By Seidlits H.B. No. 2111
74R6962 E
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to permitting the creation of gas marketing cooperative
1-3 corporations under the authority of the Railroad Commission of
1-4 Texas.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subtitle C, Title 3, Natural Resources Code, is
1-7 amended by adding Chapter 104 to read as follows:
1-8 CHAPTER 104. PRODUCERS' COOPERATIVE MARKETING ASSOCIATIONS
1-9 SUBCHAPTER A. GENERAL PROVISIONS
1-10 Sec. 104.001. POLICY. The purpose of this chapter is to:
1-11 (1) prevent waste, protect correlative rights, and
1-12 promote conservation through the orderly production and efficient
1-13 marketing of Texas gas by producers;
1-14 (2) provide independent gas producers in Texas a
1-15 method of collectively making their product more accessible to
1-16 markets;
1-17 (3) replace competitive forces with state regulation
1-18 of gas marketing activities conducted in furtherance of
1-19 Subdivisions (1) and (2); and
1-20 (4) ensure that persons operating under this chapter
1-21 do not engage in anticompetitive acts that do not further the
1-22 regulatory policies expressed in this section.
1-23 Sec. 104.002. DEFINITIONS. In this chapter:
1-24 (1) "Commission" means the Railroad Commission of
2-1 Texas.
2-2 (2) "Gas" means natural gas or casinghead gas.
2-3 (3) "Marketing association" or "gas marketing
2-4 association" means an association organized under this chapter.
2-5 (4) "Member" includes a member of an association
2-6 organized under this chapter without capital stock and a holder of
2-7 common stock of an association under this chapter with capital
2-8 stock.
2-9 (5) "Person" includes natural persons, partnerships of
2-10 two or more persons having a joint or common interest, and
2-11 corporations.
2-12 (6) "Producer" or "independent producer" means any
2-13 person who produces gas in Texas other than a person to whom
2-14 Section 613A(c) of the Internal Revenue Code of 1986 does not apply
2-15 by reason of Section 613A(d)(2) or (4) of that code.
2-16 Sec. 104.003. NONPROFIT ORGANIZATION. Because a marketing
2-17 association is organized not to make money for itself or for its
2-18 members as individuals but only to make money for its members as
2-19 producers, the association is considered to be a nonprofit
2-20 organization.
2-21 Sec. 104.004. APPLICATION OF GENERAL CORPORATION LAWS. The
2-22 general corporation laws of this state apply to marketing
2-23 associations unless those laws conflict with this chapter.
2-24 Sec. 104.005. APPLICABILITY. None of the provisions in this
2-25 chapter impair the power of the commission to prevent waste under
2-26 the oil and gas conservation laws of this state, except as provided
2-27 in Section 104.006, or repeal, modify, or impair any of the
3-1 provisions of Sections 85.002, 85.125, 85.241-85.243,
3-2 85.249-85.252, and 85.381-85.385 or Subchapters C, E, F, and J,
3-3 Chapter 85, relating to oil and gas conservation.
3-4 Sec. 104.006. CONFLICT WITH ANTITRUST ACTS. (a) Agreements
3-5 and operations under agreements that are in accordance with the
3-6 provisions of this chapter, being necessary to improve market
3-7 efficiency and thereby serving to help prevent waste, protect
3-8 correlative rights, and conserve the natural resources of this
3-9 state, shall not be construed to be in violation of Chapter 15,
3-10 Business & Commerce Code.
3-11 (b) If a court finds a conflict between this chapter and
3-12 Chapter 15, Business & Commerce Code, this chapter is intended as a
3-13 reasonable exception to that law, necessary for the public
3-14 interests stated in Subsection (a).
3-15 (c) If a court finds that a conflict exists between this
3-16 chapter and Chapter 15, Business & Commerce Code, and finds that
3-17 this chapter is not a reasonable exception to Chapter 15, Business
3-18 & Commerce Code, it is the intent of the legislature that this
3-19 chapter, or any conflicting portion of it, shall be declared
3-20 invalid rather than Chapter 15, Business & Commerce Code, or any
3-21 portion of it, being declared invalid.
3-22 (Sections 104.007-104.020 reserved for expansion
3-23 SUBCHAPTER B. PURPOSE AND POWERS
3-24 Sec. 104.021. PURPOSE. A gas marketing association may
3-25 engage in any activity in connection with:
3-26 (1) the selling, transporting, or storing of gas that
3-27 is produced and delivered to it by its members; or
4-1 (2) the purchase, hiring, or use by its members of
4-2 supplies, machinery, or equipment directly related to the
4-3 production, transmission, storage, or marketing of gas or in the
4-4 financing of those activities.
4-5 Sec. 104.022. RESTRICTIONS. (a) A gas marketing
4-6 association shall be operated for the mutual benefit of its members
4-7 as gas producers and shall conform to one or both of the following
4-8 requirements:
4-9 (1) a member of the association may not have more than
4-10 one vote based on the member's ownership of stock or membership
4-11 capital in the association; or
4-12 (2) the association may not pay dividends on stock or
4-13 membership capital in excess of eight percent a year.
4-14 (b) A gas marketing association may deal in the gas
4-15 production of nonmembers but is restricted to an amount that is not
4-16 greater than the value of the gas that it handles for its members.
4-17 (c) A person is not eligible to be a member of a gas
4-18 marketing association if that person is a "gas utility," "utility,"
4-19 "affiliated interest," or "affiliate" as defined in Section 1.03,
4-20 Gas Utility Regulatory Act (Article 1446e, Vernon's Texas Civil
4-21 Statutes).
4-22 (d) A person may not be a member of a gas marketing
4-23 association unless the person is:
4-24 (1) an independent producer; or
4-25 (2) a landowner, royalty owner, lessor, lessee, or
4-26 overriding royalty owner in the gas-producing property of the
4-27 independent producer.
5-1 (e) A gas marketing association may not limit the right of
5-2 any member to establish price and volume categories for gas the
5-3 member produces and contracts to sell through the association.
5-4 (f) Unless a higher level of production is permitted to be
5-5 produced and sold by gas marketing associations under applicable
5-6 federal law existing after August 31, 1995, a gas marketing
5-7 association or combination of associations operating under Section
5-8 104.024 may not market in any calendar year more than 25 percent of
5-9 the total volume of natural gas produced in Texas during the
5-10 preceding calendar year.
5-11 Sec. 104.023. GENERAL POWERS. A marketing association may:
5-12 (1) subject to the prior approval of the commission,
5-13 engage in the marketing of gas on behalf of its members;
5-14 (2) borrow money and make advances to its members;
5-15 (3) act as an agent or representative of a member in
5-16 an activity authorized by Subdivision (1) or (2);
5-17 (4) acquire, hold, own, exercise all rights of
5-18 ownership in, sell, transfer, or pledge shares of capital stocks or
5-19 bonds of a corporation or association engaged in an activity
5-20 related to that of the marketing association;
5-21 (5) establish reserves and invest the money in those
5-22 reserves in bonds or other property as provided by the
5-23 association's bylaws;
5-24 (6) buy, hold, and exercise all privileges of
5-25 ownership over real or personal property that is determined by the
5-26 association to be necessary or convenient for, or incidental to,
5-27 conducting and operating its business;
6-1 (7) perform, in or outside this state, acts that are
6-2 necessary, suitable, or proper to accomplish the purposes and
6-3 objectives permitted by this section or that are conducive to or
6-4 expedient for the interest or benefit of the association and may
6-5 contract for the performance of those acts;
6-6 (8) possess and exercise, in or outside this state,
6-7 all powers, rights, and privileges necessary for or incidental to
6-8 the purposes for which the association is organized or the
6-9 activities in which it is engaged; and
6-10 (9) exercise the rights, powers, and privileges that
6-11 are granted by the laws of this state to general corporations and
6-12 that are not inconsistent with this chapter.
6-13 Sec. 104.024. CONTRACTS AND AGREEMENTS WITH OTHER
6-14 ASSOCIATIONS. (a) A marketing association, by resolution of its
6-15 board of directors but subject to prior review by the commission
6-16 for compliance with the regulatory policies and objectives of this
6-17 chapter, may make agreements, contracts, and arrangements with any
6-18 other gas marketing cooperative corporation or association formed
6-19 in this or any other state for the cooperative and more economical
6-20 conduct of its business or a part of its business.
6-21 (b) Two or more marketing associations, jointly or
6-22 separately, may use the same methods and agencies to conduct their
6-23 respective businesses.
6-24 Sec. 104.025. MARKETING CONTRACT. (a) Subject to prior
6-25 commission review for compliance with the regulatory policies and
6-26 objectives of this chapter, a gas marketing association may from
6-27 time to time establish a form of contract with its members to
7-1 market their gas on reasonable terms, including a requirement that
7-2 the members sell during a fixed term all or a specified part of
7-3 their gas production exclusively to or through the association or
7-4 any facilities to be created by the association.
7-5 (b) The form contract may provide that the marketing
7-6 association may:
7-7 (1) sell or resell its members' gas production with or
7-8 without taking title to the gas; and
7-9 (2) pay to its members the resale price less necessary
7-10 expenses.
7-11 (c) The expenses that may be deducted from the resale price
7-12 under Subsection (b) include:
7-13 (1) sales, overhead, and other expenses;
7-14 (2) interest on preferred stock, not exceeding eight
7-15 percent a year;
7-16 (3) interest on common stock, not exceeding eight
7-17 percent a year; and
7-18 (4) reserves, including reserves for redeeming any
7-19 stock issued.
7-20 (d) A marketing association's bylaws and marketing contract
7-21 form may:
7-22 (1) fix as liquidated damages specific amounts to be
7-23 paid by a member if the member breaches the marketing contract
7-24 regarding the sale, delivery, or withholding of gas; and
7-25 (2) provide that the member will pay all costs,
7-26 premiums for bonds, expenses, and fees if the association brings an
7-27 action on the contract.
8-1 Sec. 104.026. PERSONS BOUND BY AGREEMENT. An agreement
8-2 under this chapter does not bind a landowner, royalty owner,
8-3 lessor, lessee, overriding royalty owner, or any other person who
8-4 does not execute the agreement or cause it to be executed on the
8-5 person's behalf. The agreement binds only the persons who execute
8-6 it, or on whose behalf the agreement is executed by a duly
8-7 authorized agent, and the persons' heirs, successors, assigns, and
8-8 legal representatives. A person may not be compelled or required
8-9 to enter into an agreement under this chapter, but shall be allowed
8-10 to enter into an agreement on a nondiscriminatory basis.
8-11 Sec. 104.027. COMMISSION APPROVAL. An agreement for the
8-12 cooperative marketing of gas by members is not legal or effective
8-13 until the commission finds after application, notice, and hearing
8-14 that the agreement:
8-15 (1) is appropriate and necessary to accomplish the
8-16 regulatory policies and objectives of this chapter;
8-17 (2) is in the interest of the public welfare as being
8-18 reasonably necessary to help prevent waste, protect correlative
8-19 rights, and promote the conservation of oil or gas or both; and
8-20 (3) enhances the efficient marketing of Texas gas
8-21 without permitting anticompetitive acts that do not further the
8-22 regulatory policies and objectives of this chapter.
8-23 Sec. 104.028. COMMISSION REGULATION. (a) An agreement
8-24 executed under this chapter is subject to any valid order or rule
8-25 of the commission relating to the setting of allowables, proration,
8-26 conservation, or other matters within the authority of the
8-27 commission, whether adopted before or after the execution of the
9-1 agreement.
9-2 (b) The commission may provide, on such terms and conditions
9-3 as it establishes by regulation, for the operation of a statewide
9-4 gas marketing data clearinghouse to assist any marketing
9-5 association created under this chapter.
9-6 (c) In furtherance of its regulatory authority under this
9-7 chapter, the commission may provide by regulation for the maximum
9-8 and minimum prices to be charged from time to time for gas sold by
9-9 or through a marketing association. Except for good cause shown on
9-10 application, notice, and hearing, a marketing agreement may not
9-11 provide for pricing that conflicts with any pricing provisions
9-12 established by the commission under this subsection.
9-13 Sec. 104.029. PROHIBITED PROVISIONS. (a) An agreement
9-14 authorized by this chapter may not attempt to provide for or limit
9-15 the amount of production of oil or gas by any member, unless
9-16 authorized by the commission.
9-17 (b) An agreement authorized by this chapter may not provide
9-18 directly or indirectly for the cooperative refining of crude
9-19 petroleum, distillate, condensate, or gas or a by-product of crude
9-20 petroleum, distillate, condensate, or gas. The extraction of
9-21 liquid hydrocarbons from gas, and the separation of the liquid
9-22 hydrocarbons into propanes, butanes, ethanes, distillate,
9-23 condensate, and natural gasoline, without any additional
9-24 processing, is not considered to be refining.
9-25 (c) An agreement authorized by this chapter may not provide
9-26 for the cooperative marketing of crude petroleum, condensate, or
9-27 distillate or a by-product of crude petroleum, condensate, or
10-1 distillate.
10-2 (Sections 104.030-104.040 reserved for expansion
10-3 SUBCHAPTER C. PUBLIC LAND
10-4 Sec. 104.041. AUTHORITY OF COMMISSIONER OF GENERAL LAND
10-5 OFFICE. Subject to the approval specified in Section 104.042, the
10-6 commissioner of the General Land Office, on behalf of the state or
10-7 of any fund belonging to the state, may execute contracts
10-8 committing to the agreements declared lawful by this chapter:
10-9 (1) the royalty interests in oil or gas or both
10-10 reserved by law to the state or any fund of the state in any
10-11 patent, or any contract of sale, or under the terms of any oil and
10-12 gas lease lawfully issued by an official, board, agent, agency, or
10-13 authority of the state; or
10-14 (2) the free royalty interests, whether leased or
10-15 unleased, reserved to the state under Section 51.054 or 51.201.
10-16 Sec. 104.042. NECESSARY APPROVAL BY OTHER PERSONS AND STATE
10-17 AGENCIES. (a) The School Land Board must approve an agreement
10-18 that commits:
10-19 (1) the royalty interests in land set apart by the
10-20 constitution and laws of this state for the permanent free school
10-21 fund and the several asylum funds, in river beds, inland lakes, and
10-22 channels, and the area within tidewater limits, including islands,
10-23 lakes, bays, inlets, marshes, reefs, and the bed of the sea; or
10-24 (2) the free royalty interests, whether leased or
10-25 unleased, reserved to the state under Section 51.054 or 51.201.
10-26 (b) An agreement that covers land leased for oil and gas
10-27 under Subchapter F, Chapter 52, must be executed by the owners of
11-1 the soil.
11-2 (c) An agreement that commits the royalty interests in land
11-3 or areas other than those covered by Subsections (a) and (b) must
11-4 be approved by the board, official, agent, agency, or authority of
11-5 the state vested with authority to lease or to approve the leasing
11-6 of the land or areas for oil and gas.
11-7 (Sections 104.043-104.060 reserved for expansion
11-8 SUBCHAPTER D. INCORPORATION
11-9 Sec. 104.061. INCORPORATORS. Five or more producers may
11-10 form a marketing association under this chapter.
11-11 Sec. 104.062. EXECUTION OF ARTICLES OF INCORPORATION. (a)
11-12 Each marketing association shall prepare and file articles of
11-13 incorporation signed by each incorporator.
11-14 (b) One of the incorporators shall acknowledge the articles
11-15 before an officer authorized by the laws of this state to take and
11-16 certify acknowledgements of deeds and conveyances.
11-17 Sec. 104.063. CONTENTS OF ARTICLES OF INCORPORATION. (a)
11-18 The articles of incorporation must state:
11-19 (1) the name of the marketing association;
11-20 (2) the term of existence, if it is limited;
11-21 (3) the purpose for which the association is formed;
11-22 (4) the location and street address of the
11-23 association's principal place of business;
11-24 (5) the number of directors; and
11-25 (6) the term of office of each director.
11-26 (b) If the marketing association is organized without
11-27 capital stock, the articles must state whether property rights and
12-1 interests of each member are equal or unequal and, if unequal, the
12-2 general rules applicable to all members by which the property
12-3 rights and interests of each are determined and fixed.
12-4 (c) If the marketing association is organized with capital
12-5 stock, the articles must state:
12-6 (1) the amount of capital stock authorized;
12-7 (2) the number of shares authorized;
12-8 (3) the par value of the shares; and
12-9 (4) if preferred stock is to be issued:
12-10 (A) the number of shares of common stock;
12-11 (B) the number of shares of preferred stock;
12-12 (C) the rights, preferences, and privileges
12-13 granted; and
12-14 (D) the conditions under which the association
12-15 may redeem the preferred stock.
12-16 Sec. 104.064. FILING OF ARTICLES OF INCORPORATION. (a) The
12-17 incorporators shall file the articles of incorporation in
12-18 accordance with the general corporation laws of this state.
12-19 (b) The incorporators shall file a certified copy of the
12-20 articles with the commission.
12-21 (c) If the marketing association is formed with capital
12-22 stock, the incorporators are not required to obtain subscriptions
12-23 or payment for any part of the association's capital stock as a
12-24 prerequisite to filing the articles.
12-25 Sec. 104.065. EFFECT OF FILING ARTICLES OF INCORPORATION.
12-26 When the articles of incorporation are filed with the secretary of
12-27 state, all courts shall receive the articles or a certified copy of
13-1 the articles as prima facie evidence of:
13-2 (1) facts stated in the articles; and
13-3 (2) compliance with requirements for incorporation
13-4 under this chapter.
13-5 Sec. 104.066. AMENDMENT OF ARTICLES OF INCORPORATION. (a)
13-6 A marketing association may amend its articles of incorporation at
13-7 any regular meeting of the association or at a special meeting for
13-8 that purpose at which at least 10 percent of the members are voting
13-9 in person or by proxy or mail.
13-10 (b) An amendment must first be approved by two-thirds of the
13-11 directors and then, except as provided by Subsection (c), adopted
13-12 by:
13-13 (1) a simple majority vote if 50 percent or more of
13-14 the members vote in person or by proxy or mail;
13-15 (2) a two-thirds majority vote if less than 50 percent
13-16 but 25 percent or more of the members vote in person or by proxy or
13-17 mail; or
13-18 (3) a three-fourths majority vote if less than 25
13-19 percent but 10 percent or more of the members vote in person or by
13-20 proxy or mail.
13-21 (c) An amendment of the rules required by Section 104.063(b)
13-22 for determining the property rights and interests of members of a
13-23 marketing association formed without capital stock may be adopted
13-24 by a vote or written consent of two-thirds of the members who are
13-25 present at a meeting of the association at which a quorum is
13-26 present or who are voting by proxy or mail as prescribed by an
13-27 association bylaw.
14-1 (d) After an amendment is adopted, the amendment shall be
14-2 filed in accordance with the general corporation laws of this
14-3 state.
14-4 (Sections 104.067-104.080 reserved for expansion
14-5 SUBCHAPTER E. BYLAWS
14-6 Sec. 104.081. ADOPTION. (a) A marketing association shall
14-7 adopt bylaws before the 31st day after the date the articles of
14-8 incorporation are filed with the secretary of state.
14-9 (b) The initial bylaws may be adopted by a two-thirds vote
14-10 of the incorporating directors and:
14-11 (1) a simple majority vote, if 50 percent or more of
14-12 the members vote in person or by proxy or mail;
14-13 (2) a two-thirds majority vote, if less than 50
14-14 percent but 25 percent or more of the members vote in person or by
14-15 proxy or mail; or
14-16 (3) a three-fourths majority vote, if less than 25
14-17 percent but 10 percent or more of the members vote in person or by
14-18 proxy or mail.
14-19 Sec. 104.082. CONTENTS. The bylaws may provide for one or
14-20 more of the following:
14-21 (1) the time, place, and manner of calling and
14-22 conducting meetings of the marketing association;
14-23 (2) the number and qualifications of the members;
14-24 (3) the number of members constituting a quorum;
14-25 (4) the right of members to vote by proxy, by mail, or
14-26 both and the conditions, method, and effects of the vote;
14-27 (5) the method by which a member that is an
15-1 association may cast its vote;
15-2 (6) the number of directors constituting a quorum;
15-3 (7) the qualifications, compensation, duties, and
15-4 terms of directors and officers;
15-5 (8) the time of the election of directors and officers
15-6 and the method of giving notice of the election;
15-7 (9) the penalties for violations of the bylaws;
15-8 (10) the amount of entrance, organization, and
15-9 membership fees, if any, the method of collecting the fees, and the
15-10 purposes for which the association must use the fees;
15-11 (11) the amount, if any, that each member must pay for
15-12 the association's cost of conducting business;
15-13 (12) the amount that each member is required to pay
15-14 for services rendered to the member by the association, the time of
15-15 payment, and the method of collecting the payment;
15-16 (13) the marketing contract between the association
15-17 and its members;
15-18 (14) the requirements for ownership of common stock;
15-19 (15) the time and method by which a member may
15-20 withdraw from the association or may assign or transfer common
15-21 stock;
15-22 (16) the method of assignment and transfer of a
15-23 member's interest or shares of common stock;
15-24 (17) the time and conditions on which membership
15-25 ceases;
15-26 (18) the automatic suspension of a member's rights if
15-27 the member ceases to be eligible for membership;
16-1 (19) the method and effect of expulsion of a member;
16-2 (20) the purchase by the association of a member's
16-3 interest on the death, withdrawal, or expulsion of the member, on
16-4 forfeiture of a membership, or at the option of the association;
16-5 and
16-6 (21) the method by which the value of a member's
16-7 interest is determined by conclusive appraisal by the association's
16-8 board of directors.
16-9 (Sections 104.083-104.100 reserved for expansion
16-10 SUBCHAPTER F. MEMBERSHIP CERTIFICATES AND STOCK
16-11 Sec. 104.101. STOCK. A marketing association may be
16-12 organized with or without capital stock.
16-13 Sec. 104.102. ISSUANCE OF MEMBERSHIP CERTIFICATES. When a
16-14 member of a marketing association organized without capital stock
16-15 has paid the membership fee in full, the association shall issue to
16-16 the member a certificate of membership.
16-17 Sec. 104.103. ISSUANCE OF SHARES. (a) Subject to this
16-18 section, a marketing association organized with capital stock may
16-19 from time to time sell and issue shares of capital stock in the
16-20 manner and under the terms prescribed by its bylaws.
16-21 (b) A marketing association may issue common stock only to a
16-22 person who satisfies the membership requirements prescribed by
16-23 Section 104.121.
16-24 (c) A marketing association may not sell and issue shares of
16-25 preferred stock to a person who is not a member of the association
16-26 unless the association first complies with The Securities Act
16-27 (Article 581-1 et seq., Vernon's Texas Civil Statutes).
17-1 (d) A marketing association may not issue shares of stock to
17-2 a member until the member has fully paid for the shares.
17-3 (e) A marketing association may accept promissory notes of
17-4 members as full or partial payment for stock. The association
17-5 shall hold the stock as security for payment of the note. The
17-6 association's retention of the stock does not affect the member's
17-7 right to vote.
17-8 Sec. 104.104. COMMON STOCK. (a) A stockholder may not own
17-9 more than five percent of a marketing association's issued common
17-10 stock. A marketing association by its bylaws may limit the amount
17-11 of common stock that one stockholder may own to an amount of less
17-12 than five percent of the issued common stock.
17-13 (b) At any time, except when the association's debts exceed
17-14 50 percent of its assets, a marketing association may purchase its
17-15 common stock at the book value conclusively determined by its board
17-16 of directors and pay cash for the stock within one year thereafter.
17-17 (c) A person may not transfer common stock of a marketing
17-18 association to a person who does not produce gas handled by the
17-19 association. The association shall state this restriction in its
17-20 bylaws and shall print the restriction on each common stock
17-21 certificate.
17-22 Sec. 104.105. PREFERRED STOCK. (a) A marketing association
17-23 organized with capital stock may issue preferred stock with or
17-24 without the right to vote.
17-25 (b) A marketing association may redeem preferred stock on
17-26 conditions provided by the association's articles of incorporation
17-27 and printed on the face of the stock certificates.
18-1 Sec. 104.106. STOCK ISSUED ON PURCHASE OF PROPERTY. (a) If
18-2 a marketing association organized with capital stock purchases
18-3 stock, property, or an interest in property, it may discharge its
18-4 obligations, in whole or in part, by exchanging for its acquisition
18-5 shares of preferred stock the par value of which equals the value
18-6 of the purchased property as determined by the association's board
18-7 of directors.
18-8 (b) In a transaction described by Subsection (a), the
18-9 transfer of the purchased property to the marketing association is
18-10 considered payment in cash for the issued shares of preferred
18-11 stock.
18-12 (Sections 104.107-104.120 reserved for expansion
18-13 SUBCHAPTER G. MEMBERS
18-14 Sec. 104.121. MEMBERSHIP. (a) Membership of a marketing
18-15 association is limited to independent producers that produce gas
18-16 that is handled by or through the association, affected landowners
18-17 and royalty owners, lessors, lessees, and overriding royalty owners
18-18 of the gas.
18-19 (b) A marketing association shall admit members under terms
18-20 and conditions prescribed in its bylaws, provided that membership
18-21 shall be made available to eligible landowners, royalty owners,
18-22 lessors, lessees, and overriding royalty owners on a
18-23 nondiscriminatory basis.
18-24 (c) If a member of a marketing association organized without
18-25 capital stock is not an individual, the member may authorize in
18-26 writing an individual, an associate officer, or one of its members
18-27 to act for it.
19-1 Sec. 104.122. NEW MEMBERS. (a) A marketing association
19-2 organized without capital stock may admit new members.
19-3 (b) If the property rights of the marketing association's
19-4 members are unequal, a new member is entitled to share the property
19-5 of the association with the other members in accordance with the
19-6 general rules stated in the articles of incorporation.
19-7 Sec. 104.123. MEETINGS. (a) As prescribed by its bylaws, a
19-8 marketing association annually shall hold one or more regular
19-9 meetings of its members.
19-10 (b) The board of directors may call a special meeting of the
19-11 marketing association at any time.
19-12 (c) If at any time 10 percent or more of the members file
19-13 with the board of directors a petition demanding a special meeting
19-14 of the marketing association and stating the specific business to
19-15 be considered at the meeting, the board shall call the meeting.
19-16 Sec. 104.124. NOTICE OF MEETINGS. Not later than the 10th
19-17 day before the date of the meeting of a marketing association, the
19-18 association shall:
19-19 (1) mail to each member notice of the meeting and a
19-20 statement of the purpose of the meeting; or
19-21 (2) if the bylaws so provide, publish notice of the
19-22 meeting in a newspaper of general circulation in the area in which
19-23 the association's principal place of business is located.
19-24 Sec. 104.125. VOTING. (a) A member of a marketing
19-25 association is entitled to one vote.
19-26 (b) In accordance with a bylaw adopted under Sections
19-27 104.081 and 104.082, a marketing association may provide for its
20-1 members to vote by proxy or mail.
20-2 Sec. 104.126. TERMINATION OR SUSPENSION OF MEMBERSHIP. In
20-3 accordance with its articles of incorporation or a bylaw adopted
20-4 under Sections 104.081 and 104.082, a marketing association may
20-5 provide for the termination or suspension of membership in the
20-6 association and for the purchase of a member's common or preferred
20-7 stock, if any, and all other property interest in the association.
20-8 Sec. 104.127. LIABILITY OF MEMBERS. Except for debts
20-9 contracted with the association, a member of a marketing
20-10 association is not liable for the debts of the association in an
20-11 amount that exceeds the amount that is unpaid on the member's
20-12 membership fee or subscription to capital stock, including any
20-13 unpaid balance on promissory notes given in payment for the stock.
20-14 (Sections 104.128-104.140 reserved for expansion
20-15 SUBCHAPTER H. ADMINISTRATION
20-16 Sec. 104.141. BOARD OF DIRECTORS. (a) A board of directors
20-17 shall manage a marketing association.
20-18 (b) The board shall be composed of five or more directors
20-19 who are elected by the members of the marketing association.
20-20 (c) Except as provided by Subsection (d), a person must be a
20-21 member of the marketing association to be eligible to serve as a
20-22 director.
20-23 (d) As prescribed by the bylaws of the association that is
20-24 holding the meeting, a marketing association that is a member of
20-25 the association may designate any of its members to vote on behalf
20-26 of the member association or to serve as a director of the
20-27 association holding the meeting.
21-1 Sec. 104.142. OFFICERS. (a) The directors shall elect:
21-2 (1) a president or chairman;
21-3 (2) one or more vice presidents or vice chairmen;
21-4 (3) a secretary; and
21-5 (4) a treasurer.
21-6 (b) To be eligible to serve as president, chairman, vice
21-7 president, or vice chairman, a person must be a director.
21-8 (c) The directors may combine the offices of secretary and
21-9 treasurer as secretary-treasurer.
21-10 (d) A bank or depository may serve as treasurer but is not
21-11 considered to be an officer. If a bank or depository serves as
21-12 treasurer, the secretary shall perform the usual accounting duties
21-13 of the treasurer except that the secretary may deposit money only
21-14 as authorized by the board of directors.
21-15 Sec. 104.143. REMOVAL OF OFFICER OR DIRECTOR. (a) Except
21-16 as provided by Subsection (f), a member of a marketing association
21-17 may initiate removal of an officer or director by filing in writing
21-18 with the association's secretary:
21-19 (1) the charges; and
21-20 (2) a petition that is signed by 10 percent of the
21-21 members and that requests the removal of the officer or director in
21-22 question.
21-23 (b) The members of the marketing association shall vote on
21-24 the removal at the next regular or special meeting of the
21-25 association.
21-26 (c) Before the meeting, the marketing association shall
21-27 inform the officer or director in writing of the charges.
22-1 (d) At the meeting, the marketing association shall give the
22-2 officer or director and the person bringing the charges an
22-3 opportunity to be heard in person or by counsel and to present
22-4 witnesses.
22-5 (e) The marketing association by a majority vote may remove
22-6 the officer or director and fill the vacancy.
22-7 (f) If a marketing association's bylaws provide for the
22-8 election of directors by districts with primary elections in each
22-9 district, the petition for removal of a director must state the
22-10 charges and must be signed by 20 percent of the members residing in
22-11 the district from which the director was elected. The board of
22-12 directors shall call a special meeting of the members residing in
22-13 that district to consider removal of the director. The members in
22-14 that district may remove the director by a majority vote.
22-15 Sec. 104.144. BOND. (a) Each officer, employee, or agent
22-16 who handles money or property of a marketing association or any
22-17 money or property that is under the control or in possession of a
22-18 marketing association shall execute and deliver to the association
22-19 an indemnity bond that indemnifies the association and its members
22-20 against any fraudulent, dishonest, or unlawful act by the bonded
22-21 person and other acts as provided by the association's bylaws.
22-22 (b) If the officers and directors of a marketing association
22-23 fail to require a person to execute a bond as required by
22-24 Subsection (a), each officer and director is personally liable for
22-25 all losses that would have been recovered under the bond if the
22-26 person had been bonded.
22-27 Sec. 104.145. REFERENDUM. (a) On demand of one-third of
23-1 the board of directors, the board shall refer to the entire
23-2 membership of a marketing association for decision at the next
23-3 special or regular meeting any matter than has been approved or
23-4 passed by the board.
23-5 (b) The marketing association may call a special meeting to
23-6 consider the referred matter.
23-7 Sec. 104.146. PERMITS TO DO BUSINESS. (a) Any cooperative
23-8 marketing association incorporated under the laws of another state
23-9 may apply for and be granted a permit to do business in this state.
23-10 The association shall pay as a filing fee the amount required of
23-11 domestic corporations organized for a similar purpose.
23-12 (b) A marketing association is not required to have all or
23-13 part of a paid-up capital to be entitled to a permit under
23-14 Subsection (a).
23-15 (Sections 104.147-104.160 reserved for expansion
23-16 SUBCHAPTER I. REMEDIES
23-17 Sec. 104.161. BREACH OR THREATENED BREACH OF MARKETING
23-18 CONTRACT. (a) If a member breaches or threatens to breach a
23-19 marketing contract, the marketing association may sue and, if
23-20 successful, is entitled to:
23-21 (1) an injunction to prevent further breach of the
23-22 contract; and
23-23 (2) a decree of specific performance of the contract.
23-24 (b) Pending the adjudication of an action filed under
23-25 Subsection (a), the marketing association is entitled to a
23-26 temporary restraining order and preliminary injunction against the
23-27 member if the association files:
24-1 (1) a verified complaint showing the breach or
24-2 threatened breach; and
24-3 (2) sufficient bond.
24-4 Sec. 104.162. INDUCED BREACH OF MARKETING CONTRACT; FALSE
24-5 REPORTS. In a civil suit for damages, a person is liable to a
24-6 marketing association for an amount equal to three times the amount
24-7 of actual damages proven for each offense if the person or, if the
24-8 person is a corporation, an officer or employee of the corporation:
24-9 (1) knowingly induces or attempts to induce a member
24-10 of the association to breach the member's marketing contract with
24-11 the association; or
24-12 (2) maliciously and knowingly spreads false reports
24-13 concerning the finances or management of the association.
24-14 (Sections 104.163-104.180 reserved for expansion
24-15 SUBCHAPTER J. FEES AND REPORTS
24-16 Sec. 104.181. FEES. (a) The fee for filing articles of
24-17 incorporation under this chapter is $10.
24-18 (b) The fee for filing an amendment to the articles of
24-19 incorporation under this chapter is $2.50.
24-20 (c) Each marketing association shall pay to the commission
24-21 an annual license fee of $10. A marketing association is exempt
24-22 from all other franchise or license taxes, except that a marketing
24-23 association is exempt from the franchise tax imposed by Chapter
24-24 171, Tax Code, only if exempted by that chapter.
24-25 Sec. 104.182. ANNUAL REPORT. (a) Each marketing
24-26 association shall file an annual report with the commission. The
24-27 association shall prepare the report on forms furnished by the
25-1 commission.
25-2 (b) The report must contain:
25-3 (1) the name of the marketing association;
25-4 (2) the association's principal place of business;
25-5 (3) a general statement of the association's business
25-6 operations during the fiscal year;
25-7 (4) the amount of paid-up capital stock;
25-8 (5) if the association is a stock association, the
25-9 number of shareholders;
25-10 (6) if the association is a nonstock association, the
25-11 number of members and the amount of membership fees received;
25-12 (7) the total operation expenses for the fiscal year;
25-13 (8) the amount of the association's indebtedness or
25-14 liability; and
25-15 (9) the association's balance sheets.
25-16 SECTION 2. The importance of this legislation and the
25-17 crowded condition of the calendars in both houses create an
25-18 emergency and an imperative public necessity that the
25-19 constitutional rule requiring bills to be read on three several
25-20 days in each house be suspended, and this rule is hereby suspended.