LA. HOUSE BILL 547 BY REPRESENTATIVE BURFORD - would put a deadline on payment of royalty and make the operator provide
HLS 11RS-272 ORIGINAL
Page 1 of 2
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Regular Session, 2011
HOUSE BILL NO. 547
BY REPRESENTATIVE BURFORD
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
MINERALS: Provides for time periods for royalty payments to a mineral lessor
1 AN ACT
2 To amend and reenact R.S. 31:137, relative to the payment of royalties; to provide for time
3 limits within which to make royalty payments; to provide for notice of delayed
4 payment; and to provide for related matters.
5 Be it enacted by the Legislature of Louisiana:
6 Section 1. R.S. 31:137 is hereby amended and reenacted to read as follows:
7 §137. Nonpayment of royalties; notice prerequisite to judicial demand
8 A. If a mineral lessor seeks relief for the failure of his lessee to make timely
9 or proper payment of royalties, he must shall give his lessee written notice of such
10 failure as a prerequisite to a judicial demand for damages or dissolution of the lease.
11 B. For purposes of this Section and unless otherwise provided by the mineral
12 lease, "timely payment" means payment within the delays required by R.S.
13 31:212.32, or payment within one hundred eighty days of the date actual production
14 of minerals begins for proceeds totaling one hundred dollars or more annually.
15 C. If the lessee is unable to make timely payments as provided in Subsection
16 B of this Section, the lessee shall mail a notice to all affected lessors of the inability
17 to make timely payment. The notice shall include the reason for failure to make
18 timely payment and an estimate of when payment is expected to be made.
HB NO. 547
HLS 11RS-272 ORIGINAL
Page 2 of 2
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Burford HB No. 547
Abstract: Defines "timely payment" relative to the payment of royalties.
Present law provides that if a mineral lessor seeks relief for the failure of his lessee to make timely or proper payment of royalties, he must give his lessee written notice of such failure as a prerequisite to a judicial demand for damages or dissolution of the lease. Proposed law retains present law but defines "timely payment" as payment within the delays provided by present law (R.S. 31:212.32) or payment within 180 days of production for proceeds totaling $100 or more annually, unless otherwise provided by the mineral lease.
Proposed law provides that if the lessee is unable to make timely payments as provided in proposed law, the lessee shall mail a notice to all affected lessors of the inability to make timely payment. Requires the notice to include the reason for failure to make timely payment and an estimate of when payment is expected to be made.
(Amends R.S. 31:137)
Page 1 of 2
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Regular Session, 2011
HOUSE BILL NO. 547
BY REPRESENTATIVE BURFORD
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
MINERALS: Provides for time periods for royalty payments to a mineral lessor
1 AN ACT
2 To amend and reenact R.S. 31:137, relative to the payment of royalties; to provide for time
3 limits within which to make royalty payments; to provide for notice of delayed
4 payment; and to provide for related matters.
5 Be it enacted by the Legislature of Louisiana:
6 Section 1. R.S. 31:137 is hereby amended and reenacted to read as follows:
7 §137. Nonpayment of royalties; notice prerequisite to judicial demand
8 A. If a mineral lessor seeks relief for the failure of his lessee to make timely
9 or proper payment of royalties, he must shall give his lessee written notice of such
10 failure as a prerequisite to a judicial demand for damages or dissolution of the lease.
11 B. For purposes of this Section and unless otherwise provided by the mineral
12 lease, "timely payment" means payment within the delays required by R.S.
13 31:212.32, or payment within one hundred eighty days of the date actual production
14 of minerals begins for proceeds totaling one hundred dollars or more annually.
15 C. If the lessee is unable to make timely payments as provided in Subsection
16 B of this Section, the lessee shall mail a notice to all affected lessors of the inability
17 to make timely payment. The notice shall include the reason for failure to make
18 timely payment and an estimate of when payment is expected to be made.
HB NO. 547
HLS 11RS-272 ORIGINAL
Page 2 of 2
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Burford HB No. 547
Abstract: Defines "timely payment" relative to the payment of royalties.
Present law provides that if a mineral lessor seeks relief for the failure of his lessee to make timely or proper payment of royalties, he must give his lessee written notice of such failure as a prerequisite to a judicial demand for damages or dissolution of the lease. Proposed law retains present law but defines "timely payment" as payment within the delays provided by present law (R.S. 31:212.32) or payment within 180 days of production for proceeds totaling $100 or more annually, unless otherwise provided by the mineral lease.
Proposed law provides that if the lessee is unable to make timely payments as provided in proposed law, the lessee shall mail a notice to all affected lessors of the inability to make timely payment. Requires the notice to include the reason for failure to make timely payment and an estimate of when payment is expected to be made.
(Amends R.S. 31:137)
Views: 80
Replies to This Discussion
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Oil & Gas ProPermalink Reply by The_Baron on -
I am oppose to this for the simple reason that Royalties are created by a lease, which is considered a private contract between two parties. There are already remidies in the law to sue for unpaid royalty
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Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on -
Baron from my reading those remedies remain but the 180 day period from production to notice is added to make the current law less open ended in regard to notifying royalty interests. 180 days from first production seems most liberal and the law allows for variance by lease agreement and non-payment with a notice giving the reason for the delayed payment with estimate of when the royalty will be paid. Please give us a real world example of how this amendment to the existing statute would be unreasonable from the operator's point of view?
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Oil & Gas ProPermalink Reply by The_Baron on -
I don't think its inreasonable per se- just another garble of language to an already wordy state code.
Currently, All you have to do is make a proper demand, and the Operator will respond. The ansewer may not be what you want to hear as a RI, but they will respond. This laws time limit is still open ended anyways
"if the lessee is unable to make timely payments as provided in proposed law, the lessee shall mail a notice to all affected lessors of the inability to make timely payment. Requires the notice to include the reason for failure to make timely payment and an estimate of when payment is expected to be made."
So whats the point of all of this?
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Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on -
I think that the point is to require the operator to communicate in a timely manner with affected lessors and provide a reason for delayed payment. Yes, the operator can exceed the 180 days but only if they provide a specific reason for delayed payment in writing.
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