HBA-NIK C.S.H.B. 3582 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3582 By: Keffer Civil Practices 4/11/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Under current law, pooling a nonparticipating royalty interest is prohibited without the written consent of the nonparticipating royalty interest owner. This prevents a unit from being pooled if the identity or location of a nonparticipating royalty interest owner is unknown. C.S.H.B. 3582 a district court to appoint a receiver for a royalty interest that is owned by an absent or unknown royalty owner if a particular action is brought against the royalty owner and if certain requirements are met. In addition, this bill sets out pleading and notice requirements and addresses the receiver's duties regarding ratification, pooling, and unitization agreements. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter F, Chapter 64 Civil Practice and Remedies Code, by adding Section 64.093, as follows: Sec. 64.093. RECEIVER FOR ROYALTY INTERESTS OWNED BY NONRESIDENT OR ABSENTEE. (a) Authorizes a district court to appoint a receiver for the royalty interest owned by a nonresident or absent defendant in an action that is brought by a person claiming or owning an undivided mineral interest in land in this state or an undivided leasehold interest under a mineral lease of land in the state and that has one or more defendants who have, claim, or own an undivided royalty interest in that property. (b) Provides that the defendant for whom the receiver is sought must be a person whose residence or identity is unknown or a nonresident, and who has not paid taxes on the interest or rendered it for taxes during the five-year period immediately preceding the filing of the action. (c) Provides that the plaintiff must allege by verified petition and prove that the plaintiff has made a diligent but unsuccessful effort to locate the defendant and will suffer substantial damage or injury unless the receiver is appointed. (d) Provides that in an action under Subsection (a): (1) the plaintiff must name the last known owner or last record owner of the interest as the defendant in the petition; (2) the plaintiff must serve notice on the defendant by publication pursuant to the Texas Rules of Civil Procedure (TRCP); (3) the court is authorized to appoint specified persons as the receiver; (4) the applicant is not required to post bond; and (5) the receiver is not required to post bond. (e) Provides that a receivership created under this subchapter continues as long as the defendant or the defendant's heirs, assigns, or personal representatives fail to appear in court to claim the interest. (f) Requires the receiver, as ordered by the court, to immediately ratify a mineral lease or pooling agreement or enter into a unitization agreement subject to certain conditions. (g) Authorizes a lease ratified by a receiver under this section to allow the lessee to pool and unitize land subject to the lease with adjacent land into a unit meeting certain specifications. Authorizes a receiver to ratify a pooling agreement to allow a pooled unit which meets certain specifications. (h) Provides that any money consideration for the execution of a ratification, pooling agreement, or unitization agreement by the receiver must be paid to the clerk of the court in which the case is pending before the instrument is executed. Requires the court to apply the money to the costs accruing in the case and to retain any balance for the owner of the royalty interest. Requires payments made at a later time under the lease, pooled unit, or unitization agreement to be paid into the registry of the court and impounded for the owner of the royalty interest. (i) Provides that this section is cumulative of other laws relating to removal of a cloud from title or appointment of a receiver. (j) Defines "mineral lease," "leasehold interest," "pooling agreement," and "royalty interest." (k) Provides that if there is a conflict between Subsection (d)(2) and TRCP, Subsection (d)(2) controls to the extent of the conflict. Prohibits the supreme court from amending or adopting rules in conflict with Subsection (d)(2), notwithstanding Section 22.004, Government Code. SECTION 2. Emergency clause. Effective date: upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 3582 modifies the original bill in SECTION 1 by deleting proposed Section 64.093(a) of the original bill, which stated that the purpose of this section is to encourage the exploration and development of mineral resources. The substitute modifies the original bill by redesignating Subsections (b)-(l) of the original bill to (a)-(k). The substitute modifies the original bill by conforming to Legislative Council format. C.S.H.B. 3582 also modifies the original bill by making conforming and nonsubstantive changes. C.S.H.B. 3582 modifies the original bill by adding SECTION 2 emergency clause.