Bill Text: TX HB450 | 2023-2024 | 88th Legislature | Enrolled

Texas House Bill 450 (Prior Session Legislation)

Bill Title: Relating to a cause of action for the bad faith washout of an overriding royalty interest in an oil and gas lease.

Sponsorship: Slight Partisan Bill (Republican 3-1)

Status: (Passed) 2023-05-13 - Effective on 9/1/23 [HB450 Detail]

Download: Texas-2023-HB450-Enrolled.html



	H.B. No. 450




	AN ACT
	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. DEFINITIONS. In this chapter:
	(1) "Bad faith" means the conscious taking of action
	for the purpose of washing out all or part of an overriding royalty
	interest.
	(2) "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 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 person obtained actual knowledge that
	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, 2023.


	______________________________	______________________________
	President of the Senate	Speaker of the House


	I certify that H.B. No. 450 was passed by the House on April
	11, 2023, by the following vote: Yeas 143, Nays 0, 1 present, not
	voting.

	______________________________
	Chief Clerk of the House


	I certify that H.B. No. 450 was passed by the Senate on April
	27, 2023, by the following vote: Yeas 31, Nays 0.

	______________________________
	Secretary of the Senate
	APPROVED: _____________________
	Date

	_____________________
	Governor