Texas Senate Bill SB1988

Texas 2019 - 86th Regular

Caption

Relating to causes of action for withholding payments of the proceeds from the sale of oil and gas production.

Impact

This legislation, once enacted, will directly affect the ability of payees in oil and gas contracts to pursue legal claims for withheld payments. By restricting the grounds for breach of contract claims, SB1988 aims to provide more stability and predictability in payment-related disputes within the oil and gas industry. This could encourage more fluid financial operations between payors and payees, aligning with industry practices and expectations.

Summary

SB1988 concerns legal recourse relating to payments from the sale of oil and gas production. Specifically, it amends the Natural Resources Code to prohibit a payee from bringing a breach of contract lawsuit against a payor for withholding payments under specified conditions. This bill reflects the Texas legislature's effort to clarify and potentially limit the circumstances under which parties engaged in oil and gas transactions can seek legal action regarding payment disputes.

Contention

While the bill purports to streamline payment dispute resolutions, it may be viewed as controversial among certain stakeholders. Critics could argue that it increases risks for payees by limiting their legal options when payments are withheld, thereby placing them at a disadvantage. Proponents, however, might argue that it shields payors from frivolous lawsuits and promotes a healthier business environment in Texas's vital oil and gas sector.