OIL & GAS ALERT: Proposed Texas Legislation

    24 March 2009

    Sid Miller, the Texas state representative of Comanche, Coryell, Erath, Hamilton, Somervell, and Mills Counties, has introduced House Bill 834 in the Texas House of Representatives. This proposed bill targets any mineral interest owner (which includes oil and gas companies who have taken or own oil and gas leases) whose minerals have been severed from the related surface estate. If a mineral interest owner owns severed minerals as of September 1, 2009, then the mineral interest owner must file a "report" with each county in which any part of the minerals are located by September 1, 2010 - and such report must identify the location of the minerals and the nature of the interest (e.g., royalty interest, reversionary interest, etc.). For all severed minerals that are acquired after September 1, 2010, the mineral interest owner must file a report by the one year anniversary of the mineral acquisition. Failure to timely file a report leads to a "presumption of abandonment" by the mineral interest owner. The bill allows for a surface owner to seek a declaratory judgment regarding the ownership of the minerals, AND if the mineral interest owner fails to file its required report prior to the judgment being issued, then the surface owner will be awarded title to the severed minerals.

    The bill also allows for surface owners to seek a declaratory judgment with respect to mineral interests held by mineral interest owners who have filed their report BUT who have abandoned (i.e., "terminated the use") of the mineral interests for a period of 10 years beginning no earlier than September 1, 2009.

    The bill was referred to the Energy Resources Committee in late February, and we have seen no indication that the Energy Resources Committee has taken any action yet regarding this bill, despite multiple meetings of the Energy Resources Committee since the bill landed with the committee. Furthermore, there is no companion bill that has been introduced in the Texas Senate. We will be monitoring its progress, and we will be communicating again with you concerning whether or not this bill survives.