SB1150 - Relating to the plugging of and reporting on inactive wells subject to the jurisdiction of the Railroad Commission of Texas; authorizing an administrative penalty.

      S.B. No. 1150         AN ACT   relating to the plugging of and reporting on inactive wells subject   to the jurisdiction of the Railroad Commission of Texas;   authorizing an administrative penalty.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 89.023, Natural Resources Code, is   amended by amending Subsection (b) and adding Subsections (c), (d),   (e), (f), (g), (h), (i), and (j) to read as follows:          (b)  Notwithstanding Subsection (a) and subject to   Subsection (c) , an operator may not obtain an extension of the   deadline for plugging an inactive well by complying with Subsection   (a) [ that subsection ] if :                 (1)  the well:                       (A)  has been inactive for more than 15 years; and                       (B)     was completed more than 25 years before the   date the operator submitted the request for the extension; or                 (2)   the plugging of the well is otherwise required by   commission rules or orders.           (c)     The commission may grant an extension of the deadline   for plugging an inactive well described by Subsection (b)(1) if:                 (1)     on request of the operator, the commission by   order determines that:                       (A)     the operator's demonstrated history of   returning inactive wells to operation warrants the granting of the   extension; or                       (B)     the operator's financial hardship in   complying with Subsection (b)(1) warrants the granting of the   extension;                 (2)     the inactive well is included in a compliance plan   submitted to and approved by the commission or the commission's   delegate in which the operator commits to plugging or bringing the   inactive well into production or operation as an injection well or   other type of operation by September 1, 2042; or                 (3)     the operator of the inactive well files with the   commission an individual performance bond in an amount that is not   less than the full cost calculation for plugging an inactive well,   as established by the commission, that runs with and covers the   lifetime of the well, regardless of a change in the operator.           (d)       An operator asserting financial hardship as the basis   for an extension under Subsection (c)(1)(B) shall submit to the   commission an attestation signed by the operator's authorized   representative.   The attestation must include:                 (1)     a statement that the commission should consider an   extension of the deadline for plugging an inactive well described   by Subsection (b)(1) because of the operator's financial hardship;   and                 (2)     a sworn financial statement certified by a   certified public accountant.           (e)     When considering whether to grant an operator's request   for the extension of the deadline for plugging an inactive well   under Subsection (c)(1)(B), the commission may consider:                 (1)     the attestation, including the statement and   financial statement, submitted to the commission under Subsection   (d);                 (2)     the operator's prior investment in the plugging or   maintenance of wells;                 (3)     the operator's history of compliance, including   any history of previous violations and the seriousness of those   violations;                 (4)  current economic conditions;                 (5)     the operator's percentage of inactive wells   compared to the operator's total well count; and                 (6)     any other information as required by commission   rules.           (f)     When considering whether to approve an operator's   compliance plan under Subsection (c)(2), the commission shall   consider:                 (1)  age and length of inactivity of the well;                 (2)  current economic conditions;                 (3)     the operator's percentage of inactive wells   compared to the operator's total well count;                 (4)     whether the operator has submitted to the   commission with the organization report required by Section 91.142   a plan of action for how the well operator will plug or bring the   operator's inactive well into production or operate the well as an   injection well or other type of operation;                 (5)     the well operator's record of compliance,   including any history of previous violations and the seriousness of   those violations;                 (6)     any financial assurance made by the well operator   under Subsection (a)(3) or Section 89.027;                 (7)     any potential hazards to the health and safety of   the public or the environment posed by the inactive well; and                 (8)  any good faith demonstrated by the well operator.           (g)     If the commission or its delegate denies an operator's   request for the approval of a compliance plan under Subsection   (c)(2), the operator may request a hearing from the commission   regarding that determination.           (h)     The commission shall adopt rules requiring each   operator involved in the transfer of an inactive well to jointly   submit to the commission a written affirmation stating:                 (1)     the well is in compliance with the requirements of   this section;                 (2)     the transfer was a business practice performed in   good faith; and                 (3)     the operator to whom the inactive well was   transferred will ensure continued compliance with this section.           (i)     An extension granted under Subsection (c)(1) is not   transferable to another operator.           (j)     The commission shall establish an administrative   penalty for a violation of this section in an amount determined by   the commission.          SECTION 2.  Subchapter C, Chapter 89, Natural Resources   Code, is amended by adding Sections 89.049, 89.050, and 89.051 to   read as follows:           Sec.   89.049.     ANNUAL REPORT. Not later than December 1 of   each year, the commission shall produce and deliver to the   governor, lieutenant governor, and legislature a report that   includes:                 (1)  the number of inactive wells in this state;                 (2)     the age and length of inactivity of each inactive   well;                 (3)     the number of inactive wells for which an   extension of the deadline to plug the inactive well has been granted   by the commission under Section 89.023;                 (4)     the financial assurance methods used by operators   of inactive wells, including the number of wells using each   financial assurance method available;                 (5)     the number of wells plugged in the preceding year,   including a breakdown of wells plugged by operators versus wells   plugged by the commission using state money;                 (6)     the number of inactive wells returned to   production or put into use as an injection well or other operation   in the preceding year;                 (7)     a summary of the number of operators of inactive   wells based on organization reports submitted to the commission   under Section 91.142, including the total number, based on the   reports, of operators and inactive wells that are in compliance,   are delinquent, are delinquent for longer than a year, or have been   granted an extension under Section 89.023;                 (8)     the number of organization reports the commission   has not renewed or approved under Section 91.142, including:                       (A)     for each report that has not been renewed or   approved:                             (i)  the associated well count; and                             (ii)     the total amount of financial security   submitted by the operator; and                       (B)     the total amount of financial security   collected from each operator who filed a report that has not been   renewed or approved; and                 (9)     the annual cost calculation for plugging an   inactive well, as described by Section 89.023(a).           Sec.   89.050.     OPERATOR REPORT. For each inactive well for   which 15 years have elapsed from the date on which the relevant well   completion report was filed with the commission, an operator must   submit an annual report to the commission with information   regarding the results of a successful fluid level test or hydraulic   pressure test of the well conducted in accordance with commission   rules.   The report must include appropriate documentation of the   results of the test.           Sec.   89.051.     RULEMAKING. (a) The commission shall adopt   rules as necessary to regulate and monitor inactive wells under   this chapter.           (b)     In adopting rules under this section, the commission   shall consider:                 (1)  the risk to public safety or the environment;                 (2)     wellbore and wellhead integrity, including the   ability to monitor casing pressure; and                 (3)     regional risk considerations, including   penetration of corrosive or over-pressured formations and   completion in zones containing hydrogen sulfide.          SECTION 3.  Not later than December 1, 2026, the Railroad   Commission of Texas shall submit to the governor, lieutenant   governor, and legislature the first report required by Section   89.049, Natural Resources Code, as added by this Act.          SECTION 4.  Not later than December 31, 2026, the Railroad   Commission of Texas shall adopt rules as necessary to implement   Chapter 89, Natural Resources Code, as amended by this Act.  Rules   adop [Text truncated for display. 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