Untitled Texas Attorney General Opinion

121 OFFICE OF Bonorable BB8ocm Oil88 o~~i881~8i8r, 08n0ni wit3 ofri00 Austin, Tsxas Dsar Slrr opinion no. 0-6233 80: AuthorItr and duty or CcanI88Ioner of 0oneral Land ostiaa uadsr fwo. 4a Of mu80 Bill lo. 9* Act8 of 46th ~~gls~turs, 1939, to sxulne and approve, kfors fIlla!& loam. on land8 rubjoot to pcorI8Ions of RolInquI8bmemt Aot, and rslatsd qu88tIoIl8. He hn pur letter of recent drte In vhloh you rsquest this dspartwot to rdoi8e rou on the to11wlng qu88tIon8r '1. The ltent of th8 authorIt oonferrqd 01). thm C~I8mionmr of obaoral Land OfrIo by tlrtus OS the lcrsataentOS Bee. k of H. 1).9, Aots of 46th k~ld.aturo, .1939. ‘2. Do88 88otIam 3 of the Ollurd pm luiom~muhIttod to puu nqulrod~ aat. k of RI.B, 9 (Art. !34210-2)confliot With thm prO+f8fO5B 6i th0 8O~ingUiBbD~t Act?' In oooruatl~ with -Tourfirst que8tloJlw bsn studlod the uoastmatleo our doparka& lam g.tvon this Aot and the pnotlor you w iollo~84 In admfalrtsrlsg L It...That part of your letter sotting out your dopr~matal Oon8tru0tim and pnatioa I8 a8 followrt "seation 4-m Of Eoumo bill lo. 9, pmmmmd br the 46th Isgirlatm., 1939, prorid. *lo Unoml lea80 uoautid by m 011ur . or wmro la@ or 8laenls under u&t is a~- of 8-4 k 8OUB lI tbs hliliqUf8bWlt &Ot Sbu11’ k pOtti 0 ssrtiflod OOpJ Of ruoh 1.&Sa 18 lff*OtiW fiid in th@ L&Id offlOB. HO SUah 1USO UOotlkd ' -r lffOOtiW tit8 th 8 h8rVOf Sb8l1 k ba UpOm the 8kk -1.88 it nOit. th. lOtu& ud l $m oonr;fdorrtion mid or prmlsod thorofor. '?dOS' t0 tb. -84&O Of t&i8 bt, tb, O.neml Usad Offi rplo sd %&WOSti@Ol's to in- Spat thb hunts Rsoords I o dekmlw vlnt vdr dw th. 8t8t8 OB Oil U&p8 lU808 UOOutOd on bndr subject to the Relsaqul8lmentA8t. a8 pnotIa* ua8 no- .- UO88Ur, b.OWS., bOfaD#TfthOUt q lSQ*l UW88it~ or rillag m8h lw8.8 iaths 0rr100, tb landom.rs and 10880.8 ia l mt b8tUaOOS did not bother thrrr1VOS Utth SHb(# “y th th8 8tRtS 8Wb got it8 Shari Of th@ bOIIU8, Mdi~lr, md I?OpittiS. In many fnst~oe~, *ho lu8r8 prior to ths pusage 0r Howe Bill Ro. 9 In. 1939 had tams in them In eon- ilid Vith tb8 JWWfSi~ Of th8 ~8lirrqlPi8h888& Ad, and frI1.d to Sat0 the 80-l sad trru bonus ~Oll8i&I8t~O% hbU8. Of thf8 Sort -8 W88~Uld l'88tikd iad@priVizy: th8 PO-nt8ohoolRmd of much rovonuo. ‘Th8 VOX% Of the abwo montfdi8tjinWSti- inrtUW.S~thO doprlvod of funda md SUOh -8.8 WFO Ul1.d t0 tb lttOa ti= Of & of mllm~le8~k8~dedlaatod to that Ipad. '~fIhC0th.mSm Of8O~tiO@l4-Q thf8 &partuot’hu rrrriad all 011 end @r lea8e8 tsndowd for flllng In this offiw ud uwutsd oa lsab ,robjoot to tha pro+ir$oolof tlm Rellaquhhont A&. yhul 8UOh a 10~0 18 tOmdUd iOr filing it 18 .XUiWd Wfld4. ft i8 w.d to dot.mIno ths mount ot boaw ti Iwrtrh to k paid the 8-t.. mm l.uqth or tbs prlmry tern Or th8 1~80 18 Ooluidrm. w otherbwm8iw~ vfsi~ an aomldwodrlth8pooir1~~b.~ t&w . -123 HO& h8Oa ffi1.8,-60 3 . vhethsr ths loa8*8 hare a~ prorlrianr oatmry t0 th8 ~8linqUi8~Cllt &t. ti8111 US. the km "8OlinquiS~W&t Act", I not only rsrer to m.ACt ftSslf, bnt al80 t0 tb OOUrt d80i81~, cm- struing the Act. mxb tOOI the COpf Of th0 10888 tendsr8d for riling 18 8&uInsd a8 to rhothor or not it 18 a oCrtifi8d copy as rsqulnd br 8ootloa 441, All thf8 18 dOnw vlth a 8.~80 of dut7 00 af psrt t0 84if@gW!brdth0 f.htWBSt Of th0 St&C ad to BOO tbt th8 hlWM8lit Who01 ?UUd get8 SUCh fund8 to which It I8 CatIt1.d. . 'Ifa after UIlX&inatiOiI Of SUCh leaBe, I find that thobOnu8 and rentals tobe paid the Stats a- ratlsfaatorf and In 1InC uith ubat other leases are bringlUg In the ame looallty, that the loam ha8 no provirioU8 contrary to the &tlln@Ir~ont' Act, rpd that 8 oertlfled recorded 00p of the 1CtSSC 18 tsndersd for ,filing,then, 1 Silo tI; l 1OiS89, apply tha State'8 0m-hair 0s the bow8 paymnt and aotirl thy party tSZi&rfIig th0 1~t80 Of th8 fllf?ig Of Baa!@, aad the St8k 1mS@ ~UhSC 888i~6d t0 ft. 1 al80 gfV8 a rscsipt for th. bono8 rooslvod by the Stati, Ew- ever, in no f~bno~ do 1 rile a 1ea8r until I havb n~8iV8d the 8tiktO'S ShoX'COf the bonw consideration. %hCnCver 1 find that 1W88 should not .MBflbd bOCWl80 it dO.8 not oOniOlW t0 the ri- qUlr888nt8 Bet out abow, I hold the 10880 and borpar gky8at In 8u8pm8C ad notirr~th8 party toaderlng ths 1CaSC for file 0s y obj.ctiOas. I ask the ~rt~tO~-OXMUtOthO1OB8O in S~~irutulO~S ULd hU8 th8 AW lU80 0~~81~1~ Vith th8 X'BqU.fmWntS Of th8 ~linQl%ShO~t Act. NhemvorIdoomthobanua Cm8lderatIon lou, 16dri88 tho~pbrt to t&t offeat and a8k fo rUIlpUmtIon VQ ruoh I0~0 rhorrldnot bs worth opn 80~~~ COOpBF8tiOII18 USWL~~J SWUWd~ and, after 1 U 88tiSfi.d that thC abow FCQUfX'O8Odi8 hfLV8b88n 88t, x ~pprOY8 urd fib thr lC88e. ' "It ,I8 the COti8tFUCtiOZl Of thf8 dspartmant thtttthe ~CME#iSSfoUCr Of the mWU1 bnd OffiCe ha8 the authority as well as the duty under Section 4-4 of Hoaue Bill lo. 9 to rxerlne lra888 uwutad on land8 subject to tb0 &3~inq\tiStmC!ltAct Uld tCnd&wd for film In this 0ffle.j snd that he mU8t sPPrO'fe , . 2 . 124 8uOh 18.808 88 to the-bsnU8 Slid rOXlt81 OOD- SidC~StiOa to b8 Bid thC =BtO, DC tC the other prWi8iOM P n the 108CSC Snd CD to tho , length of tho primary tom of iha 108808. In other UO~dS, th8 bOBIlRi88iO~Or mU6t OpprOrO tho lease SC 8 nholo befOr ha Silea it in tho Ganaral L8ud Offloo, and priac tc euoh approval snd filing the loeaao18 lnaffectlvo Insorer as the State 18 aonoornad. 'l!hIodepartmental oon6truotlon i8 plaoed upon SrctIon 4-a not with 8 doairo to ooeree the landowner end lessee into a lease that is dotriruantalto their interests, but with un earnest desire tc prctaat the Publio free school fund. The grext neJority of loaees tendered for iii* In this orriOt are 43tls- . fectory and 8C0~ro my fmnedfrrtsapproval, uhoro- UpOn t&y BrO prOXUptly fihd. zWt 1andOW~U3~8 -and lessees ara amra of the proolsious of tho ~eUnquIshmsnt Aot end the polioy cr this offloo, snd oooperata with ma in thesr metters. Aird most landowMir8 end les8abs aamply with my reqUW3t8 $Or ally ChOll@S III 14WMl 86 t0 th0 bonus end rental oonblderation, and pWffiiOn8 that erb Fo-oonflIot with the Ralinqulehaant Act. Only In-a rslatlvaly few insttmase hero I failed to seouro ooopsratlon from the lcrd- owner and les-seewhich rcbulted in 8 do&lock end where I ~(18 wublo to prooeed iurther.w The Supr8qio Oollrt’ or Toxs8 in W rooont 0980 or l3lrroughs1. Lylee, 181 9. H. (2) 570, ruled thst 1oOg 8ddIli8tX8tiVO CirnetZ%iOti~ Of 8 CtrtUtC 18 Ultitbd to groat weight ia'dskrdaing th8 8ff8Ct to be gilon It.. %liis rulr of lsar should br prrtIOul8rlflppUoebl@ hon 88 th8 Aot Padsr diSOU881OU W88 onsotsd b t& Legblattwo rollovdng you rromwodatlon to ds t Wr that SUCh a law WCS aboded in order that th0 St&O’8 .int8rOSt might be batter protootad., TO hold that the Act 88d8 It YOW duty to file 011 ahd gss kmses Without first oX+nining end apprcving thorn would defeat Its lerg purpose. It 18 the opinion of this doportmant that,your oo88tNotlon aS tho Act 18 oorroot, and -yaw paotioo ln ax80lnlng aad approving loa63oebeforo rim18 18 prOper. Pollowlng your dopartmentsl oonstruatian of Seotlon b-8 cf Ii.B. 9, you hgva rcSu6tyl to approve and rile oavereloil end g8a loasee submittad to you for the rsason that it 18 your oplnlon SootIon 3 0r tho loam0 Is oontrary to tkm p~oiisions cd thb RelinquIShnf?mtAoti .%DJtiOII3 Of bh0 108608 fS 66 rO~OW8l .- : I * . Hon. maoom Gile8, Pa66 5 . “3 Royaltiaa to be paid by leema m -A;$ (.I Cna-elxtaanth of the value ab all oil and gas produoad aad Saved from Said lalUlt0 . be Id to the Ommlssloner of the GenarelLand Ofir oe ror the State of Texas, at Austin, lkanrj (b) ona-rlxtronth of the value af all 011 and gel rodiioadand saved frcuaraid land to ba paid to !a aaor IndlvlduaUy. where gae rr0m a wall oap- able of praduoIn@ go8 only la not sold or used, Imaaa may pay aa royalty FIit Dollar8 ($50.00) par wall per year to said 0alntisaIowr or the Caners1 Lend Cfiloa ior tho State OS Taxaa and a’like amount to Laseor lndlvldually, and upon suah payments it will ba oonaldered thet gas la’ being produoad wIthIn the manlug ab Paragraph 2 hereof.” Section 2 or the leasa Ir as rollower *Subject to other prootlslonshara- in oontalmd, thla lease shall mmainln ioroa ior a term of tan year6 rrom this data, oallad primary term, and aa long theraerter aa oil or gas Is produoad iron said land, or es long theraarter 88 Lessee shall oonduot drllllng or rewo~klng operationa thereon with no oaasation of m&e than sixty oonsaoutlva daya until pro- duotion results, and If produotlon results, 80 long BEI 011 or gae 4s produoad.” The Relinquiahmant &t 1s oodlfiad in. Ve nonis AnnotatedOItIl Stetutae, a8 Artlolar 5367 and 5388. Artlola 5368 ir lnvolvad hare and is an.follow: . . *The owner of aald land 1s haroby p.. authorized to roll or leaso to any per8on, ilrm or oorporatlonthe oil'and gee that my bo thrraon 8. f or tharalnupon suoh terms and ooldition~ aa suoh !~ owner may daem beat, 6ubJeot only to tha provl~lol~ i. hereof, and ha ma9 hnW a eeoond lien thereon to 1 aaoura the payment of any 6um due him. All lsesoa and ralaa so awda ahall bo assignable. MO oil ok gas rights ahall ‘be rold = leered heraunder ior leas than tan oanta per aora per yaar plus royalty and the laasaa or puroha8er 8hsl.lIn every oaea pay the State tan oantn per aora par year or aala~ and rentalsi and in aasa of production ahall pay tha State the undIrldad ona-rirtaanth or the viluo of the 011 end gar raearrad herein, and 3Ike amour&m to the owner or the rbdLw The Supraw Court or Taxes In tha oaaa ot Greene v. Roblson, 8 S. W. (2) 655, end other oases, upheld ~tha aoonetltutlone.lIty oi the RalInquIshmentrAot, -and interpreted . I’ 126 . Eon. Baaoom Oiler, Pa@ 6 it to man that tbo landounar wia mda the Agent or tba State rm tha purpone ot rraoutIPlgoil and &as laaaaa on lands Sold aubjaot to the Aot, the agaat curdthe Stste to shara squally tha bonus, rantala and~royaltlaa, oxoapt the State reserved to itaa~ a si l/l6 free royalty and tan oanta par aore 1.~4I~Imumrental. ThS agent oould oontraot ,ror a royalty, OIU- half oi whloh oould be more than l/l6 1 toatgaiate, but ha ooy>d not oontrrrot for a lasau amount to . The authority of &a agent umber this Aot IS broad, and the term n.‘. . ‘upon auoh oondltlonrias auoh owner may deem baet, aubjoot.on1 to the prorlalona hazoof,” has never bean and oennot be daf1ned ulth oertalnty eimxo aaoh lease oontreot muat stand upon Its oun terms. However, with raapaot.to the authority of the agent and tma of lease ho Is authorized to axeouta, the San ,AntonIo Court speaking thr Judge Murray, In the ass8 of St&a V. Mwnolia, 173 s.’w. T (2 , .186 (writ refused), sold! “We feel that whan the antlra RelInqulah- . mant Aot la aonsidarad and lspaolally in the Ught in whloh It has heratofora be&n oonstruad, it w8a never lntemhd that the mrfaoq owner should axaeuti a deed absolute to the oil and gas in end under tha lpnd, but only an ordinaryomaroial lease, which protide, far dalay rentals unlees and until oil Ia produoad In prying quantItIaa. . . .O We inter&rat the option as ll.mltw ‘tha auth-ty of the agent to the laldng of 91 ordinary acnmaera1618Il.ati &ra laaae, providing ror a term.0r yaare not In 8x0088 or the ~8~1 and ruatasry tel;n aa praatload In the oIl’Indu~t.ry,?Q dolay rontala, and $n oaaa af praduotlon, as lang thoreafta as 011 or gas 1s .prOauoad inr the m. Thi tam * mduoad~‘aa used In the ordln~ry ‘*. laSsa, Snd as la tuai ln Seotlon2 ot tha laaaea b~rora US, : has bsan darlnsd by thr Supram Oourt in the Mea of Ouola t. King, l641,S. W. (2) 509, to wan She lotual prodtistim oi 011 and g~a In p ng qoantltIaa. Paying quaatltieewas ' dailmd to be sufrlo r ent prOdaOtIOn for the leasea or operator to make a prodit from ‘the oparatIon of the 18qSO. Tha amount oonslderad to ba In payImg qW¶titIaS is laft to the jud~ant . qr the operator, when auoh fudmant Is axarola+d in good felt& I, l!hti oourt In the. a~80 of Oerole v. KII$, apmeait the holding or a 0880 arlalsg In Tannaseaa in w oh of the word *proMoed* as uaad in an ordinary oo@uaroial lease. ;. We quot. from the opinion as f ollows~ “in the Benadum-Traaa oil ti. tr Davis, 107 F. 2nd 981,.985, a ease arid In TeanoaSaa, tha L leaeae oomplated i Gall produo % gas but no oili i Hon. Baaoa Oilor, Pam 7 It 20s want of a Derkat. Interpret&M the sixth OIrauIt’Oourt of Appaala aaldr leaaoa hero In- quafltion ware rap rlva and one years raepsotlvaly and “aa long thara- after as oil or gaa OT althsr of them Is produoad tron the laardby the laaaaa.W lhere Is abarnt rroa them the sxaot.lsnguega that gas or 011 must ba produoed In npayi& quentltlaa*. Howwar, In arcs riving at the Intent of the partlas, this Is im- plied baozuse they oontraoted .&th the and In view thst the bueineaa would be profitable td both leseor and lessee. The lattff mey have rael1Sed.a gain by retal.n.iwtha leases fq speoulatlon. The former. could reoalva no banarlt from them axoapt by msr- ketlng gaa from the premlaas. . . . term Qeylng quentItIas~~Involves iP*!l%e not cnly the anount 0r I;lroduotioll, but also tha ability to market the produot st s profit.** The lease involved in the ‘Leruiasaeeosse did not oontsln the terns round IA Seotion 3 or the leesea berora us IA this OpiAion. We reoognlzethat private parties mey enter Info a lease oontraot thet does oontaln these terms, and which would make the oases &ted a’bova ~opplloebla. Ye have u~od these oesoo In on effort to determine the ariaat 0r the usual and ordlnsry oommerolal oil and gas lease thet’ did AOt hove :A them Such provIsIons OS is found In Scotion 3 of these leases. The terms found in Sootlon 3 Or the80 leases are a$ relatively reoent origin, mfS ware not egmmonly used at the tlma the .Ralinqriiahmant Aot wss maoted. ¶‘%atinurel laws OS ‘l’axaa as ‘they rolata to pub- $10 lands have oonalatentlyfollowed the polloy of aoauhig the ilavolopnantoi,the’Stct8'8mlnarals. By davrl6prwnt wo meon the aottialproduotlon and Sal8 of the m.lMrOl,SIn order that the anda to nhloh’thelrrnda.are dmdloatadaright hero the usa~ ot the revenue ra8ultIn.g therefrom. The prInaIpa1 p&pose o? the BalinqulShmant Aot inas to aaoW the ooopara- tlon or the suria&a owner la promoting the darslepawnt or thaao reaouroea. As stated In the oaao at State vi Magnolia, aupri, In leases exsoutad aubjeot to the ptiovlalona oi the RalInquIahment Aot, It Is oontmplsted that they be tha mutual ati orbinary oommeroiel laeaaa, providing ror e derlnlte term of pars, amleas end until oil. or gas is.produoad in eying quontitiaa, then as leng tharaatter es,sctuel prod+ Pon oontlnuas. The right to aubstltutii the payment of $50.00 per wall per year on a gas Wall, where the gas ‘Is not used or j ’ sold, ior aotuel produotlon, an8 auoh payment to ha celled produotion, thua oontInuIng the lsOS8 in for68 end affect by reason of produotlon over an indetermlnabla -psrlod, is one not BOA. BerooD Oilon, Pago 8. eontmplsted by tbo RolinquitioAt Aat. The Aot oontompletor the loams to k ooatlnuod in otfoct br roaaon oiaotual pro- daotlon and the pa ent 0r r/l6 rroo royalty to the trullt * rd. Su o h l p r o vr r lo n oould o p er a te to retard th e develo p - ment of the State's minor81 ?MOQ?Oom. m0 SIQT& cow in th0 ~80 0r hg1ir0 fa & PUO~ 00. V. St&o, M S. W. (4) 265-272, rtated a rule or I lau uhloh wo aonsldor qqtlloahlo hour01 The rule ia also will *ottldd that logiil$t:v8grids or propertyrl ts iill6 prlll- 1sg.e must be oorretrued~rtriatlyf!ir.aroraa the State OA &WI& or pub110 pollof, end whafowr i8'Aot rinoquivooallygroAWd iA olear and orplioit terma is withheld. Any mablgulty or obsourity IA t&o tarAs 05 tho ltatuto must operato IA rev* of the State.* ~srta1~l.y tho RoliAqti~At Aat 1s obaoum end ~bi@UOUlr iA BUgl rV6~Ct8. Aod iA 6pite Of tho Mw oourt d~oiaio~s ooastruing the hot 66 it applies to gito~ olrourmtaLLoe8, it will, no doubt, oontlnue to be rubjooted to rurthor 0oAatruotion 8s dimsrent quei3tiaruarlso ;A the ruttar.. fA the lastant ea60 tho rule rtatod abovo mm1113prtloulerly crpplldablo ah00 the rlgbtrgrentod in the loesee are oaloul8tod to operate in revor of the 106600, rnd 0ortainZg thoro ia the possib%Ut7 0r it opuathg to the detriment or,tho Stat&. : Aooord.l~,3l7,JOU are advised that it ir the opinion or this doperbent that Sootlon 3 lf tho loasoa in:qUOStiOA iS OOAtZarr t0 th0 LbrOViriOM Or th0 iwi.n- aulshment Aotendmmara oorreotiar&m rofumltoap- JWR:BTt.jrb APPRm am. 31, 1944 . a/ Oarlor 0. Aahlo7 LR ST ASSISTART ATl!tXMEY oBR&IL APPRavRD OPIRIOR cl.MaTl%E BY BWB,Ohrir~ and 0gt-(pp.l-4) .