By: Zbranek H.B. No. 1197
73R2686 SMH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the sale or lease for oil and gas of certain public
1-3 free school and asylum lands.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 52.152(a), Natural Resources Code, is
1-6 amended to read as follows:
1-7 (a) An agreement that (1) commits the royalty interest in
1-8 land belonging to the permanent school fund or the asylum funds in
1-9 riverbeds, inland lakes, and channels, or in an area within
1-10 tidewater limits, including islands, lakes, bays, inlets, marshes,
1-11 reefs, and the bed of the sea or (2) the free royalty interests,
1-12 whether leased or unleased, reserved to the state pursuant to
1-13 Section 51.201 or 51.054 of this code must be approved by the board
1-14 and executed by the owner of the soil if the agreement covers land
1-15 leased for oil and gas under Subchapter F of this chapter and if
1-16 the right of the owner of the soil to act as agent of the state has
1-17 not expired under Section 52.1721 of this code.
1-18 SECTION 2. Subchapter F, Chapter 52, Natural Resources Code,
1-19 is amended by adding Section 52.1721 to read as follows:
1-20 Sec. 52.1721. TERMINATION OF RIGHTS OF OWNER OF SOIL. (a)
1-21 The agency authority granted to the owner of the soil under Section
1-22 52.171 of this code and the right of the owner of the soil as agent
1-23 of the state under Section 52.172 of this code to sell or lease to
1-24 any person, firm, or corporation the oil and gas that may be on or
2-1 in the soil expire September 1, 1993.
2-2 (b) This section does not affect the rights of parties to an
2-3 oil and gas lease that becomes effective before September 1, 1993.
2-4 The rights of parties to an oil and gas lease that becomes
2-5 effective before that date are governed by the remainder of this
2-6 subchapter as long as the lease remains in effect. If after
2-7 September 1, 1993, the person who is the owner of the soil on that
2-8 date ceases to be the owner of the soil, the lessee shall pay to
2-9 the state all bonus money, delay rentals, and royalties that accrue
2-10 after the date on which the person ceases to be the owner of the
2-11 soil.
2-12 (c) After the termination, expiration, or forfeiture of any
2-13 oil and gas lease in effect on September 1, 1993, or after
2-14 September 1, 1993, if the land was not covered by an oil and gas
2-15 lease on that date, land formerly subject to this subchapter is
2-16 subject to lease for oil and gas under the procedure provided by
2-17 Subchapter B, Chapter 52, of this code for the leasing of unsold
2-18 surveyed public school lands, and a lessee of the land shall pay to
2-19 the state all bonus money, delay rentals, and royalties that accrue
2-20 under the terms of the lease.
2-21 SECTION 3. Section 52.173(a), Natural Resources Code, is
2-22 amended to read as follows:
2-23 (a) If oil and/or gas should be produced in commercial
2-24 quantities within 1,000 feet of land subject to this subchapter, or
2-25 in any case where land subject to this subchapter is being drained
2-26 by production of oil or gas the <owner,> lessee, sublessee,
2-27 receiver, or other agent in control of land subject to this
3-1 subchapter shall in good faith begin the drilling of a well or
3-2 wells upon such state land within 100 days after the draining well
3-3 or wells or the well or wells completed within 1,000 feet of the
3-4 state land commence to produce in commercial quantities, and shall
3-5 prosecute such drilling with diligence to reasonably develop the
3-6 state land and to protect such state land against drainage.
3-7 SECTION 4. Section 52.174, Natural Resources Code, is
3-8 amended to read as follows:
3-9 Sec. 52.174. Failure to Drill Offset. If the lessee fails
3-10 <such persons fail> or refuses <refuse> to begin the drilling of
3-11 such well or wells within the time required or to prosecute such
3-12 drilling as necessary for the purpose intended herein, any lease of
3-13 such land executed under the provisions of this law shall be
3-14 subject to forfeiture by the Commissioner of the General Land
3-15 Office, and he shall forfeit same when he is sufficiently informed
3-16 of the facts which authorize a forfeiture, and shall, on the
3-17 wrapper containing the papers relating to such lease, write and
3-18 sign officially words declaring such forfeiture, and the lease and
3-19 all rights thereunder shall thereupon be forfeited together with
3-20 all payments made thereunder. Notice of such action shall
3-21 forthwith be mailed to the person <persons> shown by the records of
3-22 the General Land Office to be the owner <owners> of the <surface
3-23 and the owners of the> forfeited lease at the owner's <their> last
3-24 known address <addresses> as shown by the records of said office.
3-25 Upon proper showing by the owner of the forfeited lease within 30
3-26 days after the declaration of forfeiture, the lease may, at the
3-27 discretion of the commissioner and upon the terms of this
4-1 subchapter and such other terms as he may prescribe, be reinstated.
4-2 <If such lease be not reinstated within such time, or if the
4-3 commissioner finds that any unleased land included in this law is
4-4 being drained, the commissioner shall notify the person at his last
4-5 known address, as shown by records of the General Land Office to be
4-6 the surface owner, that the oil and gas is subject to sale or lease
4-7 by the owner of the soil in accordance with this law, and that
4-8 drilling is required. If such owner shall fail or refuse to obtain
4-9 the commencement of such a well within 100 days after the date of
4-10 such notice, the relinquishment herein granted and the rights
4-11 acquired thereunder shall be subject to forfeiture by the
4-12 commissioner by endorsing on the file wrapper containing the papers
4-13 relating to the sale of the land, words indicating such forfeiture,
4-14 and such rights shall thereupon be forfeited, and notice of such
4-15 forfeiture shall be forwarded to the county clerk of the county
4-16 wherein the land is situated. The rights of any owner of the soil
4-17 which may have ipso facto terminated under prior laws shall be
4-18 reinstated and are hereby reinstated, together with all rights
4-19 acquired thereunder except where rights of third parties may have
4-20 intervened. All rights herein reinstated shall be subject to the
4-21 terms and provisions of this subchapter.>
4-22 SECTION 5. Section 52.175, Natural Resources Code, is
4-23 amended to read as follows:
4-24 Sec. 52.175. Lease of Oil and Gas After Forfeiture. When a
4-25 lease for oil and gas executed by the owner of the soil <the
4-26 relinquishment or agency right herein granted> has been forfeited,
4-27 the land shall be subject to lease for oil and gas under the
5-1 procedure provided by law for the leasing of unsold surveyed public
5-2 school lands. No lease shall be executed which provides for a
5-3 royalty of less than one-eighth, payable to the state for the
5-4 benefit of the permanent free school fund. The owner of the soil
5-5 shall not be entitled to any revenue generated by a lease executed
5-6 pursuant to this section. <Upon the termination or expiration of a
5-7 lease so executed by the Commissioner of the General Land Office,
5-8 the rights of the surface owner to act under this law shall be ipso
5-9 facto reinstated.>
5-10 SECTION 6. Section 52.176, Natural Resources Code, is
5-11 amended to read as follows:
5-12 Sec. 52.176. Forfeiture of Rights. If any person, firm, or
5-13 corporation operating under this law shall fail or refuse to make
5-14 the payment of any sum within 30 days after it becomes due, or if
5-15 such one or an authorized agent should knowingly make any false
5-16 return or false report concerning production or drilling, or if
5-17 such one should fail to file reports in the manner required by law
5-18 or fail to comply with General Land Office rules and regulations or
5-19 refuse the proper authority access to the records pertaining to the
5-20 operations, or if such one or an authorized agent should knowingly
5-21 fail or refuse to give correct information to the proper authority,
5-22 or knowingly fail or refuse to furnish the land office a correct
5-23 log of any well, or if any lease is assigned and the assignment is
5-24 not filed in the General Land Office as required by law, the rights
5-25 acquired under the permit or lease shall be subject to forfeiture
5-26 by the commissioner, and he shall forfeit same when sufficiently
5-27 informed of the facts which authorize a forfeiture, and the oil and
6-1 gas shall be subject to sale in the manner provided for the sale of
6-2 other forfeited rights hereunder<, except that the owner of the
6-3 soil shall not thereby forfeit his interest in the oil and gas>.
6-4 Such forfeiture may be set aside and all rights theretofore
6-5 existing shall be reinstated at any time before the rights of
6-6 another intervene, upon satisfactory evidence of future compliance
6-7 with the provisions of this subchapter.
6-8 SECTION 7. Section 52.177, Natural Resources Code, is
6-9 amended to read as follows:
6-10 Sec. 52.177. Rights of Subsequent Purchaser. If one
6-11 acquires a valid right by permit or lease to the oil and gas in any
6-12 unsold public free school or asylum land under any other law, a
6-13 subsequent purchaser of such land shall not acquire any rights to
6-14 any of the oil and gas that may be therein<, but when the rights
6-15 under such permit or lease terminate in the manner provided in the
6-16 law under which they were obtained, then the owner of the soil
6-17 shall become the owner of that portion of the oil and gas herein
6-18 relinquished, and shall be thereafter subject to the provisions of
6-19 this law>. A forfeiture of the purchase of any survey or tract for
6-20 any cause shall operate as a forfeiture of the minerals therein to
6-21 the state. A relinquishment to the state of a lease producing oil
6-22 or gas in paying quantities shall not operate to relinquish or
6-23 convey to the owner of the soil any interest whatever in the oil
6-24 and gas that may be in the land included in said lease.
6-25 SECTION 8. Section 52.178, Natural Resources Code, is
6-26 amended to read as follows:
6-27 Sec. 52.178. Operation Under Permit. The owner of a permit
7-1 or combination of permits shall have 18 months from the date or
7-2 average date thereof in which to begin drilling a well for oil and
7-3 gas on some portion of the land included therein. The drilling on
7-4 one permit shall be sufficient protection against forfeiture of all
7-5 the permits included in a combination. Owners of permits or
7-6 combination of permits included herein shall have three years after
7-7 the date or average date thereof in which to complete the
7-8 development of oil and gas thereon, and if oil and gas should not
7-9 be found in paying quantities and a lease applied for within said
7-10 time all rights in such permit or combination of permits shall
7-11 terminate, and the oil and gas in such land shall become subject to
7-12 lease under the procedure provided by law for the leasing of unsold
7-13 surveyed public school lands <the provisions of this law relating
7-14 to the relinquishment of oil and gas to the owner of the soil>.
7-15 SECTION 9. Section 101.052(b), Natural Resources Code, is
7-16 amended to read as follows:
7-17 (b) An agreement that covers land leased for oil and gas
7-18 under the Relinquishment Act, codified as Subchapter F in Chapter
7-19 52 of this code, must be executed by the owners of the soil if the
7-20 right of the owners of the soil to act as agents of the state has
7-21 not expired under Section 52.1721 of this code.
7-22 SECTION 10. Section 1A, Chapter 590, Acts of the 63rd
7-23 Legislature, Regular Session, 1973 (Article 5421c-13, Vernon's
7-24 Texas Civil Statutes), is amended to read as follows:
7-25 Sec. 1A. If the State of Texas retains the subsurface
7-26 mineral rights to all oil, gas, and other minerals in public free
7-27 school fund land traded under Section 1 of this Act, an
8-1 unrestricted right of ingress to and egress from the land by the
8-2 state and its lessees shall be retained for the purpose of
8-3 exploration, development, and production of the oil, gas, and other
8-4 minerals to which rights are retained by the state. The state is
8-5 entitled to lease the subsurface mineral rights retained under this
8-6 section in the same manner and under the same conditions as
8-7 subsurface mineral rights in permanent school fund land in which
8-8 the state owns the surface title and the subsurface mineral rights.
8-9 A lessee of the subsurface mineral rights retained under this
8-10 section is liable to the owner of the land for actual damages to
8-11 the land that may occur as a result of exploration for and
8-12 development and production of the oil, gas, and other minerals to
8-13 which rights are retained under this section. <Notwithstanding
8-14 anything to the contrary in this article, the School Land Board, in
8-15 order to consummate a trade of equal value, is given the
8-16 discretionary right to convey the surface estate and to reserve all
8-17 the oil, gas, and other minerals with the surface owner acting as
8-18 agent for the state under what is commonly known as the
8-19 Relinquishment Act, thereby receiving one-half the bonus, rental,
8-20 and royalty as agent for the state in leasing the land and for
8-21 surface damages in the leasing of oil and gas.> The surface owner
8-22 shall <also> receive 40 percent of the bonus, rental, and royalty
8-23 for leasing and as compensation for surface damages for all leases
8-24 negotiated by such agent covering sulphur, coal, lignite, uranium,
8-25 and potash as set out under Subchapter C, Chapter 53, Natural
8-26 Resources Code <Chapter 16, Acts of the 62nd Legislature, Regular
8-27 Session, 1967, as amended (Article 5421c-10, Vernon's Texas Civil
9-1 Statutes)>.
9-2 SECTION 11. Section 52.186, Natural Resources Code, is
9-3 repealed.
9-4 SECTION 12. This Act takes effect September 1, 1993.
9-5 SECTION 13. The importance of this legislation and the
9-6 crowded condition of the calendars in both houses create an
9-7 emergency and an imperative public necessity that the
9-8 constitutional rule requiring bills to be read on three several
9-9 days in each house be suspended, and this rule is hereby suspended.