HBA-ATS C.S.H.B. 3482 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3482 By: King, Tracy Civil Practices 5/6/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Under Texas law, the applicable statute of limitations in a contract action is four years. The cause in a breach of contract case accrues when the breach occurs. Discovering when a breach occurs is difficult in any case where the factual circumstances may make it tough for the plaintiff to know if the defendant has breached a contract. This is the case for the lessors and other royalty owners of mineral leases who do not reside on the leased property. Because they are away from the property, they may be unaware for several years if a breach of the lease has occurred. Consequently, these parties may discover that the statute of limitations has run out on their claim for breach of contract. C.S.H.B. 3482 provides that a cause of action arising from an interest in an oil and gas lease does not accrue until the facts giving rise to the cause of action are discovered or by the exercise of reasonable diligence should have been discovered. The trier of fact is required to examine the circumstances of each particular case to determine what facts by the exercise of reasonable diligence should have been discovered without regard to whether the facts giving rise to the cause of action are inherently undiscoverable. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 16.004, Civil Practice and Remedies Code, by adding Subsection (d), to provide that a cause of action arising from an interest in an oil and gas lease does not accrue until the facts giving rise to the cause of action are discovered or by the exercise of reasonable diligence should have been discovered. Requires the trier of fact to examine the circumstances of each particular case to determine what facts by the exercise of reasonable diligence should have been discovered without regard to whether the facts giving rise to the cause of action are inherently undiscoverable. SECTION 2.Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 3.Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 3482 differs from the original bill in the caption by making nonsubstantive changes. C.S.H.B. 3482 differs from the original bill in SECTION 1 (proposed Section 16.004(d), Civil Practice and Remedies Code) by requiring the trier of fact to examine the circumstances of each particular case to determine what facts by the exercise of reasonable diligence should have been discovered without regard to whether the facts giving rise to the cause of action are inherently undiscoverable, rather than requiring the fact finder to determine what should have been discovered in the exercise of reasonable diligence in light of the circumstances of each particular case, regardless of whether the facts giving rise to the cause of action are inherently undiscoverable. The substitute also makes nonsubstantive changes. C.S.H.B. 3482 differs from the original bill in SECTION 2 (prospective clause) of the original by incorporating September 1, 1999, as the effective date of this Act, and by conforming to Legislative Council format.