H.B. No. 3134

	AN ACT
	relating to the plugging of inactive oil and gas wells.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 89.022, Natural Resources Code, is
	amended by amending Subsection (b) and adding Subsections (d), (e),
	and (f) to read as follows:
	(b)  Notwithstanding Subsection (a), a person who assumes
	responsibility for the physical operation and control of an
	existing inactive well must satisfy the requirements of Sections
	89.023(a)(1) and (3) [(4)] not later than six months after the date
	the commission approves the initial form described by Section
	89.002(a)(2) and filed with the commission under which the person
	assumes responsibility for the well.
	(d)  Before the commission issues an order refusing to renew
	an operator's organization report under Subsection (c), an
	authorized commission employee or a person designated by the
	commission for that purpose must determine whether the operator has
	failed to comply with the requirements of this subchapter. If the
	authorized commission employee or designated person determines
	that the organization report does not qualify for renewal on that
	ground, the authorized commission employee or designated person
	must:
	(1)  notify the operator of the determination;
	(2)  provide the operator with a written statement of
	the reasons the organization report does not qualify for renewal;
	and
	(3)  notify the operator that the operator has 90 days
	to comply with the requirements of this subchapter.
	(e)  After the expiration of the period specified by
	Subsection (d)(3), the authorized commission employee or
	designated person shall determine whether the organization report
	qualifies for renewal and notify the operator of the determination.
	If the authorized commission employee or designated person
	determines that the organization report does not qualify for
	renewal because the operator has continued to fail to comply with
	the requirements of this subchapter, the operator, not later than
	the 30th day after the date of the determination, may request a
	hearing regarding the determination.  The operator shall pay the
	costs associated with a hearing requested under this subsection.
	(f)  If the commission determines following the hearing that
	the operator has failed to comply with the requirements of this
	subchapter or the operator fails to file a timely request for a
	hearing, the commission by order shall refuse to renew the
	organization report. The organization report remains in effect
	until the commission's order becomes final.
	SECTION 2.  Section 89.023(a), Natural Resources Code, is
	amended to read as follows:
	(a)  The commission may grant an extension of the deadline
	for plugging an inactive well if the operator maintains a current
	organization report with the commission as required by Section
	91.142 and if, on or before the date of renewal of the operator's
	organization report as required by that section, the operator files
	with the commission an application for an extension that includes:
	(1)  an affirmation that complies with Section 89.029;
	(2)  [a statement that the well and associated
	facilities are in compliance with all commission rules and orders;
	[(3)]  a statement that the operator has, and on
	request will provide, evidence of a good faith claim to a continuing
	right to operate the well; and
	(3) [(4)]  at least one of the following:
	(A)  documentation that since the preceding date
	that the operator's organization report was required to be renewed
	the operator has plugged, or restored to active operation as
	defined by commission rule, a number of inactive wells equal to or
	greater than 10 percent of the number of inactive wells operated by
	the operator on that date;
	(B)  an abeyance of plugging report on a form
	approved by the commission that:
	(i)  is in the form of a certification signed
	by a person licensed by the Texas Board of Professional Engineers or
	the Texas Board of Professional Geoscientists;
	(ii)  includes:
	(a)  an affirmation by the licensed
	person that the well has:
	(1)  a reasonable expectation of
	economic value in excess of the cost of plugging the well for the
	duration of the period covered by the report, based on the cost
	calculation for plugging an inactive well; and
	(2)  a reasonable expectation of
	being restored to a beneficial use that will prevent waste of oil or
	gas resources that otherwise would not be produced if the well were
	plugged; and
	(b)  appropriate documentation
	demonstrating the basis for the affirmation of the well's future
	utility; and
	(iii)  specifies the field and the covered
	wells within that field in a format prescribed by the commission;
	(C)  a statement that the well is part of an
	enhanced oil recovery project;
	(D)  if the operator of the well is not currently
	otherwise required by commission rule or order to conduct a fluid
	level or hydraulic pressure test of the well, documentation of the
	results of a successful fluid level or hydraulic pressure test of
	the well conducted in accordance with the commission's rules in
	effect at the time the test is conducted;
	(E)  a supplemental bond, letter of credit, or
	cash deposit sufficient for each well specified in the application
	that:
	(i)  complies with the requirements of
	Chapter 91; and
	(ii)  is of an amount at least equal to the
	cost calculation for plugging an inactive well for each well
	specified in the application;
	(F)  documentation of the deposit with the
	commission each time the operator files an application of an amount
	of escrow funds as prescribed by commission rule that equal at least
	10 percent of the total cost calculation for plugging an inactive
	well for each well specified in the application; or
	(G)  if the operator is a publicly traded entity:
	(i)  the following documents:
	(a)  a copy of the operator's federal
	documents filed to comply with Financial Accounting Standards Board
	Statement No. 143, Accounting for Asset Retirement Obligations; and
	(b)  an original, executed Uniform
	Commercial Code Form 1 Financing Statement, filed with the
	secretary of state, that:
	(1)  names the operator as the
	"debtor" and the Railroad Commission of Texas as the "secured
	creditor"; and
	(2)  specifies the funds covered
	by the documents described by Sub-subparagraph (a) in the amount of
	the cost calculation for plugging an inactive well for each well
	specified in the application; or
	(ii)  a blanket bond in the amount of the
	lesser of:
	(a)  the cost calculation for plugging
	any inactive wells; or
	(b)  $2 million.
	SECTION 3.  Section 89.024(a), Natural Resources Code, is
	amended to read as follows:
	(a)  An abeyance of plugging report filed under Section
	89.023(a)(3)(B) [89.023(a)(4)(B)] is valid for a period of not more
	than five years.
	SECTION 4.  Section 89.025(a), Natural Resources Code, is
	amended to read as follows:
	(a)  For purposes of Section 89.023(a)(3)(C)
	[89.023(a)(4)(C)], an inactive well is considered to be part of an
	enhanced oil recovery project if the well is located on a unit or
	lease or in a field associated with such a project.
	SECTION 5.  Section 89.026(a), Natural Resources Code, is
	amended to read as follows:
	(a)  Documentation filed under Section 89.023(a)(3)(D)
	[89.023(a)(4)(D)] of the results of a successful fluid level test
	is valid for a period of one year from the date of the
	test.  Documentation filed under that section of the results of a
	successful hydraulic pressure test is valid for a period of not more
	than five years from the date of the test.
	SECTION 6.  Section 89.027(a), Natural Resources Code, is
	amended to read as follows:
	(a)  A supplemental bond, letter of credit, or cash deposit
	filed under Section 89.023(a)(3)(E) [89.023(a)(4)(E)] is in
	addition to any other financial assurance otherwise required of the
	operator or for the well.
	SECTION 7.  Section 89.028(a), Natural Resources Code, is
	amended to read as follows:
	(a)  Escrow funds described by Section 89.023(a)(3)(F)
	[89.023(a)(4)(F)] must be deposited with the commission each time
	an operator files an application for an extension of the deadline
	for plugging an inactive well.
	SECTION 8.  The changes in law made by this Act apply only to
	an organization report the renewal of which is pending as of the
	effective date of this Act or that is filed on or after the
	effective date of this Act.
	SECTION 9.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution.  If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2011.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I certify that H.B. No. 3134 was passed by the House on May 5,
	2011, by the following vote:  Yeas 145, Nays 1, 1 present, not
	voting; and that the House concurred in Senate amendments to H.B.
	No. 3134 on May 23, 2011, by the following vote:  Yeas 142, Nays 0,
	2 present, not voting.
	______________________________
	Chief Clerk of the House
	I certify that H.B. No. 3134 was passed by the Senate, with
	amendments, on May 19, 2011, by the following vote:  Yeas 30, Nays
	0, 1 present, not voting.
	______________________________
	Secretary of the Senate
	APPROVED: __________________
	Date
	__________________
	Governor