CHAPTER 89. ABANDONED WELLS

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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;

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;

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;

(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.

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.

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;

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.

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.

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.

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.

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.

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;

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

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.

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

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.

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.

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.

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.

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.

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.

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.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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