Texas House Bill HB2884

Texas 2021 - 87th Regular

Caption

Relating to imposing on a payor of proceeds of production from an oil or gas well a duty to notify a payee when payments to the payee are suspended.

Impact

This bill amends the Natural Resources Code, specifically adding a new section that addresses procedural requirements for payment suspensions. The measure is expected to foster improved communication between payors and payees in the oil and gas industry, reducing disputes and fostering trust. Furthermore, if a payor fails to provide the required notice, they would be liable for paying interest on the suspended amounts, which would incentivize compliance with the notification requirement and potentially prevent financial disputes between involved parties.

Summary

House Bill 2884 introduces a mandatory notification requirement for payors of proceeds from oil or gas wells in Texas when payments to a payee are suspended for reasons that do not fall under specified exceptions. The legislation seeks to enhance transparency in payment processes within the oil and gas sector, mandating that payors send a written notice to payees within 30 days of any payment suspension, detailing the reasons for the suspension. This is aimed at ensuring payees are promptly informed and can take necessary steps in response to any changes in payment status.

Contention

While HB2884 aims at safeguarding payees' rights and improving operational transparency, it could also raise concerns among payors about the increased administrative burden and liability associated with missed notifications. The interests of both industry stakeholders will need to be balanced, as the requirements could impact operational efficiencies. The requirement for payors to manage additional communications may prompt discussions about feasibility, cost implications, and how these changes would be implemented within existing frameworks.