HBA-LJP, EDN C.S.H.B. 981 77(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 981
By: King, Tracy
Energy Resources
4/12/2001
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Under current law, certain information must accompany monthly royalty
checks for proceeds derived from the sale of oil or gas production.  This
information often does not contain enough detail and it is difficult for
royalty owners to determine whether or not they are being paid correctly.
C.S.H.B. 981 provides that additional information be included with the
monthly royalty check. 

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. 

ANALYSIS

C.S.H.B. 981 amends the Natural Resources Code to provide that each check
stub, attachment to a payment form, or other remittance advice to a royalty
interest owner (owner) for proceeds derived from the sale of oil or gas
production must include, in addition to existing requirements: 

_a county and state in which the lease, property, or well is located; and

_a telephone number at which additional information regarding the payment
may be obtained and questions may be answered. 

C.S.H.B. 981 provides that a payor must, at a minimum, provide a
description of property from which oil or gas is being produced and the
type of production for the lease, property, or well for which payment of
proceeds is being reported if such information has not been provided in a
division order.  The bill sets forth provisions regarding information about
payment deductions and adjustments, heating value, lease identification,
and other information that an owner requests.  

EFFECTIVE DATE

January 1, 2002.  Provisions regarding required information take effect
September 1, 2002.  

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 981 modifies the original by replacing all references to a person
making the payment with the payor and defining "payor."  The substitute
modifies the information that each check stub, attachment to a payment
form, or other remittance advice must include.  The substitute provides
that a payor must, at a minimum, provide a description of property from
which oil or gas is being produced and the type of production for the
lease, property, or well for which payment of proceeds is being reported if
such information has not been provided in a division order. The substitute
sets forth provisions regarding information about payment deductions and
adjustments, heating value, lease identification, and other information
that an owner requests.  The substitute removes the provision authorizing
an owner to bring an action for an injunction to compel a person making a
payment to comply with the bill but authorizes an  owner who does not
receive the required information in a timely manner to send a written
request for information to the payor by certified mail.  The substitute
requires the payor to provide such information not later than the 60th day
after the request is received and authorizes an owner to bring a civil
action against the payor if the information is not received within 60 days. 

The substitute changes the effective date from on passage, or if the Act
does not receive the necessary vote, the Act takes effect September 1, 2001
to January 1, 2002, while provisions regarding required information take
effect September 1, 2002.