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.