Bill Text: TX SB1468 | 2021-2022 | 87th Legislature | Introduced


Bill Title: Relating to oil and gas liens.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2021-04-22 - Left pending in committee [SB1468 Detail]

Download: Texas-2021-SB1468-Introduced.html
  87R5593 NC-F
 
  By: Hinojosa S.B. No. 1468
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to oil and gas liens.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 9.203(j), Business & Commerce Code, is
  amended to read as follows:
         (j)  If a secured party holds a security interest that
  applies under this chapter to minerals, not including oil and gas,
  upon their extraction and the security interest also qualifies
  under applicable law as a lien on those minerals before their
  extraction, the security interest before and after production is a
  single continuous and uninterrupted lien on the property. This
  subsection is a statement of the law of this state as it existed
  before the effective date of this subsection and applies with
  respect to minerals, not including oil and gas, regardless of when
  the minerals were extracted.
         SECTION 2.  Section 9.310(b), Business & Commerce Code, is
  amended to read as follows:
         (b)  The filing of a financing statement is not necessary to
  perfect a security interest:
               (1)  that is perfected under Section 9.308(d), (e),
  (f), or (g);
               (2)  that is perfected under Section 9.309 when it
  attaches;
               (3)  in property subject to a statute, regulation, or
  treaty described in Section 9.311(a);
               (4)  in goods in possession of a bailee that is
  perfected under Section 9.312(d)(1) or (2);
               (5)  in certificated securities, documents, goods, or
  instruments which is perfected without filing, control or
  possession under Section 9.312(e), (f), or (g);
               (6)  in collateral in the secured party's possession
  under Section 9.313;
               (7)  in a certificated security that is perfected by
  delivery of the security certificate to the secured party under
  Section 9.313;
               (8)  in deposit accounts, electronic chattel paper,
  electronic documents, investment property, or letter-of-credit
  rights that is perfected by control under Section 9.314;
               (9)  in proceeds that is perfected under Section 9.315;
  or
               (10)  that is perfected under Section 9.316[; or
               [(11)  in oil or gas production or their proceeds under
  Section 9.343].
         SECTION 3.  Section 9.324(b), Business & Commerce Code, is
  amended to read as follows:
         (b)  Subject to Subsection (c) and except as otherwise
  provided in Subsection (g), a perfected purchase-money security
  interest in inventory has priority over a conflicting security
  interest in the same inventory, has priority over a conflicting
  security interest in chattel paper or an instrument constituting
  proceeds of the inventory and in proceeds of the chattel paper, if
  so provided in Section 9.330, and, except as otherwise provided in
  Section 9.327, also has priority in identifiable cash proceeds of
  the inventory to the extent the identifiable cash proceeds are
  received on or before the delivery of the inventory to a buyer, if:
               (1)  the purchase-money security interest is perfected
  when the debtor receives possession of the inventory;
               (2)  [except where excused by Section 9.343 (oil and
  gas production),] the purchase-money secured party sends an
  authenticated notification to the holder of the conflicting
  security interest;
               (3)  the holder of the conflicting security interest
  receives any required notification within five years before the
  debtor receives possession of the inventory; and
               (4)  the notification states that the person sending
  the notification has or expects to acquire a purchase-money
  security interest in inventory of the debtor and describes the
  inventory.
         SECTION 4.  Subtitle B, Title 5, Property Code, is amended by
  adding Chapter 67 to read as follows:
  CHAPTER 67. OIL AND GAS LIENS
         Sec. 67.001.  DEFINITIONS. In this chapter:
               (1)  "Affiliate" means any person who:
                     (A)  is controlled, directly or indirectly, by a
  first purchaser; or
                     (B)  controls, directly or indirectly, a first
  purchaser.
               (2)  "Agreement to sell" means an enforceable agreement
  by an interest owner, directly or through a representative, to sell
  oil or gas on or after severance to a first purchaser. The term
  includes an agreement that is express or implied, whether oral or
  written.
               (3)  "Control" means the possession, directly or
  indirectly, of the power to direct or cause the direction of the
  management and policies of a person, whether through ownership, by
  contract, or otherwise.
               (4)  "First purchaser" means the first person that
  purchases oil or gas from an interest owner, under an agreement to
  sell.
               (5)  "Gas" means natural gas, casinghead gas, and all
  constituent parts of natural gas and casinghead gas before and
  after processing but before a first purchaser transfers title,
  possession, or control of the gas to a purchaser.
               (6)  "Interest owner" means a person owning an interest
  of any kind in oil and gas rights before acquisition by a first
  purchaser. The term includes a transferee interest owner.
               (7)  "Oil" means oil, condensate, and all constituent
  parts of the oil, before or after processing but before a first
  purchaser transfers title, possession, or control of the oil to a
  purchaser.
               (8)  "Oil and gas lien" means the lien described by
  Section 67.002.
               (9)  "Oil and gas rights" means any legal or equitable
  right, title, or interest in or to oil or gas from land in this
  state. The term includes:
                     (A)  oil or gas in place before severance;
                     (B)  oil or gas production, or the right to
  receive a portion of the proceeds, on severance;
                     (C)  any interest or estate in, by, through, or
  under an oil and gas lease;
                     (D)  a right acquired under a pooling order
  relating to:
                           (i)  ownership of oil or gas;
                           (ii)  the right to proceeds; or 
                           (iii)  the right to enter into an agreement
  to sell;
                     (E)  a right to receive consideration under an
  agreement to sell oil or gas; and
                     (F)  a mortgage lien or security interest in oil
  and gas rights.
               (10)  "Operator" means a person engaged in the
  severance of oil or gas for that person only, for other persons
  only, or for that person and others.
               (11)  "Permitted lien" means a perfected and
  enforceable lien created by statute or rule of a governmental
  agency for storage or transportation charges, including terminal
  charges, tariffs, demurrage, insurance, labor, or other charges,
  owed by a first purchaser in relation to oil or gas originally
  purchased under an agreement to sell. The term does not include a
  lien that is:
                     (A)  in favor of an affiliate of a first purchaser
  unless the lien is authorized by the statute or rule creating the
  lien; or
                     (B)  for charges incurred after the 90th day after
  the date the first purchaser delivers the oil or gas for storage or
  transportation.
               (12)  "Pooling order" means an order issued by the
  Railroad Commission of Texas that requires the owners of the right
  to drill for oil or gas in a drilling and spacing unit to pool the
  owner's interests for the development of the drilling and spacing
  unit.
               (13)  "Proceeds" means, when paid or to be paid in
  consideration of, or as a consequence of, the sale of oil or gas
  under an agreement to sell:
                     (A)  oil or gas on or after severance;
                     (B)  inventory of raw, refined, or manufactured
  oil or gas after severance;
                     (C)  rights to or products of any of the oil or gas
  described by Paragraph (A) or inventory described by Paragraph (B);
                     (D)  cash proceeds;
                     (E)  accounts;
                     (F)  chattel paper;
                     (G)  instruments;
                     (H)  documents; or
                     (I)  payment intangibles with respect to any of
  the preceding.
               (14)  "Purchaser" means a person who:
                     (A)  is not an affiliate of a first purchaser; and
                     (B)  takes, receives, or purchases oil or gas from
  a first purchaser.
               (15)  "Representative" means a person who is
  authorized, expressly or by implication, including an operator or
  an authorized broker, to:
                     (A)  sell oil or gas on behalf of, or for the
  benefit of, an interest owner under an agreement to sell; or
                     (B)  receive on behalf of an interest owner the
  consideration under an agreement to sell.
               (16)  "Sales price" means the proceeds a first
  purchaser agrees to pay an interest owner or representative under
  an agreement to sell.
               (17)  "Security interest" means a security interest
  governed by Chapter 9, Business & Commerce Code.
               (18)  "Severance" means the point in time oil or gas is
  possessed at the mouth of the wellbore of an oil and gas well.
               (19)  "Transferee interest owner" means a person that
  acquires oil and gas rights from a transferor interest owner.
               (20)  "Transferor interest owner" means an interest
  owner that transfers or conveys oil and gas rights, wholly or
  partly.
         Sec. 67.002.  OIL AND GAS LIEN. (a) To secure the
  obligations of a first purchaser to pay the sales price, each
  interest owner has an oil and gas lien to the extent of the interest
  owner's interest in oil and gas rights. The oil and gas lien exists
  as part of and incident to the ownership of oil and gas rights.
         (b)  An oil and gas lien:
               (1)  exists in and attaches to all oil and gas before
  severance;
               (2)  continues uninterrupted and without lapse in all
  oil and gas on and after severance; and
               (3)  continues uninterrupted and without lapse in and
  to all proceeds from the sale of the oil or gas.
         (c)  Except as provided by Subsection (d), an oil and gas
  lien exists until the interest owner or representative first
  entitled to receive the sales price has received the sales price for
  the oil or gas.
         (d)  As between an interest owner and a representative of an
  interest owner or any person claiming adversely to the interest
  owner or representative, the interest owner's oil and gas lien
  continues uninterrupted and without lapse in proceeds in the
  possession or control of a representative until the interest owner
  on whose behalf the representative acts receives the proceeds in
  full.
         (e)  Except as provided by Subsection (f), a first purchaser
  takes free of an oil and gas lien if the first purchaser:
               (1)  in good faith, paid the sales price for the oil or
  gas to an interest owner or representative otherwise apparently
  entitled to receive the sales price; and
               (2)  is without actual knowledge that the interest
  owner or representative is not entitled to receive the sales price
  paid.
         (f)  Notwithstanding Subsection (e), the oil and gas lien
  continues uninterrupted in the proceeds paid to or otherwise due
  the interest owner or representative.
         Sec. 67.003.  TRANSFER OF OIL AND GAS RIGHTS. (a) The
  validity of an oil and gas lien is not dependent on possession of
  the oil or gas by an interest owner or representative. An oil and
  gas lien is not void or expired because of a change or transfer of
  the actual or constructive possession of or title to the oil or gas
  from the interest owner or representative to a first purchaser or
  other purchaser.
         (b)  On the conveyance or transfer of any oil and gas rights
  by a transferor interest owner, the oil and gas lien vested in the
  transferor interest owner immediately before the conveyance or
  transfer remains with the transferor interest owner to the extent
  of any oil and gas rights retained by the transferor interest owner.
         (c)  On the conveyance or transfer of any oil and gas rights
  by a transferor interest owner, the oil and gas lien vested in the
  transferor interest owner immediately before the conveyance or
  transfer is transferred to and attaches automatically to the oil
  and gas rights acquired by the transferee interest owner
  uninterrupted and without lapse and as part of and incident to the
  oil and gas rights that are conveyed or transferred.
         Sec. 67.004.  AUTOMATIC PERFECTION OF LIEN. An oil and gas
  lien of an interest owner is perfected automatically without the
  need to file a financing statement or any other type of
  documentation.
         Sec. 67.005.  COMMINGLING. (a) If oil or gas in which there
  exists more than one oil and gas lien is commingled with other oil
  or gas in a manner that the identity of the specific oil or gas is
  lost, the oil and gas lien:
               (1)  continues without interruption into and attaches
  to any resulting commingled product; and
               (2)  is perfected automatically on the date of the oil
  and gas lien's original perfection but only for the volume of the
  commingled product that is equal to the volume of product to which
  the oil and gas lien originally attached.
         (b)  If commingling described by Subsection (a) occurs, the
  oil and gas lien in the commingled product has priority over any
  security interest or other lien that is not an oil and gas lien or
  permitted lien, regardless of whether the security interest or
  other lien has been properly perfected.
         (c)  If more than one oil and gas lien attaches to the
  commingled product, the oil and gas liens rank equally in the
  proportion that the respective sales prices secured by each oil and
  gas lien bears as a percentage of the total of the sales prices
  secured by all oil and gas liens applicable to the production at the
  time the production was commingled.
         (d)  This section is intended to recognize the continuation
  of oil and gas lien rights of an interest owner in the commingled
  product stream only as to a volume of oil or gas proportionate to
  the volume of oil or gas that originated from the interest owner,
  with that volume of the commingled product being considered to have
  maintained a distinct identity as being available for sale or
  transportation under the specific contractual arrangements
  applicable to the production at the time the oil or gas entered the
  commingled product stream.
         Sec. 67.006.  RIGHTS OF PURCHASERS. (a) Except as provided
  by Subsection (b), a purchaser takes free of any oil and gas lien
  otherwise applicable to the oil or gas purchased if the purchaser:
               (1)  is a buyer in the ordinary course of the first
  purchaser's business under Chapter 9, Business & Commerce Code; or
               (2)  has paid all of the consideration due to the first
  purchaser, including by exchange of oil or gas, net-out, or
  set-off, under all applicable enforceable contracts in existence at
  the time of the payment.
         (b)  The oil and gas lien continues uninterrupted in the
  proceeds paid to or otherwise due the first purchaser.
         (c)  Except as provided by this section, an oil and gas lien
  has priority over the rights of any purchaser.
         Sec. 67.007.  PRIORITY IN RELATION TO OTHER LIENS OR
  SECURITY INTERESTS. Except for a permitted lien, an oil and gas
  lien takes priority over any other lien, whether arising by
  contract, law, equity, or otherwise, or any security interest.
         Sec. 67.008.  TITLE NOT AFFECTED. This chapter does not
  affect:
               (1)  when legal title to oil and gas may pass by
  agreement or operation of law subject to an oil and gas lien;
               (2)  the right of a first purchaser to take or receive
  oil and gas under the terms of a division order, provided that the
  division order does not modify, waive, or abrogate in any respect
  the rights of an interest owner under this chapter; or
               (3)  subject to Section 67.009, the right of a first
  purchaser to take or receive oil and gas under an agreement to sell.
         Sec. 67.009.  WAIVER. (a) Except as provided by Subsection
  (b), an interest owner may not be required, as a condition or term
  of an agreement to sell or otherwise, to:
               (1)  waive or release any oil and gas lien or a right
  under this chapter, other than on payment in full of the sales
  price; or
               (2)  agree to a provision that would apply the law of
  another state to a right granted under this chapter.
         (b)  An interest owner, or representative acting on behalf of
  an interest owner, may waive or release any oil and gas lien or any
  rights under this chapter or agree to apply the law of another state
  to the interest owner's oil and gas rights granted under this
  chapter, if the first purchaser:
               (1)  posts a letter of credit in a form and amount
  satisfactory to the interest owner; or
               (2)  agrees to prepay or escrow the sales price under an
  agreement to sell with the interest owner and performs all of the
  first purchaser's obligations under the agreement.
         (c)  Unless waived or released under Subsection (b), a
  condition or term described by Subsection (a) is void.
         Sec. 67.010.  LIMITATION ON FILING ACTION TO ENFORCE LIEN.
  (a) Except as provided by Subsection (b), an action to enforce the
  interest owner's oil and gas lien must be brought not later than the
  first anniversary of the last day of the month after the date
  proceeds from the sale of oil or gas subject to the lien are
  required by law or contract to be paid to the interest owner, but
  only as to the oil or gas sold during that month.
         (b)  The commencement of a proceeding by or against any
  person claiming an interest in any property subject to the oil and
  gas lien seeking to adjudicate the person as bankrupt or insolvent,
  or seeking relief of the person's debts under any law relating to
  bankruptcy, insolvency, reorganization, or relief of debtors, or
  seeking the entry of an order for relief or the appointment of a
  receiver, trustee, or other similar official for the person or for
  any substantial part of the person's property shall toll the
  one-year period prescribed by Subsection (a) in which to bring an
  action to enforce the oil and gas lien for an additional period of
  90 days after the earlier of the date:
               (1)  the proceeding is dismissed or otherwise finally
  concluded; or
               (2)  final relief is obtained from the appropriate
  tribunal authorizing the commencement of the action to enforce the
  oil and gas lien.
         Sec. 67.011.  VENUE; JURISDICTION. (a) An action to enforce
  the interest owner's oil and gas lien may be brought in a district
  court or other court of competent jurisdiction in the county in
  which:
               (1)  the oil and gas well from which the oil or gas is
  produced is located;
               (2)  the unpaid for oil or gas is located; or
               (3)  the proceeds for the oil or gas are located.
         (b)  An interest owner may join multiple proceedings to
  enforce oil and gas liens involving more than one oil and gas well
  in one county in the same action.
         (c)  In cases involving oil or gas from the same oil and gas
  well or wells:
               (1)  any persons claiming oil and gas liens in the oil
  or gas may join in the same action; or
               (2)  a district court may consolidate separate actions
  related to the oil or gas.
         Sec. 67.012.  PAYMENT DISPUTES. In the case of a payment
  dispute between an operator and another interest owner, a
  good-faith tender of money in satisfaction of a debt or security
  interest by one person operates as a tender of the money to both if
  tender is made:
               (1)  to the person who the operator and other interest
  owner jointly directed the first purchaser in writing to pay;
               (2)  to a person who otherwise shows the person is
  entitled to the money; or
               (3)  to a court of competent jurisdiction in the event
  of litigation or bankruptcy.
         Sec. 67.013.  COSTS; ATTORNEY'S FEES. The prevailing party
  in an action brought under this chapter is entitled to court costs
  and reasonable attorney's fees.
         Sec. 67.014.  CERTAIN RIGHTS OF OPERATOR NOT IMPAIRED. This
  chapter does not impair an operator's right to be paid, set-off, or
  withhold funds from another interest owner as security for or in
  satisfaction of a debt or security interest.
         Sec. 67.015.  INTEREST OWNER RIGHTS CUMULATIVE. The
  provisions of this chapter and the rights granted under this
  chapter are intended to be cumulative with all other rights an
  interest owner may otherwise have at law or in equity, including the
  right of any interest owner to maintain a personal action to recover
  the debt against any person liable for payment of the sales price of
  the oil or gas.
         Sec. 67.016.  LIBERAL CONSTRUCTION OF INTEREST OWNER RIGHTS.
  The rights of the interest owner shall be liberally construed to
  give the interest owner the most comprehensive protection to secure
  the receipt by the interest owner of the sales price.
         Sec. 67.017.  CONFLICT OF LAWS. To the extent of a conflict
  between the provisions of this chapter and other law, this chapter
  prevails.
         SECTION 5.  Section 9.343, Business & Commerce Code, is
  repealed.
         SECTION 6.  (a) The changes in law made by this Act do not
  affect the rights of any interest owner that accrued before the
  effective date of this Act to the extent those rights are not in
  conflict with the provisions of Chapter 67, Property Code, as added
  by this Act, and the former law is continued in effect to preserve
  those rights.
         (b)  For purposes of Sections 67.005 and 67.007, Property
  Code, as added by this Act, a "permitted lien" includes a mortgage
  lien or security interest in oil or gas that:
               (1)  is granted before the effective date of this Act by
  a first purchaser in favor of a person who is not an affiliate of the
  first purchaser; and
               (2)  secures payment under a written instrument of
  indebtedness signed by the first purchaser and accepted in writing
  by the payee before the effective date of this Act with a principal
  amount and a fixed maturity stated in the instrument, unless:
                     (A)  the instrument of indebtedness is modified,
  amended, or restated on or after the effective date of this Act to:
                           (i)  increase the principal amount that was
  owed before the effective date of this Act; or
                           (ii)  extend the stated maturity of the debt
  that was in effect before the effective date of this Act; or
                     (B)  the mortgage lien or security interest is not
  validly perfected with a first priority against the claims of all
  persons under applicable law other than persons holding a statutory
  or regulatory lien for which first priority is granted by statute or
  rule.
         SECTION 7.  This Act takes effect September 1, 2021.
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