By Keffer                                             H.B. No. 3582
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to receivers, payors, and lessees under certain mineral
 1-3     leases.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subchapter F, Chapter 64, Civil Practice and
 1-6     Remedies Code, is amended by adding Section 64.093 to read as
 1-7     follows:
 1-8           Sec. 64.093.  RECEIVER FOR ROYALTY INTERESTS OWNED BY
 1-9     NONRESIDENT OR ABSENTEE.  (a)  A district court may appoint a
1-10     receiver for the royalty interest owned by a nonresident or absent
1-11     defendant in an action that:
1-12                 (1)  is brought by a person claiming or owning an
1-13     undivided mineral interest in land in this state or an undivided
1-14     leasehold interest under a mineral lease of land in the state; and
1-15                 (2)  has one or more defendants who have, claim, or own
1-16     an undivided royalty interest in that property.
1-17           (b)  The defendant for whom the receiver is sought must:
1-18                 (1)  be a person whose residence or identity is unknown
1-19     or a nonresident; and
1-20                 (2)  not have paid taxes on the interest or rendered it
1-21     for taxes during the five-year period immediately preceding the
1-22     filing of the action.
1-23           (c)  The plaintiff in the action must allege by verified
1-24     petition and prove that the plaintiff:
 2-1                 (1)  has made a diligent but unsuccessful effort to
 2-2     locate the defendant; and
 2-3                 (2)  will suffer substantial damage or injury unless
 2-4     the receiver is appointed.
 2-5           (d)  In an action under Subsection (a):
 2-6                 (1)  the plaintiff, in the petition, must name the last
 2-7     known owner or the last record owner of the interest as defendant;
 2-8                 (2)  the plaintiff must serve notice on the defendant
 2-9     by publication as provided by the Texas Rules of Civil Procedure;
2-10                 (3)  the court may appoint as receiver the county
2-11     judge, the county clerk, or any other resident of the county in
2-12     which the land is located;
2-13                 (4)  notwithstanding the Texas Rules of Civil
2-14     Procedure, the applicant is not required to post bond; and
2-15                 (5)  the receiver is not required to post bond.
2-16           (e)  A receivership created under this section continues as
2-17     long as the defendant or the defendant's heirs, assigns, or
2-18     personal representatives fail to appear in court in person or by
2-19     agent or attorney to claim the defendant's interest.
2-20           (f)  As ordered by the court, the receiver shall immediately:
2-21                 (1)  ratify a mineral lease executed by a person owning
2-22     an undivided mineral interest in the property;
2-23                 (2)  ratify a pooling agreement executed by a person
2-24     owning an undivided mineral interest in the property or an
2-25     undivided leasehold interest in the property; or
2-26                 (3)  enter into a unitization agreement authorized by
2-27     the Railroad Commission of Texas.
 3-1           (g)  A lease ratified by a receiver under this section may
 3-2     authorize the lessee to pool and unitize land subject to the lease
 3-3     with adjacent land into a unit not to exceed 160 acres for an oil
 3-4     well or 640 acres for a gas well plus 10 percent tolerance or into
 3-5     a unit that substantially conforms to a larger unit prescribed or
 3-6     permitted by governmental rule.  A pooling agreement ratified by a
 3-7     receiver under this section may allow a pooled unit not to exceed
 3-8     160 acres for an oil well or 640 acres for a gas well plus 10
 3-9     percent tolerance or into a unit that substantially conforms to a
3-10     larger unit prescribed or permitted by governmental rule.
3-11           (h)  The monetary consideration, if any, due for the
3-12     execution of a ratification, pooling agreement, or unitization
3-13     agreement by the receiver must be paid to the clerk of the court in
3-14     which the case is pending before the receiver executes the
3-15     instrument.  It is, however, recognized that, because
3-16     ratifications, pooling agreements, and unitization agreements are
3-17     typically entered into in consideration of the future benefits
3-18     accruing to the grantor thereof, an initial monetary consideration
3-19     is not typically paid for the execution of such instruments.  The
3-20     court shall apply the money to the costs accruing in the case and
3-21     retain any balance for the owner of the royalty interest.  Payments
3-22     made at a later time under the lease, pooled unit, or unitization
3-23     agreement shall be paid into the registry of the court and
3-24     impounded for the owner of the royalty interest.
3-25           (i)  This section is cumulative of other laws relating to
3-26     removal of a cloud from title or appointment of a receiver.
3-27           (j)  In this section:
 4-1                 (1)  "Mineral lease" includes any lease of oil, gas, or
 4-2     other minerals that contains provisions necessary or incident to
 4-3     the orderly exploration, development, and recovery of oil, gas, or
 4-4     other minerals.
 4-5                 (2)  "Leasehold interest" includes ownership created
 4-6     under a mineral lease or carved out of a leasehold estate granted
 4-7     under a mineral lease, including production payments, overriding
 4-8     royalty interests, and working interests.
 4-9                 (3)  "Pooling agreement" includes any agreement that
4-10     pools or unitizes land with adjacent land for production of oil,
4-11     gas, or other minerals.
4-12                 (4)  "Royalty interest" includes any interest in the
4-13     lands entitled to share in the production of oil, gas, or other
4-14     minerals that is not required to execute a mineral lease or any
4-15     other instrument in order to vest in the mineral interest owner or
4-16     mineral leasehold interest owner the right and power, as to that
4-17     interest, to develop oil, gas, or other minerals produced solely
4-18     from those lands.
4-19           (k)  To the extent that Subsection (d)(2) conflicts with the
4-20     Texas Rules of Civil Procedure, Subsection (d)(2) controls.
4-21     Notwithstanding Section 22.004, Government Code, the supreme court
4-22     may not amend or adopt rules in conflict with Subsection (d)(2).
4-23           SECTION 2.  Section 53.001, Natural Resources Code, is
4-24     amended by adding Subdivision (4) to read as follows:
4-25                 (4)  "Surface mining" means the mining of minerals by
4-26     removing the overburden lying above the natural deposit of minerals
4-27     and mining directly from the natural deposits that are exposed.
 5-1     The term does not include in situ mining activities.
 5-2           SECTION 3.  Sections 53.065(b) and (c), Natural Resources
 5-3     Code, are amended to read as follows:
 5-4           (b)  Except as provided by Subsection (c), under [Under] a
 5-5     lease executed under this subchapter on or after September 1, 1987,
 5-6     the lessee shall pay:
 5-7                 (1)  to the state 80 percent of all bonuses agreed to
 5-8     be paid for the lease and 80 percent of all rentals and royalties
 5-9     that are payable under the lease; and
5-10                 (2)  [.  The lessee shall pay] to the owner of the
5-11     surface 20 percent of all bonuses agreed to be paid for the lease
5-12     and 20 percent of all rentals and royalties payable under the
5-13     lease.
5-14           (c)  Under a lease executed under this subchapter on or after
5-15     September 1, 1999, for the exploration and production by surface
5-16     mining of coal, lignite, potash, sulphur, thorium, or uranium, the
5-17     lessee shall pay:
5-18                 (1)  to the state 60 percent of all bonuses agreed to
5-19     be paid for the lease and 60 percent of all rentals and royalties
5-20     that are payable under the lease; and
5-21                 (2)  to the owner of the surface 40 percent of all
5-22     bonuses agreed to be paid for the lease and 40 percent of all
5-23     rentals and royalties payable under the lease.
5-24           (d)  If production is obtained, the state shall receive not
5-25     less than one-sixteenth of the value of the minerals produced.
5-26           SECTION 4.  Subchapter J, Chapter 91, Natural Resources Code,
5-27     is amended by adding Section 91.408 to read as follows:
 6-1           Sec. 91.408.  INFORMATION FOR PAYEES OF PROCEEDS OF
 6-2     PRODUCTION FROM CERTAIN GAS WELLS.  (a)  A payor of proceeds from
 6-3     the sale of gas produced from a tight formation as defined by
 6-4     Section 29(c)(2)(B), Internal Revenue Code of 1986, annually shall
 6-5     furnish the payee a statement providing the information necessary
 6-6     to compute the federal income tax credit provided by that section
 6-7     for the gas for which payment was made in the preceding year,
 6-8     including:
 6-9                 (1)  information as described in Section 91.502(1) of
6-10     this code; and
6-11                 (2)  the volume of the gas, measured in:
6-12                       (A)  thousands of cubic feet and heating value;
6-13     or
6-14                       (B)  millions of British thermal units for each
6-15     thousand cubic feet.
6-16           (b)  A payor shall furnish a statement required by Subsection
6-17     (a) not later than March 15 each year.
6-18           SECTION 5.  Section 4 of this Act takes effect September 1,
6-19     1999.
6-20           SECTION 6.  The importance of this legislation and the
6-21     crowded condition of the calendars in both houses create an
6-22     emergency and an imperative public necessity that the
6-23     constitutional rule requiring bills to be read on three several
6-24     days in each house be suspended, and this rule is hereby suspended,
6-25     and that this Act take effect and be in force from and after its
6-26     passage, and it is so enacted.