By: Sims S.B. No. 962
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the sale and development of state-owned oil, gas, and
1-2 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 to read as follows:
1-6 Sec. 32.002. APPLICATION OF CHAPTER. (a) This chapter does
1-7 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) <land> minerals subject to lease under Subchapter
1-19 F, Chapter 52 of this code, commonly known as the Relinquishment
1-20 Act, and Subchapter 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 (b) For purposes of Subsection (a)(4) of this section, land
2-14 is located in a producing area if the closest boundary line of the
2-15 surface of such land is within 2,500 feet of a well capable of
2-16 producing oil or gas in paying quantities as of January 1, 1985.
2-17 (c) Oil and gas underlying land not located within a
2-18 producing area or that is leased for the specific purpose of
2-19 drilling a horizontal well may be leased under the provisions of
2-20 Section 32.201 of this code.
2-21 (d) If title to land subject to Subchapter F, Chapter 52 of
2-22 this code, commonly known as the Relinquishment Act, is acquired by
2-23 a department, board, or agency of the state, the land shall be
2-24 leased as provided by Chapter 52 of this code for the leasing of
2-25 unsold public school land.
3-1 (e) If title to land subject to Subchapter C, Chapter 53 of
3-2 this code is acquired by a department, board, or agency of the
3-3 state, the land shall be leased as provided by Chapter 53 of this
3-4 code for the leasing of unsold surveyed public school land.
3-5 SECTION 2. Section 32.061, Natural Resources Code, is
3-6 amended to read as follows:
3-7 Sec. 32.061. BOARD'S GENERAL DUTIES. Except as provided by
3-8 Subchapter G, Chapter 51 of this code, the board shall:
3-9 (1) set the dates to open bids received for the sale
3-10 of surveyed land dedicated to the permanent school fund <and>; for
3-11 the lease of land for prospecting or exploring for, mining,
3-12 producing, storing, caring for, transporting, preserving, selling,
3-13 or disposing of oil, gas, or other minerals leased under this
3-14 chapter; and for the commitment of land to the terms of a contract
3-15 for development;
3-16 (2) determine the prices and set the terms of the
3-17 contract for which land shall be sold <and leased>, leased, or
3-18 committed to the terms of a contract for development;
3-19 (3) consult with the president, chairman, or other
3-20 head of the department, board, or agency, as applicable, or with
3-21 the representative of the head, on each matter before the board
3-22 that affects land owned or held in trust for the use and benefit of
3-23 a department, board, or agency of the state; and
3-24 (4) perform any other duties which may be required by
3-25 law.
4-1 SECTION 3. Section 32.062, Natural Resources Code, is
4-2 amended to read as follows:
4-3 Sec. 32.062. ADOPTION OF RULES AND COLLECTION OF FEES.
4-4 (a) The board shall adopt rules of procedure and rules for the
4-5 sale <and lease> of land, the leasing of land and the commitment of
4-6 land to the terms of a contract for development as provided by this
4-7 chapter.
4-8 (b) The board by rule shall adopt and shall collect
4-9 reasonable fees necessary to carry out this chapter.
4-10 SECTION 4. Section 32.064, Natural Resources Code, is
4-11 amended to read as follows:
4-12 Sec. 32.064. SURVEY OR SUBDIVISION OF LAND. The board may
4-13 have land surveyed or subdivided into tracts, lots, or blocks based
4-14 on its determination of which method will be most conducive and
4-15 convenient to facilitate the advantageous sale of land <or oil,
4-16 gas, or mineral leases>, the lease of land for oil, gas or other
4-17 minerals, or the commitment of land to the terms of a contract for
4-18 development.
4-19 SECTION 5. Section 32.065, Natural Resources Code, is
4-20 amended to read as follows:
4-21 Sec. 32.065. PERMITS FOR SURVEYS OR INVESTIGATIONS. If land
4-22 other than public school land is not under a valid lease or
4-23 committed to the terms of a contract for development, the board may
4-24 issue a permit for a geological, geophysical, or other survey or
4-25 investigation of that land that will encourage the development of
5-1 the land for oil, gas, or other minerals. The permit may be issued
5-2 for the consideration and under the terms and conditions the board
5-3 considers to be in the best interest of the state.
5-4 SECTION 6. Section 32.101, Natural Resources Code, is
5-5 amended to read as follows:
5-6 Sec. 32.101. APPLICABLE LAW. Land shall be <sold and
5-7 leased> offered for sale, for lease or for commitment to the terms
5-8 of a contract for development subject to the terms and conditions
5-9 provided by law.
5-10 SECTION 7. Section 32.105, Natural Resources Code, is
5-11 amended to read as follows:
5-12 Sec. 32.105. DATE <OF SALE AND LEASE.> FOR OPENING
5-13 BIDS. The <sale> date for opening bids for the sale <or>, lease or
5-14 development of land shall be the first or third Tuesday of the
5-15 month.
5-16 SECTION 8. Section 32.106, Natural Resources Code, is
5-17 amended to read as follows:
5-18 Sec. 32.106. DESCRIPTION OF LAND. The description of public
5-19 school land offered for sale <or>, lease or development shall be in
5-20 accord with the description which may be found in the School Land
5-21 Registry in the land office.
5-22 SECTION 9. Section 32.107, Natural Resources Code, is
5-23 amended to read as follows:
5-24 Sec. 32.107. NOTICE OF SALE <AND LEASE. (a) The board
5-25 shall publish notice of the sale or lease of land>, LEASE AND
6-1 CONTRACT. (a) Notice that the board will receive bids to
6-2 purchase, lease or develop land shall be published in at least
6-3 three issues of at least four daily newspapers.
6-4 (b) The notice shall be published at least 30 days before
6-5 the date <of sale or lease> the bids are advertised to be opened.
6-6 (c) The notice shall state that land is to be offered for
6-7 sale <or lease>, lease or commitment to the terms of a contract for
6-8 development on a certain date and at a certain time and the method
6-9 <of the sale> thereof, and shall give notice that <lists describing
6-10 the land may be obtained at the land office> interested parties may
6-11 obtain publications from the land office that contain descriptions
6-12 of the land offered for sale, lease or development.
6-13 (d) The land office may solicit and include advertising in
6-14 its publications. Fees paid to include advertising in land office
6-15 publications shall be deposited by the commissioner in the State
6-16 Treasury as a special account.
6-17 SECTION 10. Section 32.1071, Natural Resources Code, is
6-18 amended to read as follows:
6-19 Sec. 32.1071. LEASE SALES. (a) The sale of oil, gas, or
6-20 other mineral leases shall be by sealed bid or at public auction or
6-21 through a combination of public auction and sealed bid, as the
6-22 board elects.
6-23 (b) Sections 52.015 through 52.020 of this code apply to the
6-24 sale of leases by sealed bid.
6-25 (c) The leases shall be made on terms and conditions that
7-1 may be prescribed by the board.
7-2 SECTION 11. Section 32.1072, Natural Resources Code, is
7-3 amended to read as follows:
7-4 Sec. 32.1072. MINIMUM ROYALTY, BONUS, AND RENTAL. The board
7-5 may not accept a bid on an oil and gas lease that offers:
7-6 (1) a royalty of less than one-eighth of the gross
7-7 production of oil<, gas, or other minerals> or gas; or
7-8 (2) a cash bonus of less than $10 an acre.
7-9 SECTION 12. Section 32.109, Natural Resources Code, is
7-10 amended to read as follows:
7-11 Sec. 32.109. ACCEPTANCE AND REJECTION OF BIDS. (a) <The
7-12 board may reject any and all bids, but if the board elects not to
7-13 reject any and all bids, it is required to> For each tract offered
7-14 for sale, lease, or for commitment to the terms of a contract for
7-15 development, the board must either accept the best bid submitted
7-16 that meets the minimum requirements set by the board or by law, or
7-17 reject all bids.
7-18 (b) The minutes of the board shall reflect the acceptance or
7-19 rejection of a bid<, and the approval of the minutes constitutes
7-20 approval of the act of acceptance or rejection>.
7-21 SECTION 13. Section 32.110, Natural Resources Code, is
7-22 amended to read as follows:
7-23 Sec. 32.110. SPECIAL SALE FEE. (a) On land sales and
7-24 mineral leases made by the board, the purchaser or bidder is
7-25 required to pay by separate check an amount equal to one and
8-1 one-half percent of the bid payable to the commissioner as a
8-2 special fee.
8-3 (b) <Only> If the sale is by bid, only the special fees paid
8-4 on the <high> bids accepted by the board shall be deposited by the
8-5 commissioner in the State Treasury as a special fund.
8-6 (c) Failure to pay the special fee <does> shall not <render>
8-7 void a bid <void>, but the commissioner shall demand payment of the
8-8 fee before <he issues> a lease is issued to the <successful> best
8-9 bidder. If the <successful> best bidder fails or refuses to make
8-10 the payment within 30 days after demand by the commissioner, the
8-11 bidder is not entitled to a <lease or> sale of or a lease on the
8-12 tract covered by <his> that bid and the cash bonus shall be
8-13 automatically forfeited to be deposited by the commissioner in the
8-14 State Treasury to the credit of the permanent school fund <or the
8-15 appropriate special mineral fund>. The board, at its option, may
8-16 offer the tract for sale or lease to the next best bidder under the
8-17 same terms as submitted by, and as would have been granted to, the
8-18 best bidder.
8-19 (d) Checks submitted by unsuccessful bidders shall be
8-20 returned to the bidders <with their bid checks>.
8-21 SECTION 14. Section 32.151, Natural Resources Code, is
8-22 amended to read as follows:
8-23 Sec. 32.151. TERM OF LEASE. Each oil and gas lease shall be
8-24 for a primary term <of> not to exceed <five> ten years and for as
8-25 long thereafter as oil<,> or gas<, or other minerals> covered by
9-1 the lease <are> is produced in paying quantities.
9-2 SECTION 15. Subchapter F, Chapter 32, Natural Resources
9-3 Code, is amended by adding Section 32.206 to read as follows:
9-4 Sec. 32.206. RATIFICATIONS AND OTHER AGREEMENTS. (a) The
9-5 board is authorized to approve, by board action or by rule, in a
9-6 manner deemed by the board to be in the best interest of the state,
9-7 ratifications, or other contracts or agreements, to include in the
9-8 benefits of production any mineral or royalty interest in land
9-9 owned by the state that was acquired to construct or maintain
9-10 highway, road, street, or alley.
9-11 (b) Any agreement approved by the board under this section
9-12 must be executed by the commissioner to be effective.
9-13 (c) This section shall not apply to those interests subject
9-14 to pooling or unitization by lessee under leases issued under this
9-15 subchapter.
9-16 SECTION 16. Section 52.014, Natural Resources Code, is
9-17 amended to read as follows:
9-18 Sec. 52.014. DATE FOR LEASE AND NOTICE. <(a)> The date for
9-19 opening bids to lease <of> areas covered by this subchapter shall
9-20 be set and notice of the date shall be given in the manner provided
9-21 in Sections 32.105 and 32.107 of this code.
9-22 <(b) Notice of areas being offered for lease shall be
9-23 advertised for a period of 30 days before the lease date.>
9-24 SECTION 17. Section 52.015, Natural Resources Code, is
9-25 amended to read as follows:
10-1 Sec. 52.015. <APPLICATION FOR LEASE. (a) Each application
10-2 for a separate area and the first payment shall be delivered to the
10-3 land office on or before the day and hour on which the area is
10-4 subject to lease.> BIDS TO LEASE. (a) To apply to lease a tract,
10-5 a bidder must submit a separate bid for each separate tract to be
10-6 leased.
10-7 <(b) The application and payment shall be delivered in a
10-8 sealed envelope endorsed with "application to lease oil and gas"
10-9 and the date on which the area is subject to lease.> (b) Bids must
10-10 include a completed application to lease form, a payment to the
10-11 commissioner in the amount of the actual bonus bid or set, and a
10-12 separate payment to the commissioner in the amount of the special
10-13 fee provided in Section 52.016 of this code.
10-14 <(c) Any application received up to the hour in which the
10-15 applications are to be opened shall be considered to be properly
10-16 delivered regardless of whether it is opened or sealed or endorsed
10-17 or unendorsed> (c) Bids must be delivered to the land office on or
10-18 before the date and time the bids are advertised to be opened.
10-19 SECTION 18. Section 52.017, Natural Resources Code, is
10-20 amended to read as follows:
10-21 Sec. 52.017. KEEPING AND OPENING BIDS. <The envelopes> Bids
10-22 shall be kept <securely> secure and unopened by the commissioner
10-23 <or his chief clerk until the day on which the applications are to
10-24 be opened, and at that time, the board shall open the envelopes in
10-25 the presence of any persons who desire to be present>, or the
11-1 commissioner's designee, until opened on the date and at the time
11-2 set as provided in Section 52.014 of this code.
11-3 SECTION 19. Section 52.021, Natural Resources Code, is
11-4 amended to read as follows:
11-5 Sec. 52.021. TERM OF LEASE. A lease granted under this
11-6 subchapter shall be for a primary term not to exceed <five> ten
11-7 years and for as long after that time as oil or gas is produced
11-8 from the leased area.
11-9 SECTION 20. Section 52.022, Natural Resources Code, is
11-10 amended to read as follows:
11-11 Sec. 52.022. ROYALTY RATE. The board shall set the royalty
11-12 rate on production of oil and gas from land leased under this
11-13 subchapter. The royalty rate set must be at least one-eighth of
11-14 gross production, or the market value thereof, of the oil and gas
11-15 produced. <AND DELAY RENTALS. (a) In addition to the cash amount
11-16 bid for a lease, the area included in the lease shall be leased for
11-17 not less than one-eighth of the gross production of oil produced
11-18 and saved, or its value, and not less than one-eighth of the gross
11-19 production of gas produced and sold off the area or its value, plus
11-20 an amount determined by the board, until production is secured.>
11-21 <(b) If production is secured in commercial quantities and
11-22 the payment of royalty begins and continues to be paid, the lessee
11-23 is exempt from further delay rental payments on the acreage.>
11-24 <(c) If production ceases and royalty is not paid, the
11-25 lessee shall pay at the end of the lease year in which the royalty
12-1 ceased to be paid and annually after that time in advance, an
12-2 amount determined by the board for as long as the lessee desires to
12-3 maintain the rights acquired under the lease, but not for more than
12-4 five years from the date of the lease.>
12-5 SECTION 21. Section 52.023, Natural Resources Code, is
12-6 amended to read as follows:
12-7 Sec. 52.023. LEASE PROVISIONS FOR DRILLING AND
12-8 REWORKING. Each lease shall provide that:
12-9 (1) if the production of oil or gas on premises leased
12-10 under this subchapter ceases for any reason <at or> after the
12-11 expiration of the primary term, the lease will not terminate if the
12-12 lessee commences additional drilling or reworking operations within
12-13 60 days after the cessation of production;
12-14 (2) the lease shall remain in effect as long as <the>
12-15 drilling <and> or reworking operations continue in good faith and
12-16 in a workmanlike manner<,> without interruptions<,> totaling more
12-17 than 60 days <during any one such operation; and>;
12-18 (3) if the drilling or reworking operations result in
12-19 the production of oil or gas, the lease shall remain in effect <as>
12-20 so long as oil or gas is produced from the leased premises in
12-21 paying quantities or payment of shut-in <gas> royalties or payment
12-22 of compensatory royalties is made as provided by law; and
12-23 (4) if the drilling or reworking operations result in
12-24 the completion of a well as a dry hole the lease will not terminate
12-25 if the lessee commences additional drilling or reworking operations
13-1 within 60 days after the completion of the well as a dry hole and
13-2 the lease shall remain in effect so long as the lessee continues
13-3 drilling or reworking operations in good faith and in a workmanlike
13-4 manner without interruptions totaling more than 60 days.
13-5 SECTION 22. Section 52.024, Natural Resources Code, is
13-6 amended to read as follows:
13-7 Sec. 52.024. LEASE PROVISIONS FOR SHUT-IN OIL OR GAS ROYALTY
13-8 AND COMPENSATORY ROYALTY. Each lease shall provide that:
13-9 (1) For purposes of this section, a well shall be
13-10 defined as any well that has been assigned a well number by the
13-11 state agency having jurisdiction over the production of oil and
13-12 gas;
13-13 <(1)> (2) if, at any time after the expiration of the
13-14 primary term <or at any time after the expiration> of <the primary
13-15 term> a lease that is being maintained in force and effect, a well
13-16 <or wells> capable of producing oil or gas in paying quantities
13-17 <are> is located on the leased premises, but oil or gas is not
13-18 being produced for lack of suitable production facilities or lack
13-19 of a suitable market <and the lease is not being maintained in
13-20 force and effect>, then the lessee may pay as a shut-in oil or gas
13-21 royalty an amount equal to double the annual rental provided in the
13-22 lease, but not less than $1,200 a year for each well capable of
13-23 producing oil or gas in paying quantities. <Any shut-> To be
13-24 effective, each initial shut-in oil or gas royalty must be paid on
13-25 or before: (A) the expiration of the primary term, (B) 60 days
14-1 after the lessee ceases to produce oil or gas from the leased
14-2 premises, or (C) 60 days after the lessee completes a drilling
14-3 <and> or reworking operation in accordance with the lease
14-4 provisions, whichever date is <later> latest;
14-5 <(2)> (3) if the shut-in oil or gas royalty is paid,
14-6 the lease shall be considered to be a producing lease and the
14-7 payment shall extend the term of the lease for a period of one year
14-8 from the end of the primary term or from the first day of the month
14-9 <next succeeding> following the month in which production ceased,
14-10 and, after that, if no suitable production facilities or suitable
14-11 market for the oil or gas exists, the lessee may extend the lease
14-12 for four <additional and> more successive periods of one year by
14-13 paying the same amount each year on or before the expiration of
14-14 <the extended term> each shut-in year;
14-15 <(3)> (4) if, during the period the lease is kept in
14-16 effect by payment of the shut-in oil or gas royalty, oil or gas is
14-17 sold and delivered in paying quantities from a well located within
14-18 1,000 feet of the leased premises and completed in the same
14-19 producing reservoir, or in any case in which drainage is occurring,
14-20 the right to continue to <extend> maintain the lease by paying the
14-21 shut-in oil or gas royalty shall cease, but the lease shall remain
14-22 effective for the remainder of the year for which the royalty has
14-23 been paid <and>. The lessee may maintain the lease for four
14-24 <additional and> more successive <periods of one year each> years
14-25 by the lessee paying compensatory royalty at the royalty rate
15-1 provided in the lease of the market value <at the well> of
15-2 production from the well <which is> causing the drainage, or which
15-3 is completed in the same producing reservoir and within 1,000 feet
15-4 of the leased premises;
15-5 <(4)> (5) the compensatory royalty is to be paid
15-6 monthly to the commissioner beginning on or before the last day of
15-7 the month <next succeeding> following the month in which the oil or
15-8 gas is <sold and delivered from the well> produced from the well
15-9 causing the drainage, or which is completed in the same producing
15-10 reservoir and located within 1,000 feet of <or draining> the leased
15-11 premises <and completed in the same reservoir>;
15-12 <(5)> (6) if the compensatory royalty paid in any
15-13 12-month period is in an amount less than the annual shut-in oil or
15-14 gas royalty, the lessee shall pay an amount equal to the difference
15-15 within 30 days from the end of the 12-month period; and
15-16 <(6)> (7) none of these provisions will relieve the
15-17 lessee of the obligation of reasonable development nor the
15-18 obligation to drill offset wells as provided in Section 52.034 of
15-19 this code; however, at the determination of the commissioner, and
15-20 with <his> the commissioner's written approval, the payment of
15-21 compensatory royalties shall satisfy the obligation to drill offset
15-22 wells.
15-23 SECTION 23. Section 52.028, Natural Resources Code, is
15-24 amended to read as follows:
15-25 Sec. 52.028. SUSPENSION OF <OIL AND GAS LEASES> LEASE FOR
16-1 LITIGATION. (a) If an oil and gas lease that has been issued by
16-2 the commissioner is involved in litigation relating to <its> the
16-3 validity of the lease or to the authority of the commissioner to
16-4 <lease the land, the primary term of the lease> issue the lease,
16-5 the lease, and all the conditions and covenants contained in the
16-6 lease, shall be suspended <and all obligations imposed by the lease
16-7 set aside> during the period of the litigation, except as otherwise
16-8 provided in this section.
16-9 (b) If the litigation is instituted <at least six months
16-10 before the expiration of the primary term, after final judgment is
16-11 rendered> during the primary term of the lease, then, after a
16-12 final, non-appealable judgment is entered in the litigation, the
16-13 primary term provided in the lease shall begin <to run> again and
16-14 the lease shall continue to run for the remainder of the period
16-15 specified in the lease, and all conditions and covenants contained
16-16 in the lease <and all obligations and duties imposed by the lease>
16-17 shall be operative.
16-18 (c) <The lessee shall pay all annual delay rentals and any
16-19 royalties> If the litigation is instituted during the secondary
16-20 term of the lease, then, after a final, non-appealable judgment is
16-21 entered in the litigation, the lease, and all the conditions and
16-22 covenants contained in the lease, shall be operative, and the
16-23 lessee shall have 60 days from the date a final, non-appealable
16-24 judgment is entered in the litigation to commence drilling or
16-25 reworking operations on the lease as if production had ceased on
17-1 that date under the provisions of Section 52.023 of this code.
17-2 (d) Lessee shall pay all royalties, if any, that accrue
17-3 during the period of <litigation> suspension of the lease in the
17-4 same manner as they are to be paid under the <lease during the
17-5 primary term. If such delay rentals are not paid as the lease
17-6 requires, the lease shall not automatically terminate; however, the
17-7 delay rentals continue to be an obligation and debt owed by the
17-8 lessee. The delay rentals paid during the period of litigation
17-9 shall be held and returned to the lessee if the state is
17-10 unsuccessful in the litigation> terms of the lease.
17-11 SECTION 24. Section 52.0301, Natural Resources Code, is
17-12 amended to read as follows:
17-13 Sec. 52.0301. Suspension of Terms of Lease in Certain
17-14 Situations. (a) If the <owner> lessee of a valid oil and gas
17-15 lease granted by the state is <denied access to or is denied>
17-16 unable to obtain access to the leased premises, or is unable to
17-17 obtain in a timely manner a permit to drill on or produce from the
17-18 leased premises by any duly constituted authority of the United
17-19 States <after a bona fide> or of the State of Texas after a
17-20 diligent, good faith attempt has been made by the <owner> lessee to
17-21 obtain access to, or a permit to drill on or produce from, the
17-22 <lease> leased premises, the <owner> lessee may file with the board
17-23 an application describing and giving the date of the action that
17-24 deprives <him> the lessee of access to or <the right> a permit to
17-25 drill on or produce from the leased premises.
18-1 (b) If the board is satisfied that the facts included in the
18-2 application are true, <the board may enter an order in its minutes
18-3 suspending the running of both the primary and the principal term
18-4 of the lease or suspending any condition, obligation, or duty
18-5 under> and that the lessee acted diligently and in good faith in an
18-6 attempt to gain access to, or the right to drill on or produce from
18-7 the leased premises, the board may order the suspension of the
18-8 lease, or of any condition or covenant contained in the lease, from
18-9 the date <of> the board finds to be the date the cause for the
18-10 suspension <through the continued existence of the cause for the
18-11 suspension, so long as the lessee continues to make the annual
18-12 rental payments that are> began, except as otherwise provided in
18-13 this section.
18-14 (c) The board may set as a condition to approving the
18-15 application for a suspension of the lease any term or requirement
18-16 it deems to be in the best interest of the state.
18-17 (d) If the lease is suspended during its primary term,
18-18 lessee shall make payments in the amount of the annual delay rental
18-19 stipulated in the lease <on> by each anniversary date of the lease
18-20 during the period of suspension. <(c) After the board enters an
18-21 order in its minutes stating that the cause for suspension has
18-22 ceased to exist, the oil and gas lease shall again become operative
18-23 if the rental payments have been made> If the payments in the
18-24 amount of the annual delay rental are not paid by each anniversary
18-25 date of the lease, the lease shall not automatically terminate;
19-1 however, the amount of the annual delay rental stipulated in the
19-2 lease due by each anniversary of the lease during the period of
19-3 suspension<, and all suspended obligations and conditions shall
19-4 again attach and be in force for a period equivalent to the
19-5 unexpired term of the lease.>
19-6 <(d) Deleted.>
19-7 <(e) The commissioner shall give notice immediately to the
19-8 lessee of the entry of an order stating that the cause of
19-9 suspension has ceased to exist, provided annual rental payments
19-10 have been made.> continues to be an obligation and debt owed by the
19-11 lessee. Lessee shall pay all royalties, if any, that accrue during
19-12 the period of suspension of the lease in the same manner as they
19-13 are to be paid under the terms of the lease.
19-14 (e) If the lease is suspended during its primary term, then,
19-15 when the suspension ends, the primary term provided in the lease
19-16 shall begin again and continue to run for the remainder of the
19-17 period specified in the lease, and all conditions and covenants
19-18 contained in the lease, shall be operative.
19-19 (f) If the lease is suspended during its secondary term,
19-20 then, when the suspension ends, the lease, and all conditions and
19-21 covenants contained in the lease, shall be operative, and the
19-22 lessee shall have 60 days from the date the suspension ended to
19-23 commence drilling or reworking operations on the lease as if
19-24 production had ceased on that date under the provisions of Section
19-25 52.023 of this code.
20-1 <(f)> (g) This section may not be construed as abridging any
20-2 rights or privileges conveyed under Chapter 287, Acts of the 47th
20-3 Legislature, Regular Session, 1941 (Article 5366a, Vernon's Texas
20-4 Civil Statutes).
20-5 SECTION 25. Section 52.035, Natural Resources Code, is
20-6 amended to read as follows:
20-7 Sec. 52.035. Agreements With U.S. Government. (a) The
20-8 governor may execute agreements on behalf of the state to obtain
20-9 access to confidential and proprietary information from the
20-10 secretary of the United States Department of the Interior regarding
20-11 exploration, development, or production of oil or gas or any other
20-12 mineral on the outer continental shelf. The governor may agree to
20-13 waive sovereign immunity and other defenses as prescribed by this
20-14 section, and may agree to indemnify the United States government
20-15 from unauthorized disclosure of the information obtained.
20-16 (b) The information obtained from the Department of the
20-17 Interior under an agreement executed under Subsection (a) of this
20-18 section is confidential and may not be used publicly, opened to
20-19 public inspection, or disclosed, except that the information may be
20-20 examined and used by the governor and the commissioner of the
20-21 General Land Office, or their designees, for the administration of
20-22 their official duties and to assure a fair and equitable division
20-23 of federal revenues derived from leasing lands adjacent to the
20-24 boundaries of this state.
20-25 (c) The state waives its right to claim sovereign immunity
21-1 in any action commenced against the state for unauthorized
21-2 disclosure of the confidential information obtained from the
21-3 Department of the Interior under an agreement executed by the
21-4 governor under Subsection (a) of this section, and waives its right
21-5 to claim that an employee who revealed privileged information was
21-6 acting outside the scope of employment by disclosing the
21-7 information.
21-8 (d) The state agrees to hold the United States government
21-9 harmless from any actions or damages brought as a result of the
21-10 acts or omissions of the state or its employees in releasing
21-11 proprietary information obtained under an agreement executed under
21-12 Subsection (a) of this section.
21-13 SECTION 26. Section 52.076, Natural Resources Code, is
21-14 amended to read as follows:
21-15 Sec. 52.076. DUTY TO ADVERTISE. (a) The board <shall> may:
21-16 (1) advertise for bids <proposals: (1)> to lease
21-17 riverbeds and channels for oil and gas development;
21-18 (2) <to drill> advertise for bids to contract to
21-19 develop the oil or gas under or recoverable from riverbeds and
21-20 channels on consideration involving compensation with oil and gas
21-21 or money so that the state will receive a portion of the oil and
21-22 gas as it is produced or advanced royalties paid in money; <and>
21-23 (3) advertise for bids to purchase oil and gas in
21-24 place under or recoverable from riverbeds and channels without
21-25 requiring mineral development; and
22-1 (4) pool or bring an action to force pool unleased
22-2 riverbeds and channels.
22-3 (b) The board shall advertise <the proposals and conduct the
22-4 sales> notice that the board will receive bids and conduct the
22-5 award of the right to lease, develop, or purchase hereunder in the
22-6 same procedural manner as provided in Subchapter D, Chapter 32<,>
22-7 and Subchapter B, Chapter 52 of this code.
22-8 SECTION 27. Subchapter C, Chapter 52, Natural Resources
22-9 Code, is amended by adding Section 52.078 to read as follows:
22-10 Sec. 52.078. SPECIAL FEE. Each bidder on a lease under this
22-11 subchapter shall remit, with each bid by separate payment, a
22-12 special sale fee in the amount and in the manner provided in
22-13 Section 32.110 of this code.
22-14 SECTION 28. REPEALER. Section 52.079, Natural Resources
22-15 Code, is repealed.
22-16 SECTION 29. REPEALER. Section 52.081, Natural Resources
22-17 Code, is repealed.
22-18 SECTION 30. Section 52.082, Natural Resources Code, is
22-19 amended to read as follow:
22-20 Sec. 52.082. Term of Lease. A lease granted under this
22-21 subchapter shall be for a primary term <of five> not to exceed ten
22-22 years and for as long after that time as oil or gas is produced
22-23 from the leased area.
22-24 SECTION 31. REPEALER. Section 52.086, Natural Resources
22-25 Code, is repealed.
23-1 SECTION 32. Section 52.088, Natural Resources Code, is
23-2 amended to read as follows:
23-3 Sec. 52.088. ROYALTY RATE. The board shall set the royalty
23-4 rate on production of oil and gas from riverbeds and channels
23-5 leased under this subchapter. The royalty rate set must be at
23-6 least one-eighth of gross production, or the market value thereof,
23-7 of the oil and gas produced <AND DELAY RENTALS. (a) In addition
23-8 to the cash amount bid for a lease, the board shall lease the area
23-9 for not less than one-eighth of the gross production of oil
23-10 produced and saved or its value and not less than one-eighth of the
23-11 gross production of gas produced and sold off the area or its value
23-12 plus an amount determined by the board until production is secured.>
23-13 <(b) If production is secured in commercial quantities and
23-14 the payment of royalty begins and continues to be paid, the lessee
23-15 is exempt from further delay rental payments on the acreage.>
23-16 <(c) If production ceases and royalty is not paid, the
23-17 lessee shall pay at the end of the lease year in which the royalty
23-18 ceased to be paid and annually after that time in advance, in an
23-19 amount determined by the board as long as the lessee desires to
23-20 maintain the rights acquired under the lease, but not for more than
23-21 five years from the date of the lease.>
23-22 SECTION 33. REPEALER. Section 52.089, Natural Resources
23-23 Code, is repealed.
23-24 SECTION 34. Section 52.131, Natural Resources Code, is
23-25 amended to read as follows:
24-1 Sec. 52.131. Payment of Royalty Generally. (a) Royalties
24-2 due under a lease of state land or minerals that are required to be
24-3 paid to the land office, including leases on land on which a free
24-4 royalty is reserved pursuant to Section 51.201 or 51.054 of this
24-5 title, shall be due and shall be paid as provided in this section.
24-6 (b) The commissioner shall by rule set the date for making
24-7 royalty payments and for filing any reports, documents, or other
24-8 records required to be filed by the commissioner. However, the
24-9 commissioner may not set the due date for royalty on oil before the
24-10 5th day of the second month succeeding the month of production and
24-11 may not set the due date for royalty on gas before the 15th day of
24-12 the second month succeeding the month of production.
24-13 (c) Royalty payments shall be accompanied by:
24-14 (1) an affidavit of the owner, manager, or other
24-15 authorized agent, completed in the form and manner required by the
24-16 land office and showing the gross amount and disposition of all oil
24-17 and gas produced and the market value of the oil and gas;
24-18 (2) a copy of all documents, records or reports
24-19 required by the land office, confirming the gross production,
24-20 disposition, and market value, including gas meter readings,
24-21 pipeline receipts, gas line receipts, and other checks or memoranda
24-22 of amount produced and put into pipelines, tanks, pools, and gas
24-23 lines or gas storage;
24-24 (3) a check stub, schedule, summary, or other
24-25 remittance advice showing by the assigned land office lease number
25-1 the amount of royalty being paid on each lease; and
25-2 (4) other reports or records that the land office may
25-3 require to verify the gross production, disposition, and market
25-4 value.
25-5 (d) The lessee has the responsibility for paying royalties
25-6 or having royalties paid by the date provided for payment in this
25-7 section.
25-8 (e) If any royalty is not paid when due but is paid before
25-9 the 31st day after the date on which it is due, a penalty of five
25-10 percent of the royalty due shall be added to the unpaid amount due.
25-11 If the royalty is not paid before the 31st day after the date on
25-12 which it is due, a penalty of an additional five percent of the
25-13 royalty due shall be imposed. The minimum penalty under this
25-14 section is $25. The penalty may not be imposed in cases of title
25-15 dispute as to the state's portion of the royalty or to that portion
25-16 of the royalty in dispute as to <fair> the market value of the
25-17 production.
25-18 (f) The commissioner shall add a penalty of 25 percent to
25-19 any delinquent royalty if a part of the delinquency is due to fraud
25-20 or an intent to evade the provisions of this chapter.
25-21 (g) The annual interest rate on delinquent royalties is 12
25-22 percent. Interest accrues on delinquent royalties beginning 60
25-23 days after the date on which the royalty is due.
25-24 (h) If any report, affidavit, supporting document, or any
25-25 other instrument required to be filed under this chapter is not
26-1 filed when due, the commissioner shall charge a reasonable penalty
26-2 in an amount established by rule adopted by the commissioner.
26-3 (i) Interest charged under Subsection (g) of this section or
26-4 penalties under Subsection (e), (f), or (h) of this section are in
26-5 addition to any other right, including forfeiture, that the
26-6 commissioner may exercise for failure to submit a report or other
26-7 instrument.
26-8 (j) By rule, the board may provide procedures and standards
26-9 for reduction of interest charged pursuant to this section or
26-10 penalties assessed under this section or any other interest or
26-11 penalties assessed by the commissioner related to unpaid or
26-12 delinquent royalties.
26-13 SECTION 35. Section 52.133, Natural Resources Code, is
26-14 amended to read as follows:
26-15 Sec. 52.133. Payment of Royalty in Kind<. (a) In this
26-16 section, "royalty" means royalty payable in a sum of money equal to
26-17 the market value for the general area where produced and when run
26-18 or royalty that may be collected in kind.>
26-19 <(b)> (a) Each oil or gas lease covering land leased by the
26-20 board, by a board for lease other than the Board for Lease of
26-21 University Lands, or by the surface owner of land under which the
26-22 state owns the minerals, commonly referred to as Relinquishment Act
26-23 land, which shall be subject to approval by the commissioner before
26-24 it is effective, shall include a provision granting the board
26-25 authorized to lease the land or the owner of the soil of
27-1 Relinquishment Act land and the commissioner authority to take
27-2 their royalty in kind, and the commissioner and the boards for
27-3 lease may include any other reasonable provisions that are not
27-4 inconsistent with this section.
27-5 <(c)> (b) The option to take the royalty in kind may be
27-6 exercised at any time or from time to time on not less than 60
27-7 days' notice to the holder of the lease.
27-8 <(d)> (c) The <board, the> commissioner, each <board for
27-9 lease other than the Board for Lease of University Lands, or the>
27-10 owner of the soil under Subchapter F of this chapter, or the
27-11 commissioner, acting on the behalf of and at the direction of an
27-12 owner of the soil under Subchapter F of this chapter, the board, or
27-13 a board for lease may negotiate and execute <sales> contracts or
27-14 any other instruments or agreements necessary to dispose of their
27-15 portion of the royalty taken in kind, including, but not limited
27-16 to, contracts for sale, transportation, or storage.
27-17 <(e)> (d) This section does not apply to or have any effect
27-18 on the Board for Lease of University Lands or any lease executed on
27-19 university land.
27-20 <(f)> (e) This section shall not be construed to surrender
27-21 or in any way affect the right of the state or the owner of the
27-22 soil under existing or future leases to receive royalty from its
27-23 lessee on the basis of the <fair> market value <produced> of the
27-24 production from state public land or land under the provisions of
27-25 Subchapter F of this chapter.
28-1 SECTION 36. Section 52.151, Natural Resources Code, is
28-2 amended to read as follows:
28-3 Sec. 52.151. Authorization to Operate Areas as Units.
28-4 (a) The commissioner, on behalf of the state or any fund that
28-5 belongs to the state, may execute agreements that provide for
28-6 operating areas as a unit for the exploration, development, and
28-7 production of oil or gas or both and to commit to the agreements
28-8 (1) the royalty interests in oil or gas, or both, reserved to the
28-9 state, or any fund of the state, by law, in a patent, in a contract
28-10 of sale, or under the terms of an oil and gas lease legally
28-11 executed by an official, board, agent, agency, or authority of the
28-12 state, or (2) the free royalty interests, whether leased or
28-13 unleased, reserved to the state pursuant to Section 51.201 or
28-14 51.054 of this code.
28-15 (b) <The> For an agreement authorized by Subsection (a) of
28-16 this section to be effective, the commissioner must find that the
28-17 agreement is in the best interest of the state.
28-18 SECTION 37. Section 52.152, Natural Resources Code, is
28-19 amended to read as follows:
28-20 Sec. 52.152. APPROVAL OF <UNIT> AGREEMENTS. (a) An
28-21 agreement that <(1)> commits <the> (1) a royalty interest in land
28-22 belonging to the permanent school fund or the asylum funds, in
28-23 riverbeds, inland lakes, and channels, or in an area within
28-24 tidewater limits, including islands, lakes, bays, inlets, marshes,
28-25 reefs, and the bed of the sea, or (2) the free royalty interests,
29-1 whether leased or unleased, reserved to the state pursuant to
29-2 Section 51.201 or 51.054 of this code, must be approved by the
29-3 board and executed by the commissioner to be effective.
29-4 (b) An owner of the soil <if the agreement covers land
29-5 leased for oil and gas under> who is subject to the provisions of
29-6 Subchapter F of this chapter may grant to a lessee prior authority
29-7 to pool or unitize the interest of such owner in a lease executed
29-8 under the provisions of such subchapter. In order for the
29-9 provisions of an agreement to bind the interest of an owner of the
29-10 soil who is subject to the provisions of Subchapter F of this
29-11 chapter and who has not granted the lessee prior authorization to
29-12 pool or unitize such interest in an oil and gas lease executed
29-13 under the provisions of that subchapter, the agreement must be
29-14 executed by the owner of the soil.
29-15 <(b)> (c) An agreement that commits <the royalty> any
29-16 interest in any land <or an area> not listed in Subsection (a) of
29-17 this section must be approved by the board, official, agent,
29-18 agency, or authority of the state which has the authority to lease
29-19 or to approve the lease of the land for oil and gas and must be
29-20 executed by the commissioner to be effective.
29-21 SECTION 38. Section 52.153, Natural Resources Code, is
29-22 amended to read as follows:
29-23 Sec. 52.153. <AGREEMENT PROVISIONS. (a) The agreement to
29-24 operate areas as units may provide> PROVISIONS OF AGREEMENT.
29-25 (a) An agreement executed under this subchapter may include the
30-1 following provisions:
30-2 (1) that operations incident to drilling a well on any
30-3 portion of a unit shall be considered for all purposes to be
30-4 conduct of the operations on each <separately owned> tract in the
30-5 unit <by the several owners>;
30-6 (2) that production allocated by the agreement to each
30-7 tract included in the unit shall be considered for all purposes to
30-8 have been <produced> production from the tract;
30-9 (3) that the <agreement and lease, with respect to the
30-10 interest of the state, shall be effective as long as oil or gas or
30-11 both are produced from the unit in paying quantities and royalties
30-12 are paid to the state> interest reserved to or provided for the
30-13 state, or any of its funds, on production from any tract included
30-14 in the unit shall be paid only on that portion of the production
30-15 from the unit which is allocated to the tract under the agreement;
30-16 and
30-17 (4) that <royalties reserved to the state or any fund
30-18 of the state on production from any tract or portion of a tract>
30-19 each lease included in the unit shall <be paid only on the portion
30-20 of the production allocated to the tract by the agreement> remain
30-21 in effect so long as the agreement remains in effect and that on
30-22 termination of the agreement each lease shall continue in effect
30-23 under the terms and conditions of the lease.
30-24 (b) The agreement may include any other <provision which
30-25 the> terms and conditions the commissioner or any board, official,
31-1 agent, agency, or authority of the state <which> that has the
31-2 authority to lease or to approve <the leasing> a lease of the land
31-3 for oil and gas may consider <necessary for the protection of the
31-4 interests> to be in the best interest of the state.
31-5 SECTION 39. Subchapter E, Chapter 52, Natural Resources
31-6 Code, is amended by adding Section 52.154 to read as follows:
31-7 Sec. 52.154. RATIFICATIONS AND OTHER AGREEMENTS. (a) The
31-8 board is authorized to approve, by board action or by rule, in a
31-9 manner deemed by the board to be in the best interest of the state,
31-10 ratifications, or other contracts or agreements, to include in the
31-11 benefits of production any mineral or royalty interest in land
31-12 belonging to the permanent school fund or the asylum funds.
31-13 (b) Any agreement approved by the board under this section
31-14 must be executed by the commissioner to be effective.
31-15 (c) A ratification, or other contract or agreement, that
31-16 commits any of the interests listed in Subsection (a) of this
31-17 section in land not belonging to the permanent school fund or the
31-18 asylum funds must be approved by the board, official, agent,
31-19 agency, or authority of the state which has the authority to lease
31-20 or to approve the lease of the land for oil and gas and must be
31-21 executed by the commissioner to be effective.
31-22 SECTION 40. Section 52.175, Natural Resources Code, is
31-23 amended to read as follows:
31-24 Sec. 52.175. Lease of Oil and Gas After Forfeiture. When
31-25 the relinquishment or agency right herein granted has been
32-1 forfeited, the land shall be subject to lease for oil and gas under
32-2 the procedure provided by law for the leasing of unsold surveyed
32-3 public school lands. The substantive provisions of Subchapter B of
32-4 this Chapter and Subchapters D and E of Chapter 32 of this code
32-5 shall apply to such an oil and gas lease. No oil and gas lease
32-6 shall be executed which provides for a royalty of less than
32-7 one-eighth, payable to the state for the benefit of the permanent
32-8 free school fund. The owner of the soil shall not be entitled to
32-9 any revenue generated by a lease executed pursuant to this section.
32-10 Upon the termination or expiration of a lease so executed by the
32-11 Commissioner of the General Land Office, the rights of the surface
32-12 owner to act under this law shall be ipso facto reinstated.
32-13 SECTION 41. Section 52.186, Natural Resources Code, is
32-14 amended to read as follows:
32-15 Sec. 52.186. Lease of Certain Minerals When Owner of the
32-16 Soil Unavailable. (a) If an owner of the soil or of any undivided
32-17 interest therein of any land subject to the terms of this
32-18 subchapter, or Subchapter C, Chapter 53, of this code, is found to
32-19 be unavailable under Subsection (b) of this section to act as the
32-20 state's agent for leasing oil and gas or any mineral leased under
32-21 Subchapter C, Chapter 53, of this code, such land or undivided
32-22 interest therein shall be subject to lease for the applicable
32-23 minerals under the procedure provided by Subchapter B of this
32-24 Chapter 52 for the leasing of unsold surveyed public school lands.
32-25 The substantive provisions of Subchapter B of this Chapter and
33-1 Subchapters D and E of Chapter 32 of this code shall apply to such
33-2 a lease of land subject to lease under this subchapter. The
33-3 substantive provisions of Subchapter E of Chapter 53 and
33-4 Subchapters D and E of Chapter 32 of this code shall apply to such
33-5 a lease of land subject to lease under Subchapter C of Chapter 53
33-6 of this code. Subject to the provisions of Subsection (b)(4) of
33-7 this section, the owner of the soil shall not be entitled to any
33-8 revenue generated by a lease executed pursuant to this section.
33-9 (b) An owner of the soil or of an undivided interest therein
33-10 may be found to be unavailable to act as the state's agent for
33-11 leasing oil and gas or any mineral leased under Subchapter C,
33-12 Chapter 53, of this code, if the following conditions have been
33-13 satisfied:
33-14 (1) Any party who has been unable to locate an owner
33-15 of any interest, including an undivided interest, in the surface of
33-16 land subject to this subchapter or Subchapter C, Chapter 53, of
33-17 this code must submit a written affidavit to the commissioner
33-18 stating that the party (hereafter called affiant) has been unable
33-19 to locate said owner. This affidavit must specify the legal
33-20 description of the land which the affiant has been unable to lease
33-21 and the extent of the interest and type of mineral which the
33-22 affiant has been unable to lease. In the affidavit, the affiant
33-23 must also attest to the fact that he diligently searched the county
33-24 clerk's records and the tax assessor's records to determine the
33-25 name, identity, and last known place of residence of the owner of
34-1 the soil who could lease the interest that the affiant has been
34-2 unable to lease. The affiant must further attest to the results of
34-3 his search of such records and to any other steps taken to locate
34-4 the owner of the soil.
34-5 (2) The commissioner shall provide notice to any owner
34-6 of the soil identified by the affiant in Subdivision (1) of this
34-7 subsection of the consequences of a finding that such owner of the
34-8 soil is unavailable to act as the state's leasing agent. Such
34-9 notice shall be in writing to the owner of the soil's last known
34-10 address and shall also be provided by publication in the manner
34-11 provided by the Texas Rules of Civil Procedure for citation by
34-12 publication in actions against unknown owners or claimants of an
34-13 interest in land.
34-14 (3) If the owner of the soil has not contacted the
34-15 commissioner within 30 days after the completion of all notice
34-16 procedures provided under Subdivision (2) of this subsection, then
34-17 the owner of the soil will be deemed unavailable to act as the
34-18 state's leasing agent and the School Land Board may lease the
34-19 state's mineral interest under Subsection (a) of this section.
34-20 However, if prior to the execution of a lease under Subsection (a)
34-21 the owner of the soil notifies the commissioner in writing that he
34-22 can and will act as the state's agent, then the owner of the soil's
34-23 ability to act as a leasing agent under this subchapter or under
34-24 Subchapter C, Chapter 53, of this code shall be reinstated.
34-25 (4) If the owner of the soil or of any undivided
35-1 interest therein appears within two years after the execution of a
35-2 lease on his land pursuant to this section, he shall be entitled to
35-3 one-half of all royalties theretofore paid or thereafter to be paid
35-4 under such lease, reduced in the proportion which his interest
35-5 bears to the whole and undivided surface estate, upon showing to
35-6 the satisfaction of the commissioner that the information submitted
35-7 under Subsection (b)(1) was inaccurate or that a reasonably
35-8 diligent search would have resulted in his being located.
35-9 (c) Upon the termination or expiration of a lease for oil
35-10 and gas or any mineral leased under Subchapter C, Chapter 53, of
35-11 this code executed pursuant to this section, the rights of the
35-12 owner of the soil to act under this subchapter shall be ipso facto
35-13 reinstated.
35-14 SECTION 42. Section 52.291, Natural Resources Code, is
35-15 amended to read as follows:
35-16 Sec. 52.291. Coverage. The following persons, agencies, and
35-17 entities are subject to the provisions of Sections 52.292 through
35-18 52.293 of this code:
35-19 (1) the commissioner;
35-20 (2) the board;
35-21 (3) boards for lease of land owned by a department,
35-22 board, or agency of the state created by Chapter 34 of this code;
35-23 (4) the Board for Lease of University Lands;
35-24 (5) the Board of Regents of Texas A & M University;
35-25 (6) the Board of Regents of Texas Tech University;
36-1 (7) the Board of Directors of Texas A & I University;
36-2 (8) the Board of Regents, State Senior Colleges;
36-3 (9) the Board of Regents of the University of Houston;
36-4 (10) any other board of regents or other governing
36-5 board of a state-supported institution of higher learning having
36-6 authority to execute oil<,> and gas<, and mineral> leases on land
36-7 owned by the institution;
36-8 (11) an owner of land or minerals in this state whose
36-9 authority to lease the land or minerals as agent for the state
36-10 arises in whole or in part from what is commonly known as the
36-11 Relinquishment Act, codified in Subchapter F of this chapter;
36-12 (12) the Board for Lease of State Park Lands;
36-13 (13) the Board for Lease of the Texas Department of
36-14 Corrections; and
36-15 (14) the commissioners court of any county in this
36-16 state.
36-17 SECTION 43. Section 52.292, Natural Resources Code, is
36-18 amended to read as follows:
36-19 Sec. 52.292. Prohibited Leases. It is illegal for any
36-20 person included in Section 52.291 of this code to execute an oil<,>
36-21 and gas<, or mineral> lease on land on which he is authorized by
36-22 law to execute the lease unless the lease includes the terms
36-23 provided in Section 52.293 of this code.
36-24 SECTION 44. Section 52.294, Natural Resources Code, is
36-25 amended to read as follows:
37-1 Sec. 52.294. PREREQUISITE TO FILING LEASES. The
37-2 commissioner shall not receive and file an oil<,> and gas<, and
37-3 mineral> lease required to be filed by law unless the lease
37-4 includes the terms and conditions provided in Section 52.293 of
37-5 this code.
37-6 SECTION 45. Section 52.295, Natural Resources Code, is
37-7 amended to read as follows:
37-8 Sec. 52.295. CERTAIN LEASES NULL, VOID, AND OF NO FORCE AND
37-9 EFFECT. An oil<,> and <, and mineral> lease executed or received
37-10 and filed in violation of the provisions of this subchapter is
37-11 null, void, and of no force and effect.
37-12 SECTION 46. Section 52.297, Natural Resources Code, is
37-13 amended to read as follows:
37-14 Sec. 52.297. <PAYMENT OF> COMPENSATION FOR DAMAGES <FOR>
37-15 FROM USE OF SURFACE. (a) Leases issued under Subchapter B of this
37-16 chapter for unsold surveyed or unsurveyed school land, other than
37-17 land included in islands, saltwater lakes, bays, inlets, marshes,
37-18 and reefs owned by the state in tidewater limits and other than
37-19 that portion of the Gulf of Mexico within the jurisdiction of the
37-20 state, must include a provision requiring the <payment of>
37-21 compensation for damages <for> from the use of the surface in
37-22 prospecting for, exploring, developing, or producing the leased
37-23 minerals.
37-24 (b) The commissioner by rule shall set the <amount of and
37-25 shall collect money> procedure for receiving compensation for
38-1 damages to the surface of land dedicated to the permanent school
38-2 fund.
38-3 (c) Money collected for surface damages shall be deposited
38-4 in a special fund account in the State Treasury to be used for
38-5 conservation, reclamation, or constructing permanent improvements
38-6 on land that belongs to the permanent school fund.
38-7 (d) The special fund account must be an interest-bearing
38-8 account, and the interest received on the account shall be
38-9 deposited in the State Treasury to the credit of the available
38-10 school fund.
38-11 (e) Money collected under this section and designated for
38-12 the construction of permanent improvements as provided by this
38-13 section must be used not later than two years after the date on
38-14 which the money is collected.
38-15 (f) Any money that remains in the special fund account for
38-16 longer than two years shall be deposited in the State Treasury to
38-17 the credit of the permanent school fund.
38-18 (g) The <payment of> compensation for damages under this
38-19 section is in addition to any bonus, rental, royalty, or other
38-20 payment required by the lease.
38-21 SECTION 47. Section 52.321, Natural Resources Code, is
38-22 amended to read as follows:
38-23 Sec. 52.321. Definitions. In this subchapter:
38-24 (1) "Geophysical exploration" means a survey or
38-25 investigation conducted to discover or locate oil and gas prospects
39-1 using magnetic, gravity, seismic, and/or electrical techniques.
39-2 (2) "Geochemical exploration" means a survey or
39-3 investigation conducted to discover or locate oil and gas prospects
39-4 using techniques involving soil sampling and analysis.
39-5 (3) "Public school land" means land dedicated by the
39-6 constitution or laws of this state to the permanent free school
39-7 fund, and specifically includes land with a mineral classification
39-8 under Subchapter F of this chapter in which the state has retained
39-9 the oil and gas interest and areas within tidewater limits <or the
39-10 portion of the Gulf of Mexico that is under the jurisdiction of
39-11 this state>.
39-12 (4) "Areas within tidewater limits" means islands,
39-13 saltwater lakes, bays, inlets, marshes, and reefs within tidewater
39-14 limits and that portion of the Gulf of Mexico within the
39-15 jurisdiction of Texas.
39-16 (5) "Permit" means a license issued by the
39-17 commissioner authorizing geophysical and/or geochemical exploration
39-18 on public school land.
39-19 (6) "Permittee" means the holder of a permit.
39-20 SECTION 48. Section 52.324, Natural Resources Code, is
39-21 amended to read as follows:
39-22 Sec. 52.324. AUTHORITY OF COMMISSIONER. (a) The
39-23 commissioner:
39-24 (1) as a condition of issuing a permit, shall collect
39-25 reasonable fees from the applicant in an amount determined by the
40-1 commissioner;
40-2 (2) may require a permittee to furnish to the
40-3 commissioner, upon the commissioner's request, copies of maps,
40-4 plats, reports, data, and any other information in the possession
40-5 of the permittee that relates to the progress or results of an
40-6 exploration under a permit; provided however, the commissioner
40-7 shall not require a permittee to furnish any of its interpretive
40-8 data;
40-9 (3) shall by rule require a permittee to restore land
40-10 explored under the permit as nearly as is practicable to its
40-11 condition immediately prior to the exploration;
40-12 (4) shall by rule set the <amount of and shall collect
40-13 money> procedure for receiving compensation for damages to the
40-14 surface of public school land except land with a mineral
40-15 classification under Subchapter F of this chapter; and
40-16 (5) may make any other rules relating to geophysical
40-17 or geochemical explorations, permits, or permittees the
40-18 commissioner considers appropriate.
40-19 (b) Money collected for surface damages shall be deposited
40-20 and used in the manner provided by Section 52.297 of this chapter.
40-21 (c) In the case of areas within tidewater limits, the
40-22 commissioner shall follow the recommendations of the Parks and
40-23 Wildlife Department in making rules to prevent unnecessary
40-24 pollution of water, destruction of fish, oysters, and other marine
40-25 life, and obstruction of navigation.
41-1 (d) If a permittee violates a rule of the commissioner or a
41-2 term of a permit, the commissioner may cancel the permit.
41-3 (e) If by authority of Subsection (a)(2) of this section the
41-4 commissioner acquires information concerning a permittee's
41-5 geophysical or geochemical exploration, the commissioner shall
41-6 consider the information to be confidential and may not disclose
41-7 it, except by authority of a court order, to the public or any
41-8 other agency of this state.
41-9 SECTION 49. Section 53.001, Natural Resources Code, is
41-10 amended to read as follows:
41-11 Sec. 53.001. Definitions. In this chapter:
41-12 (1) "Commissioner" means the Commissioner of the
41-13 General Land Office.
41-14 (2) "Land office" means the General Land Office.
41-15 (3) "Board" means the school land board.
41-16 SECTION 50. Section 53.012, Natural Resources Code, is
41-17 amended to read as follows:
41-18 Sec. 53.012. Application for Right to Prospect. (a) A
41-19 person who desires to prospect land covered by this subchapter
41-20 shall file an application with the commissioner designating the
41-21 area to be prospected.
41-22 (b) Each area covered by an application may not be in excess
41-23 of 640 acres with a 10 percent tolerance for tracts, sections, and
41-24 surveys that include more than 640 acres.
41-25 (c) <Each application shall be accompanied by a rental
42-1 payment of not less than 25 cents an acre> The commissioner may
42-2 delineate what an application must contain.
42-3 SECTION 51. Section 53.013, Natural Resources Code, is
42-4 amended to read as follows:
42-5 Sec. 53.013. Conditions of Permit. (a) <The> After receipt
42-6 of the rental payment set by the commissioner, the commissioner
42-7 shall issue to the first applicant a permit to prospect the area
42-8 designated in <his> the applicant's application for a period of one
42-9 year from the date <his> said application is filed.
42-10 (b) <The> After receipt of an additional rental payment set
42-11 by the commissioner, the commissioner may extend the permit for a
42-12 period of one year <on payment of an annual rental of not less than
42-13 25 cents an acre>.
42-14 (c) No permit may be extended for a period of more than five
42-15 consecutive years from the date of its issuance.
42-16 SECTION 52. Section 53.015, Natural Resources Code, is
42-17 amended to read as follows:
42-18 Sec. 53.015. Application for Lease. (a) At any time during
42-19 the term of the permit, the permittee may file an application to
42-20 lease the area or a designated portion of the area covered by the
42-21 permit for the purpose of mining or producing the minerals covered
42-22 by the permit.
42-23 (b) <The application shall be accompanied by the first lease
42-24 payment of not less than $2 an acre> An application to lease must
42-25 designate the specific minerals the permittee is applying to lease.
43-1 The commissioner may delineate what other information an
43-2 application must contain.
43-3 (c) If the area designated for lease in the application is
43-4 less than the area covered by the permit, the applicant shall
43-5 include with <his> the application field notes prepared by the
43-6 county surveyor or by a licensed state land surveyor describing the
43-7 land designated.
43-8 SECTION 53. Section 53.016, Natural Resources Code, is
43-9 amended to read as follows:
43-10 Sec. 53.016. Issuance of Lease. (a) <The> After receipt of
43-11 the bonus payment set by the commissioner, the lease shall be
43-12 issued by the commissioner under the provisions of this subchapter
43-13 and shall be for a primary term not to exceed 20 years and as long
43-14 after that time as the minerals are produced in paying quantities.
43-15 (b) The commissioner may include in the lease any other
43-16 provision <he> the commissioner considers necessary for protection
43-17 of the interests of the state.
43-18 SECTION 54. REPEALER. Section 53.017, Natural Resources
43-19 Code, is repealed.
43-20 SECTION 55. Section 53.020, Natural Resources Code, is
43-21 amended to read as follows:
43-22 Sec. 53.020. ASSIGNMENT AND TRANSFER. A lease issued under
43-23 this subchapter may be transferred or assigned at any time in the
43-24 manner provided by Section 52.026 of this code <of Lease. (a) A
43-25 lease may be assigned in quantities of not less than 40 acres, but
44-1 if there are fewer than 40 acres remaining in the tract originally
44-2 leased, the lesser area may be assigned.>
44-3 <(b) The assignment shall be recorded in the county in which
44-4 the land is located, and within 90 days after it is recorded a
44-5 certified copy of the assignment, certified by the county clerk
44-6 from his records, shall be sent to the land office, together with a
44-7 filing fee set by the commissioner in an amount not less than $1
44-8 for each tract affected>.
44-9 SECTION 56. Section 53.024, Natural Resources Code, is
44-10 amended to read as follows:
44-11 Sec. 53.024. <OTHER LEASE PROVISIONS. For any lease issued
44-12 under this chapter, the penalty and interest on delinquent
44-13 royalties, and the penalty for failure to file a report, are
44-14 assessed in the same manner and in the same amounts as provided in
44-15 Section 52.131> PENALTY AND INTEREST. Leases issued under this
44-16 subchapter shall be subject to the provisions of Section 52.131(e)
44-17 through (j) of this code.
44-18 SECTION 57. Subchapter B, Chapter 53, Natural Resources
44-19 Code, is amended by adding Section 53.025 to read as follows:
44-20 Sec. 53.025. LEASE RELINQUISHMENT. A lease issued under
44-21 this subchapter may be relinquished to the state at any time in the
44-22 manner provided by Section 52.027 of this code.
44-23 SECTION 58. Subchapter B, Chapter 53, Natural Resources
44-24 Code, is amended by adding Section 53.026 to read as follows:
44-25 Sec. 53.026. IN KIND ROYALTY. (a) The commissioner or the
45-1 commissioner acting on behalf of and at the direction of the board
45-2 or a board for lease may negotiate and execute contracts or any
45-3 other instruments or agreements necessary to dispose of their
45-4 portion of the royalty taken in kind, including, but not limited
45-5 to, contracts for sale, transportation, or storage.
45-6 (b) This section shall not be construed to surrender or in
45-7 any way affect the right of the state under existing or future
45-8 leases to receive royalty from its lessee on the basis of the
45-9 market value of the production from land leased under the
45-10 provisions of this subchapter.
45-11 SECTION 59. Subchapter B, Chapter 53, Natural Resources
45-12 Code, is amended by adding Section 53.027 to read as follows:
45-13 Sec. 53.027. CONTRACTS AND AGREEMENTS. Upon the land
45-14 office's written request, mailed to the lessee's address as shown
45-15 on its lease or otherwise properly changed in conformity with the
45-16 terms of the lease, copies of contracts for the sale or processing
45-17 of minerals leased under this subchapter and subsequent agreements
45-18 and amendments to those contracts shall be filed in the land office
45-19 within 30 days after the land office mails such written request.
45-20 These contracts, agreements, and amendments so filed in the land
45-21 office shall be held in confidence by the land office unless
45-22 otherwise authorized by the lessee.
45-23 SECTION 60. Subchapter B, Chapter 53, Natural Resources
45-24 Code, is amended by adding Section 53.028 to read as follows:
45-25 Sec. 53.028. AUDIT INFORMATION CONFIDENTIAL. (a) All
46-1 information secured, derived, or obtained during the course of an
46-2 inspection or examination of books, accounts, reports, or other
46-3 records, as provided in this code, a rule, or a lease provision, is
46-4 confidential and may not be used publicly, opened for public
46-5 inspection, or disclosed, except for information set forth in a
46-6 lien filed under this chapter and except as permitted under
46-7 Subsection (d) of this section.
46-8 (b) All information made confidential in this section shall
46-9 not be subject to subpoena directed to the commissioner, the
46-10 attorney general, or the governor except in a judicial or
46-11 administrative proceeding in which this state is a party.
46-12 (c) The commissioner or the attorney general may use
46-13 information made confidential by the provisions of this section and
46-14 contracts made confidential by Section 53.027 of this code to
46-15 enforce any provisions of this chapter or may authorize their use
46-16 in judicial or administrative proceedings in which this state is a
46-17 party.
46-18 (d) This section does not prohibit:
46-19 (1) the delivery of information made confidential by
46-20 this section to the lessee or its successor, receiver, executor,
46-21 guarantor, administrator, assignee, or representative;
46-22 (2) the publication of statistics classified to
46-23 prevent the identification of a particular audit or items in a
46-24 particular audit;
46-25 (3) the release of information which is otherwise
47-1 available to the public; or
47-2 (4) the release of information concerning the amount
47-3 of royalty assessed as a result of an examination conducted under
47-4 this code, a rule, or a lease provision or the release of other
47-5 information which would have been properly included in reports
47-6 required under this code, a rule, or a lease provision.
47-7 SECTION 61. Section 53.074, Natural Resources Code, is
47-8 amended to read as follows:
47-9 Sec. 53.074. Authority and Duties of Agent.
47-10 (a) Prohibition Against Self-Dealing. The owner of the soil may
47-11 not lease, either directly or indirectly, to himself or to a
47-12 nominee, to any corporation or subsidiary in which he is a
47-13 principal stockholder, or to an employee of such a corporation or
47-14 subsidiary, or to a partnership in which he is a partner, or to an
47-15 employee of such a partnership. If the owner of the soil is a
47-16 corporation or a partnership, then the owner of the soil may not
47-17 lease, either directly or indirectly, to a principal stockholder of
47-18 the corporation or to a partner of the partnership, or any employee
47-19 of the corporation or partnership. The owner of the soil may not
47-20 lease, either directly or indirectly, to his fiduciary, including
47-21 but not limited to a guardian, trustee, executor, administrator,
47-22 receiver, or conservator. Further, the owner of the soil may not
47-23 lease, directly or indirectly, to a member of his family or anyone
47-24 related to him by marriage, blood, or adoption.
47-25 (b) Fiduciary Duty of Agent. An owner of the soil owes the
48-1 state a fiduciary duty and a duty of utmost good faith. An owner
48-2 of the soil must fully disclose any facts affecting the state's
48-3 interest and must act in the best interest of the state. Any
48-4 conflict of interest must be resolved by putting the interests of
48-5 the state before the interests of the owner of the soil. In
48-6 addition to these specific statutory duties, the owner of the soil
48-7 owes the state all the common-law duties of a holder of executive
48-8 rights.
48-9 (c) Consequences of a Breach of the Surface Owner's
48-10 Fiduciary Duty or a Violation of the Prohibition Against
48-11 Self-Dealing. When the commissioner determines that an owner of
48-12 the soil has breached any duty or obligation under this subchapter,
48-13 the commissioner may request that the attorney general file an
48-14 action or proceeding either to enforce the duties and obligations
48-15 of the owner of the soil or to forfeit the then applicable agency
48-16 rights of the surface owner. Such an action or proceeding shall be
48-17 filed in a district court in Travis County.
48-18 (d) Leasing Procedure When Surface Owner's Agency Rights
48-19 Have Been Forfeited. When the surface owner's agency rights have
48-20 been forfeited in accordance with Subsection (c) of this section,
48-21 the minerals subject to lease under this subchapter can then be
48-22 leased under the leasing procedure set out for the lease of oil and
48-23 gas under Section 52.175 of this code. The substantive provisions
48-24 of Subchapter E of this chapter and Subchapter D and E of Chapter
48-25 32 of this code shall apply to such a lease.
49-1 (e) A penalty of 10 percent shall be imposed on any sums due
49-2 the state because a surface owner breaches a fiduciary duty. This
49-3 penalty shall be applied only to amounts owed as a result of
49-4 breaches occurring on and after the effective date of this section.
49-5 The imposition of this penalty will not limit the right of the
49-6 state to obtain punitive damages, exemplary damages, or interest.
49-7 Any punitive damages or exemplary damages assessed by a court shall
49-8 be offset by the 10 percent penalty imposed by this subsection.
49-9 SECTION 62. Subchapter C, Chapter 53, Natural Resources
49-10 Code, is amended by adding Section 53.075 to read as follows:
49-11 Sec. 53.075. ASSIGNMENT AND TRANSFER. A lease issued under
49-12 this subchapter may be transferred or assigned at any time in the
49-13 manner provided by Section 52.026 of this code.
49-14 SECTION 63. Subchapter C, Chapter 53, Natural Resources
49-15 Code, is amended by adding Section 53.076 to read as follows:
49-16 Sec. 53.076. LEASE RELINQUISHMENT. A lease issued under
49-17 this subchapter may be relinquished to the state at any time in the
49-18 manner provided by Section 52.027 of this code.
49-19 SECTION 64. Subchapter C, Chapter 53, Natural Resources
49-20 Code, is amended by adding Section 53.077 to read as follows:
49-21 Sec. 53.077. IN KIND ROYALTY. (a) The commissioner, each
49-22 owner of the soil under this subchapter, or the commissioner,
49-23 acting on the behalf of and at the direction of an owner of the
49-24 soil under this subchapter may negotiate and execute contracts or
49-25 any other instruments or agreements necessary to dispose of their
50-1 portion of the royalty taken in kind, including, but not limited
50-2 to, contracts for sale, transportation, or storage.
50-3 (b) This section shall not be construed to surrender or in
50-4 any way affect the right of the state or the owner of the soil
50-5 under existing or future leases to receive royalty from its lessee
50-6 on the basis of the market value of the production from land leased
50-7 under the provisions of this subchapter.
50-8 SECTION 65. Subchapter C, Chapter 53, Natural Resources
50-9 Code, is amended by adding Section 53.078 to read as follows:
50-10 Sec. 53.078. PENALTY AND INTEREST. Leases issued under this
50-11 subchapter shall be subject to the provisions of Section 52.131 (e)
50-12 through (j) of this code.
50-13 SECTION 66. Subchapter C, Chapter 53, Natural Resources
50-14 Code, is amended by adding Section 53.079 to read as follows:
50-15 Sec. 53.079. CONTRACTS AND AGREEMENTS. Upon the land
50-16 office's written request, mailed to the lessee's address as shown
50-17 on its lease or otherwise properly changed in conformity with the
50-18 terms of the lease, copies of contracts for the sale or processing
50-19 of minerals leased under this subchapter and subsequent agreements
50-20 and amendments to those contracts shall be filed in the land office
50-21 within 30 days after the land office mails such written request.
50-22 These contracts, agreements, and amendments so filed in the land
50-23 office shall be held in confidence by the land office unless
50-24 otherwise authorized by the lessee.
50-25 SECTION 67. Subchapter C, Chapter 53, Natural Resources
51-1 Code, is amended by adding Section 53.080 to read as follows:
51-2 Sec. 53.080. AUDIT INFORMATION CONFIDENTIAL. (a) All
51-3 information secured, derived, or obtained during the course of an
51-4 inspection or examination of books, accounts, reports, or other
51-5 records, as provided in Section 53.068 of this code, a rule, or a
51-6 lease provision is confidential and may not be used publicly,
51-7 opened for public inspection, or disclosed, except for information
51-8 set forth in a lien filed under this chapter and except as
51-9 permitted under Subsection (d) of this section.
51-10 (b) All information made confidential in this section shall
51-11 not be subject to subpoena directed to the commissioner, the
51-12 attorney general, or the governor except in a judicial or
51-13 administrative proceeding in which this state is a party.
51-14 (c) The commissioner or the attorney general may use
51-15 information made confidential by the provisions of this section and
51-16 contracts made confidential by Section 53.079 of this code to
51-17 enforce any provisions of this chapter or may authorize their use
51-18 in judicial or administrative proceedings in which this state is a
51-19 party.
51-20 (d) This section does not prohibit:
51-21 (1) the delivery of information made confidential by
51-22 this section to the lessee or its successor, receiver, executor,
51-23 guarantor, administrator, assignee, or representative;
51-24 (2) the publication of statistics classified to
51-25 prevent the identification of a particular audit or items in a
52-1 particular audit;
52-2 (3) the release of information which is otherwise
52-3 available to the public; or
52-4 (4) the release of information concerning the amount
52-5 of royalty assessed as a result of an examination conducted under
52-6 Section 53.068 of this code, a rule, or a lease provision or the
52-7 release of other information which would have been properly
52-8 included in reports required under Section 53.068 of this code, a
52-9 rule, or a lease provision.
52-10 SECTION 68. Section 53.111, Natural Resources Code, is
52-11 amended to read as follows:
52-12 Sec. 53.111. Authority to Operate an Area as a Unit for
52-13 Production of Sulphur. <Subject to the provisions of this
52-14 subchapter, the> The commissioner<,> on behalf of the state or any
52-15 <of its funds,> fund that belongs to the state may execute
52-16 agreements that provide for <the operation of> operating areas as a
52-17 unit for the exploration, development, and production of sulphur
52-18 and <may> to commit to the agreements (1) the royalty interests in
52-19 sulphur reserved to <or provided for> the state or any fund of the
52-20 state<, in or in connection with any> by law, in a patent, award,
52-21 mining claim, <or> contract of sale, or under the terms of any
52-22 lease <made> legally executed by an official, board, agent, agency,
52-23 or authority of the state, or (2) the free royalty interests,
52-24 whether leased or unleased, reserved to the state pursuant to
52-25 Section 51.201 or 51.054 of this code.
53-1 SECTION 69. Section 53.112, Natural Resources Code, is
53-2 amended to read as follows:
53-3 Sec. 53.112. APPROVAL OF CERTAIN AGREEMENTS BY <THE> SCHOOL
53-4 LAND BOARD. (a) An agreement <authorized by Section 53.111 of
53-5 this code> that commits (1) a royalty <interests> interest in land
53-6 <dedicated> belonging to the permanent <free> school fund <and> or
53-7 the asylum funds, in riverbeds, inland lakes, and channels, <and
53-8 areas> or in an area within tidewater limits, including islands,
53-9 lakes, bays, inlets, marshes, reefs, and the bed of the sea, or
53-10 (2) the free royalty interests, whether leased or unleased,
53-11 reserved to the state pursuant to Section 51.201 or 51.054 of this
53-12 code, must be approved by the <school land board and must be
53-13 executed by the owners of the surface if the agreements cover land
53-14 leased for sulphur under> board and executed by the commissioner to
53-15 be effective.
53-16 (b) An owner of the soil who is subject to the provisions of
53-17 Subchapter C of this chapter may grant to a lessee prior authority
53-18 to pool or unitize the interest of such owner in a lease executed
53-19 under the provisions of such subchapter. In order for the
53-20 provisions of such an agreement to bind the interest of an owner of
53-21 the soil who is subject to the provisions of Subchapter C of this
53-22 chapter and who has not granted the lessee prior authorization to
53-23 pool or unitize such interest in a sulphur lease executed under the
53-24 provisions of that subchapter, the agreement must be executed by
53-25 the owner of the soil.
54-1 SECTION 70. Section 53.113, Natural Resources Code, is
54-2 amended to read as follows:
54-3 Sec. 53.113. Approval of <OTHER> Agreements. <Agreements>
54-4 An agreement that <commit> commits the royalty interest in any land
54-5 <that is> not <covered by> listed in Section 53.112 of this code
54-6 must be approved by the board, official, agent, agency, or
54-7 authority of the state which has the authority to lease or to
54-8 approve <a> the lease of the land <or area> for sulphur and must be
54-9 executed by the commissioner to be effective.
54-10 SECTION 71. Section 53.114, Natural Resources Code, is
54-11 amended to read as follows:
54-12 Sec. 53.114. COMMISSIONER'S APPROVAL. <An> For an agreement
54-13 authorized by Section 53.111 of this code <must> to be <found by>
54-14 effective, the commissioner <to be> must find that the agreement is
54-15 in the best interest of the state.
54-16 SECTION 72. Section 53.115, Natural Resources Code, is
54-17 amended to read as follows:
54-18 Sec. 53.115. Provisions of Agreement. (a) An agreement
54-19 executed under this subchapter may include the following
54-20 provisions:
54-21 (1) that operations incident to <the> drilling <of> a
54-22 well on any portion of <the> a unit <are> shall be considered for
54-23 all purposes to be <the> conduct of the operations on each tract in
54-24 the unit;
54-25 (2) that <the> production allocated by the agreement
55-1 to each tract included in the unit shall be considered for all
55-2 purposes <after production to be produced> to have been production
55-3 from the tract;
55-4 (3) that the <royalty> interest reserved to or
55-5 provided for the state, or any of its funds, on production from any
55-6 tract included in the unit shall be paid only on that portion of
55-7 the production from the unit which is allocated to the tract under
55-8 the agreement; and
55-9 (4) that each lease included in the unit shall remain
55-10 in effect so long as the agreement remains in effect and that on
55-11 termination of the agreement each lease shall continue in effect
55-12 under the terms and <provisions> conditions of the lease.
55-13 (b) The agreement may include any other terms<,> and
55-14 conditions<, and provisions> the commissioner or any board,
55-15 official, agent, agency, or authority of the state that has the
55-16 authority to lease or to approve a lease of the land <or area> for
55-17 sulphur may consider to be in the best interest of the state.
55-18 SECTION 73. Subchapter D, Chapter 53, Natural Resources
55-19 Code, is amended by adding Section 53.118 to read as follows:
55-20 Sec. 53.118. RATIFICATIONS AND OTHER AGREEMENTS. (a) The
55-21 board is authorized to approve, by board action or by rule, in a
55-22 manner deemed by the board to be in the best interest of the state,
55-23 ratifications, or other contracts or agreements, to include in the
55-24 benefits of production any mineral or royalty interest in land
55-25 belonging to the permanent school fund or the asylum funds.
56-1 (b) Any agreement approved by the board under this section
56-2 must be executed by the commissioner to be effective.
56-3 (c) A ratification, or other contract or agreement, that
56-4 commits any of the interests listed in Subsection (a) of this
56-5 section in land not belonging to the permanent school fund or the
56-6 asylum funds must be approved by the board, official, agent,
56-7 agency, or authority of the state which has the authority to lease
56-8 or to approve the lease of the land for sulphur and must be
56-9 executed by the commissioner to be effective.
56-10 SECTION 74. Section 53.152, Natural Resources Code, is
56-11 amended to read as follows:
56-12 Sec. 53.152. LAWS APPLICABLE TO LEASES. <(a)> Leases of
56-13 land described by Section 53.151 of this code shall be made in the
56-14 same procedural manner as leases of that land for oil and gas under
56-15 Chapter 52 of this code.
56-16 <(b) Sections 52.034 and 52.086 of this code do not apply to
56-17 leases of coal, lignite, sulphur, salt, and potash under this
56-18 subchapter.>
56-19 SECTION 75. Section 53.153, Natural Resources Code, is
56-20 amended to read as follows:
56-21 Sec. 53.153. CONDITIONS OF LEASE. (a) Coal, lignite,
56-22 sulphur, salt, and potash may be leased together or separately.
56-23 (b) A lease granted under this subchapter shall be for a
56-24 primary term not to exceed twenty years and as long after that time
56-25 as the minerals are produced in paying quantities.
57-1 SECTION 76. Section 53.154, Natural Resources Code, is
57-2 amended to read as follows:
57-3 Sec. 53.154. ROYALTY <AND DELAY RENTALS. (a) In addition
57-4 to the cash amount bid for a lease, the board shall lease the area
57-5 for not less than one-eighth of the gross> RATE. The Board shall
57-6 set the royalty rate on production of sulphur <or the value of the
57-7 sulphur that may be produced or that may be produced and sold off
57-8 the area and not less than one-sixteenth of the value of the>,
57-9 coal, lignite, salt, and potash from land leased under this
57-10 subchapter. The royalty rate set must be at least one-eighth of
57-11 gross production, or the market value thereof, of the sulphur
57-12 produced and at least one-sixteenth of gross production, or the
57-13 market value thereof, of the coal, lignite, salt, and potash
57-14 produced <that may be produced plus an amount determined by the
57-15 board until production is secured.>
57-16 <(b) If production is secured in commercial quantities and
57-17 the payment of royalty begins and continues to be paid, the lessee
57-18 is exempt from further delay rental payments on the acreage.>
57-19 <(c) If production ceases and royalty is not paid, the
57-20 lessee shall pay at the end of the lease year in which the royalty
57-21 ceased to be paid and annually after that time in advance, in an
57-22 amount determined by the board as long as the lessee desires to
57-23 maintain the rights acquired under the lease, but not for more than
57-24 five years from the date of the lease>.
57-25 SECTION 77. Section 53.155, Natural Resources Code, is
58-1 amended to read as follow:
58-2 Sec. 53.155. <PAYMENT OF> COMPENSATION FOR DAMAGES <FOR>
58-3 FROM USE OF SURFACE. (a) Leases issued under Subchapter B or E of
58-4 this chapter for unsold surveyed or unsurveyed school land, other
58-5 than land included in islands, saltwater lakes, bays, inlets,
58-6 marshes, and reefs owned by the state in tidewater limits and other
58-7 than that portion of the Gulf of Mexico within the jurisdiction of
58-8 the state, must include a provision requiring the <payment of>
58-9 compensation for damages <for> from the use of the surface in
58-10 prospecting for, exploring, developing, or producing the leased
58-11 minerals.
58-12 (b) The commissioner by rule shall set the <amount of and
58-13 shall collect money> procedure for receiving compensation for
58-14 damages to the surface of land dedicated to the permanent school
58-15 fund.
58-16 (c) Money collected for surface damages shall be deposited
58-17 in a special fund account in the State Treasury to be used for
58-18 conservation, reclamation, or constructing permanent improvements
58-19 on land that belongs to the permanent school fund.
58-20 (d) The special fund account must be an interest-bearing
58-21 account, and the interest received on the account shall be
58-22 deposited in the State Treasury to the credit of the available
58-23 school fund.
58-24 (e) Money collected under this section and designated for
58-25 the construction of permanent improvements as provided by this
59-1 section must be used not later than two years after the date on
59-2 which the money is collected.
59-3 (f) Any money that remains in the special fund account for
59-4 longer than two years shall be deposited in the State Treasury to
59-5 the credit of the permanent school fund.
59-6 (g) The <payment of> compensation for damages under this
59-7 section is in addition to any bonus, rental, royalty, or other
59-8 payment required by the lease.
59-9 SECTION 78. Subchapter E, Chapter 53, Natural Resources
59-10 Code, is amended by adding Section 53.156 to read as follows:
59-11 Sec. 53.156. CONTRACTS AND AGREEMENTS. Upon the land
59-12 office's written request, mailed to the lessee's address as shown
59-13 on its lease or otherwise properly changed in conformity with the
59-14 terms of the lease, copies of contracts for the sale or processing
59-15 of minerals leased under this subchapter and subsequent agreements
59-16 and amendments to those contracts shall be filed in the land office
59-17 within 30 days after the land office mails such written request.
59-18 These contracts, agreements and amendments so filed in the land
59-19 office shall be held in confidence by the land office unless
59-20 otherwise authorized by the lessee.
59-21 SECTION 79. Section 53.161, Natural Resources Code, is
59-22 amended to read as follows:
59-23 Sec. 53.161. Definitions. In this subchapter:
59-24 (1) "Mineral(s)" means coal, lignite, sulphur, salt,
59-25 and potash.
60-1 (2) "Geophysical exploration" means a survey or
60-2 investigation conducted to discover or locate mineral prospects
60-3 using magnetic, gravity, seismic, and/or electrical techniques.
60-4 (3) "Geochemical exploration" means a survey or
60-5 investigation conducted to discover or locate mineral prospects
60-6 using techniques involving soil sampling and analysis.
60-7 (4) "Public school land" means land dedicated by the
60-8 constitution or laws of this state to the permanent free school
60-9 fund, but does not include land with a mineral classification
60-10 described in Section 53.061 of this chapter in which the state has
60-11 retained the minerals, nor does it include areas within tidewater
60-12 limits <or the portion of the Gulf of Mexico that is under the
60-13 jurisdiction of this state>.
60-14 (5) "Permit" means a license issued by the
60-15 commissioner authorizing geophysical and/or geochemical exploration
60-16 on public school land.
60-17 (6) "Permittee" means the holder of a permit.
60-18 (7) "Areas within tidewater limits" means islands,
60-19 saltwater lakes, bays, inlets, marshes, and reefs within tidewater
60-20 limits and that portion of the Gulf of Mexico within the
60-21 jurisdiction of Texas.
60-22 SECTION 80. Section 53.162, Natural Resources Code, is
60-23 amended to read as follows:
60-24 Sec. 53.162. Permit Required for Exploration. (a) Except
60-25 for a person who has a valid mineral lease on public school land
61-1 authorized by this chapter, a person may not conduct geophysical or
61-2 geochemical exploration on public school land unless the person
61-3 obtains a permit from the commissioner.
61-4 (b) Every person who is authorized to conduct a geophysical
61-5 or geochemical exploration on public school land shall comply with
61-6 the commissioner's rules relating to such exploration. Any person
61-7 with a valid mineral lease on land subject to this chapter must
61-8 comply with the commissioner's rules concerning exploration.
61-9 SECTION 81. Chapters 32, 52, and 53, Natural Resources Code,
61-10 are hereby re-enacted subject to the preceding amendments thereto.
61-11 SECTION 82. SEVERABILITY. If any provision of this Act or
61-12 its application to any person or circumstance is held invalid, the
61-13 invalidity does not affect other provisions or applications of this
61-14 Act that can be given effect without the invalid provision or
61-15 application, and to this end the provisions of this Act are
61-16 declared to be severable.
61-17 SECTION 83. emergency. The importance of this legislation
61-18 and the crowded condition of the calendars in both houses create an
61-19 emergency and an imperative public necessity that the
61-20 constitutional rule requiring bills to be read on three several
61-21 days in each house be suspended, and this rule is hereby suspended.