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A BILL TO BE ENTITLED
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AN ACT
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relating to a prohibition against covenants not to compete for |
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independent contractors in connection with oil and gas operations. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 15.50(a), Business & Commerce Code, is |
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amended to read as follows: |
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(a) Notwithstanding Section 15.05 of this code, and subject |
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to any applicable provision of Subsection (b), a covenant not to |
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compete is enforceable if it is ancillary to or part of an otherwise |
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enforceable agreement at the time the agreement is made to the |
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extent that it contains limitations as to time, geographical area, |
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and scope of activity to be restrained that are reasonable and do |
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not impose a greater restraint than is necessary to protect the |
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goodwill or other business interest of the promisee, except as |
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provided by Section 15.501. |
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SECTION 2. Subchapter E, Chapter 15, Business & Commerce |
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Code, is amended by adding Section 15.501 to read as follows: |
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Sec. 15.501. PROHIBITION AGAINST CERTAIN COVENANTS NOT TO |
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COMPETE IN CONNECTION WITH OIL AND GAS OPERATIONS. (a) In this |
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section: |
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(1) "Downstream oil and gas operation" means an |
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activity associated with the processing and refining of oil and gas |
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into petroleum products and the distribution, marketing, and |
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shipping of those products, including safety-related activities. |
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(2) "Midstream oil and gas operation" means an |
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activity associated with the transportation, processing, and |
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storage of oil and gas between the upstream oil and gas operation |
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and the downstream oil and gas operation, including safety-related |
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activities. |
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(3) "Upstream oil and gas operation" means an activity |
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associated with the exploration, development, production, |
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processing, and transportation of oil and gas, including drilling, |
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hydraulic fracture stimulation, completion, maintenance, |
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reworking, recompletion, disposal, plugging and abandonment, |
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secondary and tertiary recovery, and remediation or safety-related |
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activities. |
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(b) An entity engaged in a downstream, midstream, or |
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upstream oil and gas operation may not require an independent |
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contractor with whom the entity contracts to enter into a covenant |
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not to compete that restricts the independent contractor from |
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performing work or providing a service for another entity engaged |
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in a downstream, midstream, or upstream oil and gas operation. |
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(c) A covenant not to compete described by Subsection (b) is |
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void and unenforceable. |
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(d) Section 15.51 does not apply to a covenant not to |
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compete described by Subsection (b). |
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SECTION 3. Section 15.52, Business & Commerce Code, is |
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amended to read as follows: |
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Sec. 15.52. PREEMPTION OF OTHER LAW. The criteria for |
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enforceability of a covenant not to compete provided by Sections |
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[Section] 15.50 and 15.501 of this code and the procedures and |
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remedies in an action to enforce a covenant not to compete provided |
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by Section 15.51 of this code are exclusive and preempt any other |
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criteria for enforceability of a covenant not to compete or |
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procedures and remedies in an action to enforce a covenant not to |
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compete under common law or otherwise. |
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SECTION 4. The change in law made by this Act applies only |
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to a covenant entered into on or after the effective date of this |
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Act. A covenant entered into before the effective date of this Act |
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is governed by the law in effect on the date the covenant was |
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entered into, and the former law is continued in effect for that |
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purpose. |
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SECTION 5. This Act takes effect September 1, 2019. |