76R9926 MI-F By Keffer H.B. No. 3582 Substitute the following for H.B. No. 3582: By Smithee C.S.H.B. No. 3582 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the appointment of a receiver for a royalty interest. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Subchapter F, Chapter 64, Civil Practice and 1-5 Remedies Code, is amended by adding Section 64.093 to read as 1-6 follows: 1-7 Sec. 64.093. RECEIVER FOR ROYALTY INTERESTS OWNED BY 1-8 NONRESIDENT OR ABSENTEE. (a) A district court may appoint a 1-9 receiver for the royalty interest owned by a nonresident or absent 1-10 defendant in an action that: 1-11 (1) is brought by a person claiming or owning an 1-12 undivided mineral interest in land in this state or an undivided 1-13 leasehold interest under a mineral lease of land in the state; and 1-14 (2) has one or more defendants who have, claim, or own 1-15 an undivided royalty interest in that property. 1-16 (b) The defendant for whom the receiver is sought must: 1-17 (1) be a person whose residence or identity is unknown 1-18 or a nonresident; and 1-19 (2) not have paid taxes on the interest or rendered it 1-20 for taxes during the five-year period immediately preceding the 1-21 filing of the action. 1-22 (c) The plaintiff in the action must allege by verified 1-23 petition and prove that the plaintiff: 1-24 (1) has made a diligent but unsuccessful effort to 2-1 locate the defendant; and 2-2 (2) will suffer substantial damage or injury unless 2-3 the receiver is appointed. 2-4 (d) In an action under Subsection (a): 2-5 (1) the plaintiff, in the petition, must name the last 2-6 known owner or the last record owner of the interest as defendant; 2-7 (2) the plaintiff must serve notice on the defendant 2-8 by publication as provided by the Texas Rules of Civil Procedure; 2-9 (3) the court may appoint as receiver the county 2-10 judge, the county clerk, or any other resident of the county in 2-11 which the land is located; 2-12 (4) notwithstanding the Texas Rules of Civil 2-13 Procedure, the applicant is not required to post bond; and 2-14 (5) the receiver is not required to post bond. 2-15 (e) A receivership created under this section continues as 2-16 long as the defendant or the defendant's heirs, assigns, or 2-17 personal representatives fail to appear in court in person or by 2-18 agent or attorney to claim the defendant's interest. 2-19 (f) As ordered by the court, the receiver shall immediately: 2-20 (1) ratify a mineral lease executed by a person owning 2-21 an undivided mineral interest in the property; 2-22 (2) ratify a pooling agreement executed by a person 2-23 owning an undivided mineral interest in the property or an 2-24 undivided leasehold interest in the property; or 2-25 (3) enter into a unitization agreement authorized by 2-26 the Railroad Commission of Texas. 2-27 (g) A lease ratified by a receiver under this section may 3-1 authorize the lessee to pool and unitize land subject to the lease 3-2 with adjacent land into a unit not to exceed 160 acres for an oil 3-3 well or 640 acres for a gas well plus 10 percent tolerance or into 3-4 a unit that substantially conforms to a larger unit prescribed or 3-5 permitted by governmental rule. A pooling agreement ratified by a 3-6 receiver under this section may allow a pooled unit not to exceed 3-7 160 acres for an oil well or 640 acres for a gas well plus 10 3-8 percent tolerance or into a unit that substantially conforms to a 3-9 larger unit prescribed or permitted by governmental rule. 3-10 (h) Any money consideration due for the execution of a 3-11 ratification, pooling agreement, or unitization agreement by the 3-12 receiver must be paid to the clerk of the court in which the case 3-13 is pending before the receiver executes the instrument. The court 3-14 shall apply the money to the costs accruing in the case and retain 3-15 any balance for the owner of the royalty interest. Payments made 3-16 at a later time under the lease, pooled unit, or unitization 3-17 agreement shall be paid into the registry of the court and 3-18 impounded for the owner of the royalty interest. 3-19 (i) This section is cumulative of other laws relating to 3-20 removal of a cloud from title or appointment of a receiver. 3-21 (j) In this section: 3-22 (1) "Mineral lease" includes any lease of oil, gas, or 3-23 other minerals that contains provisions necessary or incident to 3-24 the orderly exploration, development, and recovery of oil, gas, or 3-25 other minerals. 3-26 (2) "Leasehold interest" includes ownership created 3-27 under a mineral lease or carved out of a leasehold estate granted 4-1 under a mineral lease, including production payments, overriding 4-2 royalty interests, and working interests. 4-3 (3) "Pooling agreement" includes any agreement that 4-4 pools or unitizes land with adjacent land for production of oil, 4-5 gas, or other minerals. 4-6 (4) "Royalty interest" includes any interest in the 4-7 lands entitled to share in the production of oil, gas, or other 4-8 minerals that is not required to execute a mineral lease or any 4-9 other instrument in order to vest in the mineral interest owner or 4-10 mineral leasehold interest owner the right and power, as to that 4-11 interest, to develop oil, gas, or other minerals produced solely 4-12 from those lands. 4-13 (k) To the extent that Subsection (d)(2) conflicts with the 4-14 Texas Rules of Civil Procedure, Subsection (d)(2) controls. 4-15 Notwithstanding Section 22.004, Government Code, the supreme court 4-16 may not amend or adopt rules in conflict with Subsection (d)(2). 4-17 SECTION 2. The importance of this legislation and the 4-18 crowded condition of the calendars in both houses create an 4-19 emergency and an imperative public necessity that the 4-20 constitutional rule requiring bills to be read on three several 4-21 days in each house be suspended, and this rule is hereby suspended, 4-22 and that this Act take effect and be in force from and after its 4-23 passage, and it is so enacted.