CHAPTER 52. OIL AND GAS
NATURAL RESOURCES CODE
TITLE 2. PUBLIC DOMAIN
SUBTITLE D. DISPOSITION OF THE PUBLIC DOMAIN
CHAPTER 52. OIL AND GAS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
SUBCHAPTER B. LEASE OF PUBLIC SCHOOL AND GULF LAND
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5245, ch. 965,
Sec. 6, eff. June 19, 1983; Acts 2003, 78th Leg., ch. 1276, Sec.
13.002(b), eff. Sept. 1, 2003.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 16,
eff. Sept. 1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 17,
eff. Sept. 1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1985, 69th Leg., ch. 624, Sec. 41,
eff. Sept. 1, 1985.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 18,
eff. Sept. 1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1985, 69th Leg., ch. 923, Sec. 13,
eff. Aug. 26, 1985; Acts 1997, 75th Leg., ch. 1423, Sec. 14.11,
eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5247, ch. 965,
Sec. 9, eff. June 19, 1983; Acts 1993, 73rd Leg., ch. 897, Sec.
19, eff. Sept. 1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 20,
eff. Sept. 1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1979, 66th Leg., p. 2005, ch. 785,
Sec. 6, eff. June 13, 1979; Acts 1993, 73rd Leg., ch. 897, Sec.
21, eff. Sept. 1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1981, 67th Leg., p. 1858, ch. 438,
Sec. 1, eff. June 11, 1981; Acts 1987, 70th Leg., ch. 948, Sec.
18, eff. Sept. 1, 1987; Acts 1993, 73rd Leg., ch. 897, Sec. 22,
eff. Sept. 1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1997, 75th Leg., ch. 1423, Sec.
14.12, eff. Sept. 1, 1997.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 404, ch. 81,
Sec. 21(i), eff. Sept. 1, 1983; Acts 1987, 70th Leg., ch. 948,
Sec. 19, eff. Sept. 1, 1987; Acts 1999, 76th Leg., ch. 1125, Sec.
1, eff. Sept. 1, 1999; Acts 1999, 76th Leg., ch. 1483, Sec. 2,
eff. Aug. 30, 1999.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 404, ch. 81,
Sec. 21(j), eff. Sept. 1, 1983.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1987, 70th Leg., ch. 948, Sec. 20,
eff. Sept. 1, 1987; Acts 1993, 73rd Leg., ch. 897, Sec. 23, eff.
Sept. 1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 7, eff.
June 13, 1979. Amended by Acts 1985, 69th Leg., ch. 923, Sec. 14,
eff. Aug. 26, 1985; Acts 1987, 70th Leg., ch. 948, Sec. 21, eff.
Sept. 1, 1987; Acts 1993, 73rd Leg., ch. 897, Sec. 24, eff. Sept.
1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1987, 70th Leg., ch. 948, Sec. 22,
eff. Sept. 1, 1987.
Sec. 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, Sec. 15, eff. Aug. 26,
1985. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 25, eff.
Sept. 1, 1993.
SUBCHAPTER C. DEVELOPMENT OF RIVERBEDS AND CHANNELS
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1985, 69th Leg., ch. 923, Sec. 16,
eff. Aug. 26, 1985; Acts 1993, 73rd Leg., ch. 897, Sec. 26, eff.
Sept. 1, 1993.
Sec. 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, Sec. 27, eff. Sept. 1,
1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1985, 69th Leg., ch. 923, Sec. 17,
eff. Aug. 26, 1985.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5248, ch. 965,
Sec. 10, eff. June 19, 1983; Acts 1993, 73rd Leg., ch. 897, Sec.
28, eff. Sept. 1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 29,
eff. Sept. 1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1981, 67th Leg., p. 799, ch. 291,
Sec. 90, eff. Sept. 1, 1981.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
SUBCHAPTER D. ROYALTIES
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1985, 69th Leg., ch. 624, Sec. 42,
43, eff. Sept. 1, 1985; Acts 1987, 70th Leg., ch. 948, Sec. 23,
24, eff. Sept. 1, 1987; Acts 1993, 73rd Leg., ch. 897, Sec. 30,
eff. Sept. 1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 31,
eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 427, Sec. 1, eff.
Aug. 28, 1995; Acts 1999, 76th Leg., ch. 405, Sec. 49, eff. Sept.
1, 1999.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1986, 69th Leg., 3rd C.S., ch. 5,
Sec. 1, eff. Sept. 30, 1986.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1997, 75th Leg., ch. 1324, Sec. 2,
eff. Jan. 1, 1998.
Sec. 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, Sec. 2, eff.
Sept. 30, 1986. Amended by Acts 1987, 70th Leg., ch. 948, Sec.
25, eff. Sept. 1, 1987; Acts 1997, 75th Leg., ch. 1423, Sec.
14.13, eff. Sept. 1, 1997; Acts 2003, 78th Leg., ch. 328, Sec. 7.
Sec. 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, Sec. 2, eff.
Sept. 30, 1986. Amended by Acts 1997, 75th Leg., ch. 1423, Sec.
14.14, eff. Sept. 1, 1997.
Sec. 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, Sec. 26, eff. Sept. 1,
1987.
Sec. 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, Sec. 27, eff. Sept. 1,
1987.
SUBCHAPTER E. UNITIZATION OF LEASED AREAS
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1987, 70th Leg., ch. 948, Sec. 28,
eff. Sept. 1, 1987; Acts 1993, 73rd Leg., ch. 897, Sec. 32, eff.
Sept. 1, 1993.
Sec. 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, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1987, 70th Leg., ch. 948, Sec. 29,
eff. Sept. 1, 1987; Acts 1993, 73rd Leg., ch. 897, Sec. 33, eff.
Sept. 1, 1993.
Sec. 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