S.B. No. 962
AN ACT
1-1 relating to the sale, lease, and development of state-owned oil,
1-2 gas, and other minerals.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 32.002, Natural Resources Code, is
1-5 amended by amending Subsection (a) and adding Subsection (e) to
1-6 read as follows:
1-7 (a) This chapter does not apply to:
1-8 (1) land dedicated by the constitution or a law of
1-9 this state to The University of Texas System, land donated by a
1-10 will or instrument in writing or otherwise to The University of
1-11 Texas System, as trustee, for a scientific, educational, or other
1-12 charitable or public purpose, or any other land under the control
1-13 of the Board of Regents of The University of Texas System;
1-14 (2) land whose title is vested in the state for the
1-15 use and benefit of any part of The Texas A&M University System or
1-16 land under the control of the Board of Regents of The Texas A&M
1-17 University System;
1-18 (3) minerals <land> subject to lease under Subchapter
1-19 F, Chapter 52, of this code, commonly known as the Relinquishment
1-20 Act, and Subchapters B and C, Chapter 53, of this code;
1-21 (4) oil and gas underlying land owned by the state
1-22 that was acquired to construct or maintain a highway, road, street,
1-23 or alley, which is located in a producing area, unless the oil or
2-1 gas is leased for the specific purpose of drilling a horizontal
2-2 well;
2-3 (5) oil and gas underlying land owned by the state
2-4 that was acquired to construct or maintain a highway, road, street,
2-5 or alley if the State Highway and Public Transportation Commission
2-6 has determined that such right-of-way is no longer needed for use
2-7 by citizens as a road pursuant to Chapter 99, General Laws, Acts of
2-8 the 42nd Legislature, Regular Session, 1931 (Article 6673a,
2-9 Vernon's Texas Civil Statutes);
2-10 (6) land owned by the Texas Parks and Wildlife
2-11 Department; or
2-12 (7) land owned by the Texas Department of Corrections.
2-13 (e) If title to land subject to Subchapter C, Chapter 53, of
2-14 this code is acquired by a department, board, or agency of the
2-15 state, the land shall be leased as provided by Chapter 53 of this
2-16 code for the leasing of unsold surveyed public school lands.
2-17 SECTION 2. Section 32.061, Natural Resources Code, is
2-18 amended to read as follows:
2-19 Sec. 32.061. Board's General Duties. Except as provided by
2-20 Subchapter G, Chapter 51, of this code, the board shall:
2-21 (1) set the dates to open received bids for the sale
2-22 of surveyed land dedicated to the permanent school fund, <and> for
2-23 the lease of land for prospecting or exploring for, mining,
2-24 producing, storing, caring for, transporting, preserving, selling,
2-25 or disposing of oil, gas, or other minerals leased under this
3-1 chapter, and for the commitment of land to a contract for
3-2 development;
3-3 (2) determine the prices and set the terms of the
3-4 contract for which land shall be sold, <and> leased, or committed
3-5 to a contract for development;
3-6 (3) consult with the president, chairman, or other
3-7 head of the department, board, or agency, as applicable, or with
3-8 the representative of the head, on each matter before the board
3-9 that affects land owned or held in trust for the use and benefit of
3-10 a department, board, or agency of the state; and
3-11 (4) perform any other duties which may be required by
3-12 law.
3-13 SECTION 3. Subsection (a), Section 32.062, Natural Resources
3-14 Code, is amended to read as follows:
3-15 (a) The board shall adopt rules of procedure and rules for
3-16 the sale, <and> lease, and commitment to a contract for development
3-17 of land as provided by this chapter.
3-18 SECTION 4. Section 32.064, Natural Resources Code, is
3-19 amended to read as follows:
3-20 Sec. 32.064. Survey or Subdivision of Land. The board may
3-21 have land surveyed or subdivided into tracts, lots, or blocks based
3-22 on its determination of which method will be most conducive and
3-23 convenient to facilitate the advantageous sale of land, the lease
3-24 of land for oil, gas, or other minerals, or the commitment of land
3-25 to a contract for development <or oil, gas, or mineral leases>.
4-1 SECTION 5. Section 32.065, Natural Resources Code, is
4-2 amended to read as follows:
4-3 Sec. 32.065. Permits for Surveys or Investigations. If land
4-4 other than public school land is not under a valid lease or
4-5 committed to a contract for development, the board may issue a
4-6 permit for a geological, geophysical, or other survey or
4-7 investigation of that land that will encourage the development of
4-8 the land for oil, gas, or other minerals. The permit may be issued
4-9 for the consideration and under the terms and conditions the board
4-10 considers to be in the best interest of the state.
4-11 SECTION 6. Section 32.101, Natural Resources Code, is
4-12 amended to read as follows:
4-13 Sec. 32.101. Applicable Law. Land shall be offered for
4-14 sale, lease, or commitment to a contract for development <sold and
4-15 leased> subject to the terms and conditions provided by law.
4-16 SECTION 7. Section 32.105, Natural Resources Code, is
4-17 amended to read as follows:
4-18 Sec. 32.105. Date for Opening Bids <of Sale and Lease>. The
4-19 <sale> date for opening bids for the sale, <or> lease, or
4-20 commitment to a contract for development of land shall be the first
4-21 or third Tuesday of the month.
4-22 SECTION 8. Section 32.106, Natural Resources Code, is
4-23 amended to read as follows:
4-24 Sec. 32.106. Description of Land. The description of public
4-25 school land offered for sale, <or> lease, or commitment to a
5-1 contract for development shall be in accord with the description
5-2 which may be found in the School Land Registry in the land office.
5-3 SECTION 9. Section 32.107, Natural Resources Code, is
5-4 amended to read as follows:
5-5 Sec. 32.107. NOTICE OF SALE, <AND> LEASE, AND CONTRACT FOR
5-6 DEVELOPMENT. (a) The board shall publish notice that the board
5-7 will receive bids for <of> the sale, <or> lease, or commitment to a
5-8 contract for development of land in at least three issues of at
5-9 least four daily newspapers.
5-10 (b) The notice shall be published at least 30 days before
5-11 the date the bids are advertised to be opened <of sale or lease>.
5-12 (c) The notice shall state that land is to be offered for
5-13 sale, <or> lease, or commitment to a contract for development on a
5-14 certain date and at a certain time and the method of the sale,
5-15 lease, or commitment to a contract for development and shall give
5-16 notice that a person may obtain publications from <lists describing
5-17 the land may be obtained at> the land office that describe the land
5-18 offered for sale, lease, or commitment to a contract for
5-19 development.
5-20 (d) The land office may solicit and include advertising in
5-21 its publications. The commissioner shall deposit fees paid for
5-22 advertising in land office publications in a separate account in
5-23 the state treasury.
5-24 SECTION 10. Section 32.1071, Natural Resources Code, is
5-25 amended by adding Subsection (c) to read as follows:
6-1 (c) The leases shall be made on terms and conditions that
6-2 may be prescribed by the board.
6-3 SECTION 11. Section 32.1072, Natural Resources Code, is
6-4 amended to read as follows:
6-5 Sec. 32.1072. Minimum Royalty, Bonus, and Rental. The board
6-6 may not accept a bid on an oil and gas lease that offers:
6-7 (1) a royalty of less than one-eighth of the gross
6-8 production of oil and<,> gas<, or other minerals>; or
6-9 (2) a cash bonus of less than $10 an acre.
6-10 SECTION 12. Section 32.109, Natural Resources Code, is
6-11 amended to read as follows:
6-12 Sec. 32.109. Acceptance and Rejection of Bids. (a) For
6-13 each tract offered for sale, lease, or commitment to a contract for
6-14 development, the board must <The board may reject any and all bids,
6-15 but if the board elects not to reject any and all bids, it is
6-16 required to> accept the best bid submitted that meets the minimum
6-17 requirements set by the board or by law or reject all bids.
6-18 (b) The minutes of the board shall reflect the acceptance or
6-19 rejection of a bid<, and the approval of the minutes constitutes
6-20 approval of the act of acceptance or rejection>.
6-21 SECTION 13. Section 32.110, Natural Resources Code, is
6-22 amended to read as follows:
6-23 Sec. 32.110. Special Sale Fee. (a) On land sales and
6-24 mineral leases made by the board, the purchaser or bidder is
6-25 required to pay by separate check an amount equal to one and
7-1 one-half percent of the bid payable to the commissioner as a
7-2 special fee.
7-3 (b) If the sale is by bid, only <Only> the special fees paid
7-4 on the <high> bids accepted by the board shall be deposited by the
7-5 commissioner in the State Treasury as a special fund.
7-6 (c) Failure to pay the special fee shall <does> not void
7-7 <render> a bid <void>, but the commissioner shall demand payment of
7-8 the fee before <he issues> a lease is issued to the best
7-9 <successful> bidder. If the best <successful> bidder fails or
7-10 refuses to make the payment within 30 days after demand by the
7-11 commissioner, the bidder is not entitled to a <lease or> sale of or
7-12 a lease on the tract covered by that <his> bid and the cash bonus
7-13 shall be automatically forfeited to be deposited by the
7-14 commissioner in the State Treasury to the credit of the permanent
7-15 school fund or the appropriate special mineral fund. The board, at
7-16 its option, may offer the tract for sale or lease to the next best
7-17 bidder under the same terms as submitted by and as would have been
7-18 granted to the best bidder.
7-19 (d) Checks submitted by unsuccessful bidders shall be
7-20 returned to the bidders <with their bid checks>.
7-21 SECTION 14. Section 32.151, Natural Resources Code, is
7-22 amended to read as follows:
7-23 Sec. 32.151. Term of Lease. Each oil and gas lease shall be
7-24 for a primary term <of> not to exceed 10 <five> years and for as
7-25 long thereafter as oil or<,> gas is<, or other minerals covered by
8-1 the lease are> produced in paying quantities.
8-2 SECTION 15. Subchapter F, Chapter 32, Natural Resources
8-3 Code, is amended by adding Section 32.206 to read as follows:
8-4 Sec. 32.206. RATIFICATIONS AND OTHER AGREEMENTS. (a) The
8-5 board may approve by rule or order a ratification or other
8-6 agreement that includes in the benefits of production a mineral or
8-7 royalty interest in land owned by the state that was acquired to
8-8 construct or maintain a highway, road, street, or alley.
8-9 (b) An agreement approved by the board under this section
8-10 must be executed by the commissioner to be effective.
8-11 (c) This section does not apply to an interest subject to
8-12 pooling or unitization by a lessee under a lease issued under this
8-13 subchapter.
8-14 SECTION 16. Section 52.014, Natural Resources Code, is
8-15 amended to read as follows:
8-16 Sec. 52.014. Date for Lease and Notice. <(a)> The date for
8-17 opening bids to lease <of> areas covered by this subchapter shall
8-18 be set and notice of the date shall be given in the manner provided
8-19 in Sections 32.105 and 32.107 of this code.
8-20 <(b) Notice of areas being offered for lease shall be
8-21 advertised for a period of 30 days before the lease date.>
8-22 SECTION 17. Section 52.015, Natural Resources Code, is
8-23 amended to read as follows:
8-24 Sec. 52.015. BID TO LEASE <APPLICATION FOR LEASE>. (a) To
8-25 apply to lease a tract, a bidder must submit a separate bid for
9-1 each separate tract to be leased <Each application for a separate
9-2 area and the first payment shall be delivered to the land office on
9-3 or before the day and hour on which the area is subject to lease>.
9-4 (b) A bid must include a completed application to lease
9-5 form, a payment to the commissioner in the amount of the actual
9-6 bonus bid or set, and a separate payment to the commissioner in the
9-7 amount of the special fee provided by Section 52.016 of this code
9-8 <The application and payment shall be delivered in a sealed
9-9 envelope endorsed with "application to lease oil and gas" and the
9-10 date on which the area is subject to lease>.
9-11 (c) A bid must be delivered to the land office on or before
9-12 the date and time the board advertises that the bids will be opened
9-13 <Any application received up to the hour in which the applications
9-14 are to be opened shall be considered to be properly delivered
9-15 regardless of whether it is opened or sealed or endorsed or
9-16 unendorsed>.
9-17 SECTION 18. Section 52.017, Natural Resources Code, is
9-18 amended to read as follows:
9-19 Sec. 52.017. Keeping and Opening Bids. Bids <The envelopes>
9-20 shall be kept secure <securely> and unopened by the commissioner or
9-21 the commissioner's designee until opened on the date and at the
9-22 time set as provided in Section 52.014 of this code <or his chief
9-23 clerk until the day on which the applications are to be opened, and
9-24 at that time, the board shall open the envelopes in the presence of
9-25 any persons who desire to be present>.
10-1 SECTION 19. Section 52.021, Natural Resources Code, is
10-2 amended to read as follows:
10-3 Sec. 52.021. Term of Lease. A lease granted under this
10-4 subchapter shall be for a primary term not to exceed 10 <five>
10-5 years and for as long after that time as oil or gas is produced
10-6 from the leased area.
10-7 SECTION 20. Section 52.022, Natural Resources Code, is
10-8 amended to read as follows:
10-9 Sec. 52.022. ROYALTY RATE <AND DELAY RENTALS>. <(a)> The
10-10 board shall set the royalty rate on production of oil and gas from
10-11 land leased under this subchapter. The royalty rate set must be at
10-12 least one-eighth of the gross production or the market value of the
10-13 oil and gas produced <In addition to the cash amount bid for a
10-14 lease, the area included in the lease shall be leased for not less
10-15 than one-eighth of the gross production of oil produced and saved,
10-16 or its value, and not less than one-eighth of the gross production
10-17 of gas produced and sold off the area or its value, plus an amount
10-18 determined by the board, until production is secured.>
10-19 <(b) If production is secured in commercial quantities and
10-20 the payment of royalty begins and continues to be paid, the lessee
10-21 is exempt from further delay rental payments on the acreage.>
10-22 <(c) If production ceases and royalty is not paid, the
10-23 lessee shall pay at the end of the lease year in which the royalty
10-24 ceased to be paid and annually after that time in advance, an
10-25 amount determined by the board for as long as the lessee desires to
11-1 maintain the rights acquired under the lease, but not for more than
11-2 five years from the date of the lease>.
11-3 SECTION 21. Section 52.023, Natural Resources Code, is
11-4 amended to read as follows:
11-5 Sec. 52.023. Lease Provisions for Drilling and Reworking.
11-6 Each lease shall provide that:
11-7 (1) if the production of oil or gas on premises leased
11-8 under this subchapter ceases for any reason <at or> after the
11-9 expiration of the primary term, the lease will not terminate if the
11-10 lessee commences additional drilling or reworking operations within
11-11 60 days after the cessation of production;
11-12 (2) the lease shall remain in effect as long as <the>
11-13 drilling or <and> reworking operations continue in good faith and
11-14 in a workmanlike manner<,> without interruptions<,> totaling more
11-15 than 60 days <during any one such operation>; <and>
11-16 (3) if the drilling or reworking operations result in
11-17 the production of oil or gas, the lease shall remain in effect so
11-18 <as> long as oil or gas is produced from the leased premises in
11-19 paying quantities or payment of shut-in <gas> royalties or payment
11-20 of compensatory royalties is made as provided by law; and
11-21 (4) if the drilling or reworking operations result in
11-22 the completion of a well as a dry hole, the lease will not
11-23 terminate if the lessee commences additional drilling or reworkng
11-24 operations within 60 days after the completion of the well as a dry
11-25 hole, and the lease shall remain in effect so long as the lessee
12-1 continues drilling or reworking operations in good faith and in a
12-2 workmanlike manner without interruptions totaling more than 60
12-3 days.
12-4 SECTION 22. Section 52.024, Natural Resources Code, is
12-5 amended to read as follows:
12-6 Sec. 52.024. Lease Provisions for Shut-in Oil or Gas Royalty
12-7 and Compensatory Royalty. (a) For purposes of this section,
12-8 "well" means any well that has been assigned a well number by the
12-9 state agency having jurisdiction over the production of oil and
12-10 gas.
12-11 (b) Each lease shall provide that:
12-12 (1) if, at any time after the expiration of the
12-13 primary term <or at any time after the expiration> of <the primary
12-14 term> a lease that, until being shut in, was being maintained in
12-15 force and effect, a well <or wells> capable of producing oil or gas
12-16 in paying quantities is <are> located on the leased premises but
12-17 oil or gas is not being produced for lack of suitable production
12-18 facilities or lack of a suitable market <and the lease is not being
12-19 maintained in force and effect>, then the lessee may pay as a
12-20 shut-in oil or gas royalty an amount equal to double the annual
12-21 rental provided in the lease but not less than $1,200 a year for
12-22 each well capable of producing oil or gas in paying quantities. To
12-23 be effective, each initial <Any> shut-in oil or gas royalty must be
12-24 paid on or before: (A) the expiration of the primary term, (B) 60
12-25 days after the lessee ceases to produce oil or gas from the leased
13-1 premises, or (C) 60 days after the lessee completes a drilling or
13-2 <and> reworking operation in accordance with the lease provisions,
13-3 whichever date is latest <later>;
13-4 (2) if the shut-in oil or gas royalty is paid, the
13-5 lease shall be considered to be a producing lease and the payment
13-6 shall extend the term of the lease for a period of one year from
13-7 the end of the primary term or from the first day of the month
13-8 following <next succeeding> the month in which production ceased,
13-9 and, after that, if no suitable production facilities or suitable
13-10 market for the oil or gas exists, the lessee may extend the lease
13-11 for four more <additional and> successive periods of one year by
13-12 paying the same amount each year on or before the expiration of
13-13 each shut-in year <the extended term>;
13-14 (3) if, during the period the lease is kept in effect
13-15 by payment of the shut-in oil or gas royalty, oil or gas is sold
13-16 and delivered in paying quantities from a well located within 1,000
13-17 feet of the leased premises and completed in the same producing
13-18 reservoir, or in any case in which drainage is occurring, the right
13-19 to continue to maintain <extend> the lease by paying the shut-in
13-20 oil or gas royalty shall cease, but the lease shall remain
13-21 effective for the remainder of the year for which the royalty has
13-22 been paid. The lessee may maintain the lease <and> for four more
13-23 <additional and> successive years <periods of one year each> by the
13-24 lessee paying compensatory royalty at the royalty rate provided in
13-25 the lease of the market value <at the well> of production from the
14-1 well <which is> causing the drainage or which is completed in the
14-2 same producing reservoir and within 1,000 feet of the leased
14-3 premises;
14-4 (4) the compensatory royalty is to be paid monthly to
14-5 the commissioner beginning on or before the last day of the month
14-6 following <next succeeding> the month in which the oil or gas is
14-7 produced <sold and delivered> from the well causing the drainage or
14-8 that is completed in the same producing reservoir and located
14-9 within 1,000 feet of <or draining> the leased premises <and
14-10 completed in the same reservoir>;
14-11 (5) if the compensatory royalty paid in any 12-month
14-12 period is in an amount less than the annual shut-in oil or gas
14-13 royalty, the lessee shall pay an amount equal to the difference
14-14 within 30 days from the end of the 12-month period; and
14-15 (6) none of these provisions will relieve the lessee
14-16 of the obligation of reasonable development nor the obligation to
14-17 drill offset wells as provided in Section 52.034 of this code;
14-18 however, at the determination of the commissioner and with the
14-19 commissioner's <his> written approval, the payment of compensatory
14-20 royalties shall satisfy the obligation to drill offset wells.
14-21 SECTION 23. Section 52.028, Natural Resources Code, is
14-22 amended to read as follows:
14-23 Sec. 52.028. SUSPENSION OF LEASE BECAUSE OF LITIGATION <OIL
14-24 AND GAS LEASES>. (a) If an oil and gas lease that has been issued
14-25 by the commissioner is involved in litigation relating to the <its>
15-1 validity of the lease or to the authority of the commissioner to
15-2 issue the lease, the lease and all of the conditions and covenants
15-3 contained in the lease <land, the primary term of the lease> shall
15-4 be suspended <and all obligations imposed by the lease set aside>
15-5 during the period of the litigation, except as otherwise provided
15-6 by this section.
15-7 (b) If the litigation is instituted during the primary term
15-8 of the lease, then, after a final, nonappealable judgment is
15-9 entered in the litigation, <at least six months before the
15-10 expiration of the primary term, after final judgment is rendered,>
15-11 the primary term provided in the lease shall resume <begin to run
15-12 again> and the lease shall continue to run for the remainder of the
15-13 period specified in the lease, and all conditions and covenants
15-14 contained in <obligations and duties imposed by> the lease shall be
15-15 operative.
15-16 (c) If the litigation is instituted during the secondary
15-17 term of the lease, then, after a final, nonappealable judgment is
15-18 entered in the litigation, the lease and all the conditions and
15-19 convenants contained in the lease shall be operative, and the
15-20 lessee shall have 60 days from the date a final, nonappealable
15-21 judgment is entered in the litigation to produce in paying
15-22 quantities or to commence drilling or reworking operations on the
15-23 lease as if production had ceased on that date under Section 52.023
15-24 of this code.
15-25 (d) The lessee shall pay <all annual delay rentals and> any
16-1 royalties that accrue during the period of suspension of the lease
16-2 <litigation> in the same manner as they are to be paid under the
16-3 terms of the lease <during the primary term. If such delay rentals
16-4 are not paid as the lease requires, the lease shall not
16-5 automatically terminate; however, the delay rentals continue to be
16-6 an obligation and debt owed by the lessee. The delay rentals paid
16-7 during the period of litigation shall be held and returned to the
16-8 lessee if the state is unsuccessful in the litigation>.
16-9 SECTION 24. Section 52.0301, Natural Resources Code, is
16-10 amended to read as follows:
16-11 Sec. 52.0301. Suspension of Terms of Lease in Certain
16-12 Situations. (a) If the lessee <owner> of a valid oil and gas
16-13 lease granted by the state is unable to obtain access to the leased
16-14 premises, or is unable to obtain in a timely manner <denied access
16-15 to or is denied> a permit to drill on or produce from the leased
16-16 premises by any duly constituted authority of the United States or
16-17 of this state after a diligent, good faith <bona fide> attempt has
16-18 been made by the lessee <owner> to obtain access to, or a permit to
16-19 drill on or produce from, the leased premises, the lessee <owner>
16-20 may file with the board an application describing and giving the
16-21 date of the action that deprives the lessee <him> of access to or a
16-22 permit <the right> to drill on or produce from the leased premises.
16-23 (b) If the board is satisfied that the facts included in the
16-24 application are true and that the lessee acted diligently and in
16-25 good faith in an attempt to gain access to or the right to drill on
17-1 or produce from the leased premises, the board may <enter an> order
17-2 the suspension of the lease or any condition or covenant contained
17-3 in <its minutes suspending the running of both the primary and the
17-4 principal term of the lease or suspending any condition,
17-5 obligation, or duty under> the lease<,> from the date <of> the
17-6 board determines to be the date the cause for the suspension began,
17-7 except as otherwise provided by this section <through the continued
17-8 existence of the cause for the suspension, so long as the lessee
17-9 continues to make the annual rental payments that are stipulated in
17-10 the lease on each anniversary date of the lease during the period
17-11 of suspension>.
17-12 (c) The board may set as a condition to approving the
17-13 application for a suspension of the lease any term or requirement
17-14 that relates to the duration of the suspension, the administration
17-15 of the property during the suspension, reporting requirements
17-16 during the suspension, or another administrative matter that the
17-17 board determines is in the best interest of the state <After the
17-18 board enters an order in its minutes stating that the cause for
17-19 suspension has ceased to exist, the oil and gas lease shall again
17-20 become operative if the rental payments have been made during the
17-21 period of suspension, and all suspended obligations and conditions
17-22 shall again attach and be in force for a period equivalent to the
17-23 unexpired term of the lease>.
17-24 (d) If the lease is suspended during its primary term, the
17-25 lessee shall make payments in the amount of the annual delay rental
18-1 stipulated in the lease by each anniversary date of the lease
18-2 during the period of suspension. If the payments in the amount of
18-3 the annual delay rental are not paid by each anniversary date of
18-4 the lease, the lease shall not automatically terminate. However,
18-5 the amount of the annual delay rental stipulated in the lease due
18-6 by each anniversary date of the lease during the period of
18-7 suspension continues to be an obligation and debt owed by the
18-8 lessee. The lessee shall pay all royalties, if any, that accrue
18-9 during the period of suspension of the lease in the same manner as
18-10 they are to be paid under the terms of the lease.
18-11 (e) If the lease is suspended during its primary term, then,
18-12 when the suspension ends, the primary term provided in the lease
18-13 shall resume and continue to run for the remainder of the period
18-14 specified in the lease, and all conditions and covenants contained
18-15 in the lease shall be operative <The commissioner shall give notice
18-16 immediately to the lessee of the entry of an order stating that the
18-17 cause of suspension has ceased to exist, provided annual rental
18-18 payments have been made>.
18-19 (f) If the lease is suspended during its secondary term,
18-20 then, when the suspension ends, the lease and all of the conditions
18-21 and covenants contained in the lease shall be operative, and the
18-22 lessee shall have 60 days from the date the suspension ends to
18-23 produce in paying quantities or to commence drilling or reworking
18-24 operations on the lease as if production had ceased on that date
18-25 under Section 52.023 of this code.
19-1 (g) This section may not be construed as abridging any
19-2 rights or privileges conveyed under Chapter 287, Acts of the 47th
19-3 Legislature, Regular Session, 1941 (Article 5366a, Vernon's Texas
19-4 Civil Statutes).
19-5 SECTION 25. Subsection (a), Section 52.035, Natural
19-6 Resources Code, is amended to read as follows:
19-7 (a) The governor may execute agreements on behalf of the
19-8 state to obtain access to confidential and proprietary information
19-9 from the secretary of the United States Department of the Interior
19-10 regarding exploration, development, or production of oil, <or> gas,
19-11 or other minerals on the outer continental shelf. The governor may
19-12 agree to waive sovereign immunity and other defenses as prescribed
19-13 by this section, and may agree to indemnify the United States
19-14 government from unauthorized disclosure of the information
19-15 obtained.
19-16 SECTION 26. Section 52.076, Natural Resources Code, is
19-17 amended to read as follows:
19-18 Sec. 52.076. Duty to Advertise. (a) The board may <shall
19-19 advertise for proposals>:
19-20 (1) advertise for bids to lease riverbeds and channels
19-21 for oil and gas development;
19-22 (2) advertise for bids to contract to develop the oil
19-23 or gas under <to drill> riverbeds and channels on consideration
19-24 involving compensation with oil and gas or money so that the state
19-25 will receive a portion of the oil and gas as it is produced or
20-1 advanced royalties paid in money; <and>
20-2 (3) advertise for bids to purchase oil and gas in
20-3 place under riverbeds and channels <or recoverable> without
20-4 requiring mineral development; and
20-5 (4) pool or bring an action to force pool unleased
20-6 riverbeds and channels.
20-7 (b) The board shall advertise that the board will receive
20-8 bids and award the right to lease, develop, or purchase under this
20-9 section in the same manner <the proposals and conduct the sales> as
20-10 provided in Subchapter D, Chapter 32, of this code and Subchapter B
20-11 of this chapter.
20-12 SECTION 27. Subchapter C, Chapter 52, Natural Resources
20-13 Code, is amended by adding Section 52.077 to read as follows:
20-14 Sec. 52.077. SPECIAL FEE. Each bidder on a lease under this
20-15 subchapter shall remit with each bid by separate payment a special
20-16 sale fee in the amount and in the manner provided by Section 32.110
20-17 of this code.
20-18 SECTION 28. Section 52.082, Natural Resources Code, is
20-19 amended to read as follows:
20-20 Sec. 52.082. TERM OF LEASE. A lease granted under this
20-21 subchapter shall be for a primary term not to exceed 10 <five>
20-22 years and for as long after that time as oil or gas is produced
20-23 from the leased area.
20-24 SECTION 29. Section 52.088, Natural Resources Code, is
20-25 amended to read as follows:
21-1 Sec. 52.088. ROYALTY RATE <AND DELAY RENTALS>. <(a)> The
21-2 board shall set the royalty rate on production of oil and gas from
21-3 riverbeds and channels leased under this subchapter. The royalty
21-4 rate set must be at least one-eighth of the gross production or the
21-5 market value of the oil and gas produced <In addition to the cash
21-6 amount bid for a lease, the board shall lease the area for not less
21-7 than one-eighth of the gross production of oil produced and saved
21-8 or its value and not less than one-eighth of the gross production
21-9 of gas produced and sold off the area or its value plus an amount
21-10 determined by the board until production is secured.>
21-11 <(b) If production is secured in commercial quantities and
21-12 the payment of royalty begins and continues to be paid, the lessee
21-13 is exempt from further delay rental payments on the acreage.>
21-14 <(c) If production ceases and royalty is not paid, the
21-15 lessee shall pay at the end of the lease year in which the royalty
21-16 ceased to be paid and annually after that time in advance, in an
21-17 amount determined by the board as long as the lessee desires to
21-18 maintain the rights acquired under the lease, but not for more than
21-19 five years from the date of the lease>.
21-20 SECTION 30. Section 52.131, Natural Resources Code, is
21-21 amended by amending Subsection (e) and adding Subsection (j) to
21-22 read as follows:
21-23 (e) If any royalty is not paid when due but is paid before
21-24 the 31st day after the date on which it is due, a penalty of five
21-25 percent of the royalty due shall be added to the unpaid amount due.
22-1 If the royalty is not paid before the 31st day after the date on
22-2 which it is due, a penalty of an additional five percent of the
22-3 royalty due shall be imposed. The minimum penalty under this
22-4 section is $25. The penalty may not be imposed in cases of title
22-5 dispute as to the state's portion of the royalty or to that portion
22-6 of the royalty in dispute as to the <fair> market value of the
22-7 production.
22-8 (j) By rule, the board may provide procedures and standards
22-9 for reduction of interest charged or penalties assessed under this
22-10 section or any other interest or penalties assessed by the
22-11 commissioner relating to unpaid or delinquent royalties.
22-12 SECTION 31. Section 52.133, Natural Resources Code, is
22-13 amended to read as follows:
22-14 Sec. 52.133. Payment of Royalty in Kind. (a) <In this
22-15 section, "royalty" means royalty payable in a sum of money equal to
22-16 the market value for the general area where produced and when run
22-17 or royalty that may be collected in kind.>
22-18 <(b)> Each oil or gas lease covering land leased by the
22-19 board, by a board for lease other than the Board for Lease of
22-20 University Lands, or by the surface owner of land under which the
22-21 state owns the minerals, commonly referred to as Relinquishment Act
22-22 land, which shall be subject to approval by the commissioner before
22-23 it is effective, shall include a provision granting the board
22-24 authorized to lease the land or the owner of the soil of
22-25 Relinquishment Act land and the commissioner authority to take
23-1 their royalty in kind, and the commissioner and the boards for
23-2 lease may include any other reasonable provisions that are not
23-3 inconsistent with this section.
23-4 (b) <(c)> The option to take the royalty in kind may be
23-5 exercised at any time or from time to time on not less than 60
23-6 days' notice to the holder of the lease.
23-7 (c) <(d)> The <board, the> commissioner, <each board for
23-8 lease other than the Board for Lease of University Lands, or> the
23-9 owner of the soil under Subchapter F of this chapter, or the
23-10 commissioner, acting on the behalf of and at the direction of an
23-11 owner of the soil under Subchapter F of this chapter, the board, or
23-12 a board for lease may negotiate and execute <sales> contracts or
23-13 any other instruments or agreements necessary to dispose of their
23-14 portion of the royalty taken in kind, including contracts for sale,
23-15 transportation, or storage.
23-16 (d) <(e)> This section does not apply to or have any effect
23-17 on the Board for Lease of University Lands or any lease executed on
23-18 university land.
23-19 (e) <(f)> This section shall not be construed to surrender
23-20 or in any way affect the right of the state or the owner of the
23-21 soil under existing or future leases to receive royalty from its
23-22 lessee on the basis of the <fair> market value of the production
23-23 <produced> from state public land or land under the provisions of
23-24 Subchapter F of this chapter.
23-25 SECTION 32. Section 52.151, Natural Resources Code, is
24-1 amended to read as follows:
24-2 Sec. 52.151. Authorization to Operate Areas as Units.
24-3 (a) The commissioner, on behalf of the state or any fund that
24-4 belongs to the state, may execute agreements that provide for
24-5 operating areas as a unit for the exploration, development, and
24-6 production of oil or gas or both and to commit to the agreements:
24-7 (1) the royalty interests in oil, <or> gas, or both
24-8 oil and gas, reserved to the state or any fund of the state by law,
24-9 in a patent, in a contract of sale, or under the terms of an oil
24-10 and gas lease legally executed by an official, board, agent,
24-11 agency, or authority of the state; or
24-12 (2) the free royalty interests, whether leased or
24-13 unleased, reserved to the state pursuant to Section 51.201 or
24-14 51.054 of this code.
24-15 (b) Before executing an agreement authorized by Subsection
24-16 (a) of this section, the <The> commissioner must find that the
24-17 agreement is in the best interest of the state.
24-18 SECTION 33. Section 52.152, Natural Resources Code, is
24-19 amended to read as follows:
24-20 Sec. 52.152. Approval of <Unit> Agreements. (a) An
24-21 agreement must be approved by the board and executed by the
24-22 commissioner to be effective if the agreement <that (1)> commits:
24-23 (1) a <the> royalty interest in land belonging to the
24-24 permanent school fund or the asylum funds, in riverbeds, inland
24-25 lakes, and channels, or in an area within tidewater limits,
25-1 including islands, lakes, bays, inlets, marshes, reefs, and the bed
25-2 of the sea; or
25-3 (2) the free royalty interests, whether leased or
25-4 unleased, reserved to the state pursuant to Section 51.201 or
25-5 51.054 of this code.
25-6 (b) An <must be approved by the board and executed by the>
25-7 owner of the soil who is subject to <if the agreement covers land
25-8 leased for oil and gas under> Subchapter F of this chapter may
25-9 grant to a lessee prior authority to pool or unitize the interest
25-10 of the owner in a lease executed under that subchapter. For the
25-11 provisions of an agreement to bind the interest of an owner of the
25-12 soil who is subject to Subchapter F of this chapter and who has not
25-13 granted the lessee prior authorization to pool or unitize the
25-14 owner's interest in an oil and gas lease executed under that
25-15 subchapter, the agreement must be executed by the owner of the
25-16 soil.
25-17 (c) <(b)> An agreement that commits any <the royalty>
25-18 interest in any land <or an area> not listed in Subsection (a) of
25-19 this section must be approved by the board, official, agent,
25-20 agency, or authority of the state which has the authority to lease
25-21 or to approve the lease of the land for oil and gas and must be
25-22 executed by the commissioner to be effective.
25-23 SECTION 34. Section 52.153, Natural Resources Code, is
25-24 amended to read as follows:
25-25 Sec. 52.153. PROVISIONS OF AGREEMENT <PROVISIONS>. (a) An
26-1 agreement executed under this subchapter may include the following
26-2 provisions <The agreement to operate areas as units may provide>:
26-3 (1) that operations incident to drilling a well on any
26-4 portion of a unit shall be considered for all purposes to be
26-5 conduct of the operations on each <separately owned> tract in the
26-6 unit <by the several owners>;
26-7 (2) that production allocated by the agreement to each
26-8 tract included in the unit when produced shall be considered for
26-9 all purposes to have been production <produced> from the tract;
26-10 (3) that the interest reserved to or provided for the
26-11 state or any of its funds on production from any tract included in
26-12 the unit shall be paid only on that portion of the production from
26-13 the unit that is allocated to the tract under the agreement <and
26-14 lease, with respect to the interest of the state, shall be
26-15 effective as long as oil or gas or both are produced from the unit
26-16 in paying quantities and royalties are paid to the state>; and
26-17 (4) that each lease <royalties reserved to the state
26-18 or to any fund of the state on production from any tract or portion
26-19 of a tract> included in the unit shall remain in effect as long as
26-20 the agreement remains in effect and that on termination of the
26-21 agreement each lease shall continue in effect under the terms and
26-22 conditions of the lease <be paid only on the portion of the
26-23 production allocated to the tract by the agreement>.
26-24 (b) The agreement may include any other terms and conditions
26-25 the commissioner or any <provision which the> board, official,
27-1 agent, agency, or authority of the state that <which> has the
27-2 authority to lease or to approve a lease <the leasing> of the land
27-3 for oil and gas may consider to be in the best interest <necessary
27-4 for the protection of the interests> of the state.
27-5 SECTION 35. Subchapter E, Chapter 52, Natural Resources
27-6 Code, is amended by adding Section 52.154 to read as follows:
27-7 Sec. 52.154. RATIFICATIONS AND OTHER AGREEMENTS. (a) The
27-8 board may approve, by rule or order, a ratification or other
27-9 agreement that includes in the benefits of production a mineral or
27-10 royalty interest in land belonging to the permanent school fund or
27-11 the asylum funds.
27-12 (b) An agreement approved by the board under this section
27-13 must be executed by the commissioner to be effective.
27-14 (c) A ratification or other agreement that commits any of
27-15 the interests listed in Subsection (a) of this section in land not
27-16 belonging to the permanent school fund or the asylum funds must be
27-17 approved by the board, official, agent, agency, or authority of the
27-18 state that has the authority to lease or to approve the lease of
27-19 the land for oil and gas and must be executed by the commissioner
27-20 to be effective.
27-21 SECTION 36. Section 52.175, Natural Resources Code, is
27-22 amended to read as follows:
27-23 Sec. 52.175. LEASE OF OIL AND GAS AFTER FORFEITURE. When
27-24 the relinquishment or agency right herein granted has been
27-25 forfeited, the land shall be subject to lease for oil and gas under
28-1 the procedure provided by law for the leasing of unsold surveyed
28-2 public school lands. The substantive provisions of Subchapter B of
28-3 this chapter and Subchapters D and E, Chapter 32, of this code
28-4 shall apply to the oil and gas lease. No oil and gas lease shall
28-5 be executed which provides for a royalty of less than one-eighth,
28-6 payable to the state for the benefit of the permanent free school
28-7 fund. The owner of the soil shall not be entitled to any revenue
28-8 generated by a lease executed pursuant to this section. Upon the
28-9 termination or expiration of a lease so executed by the
28-10 Commissioner of the General Land Office, the rights of the surface
28-11 owner to act under this law shall be ipso facto reinstated.
28-12 SECTION 37. Subsection (a), Section 52.186, Natural
28-13 Resources Code, is amended to read as follows:
28-14 (a) If an owner of the soil or of any undivided interest
28-15 therein of any land subject to the terms of this subchapter or
28-16 Subchapter C, Chapter 53, of this code is found to be unavailable
28-17 under Subsection (b) of this section to act as the state's agent
28-18 for leasing oil and gas or any mineral leased under Subchapter C,
28-19 Chapter 53, of this code, such land or undivided interest therein
28-20 shall be subject to lease for the applicable minerals under the
28-21 procedure provided by Subchapter B of this chapter <Chapter 52> for
28-22 the leasing of unsold surveyed public school lands. The
28-23 substantive provisions of Subchapter B of this chapter and
28-24 Subchapters D and E, Chapter 32, of this code shall apply to a
28-25 lease of land subject to lease under this subchapter. The
29-1 substantive provisions of Subchapter E, Chapter 53, of this code
29-2 and Subchapters D and E, Chapter 32, of this code shall apply to a
29-3 lease of land subject to lease under Subchapter C, Chapter 53, of
29-4 this code. Subject to the provisions of Subsection (b)(4) of this
29-5 section, the owner of the soil shall not be entitled to any revenue
29-6 generated by a lease executed pursuant to this section.
29-7 SECTION 38. Section 52.291, Natural Resources Code, is
29-8 amended to read as follows:
29-9 Sec. 52.291. Coverage. The following persons, agencies, and
29-10 entities are subject to the provisions of Sections 52.292 through
29-11 52.293 of this code:
29-12 (1) the commissioner;
29-13 (2) the board;
29-14 (3) boards for lease of land owned by a department,
29-15 board, or agency of the state created by Chapter 34 of this code;
29-16 (4) the Board for Lease of University Lands;
29-17 (5) the Board of Regents of Texas A&M University;
29-18 (6) the Board of Regents of Texas Tech University;
29-19 (7) the Board of Directors of Texas A&I University;
29-20 (8) the Board of Regents, State Senior Colleges;
29-21 (9) the Board of Regents of the University of Houston;
29-22 (10) any other board of regents or other governing
29-23 board of a state-supported institution of higher learning having
29-24 authority to execute oil and<,> gas<, and mineral> leases on land
29-25 owned by the institution;
30-1 (11) an owner of land or minerals in this state whose
30-2 authority to lease the land or minerals as agent for the state
30-3 arises in whole or in part from what is commonly known as the
30-4 Relinquishment Act, codified in Subchapter F of this chapter;
30-5 (12) the Board for Lease of State Park Lands;
30-6 (13) the Board for Lease of the Texas Department of
30-7 Corrections; and
30-8 (14) the commissioners court of any county in this
30-9 state.
30-10 SECTION 39. Section 52.292, Natural Resources Code, is
30-11 amended to read as follows:
30-12 Sec. 52.292. Prohibited Leases. It is illegal for any
30-13 person included in Section 52.291 of this code to execute an oil
30-14 and<,> gas<, or mineral> lease on land on which he is authorized by
30-15 law to execute the lease unless the lease includes the terms
30-16 provided in Section 52.293 of this code.
30-17 SECTION 40. Section 52.294, Natural Resources Code, is
30-18 amended to read as follows:
30-19 Sec. 52.294. Prerequisite to Filing Leases. The
30-20 commissioner shall not receive and file an oil and<,> gas<, and
30-21 mineral> lease required to be filed by law unless the lease
30-22 includes the terms and conditions provided in Section 52.293 of
30-23 this code.
30-24 SECTION 41. Section 52.295, Natural Resources Code, is
30-25 amended to read as follows:
31-1 Sec. 52.295. Certain Leases Null, Void, and of No Force and
31-2 Effect. An oil and<,> gas<, and mineral> lease executed or
31-3 received and filed in violation of the provisions of this
31-4 subchapter is null, void, and of no force and effect.
31-5 SECTION 42. Section 52.297, Natural Resources Code, is
31-6 amended to read as follows:
31-7 Sec. 52.297. COMPENSATION FOR <Payment of> Damages FROM
31-8 <for> Use of Surface. (a) Leases issued under Subchapter B of
31-9 this chapter for unsold surveyed or unsurveyed school land, other
31-10 than land included in islands, saltwater lakes, bays, inlets,
31-11 marshes, and reefs owned by the state in tidewater limits and other
31-12 than that portion of the Gulf of Mexico within the jurisdiction of
31-13 the state, must include a provision requiring the compensation for
31-14 <payment of> damages from <for> the use of the surface in
31-15 prospecting for, exploring, developing, or producing the leased
31-16 minerals.
31-17 (b) The commissioner by rule shall set the procedure for
31-18 receiving compensation <amount of and shall collect money> for
31-19 damages to the surface of land dedicated to the permanent school
31-20 fund.
31-21 (c) Money collected for surface damages shall be deposited
31-22 in a special fund account in the State Treasury to be used for
31-23 conservation, reclamation, or construction of permanent
31-24 improvements on land that belongs to the permanent school fund.
31-25 (d) The special fund account must be an interest-bearing
32-1 account, and the interest received on the account shall be
32-2 deposited in the State Treasury to the credit of the available
32-3 school fund.
32-4 (e) Money collected under this section and designated for
32-5 the construction of permanent improvements as provided by this
32-6 section must be used not later than two years after the date on
32-7 which the money is collected.
32-8 (f) Any money that remains in the special fund account for
32-9 longer than two years shall be deposited in the State Treasury to
32-10 the credit of the permanent school fund.
32-11 (g) The compensation for <payment of> damages under this
32-12 section is in addition to any bonus, rental, royalty, or other
32-13 payment required by the lease.
32-14 SECTION 43. Subdivision (3), Section 52.321, Natural
32-15 Resources Code, is amended to read as follows:
32-16 (3) "Public school land" means land dedicated by the
32-17 constitution or laws of this state to the permanent free school
32-18 fund, and specifically includes land with a mineral classification
32-19 under Subchapter F of this chapter in which the state has retained
32-20 the oil and gas interest and areas within tidewater limits <or the
32-21 portion of the Gulf of Mexico that is under the jurisdiction of
32-22 this state>.
32-23 SECTION 44. Subsection (a), Section 52.324, Natural
32-24 Resources Code, is amended to read as follows:
32-25 (a) The commissioner:
33-1 (1) as a condition of issuing a permit, shall collect
33-2 reasonable fees from the applicant in an amount determined by the
33-3 commissioner;
33-4 (2) may require a permittee to furnish to the
33-5 commissioner, upon the commissioner's request, copies of maps,
33-6 plats, reports, data, and any other information in the possession
33-7 of the permittee that relates to the progress or results of an
33-8 exploration under a permit; provided however, the commissioner
33-9 shall not require a permittee to furnish any of its interpretive
33-10 data;
33-11 (3) shall by rule require a permittee to restore land
33-12 explored under the permit as nearly as is practicable to its
33-13 condition immediately prior to the exploration;
33-14 (4) shall by rule determine <set> the procedure for
33-15 receiving compensation <amount of and shall collect money> for
33-16 damages to the surface of public school land except land with a
33-17 mineral classification under Subchapter F of this chapter; and
33-18 (5) may make any other rules relating to geophysical
33-19 or geochemical explorations, permits, or permittees the
33-20 commissioner considers appropriate.
33-21 SECTION 45. Section 53.001, Natural Resources Code, is
33-22 amended by adding Subdivision (3) to read as follows:
33-23 (3) "Board" means the School Land Board.
33-24 SECTION 46. Subsection (c), Section 53.012, Natural
33-25 Resources Code, is amended to read as follows:
34-1 (c) The commissioner may determine the contents of an
34-2 application <Each application shall be accompanied by a rental
34-3 payment of not less than 25 cents an acre>.
34-4 SECTION 47. Subsections (a) and (b), Section 53.013, Natural
34-5 Resources Code, are amended to read as follows:
34-6 (a) After receipt of the rental payment set by the
34-7 commissioner, the <The> commissioner shall issue to the first
34-8 applicant a permit to prospect the area designated in the
34-9 applicant's <his> application for a period of one year from the
34-10 date the <his> application is filed.
34-11 (b) After receipt of an additional rental payment set by the
34-12 commissioner, the <The> commissioner may extend the permit for a
34-13 period of one year <on payment of an annual rental of not less than
34-14 25 cents an acre>.
34-15 SECTION 48. Subsections (b) and (c), Section 53.015, Natural
34-16 Resources Code, are amended to read as follows:
34-17 (b) An application to lease must designate the specific
34-18 minerals the permittee is applying to lease. The commissioner may
34-19 determine any additional information an application must contain
34-20 <The application shall be accompanied by the first lease payment of
34-21 not less than $2 an acre>.
34-22 (c) If the area designated for lease in the application is
34-23 less than the area covered by the permit, the applicant shall
34-24 include with the <his> application field notes prepared by the
34-25 county surveyor or by a licensed state land surveyor describing the
35-1 land designated.
35-2 SECTION 49. Section 53.016, Natural Resources Code, is
35-3 amended to read as follows:
35-4 Sec. 53.016. ISSUANCE OF LEASE. (a) After receipt of the
35-5 bonus payment set by the commissioner, the <The> lease shall be
35-6 issued by the commissioner under the provisions of this subchapter
35-7 and shall be for a primary term not to exceed 20 years and as long
35-8 after that time as the minerals are produced in paying quantities.
35-9 (b) The commissioner may include in the lease any other
35-10 provision the commissioner <he> considers necessary for protection
35-11 of the interests of the state.
35-12 SECTION 50. Section 53.020, Natural Resources Code, is
35-13 amended to read as follows:
35-14 Sec. 53.020. ASSIGNMENT AND TRANSFER <OF LEASE>. <(a)> A
35-15 lease issued under this subchapter may be transferred or assigned
35-16 at any time in the manner provided by Section 52.026 of this code
35-17 <may be assigned in quantities of not less than 40 acres, but if
35-18 there are fewer than 40 acres remaining in the tract originally
35-19 leased, the lesser area may be assigned.>
35-20 <(b) The assignment shall be recorded in the county in which
35-21 the land is located, and within 90 days after it is recorded a
35-22 certified copy of the assignment, certified by the county clerk
35-23 from his records, shall be sent to the land office, together with a
35-24 filing fee set by the commissioner in an amount not less than $1
35-25 for each tract affected>.
36-1 SECTION 51. Section 53.024, Natural Resources Code, is
36-2 amended to read as follows:
36-3 Sec. 53.024. PENALTY AND INTEREST <OTHER LEASE PROVISIONS>.
36-4 A lease issued under this subchapter shall be subject to Sections
36-5 52.131(e) through (j) <For any lease issued under this chapter, the
36-6 penalty and interest on delinquent royalties, and the penalty for
36-7 failure to file a report, are assessed in the same manner and in
36-8 the same amounts as provided in Section 52.131> of this code.
36-9 SECTION 52. Subchapter B, Chapter 53, Natural Resources
36-10 Code, is amended by adding Sections 53.025, 53.026, 53.027, and
36-11 53.028 to read as follows:
36-12 Sec. 53.025. LEASE RELINQUISHMENT. A lease issued under
36-13 this subchapter may be relinquished to the state at any time in the
36-14 manner provided by Section 52.027 of this code.
36-15 Sec. 53.026. IN KIND ROYALTY. (a) The commissioner or the
36-16 commissioner acting on behalf of and at the direction of the board
36-17 or a board for lease may negotiate and execute a contract or any
36-18 other instrument or agreement necessary to dispose of the royalty
36-19 taken in kind, including a contract for sale, transportation, or
36-20 storage.
36-21 (b) This section shall not be construed to surrender or in
36-22 any way affect the right of the state under an existing or future
36-23 lease to receive monetary royalty from its lessee.
36-24 Sec. 53.027. CONTRACTS AND AGREEMENTS. On the land office's
36-25 written request, mailed to the lessee's address as shown on its
37-1 lease or otherwise properly changed in conformity with the terms of
37-2 the lease, a copy of a contract for the sale or processing of
37-3 minerals leased under this subchapter and any subsequent agreement
37-4 or amendment to the contract shall be filed in the land office
37-5 within 30 days after the date the land office mails the written
37-6 request. The land office shall treat a contract, agreement, or
37-7 amendment filed in the land office as confidential unless otherwise
37-8 authorized by the lessee.
37-9 Sec. 53.028. AUDIT INFORMATION CONFIDENTIAL. (a) All
37-10 information secured, derived, or obtained during the course of an
37-11 inspection or examination of books, accounts, reports, or other
37-12 records as provided by this code, a rule, or a lease provision is
37-13 confidential and may not be used publicly, opened for public
37-14 inspection, or disclosed, except for information in a lien filed
37-15 under this chapter and except as permitted under Subsection (d) of
37-16 this section.
37-17 (b) All information made confidential in this section is not
37-18 subject to subpoena directed to the commissioner, the attorney
37-19 general, or the governor except in a judicial or administrative
37-20 proceeding to which this state is a party.
37-21 (c) The commissioner or the attorney general may use
37-22 information made confidential by this section and contracts made
37-23 confidential by Section 53.027 of this code to enforce this chapter
37-24 or may authorize their use in judicial or administrative
37-25 proceedings to which this state is a party.
38-1 (d) This section does not prohibit:
38-2 (1) the delivery of information made confidential by
38-3 this section to the lessee or its successor, receiver, executor,
38-4 guarantor, administrator, assignee, or representative;
38-5 (2) the publication of statistics classified to
38-6 prevent the identification of a particular audit or items in a
38-7 particular audit;
38-8 (3) the release of information that is otherwise
38-9 available to the public; or
38-10 (4) the release of information concerning the amount
38-11 of royalty assessed as a result of an examination conducted under
38-12 this code, a rule, or a lease provision or the release of other
38-13 information that would have been properly included in reports
38-14 required under this code, a rule, or a lease provision.
38-15 SECTION 53. Subsection (d), Section 53.074, Natural
38-16 Resources Code, is amended to read as follows:
38-17 (d) Leasing Procedure When Surface Owner's Agency Rights
38-18 Have Been Forfeited. When the surface owner's agency rights have
38-19 been forfeited in accordance with Subsection (c) of this section,
38-20 the minerals subject to lease under this subchapter can then be
38-21 leased under the leasing procedure set out for the lease of oil and
38-22 gas under Section 52.175 of this code. The substantive provisions
38-23 of Subchapter E of this chapter and Subchapters D and E, Chapter
38-24 32, of this code shall apply to the lease.
38-25 SECTION 54. Subchapter C, Chapter 53, Natural Resources
39-1 Code, is amended by adding Sections 53.075, 53.076, 53.077, 53.078,
39-2 53.079, and 53.080 to read as follows:
39-3 Sec. 53.075. ASSIGNMENT AND TRANSFER. A lease issued under
39-4 this subchapter may be assigned or transferred at any time in the
39-5 manner provided by Section 52.026 of this code.
39-6 Sec. 53.076. LEASE RELINQUISHMENT. A lease issued under
39-7 this subchapter may be relinquished to the state at any time in the
39-8 manner provided by Section 52.027 of this code.
39-9 Sec. 53.077. IN KIND ROYALTY. (a) The commissioner, each
39-10 owner of the soil under this subchapter, or the commissioner acting
39-11 on the behalf of and at the direction of an owner of the soil under
39-12 this subchapter may negotiate and execute a contract or any other
39-13 instrument or agreement necessary to dispose of the royalty taken
39-14 in kind, including a contract for sale, transportation, or storage.
39-15 (b) This section shall not be construed to surrender or in
39-16 any way affect the right of the state or the owner of the soil
39-17 under an existing or future lease to receive monetary royalty from
39-18 its lessee.
39-19 Sec. 53.078. PENALTY AND INTEREST. A lease issued under
39-20 this subchapter shall be subject to Sections 52.131(e) through (j)
39-21 of this code.
39-22 Sec. 53.079. CONTRACTS AND AGREEMENTS. On the land office's
39-23 written request, mailed to the lessee's address as shown on its
39-24 lease or otherwise properly changed in conformity with the terms of
39-25 the lease, a copy of a contract for the sale or processing of
40-1 minerals leased under this subchapter and any subsequent agreement
40-2 or amendment to the contract shall be filed in the land office
40-3 within 30 days after the date the land office mails the written
40-4 request. The land office shall treat a contract, agreement, or
40-5 amendment filed in the land office as confidential unless otherwise
40-6 authorized by the lessee.
40-7 Sec. 53.080. AUDIT INFORMATION CONFIDENTIAL. (a) All
40-8 information secured, derived, or obtained during the course of an
40-9 inspection or examination of books, accounts, reports, or other
40-10 records as provided by Section 53.068 of this code, a rule, or a
40-11 lease provision is confidential and may not be used publicly,
40-12 opened for public inspection, or disclosed, except for information
40-13 in a lien filed under this chapter and except as permitted under
40-14 Subsection (d) of this section.
40-15 (b) All information made confidential by this section is not
40-16 subject to subpoena directed to the commissioner, the attorney
40-17 general, or the governor except in a judicial or administrative
40-18 proceeding to which this state is a party.
40-19 (c) The commissioner or the attorney general may use
40-20 information made confidential by this section and contracts made
40-21 confidential by Section 53.079 of this code to enforce this chapter
40-22 or may authorize their use in judicial or administrative
40-23 proceedings to which this state is a party.
40-24 (d) This section does not prohibit:
40-25 (1) the delivery of information made confidential by
41-1 this section to the lessee or its successor, receiver, executor,
41-2 guarantor, administrator, assignee, or representative;
41-3 (2) the publication of statistics classified to
41-4 prevent the identification of a particular audit or items in a
41-5 particular audit;
41-6 (3) the release of information that is otherwise
41-7 available to the public; or
41-8 (4) the release of information concerning the amount
41-9 of royalty assessed as a result of an examination conducted under
41-10 Section 53.068 of this code, a rule, or a lease provision or the
41-11 release of other information that would have been properly included
41-12 in reports required under Section 53.068 of this code, a rule, or a
41-13 lease provision.
41-14 SECTION 55. Section 53.111, Natural Resources Code, is
41-15 amended to read as follows:
41-16 Sec. 53.111. Authority to Operate an Area as a Unit for
41-17 Production of Sulphur. The <Subject to the provisions of this
41-18 subchapter, the> commissioner<,> on behalf of the state or any fund
41-19 that belongs to the state <of its funds,> may execute agreements
41-20 that provide for operating <the operation of> areas as a unit for
41-21 the exploration, development, and production of sulphur and may
41-22 commit to the agreements:
41-23 (1) the royalty interests in sulphur reserved to <or
41-24 provided for> the state or any fund of the state by law in a<, in
41-25 or in connection with any> patent, award, mining claim, or contract
42-1 of sale or under the terms of any lease legally executed <made> by
42-2 an official, board, agent, agency, or authority of the state; or
42-3 (2) the free royalty interests, whether leased or
42-4 unleased, reserved to the state under Section 51.201 or 51.054 of
42-5 this code.
42-6 SECTION 56. Section 53.112, Natural Resources Code, is
42-7 amended to read as follows:
42-8 Sec. 53.112. APPROVAL OF CERTAIN AGREEMENTS BY SCHOOL LAND
42-9 BOARD. (a) An agreement must be approved by the board and
42-10 executed by the commissioner to be effective if the agreement
42-11 <authorized by Section 53.111 of this code that> commits:
42-12 (1) a royalty interest <interests> in land belonging
42-13 <dedicated> to the permanent <free> school fund or <and> the asylum
42-14 funds, in riverbeds, inland lakes, channels, or <and> areas within
42-15 tidewater limits, including islands, lakes, bays, inlets, marshes,
42-16 reefs, and the bed of the sea; or
42-17 (2) the free royalty interests, whether leased or
42-18 unleased, reserved to the state under Section 51.201 or 51.054 of
42-19 this code.
42-20 (b) An owner of the soil who is subject to Subchapter C of
42-21 this chapter may grant to a lessee prior authority to pool or
42-22 unitize the interest of the owner in a lease executed under that
42-23 subchapter. For the agreement to bind the interest of an owner of
42-24 the soil who is subject to Subchapter C of this chapter and who has
42-25 not granted the lessee prior authorization to pool or unitize the
43-1 interest of the owner in a sulphur lease executed under that
43-2 subchapter, the agreement must be executed by the owner of the soil
43-3 <must be approved by the school land board and must be executed by
43-4 the owners of the surface if the agreements cover land leased for
43-5 sulphur under Subchapter C of this chapter>.
43-6 SECTION 57. Section 53.113, Natural Resources Code, is
43-7 amended to read as follows:
43-8 Sec. 53.113. APPROVAL OF <OTHER> AGREEMENTS. An agreement
43-9 <Agreements> that commits <commit> the royalty interest in any land
43-10 <that is> not listed in <covered by> Section 53.112 of this code
43-11 must be approved by the board, official, agent, agency, or
43-12 authority of the state which has the authority to lease or to
43-13 approve the <a> lease of the land <or area> for sulphur and must be
43-14 executed by the commissioner to be effective.
43-15 SECTION 58. Section 53.114, Natural Resources Code, is
43-16 amended to read as follows:
43-17 Sec. 53.114. Commissioner's Approval. Before executing an
43-18 <An> agreement authorized by Section 53.111 of this code, <must be
43-19 found by> the commissioner must find that the agreement is <to be>
43-20 in the best interest of the state.
43-21 SECTION 59. Section 53.115, Natural Resources Code, is
43-22 amended to read as follows:
43-23 Sec. 53.115. Provisions of Agreement. (a) An agreement
43-24 executed under this subchapter may include the following
43-25 provisions:
44-1 (1) that operations incident to <the> drilling <of> a
44-2 well on any portion of a <the> unit shall be <are> considered for
44-3 all purposes to be <the> conduct of the operations on each tract in
44-4 the unit;
44-5 (2) that <the> production allocated by the agreement
44-6 to each tract included in the unit shall be considered for all
44-7 purposes to have been production <after production to be produced>
44-8 from the tract;
44-9 (3) that the <royalty> interest reserved to or
44-10 provided for the state or any of its funds on production from any
44-11 tract included in the unit shall be paid only on that portion of
44-12 the production from the unit that <which> is allocated to the tract
44-13 under the agreement; and
44-14 (4) that each lease included in the unit shall remain
44-15 in effect so long as the agreement remains in effect and that on
44-16 termination of the agreement each lease shall continue in effect
44-17 under the terms and conditions <provisions> of the lease.
44-18 (b) The agreement may include any other terms and<,>
44-19 conditions<, and provisions> the commissioner or any board,
44-20 official, agent, agency, or authority of the state that has the
44-21 authority to lease or to approve a lease of the land <or area> for
44-22 sulphur may consider to be in the best interest of the state.
44-23 SECTION 60. Subchapter D, Chapter 53, Natural Resources
44-24 Code, is amended by adding Section 53.118 to read as follows:
44-25 Sec. 53.118. RATIFICATIONS AND OTHER AGREEMENTS. (a) The
45-1 board may approve, by rule or order, a ratification or other
45-2 agreement that includes in the benefits of production a mineral or
45-3 royalty interest in land belonging to the permanent school fund or
45-4 the asylum funds.
45-5 (b) An agreement approved by the board under this section
45-6 must be executed by the commissioner to be effective.
45-7 (c) A ratification or other agreement that commits any of
45-8 the interests listed by Subsection (a) of this section in land not
45-9 belonging to the permanent school fund or the asylum funds must be
45-10 approved by the board, official, agent, agency, or authority of the
45-11 state that has the authority to lease or to approve the lease of
45-12 the land for sulphur and must be executed by the commissioner to be
45-13 effective.
45-14 SECTION 61. Section 53.152, Natural Resources Code, is
45-15 amended to read as follows:
45-16 Sec. 53.152. Laws Applicable to Leases. <(a)> Leases of
45-17 land described by Section 53.151 of this code shall be made in the
45-18 same procedural manner as leases of that land for oil and gas under
45-19 Chapter 52 of this code.
45-20 <(b) Sections 52.034 and 52.086 of this code do not apply to
45-21 leases of coal, lignite, sulphur, salt, and potash under this
45-22 subchapter.>
45-23 SECTION 62. Section 53.153, Natural Resources Code, is
45-24 amended to read as follows:
45-25 Sec. 53.153. Conditions of Lease. (a) Coal, lignite,
46-1 sulphur, salt, and potash may be leased together or separately.
46-2 (b) A lease granted under this subchapter shall be for a
46-3 primary term not to exceed 20 years and as long after that time as
46-4 the minerals are produced in paying quantities.
46-5 SECTION 63. Section 53.154, Natural Resources Code, is
46-6 amended to read as follows:
46-7 Sec. 53.154. ROYALTY RATE <AND DELAY RENTALS>. The board
46-8 shall set the royalty rate on <(a) In addition to the cash amount
46-9 bid for a lease, the board shall lease the area for not less than
46-10 one-eighth of the gross> production of sulphur, <or the value of
46-11 the sulphur that may be produced or that may be produced and sold
46-12 off the area and not less than one-sixteenth of the value of the>
46-13 coal, lignite, salt, and potash from land leased under this
46-14 subchapter. The royalty rate set must be at least one-eighth of
46-15 the gross production or the market value of the sulphur produced
46-16 and at least one-sixteenth of the gross production or the market
46-17 value of the coal, lignite, salt, and potash produced <that may be
46-18 produced plus an amount determined by the board until production is
46-19 secured.>
46-20 <(b) If production is secured in commercial quantities and
46-21 the payment of royalty begins and continues to be paid, the lessee
46-22 is exempt from further delay rental payments on the acreage.>
46-23 <(c) If production ceases and royalty is not paid, the
46-24 lessee shall pay at the end of the lease year in which the royalty
46-25 ceased to be paid and annually after that time in advance, in an
47-1 amount determined by the board as long as the lessee desires to
47-2 maintain the rights acquired under the lease, but not for more than
47-3 five years from the date of the lease>.
47-4 SECTION 64. Section 53.155, Natural Resources Code, is
47-5 amended to read as follows:
47-6 Sec. 53.155. COMPENSATION FOR <PAYMENT OF> DAMAGES FROM
47-7 <FOR> USE OF SURFACE. (a) Leases issued under Subchapter B or E
47-8 of this chapter for unsold surveyed or unsurveyed school land,
47-9 other than land included in islands, saltwater lakes, bays, inlets,
47-10 marshes, and reefs owned by the state in tidewater limits and other
47-11 than that portion of the Gulf of Mexico within the jurisdiction of
47-12 the state, must include a provision requiring compensation for <the
47-13 payment of> damages from <for> the use of the surface in
47-14 prospecting for, exploring, developing, or producing the leased
47-15 minerals.
47-16 (b) The commissioner by rule shall set the procedure for
47-17 receiving compensation <amount of and shall collect money> for
47-18 damages to the surface of land dedicated to the permanent school
47-19 fund.
47-20 (c) Money collected for surface damages shall be deposited
47-21 in a special fund account in the State Treasury to be used for
47-22 conservation, reclamation, or constructing permanent improvements
47-23 on land that belongs to the permanent school fund.
47-24 (d) The special fund account must be an interest-bearing
47-25 account, and the interest received on the account shall be
48-1 deposited in the State Treasury to the credit of the available
48-2 school fund.
48-3 (e) Money collected under this section and designated for
48-4 the construction of permanent improvements as provided by this
48-5 section must be used not later than two years after the date on
48-6 which the money is collected.
48-7 (f) Any money that remains in the special fund account for
48-8 longer than two years shall be deposited in the State Treasury to
48-9 the credit of the permanent school fund.
48-10 (g) Compensation for <The payment of> damages under this
48-11 section is in addition to any bonus, rental, royalty, or other
48-12 payment required by the lease.
48-13 SECTION 65. Subchapter E, Chapter 53, Natural Resources
48-14 Code, is amended by adding Section 53.156 to read as follows:
48-15 Sec. 53.156. CONTRACTS AND AGREEMENTS. On the land office's
48-16 written request, mailed to the lessee's address as shown on its
48-17 lease or otherwise properly changed in conformity with the terms of
48-18 the lease, a copy of a contract for the sale or processing of
48-19 minerals leased under this subchapter and any subsequent agreement
48-20 or amendment to the contract shall be filed in the land office
48-21 within 30 days after the date the land office mails the written
48-22 request. The land office shall treat a contract, agreement, or
48-23 amendment filed in the land office as confidential unless otherwise
48-24 authorized by the lessee.
48-25 SECTION 66. Section 53.161, Natural Resources Code, is
49-1 amended by amending Subsection (4) and adding Subsection (7) to
49-2 read as follows:
49-3 (4) "Public school land" means land dedicated by the
49-4 constitution or laws of this state to the permanent free school
49-5 fund, but does not include land with a mineral classification
49-6 described in Section 53.061 of this chapter in which the state has
49-7 retained the minerals, nor does it include areas within tidewater
49-8 limits <or the portion of the Gulf of Mexico that is under the
49-9 jurisdiction of this state>.
49-10 (7) "Areas within tidewater limits" means islands,
49-11 saltwater lakes, bays, inlets, marshes, and reefs within tidewater
49-12 limits and that portion of the Gulf of Mexico within the
49-13 jurisdiction of Texas.
49-14 SECTION 67. Subsection (b), Section 53.162, Natural
49-15 Resources Code, is amended to read as follows:
49-16 (b) Every person who is authorized to conduct a geophysical
49-17 or geochemical exploration on public school land shall comply with
49-18 the commissioner's rules relating to such exploration. A person
49-19 with a valid mineral lease on land subject to this chapter shall
49-20 comply with the commissioner's rules concerning exploration.
49-21 SECTION 68. Sections 52.079, 52.081, 52.086, 52.089, and
49-22 53.017, Natural Resources Code, are repealed.
49-23 SECTION 69. This Act does not affect the state's right to
49-24 take its royalty in kind or the calculation of the state's royalty
49-25 under a patent, lease, or unitization agreement executed before the
50-1 effective date of this Act.
50-2 SECTION 70. This Act takes effect September 1, 1993.
50-3 SECTION 71. The importance of this legislation and the
50-4 crowded condition of the calendars in both houses create an
50-5 emergency and an imperative public necessity that the
50-6 constitutional rule requiring bills to be read on three several
50-7 days in each house be suspended, and this rule is hereby suspended.