Texas 2025 - 89th Regular

Texas House Bill HB2256 Compare Versions

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1	1	89R7992 ANG-D
2	2	By: Goodwin H.B. No. 2256
3	3
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6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to financial security requirements for operators of oil
10	10	and gas wells.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 81.067(c), Natural Resources Code, is
13	13	amended to read as follows:
14	14	(c) The fund consists of:
15	15	(1) proceeds from bonds and other financial security
16	16	required by this chapter and benefits under well-specific plugging
17	17	insurance policies described by Section 91.104(c) that are paid to
18	18	the state as contingent beneficiary of the policies, subject to the
19	19	refund provisions of Section 91.1091, if applicable;
20	20	(2) private contributions, including contributions
21	21	made under Section 89.084;
22	22	(3) expenses collected under Section 89.083;
23	23	(4) fees imposed under Section 85.2021;
24	24	(5) costs recovered under Section 91.457 or 91.459;
25	25	(6) proceeds collected under Sections 89.085 and
26	26	91.115;
27	27	(7) interest earned on the funds deposited in the
28	28	fund;
29	29	(8) oil and gas waste hauler permit application fees
30	30	collected under Section 29.015, Water Code;
31	31	(9) costs recovered under Section 91.113(f);
32	32	(10) hazardous oil and gas waste generation fees
33	33	collected under Section 91.605;
34	34	(11) oil-field cleanup regulatory fees on oil
35	35	collected under Section 81.116;
36	36	(12) oil-field cleanup regulatory fees on gas
37	37	collected under Section 81.117;
38	38	(13) fees for a reissued certificate collected under
39	39	Section 91.707;
40	40	(14) fees collected under Section 91.1013;
41	41	(15) fees collected under Section 89.088;
42	42	(16) fees collected under Section 91.142;
43	43	(17) fees collected under Section 91.654;
44	44	(18) costs recovered under Sections 91.656 and 91.657;
45	45	(19) fees collected under Section 81.0521;
46	46	(20) fees collected under Sections 89.024 and 89.026;
47	47	(21) legislative appropriations;
48	48	(22) any surcharges collected under Section 81.070;
49	49	(23) fees collected under Section 91.0115;
50	50	(24) fees collected under Subchapter E, Chapter 121,
51	51	Utilities Code;
52	52	(25) fees collected under Section 27.0321, Water Code;
53	53	(26) fees collected under Section 81.071; [and]
54	54	(27) money collected under Section 81.021; and
55	55	(28) money transferred from a sinking fund under
56	56	Section 91.1045(b)(2).
57	57	SECTION 2. Section 89.023(a), Natural Resources Code, is
58	58	amended to read as follows:
59	59	(a) The commission may grant an extension of the deadline
60	60	for plugging an inactive well if the operator maintains a current
61	61	organization report with the commission as required by Section
62	62	91.142 and if, on or before the date of renewal of the operator's
63	63	organization report as required by that section, the operator files
64	64	with the commission an application for an extension that includes:
65	65	(1) an affirmation that complies with Section 89.029;
66	66	(2) a statement that the operator has, and on request
67	67	will provide, evidence of a good faith claim to a continuing right
68	68	to operate the well; [and]
69	69	(3) at least one of the following:
70	70	(A) documentation that since the preceding date
71	71	that the operator's organization report was required to be renewed
72	72	the operator has plugged, or restored to active operation as
73	73	defined by commission rule, a number of inactive wells equal to or
74	74	greater than 10 percent of the number of inactive wells operated by
75	75	the operator on that date;
76	76	(B) an abeyance of plugging report on a form
77	77	approved by the commission that:
78	78	(i) is in the form of a certification signed
79	79	by a person licensed by the Texas Board of Professional Engineers
80	80	and Land Surveyors as an engineer or by the Texas Board of
81	81	Professional Geoscientists;
82	82	(ii) includes:
83	83	(a) an affirmation by the licensed
84	84	person that the well has:
85	85	(1) a reasonable expectation of
86	86	economic value in excess of the cost of plugging the well for the
87	87	duration of the period covered by the report, based on the cost
88	88	calculation for plugging an inactive well; and
89	89	(2) a reasonable expectation of
90	90	being restored to a beneficial use that will prevent waste of oil or
91	91	gas resources that otherwise would not be produced if the well were
92	92	plugged; and
93	93	(b) appropriate documentation
94	94	demonstrating the basis for the affirmation of the well's future
95	95	utility; and
96	96	(iii) specifies the field and the covered
97	97	wells within that field in a format prescribed by the commission;
98	98	(C) a statement that the well is part of an
99	99	enhanced oil recovery project;
100	100	(D) if the operator of the well is not currently
101	101	otherwise required by commission rule or order to conduct a fluid
102	102	level or hydraulic pressure test of the well, documentation of the
103	103	results of a successful fluid level or hydraulic pressure test of
104	104	the well conducted in accordance with the commission's rules in
105	105	effect at the time the test is conducted;
106	106	(E) [a supplemental bond, letter of credit, or
107	107	cash deposit sufficient for each well specified in the application
108	108	that:
109	109	[(i) complies with the requirements of
110	110	Chapter 91; and
111	111	[(ii) is of an amount at least equal to the
112	112	cost calculation for plugging an inactive well for each well
113	113	specified in the application;
114	114	[(F)] documentation of the deposit with the
115	115	commission each time the operator files an application of an amount
116	116	of escrow funds as prescribed by commission rule that equal at least
117	117	10 percent of the total cost calculation for plugging an inactive
118	118	well for each well specified in the application; or
119	119	(F) [(G)] if the operator is a publicly traded
120	120	entity, [:
121	121	[(i)] the following documents:
122	122	(i) [(a)] a copy of the operator's federal
123	123	documents filed to comply with Financial Accounting Standards Board
124	124	Statement No. 143, Accounting for Asset Retirement Obligations;
125	125	and
126	126	(ii) [(b)] an original, executed Uniform
127	127	Commercial Code Form 1 Financing Statement, filed with the
128	128	secretary of state, that:
129	129	(a) [(1)] names the operator as the
130	130	"debtor" and the Railroad Commission of Texas as the "secured
131	131	creditor"; and
132	132	(b) [(2)] specifies the funds covered
133	133	by the documents described by Subparagraph (i) [Sub-subparagraph
134	134	(a)] in the amount at least equal to the applicable decommissioning
135	135	cost estimate established by the commission under Section
136	136	91.1041(b) for each well specified in the application; and
137	137	(4) a supplemental bond, letter of credit, or cash
138	138	deposit sufficient for each well specified in the application that:
139	139	(A) complies with the requirements of Chapter 91;
140	140	and
141	141	(B) is of an amount at least equal to the
142	142	applicable decommissioning cost estimate established by the
143	143	commission under Section 91.1041(b) for each well specified in the
144	144	application [of the cost calculation for plugging an inactive well
145	145	for each well specified in the application; or
146	146	[(ii) a blanket bond in the amount of the
147	147	lesser of:
148	148	[(a) the cost calculation for
149	149	plugging any inactive wells; or
150	150	[(b) $2 million].
151	151	SECTION 3. Section 89.027(a), Natural Resources Code, is
152	152	amended to read as follows:
153	153	(a) A supplemental bond, letter of credit, or cash deposit
154	154	filed under Section 89.023(a)(4) [89.023(a)(3)(E)] is in addition
155	155	to any other financial assurance otherwise required of the operator
156	156	or for the well.
157	157	SECTION 4. Section 89.028(a), Natural Resources Code, is
158	158	amended to read as follows:
159	159	(a) Escrow funds described by Section 89.023(a)(3)(E)
160	160	[89.023(a)(3)(F)] must be deposited with the commission each time
161	161	an operator files an application for an extension of the deadline
162	162	for plugging an inactive well.
163	163	SECTION 5. Sections 91.104(b) and (c), Natural Resources
164	164	Code, are amended to read as follows:
165	165	(b) A person required to file a bond, letter of credit, or
166	166	cash deposit under Section 91.103 who is an inactive operator or who
167	167	operates one or more wells must, at the time of filing or renewing
168	168	an organization report required by Section 91.142, file:
169	169	(1) an individual bond as provided under Section
170	170	91.1041; or
171	171	(2) [a blanket bond as provided under Section 91.1042;
172	172	or
173	173	[(3)] a letter of credit or cash deposit in the same
174	174	amount as required for an individual bond under Section 91.1041 [or
175	175	a blanket bond under Section 91.1042].
176	176	(c) A person required to file a bond, letter of credit, or
177	177	cash deposit under Section 91.103 who operates one or more wells is
178	178	considered to have met that requirement for a well if the well bore
179	179	is included in a well-specific plugging insurance policy that:
180	180	(1) is approved by the Texas Department of Insurance;
181	181	(2) names this state as the owner and contingent
182	182	beneficiary of the policy;
183	183	(3) names a primary beneficiary who agrees to plug the
184	184	specified well bore;
185	185	(4) is fully prepaid and cannot be canceled or
186	186	surrendered;
187	187	(5) provides that the policy continues in effect until
188	188	the specified well bore has been plugged;
189	189	(6) provides that benefits will be paid when, but not
190	190	before, the specified well bore has been plugged in accordance with
191	191	commission rules in effect at the time of plugging; and
192	192	(7) provides benefits that equal the greatest of:
193	193	(A) the [an] amount established by the commission
194	194	based on the decommissioning cost estimate established under
195	195	Section 91.1041(b) for the applicable region [equal to $2 for each
196	196	foot of well depth, as determined in the manner specified by the
197	197	commission, for the specified well];
198	198	(B) if the specified well is a bay well and
199	199	regardless of whether the well is producing oil or gas, the amount
200	200	required under commission rules for a bay well that is not producing
201	201	oil or gas;
202	202	(C) if the specified well is an offshore well and
203	203	regardless of whether the well is producing oil or gas, the amount
204	204	required under commission rules for an offshore well that is not
205	205	producing oil or gas; or
206	206	(D) the payment otherwise due under the policy
207	207	for plugging the well bore.
208	208	SECTION 6. Subchapter D, Chapter 91, Natural Resources
209	209	Code, is amended by amending Section 91.1041 and adding Section
210	210	91.1045 to read as follows:
211	211	Sec. 91.1041. INDIVIDUAL BOND. (a) A person required to
212	212	file a bond, letter of credit, or cash deposit under Section 91.103
213	213	who operates one or more wells may file a bond in an amount
214	214	established by the commission. The commission shall establish the
215	215	bond amount based on the decommissioning cost estimate established
216	216	under Subsection (b) for the applicable region [equal to $2 for each
217	217	foot of well depth for each well].
218	218	(b) Based on the information provided to the commission
219	219	under [Notwithstanding] Subsection (c) [(a)], the commission [by
220	220	rule] shall establish decommissioning cost estimates for each oil
221	221	and gas producing region of the state, as determined by the
222	222	commission, annually and post the estimates on the commission's
223	223	publicly accessible Internet website [set the amount of the bond
224	224	for an operator of one or more bay or offshore wells at a reasonable
225	225	amount that exceeds the amount provided by Subsection (a)].
226	226	(c) The commission shall require each operator to provide
227	227	decommissioning cost information to the commission on an annual
228	228	basis, including, for each well site:
229	229	(1) the depth of the well;
230	230	(2) the age of the well bore;
231	231	(3) a summary explaining factors or complications
232	232	related to the well or well site that may influence the cost of
233	233	plugging or cleanup at the well site;
234	234	(4) an estimated cost of materials and equipment
235	235	necessary to plug the well bore and clean up the well site;
236	236	(5) an estimated cost of labor necessary to plug the
237	237	well bore, clean up the well site, and remove any equipment;
238	238	(6) overhead expenses; and
239	239	(7) whether the well bore or site has undergone
240	240	reworking operations during the preceding year.
241	241	(d) When calculating under Subsection (a) the amount of the
242	242	bond a person who operates one or more wells is required to file,
243	243	the commission shall exclude a well if the well bore is included in
244	244	a well-specific plugging insurance policy described by Section
245	245	91.104(c).
246	246	(e) [(d)] If the inclusion of a bay or offshore well whose
247	247	well bore is included in a well-specific plugging insurance policy
248	248	described by Section 91.104(c) in the calculation under Subsection
249	249	(b) of the amount of the bond an operator of one or more bay or
250	250	offshore wells is required to file would result in an increase in
251	251	the amount of the bond that would otherwise be required, the rules
252	252	must provide for the exclusion of the well from the calculation.
253	253	Sec. 91.1045. PAYMENT TO AND USE OF SINKING FUND. (a) A
254	254	person who files a bond under Section 91.1041 shall pay into a
255	255	sinking fund established by the commission an amount equal to the
256	256	full cost of decommissioning the well for which the bond was filed,
257	257	as determined by the commission under Section 91.1041(b), divided
258	258	into equal annual payments to be completed by the earlier of:
259	259	(1) 15 years; or
260	260	(2) the estimated number of years the well is expected
261	261	to be productive based on the projected production decline curve of
262	262	the well.
263	263	(b) Money in the sinking fund may be used by the operator or
264	264	the commission to pay the costs of plugging the well bore and
265	265	remediating the well site. Any amount remaining in the sinking fund
266	266	after the plugging and remediation is complete shall be transferred
267	267	to:
268	268	(1) the operator, if the operator plugs the well and
269	269	remediates the well site to commission standards; or
270	270	(2) the oil and gas regulation and cleanup fund
271	271	established under Section 81.067, if, after the operator is given
272	272	the opportunity to complete the plugging and remediation, the
273	273	commission plugs the well and remediates the well site to
274	274	commission standards.
275	275	(c) This section does not apply to an operator whose
276	276	operation results in the completion of a well as a dry hole. An
277	277	operator described by this subsection must plug the well in
278	278	accordance with the inactive well plugging requirements
279	279	established under Chapter 81.
280	280	SECTION 7. Section 91.1042, Natural Resources Code, is
281	281	repealed.
282	282	SECTION 8. (a) The changes in law made by this Act apply
283	283	only to a person required to file a bond, letter of credit, or cash
284	284	deposit under Section 89.023 or 91.103, Natural Resources Code, on
285	285	or after the effective date of this Act. A person required to file a
286	286	bond, letter of credit, or cash deposit under Section 89.023 or
287	287	91.103, Natural Resources Code, before the effective date of this
288	288	Act is governed by the law as it existed immediately before the
289	289	effective date of this Act, and that law is continued in effect for
290	290	that purpose.
291	291	(b) Notwithstanding Subsection (a), an operator of a well in
292	292	existence on the effective date of this Act is not required to hold
293	293	an individual bond that meets the requirements of Section 91.1041,
294	294	Natural Resources Code, as amended by this Act, until September 1,
295	295	2030, and the law as it existed immediately before the effective
296	296	date of this Act is continued in effect for that purpose.
297	297	SECTION 9. This Act takes effect September 1, 2025.