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Mr. C. D. Slmmons~;Comptroller
University of Texas
Austin, Texas
Dear Mr. Simmons:
Opinion No. O-2716
Re: Authority of Board for Lease
of University Ian&s to offer
ana sell gas rights only In
University lands.
Your letter of October 22, 1940, requests the opinion
of this department as to whether or not the Board for Lease
of University Lands Is authorized to offer for sale and to
sell the gas rights only in certain tracts of UnIversitg lands,
without offering at the same time to sell oil leases upon
such land.
The authority of the Board to offer for sale and to
sell oil and gas in University lands IS found Ln Chapter 148
of~the Acts of 1937, Article 2603a, Vernon's Annotated Civil
Statutes, which Act amends Chapter 282 of the Acts of 1929,
and Chapter 174 of the Acts of~l931.
Section 4 of Article 2603a provides, In part, as fol-
lows:
"Whenever there shall be such demand for the
nurchase of 011 and gas in any University land
as will reasonably insure that said oil and gas
may be sold advantageously, the Board shall place
said 011 and gas in said lands on the market in
separate tracts of such area and extent as the
Board may determine most suitable for the profita-
ble marketing thereof, but in no event shall any
tract in which oil and gas is offered for sale as
a unit exceed an area of six thousand (6,000) acres.
The sale of said oil and gas shall be made at
public auction and shall be held in Austin, Texas,
at any hour between ten o'clock A.M. and five
o'clock P.M. The Board shall cause to be adver-
tised a brief description of the lands upon whlc\
the oil and gas is proposed to be sold, . . . .
(Underscoring ours).
Mr. C. D. Simmons, page 2 O-2716
Section 5, in part, provides as follows:
"The oil and gas In each tract shall be offered
for sale for~a bonus in addition to the stipulated
royalty. Each tract shall be offered separately.
Each bid shall be subject to such royalty as is
specified in the official advertisement preceding
the sale, but in no event shall be less than one-
eighth of the grost production of oil and
the land; . . . . (Underscorhg ---I--
ours In
Section 7 provides:
"If any one of the bidders at the sale at pub-
lic auction shall have offered a reasonable and
proper price for any tract offered not less than
the price fixed by the Board, the land advertised
may be leased for 011 and gas purposes under the
terms of this Act and such regulations as the
Board may prescribe, not lnconsisteht with the
provisions of this Act. All bids may be rejected
by the Board." (Underscoring ours).
Sectton 8 provides, in part, as follows:
"(a) If the Board shall determlne that a satis-
factory bid has been offered for said oil and gas,
It will make an award to the bidder offering the
highest price therefor, and a lease shall be executed
by the Commissioner of the General Lana Office, a
duplicate copy of such lease to be filed in the
General Land.Office.
"(b) The primary term of the lease, as deter-
mined by the Board prior to the promulgation of
the advertisement, shall in no case exceed five
(5 1 wws , and each lease shall provide that the
lease shall terminate at the exp1ratlon of its
primary term, and shall provide that if oil ana/
or gas is being produced in paging quantities from
the premises before termination of the primary
term, said lease shall continue in force and ef-
fect as long as such 011 and/or gas is being so
produced. The lease shall Include such additional
provisLons and regulations, not inconsistent with
the provisions of this Act, as the Board may pre-
scribe to preserve the interests of the State and
safeguard the University funds." (Underscoring ours).
It will be noted that this statute, in Section 4, au-
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. C. D. Simmons, page 3
,‘r o -2716
t,horizesthe Board, in certain circumstances, to place 'oil
ana gas' on the market; that the tracts In which 'oil and gas'
is offered for sale shall not exceed 6,000 acres and that the
'oil and gas' shall be sold at public auction.
In Section 4, it Is provided that the '011 and gag,'
shall be offered for sale for a bonus; that the royalty shall
not be less than l/Sth of the gross production of 'oil and
gas' in the land.
Section 7 provides that under certain conditions the
land advertised may be leased for '011 and gas' purposes.
In Sectton 8, provision is made for execution of leases
if the Board determines that a satisfactory bid has been of-
fered for said '011 and gas', and that such lease shall pro-
vide that If oil and/or B;as IS being produced in paying
quantities, before termination of the primary term, said lease
shall continue In force and effect so long as such oil and/or
m is being SO produced.
We recognize the rule of statutory construction which
permits the word "and!'to be held as having been used in the
disjunctive as well as the conjunctive sense when the purpose
sought to be accomplished by the Legislature is thereby ef-
fected. In Chapter 148, however, the Legislature, while ex-
pressly resorting to use of the phrase and/or in Section 8
(b), where provrsion is made for keeping the lease alive during
the production of either oil or gas, fsFled to use such term
in providing for the offering for sale, the advertisement, the
sale of leases, and the bonus and royalty to be paid. The
fact that the Legislature in one section of the statute used
the definite term "and/or", whereas fn other sections of the
same statute such term was not used, but instead the conjunc-
tive "and" was used Is, to us, highly persuasive against a
construction of the statute in a manner whfch would result in
giving the same meaning to the word "and" in Sections 4, 5 and
7, as must, perforce the express wording of the statute, be
given to the phrase "and/or In Section 8.
Furthermore, viewing the consequences of the two pos-
sible constructions of the statute, as it Is permissfble to
do when the language used is not entirely plafn - Oriental
Hotel Company~v. Griffiths, 88 Tex. 574, lt is apparent that
if Sections 4, 5 and 7 of the statutes be construed to author-
ize leases for either oil or gas, results wil'lthevebg be oc-
casioned which were plainly not intended by the LegLslature.
To illustrate, - Assume a lease is made for gas only on a tract
of land. In the process of drilling for gas, oil is discover-
ed in paying quantities, which oil flows without the necessity
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Mr. C. D. Simmons, page 4 o-2716
of pumping. Under a lease limited to gas alone, no royalty
for the oil produced would be pr+ded for, nor any. obllga-
tiOns or Covenants on the part OS tne gas lessee With respect
to the production of oil. If, however, oil is produced in
paying quantities, the gas lease, by virtue of the express
provisions of Sectfon 8 (b), is continued l.nforce beyond
its primary term even though gas is not produced in paying
quantltles.
We think It plain that no such results were intended
by the Legislature., Instead, we believe the~Leglslature~.in-
tended that the oil and the gas In a specific tract of land
should be offered for sale together, not each mineral sep-
arately; that the cash payment - the bonus - should be bid and
paid for both the 011 and gas, not for 011 alone or gas alone;
that the lease should cover both the oil and the gas and, by
virtue of Section 8 (b), that the discovery and continued
productlon of either oil or gas will operate to~contlnue the
lease in force on both 011 and gas for as,long as either oil
or gas is so produced, subject, of course, to the fulfillment
by the lessee of all the covenants and obligations of his
lease.
Accordingly, you are advised that it is our opinion
that the Board for Lease of University Lands Is not authorized
to offer for sale or to sell the gas only in University lands.
Yours very truly
ATTORNEY GENERAL OF TEXAS
By s/Robert E. Kepke
Robert E. Kepke
Assistant
REK:BT:wc
APPROVED OCT 30, 1940
s/Gerald C. Mann
ATTORNEYGENERAL OF TEXAS
Approved OpinLon Commlttee By s/BKB Chairman