1-1     By:  Brown                                            S.B. No. 1731
 1-2           (In the Senate - Filed March 12, 1999; March 15, 1999, read
 1-3     first time and referred to Committee on Natural Resources;
 1-4     April 12, 1999, reported favorably by the following vote:  Yeas 5,
 1-5     Nays 0; April 12, 1999, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to the period during which the School Land Board may
 1-9     reduce the royalty rate under certain oil and gas leases.
1-11           SECTION 1.  Subsections (c) and (d), Section 32.067, Natural
1-12     Resources Code, are amended to read as follows:
1-13           (c)  The royalty rate for oil and gas produced from a
1-14     qualifying reservoir may be reduced to not less than one-sixteenth
1-15     (6.25 percent) for a term prescribed [not to exceed two years
1-16     unless extended at the reduced rate for additional  periods not to
1-17     exceed two years on approval] by the board.  In determining whether
1-18     to grant a reduction in the royalty rate, the board may consider
1-19     whether the qualifying property is being operated efficiently,
1-20     including whether the property is pooled or has reasonable
1-21     potential for the application of secondary or tertiary recovery
1-22     techniques.
1-23           (d)  The royalty rate for the state's share under a lease
1-24     issued under Subchapter F, Chapter 52, or Sections 51.195(c)(2) and
1-25     (d) may be reduced under this section to not less than
1-26     one-thirty-second (3.125 percent) for a term prescribed [not to
1-27     exceed two years unless extended at the reduced rate for additional
1-28     periods not  to exceed two years on approval] by the board.  The
1-29     state's royalty rate may be reduced under this subsection only if
1-30     the royalty rate for the owner of the soil is reduced in the same
1-31     proportion.
1-32           SECTION 2.  This Act takes effect September 1, 1999.
1-33           SECTION 3.  The importance of this legislation and the
1-34     crowded condition of the calendars in both houses create an
1-35     emergency and an imperative public necessity that the
1-36     constitutional rule requiring bills to be read on three several
1-37     days in each house be suspended, and this rule is hereby suspended.
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