Oklahoma 2025 Regular Session

Oklahoma House Bill HB1371 Compare Versions

Version 1 (Old)

Version 2 (New)

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3		-	ENGR. H. B. NO. 1371 Page 1 1
	3	+	HB1371 HFLR Page 1
	4	+	BOLD FACE denotes Committee Amendments. 1
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28		-	ENGROSSED HOUSE
29		-	BILL NO. 1371 By: Boles of the House
	29	+	HOUSE OF REPRESENTATIVES - FLOOR VERSION
	30	+
	31	+	STATE OF OKLAHOMA
	32	+
	33	+	1st Session of the 60th Legislature (2025)
	34	+
	35	+	HOUSE BILL 1371 By: Boles of the House
30	36
31	37		and
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33	39		Green of the Senate
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	45	+	AS INTRODUCED
39	46
40		-	[ oil and gas - payment of proceeds - Production
41		-	Revenue Standard Act - undeliverable - uncashed –
42		-	interest - effective date ]
	47	+	An Act relating to oil and gas; amending 52 O.S.
	48	+	2021, Section 570.10, which relates to the payment of
	49	+	proceeds under the Production Reven ue Standard Act;
	50	+	providing that proceeds that are undeliverable or
	51	+	uncashed shall not earn interest; and providing an
	52	+	effective date.
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47	57		BE IT ENACTED BY THE PEO PLE OF THE STATE OF OKLAHOMA:
48	58		SECTION 1. AMENDATORY 52 O.S. 2 021, Section 570.10, is
49	59		amended to read as follows:
50	60		Section 570.10. A. All proceeds from the sale of production
51	61		shall be regarded as separate and distinct from all oth er funds of
52	62		any person receiving or holding the same until such time as such
53	63		proceeds are paid to the owners legally entitled thereto. Any
54	64		person holding revenue or proceeds from the sale of production shall
55	65		hold such revenue or proceeds for the benefit o f the owners legally
56		-	entitled thereto. Nothing in this subsection shall create an
57		-	express trust.
58		-	B. Except as otherwise provided in this section:
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60		-	ENGR. H. B. NO. 1371 Page 2 1
	67	+	HB1371 HFLR Page 2
	68	+	BOLD FACE denotes Committee Amendments. 1
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	93	+	entitled thereto. Nothing in this subsection shall create an
	94	+	express trust.
	95	+	B. Except as otherwise provided in this section:
85	96		1. Proceeds from the sale of oil or gas production from an oil
86	97		or gas well shall be paid to persons legally entitled thereto:
87	98		a. commencing not later than six (6) months after the
88	99		date of first sale, and
89	100		b. thereafter not later than the last day of the second
90	101		succeeding month after the end of the month within
91	102		which such production is sold.
92	103		2. Notwithstanding p aragraph 1 of this subsection, royalty
93	104		proceeds from the sale of gas production from an oil or gas well
94	105		remitted to the operator pursuant to subsection B of Section 570.4
95	106		of this title shall be paid to persons legally entitled thereto:
96	107		a. commencing not later than six (6) months after the
97	108		date of first sale, and
98	109		b. thereafter not later than the last day of the third
99	110		succeeding month after the end of the month within
100	111		which such production is sold; provided, however, when
101	112		proceeds are received by the operator in its capacity
102	113		as a producing owner, the operator may pay the royalty
103	114		share of such proceeds to the royalty interest owners
104	115		legally entitled thereto at the same ti me that it pays
105	116		the royalty proceeds received from other producing
106		-	owners for the same production mon th, but not later
107		-	than the last day of the third succeeding month after
108	117
109		-	ENGR. H. B. NO. 1371 Page 3 1
	118	+	HB1371 HFLR Page 3
	119	+	BOLD FACE denotes Committee Amendments. 1
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	144	+	owners for the same prod uction month, but not later
	145	+	than the last day of the third succeeding month after
134	146		the end of the month within which such production was
135	147		sold.
136	148		3. a. Proceeds from production may be remitted to the
137	149		persons entitled to such proceeds annually for the
138	150		twelve (12) months accumulation of proceeds totaling
139	151		at least Ten Dollars ($10.00) but less than One
140	152		Hundred Dollars ($100.00). Amounts less than Ten
141	153		Dollars ($10.00) may be held but shall be remitted
142	154		when production ceases or by the payor upon
143	155		relinquishment of payment responsibility.
144	156		b. Proceeds totaling less than One Hundred Dollars
145	157		($100.00) but more than Twenty-five Dollars ($25.00)
146	158		shall be remitted monthly if requested by the person
147	159		entitled to the proceeds. Amounts less than Ten
148	160		Dollars ($10.00) shall be r emitted annually if
149	161		requested by the person entitled to the proceeds.
150	162		c. Before proceeds greater than Twenty -five Dollars
151	163		($25.00) may be accumulated, payor shall pr ovide
152	164		notice to the person owning interest as defined in
153	165		Section 570.2 of this title, entit led to such proceeds
154	166		that there is an option to be paid monthly for
155	167		proceeds greater than Twenty-five Dollars ($25.00).
156		-	Such notice to the person shall also provide
157		-	directions for requesting monthly payment, and
158	168
159		-	ENGR. H. B. NO. 1371 Page 4 1
	169	+	HB1371 HFLR Page 4
	170	+	BOLD FACE denotes Committee Amendments. 1
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	195	+	Such notice to the person shall also provide
	196	+	directions for requesting monthly payment, and
184	197		constitutes notice to all heirs, successors ,
185	198		representatives, and assigns of the person.
186	199		4. Any delay in determining the persons legally entitled to
187	200		proceeds from production caused by unmarketable title shal l not
188	201		affect payments to persons whose title is marketable, or that
189	202		portion of a person's interest which is marketable.
190	203		C. 1. A first purchaser that pays or causes to be paid
191	204		proceeds from production to the producing owner of such production
192	205		or, at the direction of the producing owner, pays or causes to be
193	206		paid royalty proceeds from production to:
194	207		a. the royalty interest owners legally entitled thereto,
195	208		or
196	209		b. the operator of the well,
197	210		shall not thereafter be liable for such proceeds so paid and shall
198	211		have thereby discharged its duty to pay those proceeds on such
199	212		production.
200	213		2. A working intere st owner that pays or causes to be paid
201	214		royalty proceeds from production to:
202	215		a. the royalty interest owners legally entitled thereto,
203	216		or
204	217		b. the operator of the well,
205		-	shall not thereafter be liable for such proceeds so paid and
206		-	shall have thereby discharged its duty to pay those proceeds on such
207		-	production.
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209		-	ENGR. H. B. NO. 1371 Page 5 1
	219	+	HB1371 HFLR Page 5
	220	+	BOLD FACE denotes Committee Amendments. 1
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	245	+	shall not thereafter be liable for such proceeds so paid and
	246	+	shall have thereby discharged its duty to pay those proceeds on such
	247	+	production.
234	248		3. An operator that pays or causes to be paid royalty proceeds
235	249		from production, received by it as operator, to t he royalty interest
236	250		owners legally entitled thereto shall not thereafter be liable for
237	251		such proceeds so paid and shall have thereby discharged its duty to
238	252		pay those proceeds on s uch production.
239	253		4. Where royalty proceeds are paid incorrectly as a result of
240	254		an error or omission, the party whose error or omission caused the
241	255		incorrect royalty payme nts shall be liable for the additional
242	256		royalty proceeds on such production and all resu lting costs or
243	257		damages incurred by the party making the incorrect payment.
244	258		D. 1. Except as otherwise provided in paragraph 2 of this
245	259		subsection, where proceeds from th e sale of oil or gas production or
246	260		some portion of such proceeds are not paid prior to the end of the
247	261		applicable time periods provided in this section, that portion not
248	262		timely paid shall earn interest at the rate of twelve percent (12%)
249	263		per annum to be compounded annually, calculated from the end of the
250	264		month in which such production is sold until the day paid.
251	265		2. a. Where such proceeds are not paid because the title
252	266		thereto is not marketable, such proceeds shall earn
253	267		interest at the rate of (i) six percent (6%) per annum
254	268		to be compounded annually for time periods prior to
255		-	November 1, 2018, and (ii) the prime interest rate as
256		-	reported in the Wall Street Journal for time periods
257		-	on or after November 1, 2018, calculated from the end
258	269
259		-	ENGR. H. B. NO. 1371 Page 6 1
	270	+	HB1371 HFLR Page 6
	271	+	BOLD FACE denotes Committee Amendments. 1
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	296	+	November 1, 2018, and (ii) the prime interest rate as
	297	+	reported in the Wall Street Journal for time periods
	298	+	on or after November 1, 2018, calculated from the end
284	299		of the month in which such production was sold until
285	300		such time as the title to such interest becomes
286	301		marketable or the holder has received an acceptable
287	302		affidavit of death and heirship in conf ormity with
288	303		Section 67 of Title 16 of the Oklahoma Statutes, or as
289	304		set forth in subparagrap h b of this paragraph.
290	305		Marketability of title shall be determined in
291	306		accordance with the then current title examination
292	307		standards of the Oklahoma Bar Association.
293	308		b. Where marketability has remained uncured, or the
294	309		holder has not been provided an acceptabl e affidavit
295	310		of death and heirship in conformity with Section 67 of
296	311		Title 16 of the Okla homa Statutes, for a period of one
297	312		hundred twenty (120) days from the date pay ment is due
298	313		under this section, any person claiming to own the
299	314		right to receive proceeds wh ich have not been paid
300	315		because of unmarketable title may require the holder
301	316		of such proceeds, or the holder of such proceeds may
302	317		elect, to interplead the proceeds and all accrued
303	318		interest into court for a determination of the persons
304	319		legally entitled there to. Upon payment into court the
305		-	holder of such proceeds shall be relieved of any
306		-	further liability for the proper payment of such
307		-	proceeds and interest thereon.
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309		-	ENGR. H. B. NO. 1371 Page 7 1
	321	+	HB1371 HFLR Page 7
	322	+	BOLD FACE denotes Committee Amendments. 1
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334		-	c. Where such proceeds are not paid because the physical
335		-	payment check was returned to the payor operator as
336		-	undeliverable or the physical payment check is never
337		-	cashed by the royalty owner, such proceeds shall not
338		-	earn interest after the date the physical payment
339		-	check was mailed. The payor operator shall maintain
340		-	records of such mailing dates and copies of any
341		-	undeliverable envelopes and physical payment checks.
342		-	This provision shall only apply to physical payment
343		-	checks mailed to an address provided by such royalty
344		-	owner to the payor operator .
	347	+	holder of such proceeds shall be relieved of any
	348	+	further liability for the proper payment of such
	349	+	proceeds and interest thereon.
	350	+	c. Where such proceeds are not paid because the payment
	351	+	returned to the operator as undeliverable or the
	352	+	payment check is never cashed by the royalty owner ,
	353	+	such proceeds shall not earn interest.
345	354		E. 1. Except as provided in paragraph 2 of this subsection, a
346	355		first purchaser or holder of proceeds who fails to remit proceeds
347	356		from the sale of oil or gas production to owners legally entitled
348	357		thereto within the time limitations set forth in paragraph 1 of
349	358		subsection B of this section shall be liable to such owners for
350	359		interest as provided in subsection D of this section on that portion
351	360		of the proceeds not timely paid. When two or more persons fail to
352	361		remit within such time limitations, l iability for such interest
353	362		shall be shared by those persons holding the proceeds in proportion
354	363		to the time each person held such proceeds.
355	364		2. When royalty proceeds on g as production are remitted
356	365		pursuant to subsection B of Section 570.4 of this title:
	366	+	a. A first purchaser that causes such proceeds to be
	367	+	received by the operator or by a producing owner in
	368	+	the well for distribution to the royalty interest
	369	+	owner legally entitled thereto within the first month
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358		-	ENGR. H. B. NO. 1371 Page 8 1
	371	+	HB1371 HFLR Page 8
	372	+	BOLD FACE denotes Committee Amendments. 1
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383		-	a. A first purchaser that causes such proceeds to be
384		-	received by the operator or by a producing owner in
385		-	the well for distribution to the royalty interest
386		-	owner legally entitled thereto within the first month
387	397		following the month in which such production was s old
388	398		shall not be liable for interest on such proceeds.
389	399		b. A producing owner receiving royalty proceeds that
390	400		causes such proceeds to be received by the royalty
391	401		interest owner legally entitled thereto or by the
392	402		operator for distribution to the royalty intere st
393	403		owner legally entitled thereto not later than the end
394	404		of the first month fo llowing the month in which
395	405		proceeds for such production was received by the
396	406		producing owner from the purchaser shall not be liable
397	407		for interest on such proceeds.
398	408		c. An operator receiving royalty proceeds that causes
399	409		such proceeds to be received by the royalty interest
400	410		owner legally entitled thereto, not later than the end
401	411		of the first month foll owing the month in which
402	412		proceeds for such production was received by the
403	413		operator from the purchaser or producing owner, shall
404	414		not be liable for interest on such pr oceeds.
405	415		d. Liability for interest provided in subsection D of
406	416		this section shall be borne s olely by the person, or
	417	+	persons, failing to remit royalty proceeds within the
	418	+	time limitations set forth in subsection B of this
	419	+	section. When two or more persons fail to remit
	420	+	within such time limitations, liability for such
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408		-	ENGR. H. B. NO. 1371 Page 9 1
	422	+	HB1371 HFLR Page 9
	423	+	BOLD FACE denotes Committee Amendments. 1
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433		-	persons, failing to remit royalty proceeds within the
434		-	time limitations set for th in subsection B of this
435		-	section. When two or more persons fail to remit
436		-	within such time limitations, liability for such
437	448		interest shall be shared by s uch persons in proportion
438	449		to the time each person held such proceeds.
439	450		F. Nothing in this section shall be construed to impair or
440	451		amend existing or future contractua l rights provided for in gas
441	452		balancing agreements or other written agreements which express ly
442	453		provide for the taking, sharing, marketing or balancing of gas or
443	454		the proceeds therefrom. Any proceeds to be paid pursuant to any
444	455		such agreement shall not commence to earn interest until the sooner
445	456		of the time provided in such agreement for the payment of such
446	457		proceeds or ninety (90) days from the date of the depletion of the
447	458		well. Nothing herein shall be deemed to alter or limit the payment
448	459		of royalty proceeds a s provided in the Production Revenue Standards
449	460		Act.
450	461		G. All payments under the Production R evenue Standards Act to
451	462		owners or any other person or governmental entity legally entit led
452	463		to the payment may be made by electronic means including but not
453	464		limited to electronic funds transfer, Automated Clearing House
454	465		(ACH), direct deposit, wire transfer, or any other similar form of
455	466		transfer, upon the mutual written consent of the payor an d payee.
456	467		SECTION 2. This act shall become effective November 1, 2025.
457	468
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483		-	Passed the House of Representatives the 26th day of March, 2025.
484		-
485		-
486		-
487		-
488		-	Presiding Officer of the House
489		-	of Representatives
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493		-	Passed the Senate the _____ day of __________ , 2025.
494		-
495		-
496		-
497		-
498		-	Presiding Officer of the Senate
	469	+	COMMITTEE REPORT BY: COMMITTEE ON ENERGY AND NATURAL RESOURCES
	470	+	OVERSIGHT, dated 03/05/2025 - DO PASS.