By: Bivins S.B. No. 1120
A BILL TO BE ENTITLED
AN ACT
1-1 relating to permitting the creation of gas marketing cooperative
1-2 corporations under the authority of the Railroad Commission of
1-3 Texas and providing a state franchise tax exemption for such
1-4 associations.
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; and
1-17 (3) to provide state regulation of gas marketing
1-18 activities conducted in furtherance of Subdivisions (1) and (2);
1-19 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:
2-1 (1) "Commission" means the Railroad Commission of
2-2 Texas.
2-3 (2) "Gas" means natural gas or casinghead gas.
2-4 (3) "Marketing association" or "gas marketing
2-5 association" means an association organized under this chapter.
2-6 (4) "Member" includes a member of an association
2-7 organized under this chapter without capital stock and a holder of
2-8 common stock of an association under this chapter with capital
2-9 stock.
2-10 (5) "Person" includes natural persons, partnerships of
2-11 two or more persons having a joint or common interest, and
2-12 corporations.
2-13 (6) "Producer" or "independent producer" means any
2-14 person who produces gas in Texas other than a person to whom
2-15 Section 613A(c) of the Internal Revenue Code of 1986 does not apply
2-16 by reason of Section 613A(d)(2) or (4) of that code.
2-17 Sec. 104.003. NONPROFIT ORGANIZATION. Because a marketing
2-18 association is organized not to make money for itself or for its
2-19 members as individuals but only to make money for its members as
2-20 producers, the association is considered to be a nonprofit
2-21 organization.
2-22 Sec. 104.004. APPLICATION OF GENERAL CORPORATION LAWS. The
2-23 general corporation laws of this state apply to marketing
2-24 associations unless those laws conflict with this chapter.
2-25 Sec. 104.005. APPLICABILITY. None of the provisions in this
3-1 chapter impair the power of the commission to prevent waste under
3-2 the oil and gas conservation laws of this state, except as provided
3-3 in Section 104.006, or repeal, modify, or impair any of the
3-4 provisions of Sections 85.002, 85.125, 85.241-85.243,
3-5 85.249-85.252, and 85.381-85.385 or Subchapters C, E, F, and J,
3-6 Chapter 85, relating to oil and gas conservation.
3-7 Sec. 104.006. CONFLICT WITH ANTITRUST ACTS. (a) Agreements
3-8 and operations under agreements that are in accordance with the
3-9 provisions of this chapter, being necessary to improve market
3-10 efficiency and thereby serving to help prevent waste, protect
3-11 correlative rights, and conserve the natural resources of this
3-12 state, shall not be construed to be in violation of Chapter 15,
3-13 Business & Commerce Code.
3-14 (b) If a court finds a conflict between this chapter and
3-15 Chapter 15, Business & Commerce Code, this chapter is intended as a
3-16 reasonable exception to that law, necessary for the public
3-17 interests stated in Subsection (a).
3-18 (c) If a court finds that a conflict exists between this
3-19 chapter and Chapter 15, Business & Commerce Code, and finds that
3-20 this chapter is not a reasonable exception to Chapter 15, Business
3-21 & Commerce Code, it is the intent of the legislature that this
3-22 chapter, or any conflicting portion of it, shall be declared
3-23 invalid rather than Chapter 15, Business & Commerce Code, or any
3-24 portion of it, being declared invalid.
3-25 (Sections 104.007-104.020 reserved for expansion
4-1 SUBCHAPTER B. PURPOSE AND POWERS
4-2 Sec. 104.021. PURPOSE. A gas marketing association may
4-3 engage in any activity in connection with:
4-4 (1) the selling, transporting, or storing of gas that
4-5 is produced and delivered to it by its members; or
4-6 (2) the purchase, hiring, or use by its members of
4-7 supplies, machinery, or equipment directly related to the
4-8 production, transmission, storage, or marketing of gas or in the
4-9 financing of those activities.
4-10 Sec. 104.022. RESTRICTIONS. (a) A gas marketing
4-11 association shall be operated for the mutual benefit of its members
4-12 as gas producers and shall conform to one or both of the following
4-13 requirements:
4-14 (1) a member of the association may not have more than
4-15 one vote based on the member's ownership of stock or membership
4-16 capital in the association; or
4-17 (2) the association may not pay dividends on stock or
4-18 membership capital in excess of eight percent a year.
4-19 (b) A gas marketing association may deal in the gas
4-20 production of nonmembers but is restricted to an amount that is not
4-21 greater than the value of the gas that it handles for its members.
4-22 (c) A person is not eligible to be a member of a gas
4-23 marketing association if that person is a "gas utility," "utility,"
4-24 "affiliated interest," or "affiliate" as defined in Section 1.03,
4-25 Gas Utility Regulatory Act (Article 1446e, Vernon's Texas Civil
5-1 Statutes).
5-2 (d) A person may not be a member of a gas marketing
5-3 association unless the person is:
5-4 (1) an independent producer; or
5-5 (2) a landowner, royalty owner, lessor, lessee, or
5-6 overriding royalty owner in the gas-producing property of the
5-7 independent producer.
5-8 (e) A gas marketing association may not limit the right of
5-9 any member to establish price and volume categories for gas the
5-10 member produces and contracts to sell through the association.
5-11 (f) Unless a higher level of production is permitted to be
5-12 produced and sold by gas marketing associations under applicable
5-13 federal law existing after August 31, 1995, a gas marketing
5-14 association or combination of associations operating under Section
5-15 104.024 may not market in any calendar year more than 25 percent of
5-16 the total volume of natural gas produced in Texas during the
5-17 preceding calendar year.
5-18 Sec. 104.023. GENERAL POWERS. A marketing association may:
5-19 (1) subject to the prior approval of the commission,
5-20 engage in the marketing of gas on behalf of its members;
5-21 (2) borrow money and make advances to its members;
5-22 (3) act as an agent or representative of a member in
5-23 an activity authorized by Subdivision (1) or (2);
5-24 (4) acquire, hold, own, exercise all rights of
5-25 ownership in, sell, transfer, or pledge shares of capital stocks or
6-1 bonds of a corporation or association engaged in an activity
6-2 related to that of the marketing association;
6-3 (5) establish reserves and invest the money in those
6-4 reserves in bonds or other property as provided by the
6-5 association's bylaws;
6-6 (6) buy, hold, and exercise all privileges of
6-7 ownership over real or personal property that is determined by the
6-8 association to be necessary or convenient for, or incidental to,
6-9 conducting and operating its business;
6-10 (7) perform, in or outside this state, acts that are
6-11 necessary, suitable, or proper to accomplish the purposes and
6-12 objectives permitted by this section or that are conducive to or
6-13 expedient for the interest or benefit of the association and may
6-14 contract for the performance of those acts;
6-15 (8) possess and exercise, in or outside this state,
6-16 all powers, rights, and privileges necessary for or incidental to
6-17 the purposes for which the association is organized or the
6-18 activities in which it is engaged; and
6-19 (9) exercise the rights, powers, and privileges that
6-20 are granted by the laws of this state to general corporations and
6-21 that are not inconsistent with this chapter.
6-22 Sec. 104.024. CONTRACTS AND AGREEMENTS WITH OTHER
6-23 ASSOCIATIONS. (a) A marketing association, by resolution of its
6-24 board of directors but subject to prior review by the commission
6-25 for compliance with the regulatory policies and objectives of this
7-1 chapter, may make agreements, contracts, and arrangements with any
7-2 other gas marketing cooperative corporation or association formed
7-3 in this or any other state for the cooperative and more economical
7-4 conduct of its business or a part of its business.
7-5 (b) Two or more marketing associations, jointly or
7-6 separately, may use the same methods and agencies to conduct their
7-7 respective businesses.
7-8 Sec. 104.025. MARKETING CONTRACT. (a) Subject to prior
7-9 commission review for compliance with the regulatory policies and
7-10 objectives of this chapter, a gas marketing association may from
7-11 time to time establish a form of contract with its members to
7-12 market their gas on reasonable terms, including a requirement that
7-13 the members sell during a fixed term all or a specified part of
7-14 their gas production exclusively to or through the association or
7-15 any facilities to be created by the association.
7-16 (b) The form contract may provide that the marketing
7-17 association may:
7-18 (1) sell or resell its members' gas production with or
7-19 without taking title to the gas; and
7-20 (2) pay to its members the resale price less necessary
7-21 expenses.
7-22 (c) The expenses that may be deducted from the resale price
7-23 under Subsection (b) include:
7-24 (1) sales, overhead, and other expenses;
7-25 (2) interest on preferred stock, not exceeding eight
8-1 percent a year;
8-2 (3) interest on common stock, not exceeding eight
8-3 percent a year; and
8-4 (4) reserves, including reserves for redeeming any
8-5 stock issued.
8-6 (d) A marketing association's bylaws and marketing contract
8-7 form may:
8-8 (1) fix as liquidated damages specific amounts to be
8-9 paid by a member if the member breaches the marketing contract
8-10 regarding the sale, delivery, or withholding of gas; and
8-11 (2) provide that the member will pay all costs,
8-12 premiums for bonds, expenses, and fees if the association brings an
8-13 action on the contract.
8-14 Sec. 104.026. PERSONS BOUND BY AGREEMENT. An agreement
8-15 under this chapter does not bind a landowner, royalty owner,
8-16 lessor, lessee, overriding royalty owner, or any other person who
8-17 does not execute the agreement or cause it to be executed on the
8-18 person's behalf. The agreement binds only the persons who execute
8-19 it, or on whose behalf the agreement is executed by a duly
8-20 authorized agent, and the persons' heirs, successors, assigns, and
8-21 legal representatives. A person may not be compelled or required
8-22 to enter into an agreement under this chapter, but shall be allowed
8-23 to enter into an agreement on a nondiscriminatory basis.
8-24 Sec. 104.027. COMMISSION APPROVAL. An agreement for the
8-25 cooperative marketing of gas by members is not legal or effective
9-1 until the commission finds after application, notice, and hearing
9-2 that the agreement:
9-3 (1) is appropriate and necessary to accomplish the
9-4 regulatory policies and objectives of this chapter;
9-5 (2) is in the interest of the public welfare as being
9-6 reasonably necessary to help prevent waste, protect correlative
9-7 rights, and promote the conservation of oil or gas or both; and
9-8 (3) enhances the efficient marketing of Texas gas
9-9 without permitting anticompetitive acts that do not further the
9-10 regulatory policies and objectives of this chapter.
9-11 Sec. 104.028. COMMISSION REGULATION. (a) An agreement
9-12 executed under this chapter is subject to any valid order or rule
9-13 of the commission relating to the setting of allowables, proration,
9-14 conservation, or other matters within the authority of the
9-15 commission, whether adopted before or after the execution of the
9-16 agreement.
9-17 (b) The commission may provide, on such terms and conditions
9-18 as it establishes by regulation, for the operation of a statewide
9-19 gas marketing data clearinghouse to assist any marketing
9-20 association created under this chapter.
9-21 (c) In furtherance of its regulatory authority under this
9-22 chapter, the commission may provide by regulation for the maximum
9-23 and minimum prices to be charged from time to time for gas sold by
9-24 or through a marketing association. Except for good cause shown on
9-25 application, notice, and hearing, a marketing agreement may not
10-1 provide for pricing that conflicts with any pricing provisions
10-2 established by the commission under this subsection.
10-3 Sec. 104.029. PROHIBITED PROVISIONS. (a) An agreement
10-4 authorized by this chapter may not attempt to provide for or limit
10-5 the amount of production of oil or gas by any member, unless
10-6 authorized by the commission.
10-7 (b) An agreement authorized by this chapter may not provide
10-8 directly or indirectly for the cooperative refining of crude
10-9 petroleum, distillate, condensate, or gas or a by-product of crude
10-10 petroleum, distillate, condensate, or gas. The extraction of
10-11 liquid hydrocarbons from gas, and the separation of the liquid
10-12 hydrocarbons into propanes, butanes, ethanes, distillate,
10-13 condensate, and natural gasoline, without any additional
10-14 processing, is not considered to be refining.
10-15 (c) An agreement authorized by this chapter may not provide
10-16 for the cooperative marketing of crude petroleum, condensate, or
10-17 distillate or a by-product of crude petroleum, condensate, or
10-18 distillate.
10-19 (Sections 104.030-104.040 reserved for expansion
10-20 SUBCHAPTER C. PUBLIC LAND
10-21 Sec. 104.041. AUTHORITY OF COMMISSIONER OF GENERAL LAND
10-22 OFFICE. Subject to the approval specified in Section 104.042, the
10-23 commissioner of the General Land Office, on behalf of the state or
10-24 of any fund belonging to the state, may execute contracts
10-25 committing to the agreements declared lawful by this chapter:
11-1 (1) the royalty interests in oil or gas or both
11-2 reserved by law to the state or any fund of the state in any
11-3 patent, or any contract of sale, or under the terms of any oil and
11-4 gas lease lawfully issued by an official, board, agent, agency, or
11-5 authority of the state; or
11-6 (2) the free royalty interests, whether leased or
11-7 unleased, reserved to the state under Section 51.054 or 51.201.
11-8 Sec. 104.042. NECESSARY APPROVAL BY OTHER PERSONS AND STATE
11-9 AGENCIES. (a) The School Land Board must approve an agreement
11-10 that commits:
11-11 (1) the royalty interests in land set apart by the
11-12 constitution and laws of this state for the permanent free school
11-13 fund and the several asylum funds, in river beds, inland lakes, and
11-14 channels, and the area within tidewater limits, including islands,
11-15 lakes, bays, inlets, marshes, reefs, and the bed of the sea; or
11-16 (2) the free royalty interests, whether leased or
11-17 unleased, reserved to the state under Section 51.054 or 51.201.
11-18 (b) An agreement that covers land leased for oil and gas
11-19 under Subchapter F, Chapter 52, must be executed by the owners of
11-20 the soil.
11-21 (c) An agreement that commits the royalty interests in land
11-22 or areas other than those covered by Subsections (a) and (b) must
11-23 be approved by the board, official, agent, agency, or authority of
11-24 the state vested with authority to lease or to approve the leasing
11-25 of the land or areas for oil and gas.
12-1 (Sections 104.043-104.060 reserved for expansion
12-2 SUBCHAPTER D. INCORPORATION
12-3 Sec. 104.061. INCORPORATORS. Five or more producers may
12-4 form a marketing association under this chapter.
12-5 Sec. 104.062. EXECUTION OF ARTICLES OF INCORPORATION.
12-6 (a) Each marketing association shall prepare and file articles of
12-7 incorporation signed by each incorporator.
12-8 (b) One of the incorporators shall acknowledge the articles
12-9 before an officer authorized by the laws of this state to take and
12-10 certify acknowledgements of deeds and conveyances.
12-11 Sec. 104.063. CONTENTS OF ARTICLES OF INCORPORATION.
12-12 (a) The articles of incorporation must state:
12-13 (1) the name of the marketing association;
12-14 (2) the term of existence, if it is limited;
12-15 (3) the purpose for which the association is formed;
12-16 (4) the location and street address of the
12-17 association's principal place of business;
12-18 (5) the number of directors; and
12-19 (6) the term of office of each director.
12-20 (b) If the marketing association is organized without
12-21 capital stock, the articles must state whether property rights and
12-22 interests of each member are equal or unequal and, if unequal, the
12-23 general rules applicable to all members by which the property
12-24 rights and interests of each are determined and fixed.
12-25 (c) If the marketing association is organized with capital
13-1 stock, the articles must state:
13-2 (1) the amount of capital stock authorized;
13-3 (2) the number of shares authorized;
13-4 (3) the par value of the shares; and
13-5 (4) if preferred stock is to be issued:
13-6 (A) the number of shares of common stock;
13-7 (B) the number of shares of preferred stock;
13-8 (C) the rights, preferences, and privileges
13-9 granted; and
13-10 (D) the conditions under which the association
13-11 may redeem the preferred stock.
13-12 Sec. 104.064. FILING OF ARTICLES OF INCORPORATION. (a) The
13-13 incorporators shall file the articles of incorporation in
13-14 accordance with the general corporation laws of this state.
13-15 (b) The incorporators shall file a certified copy of the
13-16 articles with the commission.
13-17 (c) If the marketing association is formed with capital
13-18 stock, the incorporators are not required to obtain subscriptions
13-19 or payment for any part of the association's capital stock as a
13-20 prerequisite to filing the articles.
13-21 Sec. 104.065. EFFECT OF FILING ARTICLES OF INCORPORATION.
13-22 When the articles of incorporation are filed with the secretary of
13-23 state, all courts shall receive the articles or a certified copy of
13-24 the articles as prima facie evidence of:
13-25 (1) facts stated in the articles; and
14-1 (2) compliance with requirements for incorporation
14-2 under this chapter.
14-3 Sec. 104.066. AMENDMENT OF ARTICLES OF INCORPORATION.
14-4 (a) A marketing association may amend its articles of
14-5 incorporation at any regular meeting of the association or at a
14-6 special meeting for that purpose at which at least 10 percent of
14-7 the members are voting in person or by proxy or mail.
14-8 (b) An amendment must first be approved by two-thirds of the
14-9 directors and then, except as provided by Subsection (c), adopted
14-10 by:
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 percent
14-14 but 25 percent or more of the members vote in person or by proxy or
14-15 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 (c) An amendment of the rules required by Section 104.063(b)
14-20 for determining the property rights and interests of members of a
14-21 marketing association formed without capital stock may be adopted
14-22 by a vote or written consent of two-thirds of the members who are
14-23 present at a meeting of the association at which a quorum is
14-24 present or who are voting by proxy or mail as prescribed by an
14-25 association bylaw.
15-1 (d) After an amendment is adopted, the amendment shall be
15-2 filed in accordance with the general corporation laws of this
15-3 state.
15-4 (Sections 104.067-104.080 reserved for expansion
15-5 SUBCHAPTER E. BYLAWS
15-6 Sec. 104.081. ADOPTION. (a) A marketing association shall
15-7 adopt bylaws before the 31st day after the date the articles of
15-8 incorporation are filed with the secretary of state.
15-9 (b) The initial bylaws may be adopted by a two-thirds vote
15-10 of the incorporating directors and:
15-11 (1) a simple majority vote, if 50 percent or more of
15-12 the members vote in person or by proxy or mail;
15-13 (2) a two-thirds majority vote, if less than 50
15-14 percent but 25 percent or more of the members vote in person or by
15-15 proxy or mail; or
15-16 (3) a three-fourths majority vote, if less than 25
15-17 percent but 10 percent or more of the members vote in person or by
15-18 proxy or mail.
15-19 Sec. 104.082. CONTENTS. The bylaws may provide for one or
15-20 more of the following:
15-21 (1) the time, place, and manner of calling and
15-22 conducting meetings of the marketing association;
15-23 (2) the number and qualifications of the members;
15-24 (3) the number of members constituting a quorum;
15-25 (4) the right of members to vote by proxy, by mail, or
16-1 both and the conditions, method, and effects of the vote;
16-2 (5) the method by which a member that is an
16-3 association may cast its vote;
16-4 (6) the number of directors constituting a quorum;
16-5 (7) the qualifications, compensation, duties, and
16-6 terms of directors and officers;
16-7 (8) the time of the election of directors and officers
16-8 and the method of giving notice of the election;
16-9 (9) the penalties for violations of the bylaws;
16-10 (10) the amount of entrance, organization, and
16-11 membership fees, if any, the method of collecting the fees, and the
16-12 purposes for which the association must use the fees;
16-13 (11) the amount, if any, that each member must pay for
16-14 the association's cost of conducting business;
16-15 (12) the amount that each member is required to pay
16-16 for services rendered to the member by the association, the time of
16-17 payment, and the method of collecting the payment;
16-18 (13) the marketing contract between the association
16-19 and its members;
16-20 (14) the requirements for ownership of common stock;
16-21 (15) the time and method by which a member may
16-22 withdraw from the association or may assign or transfer common
16-23 stock;
16-24 (16) the method of assignment and transfer of a
16-25 member's interest or shares of common stock;
17-1 (17) the time and conditions on which membership
17-2 ceases;
17-3 (18) the automatic suspension of a member's rights if
17-4 the member ceases to be eligible for membership;
17-5 (19) the method and effect of expulsion of a member;
17-6 (20) the purchase by the association of a member's
17-7 interest on the death, withdrawal, or expulsion of the member, on
17-8 forfeiture of a membership, or at the option of the association;
17-9 and
17-10 (21) the method by which the value of a member's
17-11 interest is determined by conclusive appraisal by the association's
17-12 board of directors.
17-13 (Sections 104.083-104.100 reserved for expansion
17-14 SUBCHAPTER F. MEMBERSHIP CERTIFICATES AND STOCK
17-15 Sec. 104.101. STOCK. A marketing association may be
17-16 organized with or without capital stock.
17-17 Sec. 104.102. ISSUANCE OF MEMBERSHIP CERTIFICATES. When a
17-18 member of a marketing association organized without capital stock
17-19 has paid the membership fee in full, the association shall issue to
17-20 the member a certificate of membership.
17-21 Sec. 104.103. ISSUANCE OF SHARES. (a) Subject to this
17-22 section, a marketing association organized with capital stock may
17-23 from time to time sell and issue shares of capital stock in the
17-24 manner and under the terms prescribed by its bylaws.
17-25 (b) A marketing association may issue common stock only to a
18-1 person who satisfies the membership requirements prescribed by
18-2 Section 104.121.
18-3 (c) A marketing association may not sell and issue shares of
18-4 preferred stock to a person who is not a member of the association
18-5 unless the association first complies with The Securities Act
18-6 (Article 581-1 et seq., Vernon's Texas Civil Statutes).
18-7 (d) A marketing association may not issue shares of stock to
18-8 a member until the member has fully paid for the shares.
18-9 (e) A marketing association may accept promissory notes of
18-10 members as full or partial payment for stock. The association
18-11 shall hold the stock as security for payment of the note. The
18-12 association's retention of the stock does not affect the member's
18-13 right to vote.
18-14 Sec. 104.104. COMMON STOCK. (a) A stockholder may not own
18-15 more than five percent of a marketing association's issued common
18-16 stock. A marketing association by its bylaws may limit the amount
18-17 of common stock that one stockholder may own to an amount of less
18-18 than five percent of the issued common stock.
18-19 (b) At any time, except when the association's debts exceed
18-20 50 percent of its assets, a marketing association may purchase its
18-21 common stock at the book value conclusively determined by its board
18-22 of directors and pay cash for the stock within one year thereafter.
18-23 (c) A person may not transfer common stock of a marketing
18-24 association to a person who does not produce gas handled by the
18-25 association. The association shall state this restriction in its
19-1 bylaws and shall print the restriction on each common stock
19-2 certificate.
19-3 Sec. 104.105. PREFERRED STOCK. (a) A marketing association
19-4 organized with capital stock may issue preferred stock with or
19-5 without the right to vote.
19-6 (b) A marketing association may redeem preferred stock on
19-7 conditions provided by the association's articles of incorporation
19-8 and printed on the face of the stock certificates.
19-9 Sec. 104.106. STOCK ISSUED ON PURCHASE OF PROPERTY. (a) If
19-10 a marketing association organized with capital stock purchases
19-11 stock, property, or an interest in property, it may discharge its
19-12 obligations, in whole or in part, by exchanging for its acquisition
19-13 shares of preferred stock the par value of which equals the value
19-14 of the purchased property as determined by the association's board
19-15 of directors.
19-16 (b) In a transaction described by Subsection (a), the
19-17 transfer of the purchased property to the marketing association is
19-18 considered payment in cash for the issued shares of preferred
19-19 stock.
19-20 (Sections 104.107-104.120 reserved for expansion
19-21 SUBCHAPTER G. MEMBERS
19-22 Sec. 104.121. MEMBERSHIP. (a) Membership of a marketing
19-23 association is limited to independent producers that produce gas
19-24 that is handled by or through the association, affected landowners
19-25 and royalty owners, lessors, lessees, and overriding royalty owners
20-1 of the gas.
20-2 (b) A marketing association shall admit members under terms
20-3 and conditions prescribed in its bylaws, provided that membership
20-4 shall be made available to eligible landowners, royalty owners,
20-5 lessors, lessees, and overriding royalty owners on a
20-6 nondiscriminatory basis.
20-7 (c) If a member of a marketing association organized without
20-8 capital stock is not an individual, the member may authorize in
20-9 writing an individual, an associate officer, or one of its members
20-10 to act for it.
20-11 Sec. 104.122. NEW MEMBERS. (a) A marketing association
20-12 organized without capital stock may admit new members.
20-13 (b) If the property rights of the marketing association's
20-14 members are unequal, a new member is entitled to share the property
20-15 of the association with the other members in accordance with the
20-16 general rules stated in the articles of incorporation.
20-17 Sec. 104.123. MEETINGS. (a) As prescribed by its bylaws, a
20-18 marketing association annually shall hold one or more regular
20-19 meetings of its members.
20-20 (b) The board of directors may call a special meeting of the
20-21 marketing association at any time.
20-22 (c) If at any time 10 percent or more of the members file
20-23 with the board of directors a petition demanding a special meeting
20-24 of the marketing association and stating the specific business to
20-25 be considered at the meeting, the board shall call the meeting.
21-1 Sec. 104.124. NOTICE OF MEETINGS. Not later than the 10th
21-2 day before the date of the meeting of a marketing association, the
21-3 association shall:
21-4 (1) mail to each member notice of the meeting and a
21-5 statement of the purpose of the meeting; or
21-6 (2) if the bylaws so provide, publish notice of the
21-7 meeting in a newspaper of general circulation in the area in which
21-8 the association's principal place of business is located.
21-9 Sec. 104.125. VOTING. (a) A member of a marketing
21-10 association is entitled to one vote.
21-11 (b) In accordance with a bylaw adopted under Sections
21-12 104.081 and 104.082, a marketing association may provide for its
21-13 members to vote by proxy or mail.
21-14 Sec. 104.126. TERMINATION OR SUSPENSION OF MEMBERSHIP. In
21-15 accordance with its articles of incorporation or a bylaw adopted
21-16 under Sections 104.081 and 104.082, a marketing association may
21-17 provide for the termination or suspension of membership in the
21-18 association and for the purchase of a member's common or preferred
21-19 stock, if any, and all other property interest in the association.
21-20 Sec. 104.127. LIABILITY OF MEMBERS. Except for debts
21-21 contracted with the association, a member of a marketing
21-22 association is not liable for the debts of the association in an
21-23 amount that exceeds the amount that is unpaid on the member's
21-24 membership fee or subscription to capital stock, including any
21-25 unpaid balance on promissory notes given in payment for the stock.
22-1 (Sections 104.128-104.140 reserved for expansion
22-2 SUBCHAPTER H. ADMINISTRATION
22-3 Sec. 104.141. BOARD OF DIRECTORS. (a) A board of directors
22-4 shall manage a marketing association.
22-5 (b) The board shall be composed of five or more directors
22-6 who are elected by the members of the marketing association.
22-7 (c) Except as provided by Subsection (d), a person must be a
22-8 member of the marketing association to be eligible to serve as a
22-9 director.
22-10 (d) As prescribed by the bylaws of the association that is
22-11 holding the meeting, a marketing association that is a member of
22-12 the association may designate any of its members to vote on behalf
22-13 of the member association or to serve as a director of the
22-14 association holding the meeting.
22-15 Sec. 104.142. OFFICERS. (a) The directors shall elect:
22-16 (1) a president or chairman;
22-17 (2) one or more vice presidents or vice chairmen;
22-18 (3) a secretary; and
22-19 (4) a treasurer.
22-20 (b) To be eligible to serve as president, chairman, vice
22-21 president, or vice chairman, a person must be a director.
22-22 (c) The directors may combine the offices of secretary and
22-23 treasurer as secretary-treasurer.
22-24 (d) A bank or depository may serve as treasurer but is not
22-25 considered to be an officer. If a bank or depository serves as
23-1 treasurer, the secretary shall perform the usual accounting duties
23-2 of the treasurer except that the secretary may deposit money only
23-3 as authorized by the board of directors.
23-4 Sec. 104.143. REMOVAL OF OFFICER OR DIRECTOR. (a) Except
23-5 as provided by Subsection (f), a member of a marketing association
23-6 may initiate removal of an officer or director by filing in writing
23-7 with the association's secretary:
23-8 (1) the charges; and
23-9 (2) a petition that is signed by 10 percent of the
23-10 members and that requests the removal of the officer or director in
23-11 question.
23-12 (b) The members of the marketing association shall vote on
23-13 the removal at the next regular or special meeting of the
23-14 association.
23-15 (c) Before the meeting, the marketing association shall
23-16 inform the officer or director in writing of the charges.
23-17 (d) At the meeting, the marketing association shall give the
23-18 officer or director and the person bringing the charges an
23-19 opportunity to be heard in person or by counsel and to present
23-20 witnesses.
23-21 (e) The marketing association by a majority vote may remove
23-22 the officer or director and fill the vacancy.
23-23 (f) If a marketing association's bylaws provide for the
23-24 election of directors by districts with primary elections in each
23-25 district, the petition for removal of a director must state the
24-1 charges and must be signed by 20 percent of the members residing in
24-2 the district from which the director was elected. The board of
24-3 directors shall call a special meeting of the members residing in
24-4 that district to consider removal of the director. The members in
24-5 that district may remove the director by a majority vote.
24-6 Sec. 104.144. BOND. (a) Each officer, employee, or agent
24-7 who handles money or property of a marketing association or any
24-8 money or property that is under the control or in possession of a
24-9 marketing association shall execute and deliver to the association
24-10 an indemnity bond that indemnifies the association and its members
24-11 against any fraudulent, dishonest, or unlawful act by the bonded
24-12 person and other acts as provided by the association's bylaws.
24-13 (b) If the officers and directors of a marketing association
24-14 fail to require a person to execute a bond as required by
24-15 Subsection (a), each officer and director is personally liable for
24-16 all losses that would have been recovered under the bond if the
24-17 person had been bonded.
24-18 Sec. 104.145. REFERENDUM. (a) On demand of one-third of
24-19 the board of directors, the board shall refer to the entire
24-20 membership of a marketing association for decision at the next
24-21 special or regular meeting any matter than has been approved or
24-22 passed by the board.
24-23 (b) The marketing association may call a special meeting to
24-24 consider the referred matter.
24-25 Sec. 104.146. PERMITS TO DO BUSINESS. (a) Any cooperative
25-1 marketing association incorporated under the laws of another state
25-2 may apply for and be granted a permit to do business in this state.
25-3 The association shall pay as a filing fee the amount required of
25-4 domestic corporations organized for a similar purpose.
25-5 (b) A marketing association is not required to have all or
25-6 part of a paid-up capital to be entitled to a permit under
25-7 Subsection (a).
25-8 (Sections 104.147-104.160 reserved for expansion
25-9 SUBCHAPTER I. REMEDIES
25-10 Sec. 104.161. BREACH OR THREATENED BREACH OF MARKETING
25-11 CONTRACT. (a) If a member breaches or threatens to breach a
25-12 marketing contract, the marketing association may sue and, if
25-13 successful, is entitled to:
25-14 (1) an injunction to prevent further breach of the
25-15 contract; and
25-16 (2) a decree of specific performance of the contract.
25-17 (b) Pending the adjudication of an action filed under
25-18 Subsection (a), the marketing association is entitled to a
25-19 temporary restraining order and preliminary injunction against the
25-20 member if the association files:
25-21 (1) a verified complaint showing the breach or
25-22 threatened breach; and
25-23 (2) sufficient bond.
25-24 Sec. 104.162. INDUCED BREACH OF MARKETING CONTRACT; FALSE
25-25 REPORTS. In a civil suit for damages, a person is liable to a
26-1 marketing association for an amount equal to three times the amount
26-2 of actual damages proven for each offense if the person or, if the
26-3 person is a corporation, an officer or employee of the corporation:
26-4 (1) knowingly induces or attempts to induce a member
26-5 of the association to breach the member's marketing contract with
26-6 the association; or
26-7 (2) maliciously and knowingly spreads false reports
26-8 concerning the finances or management of the association.
26-9 (Sections 104.163-104.180 reserved for expansion
26-10 SUBCHAPTER J. FEES AND REPORTS
26-11 Sec. 104.181. FEES. (a) The fee for filing articles of
26-12 incorporation under this chapter is $10.
26-13 (b) The fee for filing an amendment to the articles of
26-14 incorporation under this chapter is $2.50.
26-15 (c) Each marketing association shall pay to the commission
26-16 an annual license fee of $10. A marketing association is exempt
26-17 from all other franchise or license taxes, except that a marketing
26-18 association is exempt from the franchise tax imposed by Chapter
26-19 171, Tax Code, only if exempted by that chapter.
26-20 Sec. 104.182. ANNUAL REPORT. (a) Each marketing
26-21 association shall file an annual report with the commission. The
26-22 association shall prepare the report on forms furnished by the
26-23 commission.
26-24 (b) The report must contain:
26-25 (1) the name of the marketing association;
27-1 (2) the association's principal place of business;
27-2 (3) a general statement of the association's business
27-3 operations during the fiscal year;
27-4 (4) the amount of paid-up capital stock;
27-5 (5) if the association is a stock association, the
27-6 number of shareholders;
27-7 (6) if the association is a nonstock association, the
27-8 number of members and the amount of membership fees received;
27-9 (7) the total operation expenses for the fiscal year;
27-10 (8) the amount of the association's indebtedness or
27-11 liability; and
27-12 (9) the association's balance sheets.
27-13 SECTION 2. Subtitle B, Title 3, Tax Code is amended by
27-14 adding Section 171.087 to read as follows:
27-15 Section 171.087. Exemption--Marketing Association.
27-16 A marketing association created pursuant to Chapter 104 of
27-17 the Natural Resources Code is exempted from the franchise tax.
27-18 SECTION 3. The importance of this legislation and the
27-19 crowded condition of the calendars in both houses create an
27-20 emergency and an imperative public necessity that the
27-21 constitutional rule requiring bills to be read on three several
27-22 days in each house be suspended, and this rule is hereby suspended.