Texas 2013 - 83rd Regular

Texas Senate Bill SB1094 Compare Versions

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1	1	By: Hinojosa S.B. No. 1094
2	2	(In the Senate - Filed March 5, 2013; March 12, 2013, read
3	3	first time and referred to Committee on Natural Resources;
4	4	April 3, 2013, reported favorably by the following vote: Yeas 10,
5	5	Nays 0; April 3, 2013, sent to printer.)
6	6
7	7
8	8	A BILL TO BE ENTITLED
9	9	AN ACT
10	10	relating to security interests in oil and gas production and its
11	11	proceeds.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. Section 9.301, Business & Commerce Code, is
14	14	amended to read as follows:
15	15	Sec. 9.301. LAW GOVERNING PERFECTION AND PRIORITY OF
16	16	SECURITY INTERESTS. In this section, "first purchaser" and "oil
17	17	and gas production" have the meanings assigned by Section 9.343(r).
18	18	Except as otherwise provided in Sections 9.303 through 9.306, the
19	19	following rules determine the law governing perfection, the effect
20	20	of perfection or nonperfection, and the priority of a security
21	21	interest in collateral:
22	22	(1) Except as otherwise provided in this section,
23	23	while a debtor is located in a jurisdiction, the local law of that
24	24	jurisdiction governs perfection, the effect of perfection or
25	25	nonperfection, and the priority of a security interest in
26	26	collateral.
27	27	(2) While collateral is located in a jurisdiction, the
28	28	local law of that jurisdiction governs perfection, the effect of
29	29	perfection or nonperfection, and the priority of a possessory
30	30	security interest in that collateral.
31	31	(3) Except as otherwise provided in Subdivision (4),
32	32	while tangible negotiable documents, goods, instruments, money, or
33	33	tangible chattel paper is located in a jurisdiction, the local law
34	34	of that jurisdiction governs:
35	35	(A) perfection of a security interest in the
36	36	goods by filing a fixture filing;
37	37	(B) perfection of a security interest in timber
38	38	to be cut; and
39	39	(C) the effect of perfection or nonperfection and
40	40	the priority of a nonpossessory security interest in the
41	41	collateral.
42	42	(4) The local law of the jurisdiction in which the
43	43	wellhead or minehead is located governs perfection, the effect of
44	44	perfection or nonperfection, and the priority of a security
45	45	interest in as-extracted collateral. The local law of the
46	46	jurisdiction in which the wellhead or minehead is located,
47	47	including, if applicable, the provisions of Section 9.343(b) that
48	48	provide for the automatic perfection of a security interest, govern
49	49	the perfection of a security interest against the first purchaser,
50	50	regardless of the jurisdiction in which the first purchaser is
51	51	organized, for oil and gas production owned by, received by, or due
52	52	to the first purchaser and in the identifiable proceeds of that
53	53	production owned by, received by, or due to the first purchaser, if
54	54	the proceeds are oil or gas production, inventory of raw, refined,
55	55	or manufactured oil or gas production, or rights to or products of
56	56	any of those.
57	57	(5) For a purchase-money security interest against the
58	58	first purchaser of oil and gas production or its proceeds, Sections
59	59	9.324(b) and 9.343(f) govern the priority of the purchase-money
60	60	security interest, regardless of:
61	61	(A) the jurisdiction in which the first purchaser
62	62	is organized; or
63	63	(B) whether the purchase-money security interest
64	64	was perfected by filing a financing statement, if the
65	65	purchase-money security interest was also perfected automatically
66	66	under Section 9.343(b).
67	67	SECTION 2. Subsections (b) and (c), Section 9.324, Business &
68	68	Commerce Code, are amended to read as follows:
69	69	(b) In this subsection, "first purchaser," "oil and gas
70	70	production," and "subsequent purchaser" have the meanings assigned
71	71	by Section 9.343(r). The provisions of this subsection apply
72	72	regardless of the jurisdiction in which the first purchaser is
73	73	organized. Subject to Subsection (c) and except as otherwise
74	74	provided in Subsection (g), a perfected purchase-money security
75	75	interest in inventory has priority over a conflicting security
76	76	interest in the same inventory, has priority over a conflicting
77	77	security interest in chattel paper or an instrument constituting
78	78	proceeds of the inventory and in proceeds of the chattel paper, if
79	79	so provided in Section 9.330, and, except as otherwise provided in
80	80	Section 9.327, also has priority in identifiable cash proceeds of
81	81	the inventory to the extent the identifiable cash proceeds are
82	82	received on or before the delivery of the inventory to a buyer or,
83	83	in the case of identifiable cash proceeds from oil and gas
84	84	production or its proceeds, to the extent the identifiable cash
85	85	proceeds are owned by, received by, or due to the first purchaser on
86	86	or before the delivery of the inventory to a subsequent purchaser,
87	87	if:
88	88	(1) the purchase-money security interest is perfected
89	89	automatically under Section 9.343(b) or in another authorized
90	90	manner when the debtor receives possession of the inventory;
91	91	(2) except where excused by Section 9.343 (oil and gas
92	92	production), the purchase-money secured party sends an
93	93	authenticated notification to the holder of the conflicting
94	94	security interest;
95	95	(3) the holder of the conflicting security interest
96	96	receives any required notification within five years before the
97	97	debtor receives possession of the inventory; and
98	98	(4) the notification, if notification is required,
99	99	states that the person sending the notification has or expects to
100	100	acquire a purchase-money security interest in inventory of the
101	101	debtor and describes the inventory.
102	102	(c) Subsections (b)(2)-(4) apply only if the holder of the
103	103	conflicting security interest had filed a financing statement
104	104	covering the same types of inventory:
105	105	(1) before the date of the filing, if the
106	106	purchase-money security interest is perfected only by filing, and
107	107	is not also perfected automatically under Section 9.343(b) [before
108	108	the date of the filing]; or
109	109	(2) if the purchase-money security interest is
110	110	temporarily perfected without filing or possession under Section
111	111	9.312(f), before the beginning of the 20-day period under that
112	112	subsection.
113	113	SECTION 3. Section 9.343, Business & Commerce Code, is
114	114	amended by amending Subsections (c), (f), and (g) and adding
115	115	Subsection (k-1) to read as follows:
116	116	(c) The security interest exists in oil and gas production
117	117	owned by, received by, or due to the first purchaser[,] and [also]
118	118	in the identifiable proceeds of that production owned by, received
119	119	by, or due to the first purchaser:
120	120	(1) for an unlimited time if:
121	121	(A) the proceeds are oil or gas production,
122	122	inventory of raw, refined, or manufactured oil or gas production,
123	123	or rights to or products of any of those, although the sale of those
124	124	proceeds to a subsequent [by a first] purchaser [to a buyer in the
125	125	ordinary course of business as provided in Subsection (e)] cuts off
126	126	the security interest in those proceeds;
127	127	(B) the proceeds are accounts, chattel paper,
128	128	instruments, documents, or payment intangibles; or
129	129	(C) the proceeds are cash proceeds, as defined in
130	130	Section 9.102; and
131	131	(2) for the length of time provided in Section 9.315
132	132	for all other proceeds.
133	133	(f) The security interests and all liens created by this
134	134	section have the following priorities over other Chapter 9 security
135	135	interests:
136	136	(1) A security interest created by this section,
137	137	whether perfected automatically under Subsection (b) or perfected
138	138	by the filing of the optional financing statement authorized by
139	139	Section 9.5055, is treated as a purchase-money security interest
140	140	for purposes of determining its relative priority under Section
141	141	9.324 over other security interests not provided for by this
142	142	section. A holder of a security interest created under this section
143	143	is not required to give the written notice every five years as
144	144	provided in Section 9.324(b)(3) to have purchase-money priority
145	145	over a security interest with a prior financing statement covering
146	146	inventory.
147	147	(2) A statutory lien is subordinate to all other
148	148	perfected Chapter 9 security interests and has priority over
149	149	unperfected Chapter 9 security interests and the lien creditors,
150	150	buyers, and transferees mentioned in Section 9.317.
151	151	(g) The security interests and liens created by this section
152	152	have the following priorities among themselves:
153	153	(1) Regardless of whether the optional financing
154	154	statement authorized by Section 9.5055 was filed to perfect those
155	155	security interests, if [If] a record effective as a filed financing
156	156	statement under Subsection (b) exists, the security interests
157	157	perfected by that record have priority over a security interest
158	158	automatically perfected without filing under Subsection (b). If
159	159	several security interests perfected by records exist, they have
160	160	the same priority among themselves as established by real property
161	161	law for interests in oil and gas in place. If real property law
162	162	establishes no priority among them, they share priority pro rata.
163	163	(2) A security interest perfected automatically
164	164	without filing under Subsection (b), or for which the optional
165	165	financing statement authorized by Section 9.5055 was filed, if the
166	166	security interest was also perfected automatically without filing
167	167	under Subsection (b), has priority over a lien created under
168	168	Subsection (d).
169	169	(3) A nontax lien under Subsection (d) has priority
170	170	over a lien created under that subsection that secures the payment
171	171	of taxes.
172	172	(k-1) The sale to a subsequent purchaser by the first
173	173	purchaser of oil and gas production or the proceeds of that
174	174	production, if the proceeds are oil or gas production, inventory of
175	175	raw, refined, or manufactured oil or gas production, or rights to or
176	176	products of any of those, cuts off the liens and security interests
177	177	created by this section in the oil and gas production and its
178	178	proceeds. The security interests and liens created by this section
179	179	are subject to and do not impair or impact in any manner the
180	180	exercise or enforcement by a subsequent purchaser of any rights,
181	181	including rights of a secured creditor and rights of set-off,
182	182	net-out, exchange, recoupment, or withholding of funds, provided
183	183	under any enforceable contract or applicable law that governs the
184	184	relationship between a subsequent purchaser and the first purchaser
185	185	or an affiliate or representative of the first purchaser.
186	186	SECTION 4. Subsection (r), Section 9.343, Business &
187	187	Commerce Code, is amended by adding Subdivision (5) to read as
188	188	follows:
189	189	(5) "Subsequent purchaser" means a person who is not
190	190	an affiliate of the first purchaser and who purchases from the first
191	191	purchaser or affiliate or representative of the first purchaser oil
192	192	and gas production or the proceeds of that production, if the
193	193	proceeds are oil or gas production, inventory of raw, refined, or
194	194	manufactured oil or gas production, or rights to or products of any
195	195	of those.
196	196	SECTION 5. Subchapter E, Chapter 9, Business & Commerce
197	197	Code, is amended by adding Section 9.5055 to read as follows:
198	198	Sec. 9.5055. OPTIONAL FINANCING STATEMENT FOR SECURITY
199	199	INTEREST IN OIL AND GAS PRODUCTION AND ITS PROCEEDS. (a) In this
200	200	section, "first purchaser," "interest owner," "operator," and "oil
201	201	and gas production" have the meanings assigned by Section 9.343(r).
202	202	(b) To the extent of a conflict between this section and
203	203	another provision of this subchapter, this section prevails.
204	204	(c) If a security interest in oil and gas production or its
205	205	proceeds is perfected automatically under Section 9.343(b), an
206	206	interest owner or an operator acting on behalf of one or more
207	207	interest owners may also, but is not required to, file a financing
208	208	statement against the first purchaser in the jurisdiction in which
209	209	the first purchaser is organized.
210	210	(d) A financing statement filed pursuant to this section is
211	211	sufficient if it:
212	212	(1) provides the name of the debtor;
213	213	(2) provides the name of the secured party or a
214	214	representative of the secured party; and
215	215	(3) indicates the collateral covered by the financing
216	216	statement.
217	217	SECTION 6. Subsections (e), (m), and (n), Section 9.343,
218	218	Business & Commerce Code, are repealed.
219	219	SECTION 7. The changes in law made by this Act apply only to
220	220	a civil action commenced on or after the effective date of this Act.
221	221	A civil action commenced before the effective date of this Act is
222	222	governed by the law in effect immediately before the effective date
223	223	of this Act, and that law is continued in effect for that purpose.
224	224	SECTION 8. This Act takes effect immediately if it receives
225	225	a vote of two-thirds of all the members elected to each house, as
226	226	provided by Section 39, Article III, Texas Constitution. If this
227	227	Act does not receive the vote necessary for immediate effect, this
228	228	Act takes effect September 1, 2013.
229	229	* * * * *