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Texas Senate Bill SB1150

Texas 2025 - 89th Regular

Texas Senate Bill SB1150 Compare Versions

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11 By: Middleton S.B. No. 1150
2- (In the Senate - Filed February 6, 2025; February 24, 2025,
3- read first time and referred to Committee on Natural Resources;
4- April 14, 2025, reported adversely, with favorable Committee
5- Substitute by the following vote: Yeas 9, Nays 0; April 14, 2025,
6- sent to printer.)
7-Click here to see the committee vote
8- COMMITTEE SUBSTITUTE FOR S.B. No. 1150 By: Sparks
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136 A BILL TO BE ENTITLED
147 AN ACT
15- relating to the plugging of and reporting on inactive wells subject
16- to the jurisdiction of the Railroad Commission of Texas;
17- authorizing an administrative penalty.
8+ relating to the plugging of certain inactive wells subject to the
9+ jurisdiction of the Railroad Commission of Texas.
1810 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1911 SECTION 1. Section 89.023, Natural Resources Code, is
20- amended by amending Subsection (b) and adding Subsections (c), (d),
21- (e), (f), (g), and (h) to read as follows:
22- (b) Notwithstanding Subsection (a) and subject to
23- Subsection (c), an operator may not obtain an extension of the
24- deadline for plugging an inactive well by complying with Subsection
25- (a) [that subsection] if:
26- (1) the well:
27- (A) has been inactive for more than 15 years; and
28- (B) was completed more than 25 years before the
29- date the operator submitted the request for the extension; or
30- (2) the plugging of the well is otherwise required by
31- commission rules or orders.
32- (c) The commission may grant an extension of the deadline
33- for plugging an inactive well described by Subsection (b)(1) if:
34- (1) on request of the operator, the commission by
35- order determines that the operator's:
36- (A) demonstrated history of returning inactive
37- wells to operation warrants the granting of the extension; or
38- (B) financial hardship, as determined by the
39- commission based on whether the operator was a reasonably prudent
40- operator, in complying with the provisions of this section warrants
41- the granting of the extension;
42- (2) the inactive well is included in a compliance plan
43- submitted to and approved by the commission or the commission's
44- delegate in which the operator commits to plugging or restoring the
45- inactive well to operation by September 1, 2040; or
46- (3) the operator of the inactive well files with the
47- commission an individual performance bond in an amount that is not
48- less than the full cost calculation for plugging an inactive well,
49- as established by the commission, that runs with and covers the
50- lifetime of the well, regardless of a change in the operator.
51- (d) When considering whether to approve an operator's
52- compliance plan under Subsection (c)(2), the commission or the
53- commission's delegate shall consider:
54- (1) age and length of inactivity of the well;
12+ amended by amending Subsection (b) and adding Subsections (c)
13+ through (g) to read as follows:
14+ (b) Notwithstanding Subsection (a), an operator may not
15+ obtain an extension of the deadline for plugging an inactive well by
16+ complying with that subsection:
17+ (1) if the plugging of the well is otherwise required
18+ by commission rules or orders; or
19+ (2) if the inactive well:
20+ (A) has been an inactive well for more than 15
21+ years; and
22+ (B) 25 years have elapsed since the well was
23+ completed, unless:
24+ (i) the commission approves an order
25+ granting an applicant's exception to plugging the inactive well; or
26+ (ii) the inactive well is included in an
27+ approved compliance plan under Subsection (e), in which the
28+ operator of the well commits to plug, or restore to active
29+ operation, the inactive well within a time period ending on
30+ September 1, 2040.
31+ (c) When considering a request under Subsection
32+ (b)(2)(B)(i) for an exception to plugging an inactive well, the
33+ commission shall consider an operator's demonstrated history of
34+ returning inactive wells to active status.
35+ (d) An exception approved by order of the commission under
36+ Subsection (b)(2)(B)(i) is not transferrable to another operator
37+ and shall terminate upon transfer of the well, except that a new
38+ operator of that well may seek an additional exception under
39+ Subsection (b) for that well.
40+ (e) An operator may request the commission or its delegate
41+ to approve a compliance plan for inactive wells. In approving a
42+ compliance plan pursuant to Subsection (b)(2)(B)(ii), the
43+ commission or its delegate shall consider the following factors:
44+ (1) the number of years the well has been inactive and
45+ its age;
5546 (2) current economic conditions;
56- (3) the operator's percentage of inactive wells
57- compared to the operator's total well count;
58- (4) whether the operator has submitted to the
59- commission with the organization report required by Section 91.142
60- a plan of action for how the well operator will plug or bring the
61- operator's inactive well into production or operate the well as an
62- injection well or other type of operation;
63- (5) the well operator's record of compliance,
64- including any history of previous violations and the seriousness of
65- those violations;
66- (6) any financial assurance made by the well operator
67- under Subsection (a)(3) or Section 89.027;
47+ (3) the well operator's percentage of inactive wells
48+ as compared to its total well count;
49+ (4) any plan of action by the well operator to plug or
50+ bring its inactive wells into production, injection, or other
51+ service operation, which must include a compliance report to be
52+ submitted to the commission annually with the operator's P-5
53+ renewal;
54+ (5) whether the operator has financial assurance to
55+ cover the actual plugging costs of each well;
56+ (6) the well operator's record of compliance, the
57+ history of any previous violations, and the seriousness of any
58+ previous violations;
6859 (7) any potential hazards to the health and safety of
69- the public or the environment posed by the inactive well; and
70- (8) any good faith demonstrated by the well operator.
71- (e) If the commission or its delegate denies an operator's
72- request for the approval of a compliance plan under Subsection
73- (c)(2), the operator may request a hearing from the commission
74- regarding that determination.
75- (f) Before granting a request to transfer an inactive well
76- to another operator, the commission shall require the operator to
77- whom the inactive well will be transferred to certify that the
78- operator's wells are in compliance with this section. The
79- commission may adopt rules that provide for the administrative
80- review and approval of the transfer and ensure that the wells of the
81- operator to whom the well will be transferred are in compliance with
82- this section.
83- (g) An extension granted under Subsection (c)(1) is not
84- transferable to another operator.
85- (h) The commission shall establish an administrative
86- penalty for a violation of this section in an amount determined by
87- the commission.
88- SECTION 2. Subchapter C, Chapter 89, Natural Resources
89- Code, is amended by adding Sections 89.049, 89.050, and 89.051 to
90- read as follows:
91- Sec. 89.049. ANNUAL REPORT. Not later than December 1 of
92- each year, the commission shall produce and deliver to the
93- governor, lieutenant governor, and legislature a report that
94- includes:
95- (1) the number of inactive wells in this state;
96- (2) the age and length of inactivity of each inactive
97- well;
98- (3) the number of inactive wells for which an
99- extension of the deadline to plug the inactive well has been granted
100- by the commission under Section 89.023;
101- (4) the financial assurance methods used by operators
102- of inactive wells, including the number of wells using each
103- financial assurance method available;
104- (5) the number of wells plugged in the preceding year,
105- including a breakdown of wells plugged by operators versus wells
106- plugged by the commission using state money;
107- (6) the number of inactive wells returned to
108- production or put into use as an injection well or other operation
109- in the preceding year;
110- (7) a summary of the number of operators of inactive
111- wells based on organization reports submitted to the commission
112- under Section 91.142, including the total number, based on the
113- reports, of operators and inactive wells that are in compliance,
114- are delinquent, are delinquent for longer than a year, or have been
115- granted an extension under Section 89.023;
116- (8) the number of organization reports the commission
117- has not renewed or approved under Section 91.142, including:
118- (A) for each report that has not been renewed or
119- approved:
120- (i) the associated well count; and
121- (ii) the total amount of financial security
122- submitted by the operator; and
123- (B) the total amount of financial security
124- collected from each operator who filed a report that has not been
125- renewed or approved; and
60+ the public or environmental risks posed by the inactive well; and
61+ (8) the demonstrated good faith of the well operator.
62+ (f) If the commission or its delegate denies an operator's
63+ request for approval of a compliance plan pursuant to Subsection
64+ (e), the operator may request a hearing and order of the commission.
65+ (g) The commission shall adopt rules that provide for
66+ administrative review and approval of requests to transfer an
67+ inactive well to another operator to ensure that wells of the
68+ receiving operator are in compliance with this section.
69+ SECTION 2. Subchapter B-1, Chapter 89, Natural Resources
70+ Code, is amended by adding Section 89.031 to read as follows:
71+ Sec. 89.031. ANNUAL REPORT BY COMMISSION. On or before
72+ September 1, 2026, and each year thereafter, the commission shall
73+ prepare and submit to the governor, lieutenant governor, and each
74+ member of the legislature a report on inactive wells that includes:
75+ (1) the number of inactive wells in Texas;
76+ (2) the age and length of inactivity for the inactive
77+ wells;
78+ (3) the quantity of inactive wells that use each
79+ method for extending the deadline under this chapter for plugging
80+ inactive wells;
81+ (4) the identification of the financial assurance
82+ methods being used by operators for inactive wells under this
83+ chapter, and the quantity of the number of inactive wells for each
84+ category of financial assurance;
85+ (5) the number of inactive wells and total wells that
86+ were plugged in the prior 12 months, including a breakdown by
87+ commission district of wells plugged by industry and by the
88+ commission using state-managed funds;
89+ (6) the number of inactive wells that were returned to
90+ production, injection, or other service operation in the prior 12
91+ months;
92+ (7) P-5 status statistical summary of the number of
93+ operators of inactive wells including the total number of operators
94+ and total number of inactive wells for the status categories of
95+ active P-5, P-5 Extension, Delinquent P-5, and P-5 delinquent
96+ greater than 12 months;
97+ (8) the number of P-5 Organization Reports revoked
98+ under Section 91.114, the associated well count, the total amount
99+ of financial assurance in place for those operators, and the amount
100+ of financial assurance collected; and
126101 (9) the annual cost calculation for plugging an
127- inactive well, as described by Section 89.023(a).
128- Sec. 89.050. OPERATOR REPORT. Not later than the 16th
129- anniversary of the date a well became inactive, an operator must
130- submit a report to the commission with information regarding the
131- results of a successful fluid level test or hydraulic pressure test
132- of the well conducted in accordance with commission rules. The
133- report must include appropriate documentation of the results of the
134- test.
135- Sec. 89.051. RULEMAKING. (a) The commission shall adopt
136- rules as necessary to regulate and monitor inactive wells under
137- this chapter.
138- (b) In adopting rules under this section, the commission
139- shall consider:
140- (1) the risk to public safety or the environment;
141- (2) wellbore and wellhead integrity, including the
142- ability to monitor casing pressure; and
143- (3) regional risk considerations, including
144- penetration of corrosive or over-pressured formations and
102+ inactive well, as defined in Section 89.002 (a)(9).
103+ SECTION 3. Subchapter B-1, Chapter 89, Natural Resources
104+ Code, is amended by adding Section 89.032 to read as follows:
105+ Sec. 89.032. COMMISSION RULEMAKING. (a) The commission
106+ shall by rule adopt requirements for inactive wells. In its
107+ rulemaking, the commission shall consider the following factors:
108+ (1) risk to public safety and/or the environment;
109+ (2) wellbore integrity and wellhead integrity
110+ including the ability to monitor casing pressures; and
111+ (3) regional considerations of risk such as
112+ penetration of corrosive or overpressured formations, and
145113 completion in zones containing hydrogen sulfide.
146- SECTION 3. Not later than December 1, 2026, the Railroad
147- Commission of Texas shall submit to the governor, lieutenant
148- governor, and legislature the first report required by Section
149- 89.049, Natural Resources Code, as added by this Act.
150- SECTION 4. (a) Subject to Subsection (b) of this section,
151- this Act takes effect September 1, 2025.
152- (b) The changes made by this Act to Section 89.023, Natural
153- Resources Code, take effect September 1, 2027.
154- * * * * *
114+ (b) The commission's rules shall include requirements that
115+ within one year of the 15th anniversary of a well becoming inactive,
116+ the operator of that well submit a report to the commission that:
117+ (1) demonstrates completion of a successful fluid
118+ level test or a mechanical integrity test of the well conducted in
119+ accordance with the commission's rules in effect at the time of the
120+ test, with a phase-in period for wells that require testing on the
121+ effective date of the rule; and
122+ (2) includes documentation of the results of a
123+ successful fluid level test and reporting of pressure on the
124+ production casing prior to testing.
125+ SECTION 4. This Act takes effect September 1, 2025.