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.