HBA-LJP, EDN C.S.H.B. 981 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 981 By: King, Tracy Energy Resources 4/12/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE Under current law, certain information must accompany monthly royalty checks for proceeds derived from the sale of oil or gas production. This information often does not contain enough detail and it is difficult for royalty owners to determine whether or not they are being paid correctly. C.S.H.B. 981 provides that additional information be included with the monthly royalty check. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS C.S.H.B. 981 amends the Natural Resources Code to provide that each check stub, attachment to a payment form, or other remittance advice to a royalty interest owner (owner) for proceeds derived from the sale of oil or gas production must include, in addition to existing requirements: _a county and state in which the lease, property, or well is located; and _a telephone number at which additional information regarding the payment may be obtained and questions may be answered. C.S.H.B. 981 provides that a payor must, at a minimum, provide a description of property from which oil or gas is being produced and the type of production for the lease, property, or well for which payment of proceeds is being reported if such information has not been provided in a division order. The bill sets forth provisions regarding information about payment deductions and adjustments, heating value, lease identification, and other information that an owner requests. EFFECTIVE DATE January 1, 2002. Provisions regarding required information take effect September 1, 2002. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 981 modifies the original by replacing all references to a person making the payment with the payor and defining "payor." The substitute modifies the information that each check stub, attachment to a payment form, or other remittance advice must include. The substitute provides that a payor must, at a minimum, provide a description of property from which oil or gas is being produced and the type of production for the lease, property, or well for which payment of proceeds is being reported if such information has not been provided in a division order. The substitute sets forth provisions regarding information about payment deductions and adjustments, heating value, lease identification, and other information that an owner requests. The substitute removes the provision authorizing an owner to bring an action for an injunction to compel a person making a payment to comply with the bill but authorizes an owner who does not receive the required information in a timely manner to send a written request for information to the payor by certified mail. The substitute requires the payor to provide such information not later than the 60th day after the request is received and authorizes an owner to bring a civil action against the payor if the information is not received within 60 days. The substitute changes the effective date from on passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001 to January 1, 2002, while provisions regarding required information take effect September 1, 2002.