SRC-DBM H.B. 2853 76(R)   BILL ANALYSIS


Senate Research Center   H.B. 2853
76R11637  AJA-DBy: Bosse (Ellis)
Economic Development
5/6/1999
Engrossed


DIGEST 

Currently, Texas law regulates mutual indemnity provisions in mineral
agreements.  The Texas Oilfield Anti-indemnity Act (Chapter 127, Civil
Practice and Remedies Code) limits a mutual indemnity agreement in a
mineral contract to the extent of coverage and dollar limits of insurance
which each party as indemnitor has agreed to provide in equal amounts to
the other party as indemnitee.  A federal court has interpreted this
statutory language to mean that a contract must provide for equal amounts
of insurance; if it provides for "available" amounts of insurance, the
indemnity agreement is void because it does not conform to the requirements
of the Act.  H.B. 2853 regulates insurance for mutual indemnity obligations
in certain mineral agreements. 


PURPOSE

As proposed, H.B. 2853 regulates insurance for mutual indemnity obligations
in certain mineral agreements. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 127.005(b), Civil Practice and Remedies Code, to
provide that with respect to a mutual indemnity obligation, the indemnity
obligation is limited to the extent of the coverage and dollar limits of
insurance or qualified self-insurance each party as indemnitor has agreed
to obtain for the benefit of the other party as indemnitee, rather than to
provide equal amounts to the other party as indemnitee. 

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