1-1 By: Turner of Coleman, Gallego H.B. No. 2477
1-2 (Senate Sponsor - Haywood)
1-3 (In the Senate - Received from the House May 15, 1995;
1-4 May 18, 1995, read first time and referred to Committee on Natural
1-5 Resources; May 19, 1995, reported favorably by the following vote:
1-6 Yeas 9, Nays 0; May 19, 1995, sent to printer.)
1-7 A BILL TO BE ENTITLED
1-8 AN ACT
1-9 relating to authorizing the School Land Board to allow owners of
1-10 the soil to waive agency rights and to lease oil, gas, and other
1-11 minerals in, on, and under mineral classified lands.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Subchapter F, Chapter 52, Natural Resources Code,
1-14 is amended by adding Section 52.190 to read as follows:
1-15 Sec. 52.190. LEASE BY OWNER OF THE SOIL. (a) An owner of
1-16 the soil of lands covered by this subchapter may lease those lands
1-17 for the purpose of exploring for and producing oil and gas in the
1-18 manner provided by this section.
1-19 (b) An owner of the soil may apply in writing to the board
1-20 for an oil and gas lease.
1-21 (c) The application shall contain the following:
1-22 (1) the name and address of the applicant;
1-23 (2) a complete legal description of the land the
1-24 applicant seeks to lease;
1-25 (3) the name and address of every owner of the soil of
1-26 the land the applicant seeks to lease, if the applicant is not the
1-27 sole owner of the soil;
1-28 (4) a brief letter opinion signed by an attorney
1-29 licensed in this state setting out the surface ownership of the
1-30 land sought to be leased;
1-31 (5) a statement of the applicant's experience in oil
1-32 and gas exploration and production, including, without limitation,
1-33 the applicant's Railroad Commission of Texas operator number and a
1-34 list of any State of Texas or federal oil and gas leases held or
1-35 operated by the applicant or other entity in which the applicant
1-36 has or had a significant interest during the five-year period
1-37 preceding the date of the application;
1-38 (6) a statement that the applicant intends to explore
1-39 for and, if commercially reasonable, produce oil and gas or if the
1-40 applicant plans that another person or firm shall conduct
1-41 exploration and production:
1-42 (A) the name and address of the person or firm;
1-43 (B) a description of the person's or firm's
1-44 experience in oil and gas exploration and production, including,
1-45 without limitation, the person's or firm's Railroad Commission of
1-46 Texas operator number and a list of any State of Texas or federal
1-47 oil and gas leases held or operated by the person or firm during
1-48 the five-year period preceding the date of the application; and
1-49 (C) a description of the applicant's intended
1-50 degree and type of participation in the exploration of and
1-51 production from the property and all consideration or benefits the
1-52 applicant expects to receive in connection with the exploration of
1-53 and production from the property; and
1-54 (7) the amount of bonus, rental, royalty, and other
1-55 lease terms that the applicant proposes to pay or offer or pay and
1-56 offer for the lease.
1-57 (d) The applicant shall provide geological, geophysical,
1-58 geochemical, and other data or copies of the data, including
1-59 interpretative data, pertinent to mineral exploration on the lands
1-60 for which the application is made, in the applicant's possession or
1-61 to which the applicant has reasonable access and which the
1-62 applicant has the ability to provide to the land office. All such
1-63 data shall be confidential and not subject to the provisions of
1-64 the open records law, Chapter 552, Government Code, until one year
1-65 after the expiration, termination, or forfeiture of a lease granted
1-66 pursuant to this section. After one year after the expiration,
1-67 termination, or forfeiture of such a lease, the data shall remain
1-68 confidential to the extent permitted by Chapter 552, Government
2-1 Code. If a lease is not issued, the data shall be returned to the
2-2 applicant.
2-3 (e) The board may prescribe the form of the application,
2-4 specify information required to be submitted in support of an
2-5 application, and, by rule, otherwise provide for the implementation
2-6 of this section.
2-7 (f) The staff of the land office shall review the
2-8 information presented in the application, other geological,
2-9 geophysical, and geochemical data reasonably available to it
2-10 relevant to the land proposed to be leased, and leasing information
2-11 reasonably available to it relevant to the land proposed to be
2-12 leased. The staff shall prepare a report to the board that
2-13 contains:
2-14 (1) a summary of bonus, rental, royalty, and other
2-15 lease terms then being offered and asked for leases of similar
2-16 lands in the area of the land proposed to be leased; and
2-17 (2) any factual data considered by the staff to be
2-18 relevant, including, but not limited to, data concerning the land
2-19 proposed to be leased and its estimated value for oil and gas
2-20 exploration and production, recommended lease terms, and the
2-21 applicant, including the applicant's history of leasing State of
2-22 Texas or federal lands for oil and gas.
2-23 (g) The board shall consider the application at a regular
2-24 meeting. It may, in its sole discretion, grant or deny the
2-25 application or grant the application subject to specified
2-26 conditions. Such conditions may include a requirement that if the
2-27 applicant does not materially participate in the exploration or
2-28 development of the leased premises, through labor performed, cash
2-29 or goods contributed, or supplying other enhancement in value, the
2-30 applicant must share equally with the permanent school fund any
2-31 benefit derived from the lease.
2-32 (h) After the board has approved an application, the
2-33 commissioner shall issue a lease to the applicant. The lease shall
2-34 conform, as nearly as is practicable, to the form of lease
2-35 prescribed by the board under Section 32.1071.
2-36 (i) The commissioner may not deliver a lease issued under
2-37 this section until the applicant has executed and delivered to the
2-38 commissioner a waiver of the applicant's right and duty to act as
2-39 agent for the state in leasing the leased premises and to receive
2-40 any part of the bonus, rental, royalty, and other consideration
2-41 accruing to the owner of the soil under this subchapter. The
2-42 waiver and the lease shall be effective as of the date the
2-43 commissioner executes the lease.
2-44 (j) Upon the expiration, termination, or forfeiture of a
2-45 lease issued under this section, the agency rights and duties of
2-46 the applicant as owner of the soil are reinstated without the
2-47 necessity for further action by the owner of the soil, the board,
2-48 or the commissioner.
2-49 (k) If an applicant is not the sole owner of the soil, the
2-50 applicant may secure leases from the other owners of the soil from
2-51 which the applicant is not prohibited from leasing under Section
2-52 52.189. If the applicant must obtain a lease from an owner of the
2-53 soil from whom the applicant would otherwise not be permitted to
2-54 lease in order reasonably to explore for or produce or explore for
2-55 and produce oil or gas, the commissioner may approve the lease on
2-56 the condition that the applicant shall not receive any benefit
2-57 from the lease, and, if the applicant should acquire by any method,
2-58 including devise or inheritance, the right to receive any rental,
2-59 royalty, or other benefit accruing to the owner of the soil's
2-60 interest under the lease, the applicant shall assign the benefit to
2-61 the commissioner for the benefit of the permanent school fund.
2-62 (l) The commissioner shall not approve any lease obtained by
2-63 an applicant from another owner of the soil if the lease contains
2-64 terms that are substantially inconsistent with or provide for a
2-65 lesser bonus, rental, or royalty than the lease approved by the
2-66 board. If the bonus, rental, or royalty in a lease obtained by an
2-67 applicant from another owner of the soil for a comparable interest
2-68 is greater than that approved by the board, then the lease approved
2-69 by the board shall be amended to provide for the greater bonus,
2-70 rental, or royalty, and the applicant shall be liable for all
3-1 greater sums due. In determining whether an interest is
3-2 comparable, the board shall consider the quantum of the interest,
3-3 the time at which the lease was taken, and any other aspects of the
3-4 lease transaction that the board considers to be relevant.
3-5 SECTION 2. Section 52.189(a), Natural Resources Code, is
3-6 amended to read as follows:
3-7 (a) Prohibition Against Self-Dealing. (1) The owner of the
3-8 soil may not lease, either directly or indirectly, to himself or to
3-9 a nominee, to any corporation or subsidiary in which he is a
3-10 principal stockholder<,> or to an employee of such a corporation or
3-11 subsidiary, or to a partnership in which he is a partner<,> or to
3-12 an employee of such a partnership. If the owner of the soil is a
3-13 corporation or a partnership, then the owner of the soil may not
3-14 lease, either directly or indirectly, to a principal stockholder of
3-15 the corporation or to a partner of the partnership, or any employee
3-16 of the corporation or partnership. The owner of the soil may not
3-17 lease, either directly or indirectly, to his fiduciary, including
3-18 but not limited to a guardian, trustee, executor, administrator,
3-19 receiver, or conservator.
3-20 (2) Except as provided by this section <Further>, the
3-21 owner of the soil may not lease, directly or indirectly, to a
3-22 person related to him within and including the second degree of
3-23 consanguinity or affinity, including a person related by adoption,
3-24 or to a corporation or subsidiary in which that person is a
3-25 principal stockholder, or to a partnership in which that person is
3-26 a partner, or to an employee of such a corporation or subsidiary or
3-27 partnership <a member of his family or anyone related to him by
3-28 marriage, blood, or adoption>.
3-29 (3) An owner of the soil who wishes to lease to a
3-30 person, corporation, or partnership described in Subdivision (2)
3-31 may request the approval of the board for authority to execute such
3-32 a lease before its execution. The owner of the soil requesting
3-33 approval must also execute and file with the commissioner a sworn
3-34 affidavit stating that the owner of the soil will not receive any
3-35 benefit under a lease so approved by the board that will not be
3-36 shared with the permanent school fund in the proportion prescribed
3-37 by this subchapter.
3-38 (4) If an owner of the soil makes any material
3-39 misstatement of fact in connection with an application to the board
3-40 or affidavit made pursuant to Subdivision (3), then any lease
3-41 executed pursuant to the authority of the board shall be voidable
3-42 at the election of the commissioner. The election to void such a
3-43 lease shall be cumulative of and in addition to all other remedies
3-44 available to the commissioner or the state.
3-45 SECTION 3. Subchapter C, Chapter 53, Natural Resources Code,
3-46 is amended by adding Section 53.081 to read as follows:
3-47 Sec. 53.081. LEASE BY OWNER OF THE SOIL. (a) An owner of
3-48 the soil of lands covered by this subchapter may lease those lands
3-49 for the purpose of exploring for and producing minerals other than
3-50 oil and gas in the manner provided by this section.
3-51 (b) An owner of the soil may apply in writing to the board
3-52 for a lease of a mineral or minerals other than oil and gas.
3-53 (c) The application shall contain the following:
3-54 (1) the name and address of the applicant;
3-55 (2) a complete legal description of the land the
3-56 applicant seeks to lease;
3-57 (3) the name and address of every owner of the soil of
3-58 the land the applicant seeks to lease, if the applicant is not the
3-59 sole owner of the soil;
3-60 (4) a brief letter opinion signed by an attorney
3-61 licensed in this state setting out the surface ownership of the
3-62 land sought to be leased;
3-63 (5) a statement of the applicant's experience in the
3-64 exploration for and production of minerals other than oil and gas,
3-65 including, without limitation, a list of any State of Texas or
3-66 federal mineral leases currently or previously held or operated by
3-67 the applicant or other entity in which the applicant has or had a
3-68 significant interest during the five-year period preceding the date
3-69 of the application;
3-70 (6) a statement that the applicant intends to explore
4-1 for and, if commercially reasonable, produce minerals other than
4-2 oil and gas or if the applicant plans that another person or firm
4-3 shall conduct exploration and production:
4-4 (A) the name and address of the person or firm;
4-5 (B) a description of such person's or firm's
4-6 experience in the exploration for and production of minerals other
4-7 than oil and gas, including, without limitation, a list of any
4-8 State of Texas or federal minerals other than oil and gas leases
4-9 currently or previously held or operated by the person or firm
4-10 during the five-year period preceding the date of the application;
4-11 and
4-12 (C) a description of the applicant's intended
4-13 degree and type of participation in the exploration of and
4-14 production from the property and all consideration or benefits the
4-15 applicant expects to receive in connection with the exploration of
4-16 and production from the property; and
4-17 (7) the amount of bonus, rental, royalty, and other
4-18 lease terms that the applicant proposes to pay or offer or pay and
4-19 offer for the lease.
4-20 (d) The applicant shall provide geological, geophysical,
4-21 geochemical, and other data or copies of the data, including
4-22 interpretative data, pertinent to exploration for minerals other
4-23 than oil and gas on the lands for which the application is made, in
4-24 the applicant's possession or to which the applicant has reasonable
4-25 access and which the applicant has the ability to provide to the
4-26 land office. All such data shall be confidential and not subject
4-27 to the provisions of the open records law, Chapter 552, Government
4-28 Code, until one year after the expiration, termination, or
4-29 forfeiture of a lease granted pursuant to this section. After one
4-30 year after the expiration, termination, or forfeiture of such a
4-31 lease, the data shall remain confidential to the extent permitted
4-32 by Chapter 552, Government Code. If a lease is not issued, the
4-33 data shall be returned to the applicant.
4-34 (e) The board may prescribe the form of the application,
4-35 require additional information as it considers appropriate, and, by
4-36 rule, otherwise provide for the implementation of this section.
4-37 (f) The staff of the land office shall review the
4-38 information presented in the application, such other geological,
4-39 geophysical, and geochemical data reasonably available to it
4-40 relevant to the land proposed to be leased, and leasing information
4-41 reasonably available to it relevant to the land proposed to be
4-42 leased. The staff shall prepare a report to the board that
4-43 contains:
4-44 (1) a summary of bonus, rental, royalty, and other
4-45 lease terms then being offered and asked for leases of similar
4-46 lands in the area of the land proposed to be leased; and
4-47 (2) data considered by the staff to be relevant,
4-48 including, but not limited to, data concerning the land proposed to
4-49 be leased and its estimated value for minerals other than oil and
4-50 gas, recommended lease terms, and the applicant, including the
4-51 applicant's history of leasing State of Texas or federal lands for
4-52 minerals other than oil and gas.
4-53 (g) The board shall consider the application at a regular
4-54 meeting. It may, in its sole discretion, grant or deny the
4-55 application or grant the application subject to specified
4-56 conditions. Such conditions may include a requirement that if the
4-57 applicant does not materially participate in the exploration or
4-58 development of the leased premises, through labor performed, cash
4-59 or goods contributed, or supplying other enhancement in value, the
4-60 applicant must share equally with the permanent school fund any
4-61 benefit derived from the lease.
4-62 (h) After the board has approved an application, the
4-63 commissioner shall issue a lease to the applicant. The lease shall
4-64 conform, as nearly as is practicable, to the form of lease
4-65 prescribed by the commissioner under this chapter.
4-66 (i) The commissioner may not deliver a lease issued under
4-67 this section until the applicant has executed and delivered to the
4-68 commissioner a waiver of the applicant's right and duty to act as
4-69 agent for the state in leasing the leased premises and to receive
4-70 any part of the bonus, rental, royalty, and other consideration
5-1 accruing to the owner of the soil under this subchapter. The
5-2 waiver and the lease shall be effective as of the date the
5-3 commissioner executes the lease.
5-4 (j) Upon the expiration, termination, or forfeiture of a
5-5 lease issued under this section, the agency rights and duties of
5-6 the applicant as owner of the soil are reinstated without the
5-7 necessity for further action by the owner of the soil, the board,
5-8 or the commissioner.
5-9 (k) If an applicant is not the sole owner of the soil, the
5-10 applicant may secure leases from the other owners of the soil from
5-11 which the applicant is not prohibited from leasing under Section
5-12 53.074. If the applicant must obtain a lease from an owner of the
5-13 soil from whom the applicant would otherwise not be permitted to
5-14 lease in order reasonably to explore for or produce or explore for
5-15 and produce minerals other than oil or gas, the commissioner may
5-16 approve the lease on the condition that the applicant shall not
5-17 receive any benefit from the lease, and, if the applicant should
5-18 acquire by any method, including devise or inheritance, the right
5-19 to receive any rental, royalty, or other benefit accruing to the
5-20 owner of the soil's interest under the lease, the applicant shall
5-21 assign the benefit to the commissioner for the benefit of the
5-22 permanent school fund.
5-23 (l) The commissioner shall not approve any lease obtained by
5-24 an applicant from another owner of the soil if the lease contains
5-25 terms that are substantially inconsistent with or provide for a
5-26 lesser bonus, rental, or royalty than the lease approved by the
5-27 board. If the bonus, rental, or royalty in a lease obtained by an
5-28 applicant from another owner of the soil for a comparable interest
5-29 is greater than that approved by the board, then the lease approved
5-30 by the board shall be amended to provide for the greater bonus,
5-31 rental, or royalty, and the applicant shall be liable for all
5-32 greater sums due. In determining whether an interest is
5-33 comparable, the board shall consider the quantum of the interest,
5-34 the time at which the lease was taken, and any other aspects of the
5-35 lease transaction that the board considers to be relevant.
5-36 SECTION 4. Section 53.074(a), Natural Resources Code, is
5-37 amended to read as follows:
5-38 (a) Prohibition Against Self-Dealing. (1) The owner of the
5-39 soil may not lease, either directly or indirectly, to himself or to
5-40 a nominee, to any corporation or subsidiary in which he is a
5-41 principal stockholder<,> or to an employee of such a corporation or
5-42 subsidiary, or to a partnership in which he is a partner<,> or to
5-43 an employee of such a partnership. If the owner of the soil is a
5-44 corporation or a partnership, then the owner of the soil may not
5-45 lease, either directly or indirectly, to a principal stockholder of
5-46 the corporation or to a partner of the partnership, or any employee
5-47 of the corporation or partnership. The owner of the soil may not
5-48 lease, either directly or indirectly, to his fiduciary, including
5-49 but not limited to a guardian, trustee, executor, administrator,
5-50 receiver, or conservator.
5-51 (2) Except as provided by this section <Further>, the
5-52 owner of the soil may not lease, directly or indirectly, to a
5-53 person related to him within and including the second degree of
5-54 consanguinity or affinity, including a person related by adoption,
5-55 or to a corporation or subsidiary in which that person is a
5-56 principal stockholder, or to a partnership in which that person is
5-57 a partner, or to an employee of such a corporation or subsidiary or
5-58 partnership <a member of his family or anyone related to him by
5-59 marriage, blood, or adoption>.
5-60 (3) An owner of the soil who wishes to lease to a
5-61 person, corporation, or partnership described in Subdivision (2)
5-62 may request the approval of the board for authority to execute such
5-63 a lease before its execution. The owner of the soil requesting
5-64 approval must also execute and file with the commissioner a sworn
5-65 affidavit stating that the owner of the soil will not receive any
5-66 benefit under a lease so approved by the board that will not be
5-67 shared with the permanent school fund in the proportion prescribed
5-68 by this subchapter.
5-69 (4) If an owner of the soil makes any material
5-70 misstatement of fact in connection with an application to the board
6-1 or affidavit made pursuant to Subdivision (3), then any lease
6-2 executed pursuant to the authority of the board shall be voidable
6-3 at the election of the commissioner. The election to void such a
6-4 lease shall be cumulative of and in addition to all other remedies
6-5 available to the commissioner or the state.
6-6 SECTION 5. An owner of the soil may obtain a lease under the
6-7 provisions of this Act only after the effective date of this Act,
6-8 and this Act shall not be construed to ratify or approve in any way
6-9 the acquisition by an owner of the soil, acting as agent for the
6-10 State of Texas, any interest not shared with the State of Texas,
6-11 except as expressly permitted by statute, in any lease covering or
6-12 purporting to cover any land subject to Subchapter F, Chapter 52,
6-13 Natural Resources Code, or Subchapter C, Chapter 53, Natural
6-14 Resources Code.
6-15 SECTION 6. This Act takes effect September 1, 1995.
6-16 SECTION 7. The importance of this legislation and the
6-17 crowded condition of the calendars in both houses create an
6-18 emergency and an imperative public necessity that the
6-19 constitutional rule requiring bills to be read on three several
6-20 days in each house be suspended, and this rule is hereby suspended.
6-21 * * * * *