MBN C.S.H.B. 2981 75(R)BILL ANALYSIS ENERGY RESOURCES C.S.H.B. 2981 By: Junell 4-28-97 Committee Report (Substituted) BACKGROUND Currently, Sections 91.401 et. seq., Natural Resources Code, require payors of oil and gas proceeds to make timely royalty payments. However, these provisions are silent on the issue of notification of a change of payor. Therefore, when a new payor is designated, the royalty owner is often left with no notice and no one to contact if problems or questions arise. PURPOSE H.B. 2981 obligates the payor of oil and gas proceeds to notify the payee of the termination of the payor's obligation to distribute such proceeds. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter J, Chapter 91, Natural Resources Code, by adding Section 91.407 to require that if a change in payor should occur then the payor shall give written notice to each payee, at the most recent known address, to whom the payor distributes oil or gas proceeds, to the most recent known address. States that the payor, upon receipt of the payee's address, must provide notice within the time permitted for payment of proceeds in accordance with Section 91.402. Lists notice requirements. Provides that if the payor fails to give notice the payor is liable for interest at a rate of 2% more than provided by this section. SECTION 2. Effective date: September 1, 1997. SECTION 3. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 1. C.S.H.B. 2981 clarifies that the notice must be given to the payee or the payee's designee at the payee's or designee's most recent address. Adds condition that the payor must provide notice within a time period specified in Section 91.402, upon receipt of payee's address. The substitute changes the information the notice must include. The substitute allows the notice to be given in any writing while deleting the requirement that the notice be sent by certified mail. C.S.H.B. 2981 deletes $1000 penalty for each failure to notify a payee and obligates the payor to pay interest at a rate of 2% more than prescribed in this Section for a failure to notify. SECTION 2. No change. SECTION 3. No change.