NATURAL RESOURCES CODE
CHAPTER 52. OIL AND GAS
SUBCHAPTER A. GENERAL PROVISIONS
§ 52.001. DEFINITIONS. In this chapter:
(1) "Commissioner" means the Commissioner of the
General Land Office.
(2) "Land office" means the General Land Office.
(3) "Board" means the school land board.
Acts 1977, 65th Leg., p. 2445, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
SUBCHAPTER B. LEASE OF PUBLIC SCHOOL AND GULF LAND
§ 52.011. AREA SUBJECT TO LEASE. Under the provisions
of this subchapter, the board may lease to any person for the
production of oil and natural gas:
(1) islands, saltwater lakes, bays, inlets, marshes,
and reefs owned by the state within tidewater limits;
(2) the portion of the Gulf of Mexico within the
jurisdiction of the state;
(3) all unsold surveyed and unsurveyed public school
land; and
(4) all land sold with a reservation of minerals to the
state under Section 51.054 or 51.086 of this code in which the state
has retained leasing rights.
Acts 1977, 65th Leg., p. 2445, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1983, 68th Leg., p. 5245, ch. 965, § 6,
eff. June 19, 1983; Acts 2003, 78th Leg., ch. 1276, § 13.002(b),
eff. Sept. 1, 2003.
§ 52.012. CONDITIONS FOR LEASE. Oil and gas shall only
be leased together and shall be leased separately from other
minerals.
Acts 1977, 65th Leg., p. 2445, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.013. DETERMINATION OF LEASE PRICE AND DELAY
RENTALS. The board shall determine the price at which areas under
this subchapter shall be leased and the amount of delay rentals that
shall be charged.
Acts 1977, 65th Leg., p. 2445, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.014. DATE FOR LEASE AND NOTICE. The date for
opening bids to lease areas covered by this subchapter shall be set
and notice of the date shall be given in the manner provided in
Sections 32.105 and 32.107 of this code.
Acts 1977, 65th Leg., p. 2445, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1993, 73rd Leg., ch. 897, § 16, eff. Sept.
1, 1993.
§ 52.015. BID TO LEASE. (a) To apply to lease a tract,
a bidder must submit a separate bid for each separate tract to be
leased.
(b) A bid must include a completed application to lease
form, a payment to the commissioner in the amount of the actual
bonus bid or set, and a separate payment to the commissioner in the
amount of the special fee provided by Section 52.016 of this code.
(c) A bid must be delivered to the land office on or before
the date and time the board advertises that the bids will be opened.
Acts 1977, 65th Leg., p. 2445, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1993, 73rd Leg., ch. 897, § 17, eff. Sept.
1, 1993.
§ 52.016. SPECIAL FEE. Each bidder on a lease under
this subchapter shall remit by separate check a special sale fee in
the amount and in the manner provided in Section 32.110 of this
code.
Acts 1977, 65th Leg., p. 2445, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1985, 69th Leg., ch. 624, § 41, eff. Sept.
1, 1985.
§ 52.017. KEEPING AND OPENING BIDS. Bids shall be kept
secure and unopened by the commissioner or the commissioner's
designee until opened on the date and at the time set as provided in
Section 52.014 of this code.
Acts 1977, 65th Leg., p. 2446, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1993, 73rd Leg., ch. 897, § 18, eff. Sept.
1, 1993.
§ 52.018. VOID APPLICATION. An application that
includes two or more areas or that is for a price that is less than
the fixed royalty and price per acre is void.
Acts 1977, 65th Leg., p. 2446, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.019. TIE BIDS. (a) If the highest bid for an area
is made by more than one applicant, all applications shall be
rejected and the board shall set a date for lease of the area that
shall not be later than the 15th day of the following month.
(b) The area will be subject to lease in the same manner as
it was originally subject to lease.
(c) No bids for a lease shall be considered if the price is
less than the highest bid offered in the original application.
Acts 1977, 65th Leg., p. 2446, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.020. RETURN OF PAYMENTS ON REJECTED
APPLICATIONS. The comptroller or commissioner shall return all
amounts paid on rejected applications.
Acts 1977, 65th Leg., p. 2446, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1985, 69th Leg., ch. 923, § 13, eff. Aug.
26, 1985; Acts 1997, 75th Leg., ch. 1423, § 14.11, eff. Sept. 1,
1997.
§ 52.021. TERM OF LEASE. A lease granted under this
subchapter shall be for a primary term not to exceed 10 years and
for as long after that time as oil or gas is produced from the leased
area.
Acts 1977, 65th Leg., p. 2446, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1983, 68th Leg., p. 5247, ch. 965, § 9,
eff. June 19, 1983; Acts 1993, 73rd Leg., ch. 897, § 19, eff.
Sept. 1, 1993.
§ 52.022. ROYALTY RATE. The board shall set the royalty
rate on production of oil and gas from land leased under this
subchapter. The royalty rate set must be at least one-eighth of the
gross production or the market value of the oil and gas produced.
Acts 1977, 65th Leg., p. 2446, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1993, 73rd Leg., ch. 897, § 20, eff. Sept.
1, 1993.
§ 52.023. LEASE PROVISIONS FOR DRILLING AND
REWORKING. Each lease shall provide that:
(1) if the production of oil or gas on premises leased
under this subchapter ceases for any reason after the expiration of
the primary term, the lease will not terminate if the lessee
commences additional drilling or reworking operations within 60
days after the cessation of production;
(2) the lease shall remain in effect as long as
drilling or reworking operations continue in good faith and in a
workmanlike manner without interruptions totaling more than 60
days;
(3) if the drilling or reworking operations result in
the production of oil or gas, the lease shall remain in effect so
long as oil or gas is produced from the leased premises in paying
quantities or payment of shut-in royalties or payment of
compensatory royalties is made as provided by law; and
(4) if the drilling or reworking operations result in
the completion of a well as a dry hole, the lease will not terminate
if the lessee commences additional drilling or reworking operations
within 60 days after the completion of the well as a dry hole, and
the lease shall remain in effect so long as the lessee continues
drilling or reworking operations in good faith and in a workmanlike
manner without interruptions totaling more than 60 days.
Acts 1977, 65th Leg., p. 2446, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1979, 66th Leg., p. 2005, ch. 785, § 6,
eff. June 13, 1979; Acts 1993, 73rd Leg., ch. 897, § 21, eff.
Sept. 1, 1993.
§ 52.024. LEASE PROVISIONS FOR SHUT-IN OIL OR GAS
ROYALTY AND COMPENSATORY ROYALTY. (a) For purposes of this
section, "well" means any well that has been assigned a well number
by the state agency having jurisdiction over the production of oil
and gas.
(b) Each lease shall provide that:
(1) if, at any time after the expiration of the primary
term of a lease that, until being shut in, was being maintained in
force and effect, a well capable of producing oil or gas in paying
quantities is located on the leased premises but oil or gas is not
being produced for lack of suitable production facilities or lack
of a suitable market, then the lessee may pay as a shut-in oil or gas
royalty an amount equal to double the annual rental provided in the
lease but not less than $1,200 a year for each well capable of
producing oil or gas in paying quantities. To be effective, each
initial shut-in oil or gas royalty must be paid on or before: (A)
the expiration of the primary term, (B) 60 days after the lessee
ceases to produce oil or gas from the leased premises, or (C) 60
days after the lessee completes a drilling or reworking operation
in accordance with the lease provisions, whichever date is latest;
(2) if the shut-in oil or gas royalty is paid, the
lease shall be considered to be a producing lease and the payment
shall extend the term of the lease for a period of one year from the
end of the primary term or from the first day of the month following
the month in which production ceased, and, after that, if no
suitable production facilities or suitable market for the oil or
gas exists, the lessee may extend the lease for four more successive
periods of one year by paying the same amount each year on or before
the expiration of each shut-in year;
(3) if, during the period the lease is kept in effect
by payment of the shut-in oil or gas royalty, oil or gas is sold and
delivered in paying quantities from a well located within 1,000
feet of the leased premises and completed in the same producing
reservoir, or in any case in which drainage is occurring, the right
to continue to maintain the lease by paying the shut-in oil or gas
royalty shall cease, but the lease shall remain effective for the
remainder of the year for which the royalty has been paid. The
lessee may maintain the lease for four more successive years by the
lessee paying compensatory royalty at the royalty rate provided in
the lease of the market value of production from the well causing
the drainage or which is completed in the same producing reservoir
and within 1,000 feet of the leased premises;
(4) the compensatory royalty is to be paid monthly to
the commissioner beginning on or before the last day of the month
following the month in which the oil or gas is produced from the
well causing the drainage or that is completed in the same producing
reservoir and located within 1,000 feet of the leased premises;
(5) if the compensatory royalty paid in any 12-month
period is in an amount less than the annual shut-in oil or gas
royalty, the lessee shall pay an amount equal to the difference
within 30 days from the end of the 12-month period; and
(6) none of these provisions will relieve the lessee
of the obligation of reasonable development nor the obligation to
drill offset wells as provided in Section 52.034 of this code;
however, at the determination of the commissioner and with the
commissioner's written approval, the payment of compensatory
royalties shall satisfy the obligation to drill offset wells.
Acts 1977, 65th Leg., p. 2447, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1981, 67th Leg., p. 1858, ch. 438, § 1,
eff. June 11, 1981; Acts 1987, 70th Leg., ch. 948, § 18, eff.
Sept. 1, 1987; Acts 1993, 73rd Leg., ch. 897, § 22, eff. Sept. 1,
1993.
§ 52.025. DISPOSITION OF LEASE PAYMENTS. The
comptroller shall credit the permanent school fund with amounts
received from unsurveyed school land and with two-thirds of the
amount received from other areas and shall credit the General
Revenue Fund with the remaining one-third of the payments for the
other areas.
Acts 1977, 65th Leg., p. 2448, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1997, 75th Leg., ch. 1423, § 14.12, eff.
Sept. 1, 1997.
§ 52.026. LEASE TRANSFER. (a) A lessee of an area
under this subchapter may transfer the lease at any time. The
liability of the transferor to properly discharge its obligations
under the lease, including properly plugging abandoned wells,
removing platforms or pipelines, or remediation of contamination at
drill sites shall pass to the transferee upon prior written consent
of the commissioner. The commissioner may not withhold the consent
unreasonably. The commissioner may require the transferee to
demonstrate that it has the financial responsibility to properly
discharge its obligations under the lease and may require the
transferee to post a bond or provide other security to secure those
obligations if the transferee is unable to demonstrate such
financial responsibility to the satisfaction of the commissioner.
(b) The transfer of the lease shall be recorded in any
county in which all or part of the leased area is located.
(c) Within 90 days after the execution of the transfer, the
recorded transfer or a certified copy of the recorded transfer
accompanied by a filing fee set by the commissioner in an amount not
less than $5 shall be filed in the land office.
(d) Every transferee shall succeed to all rights and be
subject to all obligations, liabilities, and penalties owed to the
state by the original lessee or any prior transferee of the lease,
including any liabilities to the state for unpaid royalties.
(e) This section does not relieve a person from the duty to
comply with a rule adopted or order issued by the Railroad
Commission of Texas under another provision of this code.
Acts 1977, 65th Leg., p. 2448, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1983, 68th Leg., p. 404, ch. 81, § 21(i),
eff. Sept. 1, 1983; Acts 1987, 70th Leg., ch. 948, § 19, eff.
Sept. 1, 1987; Acts 1999, 76th Leg., ch. 1125, § 1, eff. Sept. 1,
1999; Acts 1999, 76th Leg., ch. 1483, § 2, eff. Aug. 30, 1999.
§ 52.027. LEASE RELINQUISHMENT. (a) A lessee may
relinquish his lease to the state at any time by recording the
relinquishment in each county in which all or part of the leased
area is located.
(b) Within 90 days after the execution of the
relinquishment, the recorded relinquishment or a certified copy of
the recorded relinquishment together with a filing fee set by the
commissioner in an amount not less than $5 shall be filed in the
land office.
(c) After the lessee relinquishes the area, he is relieved
of any further obligations to the state, but the relinquishment
does not release the lessee from any obligations or liabilities
previously accrued in favor of the state.
Acts 1977, 65th Leg., p. 2448, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1983, 68th Leg., p. 404, ch. 81, § 21(j),
eff. Sept. 1, 1983.
§ 52.028. SUSPENSION OF LEASE BECAUSE OF
LITIGATION. (a) If an oil and gas lease that has been issued by
the commissioner is involved in litigation relating to the validity
of the lease or to the authority of the commissioner to issue the
lease, the lease and all of the conditions and covenants contained
in the lease shall be suspended during the period of the litigation,
except as otherwise provided by this section.
(b) If the litigation is instituted during the primary term
of the lease, then, after a final, nonappealable judgment is
entered in the litigation, the primary term provided in the lease
shall resume and the lease shall continue to run for the remainder
of the period specified in the lease, and all conditions and
covenants contained in the lease shall be operative.
(c) If the litigation is instituted during the secondary
term of the lease, then, after a final, nonappealable judgment is
entered in the litigation, the lease and all the conditions and
covenants contained in the lease shall be operative, and the lessee
shall have 60 days from the date a final, nonappealable judgment is
entered in the litigation to produce in paying quantities or to
commence drilling or reworking operations on the lease as if
production had ceased on that date under Section 52.023 of this
code.
(d) The lessee shall pay any royalties that accrue during
the period of suspension of the lease in the same manner as they are
to be paid under the terms of the lease.
Acts 1977, 65th Leg., p. 2448, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1987, 70th Leg., ch. 948, § 20, eff. Sept.
1, 1987; Acts 1993, 73rd Leg., ch. 897, § 23, eff. Sept. 1, 1993.
§ 52.029. FORFEITURE OF RIGHTS. The provisions of
Subchapter F of this chapter governing the forfeiture and
reinstatement of rights apply to forfeiture and reinstatement of
leases issued under this subchapter, and on forfeiture of a lease,
the area covered by the lease may be leased, after advertisement, by
any other person.
Acts 1977, 65th Leg., p. 2448, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.030. REFUND OF LEASE MONEY IN CERTAIN
SITUATIONS. (a) If a lessee is prevented from exploring,
developing, drilling, or producing oil and gas from the tract
leased to him as a result of the action of any agency of the United
States or of this state during the entire primary term of the lease,
he is entitled to a refund of all money paid for bonus, delay
rentals, and other fees under the lease as provided by legislative
appropriation.
(b) A refund shall be made only on verification of the claim
by the board or on the judgment of a court of competent
jurisdiction.
(c) A lessee who has a claim under this section is given
permission to bring suit against the state within two years after
the expiration of the lease in any court of competent jurisdiction
to recover the money paid.
Acts 1977, 65th Leg., p. 2448, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.0301. SUSPENSION OF TERMS OF LEASE IN CERTAIN
SITUATIONS. (a) If the lessee of a valid oil and gas lease
granted by the state is unable to obtain access to the leased
premises, or is unable to obtain in a timely manner a permit to
drill on or produce from the leased premises by any duly constituted
authority of the United States or of this state after a diligent,
good faith attempt has been made by the lessee to obtain access to,
or a permit to drill on or produce from, the leased premises, the
lessee may file with the board an application describing and giving
the date of the action that deprives the lessee of access to or a
permit to drill on or produce from the leased premises.
(b) If the board is satisfied that the facts included in the
application are true and that the lessee acted diligently and in
good faith in an attempt to gain access to or the right to drill on
or produce from the leased premises, the board may order the
suspension of the lease or any condition or covenant contained in
the lease from the date the board determines to be the date the
cause for the suspension began, except as otherwise provided by
this section.
(c) The board may set as a condition to approving the
application for a suspension of the lease any term or requirement
that relates to the duration of the suspension, the administration
of the property during the suspension, reporting requirements
during the suspension, or another administrative matter that the
board determines is in the best interest of the state.
(d) If the lease is suspended during its primary term, the
lessee shall make payments in the amount of the annual delay rental
stipulated in the lease by each anniversary date of the lease during
the period of suspension. If the payments in the amount of the
annual delay rental are not paid by each anniversary date of the
lease, the lease shall not automatically terminate. However, the
amount of the annual delay rental stipulated in the lease due by
each anniversary date of the lease during the period of suspension
continues to be an obligation and debt owed by the lessee. The
lessee shall pay all royalties, if any, that accrue during the
period of suspension of the lease in the same manner as they are to
be paid under the terms of the lease.
(e) If the lease is suspended during its primary term, then,
when the suspension ends, the primary term provided in the lease
shall resume and continue to run for the remainder of the period
specified in the lease, and all conditions and covenants contained
in the lease shall be operative .
(f) If the lease is suspended during its secondary term,
then, when the suspension ends, the lease and all of the conditions
and covenants contained in the lease shall be operative, and the
lessee shall have 60 days from the date the suspension ends to
produce in paying quantities or to commence drilling or reworking
operations on the lease as if production had ceased on that date
under Section 52.023 of this code.
(g) This section may not be construed as abridging any
rights or privileges conveyed under Chapter 287, Acts of the 47th
Legislature, Regular Session, 1941 (Article 5366a, Vernon's Texas
Civil Statutes).
Added by Acts 1979, 66th Leg., p. 2006, ch. 785, § 7, eff. June
13, 1979. Amended by Acts 1985, 69th Leg., ch. 923, § 14, eff.
Aug. 26, 1985; Acts 1987, 70th Leg., ch. 948, § 21, eff. Sept. 1,
1987; Acts 1993, 73rd Leg., ch. 897, § 24, eff. Sept. 1, 1993.
§ 52.031. EXTENSION OF LEASE BY COMMISSIONER. (a) At
the expiration of the primary term of a lease made under the
provisions of this subchapter, if production of oil or gas has not
been obtained on the leased premises but drilling operations are
being conducted in good faith and in good and workmanlike manner,
the lessee may file in the land office on or before the expiration
of the primary term a written application to the commissioner for a
30-day extension of the lease accompanied by $3,000 for 640 acres or
less or $6,000 for more than 640 acres.
(b) The commissioner shall extend the lease in writing for a
30-day period from the expiration of the primary term and as long
after that time as oil or gas is produced in paying quantities.
(c) As long as drilling operations are being conducted, the
lessee may submit an application and payment during any 30-day
extended period for an additional extension of 30 days. On
receiving the application and payment, the commissioner shall again
extend the lease in writing so that it will remain effective for an
additional 30-day period and as long after that time as oil or gas
is produced in paying quantities.
(d) No lease may be extended under this section for more
than 390 days after the expiration of the primary term unless
production is obtained in paying quantities.
Acts 1977, 65th Leg., p. 2449, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.032. REGULATION OF DEVELOPMENT AND
OPERATIONS. (a) Development and operations on areas covered by
this subchapter shall be done insofar as practicable in a manner
that will prevent the pollution of water, destruction of fish,
oysters, and other marine life, and obstruction of navigation.
(b) The commissioner shall adopt and enforce rules that may
be necessary for the purposes stated in Subsection (a) of this
section.
(c) Any rules and changes of rules adopted under this
section shall be submitted to the attorney general for his written
approval before the rules or their changes become effective.
Acts 1977, 65th Leg., p. 2449, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.033. ACCESS TO LAND. (a) If it is necessary for
the lessee to enter the enclosed land of another person for the
purpose of ingress and egress to and from the area leased from the
state and if the lessee and the owner cannot agree on the place or
the conditions of entry and exit, the lessee or his agent may
petition the commissioners court of the county in which all or part
of the enclosure is located to open the places of ingress and egress
that may be necessary.
(b) On filing the petition, the commissioners court shall
delineate the roads necessary for the stated purpose in the manner
provided for delineating third-class public roads.
Acts 1977, 65th Leg., p. 2449, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.034. OFFSET WELLS. (a) If oil or gas is produced
in commercial quantities from a well located on a privately owned
area or areas of state land leased at a lesser royalty and the well
is located within 1,000 feet of an area leased under this
subchapter, or in any case where such an area is being drained by
such a well or wells, the lessee of the state area shall begin in
good faith and prosecute diligently the drilling of an offset well
or wells on the area leased from the state within 60 days after the
initial production from the draining well or the well located
within 1,000 feet of the leased state area.
(b) An offset well shall be drilled to a depth and the means
shall be employed which may be necessary to prevent undue drainage
of oil or gas from beneath the state area.
(c) Within 30 days after an offset well has been completed
or abandoned, a log of each well shall be filed in the land office.
(d) At the determination of the commissioner and with his
written approval, the payment of a compensatory royalty shall
satisfy the obligation to drill an offset well or wells required by
Subsection (a) of this section. Such compensatory royalty shall be
paid at the royalty rate provided by the state lease issued under
this subchapter and shall be paid on the market value at the well of
production from the draining well or the well located within 1,000
feet of the leased state area.
Acts 1977, 65th Leg., p. 2450, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1987, 70th Leg., ch. 948, § 22, eff. Sept.
1, 1987.
§ 52.035. AGREEMENTS WITH U.S. GOVERNMENT. (a) The
governor may execute agreements on behalf of the state to obtain
access to confidential and proprietary information from the
secretary of the United States Department of the Interior regarding
exploration, development, or production of oil, gas, or other
minerals on the outer continental shelf. The governor may agree to
waive sovereign immunity and other defenses as prescribed by this
section, and may agree to indemnify the United States government
from unauthorized disclosure of the information obtained.
(b) The information obtained from the Department of the
Interior under an agreement executed under Subsection (a) of this
section is confidential and may not be used publicly, opened to
public inspection, or disclosed, except that the information may be
examined and used by the governor and the commissioner of the
General Land Office, or their designees, for the administration of
their official duties and to assure a fair and equitable division of
federal revenues derived from leasing lands adjacent to the
boundaries of this state.
(c) The state waives its right to claim sovereign immunity
in any action commenced against the state for unauthorized
disclosure of the confidential information obtained from the
Department of the Interior under an agreement executed by the
governor under Subsection (a) of this section, and waives its right
to claim that an employee who revealed privileged information was
acting outside the scope of employment by disclosing the
information.
(d) The state agrees to hold the United States government
harmless from any actions or damages brought as a result of the acts
or omissions of the state or its employees in releasing proprietary
information obtained under an agreement executed under Subsection
(a) of this section.
Added by Acts 1985, 69th Leg., ch. 923, § 15, eff. Aug. 26, 1985.
Amended by Acts 1993, 73rd Leg., ch. 897, § 25, eff. Sept. 1,
1993.
SUBCHAPTER C. DEVELOPMENT OF RIVERBEDS AND CHANNELS
§ 52.071. AUTHORITY OVER RIVERBEDS AND CHANNELS. The
riverbeds and channels belonging to the state are subject to
development by the state and to lease or contract for recovery of
oil and gas.
Acts 1977, 65th Leg., p. 2450, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.072. STATE POLICY. (a) With regard to leases and
contracts for the development of riverbeds and channels, it is the
policy of the state that activities of the state and all lessees and
contracting parties or their heirs, successors, or assigns under a
lease or contract shall comply with laws of the state and rules and
orders of any state agency that are applicable to development of oil
and gas bearing land in the state by persons other than the state.
(b) Each lease and contract issued under the provisions of
this subchapter is subject to the provisions of Subsection (a) of
this section.
Acts 1977, 65th Leg., p. 2450, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.073. AREA SUBJECT TO LEASE. Riverbeds and channels
that belong to the state may be leased to any person by the board
under the provisions of this subchapter.
Acts 1977, 65th Leg., p. 2450, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.074. SIZE OF TRACT. Subject to the conditions in
this subchapter, riverbeds and channels shall be leased in tracts
of the size determined by the board.
Acts 1977, 65th Leg., p. 2450, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.076. DUTY TO ADVERTISE. (a) The board may:
(1) advertise for bids to lease riverbeds and channels
for oil and gas development;
(2) advertise for bids to contract to develop the oil
or gas under riverbeds and channels on consideration involving
compensation with oil and gas or money so that the state will
receive a portion of the oil and gas as it is produced or advanced
royalties paid in money;
(3) advertise for bids to purchase oil and gas in place
under riverbeds and channels without requiring mineral
development; and
(4) pool or bring an action to force pool unleased
riverbeds and channels.
(b) The board shall advertise that the board will receive
bids and award the right to lease, develop, or purchase under this
section in the same manner as provided in Subchapter D, Chapter 32,
of this code and Subchapter B of this chapter.
Acts 1977, 65th Leg., p. 2450, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1985, 69th Leg., ch. 923, § 16, eff. Aug.
26, 1985; Acts 1993, 73rd Leg., ch. 897, § 26, eff. Sept. 1,
1993.
§ 52.077. SPECIAL FEE. Each bidder on a lease under
this subchapter shall remit with each bid by separate payment a
special sale fee in the amount and in the manner provided by Section
32.110 of this code.
Added by Acts 1993, 73rd Leg., ch. 897, § 27, eff. Sept. 1, 1993.
§ 52.080. FORMS FOR LEASE AND CONTRACT. Leases and
contracts for the development of riverbeds and channels shall be
executed on forms approved by the board.
Acts 1977, 65th Leg., p. 2451, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1985, 69th Leg., ch. 923, § 17, eff. Aug.
26, 1985.
§ 52.082. TERM OF LEASE. A lease granted under this
subchapter shall be for a primary term not to exceed 10 years and
for as long after that time as oil or gas is produced from the leased
area.
Acts 1977, 65th Leg., p. 2451, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1983, 68th Leg., p. 5248, ch. 965, § 10,
eff. June 19, 1983; Acts 1993, 73rd Leg., ch. 897, § 28, eff.
Sept. 1, 1993.
§ 52.083. CONDITIONS OF LEASE. Oil and gas shall only
be leased together and separately from other minerals.
Acts 1977, 65th Leg., p. 2451, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.084. SPECIAL LEASE PROVISIONS. Each lease shall
include the provisions required by Sections 52.023 and 52.024 of
this code.
Acts 1977, 65th Leg., p. 2451, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.085. PREVENTION OF POLLUTION. (a) Each lease and
contract shall require the lessee or contracting party or his
successors or assigns to use the highest degree of care and all
proper safeguards to prevent pollution of streams.
(b) If the lessee or contracting party fails to meet the
requirements in Subsection (a) of this section, the state is
entitled to take charge of the property immediately and to cancel
the lease.
Acts 1977, 65th Leg., p. 2451, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.087. DETERMINATION OF LEASE PRICE AND DELAY
RENTALS. The board shall determine the price at which riverbeds
and channels shall be leased and the amount of delay rentals that
shall be charged.
Acts 1977, 65th Leg., p. 2452, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.088. ROYALTY RATE. The board shall set the royalty
rate on production of oil and gas from riverbeds and channels leased
under this subchapter. The royalty rate set must be at least
one-eighth of the gross production or the market value of the oil
and gas produced.
Acts 1977, 65th Leg., p. 2452, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1993, 73rd Leg., ch. 897, § 29, eff. Sept.
1, 1993.
§ 52.090. EXTENSION OF LEASE. A lease may be extended
in the manner provided in Section 52.031 of this code.
Acts 1977, 65th Leg., p. 2453, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.091. REFUND OF LEASE MONEY IN CERTAIN
SITUATIONS. A lessee under this subchapter is entitled to a refund
of all money paid for bonus, delay rentals, and other fees for the
reasons and in the manner provided in Section 52.030 of this code.
Acts 1977, 65th Leg., p. 2453, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.092. POWER OF EMINENT DOMAIN. The board or any
person including a leaseholder or assignee, who has a contract with
the board for the development of oil and gas resources in riverbeds
and channels may exercise the power of eminent domain to condemn
land as provided in the general laws of this state for the purposes
stated in Section 52.093 of this code.
Acts 1977, 65th Leg., p. 2453, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.093. EMINENT DOMAIN PURPOSES. The board and any
person, including a leaseholder or assignee, who has a contract
with the board for the development of oil and gas resources in
riverbeds and channels may exercise the power of eminent domain for
the following purposes:
(1) to secure additional adjoining land that may be
necessary to erect power machinery and to construct storage tanks
and slush pits for the operation of the river or channel development
and to prevent or lessen the dangers of pollution involved in the
drilling of any well in the riverbed or channel; and
(2) to secure a right-of-way to and from any well that
is drilled in the riverbed or channel so that the board or any of the
leaseholders or contracting parties may go to and from the well and
may transport any materials necessary to develop the riverbed or
channel and to transport oil and gas away from the well.
Acts 1977, 65th Leg., p. 2453, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.094. DRILLING OFFSET WELL ON CONDEMNED
LAND. (a) If the landowner or other interested party and the
board or the lessee of the riverbed or channel cannot agree on the
amount of damages, if any, and it is necessary to commence
condemnation proceedings and if it is necessary for the landowner
or other interested party to drill an offset well within the area to
be condemned, the mineral rights of the condemned party are
superior to the surface rights of the condemning party.
(b) If there is any conflict surrounding the drilling of an
offset well under a permit from the Railroad Commission of Texas,
the condemning party is required to move any interference or
hindrance or to go around any offset well, and if he fails or
refuses to immediately move the interference or hindrance on
demand, the owner of the mineral rights is entitled to do so
immediately without liability.
Acts 1977, 65th Leg., p. 2453, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.095. RIGHTS OF PARTIES TO CONDEMNATION. It is the
intent of this subchapter that the mineral rights of the owner are
superior to the surface rights of the condemning party.
Acts 1977, 65th Leg., p. 2454, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.096. EXCLUSION FROM DAMAGES IN CONDEMNATION. In
determining the damages resulting from condemnation, the
commissioners or any other tribunal shall not consider the value of
oil or gas located beneath the rights-of-way of the condemned
property.
Acts 1977, 65th Leg., p. 2454, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.097. INJUNCTION. (a) No injunction may be
granted against the board, its agents, or persons with whom it has
contracted, to restrain the board from enforcing its orders or
contracts or from carrying out any development that has begun or was
contemplated by the board until notice is given to the board and its
agents or the contracting parties and a hearing is held.
(b) Before an injunction or restraining order is issued or
becomes effective, the court shall require the complaining party to
execute a bond payable to the governor with good and sufficient
sureties authorized to do business in this state in an amount
determined by the court to be sufficient to protect the state from
loss from drainage of the riverbed or channel, of lease or bonus or
consideration, or from any other reason. In determining the amount
of the bond, the court shall consider the probable and possible loss
to the state by granting the injunction.
(c) The attorney general shall bring suit on the bond to
recover any loss to the state caused by the suit for injunction.
Acts 1977, 65th Leg., p. 2454, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.098. APPEAL. (a) Either party to the suit for an
injunction or restraining order is entitled to appeal from the
final judgment.
(b) The appeal shall be returnable to the appellate court at
once and shall have precedence in that court over all pending cases,
proceedings, and causes of a different character.
(c) The court of appeals shall decide the questions involved
in the appeal at as early a date as possible.
(d) If any question is certified to the supreme court or if
writ of error is requested or granted, the supreme court shall set
the cause for hearing immediately, and the cause shall have
precedence over all other cases, proceedings, and causes of a
different character. The supreme court shall decide the cause at as
early a date as possible.
Acts 1977, 65th Leg., p. 2454, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1981, 67th Leg., p. 799, ch. 291, § 90,
eff. Sept. 1, 1981.
§ 52.099. VENUE. The venue for any suit arising from
this subchapter either by or against the board and regardless of the
kind or nature shall be in Travis County.
Acts 1977, 65th Leg., p. 2454, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.100. EFFECT OF SUBCHAPTER. The provisions of this
subchapter do not repeal or supersede Chapter 138, Acts of the 41st
Legislature, Regular Session, 1929 (Article 5414a, Vernon's Texas
Civil Statutes), which validated, relinquished, quitclaimed, and
granted to patentees and awardees and their assignees land and
minerals that are included in surveys lying across or partly across
watercourses and navigable streams in the state and that have been
patented or awarded as provided in that chapter.
Acts 1977, 65th Leg., p. 2454, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
SUBCHAPTER D. ROYALTIES
§ 52.131. PAYMENT OF ROYALTY GENERALLY. (a) Royalties
due under a lease of state land or minerals that are required to be
paid to the land office, including leases on land on which a free
royalty is reserved pursuant to Section 51.201 or 51.054 of this
title, shall be due and shall be paid as provided in this section.
(b) The commissioner shall by rule set the date for making
royalty payments and for filing any reports, documents, or other
records required to be filed by the commissioner. However, the
commissioner may not set the due date for royalty on oil before the
5th day of the second month succeeding the month of production and
may not set the due date for royalty on gas before the 15th day of
the second month succeeding the month of production.
(c) Royalty payments shall be accompanied by:
(1) an affidavit of the owner, manager, or other
authorized agent, completed in the form and manner required by the
land office and showing the gross amount and disposition of all oil
and gas produced and the market value of the oil and gas;
(2) a copy of all documents, records, or reports
required by the land office, confirming the gross production,
disposition, and market value, including gas meter readings,
pipeline receipts, gas line receipts, and other checks or memoranda
of amount produced and put into pipelines, tanks, pools, and gas
lines or gas storage;
(3) a check stub, schedule, summary, or other
remittance advice showing by the assigned land office lease number
the amount of royalty being paid on each lease; and
(4) other reports or records that the land office may
require to verify the gross production, disposition, and market
value.
(d) The lessee has the responsibility for paying royalties
or having royalties paid by the date provided for payment in this
section.
(e) If any royalty is not paid when due but is paid before
the 31st day after the date on which it is due, a penalty of five
percent of the royalty due shall be added to the unpaid amount due.
If the royalty is not paid before the 31st day after the date on
which it is due, a penalty of an additional five percent of the
royalty due shall be imposed. The minimum penalty under this
section is $25. The penalty may not be imposed in cases of title
dispute as to the state's portion of the royalty or to that portion
of the royalty in dispute as to the market value of the production.
(f) The commissioner shall add a penalty of 25 percent to
any delinquent royalty if a part of the delinquency is due to fraud
or an intent to evade the provisions of this chapter.
(g) The annual interest rate on delinquent royalties is 12
percent. Interest accrues on delinquent royalties beginning 60
days after the date on which the royalty is due.
(h) If any report, affidavit, supporting document, or any
other instrument required to be filed under this chapter is not
filed when due, the commissioner shall charge a reasonable penalty
in an amount established by rule adopted by the commissioner.
(i) Interest charged under Subsection (g) of this section or
penalties under Subsection (e), (f), or (h) of this section are in
addition to any other right, including forfeiture, that the
commissioner may exercise for failure to submit a report or other
instrument.
(j) By rule, the board may provide procedures and standards
for reduction of interest charged or penalties assessed under this
section or any other interest or penalties assessed by the
commissioner relating to unpaid or delinquent royalties.
Acts 1977, 65th Leg., p. 2455, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1985, 69th Leg., ch. 624, § 42, 43, eff.
Sept. 1, 1985; Acts 1987, 70th Leg., ch. 948, § 23, 24, eff.
Sept. 1, 1987; Acts 1993, 73rd Leg., ch. 897, § 30, eff. Sept. 1,
1993.
§ 52.132. FORM OF PAYMENT. Except as provided in
Section 52.133 of this code, royalty payments shall be made in cash,
by bank draft drawn on a state or national bank in Texas, by a
post-office or express money order, or in any other form that the
law may provide for making payments to the State Treasury and are
payable to the commissioner in Austin.
Acts 1977, 65th Leg., p. 2455, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.133. PAYMENT OF ROYALTY IN KIND. (a) Each oil or
gas lease covering land leased by the board, by a board for lease,
or by the surface owner of land under which the state owns the
minerals, commonly referred to as Relinquishment Act land, which
shall be subject to approval by the commissioner before it is
effective, shall include a provision granting the board authorized
to lease the land or the owner of the soil of Relinquishment Act
land and the commissioner authority to take their royalty in kind,
and the commissioner and the boards for lease may include any other
reasonable provisions that are not inconsistent with this section.
(b) The option to take the royalty in kind may be exercised
at any time or from time to time on not less than 60 days' notice to
the holder of the lease.
(c) The commissioner, the owner of the soil under Subchapter
F, or the commissioner acting on the behalf of and at the direction
of an owner of the soil under Subchapter F, the board, or a board for
lease, or at the direction of the Board for Lease of University
Lands, may negotiate and execute contracts or any other instruments
or agreements necessary to dispose of or enhance their portion of
the royalty taken in kind, including contracts for sale, marketing,
purchase, transportation, including purchase and exchange
agreements necessary to transport gas, and storage and including
insurance contracts or other agreements, to secure or guarantee
payment.
(d) The commissioner, the owner of the soil under Subchapter
F, or the commissioner acting on behalf of and at the direction of
an owner of the soil under Subchapter F, the board, or a board for
lease may negotiate and execute contracts or any other instruments
or agreements necessary to convert that portion of the royalty
taken in kind into other forms of energy, including electricity.
(e) This section shall not be construed to surrender or in
any way affect the right of the state or the owner of the soil under
existing or future leases to receive royalty from its lessee on the
basis of the market value of the production from state public land
or land under the provisions of Subchapter F of this chapter.
(f) For the purposes of this section, royalty taken in kind
includes oil or gas sold or marketed by the commissioner that has
been produced on state mineral lands or from the first three miles
of federal waters adjacent to the state boundaries, also known as
the 8g zone.
Acts 1977, 65th Leg., p. 2455, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1993, 73rd Leg., ch. 897, § 31, eff. Sept.
1, 1993; Acts 1995, 74th Leg., ch. 427, § 1, eff. Aug. 28, 1995;
Acts 1999, 76th Leg., ch. 405, § 49, eff. Sept. 1, 1999.
§ 52.134. FILING CONTRACTS AND AGREEMENTS. Copies of
contracts for the sale or processing of gas and subsequent
agreements and amendments to those contracts shall be filed in the
land office within 30 days after the contracts, agreements, or
amendments are made. These contracts and agreements received by
the land office shall be held in confidence by the land office
unless otherwise authorized by the lessee.
Acts 1977, 65th Leg., p. 2456, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.135. INSPECTIONS AND EXAMINATIONS. (a) The books
and accounts, receipts, and discharges of all lines, tanks, pools,
and meters and all contracts and other records relating to the
production, transportation, sale, and marketing of the oil and gas
are subject at any time to inspection and examination by the
commissioner and the attorney general and governor or their
representatives.
(b) If, after inspection and examination of books,
accounts, reports, or other records, the commissioner or his
representative determines that additional royalties are due under a
lease of state land or minerals, the commissioner shall send to the
lessee by certified mail, return receipt requested, an audit
billing notice notifying the lessee of such additional royalties,
and interest and penalty, due and of the reasons for such
determination.
(c) The lessee shall have 30 days from the date of the
receipt of such audit billing notice in which to pay such audit
deficiency assessment or to request a hearing before the
commissioner or his representative for redetermination of such
assessment. A statement of grounds setting out in detail the
lessee's reasons for disagreement with such assessment and the
factual and legal grounds on which the claim is based must be
submitted by a lessee with its request for a hearing. Such hearing
shall be conducted in accordance with the rules and procedures
established by the commissioner.
(d) In order to stop the further accrual of penalty or
interest, the lessee may pay the additional royalties assessed at
any time after receipt of an audit billing notice.
Acts 1977, 65th Leg., p. 2456, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1986, 69th Leg., 3rd C.S., ch. 5, § 1, eff.
Sept. 30, 1986.
§ 52.136. LIEN. (a) The state has a statutory first
lien on all oil and gas produced on any lease area to secure payment
of unpaid royalty and other amounts due.
(b) By acceptance of a lease, the lessee grants to the state
an express contractual lien on and security interest in all oil and
gas in and extracted from the area covered by the lease, all
proceeds which may accrue to the lessee from the sale of the oil and
gas, whether the proceeds are held by the lessee or another person,
and all fixtures on and improvements to the area covered by the
lease used in connection with the production or processing of the
oil and gas, to secure the payment of royalties and other amounts
due or to become due under the lease or this subchapter and to
secure payment of damages or loss that the state may suffer by
reason of the lessee's breach of a covenant or condition of the
lease, whether express or implied.
(c) The statutory and contractual liens and security
interests described in this section may be foreclosed with or
without court proceedings in the manner provided under Chapter 9,
Business & Commerce Code. The state may require the lessee to
execute and record instruments reasonably necessary to
acknowledge, attach, or perfect the liens.
Acts 1977, 65th Leg., p. 2456, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1997, 75th Leg., ch. 1324, § 2, eff. Jan.
1, 1998.
§ 52.137. SUIT AFTER PROTEST PAYMENT. (a) If a lessee,
who has received an audit deficiency assessment and has waived the
right to request a hearing before the commissioner or who is
required by final order of the commissioner following a hearing to
pay additional royalties, contends that such audit deficiency
assessment is unlawful or that the commissioner may not legally
demand or collect such royalties the lessee shall pay to the
commissioner the amount claimed by the commissioner, and if the
lessee intends to bring suit under this section, the lessee must
submit with the payment a protest in writing stating fully and in
detail each reason why it contends such royalty is not due. Such
payment shall be made to the commissioner within 30 days of the date
of receipt of the audit billing notice or of the date of receipt of
the final order of the commissioner following a hearing, as the case
may be. All such mailings shall be by certified mail, return
receipt requested.
(b) The commissioner, upon receipt of such payment made
under protest as authorized by this section, shall send to the
comptroller the payment and a written statement that the payment
was made under protest. Immediately upon receipt, the comptroller
shall:
(1) place the payment in state depositories bearing
interest in the same manner that other funds are required to be
placed in state depositories at interest;
(2) allocate the interest earned on these funds;
(3) credit the amount allocated to an account
established for this purpose until the status of the protest is
finally determined; and
(4) upon final determination that some or all of the
protested funds belong to the state, deposit the principal and the
allocated interest to the permanent school fund.
(c) A suit may be brought under this section against the
commissioner to recover the payment under protest. A suit under
this section is barred unless brought in the district courts of
Travis County within 90 days after the date of the protest payment
or within 90 days after the date of the final order of the
commissioner following hearing, whichever is later.
(d) The issues to be determined in a suit under this section
are limited to those arising from the reasons stated in the written
protest as originally filed.
(e) The trial of the issues in a suit under this section is
de novo and the substantial evidence rule will not apply.
Added by Acts 1986, 69th Leg., 3rd C.S., ch. 5, § 2, eff. Sept.
30, 1986. Amended by Acts 1987, 70th Leg., ch. 948, § 25, eff.
Sept. 1, 1987; Acts 1997, 75th Leg., ch. 1423, § 14.13, eff.
Sept. 1, 1997; Acts 2003, 78th Leg., ch. 328, § 7.
§ 52.138. REFUND. If a suit authorized by Section
52.137 of this code results in a final determination that all or
part of the payment under protest was not due or was unlawfully
demanded by the commissioner and belongs to the lessee, the
comptroller shall refund the proper amount, with the pro rata
interest earned on that amount, by issuance of a refund warrant
drawn against the account established for such purpose. The refund
warrant shall be returned to the commissioner and the commissioner
shall deliver it to the person entitled to receive it.
Added by Acts 1986, 69th Leg., 3rd C.S., ch. 5, § 2, eff. Sept.
30, 1986. Amended by Acts 1997, 75th Leg., ch. 1423, § 14.14,
eff. Sept. 1, 1997.
§ 52.139. LIMITATIONS ON AUDIT ASSESSMENTS. (a) If an
audit billing notice has been issued under Section 52.135 and any
outstanding audit deficiency assessment has been paid either:
(1) voluntarily;
(2) after a hearing was requested and the commissioner
has entered a final non-appealable order concerning the assessment;
or
(3) after a final non-appealable judgment has been
rendered by a court after payment of an audit assessment under
protest and filing of a suit for refund under Section 52.137 of this
code, then the commissioner may not issue another deficiency
assessment which covers the same issues, time periods, and leases
as those covered by the previous assessment.
(b) If the commissioner audits a lessee's books and records
under Section 52.135 of this code the commissioner shall notify the
lessee upon completion of his findings. If the commissioner
notifies the lessee that no additional royalties are due, the
commissioner may not again audit the books and records covering the
same issues, time periods, and leases involved in the first audit.
(c) This section shall not preclude the commissioner from
conducting subsequent audits or examinations covering the same
issues, time periods, and leases in cases where fraud exists or
where the first audit deficiency assessment results only from an
examination of documents, records, or reports submitted to the
commissioner and not from a complete audit of the books, accounts,
reports, or other records of a lessee.
Added by Acts 1987, 70th Leg., ch. 948, § 26, eff. Sept. 1, 1987.
§ 52.140. AUDIT INFORMATION CONFIDENTIAL. (a) All
information secured, derived, or obtained during the course of an
inspection or examination of books, accounts, reports, or other
records, as provided in Section 52.135 of this code, is
confidential and may not be used publicly, opened for public
inspection, or disclosed, except for information set forth in a
lien filed under this chapter and except as permitted under
Subsection (d) of this section.
(b) All information made confidential in this section shall
not be subject to subpoena directed to the commissioner, the
attorney general, or the governor except in a judicial or
administrative proceeding in which this state is a party.
(c) The commissioner or the attorney general may use
information made confidential by the provisions of this section and
contracts made confidential by Section 52.134 of this code to
enforce any provisions of this chapter or may authorize their use in
judicial or administrative proceedings in which this state is a
party.
(d) This section does not prohibit:
(1) the delivery of information made confidential by
this section to the lessee or its successor, receiver, executor,
guarantor, administrator, assignee, or representative;
(2) the publication of statistics classified to
prevent the identification of a particular audit or items in a
particular audit;
(3) the release of information which is otherwise
available to the public; or
(4) the release of information concerning the amount
of royalty assessed as a result of an examination conducted under
Section 52.135 of this code or the release of other information
which would have been properly included in reports required under
Section 52.131 of this code.
Added by Acts 1987, 70th Leg., ch. 948, § 27, eff. Sept. 1, 1987.
SUBCHAPTER E. UNITIZATION OF LEASED AREAS
§ 52.151. AUTHORIZATION TO OPERATE AREAS AS
UNITS. (a) The commissioner, on behalf of the state or any fund
that belongs to the state, may execute agreements that provide for
operating areas as a unit for the exploration, development, and
production of oil or gas or both and to commit to the agreements:
(1) the royalty interests in oil, gas, or both oil and
gas, reserved to the state or any fund of the state by law, in a
patent, in a contract of sale, or under the terms of an oil and gas
lease legally executed by an official, board, agent, agency, or
authority of the state; or
(2) the free royalty interests, whether leased or
unleased, reserved to the state pursuant to Section 51.201 or
51.054 of this code.
(b) Before executing an agreement authorized by Subsection
(a) of this section, the commissioner must find that the agreement
is in the best interest of the state.
Acts 1977, 65th Leg., p. 2456, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1987, 70th Leg., ch. 948, § 28, eff. Sept.
1, 1987; Acts 1993, 73rd Leg., ch. 897, § 32, eff. Sept. 1, 1993.
§ 52.152. APPROVAL OF AGREEMENTS. (a) An agreement
must be approved by the board and executed by the commissioner to be
effective if the agreement commits:
(1) a royalty interest in land belonging to the
permanent school fund or the asylum funds, in riverbeds, inland
lakes, and channels, or in an area within tidewater limits,
including islands, lakes, bays, inlets, marshes, reefs, and the bed
of the sea; or
(2) the free royalty interests, whether leased or
unleased, reserved to the state pursuant to Section 51.201 or
51.054 of this code.
(b) An owner of the soil who is subject to Subchapter F of
this chapter may grant to a lessee prior authority to pool or
unitize the interest of the owner in a lease executed under that
subchapter. For the provisions of an agreement to bind the interest
of an owner of the soil who is subject to Subchapter F of this
chapter and who has not granted the lessee prior authorization to
pool or unitize the owner's interest in an oil and gas lease
executed under that subchapter, the agreement must be executed by
the owner of the soil.
(c) An agreement that commits any interest in any land not
listed in Subsection (a) of this section must be approved by the
board, official, agent, agency, or authority of the state which has
the authority to lease or to approve the lease of the land for oil
and gas and must be executed by the commissioner to be effective.
Acts 1977, 65th Leg., p. 2457, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1987, 70th Leg., ch. 948, § 29, eff. Sept.
1, 1987; Acts 1993, 73rd Leg., ch. 897, § 33, eff. Sept. 1, 1993.
§ 52.153. PROVISIONS OF AGREEMENT. (a) An agreement
executed under this subchapter may include the following
provisions:
(1) that operations incident to drilling a well on any
portion of a unit shall be considered for all purposes to be conduct
of the operations on each tract in the unit;
(2) that production allocated by the agreement to each
tract included in the unit when produced shall be considered for all
purposes to have been production from the tract;
(3) that the interest reserved to or provided for the
state or any of its funds on production from any tract included in
the unit shall be paid only on that portion of the production from
the unit that is allocated to the tract under the agreement; and
(4) that each lease included in the unit shall remain
in effect as long as the agreement remains in effect and that on
termination of the agreement each lease shall continue in effect
under the terms and conditions of the lease.
(b) The agreement may include any other terms and conditions
the commissioner or any board, official, agent, agency, or
authority of the state that has the authority to lease or to approve
a lease of the land for oil and gas may consider to be in the best
interest of the state.
Acts 1977, 65th Leg., p. 2457, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1993, 73rd Leg., ch. 897, § 34, eff. Sept.
1, 1993.
§ 52.154. RATIFICATIONS AND OTHER AGREEMENTS. (a) The
board may approve, by rule or order, a ratification or other
agreement that includes in the benefits of production a mineral or
royalty interest in land belonging to the permanent school fund or
the asylum funds.
(b) An agreement approved by the board under this section
must be executed by the commissioner to be effective.
(c) A ratification or other agreement that commits any of
the interests listed in Subsection (a) of this section in land not
belonging to the permanent school fund or the asylum funds must be
approved by the board, official, agent, agency, or authority of the
state that has the authority to lease or to approve the lease of the
land for oil and gas and must be executed by the commissioner to be
effective.
Added by Acts 1993, 73rd Leg., ch. 897, § 35, eff. Sept. 1, 1993.
SUBCHAPTER F. RELINQUISHMENT
§ 52.171. SCHOOL AND ASYLUM LANDS. The state hereby
constitutes the owner of the soil its agent for the purposes herein
named, and in consideration therefor, relinquishes and vests in the
owner of the soil an undivided fifteen-sixteenths of all oil and gas
which has been undeveloped and the value of the same that may be
upon and within the surveyed and unsurveyed public free school land
and asylum lands and portions of such surveys sold with a mineral
classification or mineral reservation, subject to the terms of this
law. The remaining undivided portion of said oil and gas and its
value is hereby reserved for the use of and benefit of the public
school fund and the several asylum funds.
Acts 1977, 65th Leg., p. 2457, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.172. SALE AND LEASE BY AGENT. The owner of said
land is hereby authorized to sell or lease to any person, firm, or
corporation the oil and gas that may be thereon or therein upon such
terms and conditions as such owner may deem best, subject only to
the provisions hereof, and he may have a second lien thereon to
secure the payment of any sum due him. All leases and sales so made
shall be assignable. No oil or gas rights shall be sold or leased
hereunder for a delay rental during the primary term of less than 10
cents per acre per year plus royalty, and in case of production, the
lessee or purchaser shall pay the state the undivided one-sixteenth
of the value of the oil and gas reserved herein, and like amounts to
the owner of the soil.
Acts 1977, 65th Leg., p. 2457, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1985, 69th Leg., ch. 624, § 44, eff. Sept.
1, 1985.
§ 52.173. OFFSET WELLS. (a) If oil and/or gas should
be produced in commercial quantities within 1,000 feet of land
subject to this subchapter,or in any case where land subject to this
subchapter is being drained by production of oil or gas the owner,
lessee, sublessee, receiver, or other agent in control of land
subject to this subchapter shall in good faith begin the drilling of
a well or wells upon such state land within 100 days after the
draining well or wells or the well or wells completed within 1,000
feet of the state land commence to produce in commercial
quantities, and shall prosecute such drilling with diligence to
reasonably develop the state land and to protect such state land
against drainage.
(b) An offset well shall be drilled to a depth and the means
shall be employed which may be necessary to prevent undue drainage
of oil or gas from beneath the state land.
(c) Within 30 days after an offset well has been completed
or abandoned, a log of each well shall be filed in the land office.
(d) At the determination of the commissioner and with his
written approval, the payment of a compensatory royalty shall
satisfy the obligation to drill an offset well or wells. Such
compensatory royalty shall be paid at a royalty rate established by
the commissioner if the land is unleased, or at the royalty rate
provided by the state lease, if the land is leased. Such
compensatory royalty shall be paid on the market value at the well
of production from the draining well or the well located within
1,000 feet of the state land.
Acts 1977, 65th Leg., p. 2458, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1987, 70th Leg., ch. 948, § 30, eff. Sept.
1, 1987.
§ 52.174. FAILURE TO DRILL OFFSET. If such persons fail
or refuse to begin the drilling of such well or wells within the
time required or to prosecute such drilling as necessary for the
purpose intended herein, any lease of such land executed under the
provisions of this law shall be subject to forfeiture by the
Commissioner of the General Land Office, and he shall forfeit same
when he is sufficiently informed of the facts which authorize a
forfeiture, and shall, on the wrapper containing the papers
relating to such lease, write and sign officially words declaring
such forfeiture, and the lease and all rights thereunder shall
thereupon be forfeited together with all payments made thereunder.
Notice of such action shall forthwith be mailed to the persons shown
by the records of the General Land Office to be the owners of the
surface and the owners of the forfeited lease at their last known
addresses as shown by the records of said office. Upon proper
showing by the owner of the forfeited lease within 30 days after the
declaration of forfeiture, the lease may, at the discretion of the
commissioner and upon the terms of this subchapter and such other
terms as he may prescribe, be reinstated. If such lease be not
reinstated within such time, or if the commissioner finds that any
unleased land included in this law is being drained, the
commissioner shall notify the person at his last known address, as
shown by records of the General Land Office to be the surface owner,
that the oil and gas is subject to sale or lease by the owner of the
soil in accordance with this law, and that drilling is required. If
such owner shall fail or refuse to obtain the commencement of such a
well within 100 days after the date of such notice, the
relinquishment herein granted and the rights acquired thereunder
shall be subject to forfeiture by the commissioner by endorsing on
the file wrapper containing the papers relating to the sale of the
land, words indicating such forfeiture, and such rights shall
thereupon be forfeited, and notice of such forfeiture shall be
forwarded to the county clerk of the county wherein the land is
situated. The rights of any owner of the soil which may have ipso
facto terminated under prior laws shall be reinstated and are
hereby reinstated, together with all rights acquired thereunder
except where rights of third parties may have intervened. All
rights herein reinstated shall be subject to the terms and
provisions of this subchapter.
Acts 1977, 65th Leg., p. 2458, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.175. LEASE OF OIL AND GAS AFTER FORFEITURE. When
the relinquishment or agency right herein granted has been
forfeited, the land shall be subject to lease for oil and gas under
the procedure provided by law for the leasing of unsold surveyed
public school lands. The substantive provisions of Subchapter B of
this chapter and Subchapters D and E, Chapter 32, of this code
shall apply to the oil and gas lease. No oil and gas lease shall be
executed which provides for a royalty of less than one-eighth,
payable to the state for the benefit of the permanent free school
fund. The owner of the soil shall not be entitled to any revenue
generated by a lease executed pursuant to this section. Upon the
termination or expiration of a lease so executed by the
Commissioner of the General Land Office, the rights of the surface
owner to act under this law shall be ipso facto reinstated.
Acts 1977, 65th Leg., p. 2459, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1987, 70th Leg., ch. 912, § 1, eff. Aug.
31, 1987; Acts 1993, 73rd Leg., ch. 897, § 36, eff. Sept. 1,
1993.
§ 52.176. FORFEITURE OF RIGHTS. If any person, firm, or
corporation operating under this law shall fail or refuse to make
the payment of any sum within 30 days after it becomes due, or if
such one or an authorized agent should knowingly make any false
return or false report concerning production or drilling, or if
such one should fail to file reports in the manner required by law
or fail to comply with General Land Office rules and regulations or
refuse the proper authority access to the records pertaining to the
operations, or if such one or an authorized agent should knowingly
fail or refuse to give correct information to the proper authority,
or knowingly fail or refuse to furnish the land office a correct log
of any well, or if any lease is assigned and the assignment is not
filed in the General Land Office as required by law, the rights
acquired under the permit or lease shall be subject to forfeiture by
the commissioner, and he shall forfeit same when sufficiently
informed of the facts which authorize a forfeiture, and the oil and
gas shall be subject to sale in the manner provided for the sale of
other forfeited rights hereunder, except that the owner of the soil
shall not thereby forfeit his interest in the oil and gas. Such
forfeiture may be set aside and all rights theretofore existing
shall be reinstated at any time before the rights of another
intervene, upon satisfactory evidence of future compliance with the
provisions of this subchapter.
Acts 1977, 65th Leg., p. 2459, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.177. RIGHTS OF SUBSEQUENT PURCHASER. If one
acquires a valid right by permit or lease to the oil and gas in any
unsold public free school or asylum land under any other law, a
subsequent purchaser of such land shall not acquire any rights to
any of the oil and gas that may be therein, but when the rights under
such permit or lease terminate in the manner provided in the law
under which they were obtained, then the owner of the soil shall
become the owner of that portion of the oil and gas herein
relinquished, and shall be thereafter subject to the provisions of
this law. A forfeiture of the purchase of any survey or tract for
any cause shall operate as a forfeiture of the minerals therein to
the state. A relinquishment to the state of a lease producing oil
or gas in paying quantities shall not operate to relinquish or
convey to the owner of the soil any interest whatever in the oil and
gas that may be in the land included in said lease.
Acts 1977, 65th Leg., p. 2459, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.178. OPERATION UNDER PERMIT. The owner of a permit
or combination of permits shall have 18 months from the date or
average date thereof in which to begin drilling a well for oil and
gas on some portion of the land included therein. The drilling on
one permit shall be sufficient protection against forfeiture of all
the permits included in a combination. Owners of permits or
combination of permits included herein shall have three years after
the date or average date thereof in which to complete the
development of oil and gas thereon, and if oil and gas should not be
found in paying quantities and a lease applied for within said time
all rights in such permit or combination of permits shall
terminate, and the oil and gas in such land shall become subject to
the provisions of this law relating to the relinquishment of oil and
gas to the owner of the soil.
Acts 1977, 65th Leg., p. 2460, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.179. LEASE UNDER PERMIT. If oil or gas should be
produced in paying quantities upon any land included in this law,
the owner of the permit shall report the development to the
commissioner within 30 days thereafter and apply for a lease upon
such whole surveys or tracts in each permit as the owner or owners
of a combination of permits may desire to be leased, and accompany
the application with a log of the wells, and the correctness of the
log shall be sworn to by the owner, manager, or driller, and
thereupon a lease shall be issued without the payment of any
additional sum of money and for a period not to exceed 10 years,
subject to renewal or renewals.
Acts 1977, 65th Leg., p. 2460, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.180. PAYMENTS UNDER PERMIT. The owner of a permit
or combination of permits who desires to avail himself of the terms
of this law, shall pay the state 10 cents per acre, annually in
advance, for the second and third years, and shall likewise pay the
owner of the soil 10 cents per acre for the first year of such
permit, before availing himself of the privileges hereof, and a
like sum thereafter annually in advance. A failure to make either
of said payments shall subject the permit or permits to forfeiture
by the commissioner, and when sufficiently informed of the facts
which subject the permits to forfeiture, said commissioner shall
forfeit the same by an endorsement of forfeiture upon the wrapper
containing the papers relating to the permits and sign it
officially. The payment of 10 cents per acre to the owner of the
soil may be made to him or to the county clerk of the county in which
the land is situated, and said clerk shall deposit such payment as
he receives, in some bank at the county seat to the credit of the
record owner of such land. If the owner of the soil refuses to
accept such payment, said clerk shall withdraw such deposit and
return it to the owner of the permit. The payment, or the tender of
payment, shall be evidenced by the receipt of the owner or part
owner or county clerk filed among the papers in the land office
relating to such permits.
Acts 1977, 65th Leg., p. 2460, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.181. RELINQUISHMENT UNDER PERMIT. The owner of a
permit or combination of permits may relinquish to the state a
permit or combination of permits or any whole survey or whole tract
included in a permit at any time before obtaining a lease therefor
by having such relinquishment recorded in the counties in which the
land or part thereof is situated, and by filing it in the land
office within 60 days after its execution, with a filing fee set by
the commissioner in an amount not less than $1.
Acts 1977, 65th Leg., p. 2460, ch. 871, art. I, § 1, eff. Sept. 1,
1977. . Amended by Acts 1983, 68th Leg., p. 405, ch. 81, § 21(k),
eff. Sept. 1, 1983.
§ 52.182. DAMAGES TO SOIL. The payment of delay rentals
and the obligation to pay the owner of the soil one-sixteenth of the
production and the payment of same when produced and the acceptance
of same by the owner, shall be in lieu of all damages to the soil.
Acts 1977, 65th Leg., p. 2461, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1985, 69th Leg., ch. 923, § 18, eff. Aug.
26, 1985.
§ 52.183. EFFECTIVE DATE OF LEASE. No mineral lease
executed by the owner of the land or minerals under this subchapter
is effective until a certified copy of the lease is filed in the
land office.
Acts 1977, 65th Leg., p. 2461, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.184. STATEMENT OF CONSIDERATION. No lease
executed under this subchapter after September 17, 1939, is binding
on the state unless it recites the actual and true consideration
paid or promised.
Acts 1977, 65th Leg., p. 2461, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.185. UNIVERSITY LAND. The provisions of this
subchapter relating to a combination of permits and extension of
time for beginning development and time for development applies to
permits on university land.
Acts 1977, 65th Leg., p. 2461, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 52.186. LEASE OF CERTAIN MINERALS WHEN OWNER OF THE
SOIL UNAVAILABLE. (a) If an owner of the soil or of any undivided
interest therein of any land subject to the terms of this subchapter
or Subchapter C, Chapter 53, of this code is found to be unavailable
under Subsection (b) of this section to act as the state's agent for
leasing oil and gas or any mineral leased under Subchapter C,
Chapter 53, of this code, such land or undivided interest therein
shall be subject to lease for the applicable minerals under the
procedure provided by Subchapter B of this chapter for the leasing
of unsold surveyed public school lands. The substantive provisions
of Subchapter B of this chapter and Subchapters D and E, Chapter
32, of this code shall apply to a lease of land subject to lease
under this subchapter. The substantive provisions of Subchapter E,
Chapter 53, of this code and Subchapters D and E, Chapter 32, of
this code shall apply to a lease of land subject to lease under
Subchapter C, Chapter 53, of this code. Subject to the provisions
of Subsection (b)(4) of this section, the owner of the soil shall
not be entitled to any revenue generated by a lease executed
pursuant to this section.
(b) An owner of the soil or of an undivided interest therein
may be found to be unavailable to act as the state's agent for
leasing oil and gas or any mineral leased under Subchapter C,
Chapter 53, of this code, if the following conditions have been
satisfied:
(1) Any party who has been unable to locate an owner of
any interest, including an undivided interest, in the surface of
land subject to this subchapter or Subchapter C, Chapter 53, of this
code must submit a written affidavit to the commissioner stating
that the party (hereafter called affiant) has been unable to locate
said owner. This affidavit must specify the legal description of
the land which the affiant has been unable to lease and the extent
of the interest and type of mineral which the affiant has been
unable to lease. In the affidavit, the affiant must also attest to
the fact that he diligently searched the county clerk's records and
the tax assessor's records to determine the name, identity, and
last known place of residence of the owner of the soil who could
lease the interest that the affiant has been unable to lease. The
affiant must further attest to the results of his search of such
records and to any other steps taken to locate the owner of the
soil.
(2) The commissioner shall provide notice to any owner
of the soil identified by the affiant in Subdivision (1) of this
subsection of the consequences of a finding that such owner of the
soil is unavailable to act as the state's leasing agent. Such
notice shall be in writing to the owner of the soil's last known
address and shall also be provided by publication in the manner
provided by the Texas Rules of Civil Procedure for citation by
publication in actions against unknown owners or claimants of an
interest in land.
(3) If the owner of the soil has not contacted the
commissioner within 30 days after the completion of all notice
procedures provided under Subdivision (2) of this subsection, then
the owner of the soil will be deemed unavailable to act as the
state's leasing agent and the School Land Board may lease the
state's mineral interest under Subsection (a) of this section.
However, if prior to the execution of a lease under Subsection (a)
the owner of the soil notifies the commissioner in writing that he
can and will act as the state's agent, then the owner of the soil's
ability to act as a leasing agent under this subchapter or under
Subchapter C, Chapter 53, of this code shall be reinstated.
(4) If the owner of the soil or of any undivided
interest therein appears within two years after the execution of a
lease on his land pursuant to this section, he shall be entitled to
one-half of all royalties theretofore paid or thereafter to be paid
under such lease, reduced in the proportion which his interest
bears to the whole and undivided surface estate, upon showing to the
satisfaction of the commissioner that the information submitted
under Subsection (b)(1) was inaccurate or that a reasonably
diligent search would have resulted in his being located.
(c) Upon the termination or expiration of a lease for oil
and gas or any mineral leased under Subchapter C, Chapter 53, of
this code executed pursuant to this section, the rights of the owner
of the soil to act under this subchapter shall be ipso facto
reinstated.
Added by Acts 1979, 66th Leg., p. 860, ch. 384, § 1, eff. June 6,
1979. Amended by Acts 1987, 70th Leg., ch. 912, § 2, eff. Aug.
31, 1987; Acts 1993, 73rd Leg., ch. 897, § 37, eff. Sept. 1,
1993.
§ 52.188. ASSIGNMENTS TO THE OWNER OF THE SOIL. (a) An
owner of the soil may acquire by assignment a lease which he
executed on land subject to the Relinquishment Act, Subchapter F,
Chapter 52 of this code; however, such an assignment is subject to
the terms of this section.
(b) When an owner of the soil seeks an assignment under
Subsection (a) of this section, both the current lessee and the
owner of the soil should notify the General Land Office of the
proposed assignment. This notification must include proof of the
consideration to be paid for the assignment. The land commissioner
may then approve the assignment; if the commissioner does approve
it, then both the current lessee and the owner of the soil will
receive written notice of this approval. Such written approval
shall also become part of the General Land Office's mineral file on
this land.
(c) A lease which has been assigned to an owner of the soil
without the advance approval of the land commissioner is void as of
the time of assignment. In addition, the land commissioner may also
forfeit the agency powers of the owner of the soil, and the state
will execute a subsequent lease pursuant to Section 52.175 of this
code.
(d) Whenever an owner of the soil is assigned a
Relinquishment Act lease that he executed, he shall be accountable
to the state as follows:
(1) If the lease was assigned to the owner of the soil
without the advance approval of the commissioner and the owner of
the soil subsequently assigns the lease, the owner of the soil must
pay the state two times the entire consideration that he received
upon subsequent assignment of the lease. Payment of this money in
no way alters the fact that the lease is void under Subsection (c)
of this section.
(2) When an assignment to an owner of the soil has the
commissioner's advance approval and the owner of the soil
subsequently assigns the lease, the owner of the soil must pay the
state one-half of his profit on the subsequent assignment. His
profit is the difference between what he paid for his assignment and
what he received for the subsequent assignment.
(e) Under this section, an assignment will be treated as if
it were made to the owner of the soil when:
(1) the assignee is a nominee of the owner of the soil;
(2) the assignee is a corporation or subsidiary in
which the owner of the soil is a principal stockholder or is an
employee of such a corporation or subsidiary;
(3) the assignee is a partnership in which the owner of
the soil is a partner or is an employee of such a partnership;
(4) the assignee is a principal stockholder or
employee of the corporation which is the owner of the soil;
(5) the assignee is a partner or employee in a
partnership which is the owner of the soil;
(6) the assignee is a fiduciary for the owner of the
soil, including but not limited to a guardian, trustee, executor,
administrator, receiver, or conservator for the owner of the soil;
or
(7) the assignee is a family member of the owner of the
soil or related to the owner of the soil by marriage, blood, or
adoption.
Added by Acts 1985, 69th Leg., ch. 624, § 45, eff. Sept. 1, 1985.
Renumbered from § 52.187 and amended by Acts 1987, 70th Leg., ch.
912, § 3, eff. Aug. 31, 1987.
§ 52.189. AUTHORITY AND DUTIES OF
AGENT. (a) Prohibition Against Self-Dealing. (1) The owner of
the soil may not lease, either directly or indirectly, to himself or
to a nominee, to any corporation or subsidiary in which he is a
principal stockholder or to an employee of such a corporation or
subsidiary, or to a partnership in which he is a partner or to an
employee of such a partnership. If the owner of the soil is a
corporation or a partnership, then the owner of the soil may not
lease, either directly or indirectly, to a principal stockholder of
the corporation or to a partner of the partnership, or any employee
of the corporation or partnership. The owner of the soil may not
lease, either directly or indirectly, to his fiduciary, including
but not limited to a guardian, trustee, executor, administrator,
receiver, or conservator.
(2) Except as provided by this section, the owner of
the soil may not lease, directly or indirectly, to a person related
to him within and including the second degree of consanguinity or
affinity, including a person related by adoption, or to a
corporation or subsidiary in which that person is a principal
stockholder, or to a partnership in which that person is a partner,
or to an employee of such a corporation or subsidiary or
partnership.
(3) An owner of the soil who wishes to lease to a
person, corporation, or partnership described in Subdivision (2)
may request the approval of the board for authority to execute such
a lease before its execution. The owner of the soil requesting
approval must also execute and file with the commissioner a sworn
affidavit stating that the owner of the soil will not receive any
benefit under a lease so approved by the board that will not be
shared with the permanent school fund in the proportion prescribed
by this subchapter.
(4) If an owner of the soil makes any material
misstatement of fact in connection with an application to the board
or affidavit made pursuant to Subdivision (3), then any lease
executed pursuant to the authority of the board shall be voidable at
the election of the commissioner. The election to void such a lease
shall be cumulative of and in addition to all other remedies
available to the commissioner or the state.
(b) Fiduciary Duty of Agent. An owner of the soil owes the
state a fiduciary duty and a duty of utmost good faith. An owner of
the soil must fully disclose any facts affecting the state's
interest and must act in the best interest of the state. Any
conflict of interest must be resolved by putting the interests of
the state before the interests of the owner of the soil. In
addition to these specific statutory duties, the owner of the soil
owes the state all the common-law duties of a holder of executive
rights.
(c) When the commissioner determines that an owner of the
soil has breached any duty or obligation under this subchapter, the
commissioner may request that the attorney general file an action
or proceeding either to enforce the duties and obligations of the
owner of the soil or to forfeit the then applicable agency rights of
the surface owner. Such an action or proceeding shall be filed in a
district court in Travis County.
(d) A penalty of 10 percent shall be imposed on any sums due
the state because a surface owner breaches a fiduciary duty. This
penalty shall be applied only to amounts owed as a result of
breaches occurring on and after the effective date of this
subsection. The imposition of this penalty will not limit the right
of the state to obtain punitive damages, exemplary damages, or
interest. Any punitive damages or exemplary damages assessed by a
court shall be offset by the 10 percent penalty imposed by this
subsection.
Added by Acts 1985, 69th Leg., ch. 652, § 1, eff. June 14, 1985.
Amended by Acts 1987, 70th Leg., ch. 912, § 6, eff. Aug. 31,
1987; Acts 1987, 70th Leg., ch. 948, § 31, eff. Sept. 1, 1987.
Renumbered from § 52.187 by Acts 1987, 70th Leg., ch. 167, §
5.01(a)(31) eff. Sept. 1, 1987. Amended by Acts 1995, 74th Leg.,
ch. 937, § 2, eff. Sept. 1, 1995.
§ 52.190. LEASE BY OWNER OF THE SOIL. (a) An owner of
the soil of lands covered by this subchapter may lease those lands
for the purpose of exploring for and producing oil and gas in the
manner provided by this section.
(b) An owner of the soil may apply in writing to the board
for an oil and gas lease.
(c) The application shall contain the following:
(1) the name and address of the applicant;
(2) a complete legal description of the land the
applicant seeks to lease;
(3) the name and address of every owner of the soil of
the land the applicant seeks to lease, if the applicant is not the
sole owner of the soil;
(4) a brief letter opinion signed by an attorney
licensed in this state setting out the surface ownership of the land
sought to be leased;
(5) a statement of the applicant's experience in oil
and gas exploration and production, including, without limitation,
the applicant's Railroad Commission of Texas operator number and a
list of any State of Texas or federal oil and gas leases held or
operated by the applicant or other entity in which the applicant has
or had a significant interest during the five-year period preceding
the date of the application;
(6) a statement that the applicant intends to explore
for and, if commercially reasonable, produce oil and gas or if the
applicant plans that another person or firm shall conduct
exploration and production:
(A) the name and address of the person or firm;
(B) a description of the person's or firm's
experience in oil and gas exploration and production, including,
without limitation, the person's or firm's Railroad Commission of
Texas operator number and a list of any State of Texas or federal
oil and gas leases held or operated by the person or firm during the
five-year period preceding the date of the application; and
(C) a description of the applicant's intended
degree and type of participation in the exploration of and
production from the property and all consideration or benefits the
applicant expects to receive in connection with the exploration of
and production from the property; and
(7) the amount of bonus, rental, royalty, and other
lease terms that the applicant proposes to pay or offer or pay and
offer for the lease.
(d) The applicant shall provide geological, geophysical,
geochemical, and other data or copies of the data, including
interpretative data, pertinent to mineral exploration on the lands
for which the application is made, in the applicant's possession or
to which the applicant has reasonable access and which the
applicant has the ability to provide to the land office. All such
data shall be confidential and not subject to the provisions of the
open records law, Chapter 552, Government Code, until one year
after the expiration, termination, or forfeiture of a lease granted
pursuant to this section. After one year after the expiration,
termination, or forfeiture of such a lease, the data shall remain
confidential to the extent permitted by Chapter 552, Government
Code. If a lease is not issued, the data shall be returned to the
applicant.
(e) The board may prescribe the form of the application,
specify information required to be submitted in support of an
application, and, by rule, otherwise provide for the implementation
of this section.
(f) The staff of the land office shall review the
information presented in the application, other geological,
geophysical, and geochemical data reasonably available to it
relevant to the land proposed to be leased, and leasing information
reasonably available to it relevant to the land proposed to be
leased. The staff shall prepare a report to the board that
contains:
(1) a summary of bonus, rental, royalty, and other
lease terms then being offered and asked for leases of similar lands
in the area of the land proposed to be leased; and
(2) any factual data considered by the staff to be
relevant, including, but not limited to, data concerning the land
proposed to be leased and its estimated value for oil and gas
exploration and production, recommended lease terms, and the
applicant, including the applicant's history of leasing State of
Texas or federal lands for oil and gas.
(g) The board shall consider the application at a regular
meeting. It may, in its sole discretion, grant or deny the
application or grant the application subject to specified
conditions. Such conditions may include a requirement that if the
applicant does not materially participate in the exploration or
development of the leased premises, through labor performed, cash
or goods contributed, or supplying other enhancement in value, the
applicant must share equally with the permanent school fund any
benefit derived from the lease.
(h) After the board has approved an application, the
commissioner shall issue a lease to the applicant. The lease shall
conform, as nearly as is practicable, to the form of lease
prescribed by the board under Section 32.1071.
(i) The commissioner may not deliver a lease issued under
this section until the applicant has executed and delivered to the
commissioner a waiver of the applicant's right and duty to act as
agent for the state in leasing the leased premises and to receive
any part of the bonus, rental, royalty, and other consideration
accruing to the owner of the soil under this subchapter. The waiver
and the lease shall be effective as of the date the commissioner
executes the lease.
(j) Upon the expiration, termination, or forfeiture of a
lease issued under this section, the agency rights and duties of the
applicant as owner of the soil are reinstated without the necessity
for further action by the owner of the soil, the board, or the
commissioner.
(k) If an applicant is not the sole owner of the soil, the
applicant may secure leases from the other owners of the soil from
which the applicant is not prohibited from leasing under Section
52.189. If the applicant must obtain a lease from an owner of the
soil from whom the applicant would otherwise not be permitted to
lease in order reasonably to explore for or produce or explore for
and produce oil or gas, the commissioner may approve the lease on
the condition that the applicant shall not receive any benefit from
the lease, and, if the applicant should acquire by any method,
including devise or inheritance, the right to receive any rental,
royalty, or other benefit accruing to the owner of the soil's
interest under the lease, the applicant shall assign the benefit to
the commissioner for the benefit of the permanent school fund.
(l) The commissioner shall not approve any lease obtained by
an applicant from another owner of the soil if the lease contains
terms that are substantially inconsistent with or provide for a
lesser bonus, rental, or royalty than the lease approved by the
board. If the bonus, rental, or royalty in a lease obtained by an
applicant from another owner of the soil for a comparable interest
is greater than that approved by the board, then the lease approved
by the board shall be amended to provide for the greater bonus,
rental, or royalty, and the applicant shall be liable for all
greater sums due. In determining whether an interest is
comparable, the board shall consider the quantum of the interest,
the time at which the lease was taken, and any other aspects of the
lease transaction that the board considers to be relevant.
Added by Acts 1995, 74th Leg., ch. 937, § 1, eff. Sept. 1, 1995.
SUBCHAPTER H. LEASE LIMITATIONS
§ 52.291. COVERAGE. The following persons, agencies,
and entities are subject to the provisions of Sections 52.292
through 52.293 of this code:
(1) the commissioner;
(2) the board;
(3) boards for lease of land owned by a department,
board, or agency of the state created by Chapter 34 of this code;
(4) the Board for Lease of University Lands;
(5) the Board of Regents of Texas A&M University;
(6) the Board of Regents of Texas Tech University;
(7) the Board of Regents of the Texas State University
System;
(8) the Board of Regents of the University of Houston;
(9) any other board of regents or other governing
board of a state-supported institution of higher learning having
authority to execute oil and gas leases on land owned by the
institution;
(10) an owner of land or minerals in this state whose
authority to lease the land or minerals as agent for the state
arises in whole or in part from what is commonly known as the
Relinquishment Act, codified in Subchapter F of this chapter;
(11) the Board for Lease of State Park Lands;
(12) the Board for Lease of the Texas Department of
Criminal Justice; and
(13) the commissioners court of any county in this
state.
Acts 1977, 65th Leg., p. 2466, ch. 871, art. I, § 1, eff. Sept. 1,
1977. Amended by Acts 1993, 73rd Leg., ch. 897, § 38, eff. Sept.
1, 1993; Acts 1997, 75th Leg., ch. 227, § 6, eff. May 23, 1997.
§ 52.297. COMPENSATION FOR DAMAGES FROM USE OF
SURFACE. (a) Leases issued under Subchapter B of this chapter
for unsold surveyed or unsurveyed school land, other than land
included in islands, saltwater lakes, bays, inlets, marshes, and
reefs owned by the state in tidewater limits and other than that
portion of the Gulf of Mexico within the jurisdiction of the state,
must include a provision requiring the compensation for damages
from the use of the surface in prospecting for, exploring,
developing, or producing the leased minerals.
(b) The commissioner by rule shall set the procedure for
receiving compensation for damages to the surface of land dedicated
to the permanent school fund.
(c) Money collected for surface damages shall be deposited
in a special fund account in the State Treasury to be used for
conservation, reclamation, or construction of permanent
improvements on land that belongs to the permanent school fund.
(d) The special fund account must be an interest-bearing
account, and the interest received on the account shall be
deposited in the State Treasury to the credit of the permanent
school fund.
(e) Money collected under this section and designated for
the construction of permanent improvements as provided by this
section must be used not later than two years after the date on
which the money is collected.
(f) Any money that remains in the special fund account for
longer than two years shall be deposited in the State Treasury to
the credit of the permanent school fund.
(g) The compensation for damages under this section is in
addition to any bonus, rental, royalty, or other payment required
by the lease.
Added by Acts 1985, 69th Leg., ch. 624, § 46, eff. Sept. 1, 1985.
Amended by Acts 1993, 73rd Leg., ch. 897, § 42, eff. Sept. 1,
1993; Acts 2003, 78th Leg., ch. 328, § 8, eff. Jan. 1, 2004.
SUBCHAPTER I. GEOPHYSICAL AND GEOCHEMICAL EXPLORATION PERMIT
§ 52.321. DEFINITIONS. In this subchapter:
(1) "Geophysical exploration" means a survey or
investigation conducted to discover or locate oil and gas prospects
using magnetic, gravity, seismic, and/or electrical techniques.
(2) "Geochemical exploration" means a survey or
investigation conducted to discover or locate oil and gas prospects
using techniques involving soil sampling and analysis.
(3) "Public school land" means land dedicated by the
constitution or laws of this state to the permanent free school
fund, and specifically includes land with a mineral classification
under Subchapter F of this chapter in which the state has retained
the oil and gas interest and areas within tidewater limits.
(4) "Areas within tidewater limits" means islands,
saltwater lakes, bays, inlets, marshes, and reefs within tidewater
limits and that portion of the Gulf of Mexico within the
jurisdiction of Texas.
(5) "Permit" means a license issued by the
commissioner authorizing geophysical and/or geochemical
exploration on public school land.
(6) "Permittee" means the holder of a permit.
Added by Acts 1981, 67th Leg., p. 2451, ch. 631, § 1, eff. Sept.
1, 1981. Amended by Acts 1985, 69th Leg., ch. 624, § 47, eff.
Sept. 1, 1985; Acts 1993, 73rd Leg., ch. 897, § 43, eff. Sept. 1,
1993.
§ 52.322. PERMIT REQUIRED FOR EXPLORATION. (a) Except
for a person who has a valid oil and gas lease on public school land
authorized by this chapter, a person may not conduct geophysical or
geochemical exploration on public school land unless the person
obtains a permit from the commissioner.
(b) Every person who is authorized to conduct a geophysical
or geochemical exploration on public school land shall comply with
the commissioner's rules relating to such exploration. Any person
with a valid oil and gas lease on land subject to this chapter must
comply with the commissioner's rules concerning exploration.
(c) Nothing in this title shall prohibit the conduct of
airborne geophysical exploration.
Added by Acts 1981, 67th Leg., p. 2451, ch. 631, § 1, eff. Sept.
1, 1981. Amended by Acts 1985, 69th Leg., ch. 624, § 47, eff.
Sept. 1, 1985.
§ 52.323. APPLICATION FOR PERMIT. (a) The person
responsible for conducting a geophysical or geochemical
exploration is the person who must apply for a permit.
(b) An application for a permit shall be made on a form
prescribed by the commissioner and shall state the name and address
of each person for whom the exploration is being conducted as well
as any other information required by the commissioner.
Added by Acts 1981, 67th Leg., p. 2451, ch. 631, § 1, eff. Sept.
1, 1981.
§ 52.324. AUTHORITY OF COMMISSIONER. (a) The
commissioner:
(1) as a condition of issuing a permit, shall collect
reasonable fees from the applicant in an amount determined by the
commissioner;
(2) may require a permittee to furnish to the
commissioner, upon the commissioner's request, copies of maps,
plats, reports, data, and any other information in the possession
of the permittee that relates to the progress or results of an
exploration under a permit; provided however, the commissioner
shall not require a permittee to furnish any of its interpretive
data;
(3) shall by rule require a permittee to restore land
explored under the permit as nearly as is practicable to its
condition immediately prior to the exploration;
(4) shall by rule determine the procedure for
receiving compensation for damages to the surface of public school
land except land with a mineral classification under Subchapter F
of this chapter; and
(5) may make any other rules relating to geophysical
or geochemical explorations, permits, or permittees the
commissioner considers appropriate.
(b) Money collected for surface damages shall be deposited
and used in the manner provided by Section 52.297 of this chapter.
(c) In the case of areas within tidewater limits, the
commissioner shall follow the recommendations of the Parks and
Wildlife Department in making rules to prevent unnecessary
pollution of water, destruction of fish, oysters, and other marine
life, and obstruction of navigation.
(d) If a permittee violates a rule of the commissioner or a
term of a permit, the commissioner may cancel the permit.
(e) If by authority of Subsection (a)(2) of this section the
commissioner acquires information concerning a permittee's
geophysical or geochemical exploration, the commissioner shall
consider the information to be confidential and may not disclose
it, except by authority of a court order, to the public or any other
agency of this state.
Added by Acts 1981, 67th Leg., p. 2451, ch. 631, § 1, eff. Sept.
1, 1981. Amended by Acts 1985, 69th Leg., ch. 624, § 47, eff.
Sept. 1, 1985; Acts 1993, 73rd Leg., ch. 897, § 44, eff. Sept. 1,
1993.
§ 52.325. PERMITTEE'S FAILURE TO COMPLY. (a) If a
permittee fails to restore land in accordance with Section
52.324(a)(3) of this code and the rules of the commissioner, the
commissioner and any surface lessee may maintain an action against
the permittee for actual damages to the land, or to the
improvements, growing crops, or domesticated animals on the land
that were caused by the geophys
