By Turner of Coleman                                  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.  The Natural Resources Code is amended by adding
    1-7  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 such 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 applicant
   1-17  seeks to lease;
   1-18              (3)  the name and address of every owner of the soil of
   1-19  the land applicant seeks to lease, if the applicant is not the sole
   1-20  owner of the soil;
   1-21              (4)  a brief letter opinion signed by an attorney
   1-22  licensed in Texas setting out the surface ownership of the land
   1-23  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 operator number and a list of
    2-4  any State of Texas or federal oil and gas leases held or operated
    2-5  by the applicant or other entity in which applicant has or had a
    2-6  significant interest during the five year period preceding the date
    2-7  of the application; and
    2-8              (6)  a statement that applicant intends to explore for
    2-9  and, if commercially reasonable, produce oil and gas, or, if
   2-10  applicant plans that another person or firm shall conduct
   2-11  exploration and production:
   2-12                    (A)  the name and address of such person or firm;
   2-13                    (B)  a description of such person or firm's
   2-14  experience in oil and gas exploration and production, including,
   2-15  without limitation, such person or firm's Railroad Commission
   2-16  operator number and a list of any State of Texas or federal oil and
   2-17  gas leases held or operated by such person or firm during the
   2-18  five-year period preceding the date of the application;
   2-19                    (C)  a description of applicant's intended degree
   2-20  and type of participation in the exploration of and production from
   2-21  the property, and all consideration or benefits the applicant
   2-22  expects to receive in connection with the exploration of and
   2-23  production from the property; and
   2-24              (7)  the amount of bonus, rental, royalty, and other
   2-25  lease terms that applicant proposes to pay and/or offer for the
    3-1  lease.
    3-2        (d)  The applicant shall provide geological, geophysical,
    3-3  geochemical, and other data, or copies thereof, including
    3-4  interpretative data, pertinent to mineral exploration on the lands
    3-5  for which the application is made in applicant's possession or to
    3-6  which applicant has reasonable access and which applicant has the
    3-7  ability to provide.  All such data shall be confidential and not
    3-8  subject to the provisions of the Open Records Act, Government Code,
    3-9  Ch. 552 until one year after the expiration, termination, or
   3-10  forfeiture of a lease granted pursuant to this section.  If a lease
   3-11  is not issued the data shall be returned to the applicant.
   3-12        (e)  The board may prescribe the form of the application,
   3-13  specify information required to be submitted in support of an
   3-14  application, and, by rule, otherwise provide for the implementation
   3-15  of this section.
   3-16        (f)  The staff of the General Land Office shall review the
   3-17  information presented in the application, such other geological,
   3-18  geophysical, and geochemical data reasonably available to it
   3-19  relevant to the land proposed to be leased, and leasing information
   3-20  reasonably available to it relevant to the land proposed to be
   3-21  leased.  The staff shall prepare a report to the board that
   3-22  contains:
   3-23              (1)  a summary of bonus, rentals, royalties, and other
   3-24  lease terms then being offered and asked for leases of similar
   3-25  lands in the area of the land proposed to be leased;
    4-1              (2)  any factual data considered by the staff to be
    4-2  relevant, including, but not limited to, data concerning the land
    4-3  proposed to be leased and its estimated value for oil and gas
    4-4  exploration and production, recommended lease terms, and the
    4-5  applicant, including applicant's history of leasing State of Texas
    4-6  or federal lands for oil and gas.
    4-7        (g)  The board shall consider the application at a regular
    4-8  meeting.  It may, in its sole discretion, grant or deny the
    4-9  application, or grant the application subject to specified
   4-10  conditions.  Such conditions may include a requirement that if the
   4-11  applicant does not materially participate in the exploration or
   4-12  development of the leased premises, through labor performed, cash
   4-13  or goods contributed, or supplying other enhancement in value, the
   4-14  applicant must share equally with the permanent school fund any
   4-15  benefit derived from the lease.
   4-16        (h)  After the board has approved an application, the
   4-17  commissioner shall issue a lease to the applicant.  The lease shall
   4-18  conform, as nearly as is practicable, to the form of lease
   4-19  prescribed by the board under Section 32.1071.
   4-20        (i)  The commissioner may not deliver a lease issued under
   4-21  this section until the applicant has executed and delivered to the
   4-22  commissioner a waiver of the applicant's right and duty to act as
   4-23  agent for the state in leasing the leased premises, and to receive
   4-24  any part of the bonus, rental, royalty, and other consideration
   4-25  accruing to the owner of the soil under this subchapter.  The
    5-1  waiver and the lease shall be effective as of the date the
    5-2  commissioner executes the lease.
    5-3        (j)  Upon the expiration, termination, or forfeiture of a
    5-4  lease issued under this subsection, the agency rights and duties of
    5-5  the applicant as owner of the soil are reinstated without the
    5-6  necessity for further action by the owner of the soil, the board,
    5-7  or the commissioner.
    5-8        (k)  If an applicant is not the sole owner of the soil, the
    5-9  applicant may secure leases from the other owners of the soil from
   5-10  which the applicant is not prohibited from leasing under Section
   5-11  52.189 of this Code.  If the applicant must obtain a lease from an
   5-12  owner of the soil from whom the applicant would otherwise not be
   5-13  permitted to lease in order reasonably to explore for and/or
   5-14  produce oil or gas, the commissioner may approve such lease on the
   5-15  condition that the applicant shall not receive any benefit
   5-16  therefrom, and, if applicant should acquire by any method,
   5-17  including devise or inheritance, the right to receive any rental,
   5-18  royalty, or other benefit accruing to the owner of the soil's
   5-19  interest under such lease, applicant shall assign such benefit to
   5-20  the commissioner for the benefit of the permanent school fund.
   5-21        (l)  The commissioner shall not approve any lease obtained by
   5-22  an applicant from another owner of the soil if the lease contains
   5-23  terms that are substantially inconsistent with or provide for a
   5-24  lesser bonus, rental, or royalty than the lease approved by the
   5-25  board.  If the bonus, rental, or royalty in a lease obtained by an
    6-1  applicant from another owner of the soil for a comparable interest
    6-2  is greater than that approved by the board, then the lease approved
    6-3  by the board shall be amended to provide for such greater bonus,
    6-4  rental, or royalty, and the applicant shall be liable for all such
    6-5  greater sums due.  In determining whether an interest is
    6-6  comparable, the board shall consider the quantum of the interest,
    6-7  the time at which the lease was taken, and any other aspects of the
    6-8  lease transaction that the board considers to be relevant.
    6-9        SECTION 2.  The Natural Resources Code is amended by adding
   6-10  Section 53.081 to read as follows:
   6-11        Sec. 53.081.  LEASE BY OWNER OF THE SOIL.  (a)  An owner of
   6-12  the soil of lands covered by this subchapter may lease such lands
   6-13  for the purpose of exploring for and producing minerals other than
   6-14  oil and gas in the manner provided by this section.
   6-15        (b)  An owner of the soil may apply in writing to the board
   6-16  for a lease of a mineral or minerals other than oil and gas.
   6-17        (c)  The application shall contain the following:
   6-18              (1)  the name and address of the applicant;
   6-19              (2)  a complete legal description of the land applicant
   6-20  seeks to lease;
   6-21              (3)  the name and address of every owner of the soil of
   6-22  the land applicant seeks to lease, if the applicant is not the sole
   6-23  owner of the soil;
   6-24              (4)  a brief letter opinion signed by an attorney
   6-25  licensed in Texas setting out the surface ownership of the land
    7-1  sought to be leased;
    7-2              (5)  a statement of the applicant's experience in the
    7-3  exploration for and production of minerals other than oil and gas,
    7-4  including, without limitation, a list of any State of Texas or
    7-5  federal mineral leases currently or previously held or operated by
    7-6  the applicant or other entity in which applicant has or had a
    7-7  significant interest during the five year period preceding the date
    7-8  of the application;
    7-9              (6)  a statement that applicant intends to explore for
   7-10  and, if commercially reasonable, produce minerals other than oil
   7-11  and gas, or, if applicant plans that another person or firm shall
   7-12  conduct exploration and production:
   7-13                    (A)  the name and address of such person or firm
   7-14                    (B)  a description of such person or firm's
   7-15  experience in the exploration for and production of minerals other
   7-16  than oil and gas, including, without limitation, a list of any
   7-17  State of Texas or federal minerals other than oil and gas leases
   7-18  currently or previously held or operated by such person or firm
   7-19  during the five year period preceding the date of the application;
   7-20                    (C)  a description of applicant's intended degree
   7-21  and type of participation in the exploration of and production from
   7-22  the property, and all consideration or benefits the applicant
   7-23  expects to receive in connection with the exploration of and
   7-24  production from the property; and
   7-25              (7)  the amount of bonus, rental, royalty, and other
    8-1  lease terms that applicant proposes to pay and/or offer for the
    8-2  lease.
    8-3        (d)  The applicant shall provide geological, geophysical,
    8-4  geochemical, and other data, or copies thereof, including
    8-5  interpretative data, pertinent to exploration for minerals other
    8-6  than oil and gas on the lands for which the application is made in
    8-7  applicant's possession or to which applicant has reasonable access
    8-8  and which the applicant has the ability to provide.  All such data
    8-9  shall be confidential and not subject to the provisions of the Open
   8-10  Records Act, Government Code, Ch. 552 until one year after the
   8-11  expiration, termination, or forfeiture of a lease granted pursuant
   8-12  to this section.  If a lease is not issued, the data shall be
   8-13  returned to the applicant.
   8-14        (e)  The board may prescribe the form of the application,
   8-15  require such additional information as it considers appropriate, by
   8-16  rule, and otherwise provide for the implementation of this section.
   8-17        (f)  The staff of the General Land Office shall review the
   8-18  information presented in the application, such other geological,
   8-19  geophysical, and geochemical data reasonably available to it
   8-20  relevant to the land proposed to be leased, and leasing information
   8-21  reasonably available to it relevant to the land proposed to be
   8-22  leased.  The staff shall prepare a report to the board that
   8-23  contains:
   8-24              (1)  a summary of bonus, rentals, royalties, and other
   8-25  lease terms then being offered and asked for leases of similar
    9-1  lands in the area of the land proposed to be leased;
    9-2              (2)  any factual data considered by the staff to be
    9-3  relevant, including, but not limited to, data concerning the land
    9-4  proposed to be leased and its estimated value for minerals other
    9-5  than oil and gas, recommended lease terms, and the applicant,
    9-6  including applicant's history of leasing State of Texas or federal
    9-7  lands for minerals other than oil and gas.
    9-8        (g)  The board shall consider the application at a regular
    9-9  meeting.  It may, in its sole discretion, grant or deny the
   9-10  application, or grant the application subject to specified
   9-11  conditions.  Such conditions may include a requirement that if the
   9-12  applicant does not materially participate in the exploration or
   9-13  development of the leased premises, through labor performed, cash
   9-14  or goods contributed, or supplying other enhancement in value, the
   9-15  applicant must share equally with the permanent school fund any
   9-16  benefit derived from the lease.
   9-17        (h)  After the board has approved an application, the
   9-18  commissioner shall issue a lease to the applicant.  The lease shall
   9-19  conform, as nearly as is practicable, to the form of lease
   9-20  prescribed by the commissioner under this chapter.
   9-21        (i)  The commissioner may not deliver a lease issued under
   9-22  this section until the applicant has executed and delivered to the
   9-23  commissioner a waiver of the applicant's right and duty to act as
   9-24  agent for the state in leasing the leased premises, and to receive
   9-25  any part of the bonus, rental, royalty, and other consideration
   10-1  accruing to the owner of the soil under this subchapter.  The
   10-2  waiver and the lease shall be effective as of the date the
   10-3  commissioner executes the lease.
   10-4        (j)  Upon the expiration, termination, or forfeiture of a
   10-5  lease issued under this subsection, the agency rights and duties of
   10-6  the applicant as owner of the soil are reinstated without the
   10-7  necessity for further action by the owner of the soil, the board,
   10-8  or the commissioner.
   10-9        (k)  If an applicant is not the sole owner of the soil, the
  10-10  applicant may secure leases from the other owners of the soil from
  10-11  which the applicant is not prohibited from leasing under Section
  10-12  53.074 of this code.  If the applicant must obtain a lease from an
  10-13  owner of the soil from whom the applicant would otherwise not be
  10-14  permitted to lease in order reasonably to explore for and/or
  10-15  produce minerals other than oil or gas, the commissioner may
  10-16  approve such lease on the condition that the applicant shall not
  10-17  receive any benefit therefrom, and, if applicant should acquire by
  10-18  any method, including devise or inheritance, the right to receive
  10-19  any rental, royalty, or other benefit accruing to the owner of the
  10-20  soil's interest under such lease, applicant shall assign such
  10-21  benefit to the commissioner for the benefit of the permanent school
  10-22  fund.
  10-23        (l)  The commissioner shall not approve any lease obtained by
  10-24  an applicant from another owner of the soil if the lease contains
  10-25  terms that are substantially inconsistent with or provide for a
   11-1  lesser bonus, rental, or royalty than the lease approved by the
   11-2  board.  If the bonus, rental, or royalty in a lease obtained by an
   11-3  applicant from another owner of the soil for a comparable interest
   11-4  is greater than that approved by the board, then the lease approved
   11-5  by the board shall be amended to provide for such greater bonus,
   11-6  rental, or royalty, and the applicant shall be liable for all such
   11-7  greater sums due.  In determining whether an interest is
   11-8  comparable, the board shall consider the quantum of the interest,
   11-9  the time at which the lease was taken, and any other aspects of the
  11-10  lease transaction that the board considers to be relevant.
  11-11        SECTION 3.  An owner of the soil may obtain a lease under the
  11-12  provisions of this Act only after the effective date hereof, and
  11-13  this Act shall not be construed to ratify or approve in any way the
  11-14  acquisition by an owner of the soil, acting as agent for the State
  11-15  of Texas, any interest not shared with the State of Texas, except
  11-16  as expressly permitted by statute, in any lease covering or
  11-17  purporting to cover any land subject to Subchapter F, Chapter 52,
  11-18  Natural Resources Code.
  11-19        SECTION 4.  EMERGENCY.  The importance of this legislation
  11-20  and the crowded condition of the calendars in both houses create an
  11-21  emergency and an imperative public necessity that the
  11-22  constitutional rule requiring bills to be read on three several
  11-23  days in each house be suspended, and this rule is hereby suspended.
  11-24        SECTION 5.  This Act shall be effective on and after
  11-25  September 1, 1995.