Texas 2023 - 88th Regular

Texas Senate Bill SB1686 Compare Versions

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1	1	88R8005 JAM-F
2	2	By: Blanco S.B. No. 1686
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. Section 89.002(a), Natural Resources Code, is
56	56	amended by adding Subdivision (14) to read as follows:
57	57	(14) "Operator affected by an orphaned well" means:
58	58	(A) an operator of an oil or gas well that
59	59	accesses a productive horizon also accessed by an orphaned well; or
60	60	(B) an operator of an oil or gas well with a good
61	61	faith claim to access a productive horizon also accessed by an
62	62	orphaned well.
63	63	SECTION 3. Section 89.044(a), Natural Resources Code, is
64	64	amended to read as follows:
65	65	(a) The commission [or its employees or agents], the
66	66	operator, an operator affected by an orphaned well, [or] the
67	67	nonoperator, or an employee or agent of one of those persons, on
68	68	proper identification, may enter the land of another for the
69	69	purpose of plugging or replugging a well that has not been properly
70	70	plugged. An action to prevent the entry of land of another for the
71	71	purpose of plugging or replugging a well that has not been properly
72	72	plugged may not be sustained against a person authorized by this
73	73	subsection to enter the land for that purpose.
74	74	SECTION 4. The heading to Section 89.047, Natural Resources
75	75	Code, is amended to read as follows:
76	76	Sec. 89.047. ORPHANED WELL REDUCTION PROGRAM: OPERATORS
77	77	DESIGNATED IN 2006 OR 2007.
78	78	SECTION 5. Subchapter C, Chapter 89, Natural Resources
79	79	Code, is amended by adding Section 89.0475 to read as follows:
80	80	Sec. 89.0475. REDUCTION AND PLUGGING OF ORPHANED WELLS:
81	81	OPERATORS DESIGNATED BEGINNING IN 2024. (a) In this section,
82	82	"operator in good standing" and "orphaned well" have the meanings
83	83	assigned by Section 89.047.
84	84	(b) The commission shall designate a person who is an
85	85	operator in good standing as the operator of an orphaned well if the
86	86	person files with the commission:
87	87	(1) a factually supported claim based on a recognized
88	88	legal theory to a continuing possessory right in the mineral estate
89	89	accessed by the well, such as evidence of a current oil and gas
90	90	lease or a recorded deed conveying a fee interest in the mineral
91	91	estate;
92	92	(2) a completed certificate of compliance; and
93	93	(3) a nonrefundable fee in the amount of $250.
94	94	(c) A fee collected under Subsection (b)(3) shall be
95	95	deposited to the credit of the oil and gas regulation and cleanup
96	96	fund.
97	97	(d) A person who is designated as the operator of an
98	98	orphaned well on or after January 1, 2024, is entitled to receive:
99	99	(1) a nontransferable exemption from severance taxes
100	100	for production from the well as provided by Section 202.060, Tax
101	101	Code, until the fifth anniversary of the date the commission
102	102	designates the person as the operator of the well;
103	103	(2) a nontransferable exemption from the fees provided
104	104	by Sections 81.116 and 81.117 for production from the well until the
105	105	fifth anniversary of the date the commission designates the person
106	106	as the operator of the well; and
107	107	(3) a payment from the commission in the amount
108	108	described by Subsection (f) using money from the oil and gas
109	109	regulation and cleanup fund.
110	110	(e) A person who is designated as the operator of an
111	111	orphaned well is entitled to a payment under Subsection (d)(3) only
112	112	if:
113	113	(1) not later than the first anniversary of the date
114	114	the commission designates the person as the operator of the well:
115	115	(A) the person plugs the well in accordance with
116	116	commission rules; or
117	117	(B) the commission approves the application of
118	118	the owner of the surface estate of the tract of land on which the
119	119	well is located to condition the well for fresh water production and
120	120	the person designated as the operator of the well plugs the well in
121	121	accordance with commission rules up to the base of the usable
122	122	quality water stratum; and
123	123	(2) not later than the end of the state fiscal year
124	124	following the state fiscal year in which the person plugs the well,
125	125	the person submits to the commission:
126	126	(A) a request for reimbursement for plugging the
127	127	well; and
128	128	(B) documentation of the cost of plugging the
129	129	well.
130	130	(f) The amount to which a person is entitled under
131	131	Subsection (d)(3) is equal to 50 percent of the lesser of:
132	132	(1) the documented well-plugging costs; or
133	133	(2) the average cost incurred by the commission in the
134	134	preceding 24 months in plugging similar wells located in the same
135	135	county or general area.
136	136	(g) The commission shall make payments to persons under
137	137	Subsection (d)(3) annually in the same order the commission
138	138	determines the persons to be entitled to the payments. The
139	139	aggregate amount of payments in a state fiscal year under
140	140	Subsection (d)(3) may not exceed $500,000. The commission may, in
141	141	its discretion, make a payment to a person under Subsection (d)(3)
142	142	in the fiscal year following the fiscal year in which the well was
143	143	plugged. A person may not receive:
144	144	(1) more than one payment under Subsection (d)(3) for
145	145	the same well; or
146	146	(2) cumulative payments in an amount that exceeds the
147	147	amount of the bond, letter of credit, or cash deposit the person has
148	148	filed with the commission under Section 91.104.
149	149	(h) The commissioner shall include wells plugged under this
150	150	section in:
151	151	(1) the commission's well-plugging performance
152	152	metrics; and
153	153	(2) any monthly report produced by the commission
154	154	relating to well-plugging activity.
155	155	SECTION 6. The heading to Section 89.048, Natural Resources
156	156	Code, is amended to read as follows:
157	157	Sec. 89.048. PLUGGING OF WELL BY SURFACE ESTATE OWNER OR
158	158	AFFECTED OPERATOR.
159	159	SECTION 7. Section 89.048, Natural Resources Code, is
160	160	amended by amending Subsections (b), (c), and (d) and adding
161	161	Subsections (c-1) and (d-1) to read as follows:
162	162	(b) The owner of an interest in the surface estate of a tract
163	163	of land on which an orphaned well is located or an operator affected
164	164	by an orphaned well may contract with a commission-approved well
165	165	plugger to plug the well.
166	166	(c) If the surface estate owner or an operator affected by
167	167	an orphaned well enters into a contract under Subsection (b), the
168	168	surface estate owner, operator affected by an orphaned well, or
169	169	well plugger shall:
170	170	(1) not later than the 15th [30th] day before the date
171	171	the well is plugged, mail notice of its intent to plug the well to
172	172	the operator of the well at the operator's address as shown by the
173	173	records of the commission;
174	174	(2) assume responsibility for the physical operation
175	175	and control of the well as shown by a form the person files with the
176	176	commission and the commission approves;
177	177	(3) file a bond, letter of credit, or cash deposit
178	178	covering the well as required by Section 91.107; and
179	179	(4) plug the well in accordance with commission rules.
180	180	(c-1) On satisfaction of commission requirements, the
181	181	commission shall issue to a surface estate owner, operator affected
182	182	by an orphaned well, or well plugger, regardless of whether the
183	183	person has a good faith claim to the mineral estate accessed by an
184	184	orphaned well, a certificate of compliance and transportation
185	185	authority or similar authorization showing the person's assumption
186	186	of control of the well under Subsection (c)(2) for the purpose of
187	187	plugging or replugging the well.
188	188	(d) On successful plugging of the well by the well plugger,
189	189	the surface estate owner or an operator affected by an orphaned well
190	190	may submit documentation to the commission of the cost of the
191	191	well-plugging operation. The commission shall reimburse the
192	192	surface estate owner or an operator affected by an orphaned well
193	193	from money in the oil and gas regulation and cleanup fund in an
194	194	amount not to exceed 50 percent of the lesser of:
195	195	(1) the documented well-plugging costs; or
196	196	(2) the average cost incurred by the commission in the
197	197	preceding 24 months in plugging similar wells located in the same
198	198	county or general area.
199	199	(d-1) The commissioner shall include wells plugged under
200	200	this section in:
201	201	(1) the commission's well-plugging performance
202	202	metrics; and
203	203	(2) any monthly report produced by the commission
204	204	relating to well-plugging activity.
205	205	SECTION 8. Sections 202.060(b) and (c), Tax Code, are
206	206	amended to read as follows:
207	207	(b) The commission shall issue a certificate to a person who
208	208	is designated by the commission under Section 89.047 or 89.0475,
209	209	Natural Resources Code, as the operator of an orphaned well. The
210	210	certificate must identify the operator to whom and the well for
211	211	which the certificate is issued.
212	212	(c) Hydrocarbons produced from the well identified in the
213	213	certificate qualify for a severance tax exemption for the period
214	214	described by Section 89.047 or 89.0475, Natural Resources Code, as
215	215	applicable.
216	216	SECTION 9. This Act takes effect January 1, 2024.