Applications Open for Texas Oil and Gas Well Plugging Program

The Texas Commission on Environmental Quality (TCEQ) is accepting applications through 5:00 p.m. CT on November 9, 2026, for the Texas Voluntary Marginal Conventional Well Plugging Program (TxMCW), a voluntary program that helps owners and operators, including companies, permanently plug low-producing or idle oil and gas wells (marginal conventional wells). The program's purpose, application selection process, eligibility requirements, required application materials and the associated enforcement discretion policy are summarized below.

Background and Purpose

TCEQ has received $124 million in federal funding under the Inflation Reduction Act to reduce methane emissions from marginal conventional wells. Under the TxMCW program, TCEQ will pair successful applicants with selected vendors to perform the plugging work. Covered activities include, but are not limited to, preparing well pads, removing wellbore casings, excavation, placement of cement plugs and methane measurement before and after plugging. TCEQ may fund up to 100 percent of plugging costs, making the program a significant opportunity for oil and gas well owners and operators to retire their low-producing wells and reduce or eliminate associated potential long-term maintenance or plugging and abandonment liabilities and costs.

Selection Process

TxMCW is a priority-driven, rather than a first-come, first-serve, grant selection process. TCEQ will rank applications using a points system (up to 130 points), with points allocated based on factors that include the well's:

• proximity to a river, lake, creek or domestic freshwater well (maximum of 30 points)
• proximity to sensitive receptors (schools and hospitals within a 1-mile radius) (maximum of 30 points)
• age (maximum of 20 points)
• sour indicator (maximum of 20 points)
• average daily production rate (maximum of 20 points)
• location on tribal lands (maximum of 10 points)

Eligibility Requirements

Well Eligibility. To qualify, a well must produce less than or equal to 15 barrels of oil equivalent per day or less than or equal to 90,000 cubic feet of gas per day. Both producing and idle wells may qualify, but the well must have a known owner or operator. The following categories of wells are not eligible: orphan wells, shallow wells, mudrock wells, water wells, wells on federal land, wells subject to previous plugging attempts, tight gas wells, deviated wells, irrigation wells and injection wells.

Applicant Eligibility. The applicant must be the registered operator of the well. In addition, the applicant cannot have been previously convicted of a criminal violation under the Clean Air Act or the Clean Water Act. Applicants must allow access to all grant-selected well sites.

There is a limit of one well per application. Accordingly, if an applicant wishes to submit multiple wells for consideration for TxMCW, the applicant will have to submit an application for each well.

Application Requirements

A complete application includes:

1. application form
2. site access map
3. Railroad Commission of Texas (RRC) oil well potential test or RRC gas well back pressure test
4. copy of the RRC groundwater protection determination

A draft Grant Contract that the applicant will be required to sign if the applicant's well is accepted into the program is available on the TCEQ website. The contract includes joint and several indemnification obligations of the grantee and the plugging vendor to the state of Texas and TCEQ for any liability arising out of the plugging activities but allows the grantee and plugging vendor to independently enter into an agreement with each other for liability allocation, provided that the agreement does not alter the obligations owed to TCEQ under the Grant Contract and is acceptable to TCEQ.

Enforcement Discretion

A common concern with voluntary programs is the risk of a regulator being given access to facilities and discovering compliance violations. TCEQ has addressed this concern by stating that it will not enforce noncompliance findings related to emissions that are discovered through the TxMCW program, as long as the findings were not otherwise reasonably identifiable by other means and are not indicative of egregious, reckless or willful violations. Owners and operators should address any readily identifiable compliance issues at their well sites before applying to the TxMCW program.

How Holland & Knight Can Help

Holland & Knight's Environmental Team regularly advises oil and gas companies on federal and state environmental regulatory and compliance matters. For questions about the TxMCW program or assistance with application preparation or TxMCW contracting, please contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.