Texas Water Code 27.073 – Financial Responsibility
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(a) A person to whom an injection well permit is issued may be required by the commission or railroad commission to maintain a performance bond or other form of financial security to ensure that:
(1) an abandoned injection well is properly plugged; or
(2) funds are available for plugging, postinjection site care, and closure of an anthropogenic carbon dioxide injection well subject to Subchapter C-1.
(a-1) Notwithstanding Subsection (a), a person to whom an in situ uranium mining injection well, monitoring well, or production well permit is issued shall be required by the commission to maintain a performance bond or other form of financial security to ensure that an abandoned well is properly plugged.
Terms Used In Texas Water Code 27.073
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Escrow: Money given to a third party to be held for payment until certain conditions are met.
- 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
- Power of attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Source: OCC
(b) Each state agency is authorized to receive funds as the beneficiary of a financial responsibility mechanism established under this section for the proper plugging of an injection well. Each state agency is authorized to expend such funds from a financial responsibility mechanism for the plugging of wells covered by that mechanism.
(b-1) The railroad commission is authorized to receive funds as the beneficiary of a financial responsibility mechanism established under this chapter for the proper management of an anthropogenic carbon dioxide injection well or geologic storage facility. The funds shall be deposited to the credit of the anthropogenic carbon dioxide storage trust fund established under § 121.003, Natural Resources Code.
(c) If liability insurance is required of an applicant, the applicant may not use a claims made policy as security unless:
(1) the policy provides for a right of extension by the insured upon cancellation or nonrenewal of the policy by the insurance company;
(2) the applicant places in escrow as provided by the commission an amount sufficient to enable the commission to exercise the right under the policy to purchase an extension of the policy from the date of cancellation or expiration of the policy that is reasonable in light of the degree and duration of the risks; and
(3) the applicant provides the commission with a limited power of attorney by which the commission is given an irrevocable power to exercise the applicant’s right under the policy to purchase such an extension of the policy.
(d) In addition to other forms of financial security authorized by the rules of the commission, the commission may authorize an applicant to use the letter of credit form of financial security if either the issuing institution or another institution which guarantees payment under the letter:
(1) is a bank chartered by the state or by the federal government;
(2) is federally insured and its financial practices are regulated by the state or federal government; and
(3) is solvent and is not in receivership or owned or controlled by an entity that is insolvent or in receivership.