| |
| |
|
|
A BILL TO BE ENTITLED
|
|
|
AN ACT
|
|
|
relating to a cause of action for the bad faith washout of an |
|
|
overriding royalty interest in an oil and gas lease. |
|
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
|
SECTION 1. Title 4, Property Code, is amended by adding |
|
|
Chapter 31 to read as follows: |
|
|
CHAPTER 31. BAD FAITH WASHOUT OF OVERRIDING ROYALTY INTEREST IN OIL |
|
|
AND GAS LEASE |
|
|
Sec. 31.001. DEFINITION. In this chapter, "washout" means |
|
|
the elimination or reduction of an overriding royalty interest in |
|
|
an oil and gas lease by the forfeiture or surrender of the oil and |
|
|
gas lease by a lessee or the lessee's successors or assigns and the |
|
|
subsequent reacquisition of a lease, or all or part of the mineral |
|
|
estate associated with the lease, by the lessee or the lessee's |
|
|
successors, assigns, contractors, or subsidiaries on all or part of |
|
|
the same land, free of the overriding royalty interest. |
|
|
Sec. 31.002. CAUSE OF ACTION FOR BAD FAITH WASHOUT. A |
|
|
person may bring a cause of action for a bad faith washout of the |
|
|
person's overriding royalty interest in an oil and gas lease. The |
|
|
person is entitled to a remedy under this chapter if the person |
|
|
proves by a preponderance of the evidence that: |
|
|
(1) the person owned or had a legal right to the |
|
|
overriding royalty interest; |
|
|
(2) the defendant had control over the oil and gas |
|
|
lease burdened by the overriding royalty interest; |
|
|
(3) the defendant caused a washout of the person's |
|
|
overriding royalty interest; and |
|
|
(4) the defendant acted in bad faith by knowingly or |
|
|
intentionally causing the washout. |
|
|
Sec. 31.003. VENUE. An owner of an overriding royalty |
|
|
interest in an oil and gas lease may bring an action under this |
|
|
chapter in a district court of a county in which any part of the |
|
|
property subject to the oil and gas lease is located. |
|
|
Sec. 31.004. REMEDIES; COSTS AND FEES. (a) An owner of an |
|
|
overriding royalty interest who prevails in an action under this |
|
|
chapter may recover: |
|
|
(1) actual and exemplary damages; |
|
|
(2) enforcement of a constructive trust on the oil and |
|
|
gas lease or mineral estate acquired to accomplish the washout of |
|
|
the overriding royalty interest; and |
|
|
(3) court costs and attorney's fees. |
|
|
(b) The remedies provided by this chapter are cumulative of |
|
|
other remedies provided by common law or statute. |
|
|
Sec. 31.005. LIMITATION ON FILING ACTION. A person must |
|
|
bring an action under this chapter not later than the second |
|
|
anniversary of the date the washout occurred. |
|
|
SECTION 2. Chapter 31, Property Code, as added by this Act, |
|
|
applies only to a washout that occurs on or after the effective date |
|
|
of this Act. A washout that occurred before that date is governed |
|
|
by the law in effect immediately before the effective date of this |
|
|
Act, and that law is continued in effect for that purpose. |
|
|
SECTION 3. This Act takes effect September 1, 2021. |