Bill Text: TX HB4367 | 2021-2022 | 87th Legislature | Introduced
Bill Title: Relating to the reduction and plugging of orphaned oil and gas wells; providing for the imposition of a fee and an exemption from certain taxes and fees.
Sponsorship: Partisan Bill (Republican 1)
Status: (Introduced - Dead) 2021-03-29 - Referred to Energy Resources [HB4367 Detail]
Download: Texas-2021-HB4367-Introduced.html
| 87R633 BRG-F | ||
| By: Guillen | H.B. No. 4367 | |
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| relating to the reduction and plugging of orphaned oil and gas | ||
| wells; providing for the imposition of a fee and an exemption from | ||
| certain taxes and fees. | ||
| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
| SECTION 1. Section 81.067(c), Natural Resources Code, is | ||
| amended to read as follows: | ||
| (c) The fund consists of: | ||
| (1) proceeds from bonds and other financial security | ||
| required by this chapter and benefits under well-specific plugging | ||
| insurance policies described by Section 91.104(c) that are paid to | ||
| the state as contingent beneficiary of the policies, subject to the | ||
| refund provisions of Section 91.1091, if applicable; | ||
| (2) private contributions, including contributions | ||
| made under Section 89.084; | ||
| (3) expenses collected under Section 89.083; | ||
| (4) fees imposed under Section 85.2021; | ||
| (5) costs recovered under Section 91.457 or 91.459; | ||
| (6) proceeds collected under Sections 89.085 and | ||
| 91.115; | ||
| (7) interest earned on the funds deposited in the | ||
| fund; | ||
| (8) oil and gas waste hauler permit application fees | ||
| collected under Section 29.015, Water Code; | ||
| (9) costs recovered under Section 91.113(f); | ||
| (10) hazardous oil and gas waste generation fees | ||
| collected under Section 91.605; | ||
| (11) oil-field cleanup regulatory fees on oil | ||
| collected under Section 81.116; | ||
| (12) oil-field cleanup regulatory fees on gas | ||
| collected under Section 81.117; | ||
| (13) fees for a reissued certificate collected under | ||
| Section 91.707; | ||
| (14) fees collected under Section 91.1013; | ||
| (15) fees collected under Section 89.088; | ||
| (16) fees collected under Section 91.142; | ||
| (17) fees collected under Section 91.654; | ||
| (18) costs recovered under Sections 91.656 and 91.657; | ||
| (19) fees collected under Section 81.0521; | ||
| (20) fees collected under Sections 89.024 and 89.026; | ||
| (21) legislative appropriations; | ||
| (22) any surcharges collected under Section 81.070; | ||
| (23) fees collected under Section 91.0115; | ||
| (24) fees collected under Subchapter E, Chapter 121, | ||
| Utilities Code; | ||
| (25) fees collected under Section 27.0321, Water Code; | ||
| (26) fees collected under Section 81.071; [ |
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| (27) money collected under Section 81.021; and | ||
| (28) fees collected under Section 89.0475. | ||
| SECTION 2. The heading to Section 89.047, Natural Resources | ||
| Code, is amended to read as follows: | ||
| Sec. 89.047. ORPHANED WELL REDUCTION PROGRAM: OPERATORS | ||
| DESIGNATED IN 2006 OR 2007. | ||
| SECTION 3. Subchapter C, Chapter 89, Natural Resources | ||
| Code, is amended by adding Section 89.0475 to read as follows: | ||
| Sec. 89.0475. REDUCTION AND PLUGGING OF ORPHANED WELLS: | ||
| OPERATORS DESIGNATED BEGINNING IN 2022. (a) In this section, | ||
| "operator in good standing" and "orphaned well" have the meanings | ||
| assigned by Section 89.047. | ||
| (b) The commission shall designate a person who is an | ||
| operator in good standing as the operator of an orphaned well if the | ||
| person files with the commission: | ||
| (1) a factually supported claim based on a recognized | ||
| legal theory to a continuing possessory right in the mineral estate | ||
| accessed by the well, such as evidence of a current oil and gas | ||
| lease or a recorded deed conveying a fee interest in the mineral | ||
| estate; | ||
| (2) a completed certificate of compliance; and | ||
| (3) a nonrefundable fee in the amount of $250. | ||
| (c) A fee collected under Subsection (b)(3) shall be | ||
| deposited to the credit of the oil and gas regulation and cleanup | ||
| fund. | ||
| (d) A person who is designated as the operator of an | ||
| orphaned well on or after January 1, 2022, is entitled to receive: | ||
| (1) a nontransferable exemption from severance taxes | ||
| for production from the well as provided by Section 202.060, Tax | ||
| Code, until the fifth anniversary of the date the commission | ||
| designates the person as the operator of the well; | ||
| (2) a nontransferable exemption from the fees provided | ||
| by Sections 81.116 and 81.117 for production from the well until the | ||
| fifth anniversary of the date the commission designates the person | ||
| as the operator of the well; and | ||
| (3) a payment from the commission in the amount | ||
| described by Subsection (f) using money from the oil and gas | ||
| regulation and cleanup fund. | ||
| (e) A person who is designated as the operator of an | ||
| orphaned well is entitled to a payment under Subsection (d)(3) only | ||
| if: | ||
| (1) not later than the first anniversary of the date | ||
| the commission designates the person as the operator of the well: | ||
| (A) the person plugs the well in accordance with | ||
| commission rules; or | ||
| (B) the commission approves the application of | ||
| the owner of the surface estate of the tract of land on which the | ||
| well is located to condition the well for fresh water production and | ||
| the person designated as the operator of the well plugs the well in | ||
| accordance with commission rules up to the base of the usable | ||
| quality water stratum; and | ||
| (2) not later than the end of the state fiscal year | ||
| following the state fiscal year in which the person plugs the well, | ||
| the person submits to the commission: | ||
| (A) a request for reimbursement for plugging the | ||
| well; and | ||
| (B) documentation of the cost of plugging the | ||
| well. | ||
| (f) The amount to which a person is entitled under | ||
| Subsection (d)(3) is equal to 50 percent of the lesser of: | ||
| (1) the documented well-plugging costs; or | ||
| (2) the average cost incurred by the commission in the | ||
| preceding 24 months in plugging similar wells located in the same | ||
| county or general area. | ||
| (g) The commission shall make payments to persons under | ||
| Subsection (d)(3) annually in the same order the commission | ||
| determines the persons to be entitled to the payments. The | ||
| aggregate amount of payments in a state fiscal year under | ||
| Subsection (d)(3) may not exceed $500,000. A person may not | ||
| receive: | ||
| (1) more than one payment under Subsection (d)(3) for | ||
| the same well; or | ||
| (2) cumulative payments in an amount that exceeds the | ||
| amount of the bond, letter of credit, or cash deposit the person has | ||
| filed with the commission under Section 91.104. | ||
| SECTION 4. The heading to Section 89.048, Natural Resources | ||
| Code, is amended to read as follows: | ||
| Sec. 89.048. PLUGGING OF WELL BY SURFACE ESTATE OWNER OR | ||
| AFFECTED PERSON. | ||
| SECTION 5. Section 89.048, Natural Resources Code, is | ||
| amended by adding Subsection (b-1) and amending Subsections (c) and | ||
| (d) to read as follows: | ||
| (b-1) On approval by the commission, a person affected by an | ||
| orphaned well, including a person who does not have a good faith | ||
| claim to the mineral estate accessed by the well, may act as an | ||
| agent of the commission to contract with a well plugger to plug the | ||
| well. | ||
| (c) If the surface estate owner or affected person enters | ||
| into a contract under Subsection (b) or (b-1), as applicable, the | ||
| well plugger shall: | ||
| (1) not later than the 15th [ |
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| the well is plugged, mail notice of its intent to plug the well to | ||
| the operator of the well at the operator's address as shown by the | ||
| records of the commission; | ||
| (2) assume responsibility for the physical operation | ||
| and control of the well as shown by a form the person files with the | ||
| commission and the commission approves; | ||
| (3) file a bond, letter of credit, or cash deposit | ||
| covering the well as required by Section 91.107; and | ||
| (4) plug the well in accordance with commission rules. | ||
| (d) On successful plugging of the well by the well plugger, | ||
| the surface estate owner or affected person may submit | ||
| documentation to the commission of the cost of the well-plugging | ||
| operation. The commission shall reimburse the surface estate owner | ||
| or affected person from money in the oil and gas regulation and | ||
| cleanup fund in an amount not to exceed 50 percent of the lesser of: | ||
| (1) the documented well-plugging costs; or | ||
| (2) the average cost incurred by the commission in the | ||
| preceding 24 months in plugging similar wells located in the same | ||
| county or general area. | ||
| SECTION 6. Sections 202.060(b) and (c), Tax Code, are | ||
| amended to read as follows: | ||
| (b) The commission shall issue a certificate to a person who | ||
| is designated by the commission under Section 89.047 or 89.0475, | ||
| Natural Resources Code, as the operator of an orphaned well. The | ||
| certificate must identify the operator to whom and the well for | ||
| which the certificate is issued. | ||
| (c) Hydrocarbons produced from the well identified in the | ||
| certificate qualify for a severance tax exemption for the period | ||
| described by Section 89.047 or 89.0475, Natural Resources Code, as | ||
| applicable. | ||
| SECTION 7. This Act takes effect January 1, 2022. | ||
