Louisiana Senate Bill SR159

Louisiana 2017 Regular Session

• Introduced: 5/31/17
• Refer: 5/31/17
• Report Pass: 6/1/17
• Passed: 6/2/17

Caption

Requests the Louisiana State Law Institute to study and make recommendations regarding the classification of mineral royalties for the purposes of bankruptcy proceedings.

Impact

The study requested by SR159 aims to investigate the historical reasoning behind classifying mineral royalties as rent, and the legal implications this has in bankruptcy contexts. By potentially redefining royalties as property rights belonging to landowners or mineral owners, as opposed to a form of debt, the resolution hopes to secure a stronger claim for these owners when facing bankruptcy proceedings. The expected outcomes may influence future legislative changes that prioritize the interests of landowners involved in mineral extraction.

Summary

Senate Resolution 159 urges the Louisiana State Law Institute to conduct a study regarding the classification of mineral royalties in relation to bankruptcy proceedings. This classification is currently treated as 'rent' under Louisiana law, which is considered unique compared to other jurisdictions. The resolution seeks clarity and possibly a reevaluation of this classification as it impacts the priority of claims during bankruptcy, particularly affecting the rights of landowners owed royalties. Proponents of the study argue that changing this classification could significantly enhance the legal standing of landowners in bankruptcy situations, ensuring their rights are better protected.

Sentiment

Generally, the sentiment around SR159 appears to be supportive among landowners and those in the oil and gas sector who advocate for clearer rights when it comes to mineral royalties and bankruptcy proceedings. However, there may be stakeholders who have reservations about altering long-standing classifications, emphasizing a need for careful consideration of the implications of such changes in the legal landscape.

Contention

Notable points of contention may arise as stakeholders express diverse views on the existing classification versus the proposed changes. For instance, financial institutions and some legal experts might argue that changing the classification could disrupt expectations established by current laws, potentially impacting the funding and financial structuring of businesses involved in mineral extraction. The reaction of various interest groups will be crucial to the outcome of the study and any subsequent recommendations made by the Louisiana State Law Institute.