AN ACT
 1-1     relating to the period during which the School Land Board may
 1-2     reduce the royalty rate under certain oil and gas leases.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Subsections (c) and (d), Section 32.067, Natural
 1-5     Resources Code, are amended to read as follows:
 1-6           (c)  The royalty rate for oil and gas produced from a
 1-7     qualifying reservoir may be reduced to not less than one-sixteenth
 1-8     (6.25 percent) for a term prescribed [not to exceed two years
 1-9     unless extended at the reduced rate for additional  periods not to
1-10     exceed two years on approval] by the board.  In determining whether
1-11     to grant a reduction in the royalty rate, the board may consider
1-12     whether the qualifying property is being operated efficiently,
1-13     including whether the property is pooled or has reasonable
1-14     potential for the application of secondary or tertiary recovery
1-15     techniques.
1-16           (d)  The royalty rate for the state's share under a lease
1-17     issued under Subchapter F, Chapter 52, or Sections 51.195(c)(2) and
1-18     (d) may be reduced under this section to not less than
1-19     one-thirty-second (3.125 percent) for a term prescribed [not to
1-20     exceed two years unless extended at the reduced rate for additional
1-21     periods not  to exceed two years on approval] by the board.  The
1-22     state's royalty rate may be reduced under this subsection only if
1-23     the royalty rate for the owner of the soil is reduced in the same
1-24     proportion.
 2-1           SECTION 2.  This Act takes effect September 1, 1999.
 2-2           SECTION 3.  The importance of this legislation and the
 2-3     crowded condition of the calendars in both houses create an
 2-4     emergency and an imperative public necessity that the
 2-5     constitutional rule requiring bills to be read on three several
 2-6     days in each house be suspended, and this rule is hereby suspended.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I hereby certify that S.B. No. 1731 passed the Senate on
         April 19, 1999, by the following vote:  Yeas 30, Nays 0.
                                             _______________________________
                                                 Secretary of the Senate
               I hereby certify that S.B. No. 1731 passed the House on
         May 26, 1999, by a non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
         Approved:
         _______________________________
                     Date
         _______________________________
                   Governor