| Vote Recommendation | Economic Freedom | Property Rights | Personal Responsibility | Limited Government | Individual Liberty |
|---|---|---|---|---|---|
| Yes | Neutral | Positive | Neutral | Neutral | Neutral |
Relating to a cause of action for the bad faith washout of an overriding royalty interest in an oil and gas lease.
No significant fiscal implication to the State is anticipated.
HB 4218 would permit a person to bring a civil suit against an oil and gas entity for the bad faith washout of their overriding interest in an oil or gas lease. The plaintiff would have to prove by a preponderance of the evidence that they had an overriding royalty interest in the lease, the defendant had control over the lease burdened by the overriding interest, and the defendant acted in bad faith by knowingly causing a washout of the plaintiff's interest. A plaintiff with a successful claim would be entitled to actual damages, enforcement of a trust to re-establish the overriding interest, and court costs and attorney's fees.
HB 4218 would define a washout as the elimination or reduction of an overriding royalty interest and the subsequent reacquisition of the lease without such overriding interests. A person would have to bring a suit under this new law within two years of obtaining actual knowledge of a washout.
While we are generally wary of legislation which creates a new cause of action, we support HB 4218 because it strengthens the property rights of landowners to whom the bill pertains. If a landowner releases their contractual obligations due to information intentionally given in bad faith, they should have appropriate recourse through the civil justice system.