Texas 2023 - 88th Regular

Texas Senate Bill SB501 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	By: Hughes S.B. No. 501
2	2	(In the Senate - Filed January 19, 2023; February 17, 2023,
3	3	read first time and referred to Committee on Natural Resources &
4	4	Economic Development; April 4, 2023, reported favorably by the
5	5	following vote: Yeas 8, Nays 0; April 4, 2023, sent to printer.)
6	6	Click here to see the committee vote
7	7
8	8
9	9	A BILL TO BE ENTITLED
10	10	AN ACT
11	11	relating to a cause of action for the bad faith washout of an
12	12	overriding royalty interest in an oil and gas lease.
13	13	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
14	14	SECTION 1. Title 4, Property Code, is amended by adding
15	15	Chapter 31 to read as follows:
16	16	CHAPTER 31. BAD FAITH WASHOUT OF OVERRIDING ROYALTY INTEREST IN OIL
17	17	AND GAS LEASE
18	18	Sec. 31.001. DEFINITIONS. In this chapter:
19	19	(1) "Bad faith" means the conscious taking of action
20	20	for the purpose of washing out all or part of an overriding royalty
21	21	interest.
22	22	(2) "Washout" means the elimination or reduction of an
23	23	overriding royalty interest in an oil and gas lease by the
24	24	forfeiture or surrender of the oil and gas lease by a lessee or the
25	25	lessee's successors or assigns and the subsequent reacquisition of
26	26	a lease, or all or part of the mineral estate associated with the
27	27	lease, by the lessee or the lessee's successors, assigns,
28	28	contractors, or subsidiaries on all or part of the same land, free
29	29	of the overriding royalty interest.
30	30	Sec. 31.002. CAUSE OF ACTION FOR BAD FAITH WASHOUT. A
31	31	person may bring a cause of action for a bad faith washout of the
32	32	person's overriding royalty interest in an oil and gas lease. The
33	33	person is entitled to a remedy under this chapter if the person
34	34	proves by a preponderance of the evidence that:
35	35	(1) the person owned or had a legal right to the
36	36	overriding royalty interest;
37	37	(2) the defendant had control over the oil and gas
38	38	lease burdened by the overriding royalty interest;
39	39	(3) the defendant caused a washout of the person's
40	40	overriding royalty interest; and
41	41	(4) the defendant acted in bad faith by knowingly or
42	42	intentionally causing the washout.
43	43	Sec. 31.003. VENUE. An owner of an overriding royalty
44	44	interest in an oil and gas lease may bring an action under this
45	45	chapter in a district court of a county in which any part of the
46	46	property subject to the oil and gas lease is located.
47	47	Sec. 31.004. REMEDIES; COSTS AND FEES. (a) An owner of an
48	48	overriding royalty interest who prevails in an action under this
49	49	chapter may recover:
50	50	(1) actual damages;
51	51	(2) enforcement of a constructive trust on the oil and
52	52	gas lease or mineral estate acquired to accomplish the washout of
53	53	the overriding royalty interest; and
54	54	(3) court costs and attorney's fees.
55	55	(b) The remedies provided by this chapter are cumulative of
56	56	other remedies provided by common law or statute.
57	57	Sec. 31.005. LIMITATION ON FILING ACTION. A person must
58	58	bring an action under this chapter not later than the second
59	59	anniversary of the date the person obtained actual knowledge that
60	60	the washout occurred.
61	61	SECTION 2. Chapter 31, Property Code, as added by this Act,
62	62	applies only to a washout that occurs on or after the effective date
63	63	of this Act. A washout that occurred before that date is governed
64	64	by the law in effect immediately before the effective date of this
65	65	Act, and that law is continued in effect for that purpose.
66	66	SECTION 3. This Act takes effect September 1, 2023.
67	67	* * * * *