74R10618 E
By Turner of Coleman, Gallego H.B. No. 2477
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to authorizing the School Land Board to allow owners of
1-3 the soil to waive agency rights and to lease oil, gas, and other
1-4 minerals in, on, and under mineral classified lands.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subchapter F, Chapter 52, Natural Resources Code,
1-7 is amended by adding Section 52.190 to read as follows:
1-8 Sec. 52.190. LEASE BY OWNER OF THE SOIL. (a) An owner of
1-9 the soil of lands covered by this subchapter may lease those lands
1-10 for the purpose of exploring for and producing oil and gas in the
1-11 manner provided by this section.
1-12 (b) An owner of the soil may apply in writing to the board
1-13 for an oil and gas lease.
1-14 (c) The application shall contain the following:
1-15 (1) the name and address of the applicant;
1-16 (2) a complete legal description of the land the
1-17 applicant seeks to lease;
1-18 (3) the name and address of every owner of the soil of
1-19 the land the applicant seeks to lease, if the applicant is not the
1-20 sole owner of the soil;
1-21 (4) a brief letter opinion signed by an attorney
1-22 licensed in this state setting out the surface ownership of the
1-23 land sought to be leased;
2-1 (5) a statement of the applicant's experience in oil
2-2 and gas exploration and production, including, without limitation,
2-3 the applicant's Railroad Commission of Texas operator number and a
2-4 list of any State of Texas or federal oil and gas leases held or
2-5 operated by the applicant or other entity in which the applicant
2-6 has or had a significant interest during the five-year period
2-7 preceding the date of the application;
2-8 (6) a statement that the applicant intends to explore
2-9 for and, if commercially reasonable, produce oil and gas or if the
2-10 applicant plans that another person or firm shall conduct
2-11 exploration and production:
2-12 (A) the name and address of the person or firm;
2-13 (B) a description of the person's or firm's
2-14 experience in oil and gas exploration and production, including,
2-15 without limitation, the person's or firm's Railroad Commission of
2-16 Texas operator number and a list of any State of Texas or federal
2-17 oil and gas leases held or operated by the person or firm during
2-18 the five-year period preceding the date of the application; and
2-19 (C) a description of the applicant's intended
2-20 degree and type of participation in the exploration of and
2-21 production from the property and all consideration or benefits the
2-22 applicant expects to receive in connection with the exploration of
2-23 and production from the property; and
2-24 (7) the amount of bonus, rental, royalty, and other
2-25 lease terms that the applicant proposes to pay or offer or pay and
3-1 offer for the lease.
3-2 (d) The applicant shall provide geological, geophysical,
3-3 geochemical, and other data or copies of the data, including
3-4 interpretative data, pertinent to mineral exploration on the lands
3-5 for which the application is made, in the applicant's possession or
3-6 to which the applicant has reasonable access and which the
3-7 applicant has the ability to provide to the land office. All such
3-8 data shall be confidential and not subject to the provisions of
3-9 the open records law, Chapter 552, Government Code, until one year
3-10 after the expiration, termination, or forfeiture of a lease granted
3-11 pursuant to this section. After one year after the expiration,
3-12 termination, or forfeiture of such a lease, the data shall remain
3-13 confidential to the extent permitted by Chapter 552, Government
3-14 Code. If a lease is not issued, the data shall be returned to the
3-15 applicant.
3-16 (e) The board may prescribe the form of the application,
3-17 specify information required to be submitted in support of an
3-18 application, and, by rule, otherwise provide for the implementation
3-19 of this section.
3-20 (f) The staff of the land office shall review the
3-21 information presented in the application, other geological,
3-22 geophysical, and geochemical data reasonably available to it
3-23 relevant to the land proposed to be leased, and leasing information
3-24 reasonably available to it relevant to the land proposed to be
3-25 leased. The staff shall prepare a report to the board that
4-1 contains:
4-2 (1) a summary of bonus, rental, royalty, and other
4-3 lease terms then being offered and asked for leases of similar
4-4 lands in the area of the land proposed to be leased; and
4-5 (2) any factual data considered by the staff to be
4-6 relevant, including, but not limited to, data concerning the land
4-7 proposed to be leased and its estimated value for oil and gas
4-8 exploration and production, recommended lease terms, and the
4-9 applicant, including the applicant's history of leasing State of
4-10 Texas or federal lands for oil and gas.
4-11 (g) The board shall consider the application at a regular
4-12 meeting. It may, in its sole discretion, grant or deny the
4-13 application or grant the application subject to specified
4-14 conditions. Such conditions may include a requirement that if the
4-15 applicant does not materially participate in the exploration or
4-16 development of the leased premises, through labor performed, cash
4-17 or goods contributed, or supplying other enhancement in value, the
4-18 applicant must share equally with the permanent school fund any
4-19 benefit derived from the lease.
4-20 (h) After the board has approved an application, the
4-21 commissioner shall issue a lease to the applicant. The lease shall
4-22 conform, as nearly as is practicable, to the form of lease
4-23 prescribed by the board under Section 32.1071.
4-24 (i) The commissioner may not deliver a lease issued under
4-25 this section until the applicant has executed and delivered to the
5-1 commissioner a waiver of the applicant's right and duty to act as
5-2 agent for the state in leasing the leased premises and to receive
5-3 any part of the bonus, rental, royalty, and other consideration
5-4 accruing to the owner of the soil under this subchapter. The
5-5 waiver and the lease shall be effective as of the date the
5-6 commissioner executes the lease.
5-7 (j) Upon the expiration, termination, or forfeiture of a
5-8 lease issued under this section, the agency rights and duties of
5-9 the applicant as owner of the soil are reinstated without the
5-10 necessity for further action by the owner of the soil, the board,
5-11 or the commissioner.
5-12 (k) If an applicant is not the sole owner of the soil, the
5-13 applicant may secure leases from the other owners of the soil from
5-14 which the applicant is not prohibited from leasing under Section
5-15 52.189. If the applicant must obtain a lease from an owner of the
5-16 soil from whom the applicant would otherwise not be permitted to
5-17 lease in order reasonably to explore for or produce or explore for
5-18 and produce oil or gas, the commissioner may approve the lease on
5-19 the condition that the applicant shall not receive any benefit
5-20 from the lease, and, if the applicant should acquire by any method,
5-21 including devise or inheritance, the right to receive any rental,
5-22 royalty, or other benefit accruing to the owner of the soil's
5-23 interest under the lease, the applicant shall assign the benefit to
5-24 the commissioner for the benefit of the permanent school fund.
5-25 (l) The commissioner shall not approve any lease obtained by
6-1 an applicant from another owner of the soil if the lease contains
6-2 terms that are substantially inconsistent with or provide for a
6-3 lesser bonus, rental, or royalty than the lease approved by the
6-4 board. If the bonus, rental, or royalty in a lease obtained by an
6-5 applicant from another owner of the soil for a comparable interest
6-6 is greater than that approved by the board, then the lease approved
6-7 by the board shall be amended to provide for the greater bonus,
6-8 rental, or royalty, and the applicant shall be liable for all
6-9 greater sums due. In determining whether an interest is
6-10 comparable, the board shall consider the quantum of the interest,
6-11 the time at which the lease was taken, and any other aspects of the
6-12 lease transaction that the board considers to be relevant.
6-13 SECTION 2. Section 52.189(a), Natural Resources Code, is
6-14 amended to read as follows:
6-15 (a) Prohibition Against Self-Dealing. (1) The owner of the
6-16 soil may not lease, either directly or indirectly, to himself or to
6-17 a nominee, to any corporation or subsidiary in which he is a
6-18 principal stockholder<,> or to an employee of such a corporation or
6-19 subsidiary, or to a partnership in which he is a partner<,> or to
6-20 an employee of such a partnership. If the owner of the soil is a
6-21 corporation or a partnership, then the owner of the soil may not
6-22 lease, either directly or indirectly, to a principal stockholder of
6-23 the corporation or to a partner of the partnership, or any employee
6-24 of the corporation or partnership. The owner of the soil may not
6-25 lease, either directly or indirectly, to his fiduciary, including
7-1 but not limited to a guardian, trustee, executor, administrator,
7-2 receiver, or conservator.
7-3 (2) Except as provided by this section <Further>, the
7-4 owner of the soil may not lease, directly or indirectly, to a
7-5 person related to him within and including the second degree of
7-6 consanguinity or affinity, including a person related by adoption,
7-7 or to a corporation or subsidiary in which that person is a
7-8 principal stockholder, or to a partnership in which that person is
7-9 a partner, or to an employee of such a corporation or subsidiary or
7-10 partnership <a member of his family or anyone related to him by
7-11 marriage, blood, or adoption>.
7-12 (3) An owner of the soil who wishes to lease to a
7-13 person, corporation, or partnership described in Subdivision (2)
7-14 may request the approval of the board for authority to execute such
7-15 a lease before its execution. The owner of the soil requesting
7-16 approval must also execute and file with the commissioner a sworn
7-17 affidavit stating that the owner of the soil will not receive any
7-18 benefit under a lease so approved by the board that will not be
7-19 shared with the permanent school fund in the proportion prescribed
7-20 by this subchapter.
7-21 (4) If an owner of the soil makes any material
7-22 misstatement of fact in connection with an application to the board
7-23 or affidavit made pursuant to Subdivision (3), then any lease
7-24 executed pursuant to the authority of the board shall be voidable
7-25 at the election of the commissioner. The election to void such a
8-1 lease shall be cumulative of and in addition to all other remedies
8-2 available to the commissioner or the state.
8-3 SECTION 3. Subchapter C, Chapter 53, Natural Resources Code,
8-4 is amended by adding Section 53.081 to read as follows:
8-5 Sec. 53.081. LEASE BY OWNER OF THE SOIL. (a) An owner of
8-6 the soil of lands covered by this subchapter may lease those lands
8-7 for the purpose of exploring for and producing minerals other than
8-8 oil and gas in the manner provided by this section.
8-9 (b) An owner of the soil may apply in writing to the board
8-10 for a lease of a mineral or minerals other than oil and gas.
8-11 (c) The application shall contain the following:
8-12 (1) the name and address of the applicant;
8-13 (2) a complete legal description of the land the
8-14 applicant seeks to lease;
8-15 (3) the name and address of every owner of the soil of
8-16 the land the applicant seeks to lease, if the applicant is not the
8-17 sole owner of the soil;
8-18 (4) a brief letter opinion signed by an attorney
8-19 licensed in this state setting out the surface ownership of the
8-20 land sought to be leased;
8-21 (5) a statement of the applicant's experience in the
8-22 exploration for and production of minerals other than oil and gas,
8-23 including, without limitation, a list of any State of Texas or
8-24 federal mineral leases currently or previously held or operated by
8-25 the applicant or other entity in which the applicant has or had a
9-1 significant interest during the five-year period preceding the date
9-2 of the application;
9-3 (6) a statement that the applicant intends to explore
9-4 for and, if commercially reasonable, produce minerals other than
9-5 oil and gas or if the applicant plans that another person or firm
9-6 shall conduct exploration and production:
9-7 (A) the name and address of the person or firm;
9-8 (B) a description of such person's or firm's
9-9 experience in the exploration for and production of minerals other
9-10 than oil and gas, including, without limitation, a list of any
9-11 State of Texas or federal minerals other than oil and gas leases
9-12 currently or previously held or operated by the person or firm
9-13 during the five-year period preceding the date of the application;
9-14 and
9-15 (C) a description of the applicant's intended
9-16 degree and type of participation in the exploration of and
9-17 production from the property and all consideration or benefits the
9-18 applicant expects to receive in connection with the exploration of
9-19 and production from the property; and
9-20 (7) the amount of bonus, rental, royalty, and other
9-21 lease terms that the applicant proposes to pay or offer or pay and
9-22 offer for the lease.
9-23 (d) The applicant shall provide geological, geophysical,
9-24 geochemical, and other data or copies of the data, including
9-25 interpretative data, pertinent to exploration for minerals other
10-1 than oil and gas on the lands for which the application is made, in
10-2 the applicant's possession or to which the applicant has reasonable
10-3 access and which the applicant has the ability to provide to the
10-4 land office. All such data shall be confidential and not subject
10-5 to the provisions of the open records law, Chapter 552, Government
10-6 Code, until one year after the expiration, termination, or
10-7 forfeiture of a lease granted pursuant to this section. After one
10-8 year after the expiration, termination, or forfeiture of such a
10-9 lease, the data shall remain confidential to the extent permitted
10-10 by Chapter 552, Government Code. If a lease is not issued, the
10-11 data shall be returned to the applicant.
10-12 (e) The board may prescribe the form of the application,
10-13 require additional information as it considers appropriate, and, by
10-14 rule, otherwise provide for the implementation of this section.
10-15 (f) The staff of the land office shall review the
10-16 information presented in the application, such other geological,
10-17 geophysical, and geochemical data reasonably available to it
10-18 relevant to the land proposed to be leased, and leasing information
10-19 reasonably available to it relevant to the land proposed to be
10-20 leased. The staff shall prepare a report to the board that
10-21 contains:
10-22 (1) a summary of bonus, rental, royalty, and other
10-23 lease terms then being offered and asked for leases of similar
10-24 lands in the area of the land proposed to be leased; and
10-25 (2) data considered by the staff to be relevant,
11-1 including, but not limited to, data concerning the land proposed to
11-2 be leased and its estimated value for minerals other than oil and
11-3 gas, recommended lease terms, and the applicant, including the
11-4 applicant's history of leasing State of Texas or federal lands for
11-5 minerals other than oil and gas.
11-6 (g) The board shall consider the application at a regular
11-7 meeting. It may, in its sole discretion, grant or deny the
11-8 application or grant the application subject to specified
11-9 conditions. Such conditions may include a requirement that if the
11-10 applicant does not materially participate in the exploration or
11-11 development of the leased premises, through labor performed, cash
11-12 or goods contributed, or supplying other enhancement in value, the
11-13 applicant must share equally with the permanent school fund any
11-14 benefit derived from the lease.
11-15 (h) After the board has approved an application, the
11-16 commissioner shall issue a lease to the applicant. The lease shall
11-17 conform, as nearly as is practicable, to the form of lease
11-18 prescribed by the commissioner under this chapter.
11-19 (i) The commissioner may not deliver a lease issued under
11-20 this section until the applicant has executed and delivered to the
11-21 commissioner a waiver of the applicant's right and duty to act as
11-22 agent for the state in leasing the leased premises and to receive
11-23 any part of the bonus, rental, royalty, and other consideration
11-24 accruing to the owner of the soil under this subchapter. The
11-25 waiver and the lease shall be effective as of the date the
12-1 commissioner executes the lease.
12-2 (j) Upon the expiration, termination, or forfeiture of a
12-3 lease issued under this section, the agency rights and duties of
12-4 the applicant as owner of the soil are reinstated without the
12-5 necessity for further action by the owner of the soil, the board,
12-6 or the commissioner.
12-7 (k) If an applicant is not the sole owner of the soil, the
12-8 applicant may secure leases from the other owners of the soil from
12-9 which the applicant is not prohibited from leasing under Section
12-10 53.074. If the applicant must obtain a lease from an owner of the
12-11 soil from whom the applicant would otherwise not be permitted to
12-12 lease in order reasonably to explore for or produce or explore for
12-13 and produce minerals other than oil or gas, the commissioner may
12-14 approve the lease on the condition that the applicant shall not
12-15 receive any benefit from the lease, and, if the applicant should
12-16 acquire by any method, including devise or inheritance, the right
12-17 to receive any rental, royalty, or other benefit accruing to the
12-18 owner of the soil's interest under the lease, the applicant shall
12-19 assign the benefit to the commissioner for the benefit of the
12-20 permanent school fund.
12-21 (l) The commissioner shall not approve any lease obtained by
12-22 an applicant from another owner of the soil if the lease contains
12-23 terms that are substantially inconsistent with or provide for a
12-24 lesser bonus, rental, or royalty than the lease approved by the
12-25 board. If the bonus, rental, or royalty in a lease obtained by an
13-1 applicant from another owner of the soil for a comparable interest
13-2 is greater than that approved by the board, then the lease approved
13-3 by the board shall be amended to provide for the greater bonus,
13-4 rental, or royalty, and the applicant shall be liable for all
13-5 greater sums due. In determining whether an interest is
13-6 comparable, the board shall consider the quantum of the interest,
13-7 the time at which the lease was taken, and any other aspects of the
13-8 lease transaction that the board considers to be relevant.
13-9 SECTION 4. Section 53.074(a), Natural Resources Code, is
13-10 amended to read as follows:
13-11 (a) Prohibition Against Self-Dealing. (1) The owner of the
13-12 soil may not lease, either directly or indirectly, to himself or to
13-13 a nominee, to any corporation or subsidiary in which he is a
13-14 principal stockholder<,> or to an employee of such a corporation or
13-15 subsidiary, or to a partnership in which he is a partner<,> or to
13-16 an employee of such a partnership. If the owner of the soil is a
13-17 corporation or a partnership, then the owner of the soil may not
13-18 lease, either directly or indirectly, to a principal stockholder of
13-19 the corporation or to a partner of the partnership, or any employee
13-20 of the corporation or partnership. The owner of the soil may not
13-21 lease, either directly or indirectly, to his fiduciary, including
13-22 but not limited to a guardian, trustee, executor, administrator,
13-23 receiver, or conservator.
13-24 (2) Except as provided by this section <Further>, the
13-25 owner of the soil may not lease, directly or indirectly, to a
14-1 person related to him within and including the second degree of
14-2 consanguinity or affinity, including a person related by adoption,
14-3 or to a corporation or subsidiary in which that person is a
14-4 principal stockholder, or to a partnership in which that person is
14-5 a partner, or to an employee of such a corporation or subsidiary or
14-6 partnership <a member of his family or anyone related to him by
14-7 marriage, blood, or adoption>.
14-8 (3) An owner of the soil who wishes to lease to a
14-9 person, corporation, or partnership described in Subdivision (2)
14-10 may request the approval of the board for authority to execute such
14-11 a lease before its execution. The owner of the soil requesting
14-12 approval must also execute and file with the commissioner a sworn
14-13 affidavit stating that the owner of the soil will not receive any
14-14 benefit under a lease so approved by the board that will not be
14-15 shared with the permanent school fund in the proportion prescribed
14-16 by this subchapter.
14-17 (4) If an owner of the soil makes any material
14-18 misstatement of fact in connection with an application to the board
14-19 or affidavit made pursuant to Subdivision (3), then any lease
14-20 executed pursuant to the authority of the board shall be voidable
14-21 at the election of the commissioner. The election to void such a
14-22 lease shall be cumulative of and in addition to all other remedies
14-23 available to the commissioner or the state.
14-24 SECTION 5. An owner of the soil may obtain a lease under the
14-25 provisions of this Act only after the effective date of this Act,
15-1 and this Act shall not be construed to ratify or approve in any way
15-2 the acquisition by an owner of the soil, acting as agent for the
15-3 State of Texas, any interest not shared with the State of Texas,
15-4 except as expressly permitted by statute, in any lease covering or
15-5 purporting to cover any land subject to Subchapter F, Chapter 52,
15-6 Natural Resources Code, or Subchapter C, Chapter 53, Natural
15-7 Resources Code.
15-8 SECTION 6. This Act takes effect September 1, 1995.
15-9 SECTION 7. The importance of this legislation and the
15-10 crowded condition of the calendars in both houses create an
15-11 emergency and an imperative public necessity that the
15-12 constitutional rule requiring bills to be read on three several
15-13 days in each house be suspended, and this rule is hereby suspended.