HBA-ALS H.B. 3582 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3582 By: Keffer Civil Practices 3/22/1999 Introduced BACKGROUND AND PURPOSE Under current law, pooling a nonparticipating royalty interest is prohibited without the written consent of the nonparticipating royalty interest owner. This prevents a unit from being pooled if the identity or location of a nonparticipating royalty interest owner is unknown. Under H.B. 3582, a district court may appoint a receiver for a royalty interest that is owned by an absent or unknown royalty owner if a particular action is brought against the royalty owner and if certain requirements are met. In addition, this bill sets out pleading and notice requirements and addresses the receiver's duties regarding ratification, pooling, and unitization agreements. 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 Amends 64, Subchapter F, Civil Practice and Remedies Code, by adding Section 64.093, as follows: Sec. 64.093. RECEIVER FOR ROYALTY INTERESTS OWNED BY NONRESIDENT OR ABSENTEE. (a) Provides that the purpose of this section is to encourage the exploration and development of mineral resources. (b) Authorizes a district court to appoint a receiver for the royalty interest owned by a nonresident or absent defendant in an action that is brought by a person claiming or owning an undivided mineral interest in land in this state or an undivided leasehold interest under a mineral lease of land in the state and that has one or more defendants who have, claim, or own an undivided royalty interest in the same property. (c) Provides that the defendant for whom the receiver is sought must be a person whose residence or identity is unknown or who is a nonresident, and who has not paid taxes on the interest or rendered it for taxes during the five years immediately preceding the filing of the action. (d) Provides that the plaintiff must allege by verified petition and prove that he has made a diligent but unsuccessful effort to locate the defendant and that he will suffer substantial damage or injury unless the receiver is appointed. (e) Provides that in an action under Subsection (b): (1) the plaintiff must name the last known owner or record owner of the interest as the defendant in the verified petition; (2) the plaintiff must serve notice on the defendant by publication pursuant to the Texas Rules of Civil Procedure (TRCP); (3) the court is authorized to appoint specified persons as the receiver; (4) the applicant is not required to post bond; and (5) the receiver is not required to post bond. (f) Provides that a receivership created under this subchapter continues as long as the defendant or the defendant's heirs, assigns, or personal representatives fail to appear in court to claim the interest. (g) Requires the receiver, if ordered by the court, to immediately perform certain actions relating to ratifying a mineral lease or pooling agreement or entering into a unitization agreement. (h) Authorizes a receiver to ratify a lease under this section to allow the lessee to pool and unitize land subject to the lease with adjacent land into a unit meeting certain specifications. Authorizes a receiver to ratify a pooling agreement to allow a pooled unit which meets certain specifications. (i) Provides that any money consideration for the execution of a ratification, pooling agreement, or unitization agreement by the receiver must be paid to the clerk of the court in which the case is pending before the instrument is executed. Requires the court to apply the money to the cost accruing in the case and to retain any balance for the use and benefit of the owner of the royalty interest. Requires payments made at a later time under the lease, pooled unit, or unitization agreement to be paid into the registry of the court and impounded for the use and benefit of the owner of the royalty interest. (j) Provides that this section is cumulative of other laws relating to removal of a cloud from title or appointment of a receiver. (k) Defines "mineral lease," "leasehold interest," "pooling interest," and "royalty interest." (l) Provides that if there is a conflict between Subsection (e)(2) and TRCP, Subsection (e)(2) controls to the extent of the conflict.