NATURAL RESOURCES CODE
SUBTITLE F. LAND OF POLITICAL SUBDIVISIONS
CHAPTER 71. LEASE FOR MINERAL DEVELOPMENT
SUBCHAPTER A. LEASES BY POLITICAL SUBDIVISIONS
§ 71.001. DEFINITION. In this subchapter, "political
subdivision" means any body corporate with a recognized and defined
area.
Acts 1977, 65th Leg., p. 2504, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.002. AUTHORITY TO LEASE. A political subdivision
may lease land owned by it for mineral development, including
development of coal and lignite.
Acts 1977, 65th Leg., p. 2504, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.003. GOVERNING BODY TO EXERCISE AUTHORITY. The
governing body of the political subdivision which is vested by law
with management, control, and supervision of the political
subdivision shall exercise the right to lease the land.
Acts 1977, 65th Leg., p. 2504, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.004. NOTICE AND HEARING. Before a lease is made
under this subchapter, notice must be given and a public hearing
must be held for consideration of bids.
Acts 1977, 65th Leg., p. 2504, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.005. NOTICE OF INTENTION TO LEASE LAND. (a) After
the governing body determines that it is advisable to lease land
belonging to the political subdivision, it shall give notice of the
intention to lease the land.
(b) The notice shall describe the land to be leased and
designate the time and place at which the governing body will
receive and consider bids for the lease.
(c) The notice shall be published once a week for three
consecutive weeks in a newspaper published in the county and with
general circulation in the county.
Acts 1977, 65th Leg., p. 2504, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.006. RECEIVING BIDS AND AWARDING LEASE. On the
date specified in the notice, the governing body of the political
subdivision shall receive and consider bids submitted for leasing
all or part of the land that was advertised for lease, and the
governing body may award the lease to the highest and best bidder
who submits a bid.
Acts 1977, 65th Leg., p. 2504, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.007. REJECTION OF BIDS AND ADDITIONAL BIDS. If the
governing body believes that the bids submitted to it do not
represent the fair value of the leases, the governing body may
reject the bids, give notice, and call for additional bids.
Acts 1977, 65th Leg., p. 2505, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.008. GRANT OF LEASE. A lease made under this
subchapter, including leases for coal and lignite, may be granted
by public auction.
Acts 1977, 65th Leg., p. 2505, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.009. ROYALTY. (a) In each lease other than a
lease for coal and lignite executed under this subchapter, the
lessor shall retain at least a one-eighth royalty.
(b) In a lease for coal and lignite executed under this
subchapter, the lessor shall retain at least a royalty based on one
of the following or a combination of the following:
(1) a sum certain per ton;
(2) a percentage certain of the gross sale price
F.O.B. at the mine site of the coal and lignite; or
(3) a sum certain for each acre-foot of coal and
lignite mined and removed from the premises.
(c) Royalties under a coal and lignite lease may be paid as
advanced mineral royalties.
Acts 1977, 65th Leg., p. 2505, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.010. LEASE TERM. (a) No primary term of a lease
other than a lease for coal and lignite made under this subchapter
may be for a period of more than 10 years from the date of the
execution and approval of the lease.
(b) No primary term for a coal and lignite lease made under
this subchapter may be for a period of more than 35 years from the
date of execution.
Acts 1977, 65th Leg., p. 2505, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
SUBCHAPTER B. POOLING MINERAL LEASES
§ 71.051. DEFINITIONS. In this subchapter:
(1) "City or town" means a city or town organized or
chartered under the general laws of the state or under a special act
or charter.
(2) "Political subdivision" means a body corporate
which has a recognized and defined area.
Acts 1977, 65th Leg., p. 2505, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.052. INSERTING POOLING PROVISIONS IN LEASES. A
city, town, or political subdivision may insert in an oil and gas
lease or in an oil, gas, and mineral lease executed by it a
provision authorizing the lessee to pool the lease, the land or
minerals included in the lease, or any part of these with any other
land, leases, mineral estates, or parts of any of these to form a
drilling or spacing unit for the exploration, development, and
production of oil or gas and authorizing the lessee to form the
units and accomplish the pooling by written designations filed in
the county in which the land is located.
Acts 1977, 65th Leg., p. 2505, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.053. COMPLIANCE WITH GOVERNMENTAL AGENCIES. With
respect to land owned by the city or town or other land owned by the
political subdivisions, the drilling or spacing units may not be
more than the minimum number of acres on which an oil and gas well
must be located to comply with the rules or orders of the Railroad
Commission of Texas or any other federal or state regulatory body
that has authority to control or regulate the spacing of oil and gas
wells.
Acts 1977, 65th Leg., p. 2506, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.054. TERMS AND CONDITIONS OF LEASES OF COUNTY
SCHOOL LAND. Leases of county school land that are governed by
Article VII, Section 6, of the Texas Constitution, may include
authorization for the formation of drilling and spacing units on
any terms and provisions the commissioners court considers best.
Acts 1977, 65th Leg., p. 2506, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.055. ADDITIONAL TERMS OF LEASES. A lease covered
by this subchapter may provide:
(1) that the entire acreage pooled into a unit shall be
treated for all purposes except the payment of royalties as if it
were included in the lease and drilling or reworking operations and
production of oil or gas on any part of the unit shall be considered
for all purposes except the payment of royalties as if the
operations were on and production were from the land included in the
lease whether or not the well or wells are located on the premises
included in the lease; and
(2) that instead of the royalties provided in the
lease, the lessor shall receive on production from a pooled unit
only the proportion of the royalty provided in the lease as the
amount of the lessor's acreage placed in the unit or its royalty
interest on an acreage basis bears to the total acreage included in
the unit.
Acts 1977, 65th Leg., p. 2506, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.056. AMENDING LEASE. On application of the lessee
or present owner of any oil and gas lease or any oil, gas, and
mineral lease validly executed before June 4, 1953, by any city,
town, or political subdivision, the governing body of the city,
town, or political subdivision may amend the lease to include a
pooling provision that includes the terms provided in this
subchapter.
Acts 1977, 65th Leg., p. 2506, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
§ 71.057. AUTHORITY TO COMMIT ROYALTY
INTERESTS. (a) A city, town, or political subdivision without
notice may commit, to any agreement that provides for the operation
of areas as a unit for the exploration, development, and production
of oil or gas, any royalty interests owned by the city, town, or
political subdivision in oil or gas.
(b) The agreement may include any terms and provisions that
the city, town, or political subdivision considers best and may
provide in substance:
(1) that operations incident to drilling a well on any
portion of a unit shall be considered for all purposes to be the
conduct of the operation on each separately owned tract in the unit
by the several owners of the tracts;
(2) that the production allocated to each tract
included in a unit shall, when produced, be considered for all
purposes to have been produced from the tract by a well drilled on
it;
(3) that any lease that covers any part of the area
committed to the agreement shall continue in force as long as oil or
gas is produced in paying quantities from any part of the unit area;
and
(4) that royalties reserved to the city, town, or
political subdivision from any tract or portion of a tract included
within the unit shall be paid only on that portion of the production
allocated to the tract or on the value of the production allocated
according to the agreement.
(c) No agreement may be made by any city, town, or political
subdivision which commits the city, town, or political subdivision
to the payment of any part of the cost or expense of operating any
unit area or any well located on the area.
Acts 1977, 65th Leg., p. 2506, ch. 871, art. I, § 1, eff. Sept. 1,
1977.
