BILL ANALYSIS


                                                        H.B. 1593
                                             By: Craddick (Brown)
                                                Natural Resources
                                                         05-04-95
                              Senate Committee Report (Unamended)
BACKGROUND

The number of small checks being issued for proceeds from oil and
gas production is increasing as interests are transferred to more
owners.  This dilution of interest is becoming an administrative
problem for royalty owners and working interest owners.  A recent
survey sponsored by the National Association of Division Order
Analysts indicates that the oil and gas industry is experiencing a
dilution rate of 5-10 percent per year.  Other statistics of the
survey show that over 50 percent of the checks remitted are for
less than $100 and 33 percent of the checks issued for less than
$10 are never cashed.

PURPOSE

As proposed, H.B. 1593 authorizes oil payments of less than $100 to
be accrued before disbursement until the total amount equals $100
or more, or until 12 months' of payments have accumulated; amends
the process by which oil and gas payments are made from the payor
to the payee.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Sections 91.402(d) and (f), Natural Resources
Code, as follows:

     (d) PAYMENT: Authorizes oil payments of less than $100, rather
     than $25, to be accrued before disbursement until the total
     amount equals $100 or more, or until 12 months' proceeds
     accumulate, instead of until December 31 of each year, which
     ever comes first.  Authorizes the payor to hold accumulated
     proceeds of less than $10 until production ceases or the
     payor's responsibility for making payment for production
     ceases whichever comes first.
     
     NOTICES: Provides that there is a withholding tax, rather than
     a 20 percent withholding tax, for failure to furnish the
     Social Security/Tax I.D. number.
     
     (f) Authorizes payment to be remitted to a payee annually for
     up to 12 months' accumulation of proceeds if the payor owes
     the payee a total amount of $100 or less for production from
     all oil or gas wells for which the payor must pay the payee. 
     Requires the payor, on written request of the payee, to remit
     payment of accumulated proceeds to the payor annually if the
     payor owes the payee less than $10.  Requires the payor, on
     written request of the payee, to remit payment of proceeds to
     the payee monthly if the payor owes the payee between $25 and
     $100.  Makes nonsubstantive and conforming changes.
     
     SECTION 2.     Emergency clause.
           Effective date: upon passage.