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


Office of House Bill AnalysisH.B. 3696
By: Hawley
Energy Resources
8/10/1999
Enrolled



BACKGROUND AND PURPOSE 

Prior to the 76th Legislature, a lessee could transfer a state fee lease at
any time.  Every transferee was required to succeed to 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.  However,
bonding programs in place at the Texas Railroad Commission may not have
been adequate to ensure that wells on stateowned submerged lands or any
other lands were properly plugged and abandoned.   

H.B. 3696 authorizes a lessee to transfer a lease with the consent of the
Commissioner of the General Land Office (commissioner).  This bill
prohibits the commissioner from withholding the consent unreasonably, and
authorizes the commissioner to require the transferee to demonstrate that
it has the financial responsibility to discharge its obligations under the
lease and to post a bond or provide other security to secure those
obligations if the transferee is unable to demonstrate such financial
responsibility to the commissioner's satisfaction. 

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, by amending
Subsection (a) and adding Subsection (e), as follows: 

(a)  Requires the passage of the liability of the transferor to properly
discharge its obligations under the lease to the transferee upon prior
written consent of the Commissioner of the General Land Office
(commissioner).  Prohibits the commissioner from withholding the consent
unreasonably.  Authorizes the commissioner to require the transferee to
demonstrate that it has the financial responsibility to discharge its
obligations under the lease and to post a bond or provide other security to
secure those obligations if the transferee is unable to demonstrate such
financial responsibility to the commissioner's satisfaction. 

(e)  Provides that this section (Lease Transfer) does not relieve a person
from the duty to comply with a rule adopted or order issued by the Railroad
Commission of Texas under another provision of this code. 

SECTION 2.  Effective date: September 1, 1999.

SECTION 3.  Emergency clause.