By: Brown S.B. No. 1354
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the Board for Lease of University Lands, the leasing,
1-2 management, and administration of certain public lands, and related
1-3 fees and penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter D, Chapter 66, Education Code, is
1-6 amended to read as follows:
1-7 SUBCHAPTER D. BOARD FOR LEASE OF UNIVERSITY LANDS
1-8 Sec. 66.61. DEFINITIONS. In this subchapter:
1-9 (1) "Affiliate" includes the parent company or a
1-10 subsidiary company, a corporation having common ownership with
1-11 another of 10 percent or greater, a partner or joint venturer with
1-12 a company with respect to a business subject to this subchapter, or
1-13 a relative within the second degree of consanguinity or affinity.
1-14 Affiliates of a common entity are also affiliates of each other.
1-15 (2) "Board" means the Board for Lease of University
1-16 Lands.
1-17 (3) "Board of regents" means the board of regents of
1-18 The University of Texas System, except where otherwise specified.
1-19 (4) "Commissioner" means the Commissioner of the
1-20 General Land Office.
1-21 (5) "Lessee" means a person who holds a leasehold
1-22 interest, legal or equitable, under a lease issued pursuant to this
1-23 subchapter, or the operator of oil and gas exploration, production,
2-1 and marketing activities on the leased premises, whether or not the
2-2 operator holds an interest in the lease.
2-3 (6) "Oil and gas" means crude oil, natural gas, and
2-4 all substances, including other hydrocarbons, produced in
2-5 association with crude oil and natural gas.
2-6 (7) "University lands" means land dedicated to the
2-7 permanent university fund.
2-8 (8) "Well" means an oil or gas well that has been
2-9 assigned a well number by the state agency having regulatory
2-10 jurisdiction over the production of oil and gas. A single wellbore
2-11 may contain more than one well.
2-12 Sec. 66.62. BOARD FOR LEASE OF UNIVERSITY LANDS. (a) The
2-13 board is composed of the commissioner, two members of the board of
2-14 regents selected by that board, and one member of the board of
2-15 regents of The Texas A&M University System selected by that board.
2-16 If a regent member is unable to attend a meeting of the board, the
2-17 presiding officer of the board of regents of the applicable system
2-18 may appoint another member of that board of regents as a substitute
2-19 member of the board to attend the meeting that the regular regent
2-20 member is unable to attend. The substitute regent member shall
2-21 exercise all the powers, duties, and responsibilities of the absent
2-22 regent member during the conduct of the meeting for which he was
2-23 appointed. A substitute regent member is subject to the provisions
2-24 of this subchapter.
2-25 (b) Members of the board, other than the commissioner, serve
3-1 two-year terms expiring February 1 of each odd-numbered year.
3-2 Regent members continue to serve until a successor is appointed and
3-3 qualified.
3-4 (c) The commissioner is chairman of the board.
3-5 (d) A person who is directly or indirectly employed by, or
3-6 is an officer or employee of a person or entity actively engaged in
3-7 the exploration for or production of oil and gas, other than as a
3-8 landowner or royalty owner, may not be a regent member.
3-9 (e) An officer, employee, or paid consultant of a trade
3-10 association in the oil and gas industry may not be a regent member
3-11 or employee of the board, nor may a person who cohabits with or is
3-12 the spouse of an officer, managerial employee, or paid consultant
3-13 of a trade association in the oil and gas industry be a regent
3-14 member of the board or a non-classified employee of the board.
3-15 (f) A person who is required to register as a lobbyist under
3-16 Chapter 305, Government Code, by virtue of his activities for
3-17 compensation in or on behalf of a profession related to the
3-18 operation of the board, may not serve as a regent member of the
3-19 board or act as the general counsel to the board.
3-20 (g) The board of regents of the university system appointing
3-21 a regent member may remove the regent member from the board if that
3-22 member:
3-23 (1) does not have at the time of appointment the
3-24 qualifications required by this section for appointment to the
3-25 board;
4-1 (2) does not maintain during the service on the board
4-2 the qualifications required by this section for appointment to the
4-3 board;
4-4 (3) violates a prohibition established by Subsection
4-5 (d), (e), or (f);
4-6 (4) is unable to discharge his duties for a
4-7 substantial portion of the term for which he was appointed because
4-8 of illness or disability; or
4-9 (5) is absent from more than one-half of the regularly
4-10 scheduled board meetings which the member is eligible to attend
4-11 during a calendar year, except when the absence is excused by
4-12 majority vote of the board.
4-13 (h) The board is exempt from the provisions of Chapter 2001,
4-14 Government Code.
4-15 Sec. 66.63. CERTAIN BOARD ACTIONS. (a) A majority of the
4-16 members of the board have the power to act for the board on a
4-17 matter before the board. Two members of the board have the power
4-18 to award leases issued on a form of lease previously approved by a
4-19 majority of the board.
4-20 (b) The validity of an action of the board is not affected
4-21 because it was taken when a ground for removal of a regent member
4-22 of the board existed. A regent member continues to serve until
4-23 removed under Section 66.62(g).
4-24 Sec. 66.64. POWERS AND DUTIES OF THE BOARD. (a) The board
4-25 shall in a manner consistent with this subchapter:
5-1 (1) lease university lands for oil and gas exploration
5-2 and development on terms, at times, and in the manner it may
5-3 determine;
5-4 (2) contract for the sale or other disposition of oil
5-5 and gas royalties taken in kind;
5-6 (3) adopt rules and policies for the administration
5-7 and enforcement of this subchapter and leases issued under this
5-8 subchapter;
5-9 (4) set fees and penalties for the administration and
5-10 enforcement of this subchapter;
5-11 (5) set the terms of a contract for the development of
5-12 university lands for oil and gas;
5-13 (6) approve agreements that commit the royalty
5-14 interest in university lands on terms acceptable to the board; and
5-15 (7) exercise other powers and authority and perform
5-16 other duties as may be reasonably necessary to administer and
5-17 enforce the provisions of this subchapter.
5-18 (b) The board shall hold meetings and keep records of its
5-19 proceedings in a manner consistent with the requirements of Chapter
5-20 551, Government Code. The board shall develop and implement
5-21 policies which provide the public with a reasonable opportunity to
5-22 appear before the board, to speak on an issue under the board's
5-23 jurisdiction, or be heard with respect to a declaration of
5-24 forfeiture.
5-25 (c) Except as otherwise provided in this subchapter, the
6-1 records of the board are subject to the requirements of Chapter
6-2 552, Government Code.
6-3 (d) The financial transactions of the board are subject to
6-4 audit by the state auditor in accordance with Chapter 321,
6-5 Government Code.
6-6 (e) The board may delegate to the staff provided to it by
6-7 the board of regents any duty except as prohibited by law.
6-8 (f) The board shall appoint a secretary.
6-9 Sec. 66.65. BOARD STAFF; EXCHANGE OF INFORMATION WITH STATE
6-10 AGENCIES. (a) The board of regents shall employ and compensate
6-11 personnel to assist the board in the performance of its powers and
6-12 duties under this subchapter or may assign employees of The
6-13 University of Texas System to those duties.
6-14 (b) The members of the board, personnel and counsel employed
6-15 or assigned to assist the board, the board of regents, staff of The
6-16 University of Texas System, the commissioner and staff of the
6-17 General Land Office, the board of regents and staff of The Texas
6-18 A&M University System, the office of the comptroller, the office of
6-19 the attorney general, and any other agency or official of the state
6-20 with a reasonable business interest in state or university lands,
6-21 minerals, or resources may consult with each other and exchange
6-22 information related to the administration of leases, collection and
6-23 disposition of royalties, whether in cash or in kind, and any other
6-24 matter related to the lease, sale, or production of, or the
6-25 exploration for, oil, gas, or any other mineral or resource,
7-1 including geothermal, wind, and solar energy on state or university
7-2 lands. The information so exchanged and consultations and related
7-3 communications shall be or shall remain confidential and shall be
7-4 privileged from discovery in the same manner and to the same extent
7-5 as if the persons consulted, which includes counsel, were members
7-6 of the same agency. Sections 52.134 and 52.140, Natural Resources
7-7 Code, shall not prohibit the consultations or exchange of
7-8 information provided for by this section; however, each agency
7-9 receiving such confidential information is required to keep the
7-10 information confidential under Sections 52.134 and 52.140, Natural
7-11 Resources Code, as appropriate, and to take all reasonable actions
7-12 necessary to protect the confidential and privileged nature of the
7-13 information.
7-14 Sec. 66.66. LEASE SALES. (a) Oil and gas leases shall be
7-15 offered at public auction or by sealed bid, or through a
7-16 combination of public auction and sealed bid, as the board elects.
7-17 Contracts for development may be awarded in the same manner.
7-18 (b) The board shall publish notice that the board will
7-19 receive bids for oil and gas leases or contracts for development of
7-20 oil and gas in two or more daily newspapers in this state and in
7-21 other publications as the board may choose.
7-22 (c) The notice shall be published at least 30 days before
7-23 the date the bids will be opened.
7-24 (d) The notice shall state that land is to be offered for
7-25 lease or a contract for development and that a person may obtain a
8-1 publication from The University of Texas System offices that
8-2 describes the land offered and the minimum terms.
8-3 (e) The board of regents may solicit and include advertising
8-4 in the publication describing a lease sale. Fees paid for
8-5 advertising shall be deposited into the special fee account
8-6 established by Subsection (g) and are available for the same
8-7 purposes as described in that subsection.
8-8 (f) The board may withdraw any lands advertised for lease
8-9 before the hour set for receiving bids.
8-10 (g) Each bid is subject to the payment of a special fee
8-11 equal to one and one-half percent of the total bonus whether
8-12 stipulated or bid, which special payment shall constitute a special
8-13 fund from which the board of regents shall defray the expenses of
8-14 the sale, including the payment of the general operating expenses
8-15 for geology, engineering, field inspection, and auditing oil and
8-16 gas production of university lands and including salaries and
8-17 traveling expenses of persons employed by the board of regents for
8-18 those purposes.
8-19 (h) The board of regents may direct the comptroller of The
8-20 University of Texas System to transmit to the state comptroller for
8-21 deposit to the credit of the permanent university fund unexpended
8-22 balances remaining in the special fee account after reserving a
8-23 sufficient amount in it for the payment of current expenses as set
8-24 out in Subsection (g).
8-25 Sec. 66.67. LEASE TERMS. (a) The oil and gas lease for
9-1 each tract shall be offered for a bonus to be determined by high
9-2 bid in addition to the stipulated royalty or for a stipulated bonus
9-3 and a royalty to be determined by high bid. Each tract shall be
9-4 offered separately and the minimum bonus or royalty, depending on
9-5 the basis for the bid, and the length of the primary term for each
9-6 tract shall be set out in the official publication describing the
9-7 tracts and terms.
9-8 (b) Except as otherwise provided by law, the minimum royalty
9-9 rate shall be one-eighth of the oil or gas produced or the value
9-10 thereof.
9-11 (c) The primary term of a lease shall not exceed 10 years.
9-12 (d) Each lease shall be subject to the provisions of this
9-13 subchapter and rules promulgated by the board.
9-14 (e) The successful bidder shall pay to the board of regents
9-15 on the day the bid is accepted the full amount of bonus, whether
9-16 stipulated or bid, and the special fee in the form of payment
9-17 specified by the board.
9-18 Sec. 66.68. MARGINAL PROPERTY ROYALTY RATES. (a) In this
9-19 section:
9-20 (1) "Barrel of oil equivalent" means 6,000 cubic feet
9-21 of natural gas per 42-gallon barrel of crude oil or a volume of gas
9-22 with a minimum heating value of 6,000,000 British thermal units
9-23 (6,000 Mbtu), whichever is greater.
9-24 (2) "Lease" or "leases" means an oil and gas lease
9-25 issued or approved by the board that is valid and in force on or
10-1 after the effective date of this section.
10-2 (3) "Qualifying property" means land subject to a
10-3 lease issued under this subchapter.
10-4 (4) "Qualifying reservoir" means a reservoir having an
10-5 average daily per well production equal to or less than 15 barrels
10-6 of oil equivalent during a period established by the board by rule
10-7 and underlying either:
10-8 (A) a qualifying property; or
10-9 (B) a pooled unit including a qualifying
10-10 property.
10-11 (5) "Reservoir" has the same meaning as "common
10-12 reservoir" as defined by Section 86.002, Natural Resources Code.
10-13 (b) The board may provide by rule that the royalty rate for
10-14 qualifying reservoirs may be reduced to not less than one-sixteenth
10-15 (6.25 percent). In determining whether to grant a reduction in the
10-16 royalty rate, the board may consider whether the qualifying
10-17 property is being operated efficiently, including whether the
10-18 property is pooled or has reasonable potential for the application
10-19 of secondary or tertiary recovery techniques.
10-20 (c) If a qualifying reservoir for which royalty rate
10-21 reduction is sought under this section is included in a unit
10-22 subject to the authority of the board, the board may modify the
10-23 terms and conditions of the unit as a condition of approving a
10-24 reduction in the royalty rate.
10-25 Sec. 66.69. AWARD OF LEASE. (a) Except as otherwise
11-1 provided in this subchapter, the board shall award a lease for each
11-2 tract to the person offering the highest bid that includes the
11-3 terms adopted by the board and consistent with this subchapter.
11-4 (b) The board may reject all bids for one or more tracts.
11-5 (c) The commissioner shall execute a lease awarded by the
11-6 board in conformance with this subchapter.
11-7 Sec. 66.70. ADDITIONAL LEASE PROVISIONS. An oil and gas
11-8 lease issued under this subchapter shall include the provisions
11-9 required by this subchapter and additional provisions not
11-10 inconsistent herewith that the board may adopt to preserve the
11-11 interests of the state. On submission of an application by all
11-12 lessees under the lease in the form required by the board and
11-13 payment of any applicable fee set by the board, the board may amend
11-14 a lease that does not include provisions required by Sections
11-15 66.71, 66.72, and 66.73 to include those provisions in the form
11-16 adopted by the board at the time the lease is amended.
11-17 Sec. 66.71. LEASE PROVISIONS. (a) An oil and gas lease
11-18 issued by the board shall provide for payment of a delay rental.
11-19 During the primary term of the lease, the lease shall terminate on
11-20 the anniversary date of the lease unless:
11-21 (1) oil or gas is being produced in paying quantities
11-22 from the leased premises;
11-23 (2) drilling operations are being conducted on the
11-24 leased premises; or
11-25 (3) the lessee pays timely in the manner provided in
12-1 the lease the amount of delay rental stated in the lease.
12-2 (b) An oil and gas lease issued by the board shall provide
12-3 that if oil or gas is being produced in paying quantities from the
12-4 leased premises at the end of the primary term, the lease shall not
12-5 terminate but shall continue in force and effect as long as oil or
12-6 gas is produced in paying quantities. The board may adopt rules
12-7 specifying when a lease will be considered to be producing in
12-8 paying quantities.
12-9 (c) An oil and gas lease issued by the board shall provide
12-10 that royalty may be taken in kind at any time and from time to time
12-11 at the discretion of the board in the manner provided in this
12-12 subchapter.
12-13 Sec. 66.72. CESSATION OF PRODUCTION; DRILLING AND REWORKING.
12-14 An oil and gas lease issued under this subchapter shall provide
12-15 that the term of the lease may be extended by drilling and
12-16 reworking operations in the event of the cessation of production,
12-17 on terms as the board may adopt.
12-18 Sec. 66.73. SHUT-IN ROYALTY. An oil and gas lease issued
12-19 under this subchapter shall provide for the extension of the lease
12-20 by the payment of shut-in royalties on terms as the board may
12-21 adopt.
12-22 Sec. 66.74. LEASE EXTENSION OR SUSPENSION. (a) At the
12-23 expiration of the primary term of a lease, if production of oil or
12-24 gas has not been obtained on the leased premises, but drilling
12-25 operations are being conducted in good faith and in a good and
13-1 workmanlike manner, the lessee may apply in writing to extend the
13-2 lease for a period of 30 days. The application shall be filed with
13-3 the board of regents on or before the expiration of the primary
13-4 term.
13-5 (b) The applicant shall submit with the application a fee in
13-6 an amount set by the board of not less than $7.50 for each acre in
13-7 the lease requested to be extended.
13-8 (c) If the commissioner determines that the conditions of
13-9 this section have been met, the commissioner, or a designee
13-10 appointed by the commissioner, shall execute a written extension as
13-11 provided by this section.
13-12 (d) As long as drilling operations are being conducted in
13-13 good faith and in a good and workmanlike manner, additional
13-14 extensions of 30 days each may be granted up to an aggregate of 360
13-15 days. The lessee must submit a written application and payment on
13-16 or before the last day of the extended primary term. The payment
13-17 for each additional 30-day extension shall be in an amount set by
13-18 the board of not less than $7.50 for each acre in the lease.
13-19 (e) The board may elect to suspend a lease and all of the
13-20 conditions and covenants contained in the lease if there is a
13-21 legitimate dispute regarding the validity of the lease. The board
13-22 may rescind the suspension at any time, in which event the lease
13-23 shall resume as of the date the suspension is rescinded and shall
13-24 continue for the remainder of the period specified in the lease as
13-25 the primary term, or, if the primary term ended prior to the
14-1 suspension, the lessee shall have 60 days to commence production or
14-2 drilling and reworking operations.
14-3 Sec. 66.75. PROTECTION FROM DRAINAGE; COMPENSATORY
14-4 ROYALTIES. (a) The lessee shall protect the leased premises from
14-5 drainage. The lease may contain express terms regarding drainage
14-6 as the board may adopt.
14-7 (b) Subject to the provisions of this section, the
14-8 commissioner may execute agreements that provide for the payment of
14-9 compensatory royalty in lieu of drilling offset wells that may be
14-10 required to protect the leased premises from drainage from a well
14-11 or wells located on non-university lands, or university lands
14-12 leased at a lesser royalty, situated within 1,000 feet of or
14-13 draining the leased premises.
14-14 (c) Agreements providing for the payment of compensatory
14-15 royalty must be approved by the board.
14-16 (d) Agreements providing for the payment of compensatory
14-17 royalty must be found by the commissioner and the board to be in
14-18 the best interest of the state.
14-19 (e) Nothing in an agreement for the payment of compensatory
14-20 royalty shall relieve the lessee of the obligation of reasonable
14-21 development or of the obligation to drill offset wells, obtain
14-22 suitable regulatory relief, propose appropriate pooling or
14-23 unitization arrangements, or conduct other activities to protect
14-24 the leased premises from drainage as to other producing horizons.
14-25 (f) An agreement for the payment of compensatory royalty
15-1 shall provide that compensatory royalty be paid at the royalty rate
15-2 provided in the lease and shall provide that compensatory royalty
15-3 be paid on the market value of production from the well located on
15-4 non-university lands or university lands leased at a lesser royalty
15-5 situated within 1,000 feet of or draining the leased premises.
15-6 Sec. 66.76. ASSIGNMENT; RELINQUISHMENT. (a) Rights
15-7 acquired in a lease or contract for development issued under this
15-8 subchapter may be assigned; provided, however, for an assignment to
15-9 be valid and effective, the assignment must be filed in the county
15-10 or counties in which the leased premises are situated and a legible
15-11 copy of the recorded assignment must be filed with the board of
15-12 regents within the time set by the board, accompanied by a filing
15-13 fee and any applicable penalty for late filing set by the board for
15-14 each lease assigned and a summary in the form adopted by the board
15-15 of regents.
15-16 (b) Rights to a lease or to an assigned portion thereof may
15-17 be relinquished at any time by having an instrument of
15-18 relinquishment or release recorded in the county or counties in
15-19 which the area relinquished is situated and a legible copy of the
15-20 recorded instrument filed with the board of regents, accompanied by
15-21 a filing fee set by the board.
15-22 (c) An assignment or relinquishment of a lease or a portion
15-23 thereof or an interest in a lease shall not relieve the lessee of
15-24 accrued obligations, including the payment of royalty, penalty, or
15-25 interest, and the lessee shall remain liable therefor. All
16-1 successors in interest, whether acquiring a lease or an interest in
16-2 a lease by assignment or otherwise, shall take the lease or
16-3 interest subject to all outstanding obligations and shall be liable
16-4 for those obligations.
16-5 (d) In the enforcement of lease obligations, the board and
16-6 the board of regents shall be entitled to rely on the state of
16-7 title reflected by the records of the board of regents.
16-8 Sec. 66.77. ROYALTY PAYMENTS AND REPORTS. (a) Royalty as
16-9 stipulated in the lease and all other amounts due under this
16-10 subchapter shall be paid to the board of regents at Austin, Travis
16-11 County, Texas. The lessee of record in the records of the board of
16-12 regents shall be responsible for making or causing to be made all
16-13 payments required by this subchapter at the required times and in
16-14 the form and manner determined by the board of regents or otherwise
16-15 required by law.
16-16 (b) The board shall set by rule the date for making royalty
16-17 payments and for filing any reports, documents, or other records
16-18 required to be filed by this section. The date set by the board
16-19 must be on or after the fifth day of the second month succeeding
16-20 the month of production of oil and on or after the 15th day of the
16-21 second month succeeding the month of production of gas.
16-22 (c) A royalty payment is timely made if the payment is
16-23 deposited in a postpaid, properly addressed wrapper, with a post
16-24 office or official depository under the care and custody of, and
16-25 postmarked by, the United States Postal Service before the
17-1 applicable due date.
17-2 (d) The lessee shall provide to the board of regents with
17-3 each royalty payment:
17-4 (1) an affidavit of the owner, manager, or other
17-5 authorized agent completed in the form and manner required by the
17-6 board of regents and showing the gross amount and disposition of
17-7 all oil and gas produced and the market value of the oil and gas,
17-8 the number assigned by the Railroad Commission of Texas, and other
17-9 information as may be required by the board of regents;
17-10 (2) a purchase statement or other document showing the
17-11 price at which the oil and gas was sold;
17-12 (3) a check stub, schedule, summary, or other
17-13 remittance advice showing by the assigned lease number the amount
17-14 of royalty being paid on each lease; and
17-15 (4) other reports or records that the board of regents
17-16 may require to identify the well and lease and verify the gross
17-17 production, disposition, and market value.
17-18 (e) The board of regents may require the lessee and a person
17-19 with whom the lessee deals, including an affiliate, in connection
17-20 with the production, transportation, marketing, treatment,
17-21 processing, or sale of the oil and gas, to provide reports or other
17-22 information as the board of regents may consider necessary to
17-23 determine that royalty has been correctly paid.
17-24 (f) The board of regents may implement such practices and
17-25 procedures with regard to accounting for royalty payments as it may
18-1 determine to be in the best interest of the state.
18-2 Sec. 66.78. INTEREST AND PENALTIES. (a) If royalty is not
18-3 paid when due, a penalty of one percent shall be added to the
18-4 unpaid amount due. If the royalty is not paid within seven days
18-5 after the due date, a penalty of an additional four percent of the
18-6 royalty due is imposed. If the royalty is not paid within 30 days
18-7 after the due date, a penalty of an additional five percent is
18-8 imposed. The minimum penalty under this subsection is $25 or the
18-9 minimum penalty in excess thereof set by the board. The board
18-10 shall not add a penalty under this subsection in cases of title
18-11 dispute as to the state's portion of the royalty or to that portion
18-12 of the royalty in dispute as to fair market value.
18-13 (b) Interest shall accrue on delinquent royalties beginning
18-14 on the 61st day after the due date. The annual interest rate on
18-15 delinquent royalties is 12 percent. Interest accrued under this
18-16 subsection shall be in addition to any delinquency penalty due
18-17 under this section.
18-18 (c) The board of regents shall add a penalty of 25 percent
18-19 to delinquent sums due under this subchapter if the board
18-20 determines that the delinquency is due to fraud or an intent to
18-21 evade the provisions of this subchapter on the part of the lessee
18-22 or the lessee's agents, employees, or assignees.
18-23 (d) If a report, affidavit, supporting document, or other
18-24 instrument required to be filed under Section 66.77 or Section
18-25 66.80 is not filed when due, a penalty accrues in the amount set by
19-1 the board but not less than $10 per document for each 30-day period
19-2 of delinquency or fractional part thereof.
19-3 (e) Collection of penalty and interest charges under this
19-4 section are in addition to any rights, including forfeiture, that
19-5 the board or the board of regents may exercise for failure to pay a
19-6 royalty or to submit a report or other instrument when due.
19-7 (f) The board may provide by rule procedures and standards
19-8 for reduction of interest charged or penalties assessed under this
19-9 subchapter or other interest or penalties assessed relating to
19-10 unpaid or delinquent royalties or other amounts due.
19-11 Sec. 66.79. PAYMENT OF ROYALTY IN KIND. (a) An oil or gas
19-12 royalty due under a lease on university lands shall be paid in kind
19-13 at the discretion of the board.
19-14 (b) The option to take royalty in kind or to take cash
19-15 royalties may be exercised by the board at any time or from time to
19-16 time on not less than 60 days' notice to the lessee.
19-17 (c) The board shall enter into contracts or other
19-18 instruments or agreements to dispose of the portion of the royalty
19-19 taken in kind, which may include contracts for sale,
19-20 transportation, or storage of the oil or gas. The commissioner
19-21 shall execute contracts approved by the board under this section
19-22 that are consistent with applicable law.
19-23 (d) The board of regents may enter into insurance contracts
19-24 or other agreements to secure or guarantee payment of contracts or
19-25 other instruments or agreements to dispose of the portion of the
20-1 royalty taken in kind, including contracts for sale,
20-2 transportation, and storage.
20-3 (e) If the board has elected to take royalty in kind, then
20-4 delivery of the correct amount of oil or gas by the lessee shall
20-5 satisfy the lessee's obligation for payment of the royalty due
20-6 under the lease. This section shall not be construed to surrender
20-7 or in any way affect the right of the board of regents under
20-8 existing or future leases to receive royalty on the basis of market
20-9 value of production not taken in kind.
20-10 Sec. 66.80. RECORDS. (a) The lessee shall provide to the
20-11 board of regents a copy of every contract for the sale or
20-12 processing of oil or gas and any subsequent agreement and amendment
20-13 thereto, together with a summary in the form adopted by the board
20-14 of regents, within 30 days after the contract, agreement, or
20-15 amendment is made.
20-16 (b) The books and accounts, receipts, and discharges of all
20-17 wells, tanks, pools, meters, and pipelines, and all contracts and
20-18 other records pertaining directly or indirectly to the production,
20-19 transportation, sale, treatment, processing, or marketing of oil
20-20 and gas produced from university lands, or relevant to establishing
20-21 the volume or value of the production, whether the records are held
20-22 by or are in the possession of the lessee or a third party dealing
20-23 with the lessee, shall at all times be subject to inspection and
20-24 copying by the commissioner, the board, the board of regents, the
20-25 attorney general, the comptroller, the governor, or the
21-1 representative of any of them. The board or the board of regents
21-2 may, if necessary, compel the production of these records by
21-3 subpoena enforceable throughout the state.
21-4 Sec. 66.81. AUDIT INFORMATION CONFIDENTIAL. (a) All
21-5 documents and information secured, derived, or obtained during the
21-6 course of an inspection or examination of books, accounts, reports,
21-7 or other records of the lessee or a third party, as provided by
21-8 this subchapter, and contracts, agreements, or amendments provided
21-9 to the board of regents under Section 66.80(a) are confidential and
21-10 may not be used publicly, opened for public inspection, or
21-11 disclosed, except for information set forth in a lien filed under
21-12 this chapter and except as permitted under Subsections (c) and (d).
21-13 This section shall not apply to records or information provided by
21-14 the lessee under Section 66.77.
21-15 (b) Documents and information made confidential in this
21-16 section shall not be subject to subpoena directed to the board, the
21-17 board of regents, the commissioner, the attorney general, or the
21-18 governor except in a judicial or administrative proceeding in which
21-19 the state and a person with an equitable or legal interest in the
21-20 lease or land to which the information relates are parties.
21-21 (c) The board, the board of regents, or the attorney general
21-22 may use documents and information made confidential by the
21-23 provisions of this section and contracts made confidential by this
21-24 subchapter to enforce the provisions of this subchapter or may
21-25 authorize their use in judicial or administrative proceedings in
22-1 which this state is a party or may authorize their examination by
22-2 employees, agents, or contractors of the board of regents or the
22-3 state auditor for audit purposes.
22-4 (d) This section does not prohibit:
22-5 (1) the delivery of documents and information made
22-6 confidential by this section to the lessee or its successor,
22-7 receiver, executor, guarantor, administrator, assignee, or
22-8 representative;
22-9 (2) the publication of statistics classified to
22-10 prevent the identification of a particular audit or items in a
22-11 particular audit;
22-12 (3) the release of documents or information otherwise
22-13 available to the public;
22-14 (4) the release of documents or information concerning
22-15 the amount of royalty assessed as a result of an examination
22-16 conducted under this subchapter or the release of other information
22-17 which would have been properly included in reports required under
22-18 Section 66.77;
22-19 (5) sharing of documents or information among state
22-20 agencies pursuant to Section 66.65. Shared documents or
22-21 information will remain confidential under this section; or
22-22 (6) the release of documents or information authorized
22-23 by the lessee.
22-24 Sec. 66.82. FORFEITURE; OTHER REMEDIES. (a) If a lessee
22-25 fails or refuses to perform a material requirement of this
23-1 subchapter or the lease, the board may, after notice to the lessee
23-2 and an opportunity to be heard, declare a forfeiture of the lease
23-3 or an interest in the lease. Material requirements include but are
23-4 not limited to:
23-5 (1) failure or refusal to pay a sum due, including
23-6 penalty and interest, within 30 days after the sum becomes due;
23-7 (2) failure or refusal to tender oil or gas for
23-8 delivery as in-kind royalty;
23-9 (3) making a false report concerning exploration,
23-10 production, or royalty;
23-11 (4) failure or refusal to file an assignment as
23-12 required by this subchapter;
23-13 (5) failure or refusal, after demand, to file or make
23-14 available for inspection and copying a record or document required
23-15 to be filed or made available for inspection or copying under this
23-16 subchapter or rules promulgated thereunder;
23-17 (6) failure or refusal, after demand, to protect the
23-18 leased premises from drainage; or
23-19 (7) the breach of an obligation under the lease or
23-20 this subchapter.
23-21 (b) Forfeiture is not the exclusive remedy. The attorney
23-22 general, at the request of the board of regents, may bring suit for
23-23 damages or specific performance, or both, or other remedy, at law
23-24 or in equity.
23-25 Sec. 66.83. LIEN; ABANDONED PERSONAL PROPERTY. (a) The
24-1 board of regents shall have a statutory first lien on oil and gas
24-2 produced from the area covered by the lease to secure payment of
24-3 all unpaid royalty and other sums of money that may become due
24-4 under the lease or this subchapter.
24-5 (b) By acceptance of the lease, the lessee grants to the
24-6 board of regents an express contractual lien on and security
24-7 interest in all oil and gas in and extracted from the area covered
24-8 by the lease, all proceeds which may accrue to the lessee from the
24-9 sale of the oil and gas, whether the proceeds are held by the
24-10 lessee or another person, and all fixtures on and improvements to
24-11 the area covered by the lease used in connection with the
24-12 production or processing of the oil and gas to secure the payment
24-13 of royalties and other amounts due or to become due under the lease
24-14 or this subchapter and to secure payment of damages or loss that
24-15 the state may suffer by reason of the lessee's breach of a covenant
24-16 or condition of the lease, whether express or implied.
24-17 (c) The statutory and contractual liens and security
24-18 interest described in this section may be foreclosed with or
24-19 without court proceedings in the manner provided under Chapter 9,
24-20 Business & Commerce Code. The board of regents may require the
24-21 lessee to execute and record instruments reasonably necessary to
24-22 acknowledge, attach, or perfect the liens.
24-23 (d) Personal property, including casing, equipment, and
24-24 fixtures remaining on lands covered by the lease more than one year
24-25 after the expiration or other termination of the lease shall be
25-1 considered to be abandoned. The board of regents may take title to
25-2 abandoned personal property in any manner and keep or use the
25-3 proceeds for any purpose allowed by law. The lessee shall pay to
25-4 the board of regents on demand the positive difference between the
25-5 cost of disposing of abandoned personal property and the proceeds,
25-6 if any, from the disposition.
25-7 Sec. 66.84. PAYMENTS; DISPOSITION. Payments under this
25-8 subchapter shall be made to the board of regents, which shall:
25-9 (1) transmit to the state comptroller for deposit to
25-10 the credit of the permanent university fund all bonus, rental, and
25-11 royalty payments;
25-12 (2) transmit to the state comptroller for deposit to
25-13 the credit of the available university fund all filing, assignment,
25-14 and relinquishment fees and all other payments except those
25-15 described in Subdivision (3); and
25-16 (3) retain the one and one-half percent special fee
25-17 provided for by this subchapter for disbursement by the comptroller
25-18 of The University of Texas System for the purposes authorized by
25-19 this subchapter.
25-20 [Sec. 66.61. DEFINITION. As used in this subchapter,
25-21 "board" means the Board for Lease of University Lands.]
25-22 [Sec. 66.62. BOARD FOR LEASE. (a) The Board for Lease of
25-23 University Lands is composed of the commissioner of the general
25-24 land office, two members of the board of regents of The University
25-25 of Texas System selected by the board of regents of that system,
26-1 and one member of the board of regents of The Texas A & M
26-2 University System selected by the board of regents of that system.
26-3 In the event that a regent member of the Board for Lease of
26-4 University Lands is unable to attend any meeting of that board, the
26-5 chairman of the board of regents of the applicable system shall
26-6 appoint another member of the board of regents as a substitute
26-7 member of the Board for Lease of University Lands to attend the
26-8 meeting that the regular regent member is unable to attend. The
26-9 substitute regent member of the Board for Lease of University Lands
26-10 shall exercise all the powers, duties, and responsibilities of the
26-11 absent regent member during the conduct of the meeting for which he
26-12 was appointed. Any substitute regent member of the Board for Lease
26-13 of University Lands is subject to the provisions of this
26-14 subchapter.]
26-15 [(b) A regent member may not be directly or indirectly
26-16 employed by, or be an officer of or an attorney for, an oil or gas
26-17 company.]
26-18 [(c) An officer, employee, or paid consultant of a trade
26-19 association in the oil and gas industry may not be a member or
26-20 employee of the board, nor may a person who cohabits with or is the
26-21 spouse of an officer, managerial employee, or paid consultant of a
26-22 trade association in the oil and gas industry be a member of the
26-23 board or an employee of the board grade 17 or over, including
26-24 exempt employees, according to the position classification schedule
26-25 under the General Appropriations Act.]
27-1 [(d) A person who is required to register as a lobbyist
27-2 under Chapter 305, Government Code, by virtue of his activities for
27-3 compensation in or on behalf of a profession related to the
27-4 operation of the board, may not serve as a member of the board or
27-5 act as the general counsel to the board.]
27-6 [(e) Members of the board, other than the Commissioner of
27-7 the General Land Office, serve two-year terms expiring February 1
27-8 of each odd-numbered year.]
27-9 [(f) The Commissioner of the General Land Office serves as
27-10 chairman of the board.]
27-11 [(g) Unless the action relates to the final approval of the
27-12 award of a lease on a form approved by a majority of the board in
27-13 accordance with procedures for awarding leases that have been
27-14 previously approved by a majority of the board, a majority of the
27-15 board members has the power to act for the board. If the action
27-16 relates to the final approval of the award of a lease on a form
27-17 approved by a majority of the board in accordance with procedures
27-18 for awarding leases that have been previously approved by a
27-19 majority of the board, two board members present at a meeting have
27-20 the power to act for the board.]
27-21 [(h) The board shall perform the duties prescribed by
27-22 this subchapter and shall keep a public record of all its
27-23 proceedings.]
27-24 [(i) It is a ground for removal from the board if a member:]
27-25 [(1) does not have at the time of appointment the
28-1 qualifications required by Subsection (a) of this section for
28-2 appointment to the board;]
28-3 [(2) does not maintain during the service on the board
28-4 the qualifications required by Subsection (a) of this section for
28-5 appointment to the board;]
28-6 [(3) violates a prohibition established by Subsection
28-7 (c) or (d) of this section;]
28-8 [(4) is unable to discharge his duties for a
28-9 substantial portion of the term for which he was appointed because
28-10 of illness or disability; or]
28-11 [(5) is absent from more than one-half of the
28-12 regularly scheduled board meetings which the member is eligible to
28-13 attend during each calendar year, except when the absence is
28-14 excused by majority vote of the board.]
28-15 [(j) The validity of an action of the board is not affected
28-16 by the fact that it was taken when a ground for removal of a member
28-17 of the board existed.]
28-18 [(k) If the agency head has knowledge that a potential
28-19 ground for removal exists, he shall notify the chairman of the
28-20 board of such ground. The chairman of the board shall then notify
28-21 the governor that a potential ground for removal exists.]
28-22 [Sec. 66.63. OIL AND GAS SUBJECT TO SALE. The oil and gas
28-23 in the university lands are subject to sale under the regulations,
28-24 at the times, and on the terms provided in this subchapter, and
28-25 under the rules and regulations adopted by the board as authorized
29-1 by this subchapter, not inconsistent with the provisions of this
29-2 subchapter.]
29-3 [Sec. 66.64. PLACING OIL AND GAS ON MARKET; PUBLIC AUCTION;
29-4 ADVERTISEMENT. (a) Whenever there is a demand for the purchase of
29-5 oil and gas in any university land that will reasonably insure that
29-6 the oil and gas may be sold advantageously, the board shall place
29-7 the oil and gas in the land on the market in separate tracts of
29-8 such area and extent as the board may determine most suitable for
29-9 profitable marketing; but in no event shall any tract in which
29-10 oil and gas is offered for as a unit exceed in area of 6,000
29-11 acres.]
29-12 [(b) The sale of the oil and gas shall be made at public
29-13 auction or by sealed bid, or through a combination of public
29-14 auction and sealed bid, as the board elects. The sales shall be
29-15 held in Austin, or any other location designated by the board, at
29-16 any hour between 10 a.m. and 5 p.m.]
29-17 [(c) The board shall cause an advertisement to be made of
29-18 the sale in two or more newspapers of general circulation in this
29-19 state. The advertisement shall state the method, time, and place
29-20 of sale; the primary term of the lease proposed to be executed
29-21 covering any sale; the bonus or royalty to be paid; that lists
29-22 describing the land to be sold may be obtained from the board; and
29-23 other matters that in the judgment of the board are deemed
29-24 advisable. In addition to the foregoing mandatory provisions, the
29-25 board may cause the advertisement to be placed in oil and gas
30-1 journals in and out of the state and to be mailed generally to
30-2 persons it thinks might be interested.]
30-3 [Sec. 66.65. ROYALTY; BONUS; ANNUAL RENTAL; SPECIAL FEE.
30-4 (a) The oil and gas in each tract shall be offered for sale for a
30-5 bonus to be determined by high bid in addition to the stipulated
30-6 royalty or for a stipulated bonus and a royalty to be determined by
30-7 high bid. Each tract shall be offered separately.]
30-8 [(b) Each bid is subject to the royalty or bonus specified
30-9 in the official advertisement preceding the sale, but in no event
30-10 shall the royalty be less than one-eighth of the gross production
30-11 of oil and gas in the land; and shall further be subject to the
30-12 payment of an annual rental after the first year of not less than
30-13 10 cents per acre, payable each year in advance, unless the
30-14 royalties received from the land during the preceding year equal or
30-15 exceed the amount of the annual rental payment.]
30-16 [(c) Each bid is also subject to the payment of a special
30-17 fee equal to one percent of the total bonus whether stipulated or
30-18 bid, which special payment shall constitute a special fund from
30-19 which the Board of Regents of The University of Texas System shall
30-20 defray the expenses of the sale, including the payment for the
30-21 services of the auctioneer crying the sale and the payment of the
30-22 general operating expenses in geologizing, oil field supervision,
30-23 and auditing oil and gas production of university lands, including
30-24 salaries and traveling expenses of persons employed by the board of
30-25 regents for those purposes, and for the purpose of acquiring,
31-1 constructing, and equipping a building in the city of Midland or
31-2 adjacent area to house the administrative staff of the offices of
31-3 University Lands, Geology and Land Agent, and such other related
31-4 agencies necessary for the management and development of university
31-5 lands in West Texas.]
31-6 [(d) The Board of Regents of The University of Texas System
31-7 may also direct the comptroller of The University of Texas System
31-8 to transmit to the state treasurer for deposit to the credit of the
31-9 permanent university fund any unexpended balances remaining in the
31-10 special fund after reserving a sufficient amount in it for the
31-11 payment of current expenses as set out in Subsection (c) of this
31-12 section.]
31-13 [(e) The highest successful bidder shall pay to the Board of
31-14 Regents of The University of Texas System on the day the bid is
31-15 accepted the full amount of bonus whether stipulated or bid and the
31-16 special fee.]
31-17 [Sec. 66.66. WITHDRAWAL OF LANDS BEFORE BIDS RECEIVED. The
31-18 board may withdraw any lands advertised for lease before the hour
31-19 set for receiving bids.]
31-20 [Sec. 66.67. AWARD OF LEASE. (a) If any one of the bidders
31-21 at the sale at public auction has offered a reasonable and proper
31-22 price for any tract offered, not less than the price fixed by the
31-23 board, the land advertised may be leased for oil and gas purposes
31-24 under the terms of this subchapter and any regulations the board
31-25 may prescribe, not inconsistent with the provisions of this
32-1 subchapter. All bids may be rejected by the board.]
32-2 [(b) If the board determines that a satisfactory bid has
32-3 been offered for the oil and gas, it shall make an award to the
32-4 bidder offering the highest price, and a lease shall be executed by
32-5 the commissioner of the general land office. A duplicate copy of
32-6 the lease shall be filed in the general land office.]
32-7 [Sec. 66.68. PROVISIONS OF LEASE. (a) Each lease executed
32-8 under this subchapter shall contain, and each valid and subsisting
32-9 oil and gas lease previously executed by the commissioner under the
32-10 source statute for this subchapter, on the application of the
32-11 lessee and payment of a sum of money equal to one year's annual
32-12 rental under the lease, shall be amended by written instrument to
32-13 contain, the provisions prescribed by this section.]
32-14 [(b) Each lease shall provide that the primary term of the
32-15 lease, as determined by the board prior to the promulgation of the
32-16 advertisement, shall in no case exceed 10 years.]
32-17 [(c) Each lease shall provide that if oil and/or gas is
32-18 being produced in paying quantities from the leased premises before
32-19 the termination of the primary term, such lease shall not terminate
32-20 but shall continue in force and effect as long as oil and/or gas is
32-21 being so produced.]
32-22 [(d) Each lease shall provide that in the event production
32-23 of oil or gas on the leased premises, after once obtained, shall
32-24 cease for any cause within 60 days before the expiration of the
32-25 primary term of such lease or at any time or times thereafter, such
33-1 lease shall not terminate, if the lessee commences additional
33-2 drilling or reworking operations within 60 days thereafter, and
33-3 such lease shall remain in full force and effect so long as such
33-4 operations continue in good faith and in workmanlike manner,
33-5 without interruptions, totaling more than 60 days during any one
33-6 such operation; and if such drilling or reworking operations result
33-7 in the production of oil and/or gas, such lease shall remain in
33-8 full force and effect so long as oil or gas is produced therefrom
33-9 in paying quantities or payment of shut-in gas well royalty or
33-10 compensatory royalties is made as hereinafter provided in this
33-11 subchapter.]
33-12 [(e) Each lease shall provide that if at the expiration of
33-13 the primary term or at any time thereafter there is located on the
33-14 leased premises a well or wells capable of producing oil or gas in
33-15 paying quantities and such oil or gas is not produced for lack of
33-16 suitable production facilities or a suitable market and such lease
33-17 is not being otherwise maintained in force and effect, the lessee
33-18 may pay as royalty $1,200 per annum for each well on the lease
33-19 capable of producing oil or gas in paying quantities, such payment
33-20 to be made to the Board of Regents of The University of Texas
33-21 System at Austin, Texas. Any shut-in oil or gas royalty must be
33-22 paid on or before: (1) the expiration of the primary term of the
33-23 lease, (2) 60 days after lessee ceases to produce oil or gas from
33-24 the leased premises, or (3) 60 days after lessee completes a
33-25 drilling and reworking operation in accordance with the lease
34-1 provisions, whichever date is later. If such payment is made, the
34-2 lease shall be considered to be a producing lease and such shut-in
34-3 royalty payment shall extend the term of the lease for a period of
34-4 one year from the end of the primary term or from the first day of
34-5 the month next succeeding the month in which production ceased; and
34-6 thereafter if no suitable production facilities or suitable market
34-7 for such oil or gas exists, the lessee may extend the lease for
34-8 four additional and successive periods of one year each by the
34-9 payment of a like sum of money each year on or before the
34-10 expiration of the extended term. Provided, however, that if, while
34-11 such lease is being maintained in force and effect by payment of
34-12 such shut-in royalty, oil or gas should be sold and delivered in
34-13 paying quantities from a well situated within 1,000 feet of the
34-14 leased premises and completed in the same producing reservoir or in
34-15 any case where drainage is occurring, the right to further extend
34-16 the lease by such shut-in royalty payments shall cease, but such
34-17 lease shall remain in force and effect for the remainder of the
34-18 current one year period for which the shut-in royalty has been
34-19 paid, and for four additional and successive periods of one year
34-20 each by the payment by the lessee of compensatory royalty, at the
34-21 royalty rate provided for in such university lease of the value at
34-22 the well of production from the well which is causing the drainage
34-23 or which is completed in the same producing reservoir and within
34-24 1,000 feet of the leased premises; such compensatory royalty to be
34-25 paid monthly to the Board of Regents of The University of Texas
35-1 System at Austin, Texas, beginning on or before the last day of the
35-2 month next succeeding the month in which such oil or gas is sold
35-3 and delivered from the well situated within 1,000 feet of, or
35-4 draining, the leased premises and completed in the same producing
35-5 reservoir; provided further, that in the event such compensatory
35-6 royalties paid in any 12-month period are in a sum less than the
35-7 annual shut-in gas well royalties provided for in this section, the
35-8 lessee shall pay an additional sum equal to the difference within
35-9 30 days from the end of such 12-month period; provided further,
35-10 that nothing herein shall relieve the lessee of the obligation of
35-11 reasonable development, nor of the obligation to drill offset wells
35-12 required by Section 66.75 of this code.]
35-13 [(f) Each lease shall provide that if, at the expiration of
35-14 the primary term, production of oil and/or gas has not been
35-15 obtained in paying quantities on the leased premises but drilling
35-16 operations are being conducted thereon in good faith and in good
35-17 and workmanlike manner, the lessee may, on or before the expiration
35-18 of the primary term, file with the Board of Regents of The
35-19 University of Texas System a written application for a 30-day
35-20 extension of such lease, such application to be accompanied by a
35-21 payment to the Board of Regents of The University of Texas System
35-22 of $7.50 per acre for each acre in the lease, and the Chairman of
35-23 the Board of Regents of The University of Texas System or a
35-24 designee appointed by the Chairman shall, in writing, extend such
35-25 lease for a 30-day period from and after the expiration of the
36-1 primary term and so long thereafter as oil or gas is produced in
36-2 paying quantities from the premises; provided further, that the
36-3 lessee may, so long as such drilling operations are being conducted
36-4 in good faith, make like application and payment during any 30-day
36-5 extended period for an additional extension of 30 days not to
36-6 exceed a combined total of 180 days; provided, however, lessee may,
36-7 so long as such drilling operations are being conducted in good
36-8 faith, make written application to the Board of Regents of The
36-9 University of Texas System on or before the expiration of the
36-10 initial extended period of 180 days for an additional extension of
36-11 180 days, such application to be accompanied by a payment to the
36-12 Board of Regents of The University of Texas System of $50 per acre
36-13 for each acre in the lease, and the Chairman of the Board of
36-14 Regents of The University of Texas System or a designee appointed
36-15 by the Chairman shall, in writing, extend such lease for an
36-16 additional 180-day period from and after the expiration of the
36-17 initial extended period of 180 days, and so long thereafter as oil
36-18 or gas is produced in paying quantities from the premises;
36-19 provided, that no lease shall be extended under the provisions of
36-20 this section for more than a total of 360 days from and after the
36-21 expiration of the primary term unless production in paying
36-22 quantities has been obtained.]
36-23 [(g) Each lease shall contain a provision enabling the
36-24 board, at its election, to require that payment of royalty as
36-25 stipulated in the lease be in kind. Such option may be exercised
37-1 from time to time at the discretion of the board upon not less than
37-2 six months' notice to the lessee. The board shall have all powers
37-3 necessary to negotiate and execute sales contracts or any other
37-4 instruments necessary for the disposition of any royalty taken in
37-5 kind. Such other reasonable provisions, not inconsistent with this
37-6 subchapter, as will facilitate the efficient and equitable payment
37-7 of royalty in kind may be included in this lease by the board.]
37-8 [Sec. 66.69. LEASE: ADDITIONAL PROVISIONS. Each oil and
37-9 gas lease issued on university lands under this subchapter shall
37-10 include any additional provisions and regulations, not inconsistent
37-11 with the provisions of this subchapter, that the board may
37-12 prescribe to preserve the interest of the state and safeguard the
37-13 university funds.]
37-14 [Sec. 66.70. COMPENSATORY ROYALTIES IN LIEU OF OFFSET WELLS.
37-15 (a) Subject to the provisions of this section, the commissioner of
37-16 the general land office may execute agreements on behalf of the
37-17 permanent university fund that provide for the payment by
37-18 university land oil and gas lessees of compensatory royalty in lieu
37-19 of drilling offset wells that may be required to protect a
37-20 university oil and gas lease from drainage from a well or wells
37-21 located on non-university lands or university lands leased at a
37-22 lesser royalty situated within 1,000 feet of or draining the
37-23 university-leased premises.]
37-24 [(b) Agreements providing for the payment of compensatory
37-25 royalty must be approved by the board for lease of university
38-1 lands.]
38-2 [(c) Any such agreement must be found by the commissioner
38-3 and the board for lease to be in the best interest of the state and
38-4 necessary to prevent economic waste.]
38-5 [(d) Nothing in an agreement shall relieve the lessee of the
38-6 obligation of reasonable development or of the obligation to drill
38-7 offset wells as required by Section 66.75 of this code as to other
38-8 producing horizons.]
38-9 [(e) Beginning on the date fixed in the agreement, the
38-10 lessee shall pay the compensatory royalty monthly to the Board of
38-11 Regents of The University of Texas System in Austin, Texas.]
38-12 [(f) The agreement with respect to the interest of the state
38-13 shall remain in force and effect as long as oil and gas, or either
38-14 of them, is produced from a well located on university or
38-15 non-university acreage and draining the university-leased premises.]
38-16 [(g) The agreement may contain other provisions the
38-17 commissioner and the board for lease deem necessary to protect the
38-18 interests of the permanent university fund.]
38-19 [(h) The agreement shall provide that compensatory royalty
38-20 be paid at the royalty rate provided by the university lease and
38-21 shall provide that compensatory royalty be paid on the market value
38-22 at the well of production from the well located on non-university
38-23 lands or university lands leased at a lesser royalty situated
38-24 within 1,000 feet of or draining the university leased premises.]
38-25 [Sec. 66.71. PRORATED OR REDUCED PRODUCTION CONTRACTS.
39-1 Whenever in the discretion of the board it is to the best interest
39-2 of the university and its permanent fund that production from any
39-3 lease for a limited period of time should be prorated or reduced,
39-4 the board may execute the necessary contract or contracts with the
39-5 lessee or lessees and their assignees to effectuate the same and to
39-6 carry out the intention of this subchapter.]
39-7 [Sec. 66.72. EXTENSION OF PRODUCING LEASE. If oil or gas is
39-8 discovered in paying quantities on any tract covered by a lease,
39-9 then the lease as to that tract shall remain in force as long as
39-10 oil and gas is produced in paying quantities from the tract,
39-11 provided that the other provisions of this subchapter are complied
39-12 with by the lessee.]
39-13 [Sec. 66.73. ASSIGNMENT; RELINQUISHMENT. (a) Any rights
39-14 acquired may be assigned; provided, however, in order for an
39-15 assignment to be valid and effective, the assignment must be filed
39-16 in the county or counties in which the area is situated, and a
39-17 legible copy of the recorded assignment must be filed with the
39-18 Board of Regents of The University of Texas System, accompanied by
39-19 a filing fee of $30 for each lease assigned. If the copy of the
39-20 recorded assignment is filed with the Board of Regents of The
39-21 University of Texas System after the 90th day after the date on
39-22 which the assignment is recorded, the copy must be accompanied by
39-23 the filing fee set by the board and by a late fee equal to the
39-24 amount of the filing fee.]
39-25 [(b) Any rights to any lease and to any assigned portion
40-1 thereof may be relinquished to the state at any time by having an
40-2 instrument of relinquishment recorded in the county or counties in
40-3 which the area relinquished is situated and an original certified
40-4 copy filed with the Board of Regents of The University of Texas
40-5 System, accompanied by $1 for each area relinquished and a filing
40-6 fee of $5 for each lease involved in the relinquishment.]
40-7 [(c) Such an assignment or relinquishment shall not relieve
40-8 the lease owner of any past due obligation theretofore accrued
40-9 thereon.]
40-10 [Sec. 66.74. ROYALTY PAYMENTS; INSPECTION OF RECORDS.
40-11 (a) Royalty as stipulated in the sale shall be paid to the Board
40-12 of Regents of The University of Texas System at Austin, Texas, for
40-13 the benefit of the university permanent fund as provided in this
40-14 section.]
40-15 [(1) The board shall set by rule the date for making
40-16 royalty payments and for filing any reports, documents or other
40-17 records required to be filed by this section. However, the board
40-18 may not set the due date for royalty on oil before the fifth day of
40-19 the second month succeeding the month of production, and may not
40-20 set the due date for royalty on gas before the 15th day of the
40-21 second month succeeding the month of production.]
40-22 [(2) Royalty payments shall be accompanied by:]
40-23 [(a) an affidavit of the owner, manager, or
40-24 other authorized agent completed in the form and manner required by
40-25 the Board of Regents of The University of Texas System and showing
41-1 the gross amount and disposition of all oil and gas produced and
41-2 the market value of the oil and gas;]
41-3 [(b) a copy of all documents, records, or
41-4 reports confirming the gross production, disposition, and market
41-5 value, including gas meter readings, pipeline receipts, gas line
41-6 receipts, and other checks or memoranda of amount produced and put
41-7 into pipelines, tanks, pools, and gas lines or gas storage;]
41-8 [(c) a check stub, schedule, summary, or other
41-9 remittance advice showing by the assigned general land office lease
41-10 number the amount of royalty being paid on each lease; and]
41-11 [(d) other reports or records that the Board of
41-12 Regents of The University of Texas System may require to verify the
41-13 gross production, disposition, and market value.]
41-14 [(3) The lessee has the responsibility for paying
41-15 royalties or having royalties paid by the date provided for payment
41-16 in this section.]
41-17 [(4) If any royalty is not paid when due, a penalty of
41-18 one percent shall be added to the unpaid amount due. If the
41-19 royalty is not paid within seven days after the due date, a penalty
41-20 of an additional four percent of the royalty due is imposed. If
41-21 the royalty is not paid within 30 days after the due date, a
41-22 penalty of an additional five percent is imposed. The minimum
41-23 penalty under this subdivision is $25. Penalty under this
41-24 subdivision may not be added in cases of title dispute as to the
41-25 state's portion of the royalty or to that portion of the royalty in
42-1 dispute as to fair market value. Except as provided in Subsection
42-2 (g), Section 66.68 of this code, royalty payments shall be made in
42-3 cash, by a bank draft drawn on a state or national bank in Texas,
42-4 by a post-office or express money order, or in any other form that
42-5 the law may provide for making payments to the State Treasury and
42-6 are payable to the Board of Regents of The University of Texas
42-7 System.]
42-8 [(5) Copies of contracts for the sale or processing of
42-9 gas and subsequent agreements and amendments to those contracts
42-10 shall be filed with the Board of Regents of The University of Texas
42-11 System within 30 days after the contracts, agreements, or
42-12 amendments are made. These contracts and agreements received by
42-13 the Board of Regents of The University of Texas System shall be
42-14 held in confidence by the Board of Regents of The University of
42-15 Texas System unless otherwise authorized by the lessee.]
42-16 [(6) Interest shall accrue on delinquent royalties
42-17 beginning 60 days after the due date. The annual interest rate on
42-18 delinquent royalties is 12 percent. Interest accrued under this
42-19 subdivision shall be in addition to any delinquency penalty accrued
42-20 under Subdivision (4) of this subsection.]
42-21 [(7) The Board of Regents of The University of Texas
42-22 shall add a penalty of 25 percent to any delinquent royalties if
42-23 the delinquency is due to fraud or an intent to evade the
42-24 provisions of this subchapter on the part of the lessee or his
42-25 agents, employees, or assignees.]
43-1 [(8) If any report, affidavit, supporting document, or
43-2 any other instrument required to be filed under this subsection is
43-3 not filed when due, a penalty accrues in the amount of $10 per
43-4 document or a higher amount established by the Board of Regents of
43-5 The University of Texas, for each 30-day period of delinquency or
43-6 fractional part of that period.]
43-7 [(9) Collection of penalty and interest charges under
43-8 this subsection are in addition to any rights, including
43-9 forfeiture, that the board may exercise for failure to pay a
43-10 royalty or to submit a report or other instrument when due.]
43-11 [(b) The books and accounts, receipt and discharges of all
43-12 wells, tanks, pools, meters, pipelines, and all contracts and other
43-13 records pertaining to the production, transportation, sale, and
43-14 marketing of the oil and gas shall at all times be subject to
43-15 inspection and examination by the commissioner of the general land
43-16 office, the attorney general, the governor, or any member of the
43-17 board of regents, or the representative of either.]
43-18 [(c) For purposes of Section 66.74(a)(3) of this code, a
43-19 royalty payment is timely made if, before the applicable due date,
43-20 the payment is deposited in a postpaid, properly addressed wrapper,
43-21 with a post office or official depository under the care and
43-22 custody of the United States Postal Service.]
43-23 [Sec. 66.75. PROTECTION FROM DRAINAGE. In every case where
43-24 the area in which the oil and gas sold shall be contiguous or
43-25 adjacent to land not university land, the acceptance of the bid and
44-1 the sale made thereby shall constitute an obligation on the lessee
44-2 to adequately protect the land leased from drainage from adjacent
44-3 lands. In cases where the area in which the oil and gas is sold is
44-4 contiguous to other university lands leased or sold, at a lesser
44-5 royalty, the lessee shall likewise protect the state from drainage
44-6 from the land so leased or sold for a lesser royalty. On failure
44-7 to protect the land from drainage, the sale and all rights
44-8 thereunder may be forfeited by the board in the manner provided in
44-9 this subchapter for forfeitures.]
44-10 [Sec. 66.76. FORFEITURE; OTHER REMEDIES; LIEN. (a) If the
44-11 owner of the rights acquired under this subchapter fails or refuses
44-12 to make the payment of any sum due thereon, either as rental or
44-13 royalty on the production, within 30 days after same becomes due,
44-14 or if the owner or his authorized agent makes any false return or
44-15 false report concerning production, royalty, or drilling, or if the
44-16 owner fails or refuses to drill any offset well or wells in good
44-17 faith, as required by his lease, or if the owner or his agent
44-18 refuses the proper authority access to the records and other data
44-19 pertaining to the operations under this subchapter, or if the owner
44-20 or his authorized agent fails or refuses to give correct
44-21 information to the proper authorities, or fails or refuses to
44-22 furnish the log of any well within 30 days after production is
44-23 found in paying quantities, or if any of the material terms of the
44-24 lease are violated, the lease is subject to forfeiture by the board
44-25 by an order entered upon the minutes of the board reciting the
45-1 facts constituting the default and declaring the forfeiture.]
45-2 [(b) The board may have suit instituted for forfeiture
45-3 through the attorney general.]
45-4 [(c) On proper showing by the forfeiting owner, within 30
45-5 days after the declaration of forfeiture, the lease may, at the
45-6 discretion of the board and on such terms as it may prescribe, be
45-7 reinstated.]
45-8 [(d) In case of violation by the owner of the lease
45-9 contract, the remedy of the state by forfeiture is not the
45-10 exclusive remedy, but suit for damages or specific performance, or
45-11 both, may be instituted.]
45-12 [(e) The state shall have a first lien upon all oil and gas
45-13 produced upon the leased area and upon all rigs, tanks, pipeline,
45-14 telephone lines, and machinery and appliances used in the
45-15 production and handling of oil and gas produced thereon, to secure
45-16 any amount due from the owner of the lease.]
45-17 [Sec. 66.77. FILING OF RECORDS. All surveys, files,
45-18 records, copies of lease contracts, and all other records
45-19 pertaining to the leases hereby authorized, shall be filed in the
45-20 general land office and constitute archives thereof and copies of
45-21 any such documents shall also be filed with the Board of Regents of
45-22 The University of Texas System. All existing documents now on file
45-23 in the general land office shall be transferred by copies to the
45-24 Board of Regents of The University of Texas System.]
45-25 [Sec. 66.78. PAYMENTS; DISPOSITION. Payments under this
46-1 subchapter shall be made to the Board of Regents of The University
46-2 of Texas System at Austin, Texas, who shall:]
46-3 [(1) transmit to the state treasurer for deposit to
46-4 the credit of the permanent university fund all bonus, rental, and
46-5 royalty payments;]
46-6 [(2) transmit to the state treasurer for deposit to
46-7 the credit of the available university fund all filing, assignment,
46-8 and relinquishment fees, and all other payments except those
46-9 described in Subdivision (3) of this section; and]
46-10 [(3) retain the one percent fee payment prescribed by
46-11 Section 66.65(c) of this code, for disbursement by the comptroller
46-12 of The University of Texas System for the purposes authorized by
46-13 Section 66.65(c) of this code.]
46-14 [Sec. 66.79. FORMS; CONTRACTS; REGULATIONS. The board shall
46-15 adopt forms and contracts and shall promulgate rules and
46-16 regulations, not inconsistent with the terms of this subchapter,
46-17 that in its judgment will best effectuate the purpose of this
46-18 subchapter and will best protect the university, its lands, and the
46-19 income from the lands.]
46-20 [Sec. 66.80. EXPENSES OF EXECUTING THIS SUBCHAPTER. The
46-21 expenses of executing the provisions of this subchapter shall be
46-22 paid monthly by warrants drawn by the comptroller on the state
46-23 treasury.]
46-24 [Sec. 66.81. FINANCIAL REPORT REQUIRED. The board shall
46-25 file annually with the governor and the presiding officer of each
47-1 house of the legislature a complete and detailed written report
47-2 accounting for all funds received and disbursed by the board during
47-3 the preceding year. The form of the annual report shall be that
47-4 provided in the General Appropriations Act. The report shall be
47-5 distributed with the report required by Section 66.05 of this code.]
47-6 [Sec. 66.82. AUDIT. The financial transactions of the board
47-7 are subject to audit by the state auditor in accordance with
47-8 Chapter 321, Government Code.]
47-9 [Sec. 66.83. POLICIES ON PUBLIC HEARINGS. The board shall
47-10 develop and implement policies which will provide the public with a
47-11 reasonable opportunity to appear before the board and to speak on
47-12 any issue under the jurisdiction of the board.]
47-13 [Sec. 66.84. MARGINAL PROPERTY ROYALTY RATES. (a) In this
47-14 section:]
47-15 [(1) "Barrel of oil equivalent" means 6,000 cubic feet
47-16 of natural gas per 42-gallon barrel of crude oil or a volume of gas
47-17 with a minimum heating value of 6,000,000 British thermal units
47-18 (6,000 Mbtu), whichever is greater.]
47-19 [(2) "Lease" or "leases" means an oil and gas lease
47-20 issued or approved by the state that is valid and in force on or
47-21 after the effective date of this section.]
47-22 [(3) "Qualifying property" means land subject to a
47-23 lease issued under this subchapter.]
47-24 [(4) "Qualifying reservoir" means a reservoir having
47-25 an average daily per well production equal to or less than 15
48-1 barrels of oil equivalent during a period established by the board
48-2 by rule and underlying either:]
48-3 [(A) a qualifying property; or]
48-4 [(B) a pooled unit including a qualifying
48-5 property.]
48-6 [(5) "Reservoir" has the same meaning as "common
48-7 reservoir" as defined in Section 86.002, Natural Resources Code.]
48-8 [(b) The board may provide by rule that the royalty rate for
48-9 qualifying reservoirs may be reduced to not less than one-sixteenth
48-10 (6.25 percent). In determining whether to grant a reduction in the
48-11 royalty rate, the board may consider whether the qualifying
48-12 property is being operated efficiently, including whether the
48-13 property is pooled or has reasonable potential for the application
48-14 of secondary or tertiary recovery techniques.]
48-15 [(c) If a qualifying reservoir for which royalty rate
48-16 reduction is sought under this section is included in a unit
48-17 subject to the authority of the board, the board may modify the
48-18 terms and conditions of the unit as a condition of approving a
48-19 reduction in the royalty rate.]
48-20 SECTION 2. Subsection (d), Section 52.131, Natural Resources
48-21 Code, is amended to read as follows:
48-22 (d) The lessee has the responsibility for paying royalties
48-23 or having royalties paid by the date provided for payment in this
48-24 section. The commissioner may require the lessee and a person with
48-25 whom the lessee deals, including an affiliate, in connection with
49-1 the production, transportation, marketing, treatment, processing,
49-2 or sale of oil and gas, to provide reports or other information as
49-3 the commissioner may consider necessary to determine that royalty
49-4 has been correctly paid. For purposes of this subsection,
49-5 "affiliate" includes the parent company or a subsidiary company, a
49-6 corporation having common ownership with another of 10 percent or
49-7 greater, a partner or joint venturer with a company with respect to
49-8 a business subject to this subchapter, or a relative within the
49-9 second degree of consanguinity or affinity. For purposes of this
49-10 subsection, affiliates of a common entity are also affiliates of
49-11 each other.
49-12 SECTION 3. Subsection (a), Section 52.135, Natural Resources
49-13 Code, is amended to read as follows:
49-14 (a) The books and accounts, receipts, and discharges of all
49-15 wells [lines], tanks, pools, [and] meters, and pipelines, and all
49-16 contracts and other records pertaining directly or indirectly
49-17 [relating] to the production, transportation, sale, treatment,
49-18 processing, or [and] marketing of [the] oil and gas from lands
49-19 subject to this chapter, or relevant to establishing the volume or
49-20 value of such production, whether such records are held by or are
49-21 in the possession of the lessee or a third party dealing with the
49-22 lessee, shall at all times be [are] subject [at any time] to
49-23 inspection and copying [examination] by the commissioner, [and] the
49-24 attorney general, the [and] governor, or the representative of any
49-25 of them. The commissioner may, if necessary, compel the production
50-1 of such records by subpoena enforceable throughout the state [their
50-2 representatives].
50-3 SECTION 4. Section 52.136, Natural Resources Code, is
50-4 amended to read as follows:
50-5 Sec. 52.136. LIEN. (a) The state has a statutory first
50-6 lien on all oil and gas produced on any lease area to secure
50-7 payment of unpaid royalty and other amounts due.
50-8 (b) By acceptance of a lease, the lessee grants to the state
50-9 an express contractual lien on and security interest in all oil and
50-10 gas in and extracted from the area covered by the lease, all
50-11 proceeds which may accrue to the lessee from the sale of the oil
50-12 and gas, whether the proceeds are held by the lessee or another
50-13 person, and all fixtures on and improvements to the area covered by
50-14 the lease used in connection with the production or processing of
50-15 the oil and gas, to secure the payment of royalties and other
50-16 amounts due or to become due under the lease or this subchapter and
50-17 to secure payment of damages or loss that the state may suffer by
50-18 reason of the lessee's breach of a covenant or condition of the
50-19 lease, whether express or implied.
50-20 (c) The statutory and contractual liens and security
50-21 interests described in this section may be foreclosed with or
50-22 without court proceedings in the manner provided under Chapter 9,
50-23 Business & Commerce Code. The state may require the lessee to
50-24 execute and record instruments reasonably necessary to acknowledge,
50-25 attach, or perfect the liens.
51-1 SECTION 5. Changes made by this Act to Sections 52.131(d),
51-2 52.135(a), and 52.136, Natural Resources Code, relate to the
51-3 administration of leases and, to the extent these changes do not
51-4 conflict with existing contractual rights, these changes in law
51-5 will apply to existing and future leases.
51-6 SECTION 6. Sections 52.291, 52.292, 52.293, 52.294, 52.295,
51-7 and 52.296, Natural Resources Code, are repealed.
51-8 SECTION 7. The terms of any oil and gas lease executed
51-9 before the effective date of this Act that impose the requirements
51-10 of Sections 52.291 through 52.296, Natural Resources Code, are of
51-11 no force and effect.
51-12 SECTION 8. The changes in law made by this Act to Sections
51-13 66.66, 66.67, 66.69, 66.71, 66.72, 66.73, and 66.76(c), Education
51-14 Code, apply only to leases awarded on or after January 1, 1998,
51-15 except as provided by Section 66.70, Education Code. Leases
51-16 awarded prior to that date shall be governed by the law in effect
51-17 when the lease was issued and the former law is continued in effect
51-18 for that purpose. Changes in law made by this Act to Sections
51-19 66.65, 66.70, 66.74, 66.75, 66.76(a), (b), and (d), 66.77, 66.78,
51-20 66.79, 66.80, 66.81, 66.82, and 66.83, Education Code, relate to
51-21 the administration of leases and, to the extent that these changes
51-22 do not conflict with existing contractual rights, these changes in
51-23 law will apply to existing and future leases.
51-24 SECTION 9. This Act takes effect January 1, 1998.
51-25 SECTION 10. The importance of this legislation and the
52-1 crowded condition of the calendars in both houses create an
52-2 emergency and an imperative public necessity that the
52-3 constitutional rule requiring bills to be read on three several
52-4 days in each house be suspended, and this rule is hereby suspended.
52-5 COMMITTEE AMENDMENT NO. 1
52-6 Amend S.B. 1354 as follows:
52-7 Strike Sec. 66.61. DEFINITIONS (1) "Affiliate" that begins
52-8 on page 1, line 9 and renumber subsequent definitions
52-9 appropriately.
52-10 Strike Sec. 66.61 DEFINITIONS (5) "Lessee" that begins on
52-11 page 1, line 21 and renumber subsequent definitions appropriately.
52-12 On page 5, line 24, of Sec. 66.64(b), add the following
52-13 language after the word "forfeiture":
52-14 "The board shall give written notice to each lessee whose
52-15 leasehold interest may be forfeited. Such notice shall be given at
52-16 least twenty-one days before the meeting at which the board will
52-17 consider forfeiture of the lease. The notice shall state the time,
52-18 date, and place of the meeting of the board and include a statement
52-19 of the board's policy concerning the public's opportunity to be
52-20 heard with respect to a declaration of forfeiture. Notice shall be
52-21 properly given when mailed to the last known address of the lessee
52-22 based on the records of the board of regents or, if the records do
52-23 not contain an address, to any address that may reasonably be
52-24 determined to be an address for the lessee."
52-25 Strike Section 66.71. LEASE PROVISIONS (b) that begins on
53-1 page 12, line 2 and substitute as follows:
53-2 "If oil or gas is discovered in paying quantities on any
53-3 tract covered by a lease, then the lease as to that tract shall
53-4 remain in force as long as oil and gas is produced in paying
53-5 quantities from the tract, provided that the other provisions of
53-6 this subchapter are complied with by the lessee."
53-7 Strike Section 66.72 CESSATION OF PRODUCTION; DRILLING AND
53-8 REWORKING that begins on page 12, line 13 and substitute as
53-9 follows:
53-10 "Section 66.72 CESSATION OF PRODUCTION; DRILLING AND
53-11 REWORKING. Each lease shall provide that in the event production
53-12 of oil or gas on the leased premises, after once obtained, shall
53-13 cease for any cause within 60 days before the expiration of the
53-14 primary term of such lease or at any time or times thereafter, such
53-15 lease shall not terminate, if the lessee commences additional
53-16 drilling or reworking operations within 60 days thereafter, and
53-17 such lease shall remain in full force and effect so long as such
53-18 operations continue in good faith and in workmanlike manner,
53-19 without interruptions, totalling more than 60 days during any one
53-20 such operation; and if such drilling or reworking operations result
53-21 in the production of oil and/or gas, such lease shall remain in
53-22 full force and effect so long as oil or gas is produced therefrom
53-23 in paying quantities or payment of shut-in gas well royalty or
53-24 compensatory royalties is made as hereinafter provided in this
53-25 subchapter."
54-1 Strike the last sentence of Sec. 66.76, ASSIGNMENT,
54-2 RELINQUISHMENT, subsection (c) which begins on page 15, line 25.
54-3 On page 17, line 8, strike "other information as may be
54-4 required by the board of regents" and substitute "University lease
54-5 numbers".
54-6 Strike Sec. 66.77(e) entirely and renumber the subsequent
54-7 subsections appropriately.
54-8 On page 20, line 3, insert the following after "then" and
54-9 before "delivery": "the board may elect".
54-10 On page 20, line 4, after "gas" and before "by" insert:
54-11 "shall be at the wellhead, at the oil and gas separator, into a
54-12 pipeline connected at the well, or at such other location as may be
54-13 specified in a royalty in kind provision in the lease or other
54-14 agreement. Such delivery".
54-15 Strike Sec. 66.80(b) and substitute the following:
54-16 "(b) The books and accounts, receipts and discharges of all
54-17 wells, tanks, pools, meters, pipelines, and all contracts and other
54-18 records pertaining to the production, transportation, sale, and
54-19 marketing of the oil and gas shall at all times be subject to the
54-20 inspection, examination, and copying by the commissioner of the
54-21 general land office, the attorney general, the governor, the board
54-22 of regents, or the board, or the representative of any of them."
54-23 Add Sec. 66.82(c) to read as follows:
54-24 "The board, in its sole discretion, may authorize
54-25 reinstatement of a forfeited lease on terms the board may determine
55-1 at the time of the declaration of forfeiture."
55-2 Strike Section 2. Subsection (d) that begins on page 48, line
55-3 20 and renumber subsequent sections appropriately.
55-4 Strike Section 3, Subsection (a) that begins on page 49, line
55-5 12 and renumber subsequent sections appropriately.
55-6 Moffat