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               A BILL TO BE ENTITLED
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               AN ACT
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            relating to a cause of action for the bad faith washout of an  | 
         
         
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            overriding royalty interest in an oil and gas lease. | 
         
         
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                   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | 
         
         
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                   SECTION 1.  Title 4, Property Code, is amended by adding  | 
         
         
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            Chapter 31 to read as follows: | 
         
         
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            CHAPTER 31.  BAD FAITH WASHOUT OF OVERRIDING ROYALTY INTEREST IN OIL  | 
         
         
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            AND GAS LEASE | 
         
         
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                   Sec. 31.001.  DEFINITIONS.  In this chapter: | 
         
         
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                         (1)  "Bad faith"  means the conscious taking of action  | 
         
         
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            for the purpose of washing out all or part of an overriding royalty  | 
         
         
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            interest. | 
         
         
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                         (2)  "Washout" means the elimination or reduction of an  | 
         
         
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            overriding royalty interest in an oil and gas lease by the  | 
         
         
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            forfeiture or surrender of the oil and gas lease by a lessee or the  | 
         
         
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            lessee's successors or assigns and the subsequent reacquisition of  | 
         
         
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            a lease, or all or part of the mineral estate associated with the  | 
         
         
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            lease, by the lessee or the lessee's successors, assigns,  | 
         
         
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            contractors, or subsidiaries on all or part of the same land, free  | 
         
         
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            of the overriding royalty interest. | 
         
         
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                   Sec. 31.002.  CAUSE OF ACTION FOR BAD FAITH WASHOUT.  A  | 
         
         
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            person may bring a cause of action for a bad faith washout of the  | 
         
         
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            person's overriding royalty interest in an oil and gas lease.  The  | 
         
         
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            person is entitled to a remedy under this chapter if the person  | 
         
         
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            proves by a preponderance of the evidence that: | 
         
         
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                         (1)  the person owned or had a legal right to the  | 
         
         
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            overriding royalty interest; | 
         
         
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                         (2)  the defendant had control over the oil and gas  | 
         
         
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            lease burdened by the overriding royalty interest; | 
         
         
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                         (3)  the defendant caused a washout of the person's  | 
         
         
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            overriding royalty interest; and | 
         
         
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                         (4)  the defendant acted in bad faith by knowingly or  | 
         
         
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            intentionally causing the washout. | 
         
         
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                   Sec. 31.003.  VENUE.  An owner of an overriding royalty  | 
         
         
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            interest in an oil and gas lease may bring an action under this  | 
         
         
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            chapter in a district court of a county in which any part of the  | 
         
         
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            property subject to the oil and gas lease is located. | 
         
         
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                   Sec. 31.004.  REMEDIES; COSTS AND FEES.  (a)  An owner of an  | 
         
         
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            overriding royalty interest who prevails in an action under this  | 
         
         
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            chapter may recover: | 
         
         
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                         (1)  actual damages; | 
         
         
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                         (2)  enforcement of a constructive trust on the oil and  | 
         
         
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            gas lease or mineral estate acquired to accomplish the washout of  | 
         
         
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            the overriding royalty interest; and | 
         
         
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                         (3)  court costs and attorney's fees. | 
         
         
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                   (b)  The remedies provided by this chapter are cumulative of  | 
         
         
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            other remedies provided by common law or statute. | 
         
         
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                   Sec. 31.005.  LIMITATION ON FILING ACTION.  A person must  | 
         
         
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            bring an action under this chapter not later than the second  | 
         
         
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            anniversary of the date the person obtained actual knowledge that  | 
         
         
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            the washout occurred. | 
         
         
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                   SECTION 2.  Chapter 31, Property Code, as added by this Act,  | 
         
         
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            applies only to a washout that occurs on or after the effective date  | 
         
         
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            of this Act.  A washout that occurred before that date is governed  | 
         
         
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            by the law in effect immediately before the effective date of this  | 
         
         
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            Act, and that law is continued in effect for that purpose. | 
         
         
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                   SECTION 3.  This Act takes effect September 1, 2023. | 
         
         
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