Oil And Gas Bills Passed By Texas Legislature

by Gray Reed & McGraw

The regular session of the 2013 Texas Legislature is over and now it’s time to assess the damage. Bills significant to the oil and gas industry, and their fate, are as follows:

HB 100 – Forced unitization: Failed. Regardless of your opinion of the merits, this was no surprise.

SB 108 – Allowing adverse possession of property by a cotenant heir after 15 years: Failed. That was a good thing. The bill would have created adverse possession of  lands from a cotenant who is also a family member (hence, a “cotenant heir”). The bill may have intended to clear title to land in which numerous heirs own an interest because of intestate succession, but it surely would have created conflict at family reunions. Texas already has a method to adversely possess lands, and having numerous affidavits claiming that lands have been successfully adversely possessed (as allowed by the bill) would create title uncertainty.

SB 873 – Permitting process for oil and gas wells and use of water: Failed (left pending in committee).

SB 1747 – Transportation reinvestment zones: Passed.

See our May 14 entry  for comments on these last two.

HB 2166 – Railroad Commission’s sunset bill: Failed. “Touchy” parts (as in strongly resisted by those with something to lose, to wit, some or all of the RRC commissioners) of the bill were new ethical requirements for the commissioners, including resigning before running for another statewide office, prohibitions on campaign contributions, and reporting of contributions from parties having business before the commission.

SB 219 – The Texas Ethics Commission’s sunset bill: Passed. The resign-to-run portion of failed HB 2166 found its way into this one. We understand that the rationale for opposition to the resign-to-run requirement was that the same rule would not apply to other statewide officeholders. This bill is awaiting the Governor’s signature.

HB 2590 – Effect of foreclosure sale of property subject to an oil and gas lease: Passed, awaiting the Governor’s signature. This bill, sponsored by a producer, attracted opposition by other producers after the session closed. They promise to ask the Governor to veto it. If you take a lease subject to a deed of trust and the property is later foreclosed, you lose your lease unless you have a subordination agreement. This bill changes that: You wouldn’t lose your lease (if recorded before the security interest or after the security interest but before the foreclosure sale).  You would lose use of the surface, however, and the bill imposes new indemnification obligations on the lessee.

CR 53 – Confirming the pecan pie as the official pie of Texas. Passed.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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