Untitled Texas Attorney General Opinion

-h 29, 1939 Hoiiorable BaaoormGiles Ccumudmione~of the GeneralLand Office Austin,Tom OpinionNo. O-523 Be: $ffect of sectionlo, ch. 271 General~Laws of 1931,cm pro- edsting river bed oil and &as leaBe Dear M?. Giles This aoknowledgesreceiptof and la in reply to your letter of Maroh 17, 1939,~in which you requestthe opiuionof this Departmant upmi the~questionof irhether or not .%&ion 10 of Chapter 271, General Iawa of 1931, repealedthe $2.00 par aore lease remtal provisioncm- tained inChapter lkO,GeneralLawa of 3gthLegialature;1925. Youfur- ther request0115'opinion aa tovhether or not you ahm.l.dissuea renewal iease to Mrs. Ibnie O'Brienupon the erpiratlm of the presentoil.ai~d~ gas leasewhich she holda covering398.229 aores in the TrinityRiver bed in LibertyCounty,Texas. As ve understandyour letter,on October5, 1928,permitNo. .?724 toprospect for oil and Sac W'iasued to Mre. Ronie W8rien cover- ing the portionof the TrinityRiver bed in question; On April 30, 1929, after proper proof of the discoveryof oil had beti made to your office, ollaud gas lease Iio.I2724 vaa issuedto Mrs. IVouieOIBi%n, her heirs and asslgu~,sald,leasehavingbeen issueduuder the terms aud provisiona of Chapter 83, Ads of lgl?, as amendedby Ch. 140, Acts of 195, 39th De&siature, which latterstatuteappearsaa Artlole5344,Verno~'dCivil AnuotatedStatutes,1925,said artioleread- as follows: "Uponthe paymentof$2.00 (two dollars)per aore for eaoh acre in the permit a lease shall be issued for a term of ten (10) years,or less, as may be desired by the applicant,and with the optionof a renewalor renewalsfor au equal or shorterperiod,end imaedlately after the experaticm(expiration) of the ftiet year after the date of the leaae,the sum of (two) ($2.00)dollars !peracre shallbe paid duringths life of the lease, and in additionthereto,the owner of the $?a80 shallpay a sue of mcey equal to a royaltyof one-eighthof the value of the gross productlouof petroleum. The owner of a gas well HonorableBaama Gilas,page 2 (O-523) shall pay a royaltyof oue-teuthof the value of the metre outputof all gas disposedof off the premises;provided, howevm'that the provieiom hereof as to the paymeutof two ($2.00)dollaraper acre duriug the lease period md the life of the said lease shall not apply to leaseeof bays, marshes,reefs, saltwaterlakes or other submerged lands containingas much as 0110hundred (100) acres but not in excess of five hundred (500) aorea upon whioh 88 many 88 five wella have been drilled,and upon which BIGex- penditureof as much aa one hundredthousand($lOO,OOO.OO) dollarehaa bs6P.mada. The drilhlngof said wells and the expenditureof said amount to be eatabliahedto the satis- faotionof the commissioner:'of the land office." You attachedto your lettera certifiedcopy of the lease issuedto Mrs. O'Brien. Such lease ou page,1 thereofrecitesthat a permit to proepeotfor oil and gas had bean previouel.y issuedto Mm. O'Brienunder the provieioneof Chapter83~of aiiAct of Meroh 16, 1917, and Acts subsequentthereto. Paragraphnumberedlonpage 2 of said oil and gas lease, in part, made aa follows: "Ynadditlontothetwo dollarspar acre already paid on each aore luoludedherein,the owner of the rights hereinconveyedshallpryalike aumannuallyhere&%er in advanoeon the mea iutsluded herein,whioh ehallbe paid on orbeforethe expirstionof each year durlug the life of this contract,and In additionthereto,the owner of the rights hereiuoonveyedehallpay to the State ofTezae at theGeneralLendOffice ofTexaa,atAuetiu,Texaa,asum of money equal to a royaltyof me-eighth of the value of the gross productionof petxoleumaud ehallpay a eumof money equal to ten per cent of the value of all gae cold." You'furtherstate in your letterthat the firat yerr lease rental of $2.00 per acm~was paid in 1929 andbike paymeutwaa made in 1930; thatbeginniugwiththethMyearleam rentalthe paymentwas reducedto 25 cants per acre under provleicmsof Section 10, Chapter 271, Act of May 29, 1931, and that all.subsequentannualpaymentshave been at the rate of 25 ceuts per acre; that the 10 year periodfor which the leasewas iaauedwill expireApril 30, 1939, aud that the lesseehas writ&u to you making the requestthat a rem@ be issued. As the lease in questionwan issuedon April 30, 1929,when Chapter83, Acts of 1917, as mended by Chapter'.lkO, Acts of 1925 was iu foroe,we are of the opinionthat the paymentof rentalson such lease is governedand controlledby Umpter 140, Acts of 1925. The affectof Chapter140, Acts of 1925, iu our opinion,is to requirea cash payment at the time of the issuanceof the lease of $2.00 per acre for each 8Cm includedin the originalpermit,and a furtherannualrental paymentof Hon. BasccmGlles, page 3 (O-523) $2.00 per acre during the life of the Lease,ami 2~ additim themt'., the oil aud gas royaltyprovidedin said act shall be paid in case of production. The statuteplainlysays that *the 8um of $2.00.peracre shell be paid during the life of the lease.' It IS kaiaputabh that the life of the lease in questionto Mrs. O'Brienis flaredboth by the terms of Chapter 140, Acts of 1925, aud by the provlsiouein the lease Itself,at a,periodof 10 years frm April 30, 1929, with a right to reuew the same as providedia Chapter lk0. Therefore,a requirement of the paymentof rental of $2.00 per acre during the iife of the lee-x, in our opinion,requiresau annualpaymentor $2.00 per acre for each aud every year that the leaearemains In force, Includingany renewal term. We do not believethat the 39th Legislaturein euactingChapter 140, Acts of 1925,whioh chapterexpresslyameorda subdlvisiou2, section 7 of Chapter 83, Aota of ~~17,.35thLegislature,iutendedtherebyto re- lease the State% lesaeefrom the paymentof:mmal~rentals~stlpulated by the A& iu case productionwas secured.'The only ohangewhich Chap- ter.140,Acts of 1925,made in Chapter83, Acts of 1917, was to insert the word "immediately"in place of the word “annually” which appeared in the 1917 Act end to add a provisoto the 1917 Act which proviso is not relevantto your inquirymder the facts presentedby your letter. We cauuot esoape the ooncluaionttvrthadtheLegislature Intendedto hbollehthe requinrmentof the 1917 Act for the payment of annualrentals in case of produatlou,itwouldhave used lmguege ~hWly iadiaatbg .suoh~aninteutdbn. Such inteMiou 8lfi0 ~0ul.d have been olearly Indicatedby the Legialatum by simply strikiugfman the 1917Act the phrase O%hall~bepaid during the life of ths Lease*. In the absenceof any such aut%ou ou the part of the Legislature,we must, of necessity,hold that the Legislaturedid not intendto releaseleas- see8 frm the paymeutof the $2.00 per ame auuualrentals. The proper constructQm o?A.vticle53J&,in our opfnion,. is that mch articlere- quiresthe paymeutof annual reutsleof $2.00 per aore duriug the eut?ze 1FPe of the leaao emu after produotiouis eszmed. The furtherquestlouin ~eeeuted byeym? requestfor eu opinionaa to the effect of Sectiuz10, of Chapter27~1,Acts of 1931, RegularSession of the k?nd Legislature,whfoh appearsas Sectiou10 GE Article5421a,Vernon'8Aumtated Civil Statutes$ 1925. section 10 of Chapter271 read8 as followa: "The a?eas inoludsdherein shall be leanedfor a comlderation, in additionto the oath mouut bid tier+ for,,of not lese than one-eighth(l/8)of the gross pro- dudson of bil, or thr value of 88100,that my be ~pmduced and saved,'andnot lasa than one eighth (l/8)of the gross product:ouof gas, or the value of same, aud not Iem than one-eighth(l/8)of the gmae produc,timof sulphur,or the value of mme that may be pmdumd, that may be prodmed aud Hou. Baecaa'3llee,p4ga 4 (O-523) sold.offthe area and not less thsn one-sirtdenth(l/16) of the value q allothern&wrals thatnmybe pmduoed, aud m additimul mua of twenty-fivecents an acre per year for eaohyerrthereafteruutilprdcldctiou is scoured. When pmiuot&n ham beeu mmured In ocmaero i4l quautitiee4nd the pigmentof royaltybegins and coutlnuesto be paid, the owner shalibe ese.@?frmfurther4unualrentsl~nte orthe 4oreage. The provisl~ of this utiale inrespectto p4ymentmofrent4laf'tergroduotimmdthe ceeart of pro- duotioneh4llapply to lemes heretoforeissuedby3!e St&J onsnfarea exoept Linda belcmgiugtotha Stata lJuiveraity4nd el.e~aynu.y institutions. Lp productlon8bxd.d aease and royaltynot be paid, the owner of ths lease sh4ll, at the end of the lease year inwhiohthe myaltyaoraedto be paid4ud annu4llythereafterin rdvanoe,p4y twenty-fiveoeuta per aore so lcmg aa auohownermydesire tomaintainthe righta acqutid under the lease,not to exceedfive (5) yeun from the date of said le4ae." Youwlllobeerve th4ttha fiualaanteneeof Seotiou a0 aboveliiaitsthe time ftiwhtiha leasewbe keptinforce bywnt ello@Minti-*oCiacWlto 4perWoffive yem3. In your letter yotietate that th6 leseeeof the pmtioular lease in questioubegrn tha wt of redacedrentalsof 25 mute per aore in 1931, or eight yeti ago. Ue think olelrrly tht If Beetlou10 of"Oh4pter~looaldbe held to 4pply to the river bed levee-JnquestionwhichMS iseued in 1929, neverthelese,such learn after the yeu 1936 wae not entitUddto thebene- fit of the reducedrentalproviaicmsof Chapter271. However,48 the question4a to the effeotof Section10 of Article 9210 wil.Ldoubtiees often vise in the future witheepeot to riverbed Imae wherethefive ykr limit4tionperlodhrsnotekpired,we believethe questionof the applkaticm of Chapter27ltaang moh leases-~ on river beda cau 4ud shouldbe -redatthistimewlthoutrespwtto the expirationornon-expintiou ofthefive year LimitationperIod~ In determiningthe effectof Section10, Article 5b2lc on river bed larsea, two questioname involved. Fir&, doea Section10 by ita terma apply to or pnrpcgtto apply to river bed leases? Ebcond,Ff Section10 is con- strudd8asapplyiugto or purportfngto apply to river bed leasea,theu d.6 suah statute,so donstrued,conetitutionali' Upon ekaiu3ng the caption of Chapter271,Acts of 1931 (Vernou'sAnnotatedCivil Statutes;Artisle .9&2lc),we do not find in 4uy pm% thereofanymenticmccdW4subjectrekat- lng to tha lame, srls or developmentof river bed arem. The o4ptim ie c&tied to aetrtementthrtthe aotia one to "ragul4tethe s4leand leue of lende setapartforthebenefit of the public free aolmolfmd, and to providefor the diepoaitiouandsale ofminerale oontainedinall islands,salt w4tere, lakes,bay6, inlets,marshesaud nmfe owned by the endilluueoldpublic free a&ml State within the jurisdictionof Texae,, m. Gilee, page 5 (O-523) Basoaar landaboth mrveyed aud uumrveyed". . . and "providiuggenerallythe method end meaua for the sale of public, school lauda and the lease and developmentof the,publioschool lend&and ooastalareaa." Upcm exfaain- ing Section lof Chapter271, whioh motion purportsto exummate speci- fioallythe lauda aud areaa which are subjectto ooutroland sale uoder the proviaio~ of Chapter271,we find this significantlauguager "All landsheretoforeeet apart to the publicfree schoolfunda under the Constitutionand3.&a of Texas,and allofthe uuappropriatedandmmoldpublic daaainrunain- ing in this State of whatevercharacter,exceptriver beds, emdchnneltr,mB iaLradejlakes audbaye, and otherareas withintidewaterlhuits, EQ% aubjeotto aontrolaud sale uuder the provieionaof this Act." Thw we find t&t the captionof the statute in question fails tonention atanypointthatone of the subjectscf theAotis riverbed8 or leasestherecnorthe paynentsofrentala colsaidUasee. We furtherfind thatSe&iCp 109 the Aot embaly exoeptsriverbeds md~~chanue~ flwn controlorsale under the'Aut, It ie not until Section 101P~ebOd9Ofth4Bill~re~hedthtwefipd~menti~mrdeai lauds other than those expreaalydesignatediu Sectiona~of the Aat ahd even Section 10 of the Aot doea'notexpreselyrefer to river beds or to le4seathereon. In foot, Seotion 10 of the Act beginswith the language, cths~ueaa inoludedherein-shallbe leased* * l", therebyindioating thatSeotionlOvillderl~wit;hthe ueaa apeoifieallyenmaerated in Sectlonlof the Act. The only- in Section 10 which la susceptible atthecons~tlonfhrtrivsrbedarreino~dinSeotiorr10isfoundin that sentenceof Section10read5ng aa followw: "The proviaion~of this artiole inrespecttopaymenta of rental after produotionand the cessationof prodw3ticn shallapplyto Isamesbsreto~ issuedby the State cneny area except lands belongingto the State Universityaud al&e- mosyn4ry'3lmtitutic4ls.* In State v. Bradford,50 S. W. (2),1065,the SupraneCourt of Teuaa held tlmt Article 5k16, 1925R. C. S., did not includenor have the effectof'settingapart river beda to the PermanentFree School E'und ofTexas,notwithstandingthefa&tbatArticle 916 containedthe follow- in6 Language: "AU lads heretoforeset apart under the conatltution and lawa of Texas, and all of the unapprolniated publicdomain radning iu this State ofwhateverobaracter,andwheresoever located,inoludlngeny land&hereafterrecoveredby th? State, except that inaludedin lakes,brys andislende alongthe@ulf of Mexico within tidewaterlimits,is set apart and grantedto thepermenentschoolfundofthe State." “In viev of the impo~e~of thisatatter to the State an&thevhole people,the courtsof this stat+ have consistentlylsla that all grultewith rwpecrtto landa mdernavQablewatemi,suohaa riverbeda a' ohuule~, are t3trtatly oonqtrued agalnnt the grrntse; that, if there IE any alblguity’ip the rot, it will be 0cmBtnled In favar of the 6trta3 ma, tml#ls the act 0oIltaineplainmdunlnietakablelmguage expmsslycou- veying the land under river bade aud ohmnels, it~~vi.Ll not be croMtrued-to3ncd.uae them. Ih othmr voraa, be- fo~atrtrta~w~bsacmst;Nadtoiaclude~d.lrnder navigablewdxr6,suchasrlverbedn anddmnnels, itvlll havu to be eqa~eed ia plain and poeitivul@ua@ rrd' notingeneral l&uage.~ Ian&ryP.Robiscap,llOT0r.2~~ 219 S. W..819;8203 Robe&% V. T-U., 1OlTex. !Yri-, ~0 S. Ii.-7333City 6f Galvestonv. Menu%, 23 Tex. 349; Ro&orough v. Pi&on, 12 Tex. Civ. App. 113, 9 5. W. 791,43 8. w. 10333Rynes V. Paakkra'p2 Tear.49, 45 S.W. 5Q;aolln~.wuser,49 s. w. (26)69y(notyetrqajeea (instateeqort)l Wiel on waterRlghtsim,the me-tern states~, sacticm893." In VihiOf'thef-t tlendther the oaptlon~ttlhe body ofeCha@6r 271, Acts 1931;at any pol.n~mentlosu~ speoifioally river b&k, ipd ilso ia viev ~ofthe ~factthit Secti- lof eal(LAot+lprpressly exoeptnriver beds frcm the Luada eubjeottb cc&r61 or sale under Said hat, we 'fed canpelledto hold, in harmonywith Stat. v. Bradford,snpra, thatrlverb4W or leasee~thereon, Ortho pqmentof rentaleon snob lerrres,are not affeotedby Section10, chrpter271, ma that leaasson f snchrraasmmtbe ocmiaeredinthe seurtenumnerm~ if mid Acthadnever been prsaed. .. 33 vv are in error in the conalueionjnst ezpreesea,ena if river beda qlpld properlybe heldto be inoldea in Section 10 of Chap- ter 271,we, neverthlese, must con0hae thatseation10 80 0onstraed tronld. not be effeotlve to reduoe fmu $2.00to 25 centa per acre the rantal~ payableon the river bed leaseIn question..Thla conclusionla expressed beccke oftheprovieicum of Article3,Seotion 35 oftheConetitutionof Texss,which, inpart,provides M follows: * *%o billeroeptgemerrla~~ationbilla ehsll oontdnmore thafime subjectwhich sImll be expressedIn ita title",and that as to any subjectwhich is not expressed in the title of the bill, such act shall be void. To ocnetruethe body of Se&ion 10, Chapter271, aa inclnd- lng and apply- to river beds and river bed leaseswould bring the bod$ of the bill in oonfliotwith the captionthereofadwiththe oonstitu- tirmalproviaim above quoted,and the necessaryree Gould be that such portia of Seoticm 10 u1 appliesto river bed lesseewould be ancon- et1tut1onalallavoid. Ron. Besom Gllea, pege 7 (O-523) Althoughwe entertainseriousdoubt aa to the oonatitutiou- ality of the pr~~iaion~ in Sectim 10 of Chapter271, with respectto reductionof rentals to 25 cents per a6re after productionon auytract of State laud covered by an oil and gas lease executedprior to 1931, we make no deoiaionof such questionin this opinionfor the reason that such questionis not directly$reaemtedby your letterand Is uunecesaary to the opinionerprcssedabove. The oonatruotionwehave given in this opinionto Article 5344 is oontxa5yto the constructiongiven to such Artloleby a former Attor- ney General in an Opinionwrittenby George T. Wll&ong,Asaistant Attonxy General,dated October2'7,1931, addressedto Ron. J. Ii.Walker. Acoord- inglysuchopinionand amy other prior opinionswhi6hoonstrueArtiole 5344 or Section 10 of Article54210,VenxmfiaAnnotatedStatutes,in cm- flictwith thie opinionme herewithexpreaslywithdrawnand overruled. You are, accordingly,advisedthat in'theopinionof this De@- ment,~Sectlon10 of Chapter 271, Acts of 1931, did not repeal the $2.00 per acre lease annualrentalpro~ed in the lease in question,and such act did not reduce such rental to 25 centa per acre. You are furtherad- vised-thatit ie the opinionof thin Departmentthat a renewal lease dmuld not be fsauedcoveringthe area in questionuntil all accruedrontaleat the rata of $2.00 per aore per year are paid in full.. By: Robert E. Kepke /s Robert E. Kepke AEisintant This opinionhaa been consideredin conference,approvedand orderedrecorded. Gerald C. Manu /a G&ald C. Mann AttorneyGeneralof Texas