2017 Regular Session ENROLLED
SENATE RESOLUTION NO. 159
BY SENATOR ALLAIN
A RESOLUTION
To urge and request that the Louisiana State Law Institute study the classification of mineral
royalties under Louisiana law for the purposes of bankruptcy proceedings.
WHEREAS, the legal classification of certain debts and monies owed has
implications for priority of treatment of those debts and monies in bankruptcy proceedings;
and
WHEREAS, Louisiana is unique in the United States in its classification of mineral
royalties as "rent", and the reason for the classification is unclear; and
WHEREAS, pursuant to R.S. 30:127, mineral leases of state-owned property contain
a provision permitting the state, at its option, to take in-kind the portion due it as royalty of
any minerals produced and saved from leased premises; and
WHEREAS, certain mineral leases of privately owned property reserve to the lessor
a fraction of the oil in-kind with the right to sell, dispose, or take it as he sees fit; and
WHEREAS, under federal bankruptcy law, the classification of a debt as "rent"
affects the priority that the debt has compared to other competing claims and limits the
remedies available to collect the debt; and
WHEREAS, this classification has led to mineral royalties owed to landowners in
Louisiana being given no priority in bankruptcy proceedings.
THEREFORE, BE IT RESOLVED that the Senate of the Legislature of Louisiana
does hereby request that the Louisiana State Law Institute study the history and reasoning
for the classification of mineral royalties as "rent" in La. R.S. 31:123, and consider whether
the law should be revised to reflect that royalties are properly classified as the property of
the landowner or mineral owner at the moment of severance, rather than rent or any other
type of debt, and report its findings and recommendations for any changes to laws which
would protect the rights of public and private landowners or mineral owners to the Louisiana
Legislature no later than sixty days prior to the convening of the 2018 Regular Session.
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BE IT FURTHER RESOLVED that during the study of these issues and prior to
submitting any recommendations to the legislature, the Louisiana State Law Institute shall
include in its research information from the following:
(1) The State Mineral and Energy Board.
(2) The Louisiana Landowner's Association.
(3) Legal counsel with experience in bankruptcy matters involving oil and gas
production company debtors.
(4) The Louisiana Midcontinent Oil and Gas Association.
BE IT FURTHER RESOLVED that a copy of this Resolution be transmitted to the
director of the Louisiana State Law Institute, the secretary of the Department of Natural
Resources, the chairman of the Louisiana State Mineral and Energy Board, the executive
director of the Louisiana Landowners Association, and the president of the Louisiana
Midcontinent Oil and Gas Association.
PRESIDENT OF THE SENATE
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