Amend HB 3461 (Senate committee report) by adding the 
following SECTIONS to the bill, appropriately numbered, and 
renumbering the subsequent SECTIONS of the bill accordingly:
	SECTION ___.  Section 32.002, Natural Resources Code, is 
amended by amending Subsections (a) and (b) and adding Subsections 
(a-1) and (f) to read as follows:
	(a)  This chapter does not apply to:                                           
		(1)  land dedicated by the constitution or a law of this 
state to The University of Texas System, land donated by a will or 
instrument in writing or otherwise to The University of Texas 
System, as trustee, for a scientific, educational, or other 
charitable or public purpose, or any other land under the control of 
the Board of Regents of The University of Texas System;
		(2)  land whose title is vested in the state for the use 
and benefit of any part of The Texas A&M University System or land 
under the control of the Board of Regents of The Texas A&M 
University System;
		(3)  minerals subject to lease under Subchapter F, 
Chapter 52, [of this code,] commonly known as the Relinquishment 
Act, and Subchapters B and C, Chapter 53[, of this code];
		(4)  [oil and gas underlying land owned by the state 
that was acquired to construct or maintain a highway, road, street, 
or alley, which is located in a producing area, unless the oil or 
gas is leased for the specific purpose of drilling a horizontal 
well;
		[(5)  oil and gas underlying land owned by the state 
that was acquired to construct or maintain a highway, road, street, 
or alley if the Texas Transportation Commission has determined that 
such right-of-way is no longer needed for use by citizens as a road 
pursuant to Section 202.021, Transportation Code;
		[(6)]  land owned by the [Texas] Parks and Wildlife 
Department; or
		(5) [(7)]  land owned by the Texas Board of Criminal 
Justice.
	(a-1)  Oil and gas underlying land that is owned by this 
state, was acquired to construct or maintain a highway, road, 
street, or alley, is located in a producing area, and is subject to 
an oil or gas lease may be pooled or unitized only prospectively and 
is subject to Sections 32.201, 32.202, and 32.203.
	(b)  For purposes of Subsection (a-1) [Subsection (a)(4) of 
this section], land is located in a producing area if the closest 
boundary line of the surface of such land is within 2,500 feet of a 
well capable of producing oil or gas in paying quantities [as of 
January 1, 1985].
	(f)  This chapter does not authorize drilling or other 
operations on the surface of land during the period in which the 
land is used by this state as a highway, road, street, or alley.
	SECTION ___.  Section 32.203, Natural Resources Code, is 
amended to read as follows:
	Sec. 32.203.  COMPENSATORY ROYALTY.  Compensatory royalty 
shall be paid to the state on any lease offered and granted under 
Section 32.201 of this code if the lease is not being held by 
production on the tract, by production from a pooled unit, or by 
payment of shut-in royalties in accordance with the terms of the 
lease, and if oil or gas is sold and delivered in paying quantities 
from a well located within 2,500 feet of the leased premises and 
completed in a producible reservoir underlying the state lease or 
in any case in which drainage is occurring.  Such compensatory 
royalty shall be paid at the royalty rate provided in the state 
lease based on the value of production from the well as provided in 
the lease on which such well is located.  The compensatory royalty 
shall be paid in the same proportion that the acreage of the state 
lease has to the acreage of the state lease plus the acreage of a 
standard [the] proration unit under statewide field rules or, if 
applicable, the special field rules adopted by the Railroad 
Commission of Texas for the field in which [surrounding] the 
[draining] well has been completed.  The compensatory royalty is to 
be paid monthly to the commissioner on or before the last day of the 
month next succeeding the month in which the oil or gas is sold and 
delivered from the well [causing the drainage or from the well 
located within 2,500 feet of the leased premises and completed in a 
producible reservoir under the state lease].  Notwithstanding 
anything herein to the contrary, compensatory royalty payable under 
this section shall be no less than an amount equal to double the 
annual rental payable under the state lease.  Payment of 
compensatory royalty shall maintain the state lease in force and 
effect for so long as such payments are made as provided in this 
section.
	SECTION ___.  Subchapter F, Chapter 32, Natural Resources 
Code, is amended by adding Section 32.207 to read as follows:
	Sec. 32.207.  ADVERTISING FOR BIDS; POOLING.  Section 52.076 
applies to oil and gas under land owned by this state that was 
acquired to construct or maintain a highway, road, street, or alley 
in the same manner as that section applies to oil and gas under a 
riverbed or channel.
	SECTION ___.  Sections 32.002 and 32.203, Natural Resources 
Code, as amended by this Act, and Section 32.207, Natural Resources 
Code, as added by this Act, do not authorize:
		(1)  any person, including this state or a local 
government, to claim damages relating to production from a legally 
permitted and legally producing well the drilling of which was 
commenced before the effective date of this Act; or
		(2)  a state or local taxing authority to reallocate 
liability for severance or ad valorem taxes or increase the amount 
of those taxes imposed based on production from or the value 
attributable to production from a legally permitted and legally 
producing well the drilling of which was commenced before the 
effective date of this Act.