CHAPTER 127. INDEMNITY PROVISIONS IN CERTAIN MINERAL AGREEMENTS
CIVIL PRACTICE AND REMEDIES CODE
TITLE 6. MISCELLANEOUS PROVISIONS
CHAPTER 127. INDEMNITY PROVISIONS IN CERTAIN MINERAL AGREEMENTS
Sec. 127.001. DEFINITIONS. In this chapter:
(1) "Agreement pertaining to a well for oil, gas, or water or to
a mine for a mineral":
(A) means:
(i) a written or oral agreement or understanding concerning the
rendering of well or mine services; or
(ii) an agreement to perform a part of those services or an act
collateral to those services, including furnishing or renting
equipment, incidental transportation, or other goods and services
furnished in connection with the services; but
(B) does not include a joint operating agreement.
(2) "Joint operating agreement" means an agreement between or
among holders of working interests or operating rights for the
joint exploration, development, operation, or production of
minerals.
(3) "Mutual indemnity obligation" means an indemnity obligation
in an agreement pertaining to a well for oil, gas, or water or to
a mine for a mineral in which the parties agree to indemnify each
other and each other's contractors and their employees against
loss, liability, or damages arising in connection with bodily
injury, death, and damage to property of the respective
employees, contractors or their employees, and invitees of each
party arising out of or resulting from the performance of the
agreement.
(4) "Well or mine service":
(A) includes:
(i) drilling, deepening, reworking, repairing, improving,
testing, treating, perforating, acidizing, logging, conditioning,
purchasing, gathering, storing, or transporting oil, brine water,
fresh water, produced water, condensate, petroleum products, or
other liquid commodities, or otherwise rendering services in
connection with a well drilled to produce or dispose of oil, gas,
other minerals or water; and
(ii) designing, excavating, constructing, improving, or
otherwise rendering services in connection with a mine shaft,
drift, or other structure intended for use in exploring for or
producing a mineral; but
(B) does not include:
(i) purchasing, selling, gathering, storing, or transporting gas
or natural gas liquids by pipeline or fixed associated
facilities; or
(ii) construction, maintenance, or repair of oil, natural gas
liquids, or gas pipelines or fixed associated facilities.
(5) "Wild well" means a well from which the escape of oil or gas
is not intended and cannot be controlled by equipment used in
normal drilling practice.
(6) "Unilateral indemnity obligation" means an indemnity
obligation in an agreement pertaining to a well for oil, gas, or
water or to a mine for a mineral in which one of the parties as
indemnitor agrees to indemnify the other party as indemnitee with
respect to claims for personal injury or death to the
indemnitor's employees or agents or to the employees or agents of
the indemnitor's contractors but in which the indemnitee does not
make a reciprocal indemnity to the indemnitor.
Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985.
Amended by Acts 1989, 71st Leg., ch. 1102, Sec. 1, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 36, Sec. 1, eff. April 19, 1991.
Sec. 127.002. FINDINGS; CERTAIN AGREEMENTS AGAINST PUBLIC
POLICY. (a) The legislature finds that an inequity is fostered
on certain contractors by the indemnity provisions in certain
agreements pertaining to wells for oil, gas, or water or to mines
for other minerals.
(b) Certain agreements that provide for indemnification of a
negligent indemnitee are against the public policy of this state.
(c) The legislature finds that joint operating agreement
provisions for the sharing of costs or losses arising from joint
activities, including costs or losses attributable to the
negligent acts or omissions of any party conducting the joint
activity:
(1) are commonly understood, accepted, and desired by the
parties to joint operating agreements;
(2) encourage mineral development;
(3) are not against the public policy of this state; and
(4) are enforceable unless those costs or losses are expressly
excluded by written agreement.
Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985.
Amended by Acts 1991, 72nd Leg., ch. 36, Sec. 2, eff. April 19,
1991.
Sec. 127.003. AGREEMENT VOID AND UNENFORCEABLE. (a) Except as
otherwise provided by this chapter, a covenant, promise,
agreement, or understanding contained in, collateral to, or
affecting an agreement pertaining to a well for oil, gas, or
water or to a mine for a mineral is void if it purports to
indemnify a person against loss or liability for damage that:
(1) is caused by or results from the sole or concurrent
negligence of the indemnitee, his agent or employee, or an
individual contractor directly responsible to the indemnitee; and
(2) arises from:
(A) personal injury or death;
(B) property injury; or
(C) any other loss, damage, or expense that arises from personal
injury, death, or property injury.
Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985.
Sec. 127.004. EXCLUSIONS. This chapter does not apply to loss
or liability for damages or an expense arising from:
(1) personal injury, death, or property injury that results from
radioactivity;
(2) property injury that results from pollution, including
cleanup and control of the pollutant;
(3) property injury that results from reservoir or underground
damage, including loss of oil, gas, other mineral substance, or
water or the well bore itself;
(4) personal injury, death, or property injury that results from
the performance of services to control a wild well to protect the
safety of the general public or to prevent depletion of vital
natural resources; or
(5) cost of control of a wild well, underground or above the
surface.
Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985.
Amended by Acts 1989, 71st Leg., ch. 1102, Sec. 2, eff. Sept. 1,
1989.
Sec. 127.005. INSURANCE COVERAGE. (a) This chapter does not
apply to an agreement that provides for indemnity if the parties
agree in writing that the indemnity obligation will be supported
by liability insurance coverage to be furnished by the indemnitor
subject to the limitations specified in Subsection (b) or (c).
(b) With respect to a mutual indemnity obligation, the indemnity
obligation is limited to the extent of the coverage and dollar
limits of insurance or qualified self-insurance each party as
indemnitor has agreed to obtain for the benefit of the other
party as indemnitee.
(c) With respect to a unilateral indemnity obligation, the
amount of insurance required may not exceed $500,000.
Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985.
Amended by Acts 1989, 71st Leg., ch. 1102, Sec. 3, eff. Sept. 1,
1989; Acts 1991, 72nd Leg., ch. 36, Sec. 3, eff. April 19, 1991;
Acts 1995, 74th Leg., ch. 679, Sec. 1, eff. Aug. 28, 1995; Acts
1999, 76th Leg., ch. 1006, Sec. 1, eff. Aug. 30, 1999.
Sec. 127.006. INSURANCE CONTRACT; WORKERS' COMPENSATION. This
chapter does not affect:
(1) the validity of an insurance contract; or
(2) a benefit conferred by the workers' compensation statutes of
this state.
Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985.
Sec. 127.007. OWNER OF SURFACE ESTATE. This chapter does not
deprive an owner of the surface estate of the right to secure
indemnity from a lessee, an operator, a contractor, or other
person conducting operations for the exploration or production of
minerals of the owner's land.
Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985.