1-1     By:  King of Uvalde (Senate Sponsor - Armbrister)      H.B. No. 981
 1-2           (In the Senate - Received from the House April 30, 2001;
 1-3     May 1, 2001, read first time and referred to Committee on Natural
 1-4     Resources; May 10, 2001, reported favorably by the following vote:
 1-5     Yeas 4, Nays 0; May 10, 2001, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to oil and gas royalty reporting standards.
 1-9           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10           SECTION 1. Subchapter L, Chapter 91, Natural Resources Code,
1-11     is amended by adding Section 91.5001 to read as follows:
1-12           Sec. 91.5001.  DEFINITION. In this subchapter, "payor" has
1-13     the meaning assigned by Section 91.401.
1-14           SECTION 2. Sections 91.501-91.506, Natural Resources Code,
1-15     are amended to read as follows:
1-16           Sec. 91.501.  INFORMATION REQUIRED. If payment is made to a
1-17     royalty interest owner from the proceeds derived from the sale of
1-18     oil or gas production pursuant to a division order, lease,
1-19     servitude, or other agreement, the payor [person making the
1-20     payment] shall include the information required by Section 91.502
1-21     [of this code] on the check stub, [or on] an attachment to the
1-22     payment form, or another remittance advice.
1-23           Sec. 91.502.  TYPES OF INFORMATION PROVIDED.  Each check
1-24     stub, [or] attachment to a payment form, or other remittance advice
1-25     must include:
1-26                 (1)  the lease, property, or well name, [or] any lease,
1-27     property, or well identification number used to identify the lease,
1-28     property, or well, and a county and state in which the lease,
1-29     property, or well is located;
1-30                 (2)  the month and year during which the sales occurred
1-31     for which payment is being made;
1-32                 (3)  the total number of barrels of oil or the total
1-33     amount of gas sold;
1-34                 (4)  the price per barrel or per MCF of oil or gas
1-35     sold;
1-36                 (5)  the total amount of state severance and other
1-37     production taxes paid;
1-38                 (6)  the windfall profit tax paid on the owner's
1-39     interest;
1-40                 (7)  any other deductions or adjustments;
1-41                 (8)  the net value of total sales after deductions;
1-42                 (9)  the owner's interest in sales from the lease,
1-43     property, or well expressed as a decimal;
1-44                 (10)  the owner's share of the total value of sales
1-45     before any tax deductions;
1-46                 (11)  the owner's share of the sales value less
1-47     deductions; and
1-48                 (12)  an address and telephone number at which
1-49     additional information regarding the payment may be obtained and
1-50     questions may be answered.
1-51           Sec. 91.503.  LEASE, PROPERTY, OR WELL DESCRIPTION [NAME]. If
1-52     a division order is not provided that includes the information
1-53     required by Section 91.402(c)(1)(B) [lease, property, or well
1-54     identification number is used under Subdivision (1) of Section
1-55     91.502 of this code], the payor [person making the payment] must,
1-56     at a minimum, provide prior to or with the first payment to which
1-57     this subchapter applies the information required by Section
1-58     91.402(c)(1)(B) for the lease, property, or well for which payment
1-59     of proceeds is being reported [name to which the lease, property,
1-60     or well number refers].
1-61           Sec. 91.504.  PROVIDING INFORMATION ABOUT [EXPLANATION OF
1-62     CERTAIN] PAYMENT DEDUCTIONS AND ADJUSTMENTS, HEATING VALUE, OR
1-63     LEASE IDENTIFICATION. (a) If the payor [person making a payment]
1-64     does not explain on the check stub, [or] attachment to the payment
 2-1     form, or other remittance advice, or by a separate mailing,
 2-2     deductions from or adjustments to payments, the payor [person
 2-3     making the payment] must provide an explanation by certified mail
 2-4     not later than the 60th day after the date the payor receives a
 2-5     [on] request from [of] the royalty interest owner.  The royalty
 2-6     interest owner must send the request by certified mail.
 2-7           (b)  If a royalty interest owner requests information by
 2-8     certified mail concerning the heating value of the gas produced or
 2-9     sold from the lease, property, or well in which the owner has an
2-10     interest, the payor must, not later than the 60th day after the
2-11     date the payor receives the request, provide by certified mail:
2-12                 (1)  a copy of the Form G-1 filed with the commission;
2-13     or
2-14                 (2)  a check stub or separate statement that includes
2-15     the information.
2-16           (c)  A royalty interest owner who received a payment from a
2-17     payor during the preceding calendar year may request in writing by
2-18     certified mail that the payor provide a report listing the
2-19     following information for the preceding year:
2-20                 (1)  each lease, property, or well identification
2-21     number;
2-22                 (2)  each lease, property, or well name;
2-23                 (3)  the field name;
2-24                 (4)  the county and state in which the property is
2-25     located; and
2-26                 (5)  the commission lease identification number or
2-27     commingling permit number or any other identification number under
2-28     which the production for the lease, property, or well is being
2-29     reported to the state.
2-30           (d)  A payor who receives a request for information under
2-31     Subsection (c) shall provide the information by certified mail not
2-32     later than the 60th day after the date the payor receives the
2-33     request.
2-34           (e)  At least once every 12 months, a payor shall provide the
2-35     following statement to each royalty interest owner to whom the
2-36     payor makes a payment:
2-37           Section 91.504, Texas Natural Resources Code, gives an
2-38           owner of a royalty interest in oil or gas produced in
2-39           Texas the right to request from a payor information
2-40           about itemized deductions, the heating value of the
2-41           gas, and the Railroad Commission of Texas
2-42           identification number for the lease, property, or well
2-43           that may not have been provided to the royalty interest
2-44           owner.  The request must be in writing and must be made
2-45           by certified mail.  A payor must respond to a request
2-46           regarding itemized deductions, the heating value of the
2-47           gas, or the Railroad Commission of Texas identification
2-48           number by certified mail not later than the 60th day
2-49           after the date the request is received.  Additional
2-50           information regarding production and related
2-51           information may be obtained by contacting the Railroad
2-52           Commission of Texas' Office of Public Assistance or
2-53           accessing the commission's website.
2-54           Sec. 91.505.  PROVIDING OTHER INFORMATION. If a royalty
2-55     interest owner requests information or answers to questions
2-56     concerning a payment made pursuant to this subchapter, other than
2-57     information requested under Section 91.504, and the request is made
2-58     by certified mail, the payor [person making the payment] must
2-59     respond to the request by certified mail not later than 30 days
2-60     after the request is received.
2-61           Sec. 91.506.  EXEMPTION.  If the information required by
2-62     Section 91.502 [of this code] is provided in some other manner on a
2-63     monthly basis, the payor [person making the payment] is not
2-64     required to include the information on the check stub, [or]
2-65     attachment to the payment form, or other remittance advice.
2-66           SECTION 3.  Subchapter L, Chapter 91, Natural Resources Code,
2-67     is amended by adding Section 91.507 to read as follows:
2-68           Sec. 91.507.  ENFORCEMENT. (a)  A royalty interest owner who
2-69     does not receive the information required to be provided under
 3-1     Section 91.502 or 91.503 in a timely manner may send a written
 3-2     request for the information to the payor by certified mail.
 3-3           (b)  Not later than the 60th day after the date the payor
 3-4     receives the written request for information under this section,
 3-5     the payor shall provide the requested information by certified
 3-6     mail.
 3-7           (c)  If a payor fails to provide the requested information
 3-8     within the period specified by Subsection (b), either party may
 3-9     request mediation.
3-10           (d)  If the royalty interest owner makes a written request
3-11     for information under Section 91.504 or this section and the payor
3-12     does not provide the information within the 60-day period, the
3-13     royalty interest owner may bring a civil action against the payor
3-14     to enforce the provisions of Section 91.504 or this section, as
3-15     applicable.  The prevailing party is entitled to recover reasonable
3-16     court costs and attorney's fees.
3-17           SECTION 4.  This Act takes effect January 1, 2002, except
3-18     that Sections 91.501, 91.502, 91.504, and 91.506, Natural Resources
3-19     Code, as amended by this Act, and Section 91.507, Natural Resources
3-20     Code, as added by this Act, take effect September 1, 2002.
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