77R12252 PAM-F                           
         By McReynolds                                         H.B. No. 3410
         Substitute the following for H.B. No. 3410:
         By Walker                                         C.S.H.B. No. 3410
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the sale and lease of vacant and unsurveyed public
 1-3     school land.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1. Subchapter E, Chapter 51, Natural Resources Code,
 1-6     is amended to read as follows:
 1-7                 SUBCHAPTER E.  SALE AND LEASE OF VACANCIES
 1-8           Sec. 51.171.  PURPOSE; APPLICATION OF OTHER LAW. (a)  This
 1-9     subchapter controls the purchase and lease of vacant land and the
1-10     authority of the commissioner and the board to:
1-11                 (1)  determine whether a vacancy exists; and
1-12                 (2)  sell and lease vacant land.
1-13           (b)  To the extent a provision of this subchapter conflicts
1-14     with another law relating to vacant land, this subchapter controls.
1-15           (c)  Chapter 2001, Government Code, does not apply to a
1-16     proceeding under this subchapter.
1-17           Sec. 51.172.  DEFINITIONS. In this subchapter:
1-18                 (1)  "Applicant" means any person who files an
1-19     application to purchase or lease a vacancy.
1-20                 (2)  "Good-faith claimant" means a person who:
1-21                       (A)  occupies or uses or has previously occupied
1-22     or used, or whose predecessors in interest have occupied or used, a
1-23     vacancy for purposes other than exploring for or removing oil, gas,
1-24     sulphur, or other minerals and geothermal resources from the
 2-1     vacancy; and
 2-2                       (B)  has had, or whose predecessors in interest
 2-3     have had, the vacancy enclosed or within definite boundaries
 2-4     recognized in the community and in possession for a period of at
 2-5     least 10 years with a good-faith belief that the vacancy was
 2-6     included within the boundaries of a survey or surveys that were
 2-7     previously titled, awarded, or sold under circumstances that would
 2-8     have vested title in the vacancy if the vacancy were actually
 2-9     located within the boundaries of the survey or surveys.
2-10                 (3)  "Interested person" means a person, excluding a
2-11     good-faith claimant or an applicant, who has a present legal
2-12     interest in the surface or mineral estate of the land claimed to be
2-13     vacant.
2-14                 (4)  "Necessary party" means an applicant, interested
2-15     person, and good-faith claimant whose present legal interest in the
2-16     surface or mineral estate of the land claimed to be vacant may be
2-17     adversely affected by a vacancy determination.
2-18                 (5)  "Vacancy" means an area of unsurveyed public
2-19     school land that:
2-20                       (A)  is not in conflict on the ground with land
2-21     previously titled, awarded, or sold;
2-22                       (B)  has not been listed on the records of the
2-23     land office as public school land; and
2-24                       (C)  was not, on the date of filing of an
2-25     application:
2-26                             (i)  subject to an earlier subsisting
2-27     application; or
 3-1                             (ii)  the subject of pending litigation
 3-2     relating to state ownership or possession of the land.
 3-3           Sec. 51.173.  DISPOSITION OF VACANT LAND. (a)  Vacant and
 3-4     unsurveyed public school land shall be located, sold, and leased
 3-5     under this subchapter, except:
 3-6                 (1)  submerged lands within tidewater limits;
 3-7                 (2)  all islands, flats, and emergent lands within
 3-8     tidewater limits;
 3-9                 (3)  natural lakes; and
3-10                 (4)  riverbeds, including channels and islands in
3-11     riverbeds, above tidewater limits.
3-12           (b)  This subchapter does not alter or diminish the public
3-13     domain status of the surface estate of riverbeds and channels and
3-14     islands in riverbeds that are located above tidewater limits.
3-15           Sec. 51.174.  GENERAL POWERS AND DUTIES OF COMMISSIONER. (a)
3-16     The commissioner may:
3-17                 (1)  delegate responsibility for implementing this
3-18     subchapter; and
3-19                 (2)  perform any other act necessary to administer and
3-20     implement the purposes of this subchapter.
3-21           (b)  The commissioner shall adopt rules necessary and
3-22     convenient to administer this subchapter.
3-23           (c)  The commissioner shall advise the board relating to the
3-24     fair market value of the surface and mineral estates of vacant
3-25     land.
3-26           Sec. 51.175.  GENERAL POWERS AND DUTIES OF BOARD. (a)  The
3-27     board shall set the terms and conditions for each sale and lease of
 4-1     a vacancy.
 4-2           (b)  The board shall adopt rules governing the terms and
 4-3     conditions for the sale and lease of a vacancy.  The rules shall be
 4-4     adopted and amended as necessary to be consistent with property law
 4-5     of this state and other applicable law.
 4-6           (c)  The board may adopt rules governing mineral
 4-7     classification, royalty reservations, and awards of royalty
 4-8     reservations and preferential rights to an applicant or to a
 4-9     good-faith claimant in addition to the provisions prescribed by
4-10     this subchapter.
4-11           Sec. 51.176.  APPLICATION. (a)  To purchase or lease land
4-12     claimed to be vacant, a person must file an application  on a form
4-13     prescribed by the commissioner.  A completed application must:
4-14                 (1)  describe the land that is claimed to be vacant;
4-15                 (2)  state whether the applicant seeks to purchase the
4-16     land that is claimed to be vacant or obtain a mineral lease on the
4-17     land;
4-18                 (3)  state the name and address of each person who,
4-19     from facts known to the applicant, asserts a present legal interest
4-20     in the land claimed to be vacant;
4-21                 (4)  if applicable, state the basis and provide
4-22     documentary proof for an assertion of good-faith-claimant status;
4-23     and
4-24                 (5)  provide any other information required by the
4-25     commissioner.
4-26           (b)  The applicant must file the application with the county
4-27     surveyor of the county in which all or part of the land claimed to
 5-1     be vacant is located.  If the county does not have a county
 5-2     surveyor, the application must be filed with the county clerk.
 5-3           (c)  The county surveyor or county clerk, as applicable,
 5-4     shall mark the exact date and hour of filing on the original and a
 5-5     duplicate copy of the application and shall return a marked copy to
 5-6     the person filing the application.  The original shall be recorded
 5-7     in a book kept for that purpose separate from the deed or real
 5-8     property records.  The failure to record an application as provided
 5-9     by this subsection does not affect the validity of the application
5-10     filing.
5-11           (d)  Priority among applications covering the same land
5-12     claimed to be vacant is determined by the time of filing indicated
5-13     by the date and hour marked on the application by the county
5-14     surveyor or county clerk.
5-15           (e)  The applicant shall file with the commissioner the
5-16     duplicate copy of the application with the county official's mark
5-17     indicating the time of filing not later than the 30th day after the
5-18     date the application is filed with the county surveyor or clerk.
5-19     If the 30th day after the date of filing falls on a Saturday,
5-20     Sunday, or state or federal holiday, the application may be filed
5-21     on the next regular business day following the 30th day.  The
5-22     applicant shall include a filing fee set by the commissioner in an
5-23     amount of not less than $100.
5-24           Sec. 51.177.  PROCESSING APPLICATION. (a)  The commissioner
5-25     shall mark the date of filing on the application and assign a file
5-26     number to the application.
5-27           (b)  The commissioner shall accept an application filed in
 6-1     compliance with this subchapter and shall notify the applicant on
 6-2     acceptance of the application.
 6-3           (c)  The commissioner may reject an application and shall
 6-4     notify the applicant of the rejection if the application:
 6-5                 (1)  has material omissions;
 6-6                 (2)  does not describe the land claimed to be vacant
 6-7     adequately for the land to be located on the ground; or
 6-8                 (3)  describes as vacant land that has been finally
 6-9     adjudicated in a court of this state or of the United States not to
6-10     be vacant.
6-11           (d)  A rejected application is terminated.  No further action
6-12     is taken on the application, and the land office file is closed.
6-13           Sec. 51.178.  APPLICATION FOR AND DETERMINATION OF
6-14     GOOD-FAITH-CLAIMANT STATUS. (a)  A person may apply for
6-15     good-faith-claimant status:
6-16                 (1)  at the time an application is filed under Section
6-17     51.176; or
6-18                 (2)  not later than the 60th day after the date notice
6-19     of acceptance is published as required under Section 51.179(d).
6-20           (b)  The application must include certified copies of
6-21     applicable county records supporting the good-faith claimant's
6-22     status.
6-23           (c)  The commissioner shall, after expiration of the period
6-24     prescribed by Subsection (a)(2), declare whether a person is a
6-25     good-faith claimant.  The commissioner may consider documents filed
6-26     in support of the person's good-faith-claimant status and any other
6-27     relevant information.  The commissioner may conduct an
 7-1     investigation under Section 51.185 as necessary to make a
 7-2     determination on the application.  The commissioner has sole
 7-3     discretion to declare a person a good-faith claimant, and a person
 7-4     is not otherwise entitled to a declaration of good-faith-claimant
 7-5     status.  A declaration of the commissioner under this subsection is
 7-6     not a final order and may not be appealed, except as provided by
 7-7     Section 51.187.
 7-8           (d)  A declaration of good-faith-claimant status grants a
 7-9     preferential right to the claimant to purchase or lease the land as
7-10     provided by this subchapter.  The declaration does not confer any
7-11     other rights.
7-12           Sec. 51.179.  IDENTIFICATION OF AND NOTICE TO NECESSARY
7-13     PARTIES. (a)  The applicant shall identify each necessary party by
7-14     the name and last known address of each owner or claimant of land
7-15     or any interest in land or of a lease on, adjoining, overlapping,
7-16     or including the land claimed to be vacant as can be determined
7-17     from the records of the land office and the county clerk's office.
7-18           (b)  The applicant shall provide each necessary party with
7-19     the notice of the commissioner's acceptance of the application, a
7-20     copy of the application, and a continuance for future notices form
7-21     not later than the 90th day after the date the applicant receives
7-22     the notice of the commissioner's acceptance of the application.
7-23           (c)  Except as provided by this subsection, a necessary party
7-24     is not entitled to subsequent notices required by this subchapter
7-25     unless the party requests subsequent notices.  The commissioner
7-26     shall notify a necessary party of a final order issued under
7-27     Section 51.186.
 8-1           (d)  Not later than the 30th day after the date the notices
 8-2     are mailed under Subsection (b), the applicant must publish the
 8-3     notice of the commissioner's acceptance of the application in each
 8-4     newspaper of general circulation in the county and the general area
 8-5     in which the land is located for a period determined by the
 8-6     commissioner.  The published notice must contain a description of
 8-7     the land claimed to be vacant.
 8-8           Sec. 51.180.  DEPOSIT.  (a)  The commissioner may recover
 8-9     state funds expended in the investigation and hearings conducted
8-10     under this subchapter.
8-11           (b)  Not later than the 30th day after the date notice is
8-12     published as required by Section 51.179, the commissioner may
8-13     require the applicant to submit a deposit.  If required, the
8-14     applicant must make a deposit in an amount sufficient to pay the
8-15     costs of any survey and investigation required under this
8-16     subchapter not later than the 30th day after the date the
8-17     commissioner notifies the applicant.
8-18           (c)  If the amount deposited is insufficient, the
8-19     commissioner may make a written request for a reasonably necessary
8-20     supplemental deposit.  If a supplemental deposit is required, the
8-21     applicant must make the deposit not later than the 30th day after
8-22     the date the commissioner requests the deposit.
8-23           (d)  The commissioner and applicant may agree to alternative
8-24     payment methods to recover state funds expended in the
8-25     investigation and hearings conducted under this subchapter.
8-26           (e)  An applicant may not challenge or appeal the amount of
8-27     the required deposits, and the applicant's refusal or failure to
 9-1     make the required deposits terminates the application.
 9-2           Sec. 51.181.  DISPOSITION OF DEPOSITS.  (a)  The commissioner
 9-3     shall deposit all initial and supplemental deposits received under
 9-4     this subchapter to the credit of a separate trust account in the
 9-5     state treasury.  The comptroller, on the commissioner's order,
 9-6     shall make disbursements from that account for purposes authorized
 9-7     by this subchapter.
 9-8           (b)  After proceedings on an application are concluded and
 9-9     all expenditures authorized under this subchapter are paid, the
9-10     commissioner shall  provide the applicant a complete statement of
9-11     all deposits and expenditures and shall remit to the applicant any
9-12     balance remaining from the deposit or supplemental deposits made by
9-13     the applicant.
9-14           Sec. 51.182.  COMMISSIONER'S SURVEY.  (a)  The commissioner
9-15     may appoint a licensed state land surveyor, or the county surveyor
9-16     of the county in which the land claimed to be vacant or part of
9-17     that land is located, to investigate the applicant's claim.  The
9-18     commissioner may limit the scope of the work performed by the
9-19     surveyor.
9-20           (b)  The commissioner shall mail a notice of intention to
9-21     survey to each necessary party not later than the 30th day before
9-22     the date the surveyor begins work.  The notice must contain the
9-23     proposed starting date of the survey and the name, address, and
9-24     telephone number of the surveyor.
9-25           (c)  The fees and expenses paid for the survey are the same
9-26     as those provided by law.  If the fees and expenses are not
9-27     provided by law, the commissioner shall contract for fees and
 10-1    expenses reasonably necessary for the scope of the required work.
 10-2    Contracts under this subsection:
 10-3                (1)  must include hourly rates, categories of
 10-4    reimbursable expenses, and an estimated completion date; and
 10-5                (2)  may include other expenses the commissioner
 10-6    considers reasonable.
 10-7          (d)  The appointment of a surveyor is not required.  The
 10-8    commissioner may rely on:
 10-9                (1)  any survey conducted by a licensed state land
10-10    surveyor or a county surveyor of the county in which the land
10-11    claimed to be vacant or a part of that land is located; and
10-12                (2)  any documents or public records required to
10-13    determine whether a vacancy exists.
10-14          Sec. 51.183.  SURVEYOR'S REPORT.  (a)  Not later than the
10-15    120th day after the date a surveyor is appointed under Section
10-16    51.182, the surveyor shall file a written report of the survey, the
10-17    field notes describing the land and the lines and corners surveyed,
10-18    a plat depicting the results of the survey, and any other
10-19    information required by the commissioner.  The commissioner may
10-20    extend the time for filing the report as reasonably necessary.
10-21          (b)  The survey report must also contain the name and post
10-22    office address of each person who has possession of the land
10-23    described in the application and of each person determined by the
10-24    surveyor to have a present legal interest in the land.
10-25          Sec. 51.184.  COMPLETION OF SURVEY.  (a)  The commissioner
10-26    shall serve a true copy of the  survey report filed by the surveyor
10-27    on each necessary party, including those named in the survey
 11-1    report, by certified mail, return receipt requested, not later than
 11-2    the 10th business day after the date the survey report is filed
 11-3    with the land office.
 11-4          (b)  Any necessary party may file exceptions to the
 11-5    surveyor's report not later than the 30th day after the date the
 11-6    notice of completion is received.  If the commissioner does not
 11-7    appoint a surveyor, a necessary party may file exceptions to a
 11-8    survey report filed by the applicant during a period established by
 11-9    the commissioner.  Any exceptions must be filed with the land
11-10    office and a copy must be sent to each necessary party.
11-11          Sec. 51.185.  INVESTIGATION.  (a)  The commissioner shall
11-12    conduct an investigation of the applicant's claim that a vacancy
11-13    exists.  The commissioner may conduct a hearing.  A hearing under
11-14    this subchapter is not a contested case hearing and is not subject
11-15    to Chapter 2001, Government Code.  The commissioner is not required
11-16    to grant any hearings under this subchapter.
11-17          (b)  The commissioner shall determine the scope of any
11-18    hearings to investigate an application for good-faith-claimant
11-19    status and an application to purchase or lease vacant land.  If the
11-20    commissioner grants a hearing, the commissioner shall provide
11-21    timely notice of the time and place of the hearing to necessary
11-22    parties and shall provide each necessary party an opportunity to be
11-23    heard.  Any other procedural rights, including the right to examine
11-24    or cross-examine witnesses, may be granted in the sole discretion
11-25    of the commissioner.
11-26          (c)  The commissioner may consult with any land office
11-27    employee, including the chief surveyor, or a relevant expert during
 12-1    the investigation.
 12-2          (d)  The commissioner shall record the names of the persons
 12-3    consulted, the documents and surveys reviewed, and the relevant law
 12-4    and other materials used in the investigation.
 12-5          Sec. 51.186.  COMMISSIONER'S FINAL ORDER.  (a)  If the
 12-6    commissioner concludes that the land claimed to be vacant is not in
 12-7    conflict with land previously titled, awarded, or sold by the
 12-8    state, the commissioner may determine that a vacancy exists.  The
 12-9    commissioner shall notify each necessary party by mailing each
12-10    party a copy of the vacancy determination.  The vacancy
12-11    determination is a final order of the commissioner and may be
12-12    appealed as provided by Section 51.187.
12-13          (b)  A vacancy determination order must contain:
12-14                (1)  a field note description of the land determined to
12-15    be vacant that is sufficient to locate the land on the ground;
12-16                (2)  an accurate plat of the land that is:
12-17                      (A)  consistent with the field notes; and
12-18                      (B)  prepared by a licensed state land surveyor;
12-19    and
12-20                (3)  any other matters required by law or as the
12-21    commissioner considers appropriate.
12-22          (c)  In determining the boundaries and size of a vacancy, the
12-23    commissioner is not restricted to a description of the land claimed
12-24    to be vacant that is provided by the applicant, the surveyor, or
12-25    any other person.  The commissioner shall adopt the description of
12-26    a vacancy that best describes the vacancy and is consistent with
12-27    the investigation under this subchapter.
 13-1          (d)  If the commissioner determines that the land claimed to
 13-2    be vacant is not vacant, the commissioner shall endorse the file
 13-3    with the finding "Not Vacant Land" and shall notify each necessary
 13-4    party of the determination.  A finding of "Not Vacant Land" is
 13-5    conclusive with respect to land described in the application.  A
 13-6    finding of "Not Vacant Land" under this subsection is a final order
 13-7    of the commissioner and may be appealed as provided by Section
 13-8    51.187.
 13-9          Sec. 51.187.  APPEAL. (a)  The district court in the county
13-10    in which a majority of the vacant land is located has jurisdiction
13-11    of an appeal under this subchapter.  A person must file an appeal
13-12    not later than the 90th day after the date the commissioner's final
13-13    order is issued under Section 51.186.
13-14          (b)  The district court, in its discretion, may allow an
13-15    interested person who did not receive notice of a proceeding under
13-16    this subchapter to file an appeal after the expiration of the
13-17    90-day period prescribed by Subsection (a).
13-18          (c)  If the commissioner has not issued a final order under
13-19    Section 51.186 on or before the first anniversary of the date the
13-20    application was accepted under Section 51.177(b), the applicant may
13-21    file an action in district court to determine whether a vacancy
13-22    exists.  The filing of an action under this subsection terminates
13-23    the application with the land office.
13-24          Sec. 51.188.  SCOPE OF REVIEW. The district court shall
13-25    conduct a de novo review of the commissioner's final order
13-26    determining that a vacancy exists.
13-27          Sec. 51.189.  ISSUES REVIEWABLE. The court may review the
 14-1    commissioner's declaration of good-faith-claimant status only in
 14-2    conjunction with a review of a final order determining that a
 14-3    vacancy exists.
 14-4          Sec. 51.190.  STANDING TO APPEAL. A person who has a present
 14-5    legal interest in the surface or mineral estate at the time an
 14-6    application is filed or who acquires an interest before the date of
 14-7    the commissioner's final order may appeal the final order.
 14-8          Sec. 51.191.  PREFERENTIAL RIGHT OF GOOD-FAITH CLAIMANT. (a)
 14-9    A good-faith claimant who has been notified by the commissioner
14-10    that a vacancy exists under this subchapter has a preferential
14-11    right to purchase or lease the vacancy.  The preferential right may
14-12    be exercised after a final judicial determination or after the
14-13    commissioner's final order and the period for filing an appeal has
14-14    expired.  If the good-faith claimant does not apply to purchase or
14-15    lease the land before the 121st day after the date the preferential
14-16    right may be exercised, the preferential right expires.
14-17          (b)  The good-faith claimant may purchase or lease the
14-18    vacancy by submitting a written application to the board.
14-19          (c)  The good-faith claimant is entitled to purchase or lease
14-20    the portion of the land that is vacant:
14-21                (1)  at the price set by the board;
14-22                (2)  subject to the royalty reservations provided by
14-23    the board; and
14-24                (3)  in accordance with the law in effect on the date
14-25    the application is filed.
14-26          Sec. 51.192.  PURCHASE OR LEASE BY APPLICANT. (a)  If no
14-27    good-faith claimant exists or if no good-faith claimant exercises a
 15-1    preferential right within the applicable period, the applicant has
 15-2    a preferential right to purchase or lease the land determined to be
 15-3    vacant for 30 days after:
 15-4                (1)  a determination that no good-faith claimant
 15-5    exists; or
 15-6                (2)  the expiration of the period for exercising a
 15-7    preferential right.
 15-8          (b)  The board shall award an applicant, other than a
 15-9    good-faith claimant, a perpetual nonparticipating royalty of:
15-10                (1)  not less than 1/32 or more than 1/16 of the value
15-11    of oil, gas, and sulphur; and
15-12                (2)  one percent of the value of all geothermal and
15-13    other minerals produced. [SALE AND LEASE OF VACANT LAND. (a)
15-14    Vacant and unsurveyed public school land shall be located, sold,
15-15    and leased under this subchapter, except:]
15-16                [(1)  submerged lands within tidewater limits;]
15-17                [(2)  all islands, flats, and emergent lands within
15-18    tidewater limits;]
15-19                [(3)  natural lakes; and]
15-20                [(4)  riverbeds, including channels and islands in
15-21    riverbeds, above tidewater limits.]
15-22          [(b)  This subchapter does not alter or diminish the public
15-23    domain status of the surface estate of riverbeds and channels and
15-24    islands in riverbeds that are located above tidewater limits.]
15-25          [Sec. 51.172.  DEFINITIONS.  In this subchapter:]
15-26                [(1)  "Applicant" means any person who files an
15-27    application.  The term may include a good-faith claimant.]
 16-1                [(2)  "Application" means an application to purchase or
 16-2    lease a vacancy under this subchapter.]
 16-3                [(3)  "Good-faith claimant" means a person who:]
 16-4                      [(A)  occupies or uses or whose predecessors in
 16-5    interest have occupied or used a vacancy for purposes other than
 16-6    exploring for or removing or purporting to lease or otherwise
 16-7    convey oil, gas, sulphur, other minerals, or geothermal resources
 16-8    from the vacancy;]
 16-9                      [(B)  has had, or whose predecessors in interest
16-10    have had, the vacancy enclosed or within definite recognized
16-11    boundaries and in possession for a period of 10 or more years with
16-12    a good-faith belief that the vacancy was included within the
16-13    boundaries of a survey or surveys that were previously titled,
16-14    awarded, or sold under circumstances that would have vested title
16-15    in the vacancy if it were actually located within the boundaries of
16-16    the survey or surveys;]
16-17                      [(C)  is the owner of land adjoining a vacancy on
16-18    which no application has previously been filed; or]
16-19                      [(D)  holds under a good-faith claimant or is
16-20    entitled to a distributive share of any title acquired under an
16-21    application made by a good-faith claimant.]
16-22                [(4)  "Interest" means any right or title in or to real
16-23    property, whether affecting the surface, subsurface, or mineral
16-24    estate, including:]
16-25                      [(A)  fee simple title;]
16-26                      [(B)  a determinable fee created under a mineral
16-27    lease or conveyance or otherwise;]
 17-1                      [(C)  a royalty, nonparticipating royalty, or
 17-2    overriding royalty interest;]
 17-3                      [(D)  a remainder or reversionary interest; or]
 17-4                      [(E)  an interest arising under a lien.]
 17-5                [(5)  "Interested person" means:]
 17-6                      [(A)  a person who may own or who claims any
 17-7    interest in land claimed to be vacant or in any land adjoining or
 17-8    overlapping that land as determined from the records of the land
 17-9    office, the records of the county clerk's office, and the tax
17-10    records of the county or counties in which the land claimed to be
17-11    vacant is located;]
17-12                      [(B)  any other person who asserts a right to or
17-13    interest in the land claimed to be vacant and who is known to the
17-14    applicant or whose identity could be ascertained by the applicant
17-15    with the exercise of reasonable diligence;]
17-16                      [(C)  the attorney general; or]
17-17                      [(D)  the applicant.]
17-18                [(6)  "Vacancy" means an area of unsurveyed public
17-19    school land that:]
17-20                      [(A)  is not in conflict on the ground with land
17-21    previously titled, awarded, or sold;]
17-22                      [(B)  has not been listed on the records of the
17-23    land office as public school land; and]
17-24                      [(C)  was not, on the date of filing of an
17-25    application:]
17-26                            [(i)  subject to an earlier subsisting
17-27    application by an applicant or good-faith claimant; or]
 18-1                            [(ii)  the subject of pending litigation
 18-2    brought by the state to recover the land.]
 18-3          [Sec. 51.173.  APPLICATION. (a)  To purchase or lease a
 18-4    vacancy, a person must file an application.  The filing of an
 18-5    application commences a proceeding under this subchapter.  The
 18-6    applicant must file the application with the county surveyor of the
 18-7    county in which all or part of the land claimed to be vacant is
 18-8    located.  If the county does not have a county surveyor, the
 18-9    application must be filed with the county clerk.]
18-10          [(b)  The application must:]
18-11                [(1)  describe the land that is claimed to be vacant;]
18-12                [(2)  state whether the applicant is a good-faith
18-13    claimant;]
18-14                [(3)  state whether the applicant seeks to purchase the
18-15    vacancy or obtain a mineral lease on the vacancy;]
18-16                [(4)  state the name and last known address of all
18-17    interested persons; and]
18-18                [(5)  provide any other information that the
18-19    commissioner requires by rule.]
18-20          [(c)  The commissioner by rule shall set an application
18-21    filing fee in an amount of not less than $5. The applicant shall
18-22    pay the filing fee to the county surveyor or county clerk at the
18-23    time the application is filed.]
18-24          [(d)  The county surveyor or county clerk shall mark the
18-25    exact date and hour of filing on the original and a duplicate copy
18-26    of the application and shall return a marked copy to the person
18-27    filing the application.  The original shall be recorded in a book
 19-1    kept for that purpose separate from the deed or real property
 19-2    records.]
 19-3          [(e)  Priority among applications covering the same land
 19-4    claimed to be vacant is determined by the time of filing indicated
 19-5    by the date and hour marked on the application by the county
 19-6    surveyor or county clerk.]
 19-7          [Sec. 51.174.  FILING APPLICATION WITH COMMISSIONER. (a)  The
 19-8    applicant shall file with the commissioner a copy of the
 19-9    application with the county surveyor's or clerk's mark indicating
19-10    the time of filing not later than the 10th day after the
19-11    application is filed with the county surveyor or clerk.  The
19-12    applicant shall include a filing fee set by the commissioner in an
19-13    amount of not less than $100. If the 10th day after filing falls on
19-14    a Saturday, Sunday, or state or federal holiday, the application
19-15    may be filed on the next regular business day following the 10th
19-16    day.]
19-17          [(b)  The commissioner shall mark the date of filing on the
19-18    application and assign a file number to the application.]
19-19          [(c)  An applicant who does not file the application with the
19-20    commissioner in the time provided in this section or pay the filing
19-21    fee waives all rights under the application.]
19-22          [(d)  The commissioner may refuse to accept for filing an
19-23    application that:]
19-24                [(1)  has material omissions;]
19-25                [(2)  does not describe the land claimed to be vacant
19-26    adequately for the land to be located on the ground; or]
19-27                [(3)  describes as vacant land that has been finally
 20-1    adjudicated in a court of this state or of the United States not to
 20-2    be vacant.]
 20-3          [Sec. 51.175.  DEPOSIT. (a)  If an applicant is not a
 20-4    good-faith claimant, the commissioner shall estimate the costs of
 20-5    proceeding under the application, including the costs of a survey
 20-6    made by a licensed state land surveyor or the county surveyor, the
 20-7    preparation of copies and working sketches by the land office, the
 20-8    mailing or publication of notices and copies, and other similar
 20-9    costs, excluding allocable costs of salaries and overhead expended
20-10    by the land office in actually conducting a hearing or preparing
20-11    orders and proposals for decision.]
20-12          [(b)  The commissioner shall notify the applicant in writing
20-13    of the estimated costs and the applicant shall make a deposit with
20-14    the commissioner in the amount of the estimated costs.]
20-15          [(c)  If at any time the commissioner determines that the
20-16    funds on deposit are insufficient to pay the costs of the
20-17    proceeding, the commissioner shall estimate the additional amount
20-18    required and shall notify the applicant in writing to make a
20-19    supplemental deposit of the estimated amount.  The notice must be
20-20    dated.]
20-21          [(d)  The applicant shall make an initial deposit or a
20-22    supplemental deposit not later than the 30th day after the date of
20-23    the written notice to make the deposit.  The commissioner shall
20-24    cancel the application if the applicant does not make a required
20-25    deposit within the prescribed time.  Cancellation terminates all
20-26    rights under that application.]
20-27          [Sec. 51.176.  APPEAL OF AMOUNT OF DEPOSIT.  (a)  An
 21-1    applicant may appeal the amount of an initial deposit or
 21-2    supplemental deposit determined by the commissioner in the manner
 21-3    provided for the appeal of agency decisions under Chapter 2001,
 21-4    Government Code.]
 21-5          [(b)  If the applicant does not pay the amount determined by
 21-6    the district court on or before the 15th day after the judgment of
 21-7    the district court becomes final and nonappealable, the
 21-8    commissioner shall cancel the application.  Cancellation terminates
 21-9    all rights under that application.]
21-10          [Sec. 51.177.  DISPOSITION OF DEPOSITS. (a)  The commissioner
21-11    shall deposit all initial and supplemental deposits received under
21-12    this subchapter to the credit of a separate trust account in the
21-13    treasury.  The comptroller, on the commissioner's order, shall make
21-14    disbursements from that account for purposes authorized by this
21-15    subchapter.]
21-16          [(b)  After proceedings on an application are concluded and
21-17    all expenditures authorized under this subchapter are paid, the
21-18    commissioner shall provide the applicant a complete statement of
21-19    all deposits and expenditures and shall remit to the applicant any
21-20    balance remaining from the deposit or supplemental deposits made by
21-21    the applicant.]
21-22          [Sec. 51.178.  APPOINTMENT OF SURVEYOR. (a)  Not later than
21-23    the 60th day after the date on which the required deposit is paid,
21-24    the commissioner shall appoint a licensed state land surveyor or
21-25    the county surveyor of the county in which all or a part of the
21-26    land claimed to be vacant is located to make a survey of that land.]
21-27          [(b)  The fees and expenses paid for the survey are those
 22-1    provided by law.  If the fees and expenses are not provided by law,
 22-2    the commissioner and surveyor shall make an agreement as to the
 22-3    fees and expenses reasonable for the work to be performed.]
 22-4          [(c)  The fees and expenses shall be paid by the applicant
 22-5    and may be paid from the initial deposit or any supplementary
 22-6    deposits made by the applicant under this subchapter.]
 22-7          [(d)  The commissioner shall promulgate rules setting out the
 22-8    qualifications and method of selection of surveyors appointed
 22-9    pursuant to this section.  The rules shall provide the greatest
22-10    practicable opportunity for all qualified surveyors to obtain
22-11    appointment and shall provide the opportunity for an interested
22-12    party to move for the removal of an appointed surveyor on the
22-13    grounds of bias, prejudice, or conflict of interest.  No surveyor
22-14    appointed shall be removed, however, except upon notice to the
22-15    surveyor and all interested parties and hearing.  The fact of
22-16    removal of a surveyor shall not be a basis for any disciplinary
22-17    action against that surveyor under the Professional Land Surveying
22-18    Practices Act (Article 5282c, Vernon's Texas Civil Statutes).]
22-19          [Sec. 51.179.  NOTICE TO INTERESTED PERSONS. (a)  Not later
22-20    than the 10th day after the date on which the commissioner appoints
22-21    the surveyor, the commissioner shall give notice by certified mail,
22-22    return receipt requested, to all interested persons at the last
22-23    known address.  The notice shall contain:]
22-24                [(1)  the date of the notice;]
22-25                [(2)  a statement that a vacancy application has been
22-26    made;]
22-27                [(3)  the name, address, and telephone number of the
 23-1    surveyor appointed to make the survey;]
 23-2                [(4)  a statement that the survey may begin any time
 23-3    after the 20th day after the date of the notice;]
 23-4                [(5)  a statement that an interested party is entitled
 23-5    to:]
 23-6                      [(A)  observe the conduct of the survey;]
 23-7                      [(B)  receive a copy of the final survey report
 23-8    and other documents filed by the surveyor; and]
 23-9                      [(C)  participate in the vacancy proceeding;]
23-10                [(6)  a true and legible copy of the application; and]
23-11                [(7)  other information the commissioner by rule may
23-12    prescribe.]
23-13          [(b)  If the location of an interested person is unknown or
23-14    if a notice is returned as unclaimed or undeliverable, the
23-15    commissioner shall publish notice as prescribed by the Texas Rules
23-16    of Civil Procedure.  If notice by publication is made, the survey
23-17    may not begin and further proceedings may not be held until the
23-18    30th day after publication is completed.]
23-19          [(c)  If the applicant, another interested person, or the
23-20    surveyor shows that the delay required by Subsection (b) of this
23-21    section may materially affect the accuracy of the survey because of
23-22    destruction, alteration, or removal of natural features, monuments,
23-23    or witness objects, or for other good cause, the commissioner may
23-24    order the survey to proceed.  Notice of the request to proceed with
23-25    the survey and of any order issued in response to the request shall
23-26    be mailed first class to all interested persons.]
23-27          [(d)  The right of an interested person, personally or
 24-1    through a representative or representatives, to observe the conduct
 24-2    of a survey made under this subchapter does not require a delay in
 24-3    the conduct of a survey solely to allow an interested person or
 24-4    that person's representative to be present during the survey.]
 24-5          [Sec. 51.180.  WAIVER OF NOTICE. (a)  An interested person
 24-6    may waive service of the notice required by Section 51.179 of this
 24-7    code by filing with the commissioner a sworn affidavit stating the
 24-8    person's intent to waive notice.  The affidavit shall state that
 24-9    the person executing the waiver has been provided with a true copy
24-10    of the application filed with the commissioner.]
24-11          [(b)  The affidavit may also state clearly the interested
24-12    person's intent to waive all further notice of the vacancy
24-13    proceedings.  If the affidavit states this intent, it must also
24-14    state prominently and clearly that the interested person is aware
24-15    that waiving the right to further notice may result in the loss of
24-16    the opportunity to appear and to contest the application.]
24-17          [(c)  The commissioner by rule may prescribe the form and
24-18    specific content of the affidavit described in this section,
24-19    including additional information to be included.]
24-20          [Sec. 51.181.  SURVEY. (a)  Except when notice by publication
24-21    is required, at any time after the 20th day after the date of the
24-22    notice required by Section 51.179(a) of this code, the surveyor
24-23    shall begin the survey of the land claimed to be vacant.]
24-24          [(b)  The surveyor shall prepare and file in the land office:]
24-25                [(1)  a detailed written report of all aspects of the
24-26    survey, including record research conducted, survey corners
24-27    recovered in the course of the field survey, and details of
 25-1    boundary construction using recovered corners;]
 25-2                [(2)  field notes in the form and content prescribed by
 25-3    law, describing the land and the lines and corners surveyed;]
 25-4                [(3)  a complete plat depicting in detail the survey
 25-5    results;]
 25-6                [(4)  the names and addresses of all persons who have
 25-7    possession of the land described in the application and a
 25-8    description of the lands occupied by those persons; and]
 25-9                [(5)  the names and addresses of all persons known to
25-10    the surveyor who have or claim any interest in the land.]
25-11          [(c)  The surveyor shall file the report required by this
25-12    section not later than the 140th day after the date of the notice
25-13    required by Section 51.179(a) of this code.  If notice by
25-14    publication is required and the commissioner has not ordered the
25-15    survey to proceed, the surveyor shall file the report not later
25-16    than the 170th day after the date on which notice by publication is
25-17    completed.  If the commissioner has ordered the survey to proceed,
25-18    the surveyor shall file the report not later than the 140th day
25-19    after the date of the commissioner's order.]
25-20          [(d)  For good cause shown, the commissioner by written order
25-21    may extend the time for filing the survey.  The order shall state
25-22    the cause for the extension and shall be included in the record. A
25-23    single order may not extend the time for filing by more than 60
25-24    days.]
25-25          [(e)  An interested person at the person's own expense may
25-26    have any surveying done that the person considers desirable, but a
25-27    survey report, a plat, or field notes based on a survey made by a
 26-1    person not qualified by law to survey public lands in this state
 26-2    may not be admitted into evidence in a vacancy proceeding or filed
 26-3    in the land office.]
 26-4          [(f)  The commissioner shall serve a true copy of the survey
 26-5    report, field notes, plat, and all other documents filed by the
 26-6    surveyor on each interested person, including those named in the
 26-7    survey report, by certified mail, return receipt requested, not
 26-8    later than the fifth business day after the survey report is filed
 26-9    in the land office.]
26-10          [Sec. 51.182.  ADDITIONAL INTERESTED PERSONS. (a)  All
26-11    persons named in the survey report as occupying or as having or
26-12    claiming any interest in the land described in the application
26-13    shall be included in the proceeding as interested persons and shall
26-14    be provided notice as prescribed by this subchapter.]
26-15          [(b)  An application may not be canceled or a proceeding
26-16    terminated because of the discovery of an additional interested
26-17    person unless the commissioner finds that the person filing the
26-18    application knowingly and intentionally omitted the name of the
26-19    person from the application.]
26-20          [Sec. 51.183.  EXCEPTIONS. An interested person may file
26-21    exceptions to the survey report, field notes, and plat not later
26-22    than the 30th day after the date the survey report is filed in the
26-23    land office.  A person filing exceptions shall serve a true copy on
26-24    all interested persons and on the surveyor by certified mail,
26-25    return receipt requested.  The exceptions shall include a
26-26    certificate of the fact of that service.]
26-27          [Sec. 51.184.  ADDITIONAL SURVEYS.  (a)  The commissioner or
 27-1    the land office staff may consult with the surveyor.  The
 27-2    commissioner, after notice to the interested persons, may direct
 27-3    the surveyor to make additional surveys, to investigate as the
 27-4    commissioner considers necessary, and to prepare supplemental
 27-5    reports, plats, and field notes the commissioner requires.]
 27-6          [(b)  The commissioner shall provide copies of all reports,
 27-7    plats, field notes, and other information resulting from additional
 27-8    surveys and investigation to all interested persons.]
 27-9          [(c)  An interested person may file exceptions or other
27-10    responses not later than the 20th day after the surveyor files the
27-11    required documents with the land office.]
27-12          [(d)  Service of additional documents and exceptions or
27-13    responses to those documents shall be made as provided by Sections
27-14    51.181 and 51.183 of this code.]
27-15          [Sec. 51.185.  ACTION ON APPLICATION. (a)  Not later than the
27-16    90th day after the date on which the surveyor files the survey
27-17    report and other documents required to be filed, the commissioner
27-18    shall either deny the application as provided by Section 51.186 of
27-19    this code or hold a hearing to determine whether a vacancy exists.]
27-20          [(b)  Except as provided by Section 51.192 of this code, the
27-21    commissioner may not find that a vacancy exists unless a hearing is
27-22    held.]
27-23          [(c)  The commissioner shall decide all issues raised or that
27-24    could be raised by the application and any exceptions or responses
27-25    to the application, including the existence of a vacancy, the
27-26    boundaries of a vacancy, and the status and rights of any
27-27    interested person as a good-faith claimant or prior applicant.]
 28-1          [(d)  The commissioner may not decide in a proceeding on an
 28-2    application any claim of the state or permanent school fund for
 28-3    damages arising from trespass, the removal or use of minerals or
 28-4    geothermal resources, mispayment of proceeds from the sale or use
 28-5    of minerals or geothermal resources, damages to the soil,
 28-6    vegetation, or other life or habitat, and similar or related
 28-7    claims.  Those claims may be asserted by the commissioner in
 28-8    administrative proceedings under rules adopted by the commissioner
 28-9    or through suit brought by the attorney general at the request of
28-10    the commissioner.]
28-11          [(e)  Evidence or testimony regarding the existence or extent
28-12    of mineral development or other economic use of land claimed to be
28-13    vacant may not be introduced or considered, unless that evidence or
28-14    testimony is relevant to determine the existence or boundaries of
28-15    the alleged vacancy or the status of a person as a good-faith
28-16    claimant.]
28-17          [Sec. 51.186.  DENIAL OF APPLICATION. (a)  If, after
28-18    reviewing the survey report, any supplemental reports, any
28-19    exceptions to the reports, all pertinent publicly available records
28-20    of the land office and the state archives, and land office staff
28-21    recommendations, the commissioner decides that the land claimed to
28-22    be vacant is not vacant, the commissioner may enter an order
28-23    denying the application.  The order shall contain findings of fact,
28-24    conclusions of law, and other matters the commissioner considers
28-25    appropriate.]
28-26          [(b)  The commissioner shall promptly send a true copy of the
28-27    order denying the application to the applicant by certified mail,
 29-1    return receipt requested.]
 29-2          [(c)  The commissioner shall place in the file assigned to
 29-3    the application the original order, all materials filed by the
 29-4    surveyor, all exceptions and responses to the surveyor's filings,
 29-5    all memoranda provided to the commissioner by the land office
 29-6    staff, a list of all files and records of the land office and state
 29-7    archives examined by the staff or commissioner in connection with
 29-8    the application, and all other relevant papers.]
 29-9          [(d)  An interested person may request a rehearing and appeal
29-10    the commissioner's order as provided by Chapter 2001, Government
29-11    Code and by rules adopted by the commissioner consistent with that
29-12    Act.  If a rehearing is not requested, the order becomes final on
29-13    the 30th day after the date it is signed.  If a rehearing is
29-14    requested and denied, the order becomes final on the date that time
29-15    for appeal to the district court expires.  If appeal is taken, the
29-16    order becomes final on the date that a judgment disposing of the
29-17    order becomes final.]
29-18          [(e)  When the commissioner's order denying the vacancy is
29-19    final, all rights under the application are terminated.]
29-20          [Sec. 51.187.  EFFECT OF FINAL ORDER. (a)  A final order of
29-21    the commissioner under this subchapter is conclusive with respect
29-22    to the land described in the application or final order.  A final
29-23    order of the commissioner does not have the effect of stare decisis
29-24    with respect to land not described in the application or final
29-25    order, but may be considered with all other evidence.]
29-26          [(b)  The cancellation, withdrawal, abandonment, or
29-27    termination of an application, the refusal of the commissioner to
 30-1    accept an application for filing, or the order or judgment of any
 30-2    court resulting in or affecting such an action has no effect on a
 30-3    subsequent determination of whether any land described in the
 30-4    application is vacant.]
 30-5          [(c)  A decision of the commissioner issued before September
 30-6    1, 1993, that denies a vacancy application or letter of inquiry is
 30-7    not conclusive as to the existence or nonexistence of a vacancy.]
 30-8          [Sec. 51.188.  RULEMAKING; VENUE OF APPEALS. (a)  A hearing
 30-9    under this subchapter and further proceedings arising from the
30-10    hearing shall be conducted in accordance with Chapter 2001,
30-11    Government Code and rules adopted by the commissioner consistent
30-12    with that Act.]
30-13          [(b)  Appeal of a final order of the commissioner is to a
30-14    district court of the county in which the land claimed to be vacant
30-15    or a part of that land is located.  The district court shall review
30-16    the commissioner's order under the substantial evidence rule.]
30-17          [Sec. 51.189.  COMMISSIONER'S ORDER. (a)  If it appears to
30-18    the commissioner that the alleged vacancy is not in conflict with
30-19    land previously titled, awarded, or sold by the state or its
30-20    predecessor sovereigns, the commissioner shall enter an order
30-21    declaring the existence of a vacancy and determining all other
30-22    issues.]
30-23          [(b)  If it appears to the commissioner that the land claimed
30-24    to be vacant is not vacant, the commissioner shall enter an order
30-25    denying the application and determining all other issues.]
30-26          [(c)  The commissioner shall base the order on the testimony
30-27    and other competent evidence presented at the hearing, the
 31-1    surveyor's filings and all supplements to those filings, any
 31-2    exceptions or responses to the surveyor's filings and all
 31-3    supplements to those filings, and the publicly available records of
 31-4    the land office and the state archives.  The commissioner and the
 31-5    examiner or examiners who conduct hearings on the application may
 31-6    consult with the land office staff and the surveyor to the extent
 31-7    permitted by Chapter 2001, Government Code.  The record shall
 31-8    include a list of the names and titles of all staff consulted, a
 31-9    list of the files and documents of the land office and state
31-10    archives examined, and a copy of all memoranda provided to the
31-11    examiners or commissioner by the land office staff or by the
31-12    surveyor.]
31-13          [(d)  The order shall contain:]
31-14                [(1)  findings of fact;]
31-15                [(2)  conclusions of law;]
31-16                [(3)  a field note description of the land, if any,
31-17    found to be vacant, sufficient to locate it on the ground, and
31-18    other elements required by law;]
31-19                [(4)  an accurate plat of the land, if any, found to be
31-20    vacant consistent with the field notes and prepared by the surveyor
31-21    or a licensed state land surveyor on the land office staff; and]
31-22                [(5)  other matters the commissioner considers
31-23    appropriate.]
31-24          [(e)  The commissioner's order may adopt, without restating,
31-25    the findings of fact and conclusions of law stated in a proposal
31-26    for decision prepared by the examiner or examiners who conducted
31-27    the hearings and any opinion or statement contained in that
 32-1    proposal for decision.]
 32-2          [Sec. 51.190.  DETERMINATION OF BOUNDARIES; REOPENING. (a) In
 32-3    determining the boundaries and size of a vacancy, the commissioner
 32-4    is not restricted to a description of the land claimed to be vacant
 32-5    that is provided by the applicant, the surveyor, or an interested
 32-6    party.  The commissioner shall adopt the description of a vacancy
 32-7    that best describes the vacancy and is consistent with the
 32-8    information available under this section.]
 32-9          [(b)  If in determining the boundaries and size of a vacancy
32-10    it becomes apparent to the commissioner that persons who have not
32-11    been named as interested persons and who have not been served
32-12    notice of the proceeding under the application may be affected by
32-13    the finding that a vacancy exists at the location and with the
32-14    boundaries believed by the commissioner to conform to the record,
32-15    the proceeding shall be reopened and the persons affected shall be
32-16    joined as interested persons and given an opportunity to
32-17    participate adequately in the proceeding.  This subsection does not
32-18    require the refiling of an application or the conduct of a new
32-19    survey by the surveyor.]
32-20          [Sec. 51.191.  GOOD-FAITH CLAIMANT STATUS. (a)  An applicant
32-21    or interested person who wishes to assert status as a good-faith
32-22    claimant may file notice of claim of good-faith status at any time
32-23    before the 20th day preceding the date on which the first hearing
32-24    begins.  The notice of claim of good-faith status shall state the
32-25    grounds for the claim and describe the land claimed to be affected
32-26    by the good-faith status.  The notice shall be filed in the land
32-27    office and served on all interested persons by certified mail,
 33-1    return receipt requested.]
 33-2          [(b)  Filing notice of claim of good-faith status is not an
 33-3    admission by the person asserting the claim that a vacancy exists.]
 33-4          [Sec. 51.192.  ORDER WITHOUT NOTICE AND HEARING.  (a)  An
 33-5    applicant who asserts status as a good-faith claimant may present
 33-6    evidence to the commissioner that:]
 33-7                [(1)  the good-faith claimant owns all of the land and
 33-8    interests in land completely surrounding the land claimed to be
 33-9    vacant;]
33-10                [(2)  there is no subsisting prior application covering
33-11    the land described in the good-faith claimant's application;]
33-12                [(3)  no previous application has been made covering
33-13    the land described in the good-faith claimant's application; and]
33-14                [(4)  the good-faith claimant meets all other
33-15    requirements of a good-faith claimant.]
33-16          [(b)  If the commissioner finds that the evidence presented
33-17    is accurate, further notice to other persons is not required and,
33-18    on acceptance for filing by the commissioner of a survey made by a
33-19    licensed state land surveyor or the county surveyor of the county
33-20    in which the land claimed to be vacant or a part of that land is
33-21    located, the commissioner may enter an order declaring the
33-22    existence of the vacancy and determining the good-faith status of
33-23    the applicant.]
33-24          [(c)  For purposes of this section, land claimed to be vacant
33-25    and surrounded by lands owned only by the good-faith claimant and
33-26    the state is considered to be surrounded completely by land owned
33-27    by the good-faith claimant.]
 34-1          [(d)  Two or more persons may jointly apply as good-faith
 34-2    claimants under this section if together they meet the requirements
 34-3    of Subsection (a) of this section.]
 34-4          [(e)  A person who would have been an interested person under
 34-5    an application made under this subchapter by a person other than a
 34-6    good-faith claimant may move to set aside an order entered under
 34-7    this section by filing a written motion with the commissioner not
 34-8    later than the second anniversary of the date of that order.  The
 34-9    person shall serve a true copy of the motion by certified mail,
34-10    return receipt requested, on the applicant and all persons holding
34-11    or claiming under the applicant.]
34-12          [(f)  The commissioner shall set aside an order issued under
34-13    this section finding that a vacancy exists if, after notice and
34-14    hearing, the commissioner finds that the person asserting rights
34-15    under this section, at the time the order declaring the vacancy was
34-16    entered, did not:]
34-17                [(1)  qualify as a good-faith claimant under this
34-18    subchapter;]
34-19                [(2)  own all of the land and interests in land
34-20    surrounding the land claimed to be vacant; or]
34-21                [(3)  meet another material requirement of this
34-22    section.]
34-23          [(g)  The commissioner on the commissioner's own motion may
34-24    set aside an order after notice and hearing as required by
34-25    Subsections (e) and (f) of this section.]
34-26          [(h)  If the order is set aside, the commissioner shall
34-27    reopen the proceeding on the application and conduct the reopened
 35-1    proceeding in the same manner as proceedings on other applications.]
 35-2          [(i)  The issues in a reopened proceeding are limited to the
 35-3    status of the applicant as a good-faith claimant entitled to rights
 35-4    under this section and the rights of any other person as an
 35-5    applicant or good-faith claimant.]
 35-6          [(j)  An application of a good-faith claimant who does not
 35-7    own all of the land and interests in land completely surrounding
 35-8    the land claimed to be vacant is treated as an application under
 35-9    other sections of this subchapter.]
35-10          [Sec.  51.193.  SALE OR LEASE OF VACANCY.  (a)  When a
35-11    vacancy has been established by final order, the school land board
35-12    may sell or lease the vacancy as provided by this subchapter.]
35-13          [(b)  The board shall set the sale price and other terms and
35-14    conditions as in all other sales of other lands dedicated to the
35-15    permanent school fund.  The sale price may not be less than the
35-16    fair market value as determined by an appraisal conducted by the
35-17    land office.]
35-18          [(c)  The fee prescribed in Section 32.110(a) of this code
35-19    applies to all sales and leases made under this subchapter.]
35-20          [(d)  The board may allow a credit against the sale price in
35-21    an amount not to exceed the actual cost of the survey paid by an
35-22    applicant or good-faith claimant if:]
35-23                [(1)  the purchaser is a person exercising a
35-24    preferential right to purchase under this subchapter;]
35-25                [(2)  the board has reserved all mineral and geothermal
35-26    leasing rights; and]
35-27                [(3)  the board finds that the fair market value of the
 36-1    mineral estate is equal to or exceeds 50 percent of the amount of
 36-2    the credit.]
 36-3          [Sec. 51.194.  MARKET VALUE; MEDIATION; BINDING ARBITRATION.
 36-4    (a)  A person seeking to purchase a vacancy by exercising a right
 36-5    of preferential purchase under this subchapter, by filing a written
 36-6    request with the commissioner, may have the issue of market value
 36-7    submitted to mediation before a trained mediator acceptable to both
 36-8    the board and the person seeking to purchase the vacancy if:]
 36-9                [(1)  the price set by the board under Section 51.193
36-10    of this code exceeds by 15 percent or more the market value
36-11    estimated in an appraisal made by a real estate appraiser certified
36-12    in Texas for the person seeking to purchase the vacancy; and]
36-13                [(2)  the appraisal was made not more than six months
36-14    before the date on which the board set the price.]
36-15          [(b)  If agreement on price is not reached through mediation
36-16    on or before the 60th day after the first mediation session, the
36-17    person seeking to purchase the vacancy, by filing a written request
36-18    with the commissioner, may have the issue of market value submitted
36-19    to binding arbitration.]
36-20          [(c)  A panel of three real estate appraisers certified in
36-21    Texas shall conduct the arbitration.  The person seeking to
36-22    purchase the vacancy shall name one member of the panel, the board
36-23    shall name one member of the panel, and the two panel members shall
36-24    name the third member of the panel, who is the panel's presiding
36-25    officer. The board or the person seeking to purchase the vacancy
36-26    may object to and have disqualified the first person named to the
36-27    panel by the other party.  Appraisers employed by or who contract
 37-1    with the land office are eligible to serve on the arbitration
 37-2    panel.]
 37-3          [(d)  The arbitration shall be conducted under the rules of
 37-4    the American Arbitration Association or under other rules agreed on
 37-5    by the parties.]
 37-6          [(e)  The decision of the arbitration panel is not subject to
 37-7    judicial review.]
 37-8          [(f)  The costs of mediation and arbitration shall be shared
 37-9    equally by the land office and the person seeking to purchase the
37-10    vacancy.]
37-11          [Sec. 51.195.  CONDITIONS OF SALE; MINERAL AWARDS.  (a)  In
37-12    all sales, the board shall reserve to the permanent school fund all
37-13    oil, gas, sulphur, and other minerals and geothermal resources and
37-14    shall determine the manner in which those minerals and geothermal
37-15    resources are to be leased.]
37-16          [(b)  Before the sale of a vacancy, the land office shall
37-17    prepare and present to the board a study of the mineral prospects
37-18    and value of the vacancy, taking into consideration the size and
37-19    configuration of the vacancy, its location with respect to other
37-20    surrounding and nearby tracts, the proximity of mineral production,
37-21    and the likelihood of future mineral leasing and development.  The
37-22    study shall include a recommendation as to the method most
37-23    advantageous to the state by which the vacancy could be leased.]
37-24          [(c)  The board shall review the study and land office
37-25    recommendations and shall determine whether:]
37-26                [(1)  the state shall retain all leasing rights and the
37-27    vacancy shall be leased as provided in Subchapter B, Chapter 52,
 38-1    and Subchapters B and E, Chapter 53, of this code; or]
 38-2                [(2)  the owner of the soil shall be designated to
 38-3    execute leases as the agent of the state subject to the rights,
 38-4    obligations, and liabilities of Subchapter F, Chapter 52, and
 38-5    Subchapter C, Chapter 53, of this code.]
 38-6          [(d)  If the board determines that the owner of the soil
 38-7    shall act as agent under Subsection (c)(2) of this section, the
 38-8    board shall establish the division of bonus, rental, and royalty
 38-9    between the permanent school fund and the owner of the soil.  The
38-10    portion to be paid to the owner of the soil may not be less than 20
38-11    percent or more than 50 percent.  The board may establish different
38-12    portions to be paid to the owner of the soil for the lease of
38-13    different substances.]
38-14          [(e)  If the board provides for lease by the owner of the
38-15    soil under Subsection (c)(2) of this section, the original
38-16    purchaser is a good-faith claimant, and the vacancy was established
38-17    under an application made by a person other than a good-faith
38-18    claimant, the board shall award the applicant a perpetual
38-19    nonparticipating royalty of not less than 1/32 or more than 1/16 of
38-20    the value of all oil, gas, and sulphur produced and a perpetual
38-21    nonparticipating royalty of not less than one percent or more than
38-22    two percent of the value of all geothermal resources and all other
38-23    minerals produced.]
38-24          [(f)  If the board determines that the state shall retain all
38-25    leasing rights as provided in Subsection (c)(1) of this section,
38-26    the board shall award:]
38-27                [(1)  to an applicant other than a good-faith claimant,
 39-1    a perpetual nonparticipating royalty of 1/32 of the value of oil
 39-2    and gas and sulphur and one percent of the value of all geothermal
 39-3    resources and all other minerals produced; and]
 39-4                [(2)  to a good-faith claimant purchasing the vacancy,
 39-5    a nonparticipating royalty of 1/32 of the value of oil and gas and
 39-6    sulphur and one percent of the value of all geothermal resources
 39-7    and all other minerals produced.]
 39-8          [(g)  If a preferential right to obtain the first mineral
 39-9    lease on a vacancy is exercised by any person, the state's royalty
39-10    under the lease shall be reduced by 25 percent for a period of five
39-11    years after the date of first production under the first lease if
39-12    sales of production from or attributable to the lease are commenced
39-13    during the primary term of the lease.]
39-14          [Sec. 51.196.  PREFERENTIAL RIGHT OF GOOD-FAITH CLAIMANT.
39-15    (a)  A good-faith claimant has a preferential right to purchase or
39-16    lease the portion of a vacancy subject to the good-faith claim.]
39-17          [(b)  A good-faith claimant may exercise the preferential
39-18    right by filing a notice of intent to purchase or lease, on a form
39-19    prescribed by the board, not later than the 90th day after the date
39-20    the order establishing the vacancy becomes final.  The good-faith
39-21    claimant shall describe in the notice the portion of the vacancy
39-22    the good-faith claimant seeks to purchase or lease.  The good-faith
39-23    claimant shall mail a copy of the notice to the applicant and to
39-24    all other interested persons who have asserted status as good-faith
39-25    claimants.]
39-26          [(c)  All preferential rights held by a good-faith claimant
39-27    expire if the good-faith claimant does not file the notice of
 40-1    intent within the time prescribed by Subsection (b) of this section
 40-2    or does not complete the purchase or lease within 60 days after the
 40-3    board sets the terms of the purchase or lease.  For good cause
 40-4    shown, the board may extend the time to complete the purchase or
 40-5    lease by a period not to exceed 90 days.]
 40-6          [(d)  A good-faith claimant exercising a preferential right
 40-7    shall repay to the applicant the applicant's reasonable expenses
 40-8    incurred in determining the existence of a vacancy, excluding
 40-9    filing and attorney fees, not later than the date on which the sale
40-10    or purchase by the good-faith claimant is completed.  Failure to
40-11    pay the expenses cancels the preferential right of the good-faith
40-12    claimant.]
40-13          [Sec. 51.197.  PREFERENTIAL RIGHT OF APPLICANT OTHER THAN
40-14    GOOD-FAITH CLAIMANT.  (a)  On the expiration of the preferential
40-15    right of a good-faith claimant to purchase or lease or if there is
40-16    no good-faith claimant, an applicant who is not a good-faith
40-17    claimant has a preferential right to purchase or lease all or any
40-18    portion of the vacancy.]
40-19          [(b)  An applicant may exercise the preferential right by
40-20    filing a notice of intent to purchase or lease, on a form
40-21    prescribed by the board, not later than the 90th day after the date
40-22    on which the rights of the good-faith claimant expire.  The
40-23    applicant shall describe in the notice the portion of the vacancy
40-24    the applicant seeks to purchase or lease.  The applicant shall mail
40-25    a copy of the notice to all other interested persons asserting
40-26    status as good-faith claimants.]
40-27          [(c)  All preferential rights held by an applicant expire if
 41-1    the applicant does not file the notice of intent within the time
 41-2    prescribed by Subsection (b) of this section or does not complete
 41-3    the purchase or lease within 60 days after the date on which the
 41-4    board sets the terms of the purchase or lease.  For good cause
 41-5    shown, the board may extend the time to complete the purchase or
 41-6    lease by a period not to exceed 90 days.]
 41-7          [Sec. 51.198.  RIGHTS ASSIGNABLE.  An applicant or good-faith
 41-8    claimant may assign all rights in a vacancy or land claimed to be
 41-9    vacant.  The assignment must be in writing.  The assignor shall
41-10    record the assignment in the real property records of the county or
41-11    counties in which the vacancy or land claimed to be vacant is
41-12    located and file a certified copy of the recorded assignment in the
41-13    land office.]
41-14          [Sec. 51.199.  LEASE TERMS UNDER PREFERENTIAL RIGHTS.  The
41-15    board shall prescribe terms for preferential purchases or leases
41-16    consistent with this subchapter.  The board may not grant a
41-17    preferential lease with a royalty of less than 1/8 of the value of
41-18    all oil, gas, and sulphur produced or less than five percent of the
41-19    value of all geothermal resources and all other minerals produced.]
41-20          [Sec. 51.200.  EFFECT OF PRIOR CONVEYANCES.  (a)  A mineral
41-21    lease, surface lease, deed, or any other conveyance of any interest
41-22    in land executed by a good-faith claimant before the date of
41-23    completion of a sale or lease under this subchapter does not give
41-24    the grantee under that conveyance any interest in or to the vacancy
41-25    or its minerals.]
41-26          [(b)  A title to land or an interest in land acquired from
41-27    the state under a preferential right does not pass as
 42-1    after-acquired title under a covenant of general warranty,
 42-2    description, or other provision contained in a conveyance executed
 42-3    before the date of completion of a sale or lease under this
 42-4    subchapter.]
 42-5          [Sec. 51.201.  RULEMAKING AUTHORITY.  (a)  The commissioner
 42-6    may adopt rules consistent with this subchapter relating to
 42-7    applications to purchase or lease vacancies and the determination
 42-8    of the existence of vacancies.]
 42-9          [(b)  The board may adopt rules consistent with this
42-10    subchapter relating to the sale and lease of vacancies.]
42-11          [Sec. 51.202.  CONFLICT WITH OTHER CODE PROVISIONS.  To the
42-12    extent that any provision of this subchapter pertaining to
42-13    vacancies or the sale or lease of vacancies conflicts with any
42-14    other provision of this code, this subchapter controls.]
42-15          SECTION 2.  This Act takes effect immediately if it receives
42-16    a vote of two-thirds of all the members elected to each house, as
42-17    provided by Section 39, Article III, Texas Constitution.  If this
42-18    Act does not receive the vote necessary for immediate effect, this
42-19    Act takes effect September 1, 2001.