The Attorney General of Texas
June 28, 1978
JOHN L. HILL
Attorney General
Honorable Sob Armstrong Opinion No. Ii- 1197
Commissioner
General Land Office Re: Responsibility for enforc-
Austin, Texas 78701 ing section 52.293 of the Natural
Resources Code and remedy for
breach.
Dear Commissioner Armstrong:
You have asked two questions concerning article 5382f, V.T.C.S., now
codified as sections 52.291 through 52.296 of the Natural Resources Code.
You ask (1) who is responsible for enforcing its terms and (2) what remedies
are available if a lessee sells gas out of state in violation of this provision.
Section 52.292 makes it illegal for certain public officials, agencies,and
boards, including the Commissioner of the General Land Office, to execute an
oil, gas, or mineral lease on public land under their custody unless such lease
contains the following provision:
No natural gas or casinghead ges, including both
associated and nonassociated gas, produced from the
mineral estate subject to this lease may be sold or
contracted for sale to any person for ultimate use
outside the state unless the Railroad Commission of
Texas, after notice and hearing as provided in Title 3
of this code, finds that:
(1) the person, agency, or entity that executed
the lease in question does not require the natural
gas or casinghead gas to meet its own existing
needs for fuel;
(2) no private or public hospital, nursing home,
or other similar health-care facility in this state
requires the natural gas or casinghead gas to meet
its existing needs for fuel;
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Honorable Bob Armstrong - Page 2 (B-1197 1.
(3) no public or private school in this state that
provides elementary, secondary, or higher education
requires the natural gas or casinghead gas to meet its
existing needs for fuel;
(4) no facility of the state or of any county,
municipality, or other political subdivision in this state
requires the natural gas or casinghead gas to meet its
existing needs for fuel;
(5) no producer of food and fiber requires the natural
gas or casinghead gas necessary to meet the existing
needs of irrigation pumps and other machinery directly
related to this production; and
(6) no person who resides in this state and who relies
on natural gas or casinghead gas to provide in whole or
part his existing needs for fuel or raw material requires
the natural gas or casinghead gas to meet those needs.
Sec. 52.293.
State leases executed after the effective date of this statute are null and
void unless they contain the quoted provision. Natural Resources Code, S 52.295.
The prohibition contained in section 52.293 is not a regulation of general
application. It is to operate in the form of a specific clause contained in each lease
of state-owned land. Penalties are prescribed for failing to include the prohibition
clause in a lease, but no penalties are specified for violating the prohibition clause
itself.
It is our opinion that the legislature intended the prohibition clause to be
enforced in the same manner as other material provisions in a lease. The remedies
available in the case of a particular violation are those provided in the lease
involved and in the statutes which authorize it.
A violation of the prohibition clause contained in your Revised Lease Form
10-75, for example, is governed by the following provision in the lease: “if Lessee
shall knowingly violate any of the material provisions of this lease . . . the rights
acquired under this lease shall be subject to forfeiture by the Commissioner [of the
CL01 . . . (Paragraph 181.” Paragraph 19 describes how forfeitures may be set
aside. It is clear that the prohibition clause is to be regarded as a “material
provision” of a lease since the legislature declared that leases which fail to include
it are null and void.
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Honorable Bob Armstrong - Page 3 (H-11971
Although the usual legal and equitable remedies, such as a suit for damages or
for specific performance, may be theoretically available, they do not seem
appropriate for violations involving unauthorized sales of gas for out-of-state
consumption.
No single party Is made responsible for enforcing the prohibition against such
unauthorized sales. It is to be enforced in a particular case by the party
responsible for enforcing the other provisions of the lease involved. The
Commissioner of the General Land Office is responsible for enforcing the
prohibition clauses contained in your Revised Lease Forms 10-75. Under leases of
state park lands, authorized by Chapter 35 of the Natural Resources Code, the
Board of State Park Lands has such responsibility.
The Railroad Commission has no responsibility for enforcing the prohibition
against unauthorized gas sales. The role of the commission is confined to making
findings that the natural gas produced from state-owned lands is, or is not, required
to meet certain local needs, and to granting exceptions to the prohibition clause in
certain cases. Sees. 52.293, 52.296.
SUMMARY
Section 52.293, which operates as a clause in each lease of
state-owned land, is to be enforced as other material
provisions of a lease. The remedies available are those
provided in the lease and in the statutes which authorize it.
The party responsible for enforcing the other provisions of a
particular lease is also responsible for enforcing the clause
required by section 52.293.
~ &Attorney General of Texas
DAVID M. KENDALL, First Assistant
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Opinion Committee
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