1-1     By:  Keffer (Senate Sponsor - Haywood)                H.B. No. 3582
 1-2           (In the Senate - Received from the House May 7, 1999;
 1-3     May 10, 1999, read first time and referred to Committee on Natural
 1-4     Resources; May 14, 1999, reported favorably by the following vote:
 1-5     Yeas 4, Nays 0; May 14, 1999, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to receivers, payors, and lessees under certain mineral
 1-9     leases.
1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11           SECTION 1.  Subchapter F, Chapter 64, Civil Practice and
1-12     Remedies Code, is amended by adding Section 64.093 to read as
1-13     follows:
1-14           Sec. 64.093.  RECEIVER FOR ROYALTY INTERESTS OWNED BY
1-15     NONRESIDENT OR ABSENTEE.  (a)  A district court may appoint a
1-16     receiver for the royalty interest owned by a nonresident or absent
1-17     defendant in an action that:
1-18                 (1)  is brought by a person claiming or owning an
1-19     undivided mineral interest in land in this state or an undivided
1-20     leasehold interest under a mineral lease of land in the state; and
1-21                 (2)  has one or more defendants who have, claim, or own
1-22     an undivided royalty interest in that property.
1-23           (b)  The defendant for whom the receiver is sought must:
1-24                 (1)  be a person whose residence or identity is unknown
1-25     or a nonresident; and
1-26                 (2)  not have paid taxes on the interest or rendered it
1-27     for taxes during the five-year period immediately preceding the
1-28     filing of the action.
1-29           (c)  The plaintiff in the action must allege by verified
1-30     petition and prove that the plaintiff:
1-31                 (1)  has made a diligent but unsuccessful effort to
1-32     locate the defendant; and
1-33                 (2)  will suffer substantial damage or injury unless
1-34     the receiver is appointed.
1-35           (d)  In an action under Subsection (a):
1-36                 (1)  the plaintiff, in the petition, must name the last
1-37     known owner or the last record owner of the interest as defendant;
1-38                 (2)  the plaintiff must serve notice on the defendant
1-39     by publication as provided by the Texas Rules of Civil Procedure;
1-40                 (3)  the court may appoint as receiver the county
1-41     judge, the county clerk, or any other resident of the county in
1-42     which the land is located;
1-43                 (4)  notwithstanding the Texas Rules of Civil
1-44     Procedure, the applicant is not required to post bond; and
1-45                 (5)  the receiver is not required to post bond.
1-46           (e)  A receivership created under this section continues as
1-47     long as the defendant or the defendant's heirs, assigns, or
1-48     personal representatives fail to appear in court in person or by
1-49     agent or attorney to claim the defendant's interest.
1-50           (f)  As ordered by the court, the receiver shall immediately:
1-51                 (1)  ratify a mineral lease executed by a person owning
1-52     an undivided mineral interest in the property;
1-53                 (2)  ratify a pooling agreement executed by a person
1-54     owning an undivided mineral interest in the property or an
1-55     undivided leasehold interest in the property; or
1-56                 (3)  enter into a unitization agreement authorized by
1-57     the Railroad Commission of Texas.
1-58           (g)  A lease ratified by a receiver under this section may
1-59     authorize the lessee to pool and unitize land subject to the lease
1-60     with adjacent land into a unit not to exceed 160 acres for an oil
1-61     well or 640 acres for a gas well plus 10 percent tolerance or into
1-62     a unit that substantially conforms to a larger unit prescribed or
1-63     permitted by governmental rule.  A pooling agreement ratified by a
1-64     receiver under this section may allow a pooled unit not to exceed
 2-1     160 acres for an oil well or 640 acres for a gas well plus 10
 2-2     percent tolerance or into a unit that substantially conforms to a
 2-3     larger unit prescribed or permitted by governmental rule.
 2-4           (h)  The monetary consideration, if any, due for the
 2-5     execution of a ratification, pooling agreement, or unitization
 2-6     agreement by the receiver must be paid to the clerk of the court in
 2-7     which the case is pending before the receiver executes the
 2-8     instrument.  It is, however, recognized that, because
 2-9     ratifications, pooling agreements, and unitization agreements are
2-10     typically entered into in consideration of the future benefits
2-11     accruing to the grantor thereof, an initial monetary consideration
2-12     is not typically paid for the execution of such instruments.  The
2-13     court shall apply the money to the costs accruing in the case and
2-14     retain any balance for the owner of the royalty interest.  Payments
2-15     made at a later time under the lease, pooled unit, or unitization
2-16     agreement shall be paid into the registry of the court and
2-17     impounded for the owner of the royalty interest.
2-18           (i)  This section is cumulative of other laws relating to
2-19     removal of a cloud from title or appointment of a receiver.
2-20           (j)  In this section:
2-21                 (1)  "Mineral lease" includes any lease of oil, gas, or
2-22     other minerals that contains provisions necessary or incident to
2-23     the orderly exploration, development, and recovery of oil, gas, or
2-24     other minerals.
2-25                 (2)  "Leasehold interest" includes ownership created
2-26     under a mineral lease or carved out of a leasehold estate granted
2-27     under a mineral lease, including production payments, overriding
2-28     royalty interests, and working interests.
2-29                 (3)  "Pooling agreement" includes any agreement that
2-30     pools or unitizes land with adjacent land for production of oil,
2-31     gas, or other minerals.
2-32                 (4)  "Royalty interest" includes any interest in the
2-33     lands entitled to share in the production of oil, gas, or other
2-34     minerals that is not required to execute a mineral lease or any
2-35     other instrument in order to vest in the mineral interest owner or
2-36     mineral leasehold interest owner the right and power, as to that
2-37     interest, to develop oil, gas, or other minerals produced solely
2-38     from those lands.
2-39           (k)  To the extent that Subsection (d)(2) conflicts with the
2-40     Texas Rules of Civil Procedure, Subsection (d)(2) controls.
2-41     Notwithstanding Section 22.004, Government Code, the supreme court
2-42     may not amend or adopt rules in conflict with Subsection (d)(2).
2-43           SECTION 2.  Section 53.001, Natural Resources Code, is
2-44     amended by adding Subdivision (4) to read as follows:
2-45                 (4)  "Surface mining" means the mining of minerals by
2-46     removing the overburden lying above the natural deposit of minerals
2-47     and mining directly from the natural deposits that are exposed.
2-48     The term does not include in situ mining activities.
2-49           SECTION 3.  Sections 53.065(b) and (c), Natural Resources
2-50     Code, are amended to read as follows:
2-51           (b)  Except as provided by Subsection (c), under [Under] a
2-52     lease executed under this subchapter on or after September 1, 1987,
2-53     the lessee shall pay:
2-54                 (1)  to the state 80 percent of all bonuses agreed to
2-55     be paid for the lease and 80 percent of all rentals and royalties
2-56     that are payable under the lease; and
2-57                 (2)  [.  The lessee shall pay] to the owner of the
2-58     surface 20 percent of all bonuses agreed to be paid for the lease
2-59     and 20 percent of all rentals and royalties payable under the
2-60     lease.
2-61           (c)  Under a lease executed under this subchapter on or after
2-62     September 1, 1999, for the exploration and production by surface
2-63     mining of coal, lignite, potash, sulphur, thorium, or uranium, the
2-64     lessee shall pay:
2-65                 (1)  to the state 60 percent of all bonuses agreed to
2-66     be paid for the lease and 60 percent of all rentals and royalties
2-67     that are payable under the lease; and
2-68                 (2)  to the owner of the surface 40 percent of all
2-69     bonuses agreed to be paid for the lease and 40 percent of all
 3-1     rentals and royalties payable under the lease.
 3-2           (d)  If production is obtained, the state shall receive not
 3-3     less than one-sixteenth of the value of the minerals produced.
 3-4           SECTION 4.  Subchapter J, Chapter 91, Natural Resources Code,
 3-5     is amended by adding Section 91.408 to read as follows:
 3-6           Sec. 91.408.  INFORMATION FOR PAYEES OF PROCEEDS OF
 3-7     PRODUCTION FROM CERTAIN GAS WELLS.  (a)  A payor of proceeds from
 3-8     the sale of gas produced from a tight formation as defined by
 3-9     Section 29(c)(2)(B), Internal Revenue Code of 1986, annually shall
3-10     furnish the payee a statement providing the information necessary
3-11     to compute the federal income tax credit provided by that section
3-12     for the gas for which payment was made in the preceding year,
3-13     including:
3-14                 (1)  information as described in Section 91.502(1) of
3-15     this code; and
3-16                 (2)  the volume of the gas, measured in:
3-17                       (A)  thousands of cubic feet and heating value;
3-18     or
3-19                       (B)  millions of British thermal units for each
3-20     thousand cubic feet.
3-21           (b)  A payor shall furnish a statement required by Subsection
3-22     (a) not later than March 15 each year.
3-23           SECTION 5.  Section 4 of this Act takes effect September 1,
3-24     1999.
3-25           SECTION 6.  The importance of this legislation and the
3-26     crowded condition of the calendars in both houses create an
3-27     emergency and an imperative public necessity that the
3-28     constitutional rule requiring bills to be read on three several
3-29     days in each house be suspended, and this rule is hereby suspended,
3-30     and that this Act take effect and be in force from and after its
3-31     passage, and it is so enacted.
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