OFFICEOFTHEATTORNEYGENERALOFTEXAS
AUSTIN
eaOVEll SCLLCRS
~lToa”cI emlsmu
loa. Oibb Ollohrlrt.
tmridant, Agrioultural and
~@ohwhi0al Oollrgr 0r Texar
mllogo Station, Tour
mar sir: OpinionPO. O-7088
RI: Method of mla
oil, gas, rulphur and
loaror on land ownrd
Text38 r0r the wo or
c 4he&lk spaces
tqehed.lelbje
in -
forn+hQuldId bti4
r~dgrapht, 2 and 3 and 5 of the at-
led in prior to edvertieezent in ao-
oordeno\a w&h the’.. of$d’
r, decisions. In this oonneotlon, the maxl-
mm "expkd ory" $ erm,ie five years, but the Boerd is authorized
t0 select “on3 \eh@ter,. ‘terr.. ?he rAnlmwz royalty 1s **1/8~of the gross
production of oil,, g&s, sclphur and other mlneralsvl, but tLe loard
may place ads lease on t!!e mzrkat et e higher royalty. The ffilnlrmn
delay rental h’One Doller er aore, but a higher amount my be fixed
by the Board in advanoe of t he advertlse~~:rent.
The queetlons asked in your opinion request will be
quoted and answered below in the ‘order in whloh they appear in your
lqtter:
Pl. 2a:. t!ze 3oerd of llre2tors of the -. ir !‘. Jolleee
dslecate to the Zuslnsss :.ent;er of the 20113t:s 2~thC~lty
to advertise for sale (by tr;a &zrd; ht zubL?c auction, 011,
‘41.3
uoooorable Clbb Gllohrlat - iage I!
gas, aulptxr and other daerel loasea on land under
it. lxolualrr oootrol ovnod by tbr .-tit0 or Taxa8 ror
fb0 us. OS toe Collegm sad itt dlrlalona?"
Tbo first parecrrph of reo. S of Art. 36X50-3 roads
lt r o l;wr :
“900. 3. Khenever, in the opinion 0r thr merd, there
shell to ruch a demaz16for the purohaar of 011, g a s, lulphur
or other mlorral lraroa 0r1 .eny tract or prt or any trrot or
lmd as will rra@oBably laeuro on laraatsgrour sale the
Board shall laoo luoh oil+ gac, rulphur or other &ore1
lessor on ta8 d land on the market in auoh treot or trtota, or
lnl part tt..rreof, ne tha Eoard mu deelgnatr. lt ahall oauaa
to br edrertlaed l brler tloaorlpt I on of the lend rrom rhloh
~~~a~~l~, err rulphur or other mlnrrala lo proporrd to ba
3uo& ldtrrtleemeat shell be aede br insertlag in two
.or mori paparr or gonerel ~lr~uletloa~ln,f~lr ,3*ata ent.la:~
lddltlOn the Eoerd mey, la lt8~ dl66~~tlOn,: OrUa@,~ul.d.,rd~~rt~ar-
moat to bo ptood In l
qIClJw,&
OIr.cJoo~li~b~;irb'~a5~,-~i
or- thr 3trt0,0149 m.IJ.. 85 #Irr .or.:qmD,,p*jboa&,~;: cicZ$@*~’ :i,:
ana :
OOunty jUdg@ Of tbr OOUxitywhan ahld b*lda ir&l66itOi$~';i'~~d':
me11 aoplrr of suoh Froj;oralo to ruoh other prisons es the,Board
tight think would bo p&twFetad thoro,la.J,,
by tho body, do8l#mtod.,by~ lar.eadk tb~-t.y~ ttoy:.:+,tiot- bo~,daSogato~~to
’othora. Thlt la pertlouferly.~ t~um di .dtitlrr,whloh oeil i’ rot ~Mio: ox-
oro~ao of roaaon or dlaorotlon. Bowever; 8 kbard may. deleeet4. mln-
latorlel or ldalnlatretl+4 funot%Ons,nOt os:lln~ for th4' lxorol~a4
0r roe80n or dlaorrtlon by lppolntlag ego&r tO.pOrrOrm dutlea.bf
that oherector. 54 Tar. Jur. 439, ("iubllc Cffloorv, f40. 7Q):L'orne
Loologioel ,&ran4 Co. v. City of Dallas. 45 ':,.(ZdI 714, (Tcx. Clv.
APF. 19313
It wlll bi: noted from e res@?nc cf t>e st;t,it.a qaottd
qbooe t?m t raacon or direration lr Involve6 1~ t>a bcarG*r Ceter-
mlnetlon that stick (I Ctznnd exist6 for tka ~urc~ese ;I le~fet on ety
tract or land or pi;t of ar.y trpot ~5 ::I11 rcczcnnbl:: izszr.c sn >d-
Vent6Eecuc oole. In our oplnlon i.)?e bard c.cnnot ielc?erc thl~
discretion of Ctterminlrt rkan a& tract or treats should be ,-laced
OII the murkat for lrtain2. ~onerer , once the 3osrd has mtde thie de-
tsminr.tlon and haar drtezmlned the nnnner of pJbllo~tlon in scoord-
6noe with the statute quoted, thoa tbe cclrrgln& aat sf theae decl4lona
la marely a mlalsttrlsl fxctlon, v;hioh m&y be delegated. Therefore,
eubjcct to the r8~ulrcnent :knt :*.a bcerd 1s to exercise'lt~; OWI die-
Cratlon In makIn 411 ~dec$eloz~s, '(t'r) rnswtr your ;centltx zzbcr cn4
in the affirzctlve.
414
gonorable
CIbb Cll&rlot - roe..,3
Cuootloa No. 28
-can the BOrSd or Dlrootoro or th8 .i. & f:. cO1hgO
60196otr, to its Sroeldont or to thr Errrldant or the
CO11060ruthorltr
to8
(0) rolllt pub1108uotlon loereron 011,##a, oul-
phur sod other mlrrrrlo
on load rmdor lto lroluolro oostrol
omod by the Stota or TOXOOror the POO or the Collese
-~ WY
it. alli olono) ‘,
(b ) do to mlw th a t l ortlotaotory bid hor boon roooir.d
lab makeon rword to tin blddor OWrrlag the hl&heot prior,
(a) rojoat rll other bide, md
(a)---
rxrautr a loerroa thr l proved tora la favor of
biddW+fOTbI~ th. biC+t Dt ip080". . ,;
The ‘ihad ‘+a(riph’ ioi Eoo. t, Artldie ,q6158-S, ,,pro-
““~+lboi~:ln:‘puf’.*r i. ~o~~oujra,;;,,$,,;~:, ;;; ;
<-z4 .~~ - .... :,.‘, :,..,; i !’:;‘?Y.,
;i~ i
“Tb. Board ma: 'eel1tb. loarc or lrroro to tbo M&hoot
blddar at publfo motion ct the Agrioulturrl and :soohmlool
Collrgr of Toxao.Colloge Station, Torso at any hour botwoen
1O:OOa. sbaae ~;OO,p.m.Tha aoor4 old1 hare the right to
njoot all%ldr;~::~: .:, ':
Sro. 8 0r ih0 oa~co lrtlolo protldii~‘ia part’*0 r0ii0w0:
‘Ii in th8 opinion of fho Board any one of the bltldoro
ohall her8 oirrrad a rwoonablo~proper prloa ror nay
traot and aot lerr than tho.prloo rlqd by the board, the
lundo aO+ertiaod may be Ieased ror 011, ear, sulpbur add/or
other nlnoral purpoooa under the tern% or ttlc ,:.ot, and suck
rsgulrtlono. ea t$r 50~~6 may preeoribr, not lnooarlstant with
the prorlslona cf thir ;tct:
5e.o. 3 of the aam artlolo ?rovldos In >art as follo*s:
"lf thr tioard ehall detormlnr that l ~atlafoctory bid
hsc Non rroo~lor raid 011, as, Fulphur and/or other
mlnrral lrndo it ohs11 ~rocopt" the camo an6 rojbot all Other
bids en4 rllo orid aoo-ptod bid in tho Canoral Land Lfflco.*
subpare&raph (a) OS So. 7 of the oamo artlolr proTl6er
,a0 roiiowc:
“il :ht~?o*rd Chbll drtor-2lr.s thst a %6tisf%c?.cry Sld
hcs beal; receiveFl.3r seld 011, nor, r;rl;Y.ur c3dlor tt'zer
3lneralc, It ~111 rinks an msrd to ‘hb tidder Ofrsr!Ef tf?e
hlghoct price thororor, end CI loam ohell be illad in the
Seaera Idnd -rrm.-
41.5
goaoroblo slbb Cllohrlrt - ilgo”‘4~
Tha gonoel n~lo~rlt~ ro(ord to dolraatlon O< duties
by QUbliO OfYI~er8 lo ototod uador quootlon 1 above. tlkowloo
it is ma lloaoatory rulo oi tho law or lg o a othat,
y la tbo lb-
los08 oi llthor oxprooo or Impllad wthorlty th o p o wa r l
ontr u~to a
to oa ogoat rannot bo ~ologotod, aa& this do IO portloularly
lppllooblo whoa tbo oxoraloo of tho powor ooaforrod lnrolroo dla-
orotlon. 2 Tax. Jw. 471 (*A6eary-, $00. 761
la the ‘oiro or Born. i~o1o~1o.1 ANU co. v. city or
mlloo, lugm, it was hold that tto Cltv Park Bowa oould not
dO1O~dO t0 the filWtOt Of Frrkr the QCWO?‘tO aoko ContraOto iOr
tbo wwohooo ot lalmlo, the oourt ltoting la lto oplnlon that luoh
0 board oa-not do~ogoto to other8 tbo dlrobwgo or duties whloh aall
ror roaooa or dloorotlon, md uhlob are regard04 (8 a pert or t&o
pub110 trurt locumad by tbo umbrro or the board..
“Thi’ 8bOd'quot.d ~~o~l~Iono oi thr 8tatute 18 quortloa
olurl ooatrnploto 'that the (llrorotlon,lavol~trd la orlllng 1000~0,
4rto rd al- what bid As aotiolooto~,~ gnpd roj~oofing othor bl&o
.‘-*itill. b~exo?olrrd. br thc’Zom4;‘.ia&“Wogr oplnloa tho Board ‘bar
00 lutborlty to ddO&NtO tho lxoroloo ot’that -dloorotIoa to tbo
Prooldoat . So thorororo mowor hour question Ro. e la tbo aogotlve.
;;uretlo.n Ho. 8:
*:t tbo laowor tothi above ~watl&o lr in tho aogative,
o a atho luotloa bo hold without the Ward of Z!lrootoro bring
la l08010a7 ,.
lfr 00, oui the luotioaoor ray ‘aold* or oaa bids bo oo-
ooptod oalr oubjoot to tho lpprotal of tbe Board of Dlrootoro
on6 tho sale be doolwrd *oloaed' rubjoot to ouoh lpproral?”
Saotlon 1 of Art. 2613a-3 roads in part a8 follows:
-:oc. 1. Thst thr 30&d of ?lreotors or the kgrloult3rel
and Eeohmloal Collebq of Zexac 1s hereby autkorlzoC an4 en-
Fowerod to leeec for 011 end/s EF and/or 5ul>tmr sa:!/cr otktr
nlneral devaloymnt to t:@ hl@rat bidder at public euotioE all
lnnda ueed lor errerlmntsl et*.tlono mC 811 other lends undsr
itr cxolueive control or any part tkoreof now ownod by the
:.tato of Iexao and loqvlrad ror the uee or the +.rloultu~sl and
lLeo~ealoa1 Collo~o of Fsu8 and ltr dlrlslonr or th:.t may hera-
after br aoqdrod for the use of the ;~~rloulturrl end Uecheni-
oal Colla.gr of Ieras and its dlvl8lons.”
The aocond prapra+ of 7.00. . of the fmme ~rtlcls rsaCs
f5 fcllo:~s:
nonoreblr GIbb Ollobrlrt - Sage 8
_. . ,.
-‘Sea. 3. The Eoerd may eel1 the lease or leeeee to
the hlqheet bidder et pub110 luatlon et the Aerioulturel
end 2eahealaal Colbge of Toxee, Collage .~tetloa, Texee,
et 607 hour botrrra 1O:OO ea. cob b:OO pa. The Poerd
ehelf bate the right to rejrot lll bidr. Kowerer, the
hl~hoet bid&r lhell pet to the Board on the day of the
eel6 twrnty-flrb pm oent (&!a:) of the bonue bid ead the
belenoe of the bid ah611 be mid to the Poerd rltbla tnonty-
four (E4) hour6 lftrr bring aotlfled that the bid be boon
lOO6Dt.d. Fwmaats ehell ba paid la 666h. eertlP.~d awok
or 066hhr'6 oheok, le the 30erd aa dimOS8 DrmidOd; tha
feiluro to Da7 tha belenoo of the amount bib will totfelt to
tha Boer4 the Twentpflre per oat (ES{) *id.*
Soo. 5 of the 8elcIe lrtlole reede In pnrt le follow@:
“Se.0. 5. If in the opinloa or thr 3oerd an7 one ot the
bidder8 ‘ihall Iwo off4rrd e roaronablr and proper prloo for
any troot aa4 .aot leer then the prior fixed by the Boerd,
the lend6-6d+artir6b..ory.ba lo6erb for.oIl, ~68 6UlDhUr end/
or 'other mlnorrl. .$argoeee arbor the teN .of ~thfe Aot, end
lt~ooh.ro&uletioae ‘aa thr board. may, proeorIba;~i sot ?InooaeIetoat
with the protlelone of t%le Aot. In the @tent nq bid 18 eo-
oegted by the Bocrd et pub110 luotion lny eubee~~uent grooodure
for the eels of oil end/or tee lnd/or.solphur end/or other
rlnerel leeeee ehell be In the mconor above J;rovIGeQ.”
St. 16 lpperont i&e thi. ib&. +oridloa~ pt. tbe etetute
.tlWt th. method Ol.&lO ie~by’publlo lNtlon but t&t the Board
ohall ha+6 thr rlfht to rajaot all bid6 6ad IO not rogulrrd to ec-
oept 6 bla that 16 no t letideotory to the Board. fn our opinion,
homvor, trots the lenguege quoted,the Legieleture in wleotlrlg thle
etetate did not oontoei~lete th a tla luotloneer should &etermlne
the eooepteblllty of the hl@est bid end oloee the ecle. ‘In06 tl-te
rtrtote ~.?oes tc the Fosrt t!m dleoratlon of detcrr-,lnlny ðer
any one of the bidderr. ht.6 offered B *reoeon:tlc and ;ro;cr ;.r?cr.-
6nd wbetker it lr a 'eat!sfsctory bid“, and since it turt!ssr gives
the ?or;rC the right to reiect all bids, t.k:s ;wial?ture Lust %vc
conts~;~lstnd :.c::t t’:o -c..:r? wx:C c:r,5ltier the tlCc snC within II
re-.FomSls ti-e meiie 5te ~ec?elonr tliere&n. ‘rot 1k.e ;usliZic:itiont
rtgfed, it 1~ r.:F’.rer.t tht the ::.flslsture 6!d cGt. intene 83 ':Uk-
lit auction” in the ordjnsry eeone of :kst tern. ?te ra;nlrekent
state0 la .eo. 2 quota! above t!xt the hi@mr;t bidder a!xll ?a? to
the I;oard on the dsv of eale .?5’ of th bonus bld cat2 the bslanoa
of the bid ahall be-;e?C ts the FosrC *ltkln ?C Scum sfter beln
notified t!-.at the bld !?*e tern aooe .tsd 1nCloata ttxt em8 -----Id
of tlze wee oontezplated .betreen tak5--oc fhe bids an6 t?.e %erC’e
dec,l~ion PE to whether t”.r tj$.ke?t bid ~t.0~16 5:r? -cceF,ied.
Honoreble FJibb Gilohriet - Face a
the bl6e without teklou at17 notion thereon would be 6 mere mini-
gtertel sot not lnvolrlng 4leoretlon, we see DO objeotion to the
Board’s 4elegetlog thie funotlon.
Theroforr, in lo ewer to your queetioa No. S, It la
oar opinion that the suetion ban be he14 without tbr Board or Dlr-
leto r being
e In leeeion; but that the luotloaoer oennot say weol4*
gad that bide oen bo iooepted only lubleot to tbo approval of the
mar4 of Dlnotors. fn this oonwotlon it 18 IWther our oplnlon
?&et the person deel~nsted by the Boer6 to reoel~e ,blee shell per-
form the aInleterlel funotion of deternialng the hlgheet bonus bid
end 60 InfOrarine the biddora in order that the highest bidder may
pa7 to the Boer4 25$ of thr bonus bid on the day of the lele In
eooordenoe with the statute.
queotlon No. 4: ..
.,,, _~ ~~ ;::i .,;
*Can thorr,br more than on0 trrlrble In-the (1) bonus,
(8) royelt7 an4 (5) 4ele~e4 ranta> paymonte or.muet all but
one be flsed~ b the .Eocird of ‘~Dlreotore {In ~4ienoe or thm
ldrertleeaent /WIthy a ~-midmum $ixee .bt 6614: Boasqror the E
m.*
Sec. 4 of the statute ln~queetlon reeds es followa:
...z _.
*Sea. 4. A reperete bid ahall be me&e for ieoh treot or
lub4lrldon thereof. ~1:~
~.,Nobide’ shell’ be;~‘eooepted whloh offer e
Myelty OS leee’~tben one-righth (1/8th) of thc&oee produotlon
of oil ear, lulphur and other minerals in the la!14 bid upon
end tbje minimum ro7eltv me7 be iaoreeerd et the dleoret~ion of
the Board. Every bld shell oerr the obllgetlon to pay en
amount not leer then One Dollar T31.00) per sore ior delay in
drilling or derelopment; euoh amount to be fixed by the Roar&
in advanoe.of the advertisement and shall be paid every year
ror five (5) years unloae in the meantlme production In pay-
lng quantities Is had upon the land or aald land la re-leased
by the Ies:ee.*
It ail1 be noted that the above provision speclflce?ly
requires that the delay rental be rlred by the 3oerd in sdvance Or
the edvertlalng. AZ to the royalty, the statute rlres a minimum of
one-eighth of the grosa prcduotlon, but provides that thie wmlnlmJ~
royalty may be Increased at the dlsoretlon of the Eoard.*
In Texas an 011 and &as lea66 amounts to e grant Of a
‘determinable fee estate In the 011 and cae In plaoe. That la, If
the 1ea:e provides for a one-elgbth royalty, it Is a conveyance of
en UndfpiCed seven-eii?te ‘interest in the 311 end. -s& in T~SCC, p:b-
jsct to reversion. :!3refore, if tie royalty z.ere left lndefinito
so tF.c;t bidders cxld iid on r;yaities, the estate 2 interest in
the mlieralr oTtered ror sale xould be lndefinlte, an& the bidders
Honorrble Clbb Cllotrl#t - iaea 7
mould not bo orfrrlae to buy the laa~o Interest. ror lxomplo, fr
oa# pereon bid oao-•lubtb royrlty, 8a4 8aothrr bid Oar-rourth royal-
ty, than uador our theory of ownership or 011 sad ear, th8 form-r
mu14 ba Otiorlnq. to buy on ua4l+lUod reT*n-sights intorrat, where-
lc the latter would bc. offsring to buy aa ua4irldod thr88-fourtha
laterrat. fo our ogfaioa bldr or thin 6horootrr nrr not aoatm-
plated br thr Laglrloture. In ddltion, tbr pblrcor ‘MC of the
bonur bid” 8~4 *a rroronobla sad prover prison ~~14 4~81 to contern-
plats oooh bonus bldo oalf.
Tberlfofb, in oa8war to your queotloa No. 4, It $8 our
O$dliOll thrt both the dOlay raatal Fav@lit 8a4 the rOyoltJ muot bo
tired by tbr so&r4 oi Mreetoto in ldto a o e of tho l5wr tlo la a . ld
that thr bonus blQ fr tho oall varirbla prmitted under the rtrtuta.
~.ueotlonh’o. 8:
-%a~ un7 doyr ia rdtanaa 0S tk olaotloa rrlr rhould the
aotlae of the rrlr be wbl$rhrb?”
The #tatUte dOOi nOLOtptoT$d@ hoti uay dayi ik l4TOaeO OS
the motion rllr tha notloo of ralr shout4 be pubtlrhod. COO. 3 of
th AytiOl@,~ Qu0t.d U’?dW yOUr QWOtiOl3 NO. 1 FrOTid.0 tht the 84.
rertlrezmtn oboll bo nm4e by inorrtin& aon8 1n two or more pwrr
or gooar olroulatlon la. thir teto 8~4, la the Poord*o dlroretloa,
lo. ln 011 aa far. journal, 8nb b7 molllag.ooploo to the oountp judge,
8tvl luah other prrono :.c :te Eorrd sl4ht tkiti wouL6 bo laterootrd.
ipporoatly the Legislature 414 not eonrldor tlw to be *or the es-
leaoe”, md la our oplaloa tho ltatutory r~gulrm~at io m8t when thr
ldtertirmaoatr rhell &TO broa iarrrtrd in two or non wpora or gwi-
lr81 olrOuletiOn la tblo itotr. mea this re~Arrmont 16 met, the
length ot tiao at! well OS ciy 844ltloaol publfaitf to br sirea th8
ado ore matter6 slthin ths d!soretioa of t! 8 3oora of Llreators.
InletlnF t?l*t the state witlsf?ctcrlly snsrer~ y-ur
quettlonb, ~8 are,
Yours Wry tmly,
.
\A-. 9..
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