Tex. Natural Resources Code § 89.023 — TX Code / Code nr / Chapter 89 / Section 89.023
§ 89.023. EXTENSION OF DEADLINE FOR PLUGGING INACTIVE WELL.
Status: in_force

(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 operator has, and on request will provide, evidence of a good faith claim to a continuing right to operate the well; and

(3) 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 and Land Surveyors as an engineer or by 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;

(C) a statement that the well is part of an enhanced oil 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.

(b) Notwithstanding Subsection (a) and subject to Subsection (c), an operator may not obtain an extension of the deadline for plugging an inactive well by complying with Subsection (a) if:

(1) the well:

(A) has been inactive for more than 15 years; and

(B) was completed more than 25 years before the date the operator submitted the request for the extension; or

(2) the plugging of the well is otherwise required by commission rules or orders.

(c) The commission may grant an extension of the deadline for plugging an inactive well described by Subsection (b)(1) if:

(1) on request of the operator, the commission by order determines that:

(A) the operator's demonstrated history of returning inactive wells to operation warrants the granting of the extension; or

(B) the operator's financial hardship in complying with Subsection (b)(1) warrants the granting of the extension;

(2) the inactive well is included in a compliance plan submitted to and approved by the commission or the commission's delegate in which the operator commits to plugging or bringing the inactive well into production or operation as an injection well or other type of operation by September 1, 2042; or

(3) the operator of the inactive well files with the commission an individual performance bond in an amount that is not less than the full cost calculation for plugging an inactive well, as established by the commission, that runs with and covers the lifetime of the well, regardless of a change in the operator.

(d) An operator asserting financial hardship as the basis for an extension under Subsection (c)(1)(B) shall submit to the commission an attestation signed by the operator's authorized representative. The attestation must include:

(1) a statement that the commission should consider an extension of the deadline for plugging an inactive well described by Subsection (b)(1) because of the operator's financial hardship; and

(2) a sworn financial statement certified by a certified public accountant.

(e) When considering whether to grant an operator's request for the extension of the deadline for plugging an inactive well under Subsection (c)(1)(B), the commission may consider:

(1) the attestation, including the statement and financial statement, submitted to the commission under Subsection (d);

(2) the operator's prior investment in the plugging or maintenance of wells;

(3) the operator's history of compliance, including any history of previous violations and the seriousness of those violations;

(4) current economic conditions;

(5) the operator's percentage of inactive wells compared to the operator's total well count; and

(6) any other information as required by commission rules.

(f) When considering whether to approve an operator's compliance plan under Subsection (c)(2), the commission shall consider:

(1) age and length of inactivity of the well;

(2) current economic conditions;

(3) the operator's percentage of inactive wells compared to the operator's total well count;

(4) whether the operator has submitted to the commission with the organization report required by Section 91.142 a plan of action for how the well operator will plug or bring the operator's inactive well into production or operate the well as an injection well or other type of operation;

(5) the well operator's record of compliance, including any history of previous violations and the seriousness of those violations;

(6) any financial assurance made by the well operator under Subsection (a)(3) or Section 89.027;

(7) any potential hazards to the health and safety of the public or the environment posed by the inactive well; and

(8) any good faith demonstrated by the well operator.

(g) If the commission or its delegate denies an operator's request for the approval of a compliance plan under Subsection (c)(2), the operator may request a hearing from the commission regarding that determination.

(h) The commission shall adopt rules requiring each operator involved in the transfer of an inactive well to jointly submit to the commission a written affirmation stating:

(1) the well is in compliance with the requirements of this section;

(2) the transfer was a business practice performed in good faith; and

(3) the operator to whom the inactive well was transferred will ensure continued compliance with this section.

(i) An extension granted under Subsection (c)(1) is not transferable to another operator.

(j) The commission shall establish an administrative penalty for a violation of this section in an amount determined by the commission.