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.