HBA-NMO H.B. 3004 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3004
By: Lewis, Ron
Energy Resources
3/21/99
Introduced



BACKGROUND AND PURPOSE 

Current law requires the Railroad Commission of Texas (commission) to give
at least 30 days notice to a well operator prior to entering into a
contract to plug a delinquent inactive well.  If the well operator does not
request a hearing by the 10th day after receipt of the notice, the
commission is authorized to plug the well.  The lien securing the plugging
costs incurred by the commission attaches to the well-site equipment on the
date the well is required to be plugged; however, the commission may not
foreclose on the lien until it enters into a contract to plug the well.
This legal structure creates an opportunity for well operators to enter
into third-party agreements for the stripping of well-site equipment.  H.B.
3004 provides that the lien attaches to the well-site equipment upon
notice.        

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 89.043(c), Natural Resources Code, to require
the notice, sent at least 30 days before the date the Railroad Commission
of Texas (commission) enters into a contract to plug a delinquent inactive
well, directing a well operator to plug the well, to state that the
commission has a lien on all well-site equipment under Section 89.083
(First Lien on Equipment; Cause of Action if Commission Plugs), Natural
Resources Code.  Makes conforming and nonsubstantive changes. 

SECTION 2.  Amends Section 89.043(c), Natural Resources Code, to provide
that 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
under to a lien, lease, judgment, written contract or security agreement
before the commission sends notice under Section 89.043(c), rather than
before the commission enters into a plugging contract.  Prohibits a person
from removing, rather than prohibiting the removal of, certain equipment
from an inactive well. 

SECTION 3.Emergency clause.
  Effective date: upon passage.