Bill Text: TX HB4218 | 2021-2022 | 87th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to a cause of action for the bad faith washout of an overriding royalty interest in an oil and gas lease.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Vetoed) 2021-06-18 - Vetoed by the Governor [HB4218 Detail]
Download: Texas-2021-HB4218-Introduced.html
Bill Title: Relating to a cause of action for the bad faith washout of an overriding royalty interest in an oil and gas lease.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Vetoed) 2021-06-18 - Vetoed by the Governor [HB4218 Detail]
Download: Texas-2021-HB4218-Introduced.html
87R6894 DRS-F | ||
By: Craddick | H.B. No. 4218 |
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relating to a cause of action for the bad faith washout of an | ||
overriding royalty interest in an oil and gas lease. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Title 4, Property Code, is amended by adding | ||
Chapter 31 to read as follows: | ||
CHAPTER 31. BAD FAITH WASHOUT OF OVERRIDING ROYALTY INTEREST IN OIL | ||
AND GAS LEASE | ||
Sec. 31.001. DEFINITION. In this chapter, "washout" means | ||
the elimination or reduction of an overriding royalty interest in | ||
an oil and gas lease by the forfeiture or surrender of the oil and | ||
gas lease by a lessee or the lessee's successors or assigns and the | ||
subsequent reacquisition of a lease, or all or part of the mineral | ||
estate associated with the lease, by the lessee or the lessee's | ||
successors, assigns, contractors, or subsidiaries on all or part of | ||
the same land, free of the overriding royalty interest. | ||
Sec. 31.002. CAUSE OF ACTION FOR BAD FAITH WASHOUT. A | ||
person may bring a cause of action for a bad faith washout of the | ||
person's overriding royalty interest in an oil and gas lease. The | ||
person is entitled to a remedy under this chapter if the person | ||
proves by a preponderance of the evidence that: | ||
(1) the person owned or had a legal right to the | ||
overriding royalty interest; | ||
(2) the defendant had control over the oil and gas | ||
lease burdened by the overriding royalty interest; | ||
(3) the defendant caused a washout of the person's | ||
overriding royalty interest; and | ||
(4) the defendant acted in bad faith by knowingly or | ||
intentionally causing the washout. | ||
Sec. 31.003. VENUE. An owner of an overriding royalty | ||
interest in an oil and gas lease may bring an action under this | ||
chapter in a district court of a county in which any part of the | ||
property subject to the oil and gas lease is located. | ||
Sec. 31.004. REMEDIES; COSTS AND FEES. (a) An owner of an | ||
overriding royalty interest who prevails in an action under this | ||
chapter may recover: | ||
(1) actual and exemplary damages; | ||
(2) enforcement of a constructive trust on the oil and | ||
gas lease or mineral estate acquired to accomplish the washout of | ||
the overriding royalty interest; and | ||
(3) court costs and attorney's fees. | ||
(b) The remedies provided by this chapter are cumulative of | ||
other remedies provided by common law or statute. | ||
Sec. 31.005. LIMITATION ON FILING ACTION. A person must | ||
bring an action under this chapter not later than the second | ||
anniversary of the date the washout occurred. | ||
SECTION 2. Chapter 31, Property Code, as added by this Act, | ||
applies only to a washout that occurs on or after the effective date | ||
of this Act. A washout that occurred before that date is governed | ||
by the law in effect immediately before the effective date of this | ||
Act, and that law is continued in effect for that purpose. | ||
SECTION 3. This Act takes effect September 1, 2021. |