BILL ANALYSIS


                                                        S.B. 1347
                                                         By: West
                                                Natural Resources
                                                         04-12-95
                                     Committee Report (Unamended)
BACKGROUND

Current law permits the state to take royalty in-kind, such as oil
or gas instead of money, to satisfy a lessee's royalty obligation. 
The state is authorized to negotiate contracts or any other
instruments or agreements necessary to dispose of royalties taken
in-kind.

Most of the state's royalties taken in-kind are sold to state
agencies with the remainder sold on the spot market.  Since payment
is not due until after delivery of the gas, it is necessary for the
state to secure or guarantee payment by the purchasers.  The
General Land Office has concluded that the best choice would be to
purchase credit insurance.  The comptroller's office has indicated
that it considers expenditures for insurance to be authorized under
current law, but it recommended that this type of agreement be
specifically mentioned in the codes.

PURPOSE

As proposed, S.B. 1347 authorizes the commissioner of the General
Land Office, a soil owner, or the School Land Board to negotiate
and enter into insurance contracts or other agreements to secure or
guarantee payment on in-kind sales.

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 Section 52.133(c), Chapter 52D, Natural Resources
Code, to authorize the commissioner of the General Land Office, the
owner of the soil under Subchapter F of this chapter, the
commissioner, acting on behalf of and at the direction of the soil
owner, the School Land Board, or a board for lease to negotiate and
execute contracts or any other instruments or agreements necessary
to dispose of their portion of the royalty taken in kind, including
contracts for sale, transportation, and storage, and including
insurance contracts or other agreements to secure or guarantee
payment.

SECTION 2. Emergency clause.
           Effective date: 90 days after adjournment.