HBA-SEB H.B. 3696 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3696
By: Hawley
Energy Resources
4/19/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, a state fee lease may be transferred at any time by a lessee.
Additionally, every tranferee is required to succeed all rights and be
subject to all obligations, liabilities, and penalties owed to the state by
the original lessee or any prior transferee of the lease.  As it stands,
current bonding programs in place at the Railroad Commission of Texas may
not be adequate to ensure that wells on state-owned submerged lands or any
other lands are properly plugged and abandoned.   

H.B. 3696 provides that liability to plug and abandon a well transfers to
the assignee only upon the written consent of the Commissioner of the
General Land Office (commissioner).  This bill also authorizes the
commissioner to require a bond to be posted if the commissioner finds that
an assignee is financially incapable of properly plugging and abandoning a
well, removing platforms and pipelines, or remediating any contamination at
the drill site. 

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 52.026, Natural Resources Code, to require the
liability of an assignor to pass to an assignee upon prior written consent
of the Commissioner of the General Land Office (commissioner).  Provides
that the liability is the liability of a lessee to properly plug and
abandon any wells.  Authorizes the commissioner to require the assignee to
demonstrate that it has the financial ability to properly discharge its
obligations under the lease.  Authorizes the commissioner to require the
posting of a bond or other security to secure these obligations if the
commissioner determines it to be in the best interest of the permanent
school fund. 

SECTION 2.  Amends Section 52.172, Natural Resources Code, to require all
leases and sales to be assignable with prior written consent of the owner.

SECTION 3.  Amends Section 52.032, Natural Resources Code, to authorize the
commissioner to require the posting of a bond or other security to secure
obligations if the commissioner decides that an assignee is financially
incapable of properly plugging and abandoning wells, removing platforms and
pipelines, or remediating any contamination at the drill site.
Redesignates Subsection (c) to (d). Makes a conforming change. 

SECTION 4.  Emergency clause.
            Effective date:  90 days after adjournment.