under Section 81.117;
37	37	(13) fees for a reissued certificate collected under
38	38	Section 91.707;
39	39	(14) fees collected under Section 91.1013;
40	40	(15) fees collected under Section 89.088;
41	41	(16) fees collected under Section 91.142;
42	42	(17) fees collected under Section 91.654;
43	43	(18) costs recovered under Sections 91.656 and 91.657;
44	44	(19) fees collected under Section 81.0521;
45	45	(20) fees collected under Sections 89.024 and 89.026;
46	46	(21) legislative appropriations;
47	47	(22) any surcharges collected under Section 81.070;
48	48	(23) fees collected under Section 91.0115;
49	49	(24) fees collected under Subchapter E, Chapter 121,
50	50	Utilities Code;
51	51	(25) fees collected under Section 27.0321, Water Code;
52	52	(26) fees collected under Section 81.071; [and]
53	53	(27) money collected under Section 81.021; and
54	54	(28) fees collected under Section 89.0475.
55	55	SECTION 2. The heading to Section 89.047, Natural Resources
56	56	Code, is amended to read as follows:
57	57	Sec. 89.047. ORPHANED WELL REDUCTION PROGRAM: OPERATORS
58	58	DESIGNATED IN 2006 OR 2007.
59	59	SECTION 3. Subchapter C, Chapter 89, Natural Resources
60	60	Code, is amended by adding Section 89.0475 to read as follows:
61	61	Sec. 89.0475. REDUCTION AND PLUGGING OF ORPHANED WELLS:
62	62	OPERATORS DESIGNATED BEGINNING IN 2022. (a) In this section,
63	63	"operator in good standing" and "orphaned well" have the meanings
64	64	assigned by Section 89.047.
65	65	(b) The commission shall designate a person who is an
66	66	operator in good standing as the operator of an orphaned well if the
67	67	person files with the commission:
68	68	(1) a factually supported claim based on a recognized
69	69	legal theory to a continuing possessory right in the mineral estate
70	70	accessed by the well, such as evidence of a current oil and gas
71	71	lease or a recorded deed conveying a fee interest in the mineral
72	72	estate;
73	73	(2) a completed certificate of compliance; and
74	74	(3) a nonrefundable fee in the amount of $250.
75	75	(c) A fee collected under Subsection (b)(3) shall be
76	76	deposited to the credit of the oil and gas regulation and cleanup
77	77	fund.
78	78	(d) A person who is designated as the operator of an
79	79	orphaned well on or after January 1, 2022, is entitled to receive:
80	80	(1) a nontransferable exemption from severance taxes
81	81	for production from the well as provided by Section 202.060, Tax
82	82	Code, until the fifth anniversary of the date the commission
83	83	designates the person as the operator of the well;
84	84	(2) a nontransferable exemption from the fees provided
85	85	by Sections 81.116 and 81.117 for production from the well until the
86	86	fifth anniversary of the date the commission designates the person
87	87	as the operator of the well; and
88	88	(3) a payment from the commission in the amount
89	89	described by Subsection (f) using money from the oil and gas
90	90	regulation and cleanup fund.
91	91	(e) A person who is designated as the operator of an
92	92	orphaned well is entitled to a payment under Subsection (d)(3) only
93	93	if:
94	94	(1) not later than the first anniversary of the date
95	95	the commission designates the person as the operator of the well:
96	96	(A) the person plugs the well in accordance with
97	97	commission rules; or
98	98	(B) the commission approves the application of
99	99	the owner of the surface estate of the tract of land on which the
100	100	well is located to condition the well for fresh water production and
101	101	the person designated as the operator of the well plugs the well in
102	102	accordance with commission rules up to the base of the usable
103	103	quality water stratum; and
104	104	(2) not later than the end of the state fiscal year
105	105	following the state fiscal year in which the person plugs the well,
106	106	the person submits to the commission:
107	107	(A) a request for reimbursement for plugging the
108	108	well; and
109	109	(B) documentation of the cost of plugging the
110	110	well.
111	111	(f) The amount to which a person is entitled under
112	112	Subsection (d)(3) is equal to 50 percent of the lesser of:
113	113	(1) the documented well-plugging costs; or
114	114	(2) the average cost incurred by the commission in the
115	115	preceding 24 months in plugging similar wells located in the same
116	116	county or general area.
117	117	(g) The commission shall make payments to persons under
118	118	Subsection (d)(3) annually in the same order the commission
119	119	determines the persons to be entitled to the payments. The
120	120	aggregate amount of payments in a state fiscal year under
121	121	Subsection (d)(3) may not exceed $500,000. A person may not
122	122	receive:
123	123	(1) more than one payment under Subsection (d)(3) for
124	124	the same well; or
125	125	(2) cumulative payments in an amount that exceeds the
126	126	amount of the bond, letter of credit, or cash deposit the person has
127	127	filed with the commission under Section 91.104.
128	128	SECTION 4. The heading to Section 89.048, Natural Resources
129	129	Code, is amended to read as follows:
130	130	Sec. 89.048. PLUGGING OF WELL BY SURFACE ESTATE OWNER OR
131	131	AFFECTED PERSON.
132	132	SECTION 5. Section 89.048, Natural Resources Code, is
133	133	amended by adding Subsection (b-1) and amending Subsections (c) and
134	134	(d) to read as follows:
135	135	(b-1) On approval by the commission, a person affected by an
136	136	orphaned well, including a person who does not have a good faith
137	137	claim to the mineral estate accessed by the well, may act as an
138	138	agent of the commission to contract with a well plugger to plug the
139	139	well.
140	140	(c) If the surface estate owner or affected person enters
141	141	into a contract under Subsection (b) or (b-1), as applicable, the
142	142	well plugger shall:
143	143	(1) not later than the 15th [30th] day before the date
144	144	the well is plugged, mail notice of its intent to plug the well to
145	145	the operator of the well at the operator's address as shown by the
146	146	records of the commission;
147	147	(2) assume responsibility for the physical operation
148	148	and control of the well as shown by a form the person files with the
149	149	commission and the commission approves;
150	150	(3) file a bond, letter of credit, or cash deposit
151	151	covering the well as required by Section 91.107; and
152	152	(4) plug the well in accordance with commission rules.
153	153	(d) On successful plugging of the well by the well plugger,
154	154	the surface estate owner or affected person may submit
155	155	documentation to the commission of the cost of the well-plugging
156	156	operation. The commission shall reimburse the surface estate owner
157	157	or affected person from money in the oil and gas regulation and
158	158	cleanup fund in an amount not to exceed 50 percent of the lesser of:
159	159	(1) the documented well-plugging costs; or
160	160	(2) the average cost incurred by the commission in the
161	161	preceding 24 months in plugging similar wells located in the same
162	162	county or general area.
163	163	SECTION 6. Sections 202.060(b) and (c), Tax Code, are
164	164	amended to read as follows:
165	165	(b) The commission shall issue a certificate to a person who
166	166	is designated by the commission under Section 89.047 or 89.0475,
167	167	Natural Resources Code, as the operator of an orphaned well. The
168	168	certificate must identify the operator to whom and the well for
169	169	which the certificate is issued.
170	170	(c) Hydrocarbons produced from the well identified in the
171	171	certificate qualify for a severance tax exemption for the period
172	172	described by Section 89.047 or 89.0475, Natural Resources Code, as
173	173	applicable.
174	174	SECTION 7. This Act takes effect January 1, 2022.