Texas 2021 - 87th Regular

Texas Senate Bill SB1468 Compare Versions

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1	1	87R5593 NC-F
2	2	By: Hinojosa S.B. No. 1468
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to oil and gas liens.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Section 9.203(j), Business & Commerce Code, is
10	10	amended to read as follows:
11	11	(j) If a secured party holds a security interest that
12	12	applies under this chapter to minerals, not including oil and gas,
13	13	upon their extraction and the security interest also qualifies
14	14	under applicable law as a lien on those minerals before their
15	15	extraction, the security interest before and after production is a
16	16	single continuous and uninterrupted lien on the property. This
17	17	subsection is a statement of the law of this state as it existed
18	18	before the effective date of this subsection and applies with
19	19	respect to minerals, not including oil and gas, regardless of when
20	20	the minerals were extracted.
21	21	SECTION 2. Section 9.310(b), Business & Commerce Code, is
22	22	amended to read as follows:
23	23	(b) The filing of a financing statement is not necessary to
24	24	perfect a security interest:
25	25	(1) that is perfected under Section 9.308(d), (e),
26	26	(f), or (g);
27	27	(2) that is perfected under Section 9.309 when it
28	28	attaches;
29	29	(3) in property subject to a statute, regulation, or
30	30	treaty described in Section 9.311(a);
31	31	(4) in goods in possession of a bailee that is
32	32	perfected under Section 9.312(d)(1) or (2);
33	33	(5) in certificated securities, documents, goods, or
34	34	instruments which is perfected without filing, control or
35	35	possession under Section 9.312(e), (f), or (g);
36	36	(6) in collateral in the secured party's possession
37	37	under Section 9.313;
38	38	(7) in a certificated security that is perfected by
39	39	delivery of the security certificate to the secured party under
40	40	Section 9.313;
41	41	(8) in deposit accounts, electronic chattel paper,
42	42	electronic documents, investment property, or letter-of-credit
43	43	rights that is perfected by control under Section 9.314;
44	44	(9) in proceeds that is perfected under Section 9.315;
45	45	or
46	46	(10) that is perfected under Section 9.316[; or
47	47	[(11) in oil or gas production or their proceeds under
48	48	Section 9.343].
49	49	SECTION 3. Section 9.324(b), Business & Commerce Code, is
50	50	amended to read as follows:
51	51	(b) Subject to Subsection (c) and except as otherwise
52	52	provided in Subsection (g), a perfected purchase-money security
53	53	interest in inventory has priority over a conflicting security
54	54	interest in the same inventory, has priority over a conflicting
55	55	security interest in chattel paper or an instrument constituting
56	56	proceeds of the inventory and in proceeds of the chattel paper, if
57	57	so provided in Section 9.330, and, except as otherwise provided in
58	58	Section 9.327, also has priority in identifiable cash proceeds of
59	59	the inventory to the extent the identifiable cash proceeds are
60	60	received on or before the delivery of the inventory to a buyer, if:
61	61	(1) the purchase-money security interest is perfected
62	62	when the debtor receives possession of the inventory;
63	63	(2) [except where excused by Section 9.343 (oil and
64	64	gas production),] the purchase-money secured party sends an
65	65	authenticated notification to the holder of the conflicting
66	66	security interest;
67	67	(3) the holder of the conflicting security interest
68	68	receives any required notification within five years before the
69	69	debtor receives possession of the inventory; and
70	70	(4) the notification states that the person sending
71	71	the notification has or expects to acquire a purchase-money
72	72	security interest in inventory of the debtor and describes the
73	73	inventory.
74	74	SECTION 4. Subtitle B, Title 5, Property Code, is amended by
75	75	adding Chapter 67 to read as follows:
76	76	CHAPTER 67. OIL AND GAS LIENS
77	77	Sec. 67.001. DEFINITIONS. In this chapter:
78	78	(1) "Affiliate" means any person who:
79	79	(A) is controlled, directly or indirectly, by a
80	80	first purchaser; or
81	81	(B) controls, directly or indirectly, a first
82	82	purchaser.
83	83	(2) "Agreement to sell" means an enforceable agreement
84	84	by an interest owner, directly or through a representative, to sell
85	85	oil or gas on or after severance to a first purchaser. The term
86	86	includes an agreement that is express or implied, whether oral or
87	87	written.
88	88	(3) "Control" means the possession, directly or
89	89	indirectly, of the power to direct or cause the direction of the
90	90	management and policies of a person, whether through ownership, by
91	91	contract, or otherwise.
92	92	(4) "First purchaser" means the first person that
93	93	purchases oil or gas from an interest owner, under an agreement to
94	94	sell.
95	95	(5) "Gas" means natural gas, casinghead gas, and all
96	96	constituent parts of natural gas and casinghead gas before and
97	97	after processing but before a first purchaser transfers title,
98	98	possession, or control of the gas to a purchaser.
99	99	(6) "Interest owner" means a person owning an interest
100	100	of any kind in oil and gas rights before acquisition by a first
101	101	purchaser. The term includes a transferee interest owner.
102	102	(7) "Oil" means oil, condensate, and all constituent
103	103	parts of the oil, before or after processing but before a first
104	104	purchaser transfers title, possession, or control of the oil to a
105	105	purchaser.
106	106	(8) "Oil and gas lien" means the lien described by
107	107	Section 67.002.
108	108	(9) "Oil and gas rights" means any legal or equitable
109	109	right, title, or interest in or to oil or gas from land in this
110	110	state. The term includes:
111	111	(A) oil or gas in place before severance;
112	112	(B) oil or gas production, or the right to
113	113	receive a portion of the proceeds, on severance;
114	114	(C) any interest or estate in, by, through, or
115	115	under an oil and gas lease;
116	116	(D) a right acquired under a pooling order
117	117	relating to:
118	118	(i) ownership of oil or gas;
119	119	(ii) the right to proceeds; or
120	120	(iii) the right to enter into an agreement
121	121	to sell;
122	122	(E) a right to receive consideration under an
123	123	agreement to sell oil or gas; and
124	124	(F) a mortgage lien or security interest in oil
125	125	and gas rights.
126	126	(10) "Operator" means a person engaged in the
127	127	severance of oil or gas for that person only, for other persons
128	128	only, or for that person and others.
129	129	(11) "Permitted lien" means a perfected and
130	130	enforceable lien created by statute or rule of a governmental
131	131	agency for storage or transportation charges, including terminal
132	132	charges, tariffs, demurrage, insurance, labor, or other charges,
133	133	owed by a first purchaser in relation to oil or gas originally
134	134	purchased under an agreement to sell. The term does not include a
135	135	lien that is:
136	136	(A) in favor of an affiliate of a first purchaser
137	137	unless the lien is authorized by the statute or rule creating the
138	138	lien; or
139	139	(B) for charges incurred after the 90th day after
140	140	the date the first purchaser delivers the oil or gas for storage or
141	141	transportation.
142	142	(12) "Pooling order" means an order issued by the
143	143	Railroad Commission of Texas that requires the owners of the right
144	144	to drill for oil or gas in a drilling and spacing unit to pool the
145	145	owner's interests for the development of the drilling and spacing
146	146	unit.
147	147	(13) "Proceeds" means, when paid or to be paid in
148	148	consideration of, or as a consequence of, the sale of oil or gas
149	149	under an agreement to sell:
150	150	(A) oil or gas on or after severance;
151	151	(B) inventory of raw, refined, or manufactured
152	152	oil or gas after severance;
153	153	(C) rights to or products of any of the oil or gas
154	154	described by Paragraph (A) or inventory described by Paragraph (B);
155	155	(D) cash proceeds;
156	156	(E) accounts;
157	157	(F) chattel paper;
158	158	(G) instruments;
159	159	(H) documents; or
160	160	(I) payment intangibles with respect to any of
161	161	the preceding.
162	162	(14) "Purchaser" means a person who:
163	163	(A) is not an affiliate of a first purchaser; and
164	164	(B) takes, receives, or purchases oil or gas from
165	165	a first purchaser.
166	166	(15) "Representative" means a person who is
167	167	authorized, expressly or by implication, including an operator or
168	168	an authorized broker, to:
169	169	(A) sell oil or gas on behalf of, or for the
170	170	benefit of, an interest owner under an agreement to sell; or
171	171	(B) receive on behalf of an interest owner the
172	172	consideration under an agreement to sell.
173	173	(16) "Sales price" means the proceeds a first
174	174	purchaser agrees to pay an interest owner or representative under
175	175	an agreement to sell.
176	176	(17) "Security interest" means a security interest
177	177	governed by Chapter 9, Business & Commerce Code.
178	178	(18) "Severance" means the point in time oil or gas is
179	179	possessed at the mouth of the wellbore of an oil and gas well.
180	180	(19) "Transferee interest owner" means a person that
181	181	acquires oil and gas rights from a transferor interest owner.
182	182	(20) "Transferor interest owner" means an interest
183	183	owner that transfers or conveys oil and gas rights, wholly or
184	184	partly.
185	185	Sec. 67.002. OIL AND GAS LIEN. (a) To secure the
186	186	obligations of a first purchaser to pay the sales price, each
187	187	interest owner has an oil and gas lien to the extent of the interest
188	188	owner's interest in oil and gas rights. The oil and gas lien exists
189	189	as part of and incident to the ownership of oil and gas rights.
190	190	(b) An oil and gas lien:
191	191	(1) exists in and attaches to all oil and gas before
192	192	severance;
193	193	(2) continues uninterrupted and without lapse in all
194	194	oil and gas on and after severance; and
195	195	(3) continues uninterrupted and without lapse in and
196	196	to all proceeds from the sale of the oil or gas.
197	197	(c) Except as provided by Subsection (d), an oil and gas
198	198	lien exists until the interest owner or representative first
199	199	entitled to receive the sales price has received the sales price for
200	200	the oil or gas.
201	201	(d) As between an interest owner and a representative of an
202	202	interest owner or any person claiming adversely to the interest
203	203	owner or representative, the interest owner's oil and gas lien
204	204	continues uninterrupted and without lapse in proceeds in the
205	205	possession or control of a representative until the interest owner
206	206	on whose behalf the representative acts receives the proceeds in
207	207	full.
208	208	(e) Except as provided by Subsection (f), a first purchaser
209	209	takes free of an oil and gas lien if the first purchaser:
210	210	(1) in good faith, paid the sales price for the oil or
211	211	gas to an interest owner or representative otherwise apparently
212	212	entitled to receive the sales price; and
213	213	(2) is without actual knowledge that the interest
214	214	owner or representative is not entitled to receive the sales price
215	215	paid.
216	216	(f) Notwithstanding Subsection (e), the oil and gas lien
217	217	continues uninterrupted in the proceeds paid to or otherwise due
218	218	the interest owner or representative.
219	219	Sec. 67.003. TRANSFER OF OIL AND GAS RIGHTS. (a) The
220	220	validity of an oil and gas lien is not dependent on possession of
221	221	the oil or gas by an interest owner or representative. An oil and
222	222	gas lien is not void or expired because of a change or transfer of
223	223	the actual or constructive possession of or title to the oil or gas
224	224	from the interest owner or representative to a first purchaser or
225	225	other purchaser.
226	226	(b) On the conveyance or transfer of any oil and gas rights
227	227	by a transferor interest owner, the oil and gas lien vested in the
228	228	transferor interest owner immediately before the conveyance or
229	229	transfer remains with the transferor interest owner to the extent
230	230	of any oil and gas rights retained by the transferor interest owner.
231	231	(c) On the conveyance or transfer of any oil and gas rights
232	232	by a transferor interest owner, the oil and gas lien vested in the
233	233	transferor interest owner immediately before the conveyance or
234	234	transfer is transferred to and attaches automatically to the oil
235	235	and gas rights acquired by the transferee interest owner
236	236	uninterrupted and without lapse and as part of and incident to the
237	237	oil and gas rights that are conveyed or transferred.
238	238	Sec. 67.004. AUTOMATIC PERFECTION OF LIEN. An oil and gas
239	239	lien of an interest owner is perfected automatically without the
240	240	need to file a financing statement or any other type of
241	241	documentation.
242	242	Sec. 67.005. COMMINGLING. (a) If oil or gas in which there
243	243	exists more than one oil and gas lien is commingled with other oil
244	244	or gas in a manner that the identity of the specific oil or gas is
245	245	lost, the oil and gas lien:
246	246	(1) continues without interruption into and attaches
247	247	to any resulting commingled product; and
248	248	(2) is perfected automatically on the date of the oil
249	249	and gas lien's original perfection but only for the volume of the
250	250	commingled product that is equal to the volume of product to which
251	251	the oil and gas lien originally attached.
252	252	(b) If commingling described by Subsection (a) occurs, the
253	253	oil and gas lien in the commingled product has priority over any
254	254	security interest or other lien that is not an oil and gas lien or
255	255	permitted lien, regardless of whether the security interest or
256	256	other lien has been properly perfected.
257	257	(c) If more than one oil and gas lien attaches to the
258	258	commingled product, the oil and gas liens rank equally in the
259	259	proportion that the respective sales prices secured by each oil and
260	260	gas lien bears as a percentage of the total of the sales prices
261	261	secured by all oil and gas liens applicable to the production at the
262	262	time the production was commingled.
263	263	(d) This section is intended to recognize the continuation
264	264	of oil and gas lien rights of an interest owner in the commingled
265	265	product stream only as to a volume of oil or gas proportionate to
266	266	the volume of oil or gas that originated from the interest owner,
267	267	with that volume of the commingled product being considered to have
268	268	maintained a distinct identity as being available for sale or
269	269	transportation under the specific contractual arrangements
270	270	applicable to the production at the time the oil or gas entered the
271	271	commingled product stream.
272	272	Sec. 67.006. RIGHTS OF PURCHASERS. (a) Except as provided
273	273	by Subsection (b), a purchaser takes free of any oil and gas lien
274	274	otherwise applicable to the oil or gas purchased if the purchaser:
275	275	(1) is a buyer in the ordinary course of the first
276	276	purchaser's business under Chapter 9, Business & Commerce Code; or
277	277	(2) has paid all of the consideration due to the first
278	278	purchaser, including by exchange of oil or gas, net-out, or
279	279	set-off, under all applicable enforceable contracts in existence at
280	280	the time of the payment.
281	281	(b) The oil and gas lien continues uninterrupted in the
282	282	proceeds paid to or otherwise due the first purchaser.
283	283	(c) Except as provided by this section, an oil and gas lien
284	284	has priority over the rights of any purchaser.
285	285	Sec. 67.007. PRIORITY IN RELATION TO OTHER LIENS OR
286	286	SECURITY INTERESTS. Except for a permitted lien, an oil and gas
287	287	lien takes priority over any other lien, whether arising by
288	288	contract, law, equity, or otherwise, or any security interest.
289	289	Sec. 67.008. TITLE NOT AFFECTED. This chapter does not
290	290	affect:
291	291	(1) when legal title to oil and gas may pass by
292	292	agreement or operation of law subject to an oil and gas lien;
293	293	(2) the right of a first purchaser to take or receive
294	294	oil and gas under the terms of a division order, provided that the
295	295	division order does not modify, waive, or abrogate in any respect
296	296	the rights of an interest owner under this chapter; or
297	297	(3) subject to Section 67.009, the right of a first
298	298	purchaser to take or receive oil and gas under an agreement to sell.
299	299	Sec. 67.009. WAIVER. (a) Except as provided by Subsection
300	300	(b), an interest owner may not be required, as a condition or term
301	301	of an agreement to sell or otherwise, to:
302	302	(1) waive or release any oil and gas lien or a right
303	303	under this chapter, other than on payment in full of the sales
304	304	price; or
305	305	(2) agree to a provision that would apply the law of
306	306	another state to a right granted under this chapter.
307	307	(b) An interest owner, or representative acting on behalf of
308	308	an interest owner, may waive or release any oil and gas lien or any
309	309	rights under this chapter or agree to apply the law of another state
310	310	to the interest owner's oil and gas rights granted under this
311	311	chapter, if the first purchaser:
312	312	(1) posts a letter of credit in a form and amount
313	313	satisfactory to the interest owner; or
314	314	(2) agrees to prepay or escrow the sales price under an
315	315	agreement to sell with the interest owner and performs all of the
316	316	first purchaser's obligations under the agreement.
317	317	(c) Unless waived or released under Subsection (b), a
318	318	condition or term described by Subsection (a) is void.
319	319	Sec. 67.010. LIMITATION ON FILING ACTION TO ENFORCE LIEN.
320	320	(a) Except as provided by Subsection (b), an action to enforce the
321	321	interest owner's oil and gas lien must be brought not later than the
322	322	first anniversary of the last day of the month after the date
323	323	proceeds from the sale of oil or gas subject to the lien are
324	324	required by law or contract to be paid to the interest owner, but
325	325	only as to the oil or gas sold during that month.
326	326	(b) The commencement of a proceeding by or against any
327	327	person claiming an interest in any property subject to the oil and
328	328	gas lien seeking to adjudicate the person as bankrupt or insolvent,
329	329	or seeking relief of the person's debts under any law relating to
330	330	bankruptcy, insolvency, reorganization, or relief of debtors, or
331	331	seeking the entry of an order for relief or the appointment of a
332	332	receiver, trustee, or other similar official for the person or for
333	333	any substantial part of the person's property shall toll the
334	334	one-year period prescribed by Subsection (a) in which to bring an
335	335	action to enforce the oil and gas lien for an additional period of
336	336	90 days after the earlier of the date:
337	337	(1) the proceeding is dismissed or otherwise finally
338	338	concluded; or
339	339	(2) final relief is obtained from the appropriate
340	340	tribunal authorizing the commencement of the action to enforce the
341	341	oil and gas lien.
342	342	Sec. 67.011. VENUE; JURISDICTION. (a) An action to enforce
343	343	the interest owner's oil and gas lien may be brought in a district
344	344	court or other court of competent jurisdiction in the county in
345	345	which:
346	346	(1) the oil and gas well from which the oil or gas is
347	347	produced is located;
348	348	(2) the unpaid for oil or gas is located; or
349	349	(3) the proceeds for the oil or gas are located.
350	350	(b) An interest owner may join multiple proceedings to
351	351	enforce oil and gas liens involving more than one oil and gas well
352	352	in one county in the same action.
353	353	(c) In cases involving oil or gas from the same oil and gas
354	354	well or wells:
355	355	(1) any persons claiming oil and gas liens in the oil
356	356	or gas may join in the same action; or
357	357	(2) a district court may consolidate separate actions
358	358	related to the oil or gas.
359	359	Sec. 67.012. PAYMENT DISPUTES. In the case of a payment
360	360	dispute between an operator and another interest owner, a
361	361	good-faith tender of money in satisfaction of a debt or security
362	362	interest by one person operates as a tender of the money to both if
363	363	tender is made:
364	364	(1) to the person who the operator and other interest
365	365	owner jointly directed the first purchaser in writing to pay;
366	366	(2) to a person who otherwise shows the person is
367	367	entitled to the money; or
368	368	(3) to a court of competent jurisdiction in the event
369	369	of litigation or bankruptcy.
370	370	Sec. 67.013. COSTS; ATTORNEY'S FEES. The prevailing party
371	371	in an action brought under this chapter is entitled to court costs
372	372	and reasonable attorney's fees.
373	373	Sec. 67.014. CERTAIN RIGHTS OF OPERATOR NOT IMPAIRED. This
374	374	chapter does not impair an operator's right to be paid, set-off, or
375	375	withhold funds from another interest owner as security for or in
376	376	satisfaction of a debt or security interest.
377	377	Sec. 67.015. INTEREST OWNER RIGHTS CUMULATIVE. The
378	378	provisions of this chapter and the rights granted under this
379	379	chapter are intended to be cumulative with all other rights an
380	380	interest owner may otherwise have at law or in equity, including the
381	381	right of any interest owner to maintain a personal action to recover
382	382	the debt against any person liable for payment of the sales price of
383	383	the oil or gas.
384	384	Sec. 67.016. LIBERAL CONSTRUCTION OF INTEREST OWNER RIGHTS.
385	385	The rights of the interest owner shall be liberally construed to
386	386	give the interest owner the most comprehensive protection to secure
387	387	the receipt by the interest owner of the sales price.
388	388	Sec. 67.017. CONFLICT OF LAWS. To the extent of a conflict
389	389	between the provisions of this chapter and other law, this chapter
390	390	prevails.
391	391	SECTION 5. Section 9.343, Business & Commerce Code, is
392	392	repealed.
393	393	SECTION 6. (a) The changes in law made by this Act do not
394	394	affect the rights of any interest owner that accrued before the
395	395	effective date of this Act to the extent those rights are not in
396	396	conflict with the provisions of Chapter 67, Property Code, as added
397	397	by this Act, and the former law is continued in effect to preserve
398	398	those rights.
399	399	(b) For purposes of Sections 67.005 and 67.007, Property
400	400	Code, as added by this Act, a "permitted lien" includes a mortgage
401	401	lien or security interest in oil or gas that:
402	402	(1) is granted before the effective date of this Act by
403	403	a first purchaser in favor of a person who is not an affiliate of the
404	404	first purchaser; and
405	405	(2) secures payment under a written instrument of
406	406	indebtedness signed by the first purchaser and accepted in writing
407	407	by the payee before the effective date of this Act with a principal
408	408	amount and a fixed maturity stated in the instrument, unless:
409	409	(A) the instrument of indebtedness is modified,
410	410	amended, or restated on or after the effective date of this Act to:
411	411	(i) increase the principal amount that was
412	412	owed before the effective date of this Act; or
413	413	(ii) extend the stated maturity of the debt
414	414	that was in effect before the effective date of this Act; or
415	415	(B) the mortgage lien or security interest is not
416	416	validly perfected with a first priority against the claims of all
417	417	persons under applicable law other than persons holding a statutory
418	418	or regulatory lien for which first priority is granted by statute or
419	419	rule.
420	420	SECTION 7. This Act takes effect September 1, 2021.