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A BILL TO BE ENTITLED
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AN ACT
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relating to oil and gas liens. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 9.109(d), Business & Commerce Code, is |
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amended to read as follows: |
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(d) This chapter does not apply to: |
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(1) a landlord's lien, other than an agricultural |
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lien; |
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(2) a lien, other than an agricultural lien, given by |
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statute or other rule of law for services or materials, but Section |
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9.333 applies with respect to priority of the lien; |
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(3) an assignment of a claim for wages, salary, or |
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other compensation of an employee; |
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(4) a sale of accounts, chattel paper, payment |
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intangibles, or promissory notes as part of a sale of the business |
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out of which they arose; |
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(5) an assignment of accounts, chattel paper, payment |
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intangibles, or promissory notes that is for the purpose of |
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collection only; |
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(6) an assignment of a right to payment under a |
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contract to an assignee that is also obligated to perform under the |
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contract; |
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(7) an assignment of a single account, payment |
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intangible, or promissory note to an assignee in full or partial |
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satisfaction of a preexisting indebtedness; |
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(8) a transfer of an interest in or an assignment of a |
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claim under a policy of insurance, other than an assignment by or to |
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a health care provider of a health-care-insurance receivable and |
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any subsequent assignment of the right to payment, but Sections |
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9.315 and 9.322 apply with respect to proceeds and priorities in |
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proceeds; |
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(9) an assignment of a right represented by a |
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judgment, other than a judgment taken on a right to payment that was |
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collateral; |
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(10) a right of recoupment or set-off, but: |
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(A) Section 9.340 applies with respect to the |
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effectiveness of rights of recoupment or set-off against deposit |
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accounts; and |
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(B) Section 9.404 applies with respect to |
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defenses or claims of an account debtor; |
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(11) the creation or transfer of an interest in or lien |
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on real property, including a lease or rents, as defined by Section |
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64.001, Property Code, the interest of a vendor or vendee in a |
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contract for deed to purchase an interest in real property, or the |
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interest of an optionor or optionee in an option to purchase an |
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interest in real property, except to the extent that provision is |
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made for: |
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(A) liens on real property in Sections 9.203 and |
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9.308; |
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(B) fixtures in Section 9.334; |
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(C) fixture filings in Sections 9.501, 9.502, |
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9.512, 9.516, and 9.519; and |
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(D) security agreements covering personal and |
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real property in Section 9.604; |
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(12) an assignment of a claim arising in tort, other |
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than a commercial tort claim, but Sections 9.315 and 9.322 apply |
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with respect to proceeds and priorities in proceeds; [or] |
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(13) an assignment of a deposit account, other than a |
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nonnegotiable certificate of deposit, in a consumer transaction, |
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but Sections 9.315 and 9.322 apply with respect to proceeds and |
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priorities in proceeds; or |
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(14) an oil and gas lien arising under Chapter 67, |
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Property Code. |
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SECTION 2. Section 9.310(b), Business & Commerce Code, is |
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amended to read as follows: |
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(b) The filing of a financing statement is not necessary to |
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perfect a security interest: |
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(1) that is perfected under Section 9.308(d), (e), |
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(f), or (g); |
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(2) that is perfected under Section 9.309 when it |
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attaches; |
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(3) in property subject to a statute, regulation, or |
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treaty described in Section 9.311(a); |
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(4) in goods in possession of a bailee that is |
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perfected under Section 9.312(d)(1) or (2); |
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(5) in certificated securities, documents, goods, or |
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instruments which is perfected without filing, control or |
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possession under Section 9.312(e), (f), or (g); |
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(6) in collateral in the secured party's possession |
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under Section 9.313; |
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(7) in a certificated security that is perfected by |
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delivery of the security certificate to the secured party under |
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Section 9.313; |
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(8) in deposit accounts, electronic chattel paper, |
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electronic documents, investment property, or letter-of-credit |
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rights that is perfected by control under Section 9.314; |
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(9) in proceeds that is perfected under Section 9.315; |
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or |
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(10) that is perfected under Section 9.316[; or |
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[(11) in oil or gas production or their proceeds under |
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Section 9.343]. |
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SECTION 3. Section 9.324(b), Business & Commerce Code, is |
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amended to read as follows: |
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(b) Subject to Subsection (c) and except as otherwise |
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provided in Subsection (g), a perfected purchase-money security |
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interest in inventory has priority over a conflicting security |
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interest in the same inventory, has priority over a conflicting |
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security interest in chattel paper or an instrument constituting |
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proceeds of the inventory and in proceeds of the chattel paper, if |
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so provided in Section 9.330, and, except as otherwise provided in |
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Section 9.327, also has priority in identifiable cash proceeds of |
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the inventory to the extent the identifiable cash proceeds are |
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received on or before the delivery of the inventory to a buyer, if: |
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(1) the purchase-money security interest is perfected |
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when the debtor receives possession of the inventory; |
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(2) [except where excused by Section 9.343 (oil and |
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gas production),] the purchase-money secured party sends an |
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authenticated notification to the holder of the conflicting |
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security interest; |
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(3) the holder of the conflicting security interest |
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receives any required notification within five years before the |
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debtor receives possession of the inventory; and |
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(4) the notification states that the person sending |
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the notification has or expects to acquire a purchase-money |
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security interest in inventory of the debtor and describes the |
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inventory. |
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SECTION 4. Subtitle B, Title 5, Property Code, is amended by |
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adding Chapter 67 to read as follows: |
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CHAPTER 67. OIL AND GAS LIENS |
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Sec. 67.001. DEFINITIONS. In this chapter: |
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(1) "Affiliate" means any person who: |
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(A) is controlled, directly or indirectly, by a |
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first purchaser; or |
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(B) controls, directly or indirectly, a first |
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purchaser. |
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(2) "Agreement to sell" means an enforceable agreement |
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by an interest owner, directly or through a representative, to sell |
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oil or gas on or after severance to a first purchaser. The term |
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includes an agreement that is express or implied, whether oral or |
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written. |
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(3) "Control" means the possession, directly or |
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indirectly, of the power to direct or cause the direction of the |
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management and policies of a person, whether through ownership, by |
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contract, or otherwise. |
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(4) "First purchaser" means the first person that |
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purchases oil or gas from an interest owner, under an agreement to |
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sell. |
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(5) "Gas" means natural gas, casinghead gas, and all |
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constituent parts of natural gas and casinghead gas before and |
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after processing but before a first purchaser transfers title, |
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possession, or control of the gas to a purchaser. |
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(6) "Interest owner" means a person, including a |
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transferee interest owner, owning an interest of any kind in oil and |
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gas rights before acquisition by a first purchaser. |
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(7) "Oil" means oil, condensate, and all constituent |
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parts of the oil, before or after processing but before a first |
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purchaser transfers title, possession, or control of the oil to a |
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purchaser. |
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(8) "Oil and gas lien" means the lien described by |
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Section 67.002. |
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(9) "Oil and gas rights" means any legal or equitable |
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right, title, or interest in or to oil or gas from land in this |
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state. The term includes: |
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(A) oil or gas in place before severance; |
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(B) oil or gas production, or the right to |
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receive a portion of the proceeds, on severance; |
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(C) any interest or estate in, by, through, or |
|
under an oil and gas lease; |
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(D) a right acquired under a pooling order |
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relating to: |
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(i) ownership of oil or gas; |
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(ii) the right to proceeds; or |
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(iii) the right to enter into an agreement |
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to sell; |
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(E) a right to receive consideration under an |
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agreement to sell oil or gas; and |
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(F) a mortgage lien or security interest in oil |
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and gas rights. |
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(10) "Operator" means a person engaged in the |
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severance of oil or gas for that person only, for other persons |
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only, or for that person and others. |
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(11) "Permitted lien" means a perfected and |
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enforceable lien created by statute or rule of a governmental |
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agency for storage or transportation charges, including terminal |
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charges, tariffs, demurrage, insurance, labor, or other charges, |
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owed by a first purchaser in relation to oil or gas originally |
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purchased under an agreement to sell. The term does not include a |
|
lien that is: |
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(A) in favor of an affiliate of a first purchaser |
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unless the lien is authorized by the statute or rule creating the |
|
lien; or |
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(B) for charges incurred after the 90th day after |
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the date the first purchaser delivers the oil or gas for storage or |
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transportation. |
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(12) "Pooling order" means an order issued by the |
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Railroad Commission of Texas that requires the owners of the right |
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to drill for oil or gas in a drilling and spacing unit to pool the |
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owner's interests for the development of the drilling and spacing |
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unit. |
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(13) "Proceeds" means, when paid or to be paid in |
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consideration of, or as a consequence of, the sale of oil or gas |
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under an agreement to sell: |
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(A) oil or gas on or after severance; |
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(B) inventory of raw, refined, or manufactured |
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oil or gas after severance; |
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(C) rights to or products of any of the oil or gas |
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described by Paragraph (A) or inventory described by Paragraph (B); |
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(D) cash proceeds; |
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(E) accounts; |
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(F) chattel paper; |
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(G) instruments; |
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(H) documents; or |
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(I) payment intangibles with respect to any of |
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the preceding. |
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(14) "Purchaser" means a person who: |
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(A) is not an affiliate of a first purchaser; and |
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(B) takes, receives, or purchases oil or gas from |
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a first purchaser. |
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(15) "Representative" means a person who is |
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authorized, expressly or by implication, including an operator or |
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an authorized broker, to: |
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(A) sell oil or gas on behalf of, or for the |
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benefit of, an interest owner under an agreement to sell; or |
|
(B) receive on behalf of an interest owner the |
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consideration under an agreement to sell. |
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(16) "Sales price" means the proceeds a first |
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purchaser agrees to pay an interest owner or representative under |
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an agreement to sell. |
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(17) "Security interest" means a security interest |
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governed by Chapter 9, Business & Commerce Code. |
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(18) "Severance" means the point in time oil or gas is |
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possessed at the mouth of the wellbore of an oil and gas well. |
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(19) "Transferee interest owner" means a person that |
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acquires oil and gas rights from a transferor interest owner. |
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(20) "Transferor interest owner" means an interest |
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owner that transfers or conveys oil and gas rights, wholly or |
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partly. |
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Sec. 67.002. OIL AND GAS LIEN. (a) To secure the |
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obligations of a first purchaser to pay the sales price, each |
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interest owner has an oil and gas lien to the extent of the interest |
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owner's interest in oil and gas rights. The oil and gas lien exists |
|
as part of and incident to the ownership of oil and gas rights. |
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(b) An oil and gas lien: |
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(1) exists in and attaches to all oil and gas before |
|
severance; |
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(2) continues uninterrupted and without lapse in all |
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oil and gas on and after severance; and |
|
(3) continues uninterrupted and without lapse in and |
|
to all proceeds from the sale of the oil or gas. |
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(c) Except as provided by Subsection (d), an oil and gas |
|
lien exists until the interest owner or representative first |
|
entitled to receive the sales price has received the sales price for |
|
the oil or gas production, but the lien does not continue to attach |
|
to the production after the production is sold by the first |
|
purchaser, unless the first subsequent purchaser: |
|
(1) is an affiliate of the first purchaser; or |
|
(2) has actual knowledge, not constructive notice or |
|
inquiry notice, that the first purchaser has not paid the interest |
|
owner or representative first entitled to receive the sales price. |
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(d) As between an interest owner and a representative of an |
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interest owner or any person claiming adversely to the interest |
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owner or representative, the interest owner's oil and gas lien |
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continues uninterrupted and without lapse in proceeds in the |
|
possession or control of a representative until the interest owner |
|
on whose behalf the representative acts receives the proceeds in |
|
full. |
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(e) Except as provided by Subsection (f), a first purchaser |
|
takes free of an oil and gas lien if the first purchaser: |
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(1) in good faith, paid the sales price for the oil or |
|
gas to an interest owner or representative otherwise apparently |
|
entitled to receive the sales price; and |
|
(2) is without actual knowledge that the interest |
|
owner or representative is not entitled to receive the sales price |
|
paid. |
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(f) Notwithstanding Subsection (e), the oil and gas lien |
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continues uninterrupted in the proceeds paid to or otherwise due |
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the interest owner or representative. |
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Sec. 67.003. TRANSFER OF OIL AND GAS RIGHTS. (a) The |
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validity of an oil and gas lien is not dependent on possession of |
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the oil or gas by an interest owner or representative. An oil and |
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gas lien is not void or expired because of a change or transfer of |
|
the actual or constructive possession of or title to the oil or gas |
|
from the interest owner or representative to a first purchaser or |
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other purchaser. |
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(b) On the conveyance or transfer of any oil and gas rights |
|
by a transferor interest owner, the oil and gas lien vested in the |
|
transferor interest owner immediately before the conveyance or |
|
transfer remains with the transferor interest owner to the extent |
|
of any oil and gas rights retained by the transferor interest owner. |
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(c) On the conveyance or transfer of any oil and gas rights |
|
by a transferor interest owner, the oil and gas lien vested in the |
|
transferor interest owner immediately before the conveyance or |
|
transfer is transferred to and attaches automatically to the oil |
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and gas rights acquired by the transferee interest owner |
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uninterrupted and without lapse and as part of and incident to the |
|
oil and gas rights that are conveyed or transferred. |
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Sec. 67.004. AUTOMATIC PERFECTION OF LIEN. An oil and gas |
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lien of an interest owner is perfected automatically without the |
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need to file a financing statement or any other type of |
|
documentation. |
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Sec. 67.005. COMMINGLING. (a) If oil or gas in which there |
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exists more than one oil and gas lien is commingled with other oil |
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or gas in a manner that the identity of the specific oil or gas is |
|
lost, the oil and gas lien: |
|
(1) continues without interruption into and attaches |
|
to any resulting commingled product; and |
|
(2) is perfected automatically on the date of the oil |
|
and gas lien's original perfection but only for the volume of the |
|
commingled product that is equal to the volume of product to which |
|
the oil and gas lien originally attached. |
|
(b) If commingling described by Subsection (a) occurs, the |
|
oil and gas lien in the commingled product has priority over any |
|
security interest or other lien that is not an oil and gas lien or |
|
permitted lien, regardless of whether the security interest or |
|
other lien has been properly perfected. |
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(c) If more than one oil and gas lien attaches to the |
|
commingled product, the oil and gas liens rank equally in the |
|
proportion that the respective sales prices secured by each oil and |
|
gas lien bears as a percentage of the total of the sales prices |
|
secured by all oil and gas liens applicable to the production at the |
|
time the production was commingled. |
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(d) This section is intended to recognize the continuation |
|
of oil and gas lien rights of an interest owner in the commingled |
|
product stream only as to a volume of oil or gas proportionate to |
|
the volume of oil or gas that originated from the interest owner, |
|
with that volume of the commingled product being considered to have |
|
maintained a distinct identity as being available for sale or |
|
transportation under the specific contractual arrangements |
|
applicable to the production at the time the oil or gas entered the |
|
commingled product stream. |
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Sec. 67.006. RIGHTS OF PURCHASERS. (a) Except as provided |
|
by Subsection (b), a purchaser takes free of any oil and gas lien |
|
otherwise applicable to the oil or gas purchased if the purchaser: |
|
(1) is a buyer in the ordinary course of the first |
|
purchaser's business under Chapter 9, Business & Commerce Code; or |
|
(2) has paid all of the consideration due to the first |
|
purchaser, including by exchange of oil or gas, net-out, or |
|
set-off, under all applicable enforceable contracts in existence at |
|
the time of the payment. |
|
(b) The oil and gas lien continues uninterrupted in the |
|
proceeds paid to or otherwise due the first purchaser. |
|
(c) Except as provided by this section, an oil and gas lien |
|
has priority over the rights of any purchaser. |
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Sec. 67.007. PRIORITY IN RELATION TO OTHER LIENS OR |
|
SECURITY INTERESTS. Except for a permitted lien, an oil and gas |
|
lien takes priority over any other lien, whether arising by |
|
contract, law, equity, or otherwise, or any security interest. |
|
Sec. 67.008. TITLE NOT AFFECTED. This chapter does not |
|
affect: |
|
(1) when legal title to oil and gas may pass by |
|
agreement or operation of law subject to an oil and gas lien; |
|
(2) the right of a first purchaser to take or receive |
|
oil and gas under the terms of a division order, provided that the |
|
division order does not modify, waive, or abrogate in any respect |
|
the rights of an interest owner under this chapter; or |
|
(3) subject to Section 67.009, the right of a first |
|
purchaser to take or receive oil and gas under an agreement to sell. |
|
Sec. 67.009. WAIVER. (a) Except as provided by Subsection |
|
(b), an interest owner may not be required, as a condition or term |
|
of an agreement to sell or otherwise, to: |
|
(1) waive or release any oil and gas lien or a right |
|
under this chapter, other than on payment in full of the sales |
|
price; or |
|
(2) agree to a provision that would apply the law of |
|
another state to a right granted under this chapter. |
|
(b) An interest owner, or representative acting on behalf of |
|
an interest owner, may waive or release any oil and gas lien or any |
|
rights under this chapter or agree to apply the law of another state |
|
to the interest owner's oil and gas rights granted under this |
|
chapter, if the first purchaser: |
|
(1) posts a letter of credit in a form and amount |
|
satisfactory to the interest owner; or |
|
(2) agrees to prepay or escrow the sales price under an |
|
agreement to sell with the interest owner and performs all of the |
|
first purchaser's obligations under the agreement. |
|
(c) Unless waived or released under Subsection (b), a |
|
condition or term described by Subsection (a) is void. |
|
Sec. 67.010. LIMITATION ON FILING ACTION TO ENFORCE LIEN. |
|
(a) Except as provided by Subsection (b), an action to enforce the |
|
interest owner's oil and gas lien must be brought not later than the |
|
first anniversary of the last day of the month after the date |
|
proceeds from the sale of oil or gas subject to the lien are |
|
required by law or contract to be paid to the interest owner, but |
|
only as to the oil or gas sold during that month. |
|
(b) The commencement of a proceeding by or against any |
|
person claiming an interest in any property subject to the oil and |
|
gas lien seeking to adjudicate the person as bankrupt or insolvent, |
|
or seeking relief of the person's debts under any law relating to |
|
bankruptcy, insolvency, reorganization, or relief of debtors, or |
|
seeking the entry of an order for relief or the appointment of a |
|
receiver, trustee, or other similar official for the person or for |
|
any substantial part of the person's property shall toll the |
|
one-year period prescribed by Subsection (a) in which to bring an |
|
action to enforce the oil and gas lien for an additional period of |
|
90 days after the earlier of the date: |
|
(1) the proceeding is dismissed or otherwise finally |
|
concluded; or |
|
(2) final relief is obtained from the appropriate |
|
tribunal authorizing the commencement of the action to enforce the |
|
oil and gas lien. |
|
Sec. 67.011. VENUE; JURISDICTION. (a) An action to enforce |
|
the interest owner's oil and gas lien may be brought in a district |
|
court or other court of competent jurisdiction in the county in |
|
which: |
|
(1) the oil and gas well from which the oil or gas is |
|
produced is located; |
|
(2) the unpaid for oil or gas is located; or |
|
(3) the proceeds for the oil or gas are located. |
|
(b) An interest owner may join multiple proceedings to |
|
enforce oil and gas liens involving more than one oil and gas well |
|
in one county in the same action. |
|
(c) In cases involving oil or gas from the same oil and gas |
|
well or wells: |
|
(1) any persons claiming oil and gas liens in the oil |
|
or gas may join in the same action; or |
|
(2) a district court may consolidate separate actions |
|
related to the oil or gas. |
|
Sec. 67.012. PAYMENT DISPUTES. In the case of a payment |
|
dispute between an operator and another interest owner, a |
|
good-faith tender of money in satisfaction of a debt or security |
|
interest by one person operates as a tender of the money to both if |
|
tender is made: |
|
(1) to the person who the operator and other interest |
|
owner jointly directed the first purchaser in writing to pay; |
|
(2) to a person who otherwise shows the person is |
|
entitled to the money; or |
|
(3) to a court of competent jurisdiction in the event |
|
of litigation or bankruptcy. |
|
Sec. 67.013. COSTS; ATTORNEY'S FEES. The prevailing party |
|
in an action brought under this chapter is entitled to court costs |
|
and reasonable attorney's fees. |
|
Sec. 67.014. CERTAIN RIGHTS OF OPERATOR NOT IMPAIRED. This |
|
chapter does not impair an operator's right to be paid, set-off, or |
|
withhold funds from another interest owner as security for or in |
|
satisfaction of a debt or security interest. |
|
Sec. 67.015. INTEREST OWNER RIGHTS CUMULATIVE. The |
|
provisions of this chapter and the rights granted under this |
|
chapter are intended to be cumulative with all other rights an |
|
interest owner may otherwise have at law or in equity, including the |
|
right of any interest owner to maintain a personal action to recover |
|
the debt against any person liable for payment of the sales price of |
|
the oil or gas. |
|
Sec. 67.016. LIBERAL CONSTRUCTION OF INTEREST OWNER RIGHTS. |
|
The rights of the interest owner shall be liberally construed to |
|
give the interest owner the most comprehensive protection to secure |
|
the receipt by the interest owner of the sales price. |
|
Sec. 67.017. CONFLICT OF LAWS. To the extent of a conflict |
|
between the provisions of this chapter and other law, this chapter |
|
prevails. |
|
SECTION 5. Sections 9.203(j) and 9.343, Business & Commerce |
|
Code, are repealed. |
|
SECTION 6. (a) The changes in law made by this Act do not |
|
affect the rights of any interest owner that accrued before the |
|
effective date of this Act to the extent those rights are not in |
|
conflict with the provisions of Chapter 67, Property Code, as added |
|
by this Act, and the former law is continued in effect to preserve |
|
those rights. |
|
(b) For purposes of Sections 67.005 and 67.007, Property |
|
Code, as added by this Act, a "permitted lien" includes a mortgage |
|
lien or security interest in oil or gas that: |
|
(1) is granted before the effective date of this Act by |
|
a first purchaser in favor of a person who is not an affiliate of the |
|
first purchaser; and |
|
(2) secures payment under a written instrument of |
|
indebtedness signed by the first purchaser and accepted in writing |
|
by the payee before the effective date of this Act with a principal |
|
amount and a fixed maturity stated in the instrument, unless: |
|
(A) the instrument of indebtedness is modified, |
|
amended, or restated on or after the effective date of this Act to: |
|
(i) increase the principal amount that was |
|
owed before the effective date of this Act; or |
|
(ii) extend the stated maturity of the debt |
|
that was in effect before the effective date of this Act; or |
|
(B) the mortgage lien or security interest is not |
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validly perfected with a first priority against the claims of all |
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persons under applicable law other than persons holding a statutory |
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or regulatory lien for which first priority is granted by statute or |
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rule. |
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SECTION 7. This Act takes effect September 1, 2021. |