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.