Texas Natural Resources Code 91.115 – First Lien On Equipment and Stored Hydrocarbons or Drill Cuttings
(a) If a responsible person fails to clean up a site or facility that has ceased oil and gas operations under the commission’s jurisdiction on or before the date the site or facility is required to be cleaned up by law or by a rule adopted or order issued by the commission, the state has a first lien, superior to all preexisting and subsequent liens and security interests, on the responsible person’s interest in any hydrocarbons or drill cuttings stored at the site or facility and in any equipment that is:
(1) located at the site or facility; and
(2) used by the responsible person in connection with the activity that generated the pollution.
(b) The lien is in the amount of the total costs of cleaning up the oil and gas wastes or other substances from the site or facility and arises on the date the site or facility is required by law or by a rule or order of the commission to be cleaned up.
Terms Used In Texas Natural Resources Code 91.115
- Contract: A legal written agreement that becomes binding when signed.
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Lien: A claim against real or personal property in satisfaction of a debt.
- Person: includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity. See Texas Government Code 311.005
- Rule: includes regulation. See Texas Government Code 311.005
- Written: includes any representation of words, letters, symbols, or figures. See Texas Government Code 311.005
(c) The commission may foreclose on the lien by entering into a contract to clean up the site or facility. The commission is not required to give notice or an opportunity for a hearing to subordinate lienholders before entering into a contract to clean up the site or facility.
(d) The lien is extinguished if the site or facility is cleaned up in accordance with commission rules by any person before the commission enters into a contract to clean up the site or facility.
(e) The lien is extinguished as to any stored hydrocarbons or drill cuttings or items of equipment that are lawfully removed by any person other than the operator or a nonoperator according to a lien, lease, judgment, written contract, or security agreement before the commission enters into a cleanup contract. An item of equipment may not be removed from an abandoned site or facility if the removal will cause the release of a substance that may cause pollution unless the substance is lawfully disposed of.
(f) Equipment or stored hydrocarbons or drill cuttings subject to a lien under this section are presumed to have been abandoned on the date the commission enters into a contract to clean up the site or facility on which the equipment, hydrocarbons, or drill cuttings are located.
(f-1) The commission may dispose of the abandoned equipment or stored hydrocarbons in accordance with the provisions of Sections 89.085, 89.086, and 89.087 for the disposition of well-site equipment and hydrocarbons.
(f-2) The commission may dispose of the abandoned stored drill cuttings by contracting with a person to treat the drill cuttings at the site or facility for a subsequent beneficial use and selling the treated drill cuttings at a public auction or a public or private sale. Sections 89.085(c)-(i), 89.086, and 89.087 apply to the disposition of drill cuttings under this subsection in the same manner as those sections apply to the disposition of hydrocarbons.
(g) In this section:
(1) “Drill cuttings” has the meaning assigned by Section 123.001.
(2) “Responsible person” has the meaning assigned by Section 91.113.
(3) “Treat” means to use a manufacturing, mechanical, thermal, or chemical process other than sizing, shaping, diluting, or sorting.
(h) The lien provided by this section, as it relates to stored hydrocarbons, shall be subject to and inferior to any lien in favor of the State of Texas to secure royalty payments.