Texas House Bill HB 5105

Texas 2025 - 89th Regular

• Filed: 3/13/25

Caption

Relating to the imposition on a payor of proceeds of production from an oil or gas well of a duty to notify a payee when payments to the payee are suspended.

Summary

HB 5105 would add a new section to the Texas Natural Resources Code requiring a payor of oil or gas production proceeds to give written notice when payments to a payee are suspended for reasons other than those already covered by existing law. The notice must be sent within 30 days after the suspension and must explain the reason for the suspension in reasonable detail, while also including information currently required by Section 91.502(1). If the payor fails to provide the required notice, the bill would require the payor to pay interest on the suspended amount beginning on the 31st day after suspension and continuing until notice is delivered. The interest rate would be two percentage points above the New York Federal Reserve Bank’s loan rate for depository institutions, unless the parties have agreed in writing to a different rate. The bill would apply only to suspensions made on or after its effective date of September 1, 2025.

Impact

The bill would create a new statutory notice obligation for purchasers/payors of oil and gas proceeds and add a financial penalty for noncompliance. It would affect the rights and remedies of royalty owners, mineral interest owners, and other payees whose production payments are suspended, while imposing additional administrative and compliance duties on operators, purchasers, and other payors in the oil and gas industry. Existing law would continue to govern suspensions made before the effective date.

Sentiment

The available legislative history shows little recorded debate or formal vote activity, and the bill was left pending in committee. Based on the bill’s structure, it appears aimed at improving transparency and payment accountability rather than making a broader policy change, suggesting a generally practical, consumer-protection-oriented purpose. The absence of recorded committee discussion makes it difficult to identify strong support or opposition from the available materials.

Contention

The main point of potential contention is the added burden on payors, who would have to track suspension events, issue timely written explanations, and potentially pay interest if notice is delayed. Support would likely come from royalty owners and other payees who benefit from prompt notice and compensation when payments are withheld. The bill also leaves room for dispute over what constitutes a sufficiently detailed explanation and whether the interest penalty is appropriate when suspensions are caused by legitimate title, ownership, or payment issues.