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.
3-21 * * * * *