By: Shelley S.B. No. 1469
73R10026 SMH-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the sale, lease, and development of state-owned oil,
1-3 gas, and other minerals.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 32.002, Natural Resources Code, is
1-6 amended by amending Subsection (a) and adding Subsection (e) to
1-7 read as follows:
1-8 (a) This chapter does not apply to:
1-9 (1) land dedicated by the constitution or a law of
1-10 this state to The University of Texas System, land donated by a
1-11 will or instrument in writing or otherwise to The University of
1-12 Texas System, as trustee, for a scientific, educational, or other
1-13 charitable or public purpose, or any other land under the control
1-14 of the Board of Regents of The University of Texas System;
1-15 (2) land whose title is vested in the state for the
1-16 use and benefit of any part of The Texas A&M University System or
1-17 land under the control of the Board of Regents of The Texas A&M
1-18 University System;
1-19 (3) minerals <land> subject to lease under Subchapter
1-20 F, Chapter 52, of this code, commonly known as the Relinquishment
1-21 Act, and Subchapters B and C, Chapter 53, of this code;
1-22 (4) oil and gas underlying land owned by the state
1-23 that was acquired to construct or maintain a highway, road, street,
1-24 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 Texas <State Highway and Public> Transportation
2-6 Commission has determined that such right-of-way is no longer
2-7 needed for use by citizens as a road pursuant to Chapter 99,
2-8 General Laws, Acts of the 42nd Legislature, Regular Session, 1931
2-9 (Article 6673a, 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 Criminal
2-13 Justice <Corrections>.
2-14 (e) If title to land subject to Subchapter C, Chapter 53, of
2-15 this code is acquired by a department, board, or agency of the
2-16 state, the land shall be leased as provided by Chapter 53 of this
2-17 code for the leasing of unsold surveyed public school lands.
2-18 SECTION 2. Section 32.061, Natural Resources Code, is
2-19 amended to read as follows:
2-20 Sec. 32.061. Board's General Duties. Except as provided by
2-21 Subchapter G, Chapter 51, of this code, the board shall:
2-22 (1) set the dates to open received bids for the sale
2-23 of surveyed land dedicated to the permanent school fund, <and> for
2-24 the lease of land for prospecting or exploring for, mining,
2-25 producing, storing, caring for, transporting, preserving, selling,
2-26 or disposing of oil, gas, or other minerals leased under this
2-27 chapter, and for the commitment of land to a contract for
3-1 development;
3-2 (2) determine the prices and set the terms of the
3-3 contract for which land shall be sold, <and> leased, or committed
3-4 to a contract for development;
3-5 (3) consult with the president, chairman, or other
3-6 head of the department, board, or agency, as applicable, or with
3-7 the representative of the head, on each matter before the board
3-8 that affects land owned or held in trust for the use and benefit of
3-9 a department, board, or agency of the state; and
3-10 (4) perform any other duties which may be required by
3-11 law.
3-12 SECTION 3. Subsection (a), Section 32.062, Natural Resources
3-13 Code, is amended to read as follows:
3-14 (a) The board shall adopt rules of procedure and rules for
3-15 the sale, <and> lease, and commitment to a contract for development
3-16 of land as provided by this chapter.
3-17 SECTION 4. Section 32.064, Natural Resources Code, is
3-18 amended to read as follows:
3-19 Sec. 32.064. Survey or Subdivision of Land. The board may
3-20 have land surveyed or subdivided into tracts, lots, or blocks based
3-21 on its determination of which method will be most conducive and
3-22 convenient to facilitate the advantageous sale of land, the lease
3-23 of land for oil, gas, or other minerals, or the commitment of land
3-24 to a contract for development <or oil, gas, or mineral leases>.
3-25 SECTION 5. Section 32.065, Natural Resources Code, is
3-26 amended to read as follows:
3-27 Sec. 32.065. Permits for Surveys or Investigations. If land
4-1 other than public school land is not under a valid lease or
4-2 committed to a contract for development, the board may issue a
4-3 permit for a geological, geophysical, or other survey or
4-4 investigation of that land that will encourage the development of
4-5 the land for oil, gas, or other minerals. The permit may be issued
4-6 for the consideration and under the terms and conditions the board
4-7 considers to be in the best interest of the state.
4-8 SECTION 6. Section 32.101, Natural Resources Code, is
4-9 amended to read as follows:
4-10 Sec. 32.101. Applicable Law. Land shall be offered for
4-11 sale, lease, or commitment to a contract for development <sold and
4-12 leased> subject to the terms and conditions provided by law.
4-13 SECTION 7. Section 32.105, Natural Resources Code, is
4-14 amended to read as follows:
4-15 Sec. 32.105. Date for Opening Bids <of Sale and Lease>. The
4-16 <sale> date for opening bids for the sale, <or> lease, or
4-17 commitment to a contract for development of land shall be the first
4-18 or third Tuesday of the month.
4-19 SECTION 8. Section 32.106, Natural Resources Code, is
4-20 amended to read as follows:
4-21 Sec. 32.106. Description of Land. The description of public
4-22 school land offered for sale, <or> lease, or commitment to a
4-23 contract for development shall be in accord with the description
4-24 which may be found in the School Land Registry in the land office.
4-25 SECTION 9. Section 32.107, Natural Resources Code, is
4-26 amended to read as follows:
4-27 Sec. 32.107. NOTICE OF SALE, <AND> LEASE, AND CONTRACT FOR
5-1 DEVELOPMENT. (a) The board shall publish notice that the board
5-2 will receive bids for <of> the sale, <or> lease, or commitment to a
5-3 contract for development of land in at least three issues of at
5-4 least four daily newspapers.
5-5 (b) The notice shall be published at least 30 days before
5-6 the date the bids are advertised to be opened <of sale or lease>.
5-7 (c) The notice shall state that land is to be offered for
5-8 sale, <or> lease, or commitment to a contract for development on a
5-9 certain date and at a certain time and the method of the sale,
5-10 lease, or commitment to a contract for development and shall give
5-11 notice that a person may obtain publications from <lists describing
5-12 the land may be obtained at> the land office that describe the land
5-13 offered for sale, lease, or commitment to a contract for
5-14 development.
5-15 (d) The land office may solicit and include advertising in
5-16 its publications. The commissioner shall deposit fees paid for
5-17 advertising in land office publications in a separate account in
5-18 the state treasury.
5-19 SECTION 10. Section 32.1071, Natural Resources Code, is
5-20 amended by adding Subsection (c) to read as follows:
5-21 (c) The leases shall be made on terms and conditions that
5-22 may be prescribed by the board.
5-23 SECTION 11. Section 32.1072, Natural Resources Code, is
5-24 amended to read as follows:
5-25 Sec. 32.1072. Minimum Royalty, Bonus, and Rental. The board
5-26 may not accept a bid on an oil and gas lease that offers:
5-27 (1) a royalty of less than one-eighth of the gross
6-1 production of oil and<,> gas<, or other minerals>; or
6-2 (2) a cash bonus of less than $10 an acre.
6-3 SECTION 12. Section 32.109, Natural Resources Code, is
6-4 amended to read as follows:
6-5 Sec. 32.109. Acceptance and Rejection of Bids. (a) For
6-6 each tract offered for sale, lease, or commitment to a contract for
6-7 development, the board must <The board may reject any and all bids,
6-8 but if the board elects not to reject any and all bids, it is
6-9 required to> accept the best bid submitted that meets the minimum
6-10 requirements set by the board or by law or reject all bids.
6-11 (b) The minutes of the board shall reflect the acceptance or
6-12 rejection of a bid<, and the approval of the minutes constitutes
6-13 approval of the act of acceptance or rejection>.
6-14 SECTION 13. Section 32.110, Natural Resources Code, is
6-15 amended to read as follows:
6-16 Sec. 32.110. Special Sale Fee. (a) On land sales and
6-17 mineral leases made by the board, the purchaser or bidder is
6-18 required to pay by separate check an amount equal to one and
6-19 one-half percent of the bid payable to the commissioner as a
6-20 special fee.
6-21 (b) If the sale is by bid, only <Only> the special fees paid
6-22 on the <high> bids accepted by the board shall be deposited by the
6-23 commissioner in the State Treasury as a special fund.
6-24 (c) Failure to pay the special fee shall <does> not void
6-25 <render> a bid <void>, but the commissioner shall demand payment of
6-26 the fee before <he issues> a lease is issued to the best
6-27 <successful> bidder. If the best <successful> bidder fails or
7-1 refuses to make the payment within 30 days after demand by the
7-2 commissioner, the bidder is not entitled to a <lease or> sale of or
7-3 a lease on the tract covered by that <his> bid and the cash bonus
7-4 shall be automatically forfeited to be deposited by the
7-5 commissioner in the State Treasury to the credit of the permanent
7-6 school fund or the appropriate special mineral fund. The board, at
7-7 its option, may offer the tract for sale or lease to the next best
7-8 bidder under the same terms as submitted by and as would have been
7-9 granted to the best bidder.
7-10 (d) Checks submitted by unsuccessful bidders shall be
7-11 returned to the bidders <with their bid checks>.
7-12 SECTION 14. Section 32.151, Natural Resources Code, is
7-13 amended to read as follows:
7-14 Sec. 32.151. Term of Lease. Each oil and gas lease shall be
7-15 for a primary term <of> not to exceed 10 <five> years and for as
7-16 long thereafter as oil or<,> gas is<, or other minerals covered by
7-17 the lease are> produced in paying quantities.
7-18 SECTION 15. Subchapter F, Chapter 32, Natural Resources
7-19 Code, is amended by adding Section 32.206 to read as follows:
7-20 Sec. 32.206. RATIFICATIONS AND OTHER AGREEMENTS. (a) The
7-21 board may approve by rule or order a ratification or other
7-22 agreement that includes in the benefits of production a mineral or
7-23 royalty interest in land owned by the state that was acquired to
7-24 construct or maintain a highway, road, street, or alley.
7-25 (b) An agreement approved by the board under this section
7-26 must be executed by the commissioner to be effective.
7-27 (c) This section does not apply to an interest subject to
8-1 pooling or unitization by a lessee under a lease issued under this
8-2 subchapter.
8-3 SECTION 16. Section 52.014, Natural Resources Code, is
8-4 amended to read as follows:
8-5 Sec. 52.014. Date for Lease and Notice. <(a)> The date for
8-6 opening bids to lease <of> areas covered by this subchapter shall
8-7 be set and notice of the date shall be given in the manner provided
8-8 in Sections 32.105 and 32.107 of this code.
8-9 <(b) Notice of areas being offered for lease shall be
8-10 advertised for a period of 30 days before the lease date.>
8-11 SECTION 17. Section 52.015, Natural Resources Code, is
8-12 amended to read as follows:
8-13 Sec. 52.015. BID TO LEASE <APPLICATION FOR LEASE>. (a) To
8-14 apply to lease a tract, a bidder must submit a separate bid for
8-15 each separate tract to be leased <Each application for a separate
8-16 area and the first payment shall be delivered to the land office on
8-17 or before the day and hour on which the area is subject to lease>.
8-18 (b) A bid must include a completed application to lease
8-19 form, a payment to the commissioner in the amount of the actual
8-20 bonus bid or set, and a separate payment to the commissioner in the
8-21 amount of the special fee provided by Section 52.016 of this code
8-22 <The application and payment shall be delivered in a sealed
8-23 envelope endorsed with "application to lease oil and gas" and the
8-24 date on which the area is subject to lease>.
8-25 (c) A bid must be delivered to the land office on or before
8-26 the date and time the board advertises that the bids will be opened
8-27 <Any application received up to the hour in which the applications
9-1 are to be opened shall be considered to be properly delivered
9-2 regardless of whether it is opened or sealed or endorsed or
9-3 unendorsed>.
9-4 SECTION 18. Section 52.017, Natural Resources Code, is
9-5 amended to read as follows:
9-6 Sec. 52.017. Keeping and Opening Bids. Bids <The envelopes>
9-7 shall be kept secure <securely> and unopened by the commissioner or
9-8 the commissioner's designee until opened on the date and at the
9-9 time set as provided in Section 52.014 of this code <or his chief
9-10 clerk until the day on which the applications are to be opened, and
9-11 at that time, the board shall open the envelopes in the presence of
9-12 any persons who desire to be present>.
9-13 SECTION 19. Section 52.021, Natural Resources Code, is
9-14 amended to read as follows:
9-15 Sec. 52.021. Term of Lease. A lease granted under this
9-16 subchapter shall be for a primary term not to exceed 10 <five>
9-17 years and for as long after that time as oil or gas is produced
9-18 from the leased area.
9-19 SECTION 20. Section 52.022, Natural Resources Code, is
9-20 amended to read as follows:
9-21 Sec. 52.022. ROYALTY RATE <AND DELAY RENTALS>. <(a)> The
9-22 board shall set the royalty rate on production of oil and gas from
9-23 land leased under this subchapter. The royalty rate set must be at
9-24 least one-eighth of the gross production or the market value of the
9-25 oil and gas produced <In addition to the cash amount bid for a
9-26 lease, the area included in the lease shall be leased for not less
9-27 than one-eighth of the gross production of oil produced and saved,
10-1 or its value, and not less than one-eighth of the gross production
10-2 of gas produced and sold off the area or its value, plus an amount
10-3 determined by the board, until production is secured.>
10-4 <(b) If production is secured in commercial quantities and
10-5 the payment of royalty begins and continues to be paid, the lessee
10-6 is exempt from further delay rental payments on the acreage.>
10-7 <(c) If production ceases and royalty is not paid, the
10-8 lessee shall pay at the end of the lease year in which the royalty
10-9 ceased to be paid and annually after that time in advance, an
10-10 amount determined by the board for as long as the lessee desires to
10-11 maintain the rights acquired under the lease, but not for more than
10-12 five years from the date of the lease>.
10-13 SECTION 21. Section 52.023, Natural Resources Code, is
10-14 amended to read as follows:
10-15 Sec. 52.023. Lease Provisions for Drilling and Reworking.
10-16 Each lease shall provide that:
10-17 (1) if the production of oil or gas on premises leased
10-18 under this subchapter ceases for any reason <at or> after the
10-19 expiration of the primary term, the lease will not terminate if the
10-20 lessee commences additional drilling or reworking operations within
10-21 60 days after the cessation of production;
10-22 (2) the lease shall remain in effect as long as <the>
10-23 drilling or <and> reworking operations continue in good faith and
10-24 in a workmanlike manner<,> without interruptions<,> totaling more
10-25 than 60 days <during any one such operation>; <and>
10-26 (3) if the drilling or reworking operations result in
10-27 the production of oil or gas, the lease shall remain in effect so
11-1 <as> long as oil or gas is produced from the leased premises in
11-2 paying quantities or payment of shut-in <gas> royalties or payment
11-3 of compensatory royalties is made as provided by law; and
11-4 (4) if the drilling or reworking operations result in
11-5 the completion of a well as a dry hole, the lease will not
11-6 terminate if the lessee commences additional drilling or reworking
11-7 operations within 60 days after the completion of the well as a dry
11-8 hole, and the lease shall remain in effect so long as the lessee
11-9 continues drilling or reworking operations in good faith and in a
11-10 workmanlike manner without interruptions totaling more than 60
11-11 days.
11-12 SECTION 22. Section 52.024, Natural Resources Code, is
11-13 amended to read as follows:
11-14 Sec. 52.024. Lease Provisions for Shut-in Oil or Gas Royalty
11-15 and Compensatory Royalty. (a) For purposes of this section,
11-16 "well" means any well that has been assigned a well number by the
11-17 state agency having jurisdiction over the production of oil and
11-18 gas.
11-19 (b) Each lease shall provide that:
11-20 (1) if, at any time after the expiration of the
11-21 primary term <or at any time after the expiration> of <the primary
11-22 term> a lease that, until being shut in, was being maintained in
11-23 force and effect, a well <or wells> capable of producing oil or gas
11-24 in paying quantities is <are> located on the leased premises but
11-25 oil or gas is not being produced for lack of suitable production
11-26 facilities or lack of a suitable market <and the lease is not being
11-27 maintained in force and effect>, then the lessee may pay as a
12-1 shut-in oil or gas royalty an amount equal to double the annual
12-2 rental provided in the lease but not less than $1,200 a year for
12-3 each well capable of producing oil or gas in paying quantities. To
12-4 be effective, each initial <Any> shut-in oil or gas royalty must be
12-5 paid on or before: (A) the expiration of the primary term, (B) 60
12-6 days after the lessee ceases to produce oil or gas from the leased
12-7 premises, or (C) 60 days after the lessee completes a drilling or
12-8 <and> reworking operation in accordance with the lease provisions,
12-9 whichever date is latest <later>;
12-10 (2) if the shut-in oil or gas royalty is paid, the
12-11 lease shall be considered to be a producing lease and the payment
12-12 shall extend the term of the lease for a period of one year from
12-13 the end of the primary term or from the first day of the month
12-14 following <next succeeding> the month in which production ceased,
12-15 and, after that, if no suitable production facilities or suitable
12-16 market for the oil or gas exists, the lessee may extend the lease
12-17 for four more <additional and> successive periods of one year by
12-18 paying the same amount each year on or before the expiration of
12-19 each shut-in year <the extended term>;
12-20 (3) if, during the period the lease is kept in effect
12-21 by payment of the shut-in oil or gas royalty, oil or gas is sold
12-22 and delivered in paying quantities from a well located within 1,000
12-23 feet of the leased premises and completed in the same producing
12-24 reservoir, or in any case in which drainage is occurring, the right
12-25 to continue to maintain <extend> the lease by paying the shut-in
12-26 oil or gas royalty shall cease, but the lease shall remain
12-27 effective for the remainder of the year for which the royalty has
13-1 been paid. The lessee may maintain the lease <and> for four more
13-2 <additional and> successive years <periods of one year each> by the
13-3 lessee paying compensatory royalty at the royalty rate provided in
13-4 the lease of the market value <at the well> of production from the
13-5 well <which is> causing the drainage or which is completed in the
13-6 same producing reservoir and within 1,000 feet of the leased
13-7 premises;
13-8 (4) the compensatory royalty is to be paid monthly to
13-9 the commissioner beginning on or before the last day of the month
13-10 following <next succeeding> the month in which the oil or gas is
13-11 produced <sold and delivered> from the well causing the drainage or
13-12 that is completed in the same producing reservoir and located
13-13 within 1,000 feet of <or draining> the leased premises <and
13-14 completed in the same reservoir>;
13-15 (5) if the compensatory royalty paid in any 12-month
13-16 period is in an amount less than the annual shut-in oil or gas
13-17 royalty, the lessee shall pay an amount equal to the difference
13-18 within 30 days from the end of the 12-month period; and
13-19 (6) none of these provisions will relieve the lessee
13-20 of the obligation of reasonable development nor the obligation to
13-21 drill offset wells as provided in Section 52.034 of this code;
13-22 however, at the determination of the commissioner and with the
13-23 commissioner's <his> written approval, the payment of compensatory
13-24 royalties shall satisfy the obligation to drill offset wells.
13-25 SECTION 23. Section 52.028, Natural Resources Code, is
13-26 amended to read as follows:
13-27 Sec. 52.028. SUSPENSION OF LEASE BECAUSE OF LITIGATION <OIL
14-1 AND GAS LEASES>. (a) If an oil and gas lease that has been issued
14-2 by the commissioner is involved in litigation relating to the <its>
14-3 validity of the lease or to the authority of the commissioner to
14-4 issue the lease, the lease and all the conditions and covenants
14-5 contained in <land, the primary term of> the lease shall be
14-6 suspended <and all obligations imposed by the lease set aside>
14-7 during the period of the litigation, except as otherwise provided
14-8 by this section.
14-9 (b) If the litigation is instituted during the primary term
14-10 of the lease, then, after a final, nonappealable judgment is
14-11 entered in the litigation <at least six months before the
14-12 expiration of the primary term, after final judgment is rendered>,
14-13 the primary term provided in the lease shall resume <begin to run
14-14 again> and the lease shall continue to run for the remainder of the
14-15 period specified in the lease, and all conditions and covenants
14-16 contained in <obligations and duties imposed by> the lease shall be
14-17 operative.
14-18 (c) If the litigation is instituted during the secondary
14-19 term of the lease, then, after a final, nonappealable judgment is
14-20 entered in the litigation, the lease and all the conditions and
14-21 convenants contained in the lease shall be operative, and the
14-22 lessee shall have 60 days from the date a final, nonappealable
14-23 judgment is entered in the litigation to produce in paying
14-24 quantities or to commence drilling or reworking operations on the
14-25 lease as if production had ceased on that date under Section 52.023
14-26 of this code.
14-27 (d) The lessee shall pay <all annual delay rentals and> any
15-1 royalties that accrue during the period of suspension of the lease
15-2 <litigation> in the same manner as they are to be paid under the
15-3 terms of the lease <during the primary term. If such delay rentals
15-4 are not paid as the lease requires, the lease shall not
15-5 automatically terminate; however, the delay rentals continue to be
15-6 an obligation and debt owed by the lessee. The delay rentals paid
15-7 during the period of litigation shall be held and returned to the
15-8 lessee if the state is unsuccessful in the litigation>.
15-9 SECTION 24. Section 52.0301, Natural Resources Code, is
15-10 amended to read as follows:
15-11 Sec. 52.0301. Suspension of Terms of Lease in Certain
15-12 Situations. (a) If the lessee <owner> of a valid oil and gas
15-13 lease granted by the state is unable to obtain access to the leased
15-14 premises, or is unable to obtain in a timely manner <denied access
15-15 to or is denied> a permit to drill on or produce from the leased
15-16 premises by any duly constituted authority of the United States or
15-17 of this state after a diligent, good faith <bona fide> attempt has
15-18 been made by the lessee <owner> to obtain access to, or a permit to
15-19 drill on or produce from, the leased premises, the lessee <owner>
15-20 may file with the board an application describing and giving the
15-21 date of the action that deprives the lessee <him> of access to or a
15-22 permit <the right> to drill on or produce from the leased premises.
15-23 (b) If the board is satisfied that the facts included in the
15-24 application are true and that the lessee acted diligently and in
15-25 good faith in an attempt to gain access to or the right to drill on
15-26 or produce from the leased premises, the board may <enter an> order
15-27 the suspension of the lease or any condition or covenant contained
16-1 in <its minutes suspending the running of both the primary and the
16-2 principal term of the lease or suspending any condition,
16-3 obligation, or duty under> the lease<,> from the date <of> the
16-4 board determines to be the date the cause for the suspension began,
16-5 except as otherwise provided by this section <through the continued
16-6 existence of the cause for the suspension, so long as the lessee
16-7 continues to make the annual rental payments that are stipulated in
16-8 the lease on each anniversary date of the lease during the period
16-9 of suspension>.
16-10 (c) The board may set as a condition to approving the
16-11 application for a suspension of the lease any term or requirement
16-12 that relates to the duration of the suspension, the administration
16-13 of the property during the suspension, reporting requirements
16-14 during the suspension, or another administrative matter that the
16-15 board determines is in the best interest of the state <After the
16-16 board enters an order in its minutes stating that the cause for
16-17 suspension has ceased to exist, the oil and gas lease shall again
16-18 become operative if the rental payments have been made during the
16-19 period of suspension, and all suspended obligations and conditions
16-20 shall again attach and be in force for a period equivalent to the
16-21 unexpired term of the lease>.
16-22 (d) If the lease is suspended during its primary term, the
16-23 lessee shall make payments in the amount of the annual delay rental
16-24 stipulated in the lease by each anniversary date of the lease
16-25 during the period of suspension. If the payments in the amount of
16-26 the annual delay rental are not paid by each anniversary date of
16-27 the lease, the lease shall not automatically terminate. However,
17-1 the amount of the annual delay rental stipulated in the lease due
17-2 by each anniversary date of the lease during the period of
17-3 suspension continues to be an obligation and debt owed by the
17-4 lessee. The lessee shall pay all royalties, if any, that accrue
17-5 during the period of suspension of the lease in the same manner as
17-6 they are to be paid under the terms of the lease.
17-7 (e) If the lease is suspended during its primary term, then,
17-8 when the suspension ends, the primary term provided in the lease
17-9 shall resume and continue to run for the remainder of the period
17-10 specified in the lease, and all conditions and covenants contained
17-11 in the lease shall be operative <The commissioner shall give notice
17-12 immediately to the lessee of the entry of an order stating that the
17-13 cause of suspension has ceased to exist, provided annual rental
17-14 payments have been made>.
17-15 (f) If the lease is suspended during its secondary term,
17-16 then, when the suspension ends, the lease and all of the conditions
17-17 and covenants contained in the lease shall be operative, and the
17-18 lessee shall have 60 days from the date the suspension ends to
17-19 produce in paying quantities or to commence drilling or reworking
17-20 operations on the lease as if production had ceased on that date
17-21 under Section 52.023 of this code.
17-22 (g) This section may not be construed as abridging any
17-23 rights or privileges conveyed under Chapter 287, Acts of the 47th
17-24 Legislature, Regular Session, 1941 (Article 5366a, Vernon's Texas
17-25 Civil Statutes).
17-26 SECTION 25. Subsection (a), Section 52.035, Natural
17-27 Resources Code, is amended to read as follows:
18-1 (a) The governor may execute agreements on behalf of the
18-2 state to obtain access to confidential and proprietary information
18-3 from the secretary of the United States Department of the Interior
18-4 regarding exploration, development, or production of oil, <or> gas,
18-5 or other minerals on the outer continental shelf. The governor may
18-6 agree to waive sovereign immunity and other defenses as prescribed
18-7 by this section, and may agree to indemnify the United States
18-8 government from unauthorized disclosure of the information
18-9 obtained.
18-10 SECTION 26. Section 52.076, Natural Resources Code, is
18-11 amended to read as follows:
18-12 Sec. 52.076. Duty to Advertise. (a) The board may <shall
18-13 advertise for proposals>:
18-14 (1) advertise for bids to lease riverbeds and channels
18-15 for oil and gas development;
18-16 (2) advertise for bids to contract to develop the oil
18-17 or gas under <to drill> riverbeds and channels on consideration
18-18 involving compensation with oil and gas or money so that the state
18-19 will receive a portion of the oil and gas as it is produced or
18-20 advanced royalties paid in money; <and>
18-21 (3) advertise for bids to purchase oil and gas in
18-22 place under riverbeds and channels <or recoverable> without
18-23 requiring mineral development; and
18-24 (4) pool or bring an action to force pool unleased
18-25 riverbeds and channels.
18-26 (b) The board shall advertise that the board will receive
18-27 bids and award the right to lease, develop, or purchase under this
19-1 section in the same manner <the proposals and conduct the sales> as
19-2 provided in Subchapter D, Chapter 32, of this code and Subchapter B
19-3 of this chapter.
19-4 SECTION 27. Subchapter C, Chapter 52, Natural Resources
19-5 Code, is amended by adding Section 52.077 to read as follows:
19-6 Sec. 52.077. SPECIAL FEE. Each bidder on a lease under this
19-7 subchapter shall remit with each bid by separate payment a special
19-8 sale fee in the amount and in the manner provided by Section 32.110
19-9 of this code.
19-10 SECTION 28. Section 52.082, Natural Resources Code, is
19-11 amended to read as follows:
19-12 Sec. 52.082. TERM OF LEASE. A lease granted under this
19-13 subchapter shall be for a primary term not to exceed 10 <five>
19-14 years and for as long after that time as oil or gas is produced
19-15 from the leased area.
19-16 SECTION 29. Section 52.088, Natural Resources Code, is
19-17 amended to read as follows:
19-18 Sec. 52.088. ROYALTY RATE <AND DELAY RENTALS>. <(a)> The
19-19 board shall set the royalty rate on production of oil and gas from
19-20 riverbeds and channels leased under this subchapter. The royalty
19-21 rate set must be at least one-eighth of the gross production or the
19-22 market value of the oil and gas produced <In addition to the cash
19-23 amount bid for a lease, the board shall lease the area for not less
19-24 than one-eighth of the gross production of oil produced and saved
19-25 or its value and not less than one-eighth of the gross production
19-26 of gas produced and sold off the area or its value plus an amount
19-27 determined by the board until production is secured.>
20-1 <(b) If production is secured in commercial quantities and
20-2 the payment of royalty begins and continues to be paid, the lessee
20-3 is exempt from further delay rental payments on the acreage.>
20-4 <(c) If production ceases and royalty is not paid, the
20-5 lessee shall pay at the end of the lease year in which the royalty
20-6 ceased to be paid and annually after that time in advance, in an
20-7 amount determined by the board as long as the lessee desires to
20-8 maintain the rights acquired under the lease, but not for more than
20-9 five years from the date of the lease>.
20-10 SECTION 30. Section 52.131, Natural Resources Code, is
20-11 amended by amending Subsection (e) and adding Subsection (j) to
20-12 read as follows:
20-13 (e) If any royalty is not paid when due but is paid before
20-14 the 31st day after the date on which it is due, a penalty of five
20-15 percent of the royalty due shall be added to the unpaid amount due.
20-16 If the royalty is not paid before the 31st day after the date on
20-17 which it is due, a penalty of an additional five percent of the
20-18 royalty due shall be imposed. The minimum penalty under this
20-19 section is $25. The penalty may not be imposed in cases of title
20-20 dispute as to the state's portion of the royalty or to that portion
20-21 of the royalty in dispute as to the <fair> market value of the
20-22 production.
20-23 (j) By rule, the board may provide procedures and standards
20-24 for reduction of interest charged or penalties assessed under this
20-25 section or any other interest or penalties assessed by the
20-26 commissioner relating to unpaid or delinquent royalties.
20-27 SECTION 31. Section 52.133, Natural Resources Code, is
21-1 amended to read as follows:
21-2 Sec. 52.133. Payment of Royalty in Kind. (a) <In this
21-3 section, "royalty" means royalty payable in a sum of money equal to
21-4 the market value for the general area where produced and when run
21-5 or royalty that may be collected in kind.>
21-6 <(b)> Each oil or gas lease covering land leased by the
21-7 board, by a board for lease other than the Board for Lease of
21-8 University Lands, or by the surface owner of land under which the
21-9 state owns the minerals, commonly referred to as Relinquishment Act
21-10 land, which shall be subject to approval by the commissioner before
21-11 it is effective, shall include a provision granting the board
21-12 authorized to lease the land or the owner of the soil of
21-13 Relinquishment Act land and the commissioner authority to take
21-14 their royalty in kind, and the commissioner and the boards for
21-15 lease may include any other reasonable provisions that are not
21-16 inconsistent with this section.
21-17 (b) <(c)> The option to take the royalty in kind may be
21-18 exercised at any time or from time to time on not less than 60
21-19 days' notice to the holder of the lease.
21-20 (c) <(d)> The <board, the> commissioner, <each board for
21-21 lease other than the Board for Lease of University Lands, or> the
21-22 owner of the soil under Subchapter F of this chapter, or the
21-23 commissioner, acting on the behalf of and at the direction of an
21-24 owner of the soil under Subchapter F of this chapter, the board, or
21-25 a board for lease may negotiate and execute <sales> contracts or
21-26 any other instruments or agreements necessary to dispose of their
21-27 portion of the royalty taken in kind, including contracts for sale,
22-1 transportation, or storage.
22-2 (d) <(e)> This section does not apply to or have any effect
22-3 on the Board for Lease of University Lands or any lease executed on
22-4 university land.
22-5 (e) <(f)> This section shall not be construed to surrender
22-6 or in any way affect the right of the state or the owner of the
22-7 soil under existing or future leases to receive royalty from its
22-8 lessee on the basis of the <fair> market value of the production
22-9 <produced> from state public land or land under the provisions of
22-10 Subchapter F of this chapter.
22-11 SECTION 32. Section 52.151, Natural Resources Code, is
22-12 amended to read as follows:
22-13 Sec. 52.151. Authorization to Operate Areas as Units.
22-14 (a) The commissioner, on behalf of the state or any fund that
22-15 belongs to the state, may execute agreements that provide for
22-16 operating areas as a unit for the exploration, development, and
22-17 production of oil or gas or both and to commit to the agreements:
22-18 (1) the royalty interests in oil, <or> gas, or both
22-19 oil and gas, reserved to the state or any fund of the state by law,
22-20 in a patent, in a contract of sale, or under the terms of an oil
22-21 and gas lease legally executed by an official, board, agent,
22-22 agency, or authority of the state; or
22-23 (2) the free royalty interests, whether leased or
22-24 unleased, reserved to the state pursuant to Section 51.201 or
22-25 51.054 of this code.
22-26 (b) Before executing an agreement authorized by Subsection
22-27 (a) of this section, the <The> commissioner must find that the
23-1 agreement is in the best interest of the state.
23-2 SECTION 33. Section 52.152, Natural Resources Code, is
23-3 amended to read as follows:
23-4 Sec. 52.152. Approval of <Unit> Agreements. (a) An
23-5 agreement must be approved by the board and executed by the
23-6 commissioner to be effective if the agreement <that (1)> commits:
23-7 (1) a <the> royalty interest in land belonging to the
23-8 permanent school fund or the asylum funds, in riverbeds, inland
23-9 lakes, and channels, or in an area within tidewater limits,
23-10 including islands, lakes, bays, inlets, marshes, reefs, and the bed
23-11 of the sea; or
23-12 (2) the free royalty interests, whether leased or
23-13 unleased, reserved to the state pursuant to Section 51.201 or
23-14 51.054 of this code.
23-15 (b) An <must be approved by the board and executed by the>
23-16 owner of the soil who is subject to <if the agreement covers land
23-17 leased for oil and gas under> Subchapter F of this chapter may
23-18 grant to a lessee prior authority to pool or unitize the interest
23-19 of the owner in a lease executed under that subchapter. For the
23-20 provisions of an agreement to bind the interest of an owner of the
23-21 soil who is subject to Subchapter F of this chapter and who has not
23-22 granted the lessee prior authorization to pool or unitize the
23-23 owner's interest in an oil and gas lease executed under that
23-24 subchapter, the agreement must be executed by the owner of the
23-25 soil.
23-26 (c) <(b)> An agreement that commits any <the royalty>
23-27 interest in any land <or an area> not listed in Subsection (a) of
24-1 this section must be approved by the board, official, agent,
24-2 agency, or authority of the state which has the authority to lease
24-3 or to approve the lease of the land for oil and gas and must be
24-4 executed by the commissioner to be effective.
24-5 SECTION 34. Section 52.153, Natural Resources Code, is
24-6 amended to read as follows:
24-7 Sec. 52.153. PROVISIONS OF AGREEMENT <PROVISIONS>. (a) An
24-8 agreement executed under this subchapter may include the following
24-9 provisions <The agreement to operate areas as units may provide>:
24-10 (1) that operations incident to drilling a well on any
24-11 portion of a unit shall be considered for all purposes to be
24-12 conduct of the operations on each <separately owned> tract in the
24-13 unit <by the several owners>;
24-14 (2) that production allocated by the agreement to each
24-15 tract included in the unit when produced shall be considered for
24-16 all purposes to have been production <produced> from the tract;
24-17 (3) that the interest reserved to or provided for the
24-18 state or any of its funds on production from any tract included in
24-19 the unit shall be paid only on that portion of the production from
24-20 the unit that is allocated to the tract under the agreement <and
24-21 lease, with respect to the interest of the state, shall be
24-22 effective as long as oil or gas or both are produced from the unit
24-23 in paying quantities and royalties are paid to the state>; and
24-24 (4) that each lease <royalties reserved to the state
24-25 or to any fund of the state on production from any tract or portion
24-26 of a tract> included in the unit shall remain in effect as long as
24-27 the agreement remains in effect and that on termination of the
25-1 agreement each lease shall continue in effect under the terms and
25-2 conditions of the lease <be paid only on the portion of the
25-3 production allocated to the tract by the agreement>.
25-4 (b) The agreement may include any other terms and conditions
25-5 the commissioner or any <provision which the> board, official,
25-6 agent, agency, or authority of the state that <which> has the
25-7 authority to lease or to approve a lease <the leasing> of the land
25-8 for oil and gas may consider to be in the best interest <necessary
25-9 for the protection of the interests> of the state.
25-10 SECTION 35. Subchapter E, Chapter 52, Natural Resources
25-11 Code, is amended by adding Section 52.154 to read as follows:
25-12 Sec. 52.154. RATIFICATIONS AND OTHER AGREEMENTS. (a) The
25-13 board may approve, by rule or order, a ratification or other
25-14 agreement that includes in the benefits of production a mineral or
25-15 royalty interest in land belonging to the permanent school fund or
25-16 the asylum funds.
25-17 (b) An agreement approved by the board under this section
25-18 must be executed by the commissioner to be effective.
25-19 (c) A ratification or other agreement that commits any of
25-20 the interests listed in Subsection (a) of this section in land not
25-21 belonging to the permanent school fund or the asylum funds must be
25-22 approved by the board, official, agent, agency, or authority of the
25-23 state that has the authority to lease or to approve the lease of
25-24 the land for oil and gas and must be executed by the commissioner
25-25 to be effective.
25-26 SECTION 36. Section 52.175, Natural Resources Code, is
25-27 amended to read as follows:
26-1 Sec. 52.175. LEASE OF OIL AND GAS AFTER FORFEITURE. When
26-2 the relinquishment or agency right herein granted has been
26-3 forfeited, the land shall be subject to lease for oil and gas under
26-4 the procedure provided by law for the leasing of unsold surveyed
26-5 public school lands. The substantive provisions of Subchapter B of
26-6 this chapter and Subchapters D and E, Chapter 32, of this code
26-7 shall apply to the oil and gas lease. No oil and gas lease shall
26-8 be executed which provides for a royalty of less than one-eighth,
26-9 payable to the state for the benefit of the permanent free school
26-10 fund. The owner of the soil shall not be entitled to any revenue
26-11 generated by a lease executed pursuant to this section. Upon the
26-12 termination or expiration of a lease so executed by the
26-13 Commissioner of the General Land Office, the rights of the surface
26-14 owner to act under this law shall be ipso facto reinstated.
26-15 SECTION 37. Subsection (a), Section 52.186, Natural
26-16 Resources Code, is amended to read as follows:
26-17 (a) If an owner of the soil or of any undivided interest
26-18 therein of any land subject to the terms of this subchapter or
26-19 Subchapter C, Chapter 53, of this code is found to be unavailable
26-20 under Subsection (b) of this section to act as the state's agent
26-21 for leasing oil and gas or any mineral leased under Subchapter C,
26-22 Chapter 53, of this code, such land or undivided interest therein
26-23 shall be subject to lease for the applicable minerals under the
26-24 procedure provided by Subchapter B of this chapter <Chapter 52> for
26-25 the leasing of unsold surveyed public school lands. The
26-26 substantive provisions of Subchapter B of this chapter and
26-27 Subchapters D and E, Chapter 32, of this code shall apply to a
27-1 lease of land subject to lease under this subchapter. The
27-2 substantive provisions of Subchapter E, Chapter 53, of this code
27-3 and Subchapters D and E, Chapter 32, of this code shall apply to a
27-4 lease of land subject to lease under Subchapter C, Chapter 53, of
27-5 this code. Subject to the provisions of Subsection (b)(4) of this
27-6 section, the owner of the soil shall not be entitled to any revenue
27-7 generated by a lease executed pursuant to this section.
27-8 SECTION 38. Section 52.291, Natural Resources Code, is
27-9 amended to read as follows:
27-10 Sec. 52.291. Coverage. The following persons, agencies, and
27-11 entities are subject to the provisions of Sections 52.292 through
27-12 52.293 of this code:
27-13 (1) the commissioner;
27-14 (2) the board;
27-15 (3) boards for lease of land owned by a department,
27-16 board, or agency of the state created by Chapter 34 of this code;
27-17 (4) the Board for Lease of University Lands;
27-18 (5) the Board of Regents of Texas A&M University;
27-19 (6) the Board of Regents of Texas Tech University;
27-20 (7) the Board of Directors of Texas A&I University;
27-21 (8) the Board of Regents, State Senior Colleges;
27-22 (9) the Board of Regents of the University of Houston;
27-23 (10) any other board of regents or other governing
27-24 board of a state-supported institution of higher learning having
27-25 authority to execute oil and<,> gas<, and mineral> leases on land
27-26 owned by the institution;
27-27 (11) an owner of land or minerals in this state whose
28-1 authority to lease the land or minerals as agent for the state
28-2 arises in whole or in part from what is commonly known as the
28-3 Relinquishment Act, codified in Subchapter F of this chapter;
28-4 (12) the Board for Lease of State Park Lands;
28-5 (13) the Board for Lease of the Texas Department of
28-6 Criminal Justice <Corrections>; and
28-7 (14) the commissioners court of any county in this
28-8 state.
28-9 SECTION 39. Section 52.292, Natural Resources Code, is
28-10 amended to read as follows:
28-11 Sec. 52.292. Prohibited Leases. It is illegal for any
28-12 person included in Section 52.291 of this code to execute an oil
28-13 and<,> gas<, or mineral> lease on land on which he is authorized by
28-14 law to execute the lease unless the lease includes the terms
28-15 provided in Section 52.293 of this code.
28-16 SECTION 40. Section 52.294, Natural Resources Code, is
28-17 amended to read as follows:
28-18 Sec. 52.294. Prerequisite to Filing Leases. The
28-19 commissioner shall not receive and file an oil and<,> gas<, and
28-20 mineral> lease required to be filed by law unless the lease
28-21 includes the terms and conditions provided in Section 52.293 of
28-22 this code.
28-23 SECTION 41. Section 52.295, Natural Resources Code, is
28-24 amended to read as follows:
28-25 Sec. 52.295. Certain Leases Null, Void, and of No Force and
28-26 Effect. An oil and<,> gas<, and mineral> lease executed or
28-27 received and filed in violation of the provisions of this
29-1 subchapter is null, void, and of no force and effect.
29-2 SECTION 42. Section 52.297, Natural Resources Code, is
29-3 amended to read as follows:
29-4 Sec. 52.297. COMPENSATION FOR <Payment of> Damages FROM
29-5 <for> Use of Surface. (a) Leases issued under Subchapter B of
29-6 this chapter for unsold surveyed or unsurveyed school land, other
29-7 than land included in islands, saltwater lakes, bays, inlets,
29-8 marshes, and reefs owned by the state in tidewater limits and other
29-9 than that portion of the Gulf of Mexico within the jurisdiction of
29-10 the state, must include a provision requiring the compensation for
29-11 <payment of> damages from <for> the use of the surface in
29-12 prospecting for, exploring, developing, or producing the leased
29-13 minerals.
29-14 (b) The commissioner by rule shall set the procedure for
29-15 receiving compensation <amount of and shall collect money> for
29-16 damages to the surface of land dedicated to the permanent school
29-17 fund.
29-18 (c) Money collected for surface damages shall be deposited
29-19 in a special fund account in the State Treasury to be used for
29-20 conservation, reclamation, or construction of permanent
29-21 improvements on land that belongs to the permanent school fund.
29-22 (d) The special fund account must be an interest-bearing
29-23 account, and the interest received on the account shall be
29-24 deposited in the State Treasury to the credit of the available
29-25 school fund.
29-26 (e) Money collected under this section and designated for
29-27 the construction of permanent improvements as provided by this
30-1 section must be used not later than two years after the date on
30-2 which the money is collected.
30-3 (f) Any money that remains in the special fund account for
30-4 longer than two years shall be deposited in the State Treasury to
30-5 the credit of the permanent school fund.
30-6 (g) The compensation for <payment of> damages under this
30-7 section is in addition to any bonus, rental, royalty, or other
30-8 payment required by the lease.
30-9 SECTION 43. Subdivision (3), Section 52.321, Natural
30-10 Resources Code, is amended to read as follows:
30-11 (3) "Public school land" means land dedicated by the
30-12 constitution or laws of this state to the permanent <free> school
30-13 fund, and specifically includes land with a mineral classification
30-14 under Subchapter F of this chapter in which the state has retained
30-15 the oil and gas interest and areas within tidewater limits <or the
30-16 portion of the Gulf of Mexico that is under the jurisdiction of
30-17 this state>.
30-18 SECTION 44. Subsection (a), Section 52.324, Natural
30-19 Resources Code, is amended to read as follows:
30-20 (a) The commissioner:
30-21 (1) as a condition of issuing a permit, shall collect
30-22 reasonable fees from the applicant in an amount determined by the
30-23 commissioner;
30-24 (2) may require a permittee to furnish to the
30-25 commissioner, upon the commissioner's request, copies of maps,
30-26 plats, reports, data, and any other information in the possession
30-27 of the permittee that relates to the progress or results of an
31-1 exploration under a permit; provided however, the commissioner
31-2 shall not require a permittee to furnish any of its interpretive
31-3 data;
31-4 (3) shall by rule require a permittee to restore land
31-5 explored under the permit as nearly as is practicable to its
31-6 condition immediately prior to the exploration;
31-7 (4) shall by rule determine <set> the procedure for
31-8 receiving compensation <amount of and shall collect money> for
31-9 damages to the surface of public school land except land with a
31-10 mineral classification under Subchapter F of this chapter; and
31-11 (5) may make any other rules relating to geophysical
31-12 or geochemical explorations, permits, or permittees the
31-13 commissioner considers appropriate.
31-14 SECTION 45. Section 53.001, Natural Resources Code, is
31-15 amended by adding Subdivision (3) to read as follows:
31-16 (3) "Board" means the School Land Board.
31-17 SECTION 46. Subsection (c), Section 53.012, Natural
31-18 Resources Code, is amended to read as follows:
31-19 (c) The commissioner may determine the contents of an
31-20 application <Each application shall be accompanied by a rental
31-21 payment of not less than 25 cents an acre>.
31-22 SECTION 47. Subsections (a) and (b), Section 53.013, Natural
31-23 Resources Code, are amended to read as follows:
31-24 (a) After receipt of the rental payment set by the
31-25 commissioner, the <The> commissioner shall issue to the first
31-26 applicant a permit to prospect the area designated in the
31-27 applicant's <his> application for a period of one year from the
32-1 date the <his> application is filed.
32-2 (b) After receipt of an additional rental payment set by the
32-3 commissioner, the <The> commissioner may extend the permit for a
32-4 period of one year <on payment of an annual rental of not less than
32-5 25 cents an acre>.
32-6 SECTION 48. Subsections (b) and (c), Section 53.015, Natural
32-7 Resources Code, are amended to read as follows:
32-8 (b) An application to lease must designate the specific
32-9 minerals the permittee is applying to lease. The commissioner may
32-10 determine any additional information an application must contain
32-11 <The application shall be accompanied by the first lease payment of
32-12 not less than $2 an acre>.
32-13 (c) If the area designated for lease in the application is
32-14 less than the area covered by the permit, the applicant shall
32-15 include with the <his> application field notes prepared by the
32-16 county surveyor or by a licensed state land surveyor describing the
32-17 land designated.
32-18 SECTION 49. Section 53.016, Natural Resources Code, is
32-19 amended to read as follows:
32-20 Sec. 53.016. ISSUANCE OF LEASE. (a) After receipt of the
32-21 bonus payment set by the commissioner, the <The> lease shall be
32-22 issued by the commissioner under the provisions of this subchapter
32-23 and shall be for a primary term not to exceed 20 years and as long
32-24 after that time as the minerals are produced in paying quantities.
32-25 (b) The commissioner may include in the lease any other
32-26 provision the commissioner <he> considers necessary for protection
32-27 of the interests of the state.
33-1 SECTION 50. Section 53.020, Natural Resources Code, is
33-2 amended to read as follows:
33-3 Sec. 53.020. ASSIGNMENT AND TRANSFER <OF LEASE>. <(a)> A
33-4 lease issued under this subchapter may be transferred or assigned
33-5 at any time in the manner provided by Section 52.026 of this code
33-6 <may be assigned in quantities of not less than 40 acres, but if
33-7 there are fewer than 40 acres remaining in the tract originally
33-8 leased, the lesser area may be assigned.>
33-9 <(b) The assignment shall be recorded in the county in which
33-10 the land is located, and within 90 days after it is recorded a
33-11 certified copy of the assignment, certified by the county clerk
33-12 from his records, shall be sent to the land office, together with a
33-13 filing fee set by the commissioner in an amount not less than $1
33-14 for each tract affected>.
33-15 SECTION 51. Section 53.024, Natural Resources Code, is
33-16 amended to read as follows:
33-17 Sec. 53.024. PENALTY AND INTEREST <OTHER LEASE PROVISIONS>.
33-18 A lease issued under this subchapter shall be subject to Sections
33-19 52.131(e) through (j) <For any lease issued under this chapter, the
33-20 penalty and interest on delinquent royalties, and the penalty for
33-21 failure to file a report, are assessed in the same manner and in
33-22 the same amounts as provided in Section 52.131> of this code.
33-23 SECTION 52. Subchapter B, Chapter 53, Natural Resources
33-24 Code, is amended by adding Sections 53.025, 53.026, 53.027, and
33-25 53.028 to read as follows:
33-26 Sec. 53.025. LEASE RELINQUISHMENT. A lease issued under
33-27 this subchapter may be relinquished to the state at any time in the
34-1 manner provided by Section 52.027 of this code.
34-2 Sec. 53.026. IN KIND ROYALTY. (a) The commissioner or the
34-3 commissioner acting on behalf of and at the direction of the board
34-4 or a board for lease may negotiate and execute a contract or any
34-5 other instrument or agreement necessary to dispose of the royalty
34-6 taken in kind, including a contract for sale, transportation, or
34-7 storage.
34-8 (b) This section shall not be construed to surrender or in
34-9 any way affect the right of the state under an existing or future
34-10 lease to receive monetary royalty from its lessee.
34-11 Sec. 53.027. CONTRACTS AND AGREEMENTS. On the land office's
34-12 written request, mailed to the lessee's address as shown on its
34-13 lease or otherwise properly changed in conformity with the terms of
34-14 the lease, a copy of a contract for the sale or processing of
34-15 minerals leased under this subchapter and any subsequent agreement
34-16 or amendment to the contract shall be filed in the land office
34-17 within 30 days after the date the land office mails the written
34-18 request. The land office shall treat a contract, agreement, or
34-19 amendment filed in the land office as confidential unless otherwise
34-20 authorized by the lessee.
34-21 Sec. 53.028. AUDIT INFORMATION CONFIDENTIAL. (a) All
34-22 information secured, derived, or obtained during the course of an
34-23 inspection or examination of books, accounts, reports, or other
34-24 records as provided by this code, a rule, or a lease provision is
34-25 confidential and may not be used publicly, opened for public
34-26 inspection, or disclosed, except for information in a lien filed
34-27 under this chapter and except as permitted under Subsection (d) of
35-1 this section.
35-2 (b) All information made confidential in this section is not
35-3 subject to subpoena directed to the commissioner, the attorney
35-4 general, or the governor except in a judicial or administrative
35-5 proceeding to which this state is a party.
35-6 (c) The commissioner or the attorney general may use
35-7 information made confidential by this section and contracts made
35-8 confidential by Section 53.027 of this code to enforce this chapter
35-9 or may authorize their use in judicial or administrative
35-10 proceedings to which this state is a party.
35-11 (d) This section does not prohibit:
35-12 (1) the delivery of information made confidential by
35-13 this section to the lessee or its successor, receiver, executor,
35-14 guarantor, administrator, assignee, or representative;
35-15 (2) the publication of statistics classified to
35-16 prevent the identification of a particular audit or items in a
35-17 particular audit;
35-18 (3) the release of information that is otherwise
35-19 available to the public; or
35-20 (4) the release of information concerning the amount
35-21 of royalty assessed as a result of an examination conducted under
35-22 this code, a rule, or a lease provision or the release of other
35-23 information that would have been properly included in reports
35-24 required under this code, a rule, or a lease provision.
35-25 SECTION 53. Subsection (d), Section 53.074, Natural
35-26 Resources Code, is amended to read as follows:
35-27 (d) Leasing Procedure When Surface Owner's Agency Rights
36-1 Have Been Forfeited. When the surface owner's agency rights have
36-2 been forfeited in accordance with Subsection (c) of this section,
36-3 the minerals subject to lease under this subchapter can then be
36-4 leased under the leasing procedure set out for the lease of oil and
36-5 gas under Section 52.175 of this code. The substantive provisions
36-6 of Subchapter E of this chapter and Subchapters D and E, Chapter
36-7 32, of this code shall apply to the lease.
36-8 SECTION 54. Subchapter C, Chapter 53, Natural Resources
36-9 Code, is amended by adding Sections 53.075, 53.076, 53.077, 53.078,
36-10 53.079, and 53.080 to read as follows:
36-11 Sec. 53.075. ASSIGNMENT AND TRANSFER. A lease issued under
36-12 this subchapter may be assigned or transferred at any time in the
36-13 manner provided by Section 52.026 of this code.
36-14 Sec. 53.076. LEASE RELINQUISHMENT. A lease issued under
36-15 this subchapter may be relinquished to the state at any time in the
36-16 manner provided by Section 52.027 of this code.
36-17 Sec. 53.077. IN KIND ROYALTY. (a) The commissioner, each
36-18 owner of the soil under this subchapter, or the commissioner acting
36-19 on the behalf of and at the direction of an owner of the soil under
36-20 this subchapter may negotiate and execute a contract or any other
36-21 instrument or agreement necessary to dispose of the royalty taken
36-22 in kind, including a contract for sale, transportation, or storage.
36-23 (b) This section shall not be construed to surrender or in
36-24 any way affect the right of the state or the owner of the soil
36-25 under an existing or future lease to receive monetary royalty from
36-26 its lessee.
36-27 Sec. 53.078. PENALTY AND INTEREST. A lease issued under
37-1 this subchapter shall be subject to Sections 52.131(e) through (j)
37-2 of this code.
37-3 Sec. 53.079. CONTRACTS AND AGREEMENTS. On the land office's
37-4 written request, mailed to the lessee's address as shown on its
37-5 lease or otherwise properly changed in conformity with the terms of
37-6 the lease, a copy of a contract for the sale or processing of
37-7 minerals leased under this subchapter and any subsequent agreement
37-8 or amendment to the contract shall be filed in the land office
37-9 within 30 days after the date the land office mails the written
37-10 request. The land office shall treat a contract, agreement, or
37-11 amendment filed in the land office as confidential unless otherwise
37-12 authorized by the lessee.
37-13 Sec. 53.080. AUDIT INFORMATION CONFIDENTIAL. (a) All
37-14 information secured, derived, or obtained during the course of an
37-15 inspection or examination of books, accounts, reports, or other
37-16 records as provided by Section 53.068 of this code, a rule, or a
37-17 lease provision is confidential and may not be used publicly,
37-18 opened for public inspection, or disclosed, except for information
37-19 in a lien filed under this chapter and except as permitted under
37-20 Subsection (d) of this section.
37-21 (b) All information made confidential by this section is not
37-22 subject to subpoena directed to the commissioner, the attorney
37-23 general, or the governor except in a judicial or administrative
37-24 proceeding to which this state is a party.
37-25 (c) The commissioner or the attorney general may use
37-26 information made confidential by this section and contracts made
37-27 confidential by Section 53.079 of this code to enforce this chapter
38-1 or may authorize their use in judicial or administrative
38-2 proceedings to which this state is a party.
38-3 (d) This section does not prohibit:
38-4 (1) the delivery of information made confidential by
38-5 this section to the lessee or its successor, receiver, executor,
38-6 guarantor, administrator, assignee, or representative;
38-7 (2) the publication of statistics classified to
38-8 prevent the identification of a particular audit or items in a
38-9 particular audit;
38-10 (3) the release of information that is otherwise
38-11 available to the public; or
38-12 (4) the release of information concerning the amount
38-13 of royalty assessed as a result of an examination conducted under
38-14 Section 53.068 of this code, a rule, or a lease provision or the
38-15 release of other information that would have been properly included
38-16 in reports required under Section 53.068 of this code, a rule, or a
38-17 lease provision.
38-18 SECTION 55. Section 53.111, Natural Resources Code, is
38-19 amended to read as follows:
38-20 Sec. 53.111. Authority to Operate an Area as a Unit for
38-21 Production of Sulphur. The <Subject to the provisions of this
38-22 subchapter, the> commissioner<,> on behalf of the state or any fund
38-23 that belongs to the state <of its funds,> may execute agreements
38-24 that provide for operating <the operation of> areas as a unit for
38-25 the exploration, development, and production of sulphur and may
38-26 commit to the agreements:
38-27 (1) the royalty interests in sulphur reserved to <or
39-1 provided for> the state or any fund of the state by law in a<, in
39-2 or in connection with any> patent, award, mining claim, or contract
39-3 of sale or under the terms of any lease legally executed <made> by
39-4 an official, board, agent, agency, or authority of the state; or
39-5 (2) the free royalty interests, whether leased or
39-6 unleased, reserved to the state under Section 51.201 or 51.054 of
39-7 this code.
39-8 SECTION 56. Section 53.112, Natural Resources Code, is
39-9 amended to read as follows:
39-10 Sec. 53.112. APPROVAL OF CERTAIN AGREEMENTS BY SCHOOL LAND
39-11 BOARD. (a) An agreement must be approved by the board and
39-12 executed by the commissioner to be effective if the agreement
39-13 <authorized by Section 53.111 of this code that> commits:
39-14 (1) a royalty interest <interests> in land belonging
39-15 <dedicated> to the permanent <free> school fund or <and> the asylum
39-16 funds, in riverbeds, inland lakes, channels, or <and> areas within
39-17 tidewater limits, including islands, lakes, bays, inlets, marshes,
39-18 reefs, and the bed of the sea; or
39-19 (2) the free royalty interests, whether leased or
39-20 unleased, reserved to the state under Section 51.201 or 51.054 of
39-21 this code.
39-22 (b) An owner of the soil who is subject to Subchapter C of
39-23 this chapter may grant to a lessee prior authority to pool or
39-24 unitize the interest of the owner in a lease executed under that
39-25 subchapter. For the agreement to bind the interest of an owner of
39-26 the soil who is subject to Subchapter C of this chapter and who has
39-27 not granted the lessee prior authorization to pool or unitize the
40-1 interest of the owner in a sulphur lease executed under that
40-2 subchapter, the agreement must be executed by the owner of the soil
40-3 <must be approved by the school land board and must be executed by
40-4 the owners of the surface if the agreements cover land leased for
40-5 sulphur under Subchapter C of this chapter>.
40-6 SECTION 57. Section 53.113, Natural Resources Code, is
40-7 amended to read as follows:
40-8 Sec. 53.113. APPROVAL OF <OTHER> AGREEMENTS. An agreement
40-9 <Agreements> that commits <commit> the royalty interest in any land
40-10 <that is> not listed in <covered by> Section 53.112 of this code
40-11 must be approved by the board, official, agent, agency, or
40-12 authority of the state which has the authority to lease or to
40-13 approve the <a> lease of the land <or area> for sulphur and must be
40-14 executed by the commissioner to be effective.
40-15 SECTION 58. Section 53.114, Natural Resources Code, is
40-16 amended to read as follows:
40-17 Sec. 53.114. Commissioner's Approval. Before executing an
40-18 <An> agreement authorized by Section 53.111 of this code, <must be
40-19 found by> the commissioner must find that the agreement is <to be>
40-20 in the best interest of the state.
40-21 SECTION 59. Section 53.115, Natural Resources Code, is
40-22 amended to read as follows:
40-23 Sec. 53.115. Provisions of Agreement. (a) An agreement
40-24 executed under this subchapter may include the following
40-25 provisions:
40-26 (1) that operations incident to <the> drilling <of> a
40-27 well on any portion of a <the> unit shall be <are> considered for
41-1 all purposes to be <the> conduct of the operations on each tract in
41-2 the unit;
41-3 (2) that <the> production allocated by the agreement
41-4 to each tract included in the unit shall be considered for all
41-5 purposes to have been production <after production to be produced>
41-6 from the tract;
41-7 (3) that the <royalty> interest reserved to or
41-8 provided for the state or any of its funds on production from any
41-9 tract included in the unit shall be paid only on that portion of
41-10 the production from the unit that <which> is allocated to the tract
41-11 under the agreement; and
41-12 (4) that each lease included in the unit shall remain
41-13 in effect so long as the agreement remains in effect and that on
41-14 termination of the agreement each lease shall continue in effect
41-15 under the terms and conditions <provisions> of the lease.
41-16 (b) The agreement may include any other terms and<,>
41-17 conditions<, and provisions> the commissioner or any board,
41-18 official, agent, agency, or authority of the state that has the
41-19 authority to lease or to approve a lease of the land <or area> for
41-20 sulphur may consider to be in the best interest of the state.
41-21 SECTION 60. Subchapter D, Chapter 53, Natural Resources
41-22 Code, is amended by adding Section 53.118 to read as follows:
41-23 Sec. 53.118. RATIFICATIONS AND OTHER AGREEMENTS. (a) The
41-24 board may approve, by rule or order, a ratification or other
41-25 agreement that includes in the benefits of production a mineral or
41-26 royalty interest in land belonging to the permanent school fund or
41-27 the asylum funds.
42-1 (b) An agreement approved by the board under this section
42-2 must be executed by the commissioner to be effective.
42-3 (c) A ratification or other agreement that commits any of
42-4 the interests listed by Subsection (a) of this section in land not
42-5 belonging to the permanent school fund or the asylum funds must be
42-6 approved by the board, official, agent, agency, or authority of the
42-7 state that has the authority to lease or to approve the lease of
42-8 the land for sulphur and must be executed by the commissioner to be
42-9 effective.
42-10 SECTION 61. Section 53.152, Natural Resources Code, is
42-11 amended to read as follows:
42-12 Sec. 53.152. Laws Applicable to Leases. <(a)> Leases of
42-13 land described by Section 53.151 of this code shall be made in the
42-14 same procedural manner as leases of that land for oil and gas under
42-15 Chapter 52 of this code.
42-16 <(b) Sections 52.034 and 52.086 of this code do not apply to
42-17 leases of coal, lignite, sulphur, salt, and potash under this
42-18 subchapter.>
42-19 SECTION 62. Section 53.153, Natural Resources Code, is
42-20 amended to read as follows:
42-21 Sec. 53.153. Conditions of Lease. (a) Coal, lignite,
42-22 sulphur, salt, and potash may be leased together or separately.
42-23 (b) A lease granted under this subchapter shall be for a
42-24 primary term not to exceed 20 years and as long after that time as
42-25 the minerals are produced in paying quantities.
42-26 SECTION 63. Section 53.154, Natural Resources Code, is
42-27 amended to read as follows:
43-1 Sec. 53.154. ROYALTY RATE <AND DELAY RENTALS>. The board
43-2 shall set the royalty rate on and determine the market value
43-3 <(a) In addition to the cash amount bid for a lease, the board
43-4 shall lease the area for not less than one-eighth> of the gross
43-5 production of sulphur, <or the value of the sulphur that may be
43-6 produced or that may be produced and sold off the area and not less
43-7 than one-sixteenth of the value of the> coal, lignite, salt, and
43-8 potash from land leased under this subchapter. The royalty rate
43-9 shall be at least one-eighth of the gross production or the market
43-10 value of the sulphur produced and at least one-sixteenth of the
43-11 gross production or the market value of the coal, lignite, salt,
43-12 and potash produced. If the board determines that a lesser royalty
43-13 rate is necessary to promote economic development of coal, lignite,
43-14 salt, or potash, the board may lease coal, lignite, salt, or potash
43-15 under this subchapter for a lesser royalty rate, but the board may
43-16 not lease coal, lignite, salt, or potash for a royalty rate of less
43-17 than 20 cents for a short ton <that may be produced plus an amount
43-18 determined by the board until production is secured.>
43-19 <(b) If production is secured in commercial quantities and
43-20 the payment of royalty begins and continues to be paid, the lessee
43-21 is exempt from further delay rental payments on the acreage.>
43-22 <(c) If production ceases and royalty is not paid, the
43-23 lessee shall pay at the end of the lease year in which the royalty
43-24 ceased to be paid and annually after that time in advance, in an
43-25 amount determined by the board as long as the lessee desires to
43-26 maintain the rights acquired under the lease, but not for more than
43-27 five years from the date of the lease>.
44-1 SECTION 64. Section 53.155, Natural Resources Code, is
44-2 amended to read as follows:
44-3 Sec. 53.155. COMPENSATION FOR <PAYMENT OF> DAMAGES FROM
44-4 <FOR> USE OF SURFACE. (a) Leases issued under Subchapter B or E
44-5 of this chapter for unsold surveyed or unsurveyed school land,
44-6 other than land included in islands, saltwater lakes, bays, inlets,
44-7 marshes, and reefs owned by the state in tidewater limits and other
44-8 than that portion of the Gulf of Mexico within the jurisdiction of
44-9 the state, must include a provision requiring compensation for <the
44-10 payment of> damages from <for> the use of the surface in
44-11 prospecting for, exploring, developing, or producing the leased
44-12 minerals.
44-13 (b) The commissioner by rule shall set the procedure for
44-14 receiving compensation <amount of and shall collect money> for
44-15 damages to the surface of land dedicated to the permanent school
44-16 fund.
44-17 (c) Money collected for surface damages shall be deposited
44-18 in a special fund account in the State Treasury to be used for
44-19 conservation, reclamation, or constructing permanent improvements
44-20 on land that belongs to the permanent school fund.
44-21 (d) The special fund account must be an interest-bearing
44-22 account, and the interest received on the account shall be
44-23 deposited in the State Treasury to the credit of the available
44-24 school fund.
44-25 (e) Money collected under this section and designated for
44-26 the construction of permanent improvements as provided by this
44-27 section must be used not later than two years after the date on
45-1 which the money is collected.
45-2 (f) Any money that remains in the special fund account for
45-3 longer than two years shall be deposited in the State Treasury to
45-4 the credit of the permanent school fund.
45-5 (g) Compensation for <The payment of> damages under this
45-6 section is in addition to any bonus, rental, royalty, or other
45-7 payment required by the lease.
45-8 SECTION 65. Subchapter E, Chapter 53, Natural Resources
45-9 Code, is amended by adding Section 53.156 to read as follows:
45-10 Sec. 53.156. CONTRACTS AND AGREEMENTS. On the land office's
45-11 written request, mailed to the lessee's address as shown on its
45-12 lease or otherwise properly changed in conformity with the terms of
45-13 the lease, a copy of a contract for the sale or processing of
45-14 minerals leased under this subchapter and any subsequent agreement
45-15 or amendment to the contract shall be filed in the land office
45-16 within 30 days after the date the land office mails the written
45-17 request. The land office shall treat a contract, agreement, or
45-18 amendment filed in the land office as confidential unless otherwise
45-19 authorized by the lessee.
45-20 SECTION 66. Section 53.161, Natural Resources Code, is
45-21 amended by amending Subsection (4) and adding Subsection (7) to
45-22 read as follows:
45-23 (4) "Public school land" means land dedicated by the
45-24 constitution or laws of this state to the permanent <free> school
45-25 fund, but does not include land with a mineral classification
45-26 described in Section 53.061 of this chapter in which the state has
45-27 retained the minerals, nor does it include areas within tidewater
46-1 limits <or the portion of the Gulf of Mexico that is under the
46-2 jurisdiction of this state>.
46-3 (7) "Areas within tidewater limits" means islands,
46-4 saltwater lakes, bays, inlets, marshes, and reefs within tidewater
46-5 limits and that portion of the Gulf of Mexico within the
46-6 jurisdiction of Texas.
46-7 SECTION 67. Subsection (b), Section 53.162, Natural
46-8 Resources Code, is amended to read as follows:
46-9 (b) Every person who is authorized to conduct a geophysical
46-10 or geochemical exploration on public school land shall comply with
46-11 the commissioner's rules relating to such exploration. A person
46-12 with a valid mineral lease on land subject to this chapter shall
46-13 comply with the commissioner's rules concerning exploration.
46-14 SECTION 68. Sections 52.079, 52.081, 52.086, 52.089, and
46-15 53.017, Natural Resources Code, are repealed.
46-16 SECTION 69. This Act does not affect the state's right to
46-17 take its royalty in kind or the calculation of the state's royalty
46-18 under a patent, lease, or unitization agreement executed before the
46-19 effective date of this Act.
46-20 SECTION 70. This Act takes effect September 1, 1993.
46-21 SECTION 71. The importance of this legislation and the
46-22 crowded condition of the calendars in both houses create an
46-23 emergency and an imperative public necessity that the
46-24 constitutional rule requiring bills to be read on three several
46-25 days in each house be suspended, and this rule is hereby suspended.