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State f/Je!UU!-Osee
PUBLIC CHAPTER NO. 725
SENATE BILL NO. 2231
By Johnson, Reeves
Substituted for: House Bill No. 2535
By Lamberth, Cochran, Grills
AN ACT to amend Tennessee Code Annotated, Title 59; Title 60 and Title 68, relative to the
production of oil and gas.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 60-1-101(7), is amended by deleting the
subdivision and substituting:
(7) "Operator" means any person who is supervising or responsible for drilling,
operating, producing, repairing, abandoning, or plugging of wells under this part;
SECTION 2. Tennessee Code Annotated, Section 60-1-101(9), is amended by deleting the
subdivision and substituting:
(9) "Person" means any natural person, public or private entity, or any subdivision or
agent thereof, including a corporation, association, partnership, receiver, trustee, guardian,
executor, administrator, fiduciary, agent, or representative of any kind;
SECTION 3. Tennessee Code Annotated, Section 60-1-101(10), is amended by deleting
"crude petroleum".
SECTION 4. Tennessee Code Annotated, Section 60-1-101 (11 ), is amended by deleting the
subdivision and substituting:
(11) "Producer" means the owner or operator of a well or wells capable of producing
oil or gas, or both, in paying quantities;
SECTION 5. Tennessee Code Annotated, Section 60-1-101, is amended by adding the
following as a new subdivision:
( ) "Well" means a borehole drilled or proposed to be drilled for the purpose of
producing natural gas or oil, or both, or a borehole through which natural gas or oil, or both,
is being produced.
SECTION 6. Tennessee Code Annotated, Section 60-1-103(a)(1), is amended by deleting
the subdivision and substituting:
(1) A person shall not conduct any surface disturbances incidental to or in preparation
for drilling until a permit application has been submitted to the supervisor. The supervisor
shall not issue a permit until the conditions established by this subsection (a) have been met.
SECTION 7. Tennessee Code Annotated, Section 60-1-103(a)(3), is amended by deleting
"blue-line streams within one-half mile (0.5 mi.) of the well site or access roads" and substituting
"streams within one-fourth mile (1/4 mi.) of the well site".
SECTION 8. Tennessee Code Annotated, Section 60-1-103(a)(5), is amended by deleting
the subdivision and substituting:
SB 2231
(5) A person shall not drill or operate a well without a permit issued by the supervisor.
SECTION 9. Tennessee Code Annotated, Section 60-1-103(d), is amended by deleting the
subsection and substituting:
(d) Upon approval, the operator's plan must be a condition of the operator's permit.
Failure to comply with the plan is grounds for one (1) or more of the following:
(1) Suspension of operations;
(2) Permit revocation;
(3) Forfeiture of bonds;
(4) Assessment of civil penalties as provided by this chapter; and
(5) Imposition of any other penalties permitted by this chapter.
SECTION 10. Tennessee Code Annotated, Section 60-1-104(a), is amended by deleting
"crude petroleum" wherever it appears and substituting instead "oil".
SECTION 11. Tennessee Code Annotated, Section 60-1-104(b), is amended by deleting "oil
and gas".
SECTION 12. Tennessee Code Annotated, Section 60-1-105, is amended by deleting the
section in its entirety.
SECTION 13. Tennessee Code Annotated, Section 60-1-202(a)(3), is amended by adding
"to contract with any person to perform plugging or reclamation work;" immediately preceding "and
to take such action as may be necessary to enforce this chapter;".
SECTION 14. Tennessee Code Annotated, Section 60-1-202(a)(4), is amended by deleting
the subdivision and substituting:
(4) To promulgate rules, in accordance with the Uniform Administrative Procedures
Act, compiled in title 4, chapter 5, to effectuate this chapter, including but not limited to the
following: •
(A) To require the drilling, casing, and plugging of wells in a manner that
prevents the escaping of oil and gas out of one (1) stratum to another; to prevent
intrusion of water to oil and gas strata; to prevent pollution of fresh water by oil, gas,
or salt water; to protect potentially mineable coal and other minerals; and to require a
bond for the plugging of each well;
(B) To require notification to the supervisor, upon such forms as the
supervisor shall prescribe, of the intention to drill any well for oil or gas;
(C) To require the filing of logs, including electrical logs and drilling records,
cores and drill cutting samples, and all other downhole surveys and information,
within sixty (60) days following the cessa~ion of drilling operations of the well;
(D) To prevent wells from being drilled, operated, and produced in such
manner as to cause injury to neighboring leases or property;
(E) To prevent the drowning by water of any oil and gas stratum in paying
quantities and to prevent the premature and irregular encroachment of water which
would affect the total ultimate recovery of oil and gas;
(F) To require the operation of wells with efficient gas-oil ratios and to fix such
ratios;
(G) To prevent "blow outs," "caving," and "seepage" in the same sense that
conditions indicated by such terms are generally understood in the oil and gas
business;
, (H) To prevent fires;
(I) To identify ownership of oil and gas wells, producing leases, refineries,
tanks, plants, structures, and all storage and transportation equipment and facilities;
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(J) To regulate the "shooting" and chemical treatment of wells in the same
sense that conditions indicated by such terms are generally understood in the oil and
gas business;
(K) To regulate secondary recovery methods;
(L) To regulate the spacing of wells;
(M) To provide for the forced integration of separately owned tracts and other
property ownership interests into drilling and production units;
(N) To provide that the board may, in the absence of a voluntary agreement
and at least sixty (60) days after providing notice to owners, force a volumetric or
surface poolwide unit; provided, that the pool producers having rights to more than
fifty percent (50%) of the pool acreage request such unitization of the pool;
(0) To provide that the board may, in the absence of an acceptable plan of
unitization by the· producers, shut in the pool to prevent waste and to protect
correlative rights until an acceptable plan is presented by the producers;
(P) To require that any person conducting oil or gas operations, or causing
surface disturbances preparatory to or incidental to such operations, conduct such
operations in a manner which will prevent or mitigate adverse environmental impacts,
such as soil erosion and water pollution, and perform reclamation of all areas
disturbed by the operations, including access roads, as prescribed by part 7 of this
chapter; and
(Q) To require that any operator conducting oil and gas operations, or causing
surface disturbances preparatory to or incidental to such operations, for wells
permitted and drilled after July 1, 1987, post a bond or bonds to secure compliance
with the requirements of this chapter and the rules promulgated under this chapter,
both for plugging of the wells and reclamation of the surface. A prospective operator
shall post the bond with the supervisor at the time the prospective operator's permit
application is submitted. The bond takes effect when the initial surface disturbances
begin. As an alternative to the performance bond required in this subdivision
(a)(4)(Q), a person may submit:
(i) A certificate of deposit issued by any federally-insured financial
institution to be placed in a separate departmental account that must not
revert to the general fund;
(ii) An irrevocable letter of credit issued by any federally-insured bank
or savings and loan association; or
(iii) Other cash or securities in an amount mutually agreed to by the
supervisor and the operator, to be placed in a separate departmental account
that must not revert to the general fund.
SECTION :15. Tennessee Code Annotated, Section 60-1-203, is amended by deleting the
section in its entirety.
SECTION 16. Tennessee Code Annotated, Section 60-1-204, is amended by deleting the
section in its entirety. ,
SECTION 17. Tennessee Code Annotated, Section 60-1-207, is amended· by deleting the
section in its entirety.
SECTION 18. Tennessee Code Annotated, Section 60-1-208, is amended by deleting the
section in its entirety.
SECTION 19. Tennessee Code Annotated, Section 60-1-209, is amended by deleting the
section in its entirety and substituting:
60-1-209.
(a)(1) No later than the filing of the application with the supervisor for a permit to drill
and prior to initiating site preparation, the applicant shall give notice by certified mail,
return receipt requested, •of the applicant's intent to drill to the property owner or
owners of the surface of the land to be drilled or to be affected by the surface
disturbances listed in subdivision (a)(3).
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(2) The property owners to be notified under this section are each property
owner of record in the property tax assessor's office in the county where the property
is located.
(3) The notice must include: the proposed location of the well site; the
proposed location of all new ingress and egress; the location of all diversions, drilling
pits, dikes, and related structures and facilities; the location of proposed storage
tanks; and all other surface disturbances.
(4) The notice must state that each property owner of record and the applicant
have fifteen (15) business days from the date of mailing to discuss the location of
surface disturbances in connection with the drilling operation. The notice must also
state that if each property owner and the applicant are unable to resolve differences
regarding the location of surface disturbances, either or both may bring an action for
settlement in a court of proper jurisdiction.
(b) Notwithstanding any other requirements for a permit to drill, such a permit may
only be issued if:
(1) The applicant submits to the supervisor statements of no objection signed
by each property owner entitled to notice under subsection (a); or
(2) Upon the submittal of a court order approving the location to the
supervisor.
SECTION 20. Tennessee Code Annotated, Section 60-1-401, is amended by deleting the
section in its entirety and substituting:
60-1-401.
(a) If, upon an inspection or investigation, the supervisor determines that a person is
in violation of this chapter, rules promulgated pursuant to this chapter, an order adopted by
the board, or terms or conditions of a permit, the supervisor shall with reasonable
promptness, and in no event no later than six (6) months following the inspection or
investigation, issue by certified mail a written notice that states the nature and, if applicable,
the location of the violation, including a reference to the statute, rules, order, or permit terms
or conditions alleged to have been violated. In addition, the notice must fix a reasonable time
for abatement of the violation. The supervisor may suspend or lengthen the abatement
period upon a showing of a good faith effort to comply with the abatement requirements and
that failure to comply with the abatement requirements is due to factors beyond the person's
reasonable control. If applicable, the notice may state that the supervisor has reason to
believe that a violation, or the failure to abate such violation, should result in the assessment
of a civil penalty.
(b)(1) The supervisor may assess civil. penalties up to ten thousand dollars ($10,000)
for each day a violation occurs against a person who violates this chapter, rules
promulgated pursuant to this chapter, an order adopted by the board, or the terms or
conditions of a permit.
(2) A civil penalty must be assessed in the following manner:
(A) An order and assessment must be issued by certified mail, return
receipt requested, personal service, or any other means authorized by the
Tennessee Rules of Civil Procedure stating the amount of the penalty to be
assessed and the reason therefor;
(B) An order and assessment issued pursuant to subdivision (b)(2)(A)
must inform the person of the right to appeal to the ,board within thirty (30)
days of service by filing a written notice of appeal with the supervisor and the
board setting forth the grounds and reasons for the objections and requesting
a hearing in the matter involved before the board;
(C) A hearing brought before the board must be conducted as a
contested case in accordance with the Uniform Administrative Procedures Act,
compiled in title 4, chapter 5; and
(D) If a petition for review of an order and assessment is not filed
within thirty (30) days after the ·date of service, the person is deemed to
. consent to the order and assessment, and the order and assessment is final.
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·(3) In assessing a civil penalty, the supervisor shall consider the following:
(A) The appropriateness of the penalty with respect to the size of the
business of the person assessed;
(B) The gravity of the violation;
(C) The good faith of the person;
(D) The person's history of previous violations;
(E) The economic benefit gained by the person; and
(F) Damages to this state, including waste resulting from the violation,
as well as expenses incurred in investigating and enforcing this section and
the costs involved in rectifying any damage.
(4)(A) If a person appeals an order and assessment of a penalty pursuant to
this subsection (b), the appeal must be conducted as a contested case and
heard before an administrative judge sitting alone pursuant to§§ 4-5-301 (a)(2)
and 4-5-314(b), unless settled by the parties.
(8) The administrative judge to whom an appeal is assigned shall
convene the parties for a scheduling conference within thirty (30) days of the
date the appeal is filed.
(C) The administrative judge shall issue a scheduling order for the
contested case that results in a hearing being completed within one-hundred
eighty (180) days of the scheduling conference, unless the parties agree to a
longer time or the administrative judge allows otherwise for good cause
shown, and an initial order being issued within ninety (90) days of completion
of the record of the hearing.
(D) The administrative judge's initial order, together with any earlier
orders issued by the administrative judge, becomes final unless a party
appeals pursuant to § 4-5-315 within fifteen (15) days after entry of the initial
order.
(E) The board is precluded from reviewing ari initial order unless
appealed by a party. Upon appeal to the board by a party the board shall
afford each party an opportunity to present briefs, review the record, and allow
each party an opportunity to present oral argument. If appealed to the board,
the review of the administrative judge's initial order is limited to the record, but
must be reviewed de novo with no presumption of correctness. In such
appeals, the board shall render a final order, in accordance with § 4-5-315,
affirming, modifying, remanding, or vacating the order and assessment. A final
order rendered pursuant to this subdivision (b)(4)(E) is effective upon its entry
unless a later effective date is stated in the final order. A petition to stay the
effective date of a final order may be filed under § 4-5-316. A petition for
reconsideration of a final order may be filed pursuant to § 4-5-317. Judicial
review of a final order may be sought by filing a petition for review in
accordance with § 4-5-322.
(F) An order of an administrative judge that becomes final in the
absence of an appeal is deemed to be a decision of the board in that case for
purposes of the standard of review by a court; provided, however, that in other
matters before the board, it may be considered but is not binding on the
board.
(c)(1) The supervisor, through a notice of forfeiture, may order the forfeiture of the
bond to the department for any person who violates this chapter, rules promulgated
pursuant to this chapter, an order adopted by the board, or the terms or conditions of
a permit.
(2) A bond forfeiture must be issued in the following manner:
(A) The supervisor shall with reasonable promptness, and no later than
six (6) months following the inspection or investigation, issue to the person by
certified mail a notice of noncompli~nce that states the nature, and if
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applicable, the location of the violation, including a reference to the alleged
violation;
(8) A notice of noncompliance must fix a reasonable time for
abatement of the violation. The supervisor may suspend or lengthen the
abatement period upon a showing of a good faith effort to comply with the
abatement requirements and that failure to comply with the abatement
requirements is due to factors beyond the person's reasonable control. If the
supervisor has reason to believe that the violation, or the failure to abate the
violation, may result in bond forfeiture, the notice may so state;
(C) If, within the period of abatement established in the notice of
noncompliance, no agreement has been reached with the supervisor
regarding the alleged failure to comply, and the supervisor determines that the
person has not complied with the requirements set forth by the notice of
noncompliance, then the supervisor shall issue a notice of forfeiture to the
person by certified mail, return receipt requested, personal service, or any
other means authorized by the Tennessee Rules of Civil Procedure stating
that the bond is ordered forfeited to the department;
(D) A notice of forfeiture issued pursuant to this subsection (c) must
inform the person of their right to appeal to the board within a period of thirty
(30) days of service by filing a written notice of appeal with the supervisor and
the board setting forth the grounds and reasons for the objections and asking
for a hearing in the matter involved before the board.
(E) Any hearing brought before the board must be conducted as a
contested case in accordance with the Uniform Administrative Procedures Act,
compiled in title 4, chapter 5; and
(F) If a petition for review of the notice of forfeiture is not filed within
thirty (30) days after the date the notice of forfeiture is served, then the bond
must be ordered forfeited to the department.
(3)(A) If a person appeals a notice of forfeiture pursuant to this subsection (c),
the appeal must be conducted as a contested case and heard before an
administrative judge sitting alone pursuant to§§ 4-5-301 (a)(2) and 4-5-314(b),
unless settled by the parties.
(8) The administrative judge to whom an appeal is assigned shall
convene the parties for a scheduling conference within thirty (30) days of the
date the appeal is filed.
(C) The administrative judge shall issue a scheduling order for the
contested case that results in a hearing being completed within one-hundred
eighty (180) days of the scheduling conference, unless the parties agree to a
longer time or the administrative judge allows otherwise for good cause
shown, and an initial order being issued within ninety (90) days of completion
of the record of the hearing.
(D) The administrative judge's initial order, together with any earlier
orders issued by the administrative judge, becomes final unless a party
appeals pursuant to § 4-5-315 within fifteen (15) days after entry of the initial
order. •
(E) The board shall not review an initial order unless appealed by a
party. Upon appeal to the board by a party, the board shall afford each party
an opportunity to present briefs, review .the record, and allow each party an
opportunity to present oral argument. If appealed to the board, the review of
the administrative judge's initial order is limited to the record, but must be
reviewed de nova with no presumption of correctness. In such appeals, the
board shall render a final order, in accordance with § 4-5-314, affirming,
modifying, remanding, or vacating the notice of forfeiture. A final order
rendered pursuant to this subdivision (c)(3)(E) is effective upon its entry
unless a later effective date is stated in the final order. A petition to stay the
effective date of a final order may be filed under § 4-5-316. A petition for
reconsideration of a final order may be filed pursuant to § 4-5-317. Judicial
review of a final order may be sought by filing a petition for review in
accordance with§ 4-5-322.
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(F) An order of an administrative judge that becomes final in the
absence of an appeal is deemed to be a decision of the board in that case for
purposes of the standard of review by a court; provided, however, that in other
matters before the board, it may be considered but is not binding on the
board.
(4)(A) Reclamation bonds must be performance bonds, conditioned on the
reclamation of the well site and access roads pursuant to part 7 of this
chapter.
(8) Any portion of a reclamation bond not expended for the purposes
described in subdivision (c)(4)(A) shall be refunded to the operator or the
operator's surety if the conditions of the bond are fully satisfied.
(C) If the conditions of a reclamation bond are not fully satisfied,
because the bond is a blanket bond or otherwise, the unexpended proceeds
must be held or applied in a manner to secure the performance of the
remaining obligations secured by the bond. If the bond is a blanket bond and
the unexpended portion is less than is required for the remaining wells
covered by the bond, a supplementary bond must be required.
SECTION 21. Tennessee Code Annotated, Section 60-1-404(a), is amended by deleting the
subsection and substituting:
(a) All sums received in payment of penalties and bond forfeitures pursuant to this
part must be placed in the state treasury in a separate account to be designated as the
Tennessee oil and gas reclamation fund.
SECTION 22. Tennessee Code Annotated, Section 60-1-404, is amended by deleting
"default and" from subsections (b) and (c).
SECTION 23. Tennessee Code Annotated, Section 60-1-701, is amended by deleting the
section and substituting:
At the well site, the operator shall take measures to prevent or minimize soil erosion
and pollution of surface waters during the life of the operation, including work preparatory to
or incidental to such operations. Such measures may include s~diment ponds, berms,
diversion ditches, hay bales, and other measures designed to prevent erosion and discharge
of pollutants from the well site.
SECTION 24. Tennessee Code Annotated, Section 60-1-702, is amended by deleting the
section and substituting:
Access roads must be constructed and maintained in accordance with all applicable
local, state, and federal laws, rules, and regulations, including, but not limited to, the
requirements of title 69, chapter 3, part 1, and applicable rules promulgated by the board.
SECTION 25. Tennessee Code Annotated, Section 60-1-703(6), is amended by deleting the
subdivision and substituting:
(6) Access roads are subject to all of the above reclamation requirements unless the
landowner establishes by sworn affidavit that a road will continue to be used for purposes
other than well access. The acces_s road must be maintained in a usable condition by the
surface owner and must comply with all applicable local, state, and federal laws and
regulations, including, but not limited to, the requirements of title 69, chapter 3, part 1, and
applicable rules promulgated by the board. An access road may continue to be used by the
operator to gain access to the well site in order to determine the adequacy of the vegetation
cover or to perform additional revegetation;
SECTION 26. Tennessee Code Annotated, Section 60-1-703(7), is amended by deleting the
subdivision and substituting: •
(7) Revegetation success must not be determined until after two (2) successfully
completed growing seasons have occurred, or at a lesser time as determined by the
supervisor; and
SECTION 27. Tennessee Code Annotated, Section 60-1-704(a), is amended by deleting the
subsection and substituting:
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SB 2231
(a) Upon satisfactory completion of regrading and revegetation of all disturbed areas
except active work areas and access roads needed for oil or gas production, the supervisor
may release one-third (1/3) of the reclamation bond upon written request by the operator or
as determined by the supervisor. After plugging, and upon final reclamation and satisfactory
survival of the vegetation as determined by the supervisor, the supervisor may release the
remainder of the reclamation bond upon written request of the operator or as determined by
the supervisor.
SECTION 28. Tennessee Code Annotated, Section 60-1-705, is amended by deleting the
section.
SECTION 29. Tennessee Code Annotated, Section 68-203-103(b)(6), is amended by
deleting the subdivision and substituting:
(6) The fees under the Mineral Test Hole Regulatory Act, compiled in title 59, as a
new chapter pursuant to Section 30, must be set by the supervisor in accordance with
redesignated § 59-9-105.
SECTION 30. Tennessee Code Annotated, Title 60, Chapter 1,, Part 5, is amended by
deleting "part" wherever it appears and substituting "chapter" in §§ 60-1-501; 60-1-502; 60-1-503;
60-1-504(a), (b)(1), (b)(3), (b)(4), (b)(5), and (b)(9); 60-1-505(a) and (c); 60-1-506; 60-1-507; 60-1-
508(1), (3), and (5); 60-1-509; 60-1-510(a) and (c); and 60-1-511.
SECTION 31. The Tennessee Code Commission is directed to transfer the Mineral Test Hole
Regulatory Act, compiled in Title 60, Chapter 1, Part 5, from that part to Title 59 as a new chapter 9.
SECTION 32. This act takes effect upon becoming a law, the public welfare requiring it.
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SENATE BILL NO. 2231
PASSED: March 30, 2026
Y McNALLY
HE SENATE
•
CAMERON"91!!'XTON,SPEAKER
HOUSE OF REPRESENTATIVES
fuj , IY APPROVED this
l:l. day of 2026
• Uc
BILL LEE, GOVERNOREvery fact on this page links to its source, starting with the official bill record.