By Lewis of Orange                                    H.B. No. 1850
         77R5831 SMH-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to audits regarding oil and gas produced from certain
 1-3     state land.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1. Sections 52.135(b)-(d), Natural Resources Code,
 1-6     are amended to read as follows:
 1-7           (b)  If, after inspection and examination of books, accounts,
 1-8     reports, or other records, the commissioner or his representative
 1-9     determines that additional royalties are due under a lease of state
1-10     land or minerals, the commissioner shall send to the lessee by
1-11     first class [certified] mail[, return receipt requested,] an audit
1-12     billing notice notifying the lessee of such additional royalties,
1-13     and interest and penalty, due and of the reasons for such
1-14     determination.
1-15           (c)  [The lessee shall have 30 days from the date of the
1-16     receipt of such audit billing notice in which to pay such audit
1-17     deficiency assessment or to request a hearing before the
1-18     commissioner or his representative for redetermination of such
1-19     assessment.  A statement of grounds setting out in detail the
1-20     lessee's reasons for disagreement with such assessment and the
1-21     factual and legal grounds on which the claim is based must be
1-22     submitted by a lessee with its request for a hearing. Such hearing
1-23     shall be conducted in accordance with the rules and procedures
1-24     established by the commissioner.]
 2-1           [(d)]  In order to stop the further accrual of penalty or
 2-2     interest, the lessee may pay the additional royalties assessed at
 2-3     any time [after receipt of an audit billing notice].
 2-4           SECTION 2. Sections 52.137, 52.138, and 52.139, Natural
 2-5     Resources Code, are repealed.
 2-6           SECTION 3. (a)  This Act takes effect September 1, 2001.
 2-7           (b)  The change in law made by this Act applies only to an
 2-8     audit deficiency assessment for which an audit billing notice is
 2-9     mailed on or after the effective date of this Act.  An audit
2-10     deficiency assessment for which an audit billing notice was mailed
2-11     before the effective date of this Act is governed by the law in
2-12     effect on the date the audit billing notice was mailed, and that
2-13     law is continued in effect for that purpose.