CHAPTER 89. ABANDONED WELLS
NATURAL RESOURCES CODE
TITLE 3. OIL AND GAS
SUBTITLE B. CONSERVATION AND REGULATION OF OIL AND GAS
CHAPTER 89. ABANDONED WELLS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 89.001. POLICY. The conservation and development of all
the natural resources of this state are declared to be a public
right and duty. It is also declared that the protection of water
and land of the state against pollution or the escape of oil or
gas is in the public interest. In the exercise of the police
power of the state, it is necessary and desirable to provide
additional means so that wells that are drilled for the
exploration, development, or production of oil or gas, or as
injection or salt water disposal wells, and that have been
abandoned and are leaking salt water, oil, gas, or other
deleterious substances into freshwater formations or on the
surface of the land, may be plugged, replugged, or repaired by or
under the authority and direction of the commission.
Acts 1977, 65th Leg., p. 2552, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
Sec. 89.002. DEFINITIONS. (a) In this chapter:
(1) "Well" means a hole drilled for the purpose of:
(A) producing oil or gas;
(B) injecting fluid or gas in the ground in connection with the
exploration or production of oil and gas;
(C) obtaining geological information by taking cores or through
seismic operations; or
(D) producing geothermal energy and associated resources that
are subject to the jurisdiction of the Railroad Commission of
Texas.
(2) "Operator" means a person who assumes responsibility for the
physical operation and control of a well as shown by a form the
person files with the commission and the commission approves. The
commission may not require a person to assume responsibility for
a well as a condition to being permitted to assume responsibility
for another well. In the event of a sale or conveyance of an
unplugged well or the right to operate an unplugged well, a
person ceases being the operator for the purpose of Section
89.011 only if the well was in compliance with commission rules
relating to safety or the prevention or control of pollution at
the time of sale or conveyance and once the person who acquires
the well or right to operate the well:
(A) specifically identifies the well as a well for which the
person assumes plugging responsibility on forms required and
approved by the commission;
(B) has a commission-approved organization report as required by
Section 91.142;
(C) has a commission-approved bond, letter of credit, or cash
deposit under Sections 91.103-91.107 covering the well; and
(D) places the well in compliance with commission rules.
(3) "Nonoperator" means a person who owns a working interest in
a well at the time the well is required to be plugged pursuant to
commission rules and is not an operator as defined in Subdivision
(2) of this subsection.
(4) "Commission" means the Railroad Commission of Texas.
(5) "Well-site equipment" means any production-related equipment
or materials specific to the well being plugged, including
motors, pumps, pump jacks, tanks, tank batteries, separators,
compressors, casing, tubing, and rods.
(6) "Lease" means the lease on which a well made the subject of
a plugging contract is located.
(7) "Delinquent inactive well" means an inactive well for which,
after notice and opportunity for a hearing, the commission has
not extended the plugging deadline.
(8) "Plugging" includes replugging.
(9) "Cost calculation for plugging an inactive well" means the
commission's calculated cost for each foot of well depth plugged
based on average actual plugging costs for wells reported by the
commission for the preceding state fiscal year for the commission
oil and gas division district in which the inactive well is
located.
(10) "Enhanced oil recovery project":
(A) means:
(i) a commission-approved project that uses any process for the
displacement of oil or other hydrocarbons from a reservoir other
than primary recovery and includes the use of an immiscible,
miscible, chemical, thermal, or biological process;
(ii) a certified project described by Section 202.054, Tax Code;
or
(iii) any other project approved by the commission for enhanced
oil recovery; and
(B) does not include a water disposal project.
(11) "Good faith claim" means a factually supported claim based
on a recognized legal theory to a continuing possessory right in
a mineral estate, such as evidence of a currently valid oil and
gas lease or a recorded deed conveying a fee interest in the
mineral estate.
(12) "Inactive well" means an unplugged well that has had no
reported production, disposal, injection, or other permitted
activity for a period of greater than 12 months.
(13) "Physically terminated electric service to the well's
production site" means that electric service to an inactive well
site has been disconnected at a point on the electric service
lines most distant from the production site toward the main
supply line in a manner that will not interfere with electrical
supply to adjacent operations, including cathodic protection
units.
(b) The terms operator and nonoperator as defined in this
section do not mean a royalty interest owner or an overriding
royalty interest owner.
Acts 1977, 65th Leg., p. 2552, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5255, ch. 967,
Sec. 4, eff. Sept. 1, 1983; Acts 1983, 68th Leg., p. 5406, ch.
1002, Sec. 1, eff. Aug. 29, 1983; Acts 1993, 73rd Leg., ch. 882,
Sec. 1, eff. Sept. 1, 1993; Acts 1993, 73rd Leg., ch. 515, Sec.
1, eff. Jan. 1, 1994; Acts 1997, 75th Leg., ch. 89, Sec. 1, eff.
Sept. 1, 1997; Acts 2001, 77th Leg., ch. 1233, Sec. 11, eff.
Sept. 1, 2004.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
442, Sec. 1, eff. September 1, 2009.
Sec. 89.003. APPLICABILITY. The provisions of this chapter do
not alter causes of action arising before August 30, 1965.
Acts 1977, 65th Leg., p. 2553, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
SUBCHAPTER B. DUTY TO PLUG WELLS
Sec. 89.011. DUTY OF OPERATOR. (a) The operator of a well
shall properly plug the well when required and in accordance with
the commission's rules that are in effect at the time of the
plugging.
(b) If useable quality water zones are present, the operator
shall verify the placement of the plug at the base of the deepest
fresh water zone required to be protected. The well is considered
to have been properly plugged only when the verification is
satisfactory and meets commission requirements.
(c) If, for the use of the surface owner, the operator of the
well plugs the well back to produced fresh water, the duty of the
operator to properly plug the well ends only when:
(1) the well has been properly plugged in accordance with
commission requirements; and
(2) the surface owner has obtained a permit for the well from
the groundwater conservation district, if applicable.
(d) Subsections (b) and (c) apply only to wells plugged on or
after the effective date of this Act.
(e) The duty of a person to plug an unplugged well that has
ceased operation ends only if the person's interest in the well
is sold or conveyed while the well is in compliance with rules of
the commission relating to safety or the prevention or control of
pollution and the provisions of Sections 89.002(a)(2)(A)-(D) have
been met. The person acquiring the seller's interest through such
a sale or conveyance succeeds the seller as the operator of the
well for the purpose of plugging responsibility once the
provisions of Sections 89.002(a)(2)(A)-(D) have been met.
Acts 1977, 65th Leg., p. 2553, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 882, Sec. 2,
eff. Sept. 1, 1993; Acts 1997, 75th Leg., ch. 89, Sec. 2, eff.
Sept. 1, 1997; Acts 2001, 77th Leg., ch. 1233, Sec. 12, eff.
Sept. 1, 2001.
Sec. 89.012. DUTY OF NONOPERATOR. If the operator of a well
fails to comply with Section 89.011 of this code, each
nonoperator is responsible for his proportionate share of the
cost of the proper plugging of the well within a reasonable time,
according to the rules of the commission in effect at the time
the responsibility attaches.
Acts 1977, 65th Leg., p. 2553, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
SUBCHAPTER B-1. PLUGGING OF CERTAIN INACTIVE WELLS
Sec. 89.021. APPLICABILITY. This subchapter does not apply to a
bay or offshore well as defined by commission rules.
Added by Acts 2009, 81st Leg., R.S., Ch.
442, Sec. 2, eff. September 1, 2009.
Sec. 89.022. PLUGGING OF INACTIVE WELLS REQUIRED. (a) Except
as provided by Section 89.023, on or before the date the operator
is required to renew the operator's organization report required
by Section 91.142, an operator of an inactive well must plug the
well in accordance with statutes and commission rules in effect
at the time of plugging.
(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 (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.
(c) The commission may not renew or approve the organization
report required by Section 91.142 for an operator that fails to
comply with the requirements of this subchapter.
Added by Acts 2009, 81st Leg., R.S., Ch.
442, Sec. 2, eff. September 1, 2009.
Sec. 89.023. EXTENSION OF DEADLINE FOR PLUGGING INACTIVE WELL.
(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
(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.
(b) Notwithstanding Subsection (a), an operator may not obtain
an extension of the deadline for plugging an inactive well by
complying with that subsection if the plugging of the well is
otherwise required by commission rules or orders.
Added by Acts 2009, 81st Leg., R.S., Ch.
442, Sec. 2, eff. September 1, 2009.
Sec. 89.024. ABEYANCE OF PLUGGING REPORT. (a) An abeyance of
plugging report filed under Section 89.023(a)(4)(B) is valid for
a period of not more than five years.
(b) An abeyance of plugging report may cover more than one well
in a field but may not cover more than one field.
(c) An abeyance of plugging report may not be transferred to a
new operator of an existing inactive well. A new operator of an
existing inactive well must file a new abeyance of plugging
report or otherwise comply with the requirements of this
subchapter on or before the deadline provided by Section
89.022(b). This subsection does not prohibit the transfer of an
abeyance of plugging report in the event of a change of name of
an operator.
(d) An operator who files an abeyance of plugging report must
pay an annual fee of $100 for each well covered by the report. A
fee collected under this section shall be deposited in the
oil-field cleanup fund.
Added by Acts 2009, 81st Leg., R.S., Ch.
442, Sec. 2, eff. September 1, 2009.
Sec. 89.025. ENHANCED OIL RECOVERY PROJECT. (a) For purposes
of Section 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.
(b) A statement that an inactive well is part of an enhanced oil
recovery project may not be transferred to a new operator of an
existing inactive well. A new operator of an existing inactive
well must file a new statement that the well is part of such a
project or otherwise comply with the requirements of this
subchapter on or before the deadline provided by Section
89.022(b). This subsection does not prohibit the transfer of a
statement that a well is part of an enhanced oil recovery project
in the event of a change of name of an operator.
Added by Acts 2009, 81st Leg., R.S., Ch.
442, Sec. 2, eff. September 1, 2009.
Sec. 89.026. FLUID LEVEL OR HYDRAULIC PRESSURE TEST. (a)
Documentation filed under Section 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.
(b) The operator must notify the office of the commission oil
and gas division district in which an inactive well is located at
least three days before the date the operator conducts a fluid
level or hydraulic pressure test of the well and may not conduct
the test without the approval of the office. The commission may
require that a test be witnessed by a commission employee.
(c) Documentation of the results of a successful fluid level or
hydraulic pressure test may be transferred to a new operator of
an existing inactive well.
(d) An operator who files documentation described by Subsection
(a) must pay an annual fee of $50 for each well covered by the
documentation. A fee collected under this section shall be
deposited in the oil-field cleanup fund.
Added by Acts 2009, 81st Leg., R.S., Ch.
442, Sec. 2, eff. September 1, 2009.
Sec. 89.027. SUPPLEMENTAL FINANCIAL ASSURANCE. (a) A
supplemental bond, letter of credit, or cash deposit filed under
Section 89.023(a)(4)(E) is in addition to any other financial
assurance otherwise required of the operator or for the well.
(b) A supplemental bond, letter of credit, or cash deposit may
not be transferred to a new operator of an existing inactive
well. A new operator of an existing inactive well must file a
new supplemental bond, letter of credit, or cash deposit or
otherwise comply with the requirements of this subchapter by the
deadline provided by Section 89.022(b).
Added by Acts 2009, 81st Leg., R.S., Ch.
442, Sec. 2, eff. September 1, 2009.
Sec. 89.028. ESCROW FUNDS. (a) Escrow funds described by
Section 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.
(b) Escrow funds deposited with the commission may be released
only with the approval of the commission as prescribed by
commission rule.
Added by Acts 2009, 81st Leg., R.S., Ch.
442, Sec. 2, eff. September 1, 2009.
Sec. 89.029. AFFIRMATION REGARDING SURFACE REQUIREMENTS. (a)
An application for an extension of the deadline for plugging an
inactive well must include a written affirmation by the operator:
(1) that the operator has physically terminated electric service
to the well's production site; and
(2) stating the following, as applicable, if the operator does
not own the surface of the land on which the well is located:
(A) if the well has been inactive for at least five years but
for less than 10 years as of the date of renewal of the
operator's organization report, that the operator has emptied or
purged of production fluids all piping, tanks, vessels, and
equipment associated with and exclusive to the well; or
(B) if the well has been inactive for at least 10 years as of
the date of renewal of the operator's organization report, that
the operator has removed all surface process equipment and
related piping, tanks, tank batteries, pump jacks, headers, and
fences, as well as junk and trash as defined by commission rule,
associated with and exclusive to the well.
(b) An operator of an inactive well shall leave a clearly
visible marker at the wellhead of the well.
(c) The commission shall adopt rules regulating the transfer of
material described by Subsection (a)(2)(B) and restricting its
accumulation on an active lease.
(d) Notwithstanding Subsection (a), an operator may be eligible
for a temporary extension of the deadline for plugging an
inactive well or a temporary exemption from the requirements of
Subsection (a) as provided by commission rule if the operator is
unable to comply with the requirements of that subsection because
of safety concerns or required maintenance of the well site and
the operator includes with the application a written affirmation
of the facts regarding the safety concerns or maintenance.
(e) An operator may be eligible for an extension of the deadline
for plugging a well without complying with Subsection (a)(2)(B)
if the well is located on a unit or lease or in a field
associated with an enhanced oil recovery project and the operator
includes a statement in the written affirmation that the well is
part of such a project. The exemption provided by this
subsection applies only to the equipment required for the
project.
(f) Notwithstanding the other provisions of this subchapter, the
commission shall adopt rules providing for the phase-in of the
duty to comply with Subsection (a)(2)(B) over a period of five
years beginning September 1, 2010. The rules must require the
operators of one-fifth of the wells that are subject to that
subsection in each year during the phase-in period to comply with
that subsection.
Added by Acts 2009, 81st Leg., R.S., Ch.
442, Sec. 2, eff. September 1, 2009.
Sec. 89.030. REVOCATION OF EXTENSION OF DEADLINE FOR PLUGGING
INACTIVE WELL. The commission may revoke an extension of the
deadline for plugging an inactive well granted under this
subchapter if the commission determines, after notice and an
opportunity for a hearing, that the applicant is ineligible for
the extension under the commission's rules or orders.
Added by Acts 2009, 81st Leg., R.S., Ch.
442, Sec. 2, eff. September 1, 2009.
SUBCHAPTER C. POWERS AND DUTIES OF THE COMMISSION
Sec. 89.041. DETERMINING PROPER PLUGGING. If it comes to the
attention of the commission that a well that has been abandoned
or is not being operated is causing or is likely to cause
pollution of fresh water above or below the ground or if gas or
oil is escaping from the well, the commission may determine at a
hearing, after due notice, whether or not the well was properly
plugged as provided in Section 89.011 or Section 89.012 of this
code.
Acts 1977, 65th Leg., p. 2553, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5256, ch. 967,
Sec. 5, eff. Sept. 1, 1983; Acts 1983, 68th Leg., p. 5407, ch.
1002, Sec. 2, eff. Aug. 29, 1983.
Sec. 89.042. COMMISSION ORDER TO PLUG. (a) If the commission
finds that the well was not properly plugged, it shall order the
operator to plug the well according to the rules of the
commission in effect at the time the order is issued.
(b) If the operator cannot be found or is no longer in existence
or has no assets with which to properly plug the well, the
commission shall order the nonoperators to plug the well
according to the rules of the commission in effect at the time
the order is issued.
(c) Repealed by Acts 1983, 68th Leg., p. 5409, ch. 1002, Sec. 3,
eff. Aug. 29, 1983.
Acts 1977, 65th Leg., p. 2553, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5256, ch. 967,
Sec. 5, eff. Sept. 1, 1983; Acts 1983, 68th Leg., p. 5409, ch.
1002, Sec. 3, eff. Aug. 29, 1983.
Sec. 89.043. PLUGGING BY COMMISSION. (a) If the commission
determines at a hearing under Section 89.041 of this code that a
well has not been properly plugged or needs replugging, the
commission, through its employees or through a person acting as
agent for the commission, may plug or replug the well if:
(1) the well was properly plugged according to rules in effect
at the time the well was abandoned or ceased to be operated; or
(2) neither the operator nor nonoperator properly plugged the
well, and
(A) neither the operator nor nonoperator can be found; or
(B) neither the operator nor nonoperator has assets with which
to properly plug the well.
(b) If a well is leaking salt water, oil, or gas or is likely to
leak salt water, oil, or gas, and the leakage will cause or is
likely to cause a serious threat of pollution or injury to the
public health, the commission, through its employees or agents,
may direct the operator to take remedial action or to plug the
well or may plug or replug the well without holding a hearing
under Section 89.041 of this code or giving notice under
Subsection (c) of this section.
(c) Not later than the 30th day before the date the commission
enters into a contract to plug a delinquent inactive well, the
commission shall send a notice by certified mail to the operator
of the well at the address last reported to the commission as
required by Section 91.142 and commission rules. The notice shall
direct the operator to plug the well and shall state that:
(1) the commission may plug the well and foreclose its statutory
lien under Section 89.083 unless the operator requests a hearing
not later than the 10th day after the date the operator receives
the notice;
(2) if the commission forecloses its statutory lien under
Section 89.083, all well-site equipment will be presumed to have
been abandoned and the commission may dispose of the equipment
and hydrocarbons from the well as provided by Section 89.085;
(3) if the commission plugs the well, the commission:
(A) by order may require the operator to reimburse the
commission for the plugging costs; or
(B) may request the attorney general to file suit against the
operator to recover those costs;
(4) the commission has a statutory lien on all well-site
equipment under Section 89.083; and
(5) the lien described by Subdivision (4) is foreclosed by
operation of law if the commission does not receive a valid and
timely request for a hearing before the 15th day after the date
the notice is mailed.
(d) The operator of a well made the subject of a prior
commission final order directing that it be plugged is not
entitled to a second hearing under this section.
(e) The commission shall file for record a copy of the notice in
the office of the county clerk of the county in which the well is
located. The notice filed with the county need not be
acknowledged. The copy of the notice filed in the office of the
county clerk must contain the section, block, survey, and
abstract number, when available to the commission, of the land on
which the well is located. The clerk shall record the notice in
the real property records of the county. The commission shall
not be charged a fee for the filing or recording of the notice.
The commission shall furnish a copy of the notice to a holder of
a lien on the well or a nonoperator on that person's request.
For purposes of title insurance policies issued under authority
of Title 11, Insurance Code, this notice is not a notice of
enforcement or violation of law, ordinance, or governmental
regulation unless the notice contains a legally sufficient
description of the specific land on which the well is located.
(f) At the request of the commission, the attorney general may
file suit to enforce an order issued by the commission under
Subsection (c)(3)(A).
Acts 1977, 65th Leg., p. 2554, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5256, ch. 967,
Sec. 5, eff. Sept. 1, 1983; Acts 1983, 68th Leg., p. 5407, ch.
1002, Sec. 2, eff. Aug. 29, 1983; Acts 1993, 73rd Leg., ch. 515,
Sec. 2, eff. Jan. 1, 1994; Acts 1995, 74th Leg., ch. 928, Sec. 1,
eff. Aug. 28, 1995; Acts 1999, 76th Leg., ch. 29, Sec. 1, eff.
Aug. 30, 1999; Acts 1999, 76th Leg., ch. 57, Sec. 1, eff. May 10,
1999; Acts 2001, 77th Leg., ch. 1233, Sec. 13, eff. Sept. 1,
2001.
Amended by:
Acts 2005, 79th Leg., Ch.
728, Sec. 11.147, eff. September 1, 2005.
Sec. 89.044. RIGHT TO ENTER ON LAND. (a) The commission or its
employees or agents, the operator, or the nonoperator, on proper
identification, may enter the land of another for the purpose of
plugging or replugging a well that has not been properly plugged.
(b) A prospective operator who has been authorized under Section
89.047 to conduct a surface inspection of a well, on proper
identification, may enter the land of another for the sole
purpose of conducting the inspection.
Acts 1977, 65th Leg., p. 2554, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5256, ch. 967,
Sec. 5, eff. Sept. 1, 1983; Acts 1983, 68th Leg., p. 5407, ch.
1002, Sec. 2, eff. Aug. 29, 1983.
Amended by:
Acts 2005, 79th Leg., Ch.
267, Sec. 3, eff. January 1, 2006.
Sec. 89.045. LIABILITY FOR DAMAGES. The commission and its
employees and agents, the operator, and the nonoperator are not
liable for any damages that may occur as a result of acts done or
omitted to be done by them or each of them in a good-faith effort
to carry out this chapter.
Acts 1977, 65th Leg., p. 2554, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5256, ch. 967,
Sec. 5, eff. Sept. 1, 1983; Acts 1983, 68th Leg., p. 5407, ch.
1002, Sec. 2, eff. Aug. 29, 1983.
Sec. 89.046. PENALTIES AND OTHER RELIEF. The plugging or
replugging of a well by the commission does not prevent the
commission from seeking penalties or other relief provided by law
from any person who is required by law, rules adopted by the
commission, or a valid order of the commission to plug the well.
Added by Acts 1983, 68th Leg., p. 5256, ch. 967, Sec. 5, eff.
Sept. 1, 1983.
Sec. 89.047. ORPHANED WELL REDUCTION PROGRAM. (a) In this
section:
(1) "Depth of the well" means the vertical depth of a well as
measured in linear feet from the surface to the lowest
perforation of the casing of the well that is within the
commission-designated correlative interval for the field for
which the well is issued a permit.
(2) "Operator in good standing" means an operator who:
(A) has a commission-approved organization report;
(B) is the designated operator of at least one well within the
jurisdiction of the commission;
(C) has filed with the commission under Section 91.104 a bond,
letter of credit, or cash deposit in an amount sufficient to
qualify to operate one or more additional wells; and
(D) is not the subject of a commission or court order regarding
a violation of a commission rule with which the operator has not
complied or a complaint that has been docketed by the commission
alleging a violation of a commission rule.
(3) "Orphaned well" means a well:
(A) for which the commission has issued a permit;
(B) for which production of oil or gas or another activity under
the jurisdiction of the commission has not been reported to the
commission for the preceding 12 months; and
(C) whose operator's commission-approved organization report has
lapsed.
(4) "Producing well" means a well classified by the commission
as an oil or gas well in accordance with commission rules.
(5) "Service well" means a well for which the commission has
issued a permit that is not a producing well. The term includes
an injection, disposal, or brine mining well.
(b) A person who is considering assumption of operatorship and
regulatory responsibility for an orphaned well may nominate the
well under consideration by filing a request on a form prescribed
by the commission notifying the commission that the person seeks
authority to conduct a surface inspection of the well to
determine whether the person desires to be designated by the
commission as the operator of the well.
(c) If the person is an operator in good standing and the well
is not already subject to a nomination, the commission shall
accept the nomination and issue a written confirmation to the
person of the person's authority to conduct a surface inspection
of the nominated well for a stated period not to exceed 30 days.
(d) A person to whom a confirmation is issued under Subsection
(c) may conduct a surface inspection of the well. The person
must deliver written notice to the owner of record of the surface
estate and any occupant of the tract on which the well is located
at least three days before the date of the inspection. The
notice must:
(1) identify the orphaned well;
(2) state the name, address, and telephone number of the person;
(3) state the date the person intends to conduct the surface
inspection;
(4) state the name of at least one representative of the person
who will participate in the surface inspection; and
(5) state that the person intends to inspect the orphaned well
in accordance with this section for the purpose of assessing the
current status and viability of the well.
(e) In conducting a surface inspection of the orphaned well, the
person may visually inspect the well and all related equipment,
tanks, and other facilities and may conduct noninvasive testing
such as using a gauge to determine the pressure present at the
wellhead but may not produce oil or gas from the well, reenter
the well, pull tubing from or perform any other type of downhole
work on the well, conduct a salvage operation on the well, or
remove any tangible item from the well site.
(f) The commission shall designate the person as the operator of
the 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.
(g) A fee collected under Subsection (f) shall be deposited to
the credit of the general revenue fund and may be appropriated
only to the commission to be used to enforce the laws and rules
concerning oil and gas conservation and waste and pollution
prevention.
(h) A person who is designated as the operator of an orphaned
well on or after January 1, 2006, and not later than December 31,
2007, is entitled to receive:
(1) a nontransferable exemption from severance taxes for all
future production from the well as provided by Section 202.060,
Tax Code;
(2) a nontransferable exemption from the fees provided by
Sections 81.116 and 81.117 for all future production from the
well; and
(3) a payment from the commission in an amount equal to the
depth of the well multiplied by 50 cents for each foot of well
depth if, not later than the third anniversary of the date the
commission designates the person as the operator of the well, the
person brings the well back into continuous active operation or
plugs the well in accordance with commission rules.
(i) A well is considered to be in continuous active operation
for purposes of Subsection (h)(3) if:
(1) the well is a producing well and the well has produced at
least 10 barrels of oil or 100 mcf of gas per month for at least
three consecutive months as shown in the records of the
commission and as authorized by a permit issued by the
commission; or
(2) the well is a service well and the well has been used for
the disposal or injection of oil and gas wastes or another
purpose related to the production of oil or gas for at least
three consecutive months as shown in the records of the
commission and as authorized by a permit issued by the
commission.
(j) The commission shall make payments to operators under
Subsection (h)(3) annually in the same order the commission
determines the operators to be entitled to the payments. The
aggregate amount of payments in a state fiscal year under that
subsection may not exceed $500,000. An operator may not receive:
(1) more than one payment under that subsection 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 operator has
filed with the commission under Section 91.104.
Added by Acts 2005, 79th Leg., Ch.
267, Sec. 4, eff. January 1, 2006.
Sec. 89.048. PLUGGING OF WELL BY SURFACE ESTATE OWNER. (a) In
this section, "orphaned well" has the meaning assigned by Section
89.047.
(b) The owner of an interest in the surface estate of a tract of
land on which an orphaned well is located may contract with a
commission-approved well plugger to plug the well.
(c) If the surface estate owner enters into a contract under
Subsection (b), the well plugger shall:
(1) not later than the 30th day before the date 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 may submit documentation to the commission
of the cost of the well-plugging operation. The commission shall
reimburse the surface estate owner from money in the oil-field
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 general
area.
(e) The commission shall adopt any rules reasonably necessary to
implement this section.
Added by Acts 2005, 79th Leg., Ch.
267, Sec. 4, eff. January 1, 2006.
SUBCHAPTER D. COSTS OF PLUGGING WELLS
Sec. 89.081. CAUSE OF ACTION FOR DISPROPORTIONATE SHARE OF COST.
If an operator or nonoperator owns only a partial interest in
the well or oil and gas and the operator or nonoperator pays a
larger proportion of the cost of plugging the well than his
proportionate interest in the well or oil and gas, he has a cause
of action against the other operators and nonoperators for their
proportionate shares of the cost of plugging.
Acts 1977, 65th Leg., p. 2554, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5251, ch. 967,
Sec. 1, eff. Sept. 1, 1983; Acts 1983, 68th Leg., p. 5407, ch.
1002, Sec. 2, eff. Aug. 29, 1983.
Sec. 89.083. FIRST LIEN ON EQUIPMENT; CAUSE OF ACTION IF
COMMISSION PLUGS. (a) If a well has not been plugged by the
deadline for plugging established by commission rules, the state
has a first lien, superior to all other preexisting and
subsequent liens and security interests, on the operator's and
nonoperator's interests in well-site equipment, in the amount of
the total costs of removing well-site equipment from the well,
plugging the well, and transporting, storing, and disposing of
the well-site equipment.
(b) The lien arises on the date by which the well is required to
be plugged under commission rules.
(c) The lien may be foreclosed by judicial action or commission
order at any time after notice and an opportunity for a hearing.
If notice is mailed under Section 89.043 and if the lien is not
previously foreclosed, the lien is foreclosed by operation of law
on the 15th day after the date the notice is mailed unless the
commission has received a valid and timely request for a hearing
before that date. The commission is not required to give notice
or an opportunity for a hearing to subordinate lienholders or
nonoperators before foreclosing the lien.
(d) The lien is extinguished if the well is plugged or otherwise
brought into compliance in accordance with commission rules by
any person authorized to do so before the commission enters into
a plugging contract.
(e) The lien is extinguished as to any item of well-site
equipment that is lawfully removed by any person other than the
operator or a nonoperator pursuant to a lien, lease, judgment,
written contract, or security agreement before the commission
sends notice under Section 89.043(c). A person may not remove
from an inactive well site any equipment necessary to prevent the
well from serving as a conduit for the passage of oil, gas,
saltwater, oil and gas wastes, or freshwater from one stratum or
formation to another or to the surface or from the surface
downward except in the course of plugging in accordance with
commission rules.
(f) If the commission plugs a well under Sections 89.043 through
89.044 of this code, the state has a cause of action for all
reasonable expenses incurred in plugging or replugging the well
and not recovered under Section 89.085 of this code or through
reimbursement to the commission.
(g) The cause of action is:
(1) first, against the operator, to be secured by a first lien,
superior to all preexisting and subsequent liens and security
interests, on the operator's interest in the oil and gas in the
land and the fixtures, machinery, and equipment found or used on
the land where the well is located; and
(2) second, against a nonoperator at the time the well should
have been plugged, to be secured by a lien on the nonoperator's
interest in the oil and gas in the land. A nonoperator may be
made a party defendant in the suit against the operator.
(h) The commission:
(1) by order may require the operator and any nonoperator to
reimburse the commission for all reasonable expenses incurred in
plugging a well; or
(2) may request the attorney general to file suit against the
operator and any nonoperator to recover those expenses.
(i) At the request of the commission, the attorney general may
file suit to enforce an order issued by the commission under
Subsection (h)(1).
(j) Money collected in a suit under this section shall be
deposited in the state oil-field cleanup fund.
(k) A civil action for reimbursement under this section may be
brought in Travis County, the county in which the plugged well is
located, or the county in which any defendant resides.
Acts 1977, 65th Leg., p. 2555, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5251, ch. 967,
Sec. 1, eff. Sept. 1, 1983; Acts 1983, 68th Leg., p. 5407, ch.
1002, Sec. 2, eff. Aug. 29, 1983; Acts 1991, 72nd Leg., ch. 603,
Sec. 6, eff. Sept. 1, 1991; Acts 1993, 73rd Leg., ch. 515, Sec.
3, eff. Jan. 1, 1994; Acts 1999, 76th Leg., ch. 29, Sec. 2, eff.
Aug. 30, 1999; Acts 1999, 76th Leg., ch. 57, Sec. 2, eff. May 10,
1999; Acts 2001, 77th Leg., ch. 1233, Sec. 14, eff. Sept. 1,
2001.
Sec. 89.084. MONEY PAID COMMISSION BY PRIVATE PERSON. (a) The
commission may accept money from private persons and use the
money to plug or replug a well.
(b) Paying money to the commission is not an admission that the
person paying the money is obligated to plug or replug the well.
Evidence that a person has paid money to the commission is not
admissible against the person in a suit in which the person's
obligation to plug a well is an issue and introducing the
evidence is a compulsory ground for mistrial.
Acts 1977, 65th Leg., p. 2555, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
Sec. 89.085. POSSESSION AND SALE OF EQUIPMENT TO COVER PLUGGING
COSTS. (a) When the commission forecloses its lien under
Section 89.083 on a delinquent inactive well, well-site equipment
and any amount of hydrocarbons from the well that is stored on
the lease are presumed to have been abandoned and may be disposed
of by the commission in a commercially reasonable manner by
either or both of the following methods:
(1) entering into a plugging contract that provides that the
person plugging or cleaning up pollution, or both, will take
title to well-site equipment, hydrocarbons from the well that are
stored on the lease, or hydrocarbons recovered during the
plugging operation in exchange for a sum of money deducted as a
credit from the contract price; or
(2) selling the well-site equipment, hydrocarbons from the well
that are stored on the lease, or hydrocarbons recovered during
the plugging operation at a public auction or a public or private
sale.
(b) The commission shall assign separate costs to:
(1) removing well-site equipment;
(2) plugging the well; and
(3) transporting, storing, and disposing of the well-site
equipment.
(c) The commission shall dispose of well-site equipment or
hydrocarbons under this section at a price or value that reflects
the generally recognized market value of the equipment or
hydrocarbons, with allowances for physical condition.
(d) The commission shall deposit money received from the sale of
well-site equipment or hydrocarbons under this section to the
credit of the oil-field cleanup fund. The commission shall
separately account for money and credit received for each well.
(e) A person who acquires well-site equipment or hydrocarbons
under this section by sale or contract receives a clear title,
free of all prior legal or equitable claims of whatever nature,
whether perfected or inchoate.
(f) Not later than the 30th day after the date well-site
equipment or hydrocarbons are disposed of under this section, the
commission shall mail a notice by first class mail to the
operator of the well at the address last reported to the
commission as required by Section 91.142 of this code and
commission rules and, on request, to any lienholder or
nonoperator.
(g) The notice required by Subsection (f) of this section must
include:
(1) the lease name;
(2) the well number;
(3) the county in which the well is located;
(4) the abstract number of the property on which the lease is
situated;
(5) the commission lease or gas well identification number or
drilling permit number;
(6) a list of the property disposed of under this section; and
(7) a statement that any person who has a legal or equitable
ownership or security interest in the equipment or hydrocarbons
that was in existence on the date the commission foreclosed its
statutory lien may file a claim with the commission.
(h) Not later than the 180th day after the date the well-site
equipment or hydrocarbons are disposed of under this section, the
commission shall publish a notice that states:
(1) the lease name;
(2) the well number;
(3) the county in which the well is located;
(4) the commission lease or gas well identification number or
drilling permit number; and
(5) that equipment or hydrocarbons if applicable from the well
and lease were disposed of under this section and that any person
who has a legal or equitable ownership or security interest in
the equipment or hydrocarbons that was in existence on the date
the commission foreclosed its statutory lien may file a claim
with the commission.
(i) The commission shall publish the notice required under
Subsection (h) of this section in a newspaper of general
circulation in the county in which the lease is located. A single
notice may contain the information required for more than one
well and lease. A notice given under this section following the
plugging of a well may be combined with a notice given under
Section 91.115 of this code following the cleanup of a site or
facility.
Added by Acts 1985, 69th Leg., ch. 715, Sec. 1, eff. Aug. 26,
1985. Amended by Acts 1989, 71st Leg., ch. 755, Sec. 1, eff.
Sept. 1, 1989; Acts 1993, 73rd Leg., ch. 515, Sec. 4, eff. Jan.
1, 1994; Acts 2001, 77th Leg., ch. 1233, Sec. 15, eff. Sept. 1,
2001.
Sec. 89.086. CLAIMS AGAINST THE OIL-FIELD CLEANUP FUND. (a) A
person with a legal or equitable ownership or security interest
in well-site equipment or hydrocarbons disposed of under Section
89.085 of this code may make a claim against the oil-field
cleanup fund unless an element of the transaction giving rise to
the interest occurs after the commission forecloses its statutory
lien under Section 89.083.
(b) The commission shall adopt a form on which a person may file
a sworn claim with the commission.
(c) A claimant must identify the well-site equipment or
hydrocarbons in which the claimant has an interest and state the
amount of the property interest as of the date the commission
foreclosed its statutory lien under Section 89.083.
(d) The commission may require a person to include with a claim
documentation that substantiates the claim or to disclose whether
the claimant was an operator or nonoperator of the well.
(e) The commission may set a hearing to receive evidence on a
claim filed under this section. The commission shall notify the
claimant of the date, time, and place of a hearing.
(f) If the commission holds a hearing, the commission shall
issue:
(1) a decision on the claim;
(2) a statement of findings of fact that includes the substance
of the evidence heard; and
(3) the conclusions of law that support the decision.
(g) The commission shall consider the validity of claims in the
order in which the claims are filed.
(h) The commission shall suspend an amount of money in the
oil-field cleanup fund equal to the amount of the claim until the
claim is finally resolved. If the provisions of Subsection (k) of
this section prevent suspension of the full amount of the claim,
the commission shall treat the claim as two consecutively filed
claims, one in the amount of funds available for suspension and
the other in the remaining amount of the claim.
(i) A claim made by or on behalf of the operator or a
nonoperator of a well or a successor to the rights of the
operator or nonoperator is subject to a ratable deduction from
the proceeds or credit received for the well-site equipment to
cover the costs incurred by the commission in removing the
equipment or hydrocarbons from the well or in transporting,
storing, or disposing of the equipment or hydrocarbons. A claim
made by a person who is not an operator or nonoperator is subject
to a ratable deduction for the costs incurred by the commission
in removing the equipment from the well. If a claimant is a
person who is responsible under law or commission rules for
plugging the well or cleaning up pollution originating on the
lease or if the claimant owes a penalty assessed by the
commission or a court for a violation of a commission rule or
order, the commission may recoup from or offset against a valid
claim an expense incurred by the oil-field cleanup fund that is
not otherwise reimbursed or any penalties owed. An amount
recouped from, deducted from, or offset against a claim under
this subsection shall be treated as an invalid portion of the
claim and shall remain suspended in the oil-field cleanup fund in
the manner provided by Subsection (j) of this section.
(j) If the commission finds that a claim is valid in whole or in
part, the commission shall pay the valid portion of the claim
from the suspended amount in the oil-field cleanup fund not later
than the 30th day after the date of the commission's decision. If
the commission finds that a claim is invalid in whole or in part,
the commission shall continue to suspend in the oil-field cleanup
fund an amount equal to the invalid portion of the claim until
the period during which the commission's decision may be appealed
has expired or, if appealed, during the period the case is under
judicial review. If on appeal the district court finds the claim
valid in whole or in part, the commission shall pay the valid
portion of the claim from the suspended amount in the oil-field
cleanup fund not later than 30 days after the date the court's
judgment becomes unappealable. On the date the commission's
decision is not subject to judicial review, the commission shall
release from the suspended amount in the oil-field cleanup fund
the amount of the claim held to be invalid.
(k) If the aggregate of claims paid and money suspended that
relates to well-site equipment or hydrocarbons from a particular
well equals the total of the actual proceeds and credit realized
from the disposition of that equipment or those hydrocarbons, the
oil-field cleanup fund is not liable for any subsequently filed
claims that relate to the same equipment or hydrocarbons unless
and until the commission releases from the suspended amount money
derived from the disposition of that equipment or those
hydrocarbons. If the commission releases money, then the
commission shall suspend money in the amount of subsequently
filed claims in the order of filing.
(l) A person who informs a potential claimant that the potential
claimant may be entitled to file a claim under this section or
who files a claim on behalf of a claimant may not contract for or
receive from the claimant for services an amount greater than 10
percent of the paid claim.
Added by Acts 1993, 73rd Leg., ch. 515, Sec. 5, eff. Jan. 1,
1994. Amended by Acts 2001, 77th Leg., ch. 1233, Sec. 16, eff.
Sept. 1, 2001.
Sec. 89.087. JUDICIAL REVIEW OF COMMISSION DECISIONS; IMMUNITY
FROM SUIT AND LIABILITY. (a) A claimant aggrieved by the
commission's decision on a claim may appeal the decision in a
district court of Travis County on or before the 60th day after
the date the decision was issued. If the commission does not
decide a claim by the 90th day after the date it was filed, the
claimant may appeal within the 60-day period beginning on the
91st day after the date of filing.
(b) Judicial review under this section is by trial de novo.
(c) No interest accrues on a claim before an appeal is filed
under this section.
(d) Except to the extent permitted by this chapter, and
notwithstanding any other provision of law, the commission, its
employees or agents, and the State of Texas are immune from suit
and from liability based on the disposition of well-site
equipment or hydrocarbons in accordance with this chapter.
Added by Acts 1993, 73rd Leg., ch. 515, Sec. 5, eff. Jan. 1,
1994.
Sec. 89.088. RECORD OF REQUEST FOR NOTICE BY LIENHOLDER OR
NONOPERATOR; FORM; FEE. (a) The commission shall maintain a
record of a request for notice by a lienholder or nonoperator
under Section 89.043(e) or 89.085(f) of this code for five years
after the date on which the commission receives the request.
(b) The commission shall prepare a form for a request for
notice. The commission shall require a person who requests notice
to include on the form information that identifies the lease
covered by the request.
(c) The commission may charge a filing fee for a request for
notice not to exceed $10 for each lease covered by the request.
Added by Acts 1993, 73rd Leg., ch. 515, Sec. 5, eff. Jan. 1,
1994.
SUBCHAPTER E. ENFORCEMENT; JUDICIAL REVIEW
Sec. 89.121. ENFORCEMENT BY COMMISSION. (a) In addition to the
powers specifically granted to the commission under this chapter,
the commission may enforce this chapter or any rule or order of
the commission adopted under this chapter in the same manner and
on the same conditions as provided in the other chapters of Title
3 of this code.
(b) Civil penalties collected for violations of this chapter or
of rules relating to plugging that are adopted under this code
shall be deposited in the state oil-field cleanup fund.
Acts 1977, 65th Leg., p. 2555, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5251, ch. 967,
Sec. 1, eff. Sept. 1, 1983; Acts 1991, 72nd Leg., ch. 603, Sec.
7, eff. Sept. 1, 1991.
Sec. 89.122. APPEAL TO COURTS. Any person affected by the
provisions of this chapter may sue to test the validity of any
order adopted by the commission under this chapter in the same
manner, on the same conditions, and to the same court or courts
as prescribed for suits testing the validity of orders of the
commission adopted under the general oil conservation statutes of
this state.
Acts 1977, 65th Leg., p. 2555, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.