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NATURAL RESOURCES CODE

TITLE 2. PUBLIC DOMAIN

SUBTITLE D. DISPOSITION OF THE PUBLIC DOMAIN

CHAPTER 53. MINERALS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 53.001. DEFINITIONS. In this chapter:

(1) "Commissioner" means the Commissioner of the General Land

Office.

(2) "Land office" means the General Land Office.

(3) "Board" means the School Land Board.

(4) "Surface mining" means the mining of minerals by removing

the overburden lying above the natural deposit of minerals and

mining directly from the natural deposits that are exposed. The

term does not include in situ mining activities.

Acts 1977, 65th Leg., p. 2469, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 45,

eff. Sept. 1, 1993; Acts 1999, 76th Leg., ch. 1483, Sec. 3, eff.

Aug. 30, 1999.

SUBCHAPTER B. PROSPECT AND LEASE ON STATE LAND

Sec. 53.011. LAND SUBJECT TO PROSPECT. Any tract of land that

belongs to the state, including islands, salt and freshwater

lakes, bays, inlets, marshes, and reefs owned by the state within

tidewater limits, the part of the Gulf of Mexico within the

state's jurisdiction, unsold surveyed public school land, rivers

and channels that belong to the state, and land sold with a

reservation of minerals to the state are subject to prospect by

any person for those minerals which are not subject to lease or

permit under any other statute. A person may not prospect from a

location within 2,500 feet of a military base, but prospectors

may, from a location more than 2,500 feet from a base, look for

minerals within the 2,500-foot strip.

Acts 1977, 65th Leg., p. 2469, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1987, 70th Leg., ch. 912, Sec. 4,

eff. Aug. 31, 1987; Acts 1987, 70th Leg., ch. 1061, Sec. 4, eff.

Aug. 31, 1987; Acts 2003, 78th Leg., ch. 149, Sec. 14, eff. May

27, 2003.

Sec. 53.012. APPLICATION FOR RIGHT TO PROSPECT. (a) A person

who desires to prospect land covered by this subchapter shall

file an application with the commissioner designating the area to

be prospected.

(b) Each area covered by an application may not be in excess of

640 acres with a 10 percent tolerance for tracts, sections, and

surveys that include more than 640 acres.

application.

Acts 1977, 65th Leg., p. 2469, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 46,

eff. Sept. 1, 1993.

Sec. 53.013. CONDITIONS OF PERMIT. (a) The commissioner may

issue to the first applicant a permit to prospect the area

designated in the applicant's application for a period up to one

year from the date the application is filed. If the commissioner

elects to grant the application for a permit to prospect under

the provisions of this subchapter, the permit shall not be issued

until after the land office receives the rental payment set by

the commissioner.

(b) After receipt of an additional rental payment set by the

commissioner, the commissioner may extend the permit for a period

of one year.

consecutive years from the date of its issuance.

Acts 1977, 65th Leg., p. 2470, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1985, 69th Leg., ch. 923, Sec. 19,

eff. Aug. 26, 1985; Acts 1993, 73rd Leg., ch. 897, Sec. 47, eff.

Sept. 1, 1993; Acts 1995, 74th Leg., ch. 354, Sec. 4, eff. Aug.

28, 1995.

Sec. 53.015. APPLICATION FOR LEASE. (a) At any time during the

term of the permit, the permittee may file an application to

lease the area or a designated portion of the area covered by the

permit for the purpose of mining or producing the minerals

covered by the permit.

(b) An application to lease must designate the specific minerals

the permittee is applying to lease. The commissioner may

determine any additional information an application must contain.

than the area covered by the permit, the applicant shall include

with the application field notes prepared by the county surveyor

or by a licensed state land surveyor describing the land

designated.

Acts 1977, 65th Leg., p. 2470, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 48,

eff. Sept. 1, 1993.

Sec. 53.016. ISSUANCE OF LEASE. (a) After receipt of the bonus

payment set by the commissioner, the lease shall be issued by the

commissioner under the provisions of this subchapter and shall be

for a primary term not to exceed 20 years and as long after that

time as the minerals are produced in paying quantities.

(b) Any lease covering land adjacent to a military base shall

require the lessee to forego the right to use the surface within

2,500 feet of the military base while exploiting the minerals.

The commissioner may include in the lease any other provision the

commissioner considers necessary for protection of the interests

of the state.

Acts 1977, 65th Leg., p. 2470, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 5248, ch. 965,

Sec. 11, eff. June 19, 1983; Acts 1993, 73rd Leg., ch. 897, Sec.

49, eff. Sept. 1, 1993; Acts 2003, 78th Leg., ch. 149, Sec. 15,

eff. May 27, 2003.

Sec. 53.018. ROYALTY. The royalty under the lease shall not be

less than one-sixteenth of the value of the minerals produced

under the lease.

Acts 1977, 65th Leg., p. 2470, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.019. PAYMENTS. Lease payments and royalty shall be paid

to the commissioner at Austin, and all payments shall be credited

to the account of the permanent school fund.

Acts 1977, 65th Leg., p. 2470, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.020. ASSIGNMENT AND TRANSFER. A lease issued under this

subchapter may be transferred or assigned at any time in the

manner provided by Section 52.026 of this code.

Acts 1977, 65th Leg., p. 2470, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1983, 68th Leg., p. 405, ch. 81,

Sec. 21(l), eff. Sept. 1, 1983; Acts 1993, 73rd Leg., ch. 897,

Sec. 50, eff. Sept. 1, 1993.

Sec. 53.021. FORFEITURE OF LEASE. (a) A lease is subject to

forfeiture by act of the commissioner if:

(1) the lessee fails or refuses to pay any amount which is due

either as a lease payment or royalty;

(2) the lessee or his authorized agent knowingly makes any false

return or false report concerning the lease;

(3) the lessee or his agent refuses the commissioner or his

authorized representative access to the records or other data

relating to operations under the lease; or

(4) a material term of the lease is violated.

(b) Any area forfeited under this section is subject to

application for a permit under the same terms as the original

application.

Acts 1977, 65th Leg., p. 2471, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.022. EFFECT OF SUBCHAPTER. None of the provisions of

this subchapter shall apply to, alter, or affect any rights

existing on June 22, 1955, under a valid permit issued by the

commissioner under the provisions of Section 12, Chapter 271,

General Laws, Acts of the 42nd Legislature, Regular Session,

1931, as amended (Article 5421c, Vernon's Texas Civil Statutes),

but if the permittee desires that his lease continue as long as

production is obtained in paying quantities, he shall pay lease

payments and royalty provided in this subchapter.

Acts 1977, 65th Leg., p. 2471, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.023. IMMEDIATE LEASE. If the commissioner determines

that a certain mineral is located on a state tract subject to

prospect under this subchapter, a lease for that mineral may be

issued immediately on the application for the prospect permit if

the applicant identifies the mineral in the application and

requests the immediate issuance of the lease.

Added by Acts 1985, 69th Leg., ch. 923, Sec. 20, eff. Aug. 26,

1985.

Sec. 53.024. PENALTY AND INTEREST. A lease issued under this

subchapter shall be subject to Sections 52.131(e) through (j) of

this code.

Added by Acts 1985, 69th Leg., ch. 923, Sec. 20, eff. Aug. 26,

1985. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 51, eff.

Sept. 1, 1993.

Sec. 53.025. LEASE RELINQUISHMENT. A lease issued under this

subchapter may be relinquished to the state at any time in the

manner provided by Section 52.027 of this code.

Added by Acts 1993, 73rd Leg., ch. 897, Sec. 52, eff. Sept. 1,

1993.

Sec. 53.026. IN KIND ROYALTY. (a) The commissioner or the

commissioner acting on behalf of and at the direction of the

board or a board for lease may negotiate and execute a contract

or any other instrument or agreement necessary to dispose of or

enhance their portion of the royalty taken in kind, including

contracts for sale, purchase, transportation, or storage.

(b) The commissioner or the commissioner acting on behalf of and

at the direction of the board or a board for lease may negotiate

and execute a contract or any other instrument or agreement

necessary to convert that portion of the royalty taken in kind to

other forms of energy, including electricity.

way affect the right of the state under an existing or future

lease to receive monetary royalty from its lessee.

Added by Acts 1993, 73rd Leg., ch. 897, Sec. 52, eff. Sept. 1,

1993. Amended by Acts 1999, 76th Leg., ch. 405, Sec. 50, eff.

Sept. 1, 1999.

Sec. 53.027. CONTRACTS AND AGREEMENTS. On the land office's

written request, mailed to the lessee's address as shown on its

lease or otherwise properly changed in conformity with the terms

of the lease, a copy of a contract for the sale or processing of

minerals leased under this subchapter and any subsequent

agreement or amendment to the contract shall be filed in the land

office within 30 days after the date the land office mails the

written request. The land office shall treat a contract,

agreement, or amendment filed in the land office as confidential

unless otherwise authorized by the lessee.

Added by Acts 1993, 73rd Leg., ch. 897, Sec. 52, eff. Sept. 1,

1993.

Sec. 53.028. AUDIT INFORMATION CONFIDENTIAL. (a) All

information secured, derived, or obtained during the course of an

inspection or examination of books, accounts, reports, or other

records as provided by this code, a rule, or a lease provision is

confidential and may not be used publicly, opened for public

inspection, or disclosed, except for information in a lien filed

under this chapter and except as permitted under Subsection (d)

of this section.

(b) All information made confidential in this section is not

subject to subpoena directed to the commissioner, the attorney

general, or the governor except in a judicial or administrative

proceeding to which this state is a party.

made confidential by this section and contracts made confidential

by Section 53.027 of this code to enforce this chapter or may

authorize their use in judicial or administrative proceedings to

which this state is a party.

(d) This section does not prohibit:

(1) the delivery of information made confidential by this

section to the lessee or its successor, receiver, executor,

guarantor, administrator, assignee, or representative;

(2) the publication of statistics classified to prevent the

identification of a particular audit or items in a particular

audit;

(3) the release of information that is otherwise available to

the public; or

(4) the release of information concerning the amount of royalty

assessed as a result of an examination conducted under this code,

a rule, or a lease provision or the release of other information

that would have been properly included in reports required under

this code, a rule, or a lease provision.

Added by Acts 1993, 73rd Leg., ch. 897, Sec. 52, eff. Sept. 1,

1993.

SUBCHAPTER C. LEASE OF MINERALS BY SURFACE OWNER

Sec. 53.061. AUTHORITY TO LEASE CERTAIN MINERALS. (a) The

state constitutes the owner of the surface its agent to lease to

any person any mineral, except oil and gas, which may be within

all or part of a survey previously sold with all minerals

reserved to the state.

(b) The lease shall be made on terms and conditions that may be

prescribed by the school land board.

Acts 1977, 65th Leg., p. 2471, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1987, 70th Leg., ch. 1061, Sec. 6,

eff. Aug. 31, 1987.

Sec. 53.062. LEASE OF MINERALS SEPARATELY AND TOGETHER.

Minerals covered by the provisions of this subchapter may be

leased either separately or together.

Acts 1977, 65th Leg., p. 2471, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.063. FORMS. The owner of the surface may lease to any

person the minerals covered by this subchapter on lease forms

prepared by the land office.

Acts 1977, 65th Leg., p. 2471, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.064. PREREQUISITES FOR EFFECTIVENESS OF LEASE. (a) No

lease executed by the owner of the surface is binding on the

state unless it recites the actual consideration paid or promised

for the lease. A lease covering land adjacent to a military base

shall require the lessee to forego the right to use the surface

within 2,500 feet of the military base while exploiting the

minerals.

(b) No lease is effective until a certified copy is filed in the

land office and the bonus accruing to the state is paid to the

commissioner. The commissioner is entitled to reject for filing

any lease submitted to him that he feels is not in the best

interest of the state.

Acts 1977, 65th Leg., p. 2471, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 2003, 78th Leg., ch. 149, Sec. 16,

eff. May 27, 2003.

Sec. 53.065. PAYMENTS UNDER LEASE. (a) Under a lease executed

under this subchapter before September 1, 1987, the lessee shall

pay to the state 60 percent of all bonuses agreed to be paid for

the lease and 60 percent of all rentals and royalties that are

payable under the lease. The lessee shall pay to the owner of the

surface 40 percent of all bonuses agreed to be paid for the lease

and 40 percent of all rentals and royalties payable under the

lease.

(b) Except as provided by Subsection (c), under a lease executed

under this subchapter on or after September 1, 1987, the lessee

shall pay:

(1) to the state 80 percent of all bonuses agreed to be paid for

the lease and 80 percent of all rentals and royalties that are

payable under the lease; and

(2) to the owner of the surface 20 percent of all bonuses agreed

to be paid for the lease and 20 percent of all rentals and

royalties payable under the lease.

September 1, 1999, for the exploration and production by surface

mining of coal, lignite, potash, sulphur, thorium, or uranium,

the lessee shall pay:

(1) to the state 60 percent of all bonuses agreed to be paid for

the lease and 60 percent of all rentals and royalties that are

payable under the lease; and

(2) to the owner of the surface 40 percent of all bonuses agreed

to be paid for the lease and 40 percent of all rentals and

royalties payable under the lease.

(d) If production is obtained, the state shall receive not less

than one-sixteenth of the value of the minerals produced.

Acts 1977, 65th Leg., p. 2472, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1987, 70th Leg., ch. 1061, Sec. 7,

eff. Aug. 31, 1987; Acts 1999, 76th Leg., ch. 1483, Sec. 4, eff.

Aug. 30, 1999.

Sec. 53.066. DAMAGES TO SURFACE. Payments made by the lessee to

the owner of the surface as provided in this subchapter and

acceptance of the payments by the owner of the surface are in

place of all damages to the soil.

Acts 1977, 65th Leg., p. 2472, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.067. PAYMENT PROCEDURE. Royalties and other payments

accruing to the state under this subchapter shall be paid to the

commissioner in Austin and shall be deposited in the fund to

which the minerals belong.

Acts 1977, 65th Leg., p. 2472, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.068. PRODUCTION REPORT AND RECORDS. (a) Each payment

shall be accompanied by an affidavit of the lessee or his

authorized agent indicating:

(1) the amount of minerals produced and marketed during the

month;

(2) the person to whom the minerals were sold; and

(3) the selling price for the minerals as shown by copies of the

smelter, mint, mill, refinery, or other returns or documents

attached to the affidavit.

(b) Books, accounts, weights, wage contracts, correspondence,

and other documents or papers relating to production under this

subchapter are open at all times to inspection by the

commissioner or his authorized representatives.

Acts 1977, 65th Leg., p. 2472, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.069. FORFEITURE OF LEASE. (a) A lease and all rights

under a lease are subject to forfeiture by action of the

commissioner if the lessee or his assignee, sublessee, receiver,

or other agent in control of the lease:

(1) fails or refuses to pay any royalty within 30 days after it

becomes due;

(2) fails or refuses to the proper authorities access to the

records relating to the operations; or

(3) knowingly fails or refuses to give correct information to

the proper authorities.

(b) The commissioner may declare the forfeiture when he is

sufficiently informed of the facts that authorize the forfeiture.

He shall write on the wrapper containing the papers relating to

the lease words declaring the forfeiture and shall sign it

officially. Then the lease and all rights under the lease

together with payments made under it are forfeited.

by the records of the land office to be the owner of the surface

and the owner of the forfeited lease at their last known

addresses as shown in the land office records.

Acts 1977, 65th Leg., p. 2472, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.070. REINSTATEMENT OF LEASE. (a) If the owner of the

forfeited lease complies with the provisions of this subchapter

within 30 days after the declaration of forfeiture, the

commissioner may reinstate the lease under the terms of this

subchapter and other terms that he may prescribe.

(b) If the lease is not reinstated within the 30-day period, the

owner of the surface, as agent of the state, is entitled to lease

the minerals.

Acts 1977, 65th Leg., p. 2473, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.071. LIEN. The state has a first lien on all minerals

produced from any lease to secure the payment of unpaid royalty

or other amounts that are due under this subchapter.

Acts 1977, 65th Leg., p. 2473, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.072. EFFECT OF CERTAIN LAWS. Any rights acquired under

Articles 5388 through 5403, Revised Civil Statutes of Texas,

1925, before March 15, 1967, are not affected by the repeal of

those articles, and the rights, powers, duties, and obligations

conferred or imposed by those articles are governed by those

repealed articles.

Acts 1977, 65th Leg., p. 2473, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.073. CERTAIN MINERALS AND LAWS EXEMPT FROM SUBCHAPTER.

The provisions of this subchapter do not apply to or affect oil

and gas and do not affect the provisions of Subchapter F, Chapter

52 of this code or Subchapter B of this chapter.

Acts 1977, 65th Leg., p. 2473, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.074. AUTHORITY AND DUTIES OF AGENT. (a) Prohibition

Against Self-Dealing. (1) The owner of the soil may not lease,

either directly or indirectly, to himself or to a nominee, to any

corporation or subsidiary in which he is a principal stockholder

or to an employee of such a corporation or subsidiary, or to a

partnership in which he is a partner or to an employee of such a

partnership. If the owner of the soil is a corporation or a

partnership, then the owner of the soil may not lease, either

directly or indirectly, to a principal stockholder of the

corporation or to a partner of the partnership, or any employee

of the corporation or partnership. The owner of the soil may not

lease, either directly or indirectly, to his fiduciary, including

but not limited to a guardian, trustee, executor, administrator,

receiver, or conservator.

(2) Except as provided by this section, the owner of the soil

may not lease, directly or indirectly, to a person related to him

within and including the second degree of consanguinity or

affinity, including a person related by adoption, or to a

corporation or subsidiary in which that person is a principal

stockholder, or to a partnership in which that person is a

partner, or to an employee of such a corporation or subsidiary or

partnership.

(3) An owner of the soil who wishes to lease to a person,

corporation, or partnership described in Subdivision (2) may

request the approval of the board for authority to execute such a

lease before its execution. The owner of the soil requesting

approval must also execute and file with the commissioner a sworn

affidavit stating that the owner of the soil will not receive any

benefit under a lease so approved by the board that will not be

shared with the permanent school fund in the proportion

prescribed by this subchapter.

(4) If an owner of the soil makes any material misstatement of

fact in connection with an application to the board or affidavit

made pursuant to Subdivision (3), then any lease executed

pursuant to the authority of the board shall be voidable at the

election of the commissioner. The election to void such a lease

shall be cumulative of and in addition to all other remedies

available to the commissioner or the state.

(b) Fiduciary Duty of Agent. An owner of the soil owes the state

a fiduciary duty and a duty of utmost good faith. An owner of the

soil must fully disclose any facts affecting the state's interest

and must act in the best interest of the state. Any conflict of

interest must be resolved by putting the interests of the state

before the interests of the owner of the soil. In addition to

these specific statutory duties, the owner of the soil owes the

state all the common-law duties of a holder of executive rights.

Duty or a Violation of the Prohibition Against Self-Dealing. When

the commissioner determines that an owner of the soil has

breached any duty or obligation under this subchapter, the

commissioner may request that the attorney general file an action

or proceeding either to enforce the duties and obligations of the

owner of the soil or to forfeit the then applicable agency rights

of the surface owner. Such an action or proceeding shall be filed

in a district court in Travis County.

(d) Leasing Procedure When Surface Owner's Agency Rights Have

Been Forfeited. When the surface owner's agency rights have been

forfeited in accordance with Subsection (c) of this section, the

minerals subject to lease under this subchapter can then be

leased under the leasing procedure set out for the lease of oil

and gas under Section 52.175 of this code. The substantive

provisions of Subchapter E of this chapter and Subchapters D and

E, Chapter 32, of this code shall apply to the lease.

(e) A penalty of 10 percent shall be imposed on any sums due the

state because a surface owner breaches a fiduciary duty. This

penalty shall be applied only to amounts owed as a result of

breaches occurring on and after the effective date of this

section. The imposition of this penalty will not limit the right

of the state to obtain punitive damages, exemplary damages, or

interest. Any punitive damages or exemplary damages assessed by a

court shall be offset by the 10 percent penalty imposed by this

subsection.

Added by Acts 1987, 70th Leg., ch. 912, Sec. 5, eff. Aug. 31,

1987. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 53, eff.

Sept. 1, 1993; Acts 1995, 74th Leg., ch. 937, Sec. 4, eff. Sept.

1, 1995.

Sec. 53.075. ASSIGNMENT AND TRANSFER. A lease issued under this

subchapter may be assigned or transferred at any time in the

manner provided by Section 52.026 of this code.

Added by Acts 1993, 73rd Leg., ch. 897, Sec. 54, eff. Sept. 1,

1993.

Sec. 53.076. LEASE RELINQUISHMENT. A lease issued under this

subchapter may be relinquished to the state at any time in the

manner provided by Section 52.027 of this code.

Added by Acts 1993, 73rd Leg., ch. 897, Sec. 54, eff. Sept. 1,

1993.

Sec. 53.077. IN KIND ROYALTY. (a) The commissioner, each owner

of the soil under this subchapter, or the commissioner acting on

the behalf of and at the direction of an owner of the soil under

this subchapter may negotiate and execute a contract or any other

instrument or agreement necessary to dispose of or enhance their

portion of the royalty taken in kind, including a contract for

sale, transportation, or storage.

(b) The commissioner, each owner of the soil under this

subchapter, or the commissioner acting on behalf of and at the

direction of the owner of the soil under this subchapter may

negotiate and execute a contract or any other instrument or

agreement necessary to convert that portion of the royalty taken

in kind to other forms of energy, including electricity.

way affect the right of the state or the owner of the soil under

an existing or future lease to receive monetary royalty from its

lessee.

Added by Acts 1993, 73rd Leg., ch. 897, Sec. 54, eff. Sept. 1,

1993. Amended by Acts 1999, 76th Leg., ch. 405, Sec. 51, eff.

Sept. 1, 1999.

Sec. 53.078. PENALTY AND INTEREST. A lease issued under this

subchapter shall be subject to Sections 52.131(e) through (j) of

this code.

Added by Acts 1993, 73rd Leg., ch. 897, Sec. 54, eff. Sept. 1,

1993.

Sec. 53.079. CONTRACTS AND AGREEMENTS. On the land office's

written request, mailed to the lessee's address as shown on its

lease or otherwise properly changed in conformity with the terms

of the lease, a copy of a contract for the sale or processing of

minerals leased under this subchapter and any subsequent

agreement or amendment to the contract shall be filed in the land

office within 30 days after the date the land office mails the

written request. The land office shall treat a contract,

agreement, or amendment filed in the land office as confidential

unless otherwise authorized by the lessee.

Added by Acts 1993, 73rd Leg., ch. 897, Sec. 54, eff. Sept. 1,

1993.

Sec. 53.080. AUDIT INFORMATION CONFIDENTIAL. (a) All

information secured, derived, or obtained during the course of an

inspection or examination of books, accounts, reports, or other

records as provided by Section 53.068 of this code, a rule, or a

lease provision is confidential and may not be used publicly,

opened for public inspection, or disclosed, except for

information in a lien filed under this chapter and except as

permitted under Subsection (d) of this section.

(b) All information made confidential by this section is not

subject to subpoena directed to the commissioner, the attorney

general, or the governor except in a judicial or administrative

proceeding to which this state is a party.

made confidential by this section and contracts made confidential

by Section 53.079 of this code to enforce this chapter or may

authorize their use in judicial or administrative proceedings to

which this state is a party.

(d) This section does not prohibit:

(1) the delivery of information made confidential by this

section to the lessee or its successor, receiver, executor,

guarantor, administrator, assignee, or representative;

(2) the publication of statistics classified to prevent the

identification of a particular audit or items in a particular

audit;

(3) the release of information that is otherwise available to

the public; or

(4) the release of information concerning the amount of royalty

assessed as a result of an examination conducted under Section

53.068 of this code, a rule, or a lease provision or the release

of other information that would have been properly included in

reports required under Section 53.068 of this code, a rule, or a

lease provision.

Added by Acts 1993, 73rd Leg., ch. 897, Sec. 54, eff. Sept. 1,

1993.

Sec. 53.081. LEASE BY OWNER OF THE SOIL. (a) An owner of the

soil of lands covered by this subchapter may lease those lands

for the purpose of exploring for and producing minerals other

than oil and gas in the manner provided by this section.

(b) An owner of the soil may apply in writing to the board for a

lease of a mineral or minerals other than oil and gas.

(1) the name and address of the applicant;

(2) a complete legal description of the land the applicant seeks

to lease;

(3) the name and address of every owner of the soil of the land

the applicant seeks to lease, if the applicant is not the sole

owner of the soil;

(4) a brief letter opinion signed by an attorney licensed in

this state setting out the surface ownership of the land sought

to be leased;

(5) a statement of the applicant's experience in the exploration

for and production of minerals other than oil and gas, including,

without limitation, a list of any State of Texas or federal

mineral leases currently or previously held or operated by the

applicant or other entity in which the applicant has or had a

significant interest during the five-year period preceding the

date of the application;

(6) a statement that the applicant intends to explore for and,

if commercially reasonable, produce minerals other than oil and

gas or if the applicant plans that another person or firm shall

conduct exploration and production:

(A) the name and address of the person or firm;

(B) a description of such person's or firm's experience in the

exploration for and production of minerals other than oil and

gas, including, without limitation, a list of any State of Texas

or federal minerals other than oil and gas leases currently or

previously held or operated by the person or firm during the

five-year period preceding the date of the application; and

participation in the exploration of and production from the

property and all consideration or benefits the applicant expects

to receive in connection with the exploration of and production

from the property; and

(7) the amount of bonus, rental, royalty, and other lease terms

that the applicant proposes to pay or offer or pay and offer for

the lease.

(d) The applicant shall provide geological, geophysical,

geochemical, and other data or copies of the data, including

interpretative data, pertinent to exploration for minerals other

than oil and gas on the lands for which the application is made,

in the applicant's possession or to which the applicant has

reasonable access and which the applicant has the ability to

provide to the land office. All such data shall be confidential

and not subject to the provisions of the open records law,

Chapter 552, Government Code, until one year after the

expiration, termination, or forfeiture of a lease granted

pursuant to this section. After one year after the expiration,

termination, or forfeiture of such a lease, the data shall remain

confidential to the extent permitted by Chapter 552, Government

Code. If a lease is not issued, the data shall be returned to the

applicant.

(e) The board may prescribe the form of the application, require

additional information as it considers appropriate, and, by rule,

otherwise provide for the implementation of this section.

(f) The staff of the land office shall review the information

presented in the application, such other geological, geophysical,

and geochemical data reasonably available to it relevant to the

land proposed to be leased, and leasing information reasonably

available to it relevant to the land proposed to be leased. The

staff shall prepare a report to the board that contains:

(1) a summary of bonus, rental, royalty, and other lease terms

then being offered and asked for leases of similar lands in the

area of the land proposed to be leased; and

(2) data considered by the staff to be relevant, including, but

not limited to, data concerning the land proposed to be leased

and its estimated value for minerals other than oil and gas,

recommended lease terms, and the applicant, including the

applicant's history of leasing State of Texas or federal lands

for minerals other than oil and gas.

(g) The board shall consider the application at a regular

meeting. It may, in its sole discretion, grant or deny the

application or grant the application subject to specified

conditions. Such conditions may include a requirement that if the

applicant does not materially participate in the exploration or

development of the leased premises, through labor performed, cash

or goods contributed, or supplying other enhancement in value,

the applicant must share equally with the permanent school fund

any benefit derived from the lease.

(h) After the board has approved an application, the

commissioner shall issue a lease to the applicant. The lease

shall conform, as nearly as is practicable, to the form of lease

prescribed by the commissioner under this chapter.

(i) The commissioner may not deliver a lease issued under this

section until the applicant has executed and delivered to the

commissioner a waiver of the applicant's right and duty to act as

agent for the state in leasing the leased premises and to receive

any part of the bonus, rental, royalty, and other consideration

accruing to the owner of the soil under this subchapter. The

waiver and the lease shall be effective as of the date the

commissioner executes the lease.

(j) Upon the expiration, termination, or forfeiture of a lease

issued under this section, the agency rights and duties of the

applicant as owner of the soil are reinstated without the

necessity for further action by the owner of the soil, the board,

or the commissioner.

(k) If an applicant is not the sole owner of the soil, the

applicant may secure leases from the other owners of the soil

from which the applicant is not prohibited from leasing under

Section 53.074. If the applicant must obtain a lease from an

owner of the soil from whom the applicant would otherwise not be

permitted to lease in order reasonably to explore for or produce

or explore for and produce minerals other than oil or gas, the

commissioner may approve the lease on the condition that the

applicant shall not receive any benefit from the lease, and, if

the applicant should acquire by any method, including devise or

inheritance, the right to receive any rental, royalty, or other

benefit accruing to the owner of the soil's interest under the

lease, the applicant shall assign the benefit to the commissioner

for the benefit of the permanent school fund.

(l) The commissioner shall not approve any lease obtained by an

applicant from another owner of the soil if the lease contains

terms that are substantially inconsistent with or provide for a

lesser bonus, rental, or royalty than the lease approved by the

board. If the bonus, rental, or royalty in a lease obtained by an

applicant from another owner of the soil for a comparable

interest is greater than that approved by the board, then the

lease approved by the board shall be amended to provide for the

greater bonus, rental, or royalty, and the applicant shall be

liable for all greater sums due. In determining whether an

interest is comparable, the board shall consider the quantum of

the interest, the time at which the lease was taken, and any

other aspects of the lease transaction that the board considers

to be relevant.

Added by Acts 1995, 74th Leg., ch. 937, Sec. 3, eff. Sept. 1,

1995.

SUBCHAPTER D. UNITIZATION OF SULPHUR PRODUCTION

Sec. 53.111. AUTHORITY TO OPERATE AN AREA AS A UNIT FOR

PRODUCTION OF SULPHUR. The commissioner on behalf of the state

or any fund that belongs to the state may execute agreements that

provide for operating areas as a unit for the exploration,

development, and production of sulphur and may commit to the

agreements:

(1) the royalty interests in sulphur reserved to the state or

any fund of the state by law in a patent, award, mining claim, or

contract of sale or under the terms of any lease legally executed

by an official, board, agent, agency, or authority of the state;

(2) the free royalty interests, whether leased or unleased,

reserved to the state under Section 51.201 or 51.054 of this

code.

Acts 1977, 65th Leg., p. 2473, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 55,

eff. Sept. 1, 1993.

Sec. 53.112. APPROVAL OF CERTAIN AGREEMENTS BY SCHOOL LAND

BOARD. (a) An agreement must be approved by the board and

executed by the commissioner to be effective if the agreement

commits:

(1) a royalty interest in land belonging to the permanent school

fund or the asylum funds, in riverbeds, inland lakes, channels,

or areas within tidewater limits, including islands, lakes, bays,

inlets, marshes, reefs, and the bed of the sea; or

(2) the free royalty interests, whether leased or unleased,

reserved to the state under Section 51.201 or 51.054 of this

code.

(b) An owner of the soil who is subject to Subchapter C of this

chapter may grant to a lessee prior authority to pool or unitize

the interest of the owner in a lease executed under that

subchapter. For the agreement to bind the interest of an owner of

the soil who is subject to Subchapter C of this chapter and who

has not granted the lessee prior authorization to pool or unitize

the interest of the owner in a sulphur lease executed under that

subchapter, the agreement must be executed by the owner of the

soil.

Acts 1977, 65th Leg., p. 2473, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 56,

eff. Sept. 1, 1993.

Sec. 53.113. APPROVAL OF AGREEMENTS. An agreement that commits

the royalty interest in any land not listed in Section 53.112 of

this code must be approved by the board, official, agent, agency,

or authority of the state which has the authority to lease or to

approve the lease of the land for sulphur and must be executed by

the commissioner to be effective.

Acts 1977, 65th Leg., p. 2473, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 57,

eff. Sept. 1, 1993.

Sec. 53.114. COMMISSIONER'S APPROVAL. Before executing an

agreement authorized by Section 53.111 of this code, the

commissioner must find that the agreement is in the best interest

of the state.

Acts 1977, 65th Leg., p. 2474, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 58,

eff. Sept. 1, 1993.

Sec. 53.115. PROVISIONS OF AGREEMENT. (a) An agreement

executed under this subchapter may include the following

provisions:

(1) that operations incident to drilling a well on any portion

of a unit shall be considered for all purposes to be conduct of

the operations on each tract in the unit;

(2) that production allocated by the agreement to each tract

included in the unit shall be considered for all purposes to have

been production from the tract;

(3) that the interest reserved to or provided for the state or

any of its funds on production from any tract included in the

unit shall be paid only on that portion of the production from

the unit that is allocated to the tract under the agreement; and

(4) that each lease included in the unit shall remain in effect

so long as the agreement remains in effect and that on

termination of the agreement each lease shall continue in effect

under the terms and conditions of the lease.

(b) The agreement may include any other terms and conditions the

commissioner or any board, official, agent, agency, or authority

of the state that has the authority to lease or to approve a

lease of the land for sulphur may consider to be in the best

interest of the state.

Acts 1977, 65th Leg., p. 2474, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 59,

eff. Sept. 1, 1993.

Sec. 53.116. APPLICATION TO UNIVERSITY LAND. None of the

provisions of this subchapter apply to any land under the control

and management of the Board of Regents of The University of Texas

System.

Acts 1977, 65th Leg., p. 2474, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.117. CONSTRUCTION OF SUBCHAPTER. (a) Agreements and

operations under this subchapter are necessary to prevent waste

and conserve the natural resources of the state and are not a

violation of the provisions of Chapter 15, Business &

Commerce Code, as amended.

(b) If a court finds a conflict between the provisions of this

subchapter and the code cited in the previous subsection, this

subchapter is intended as a reasonable exception to those laws

which is necessary to prevent waste and conserve the natural

resources.

subchapter and the laws cited in Subsection (a) of this section

and that this subchapter is not a reasonable exception to those

laws, it is the intent of the legislature that this subchapter or

any conflicting portion of this subchapter be declared invalid

and that the previously cited laws remain valid.

Acts 1977, 65th Leg., p. 2474, ch. 871, art. I, Sec. 1, eff.

Sept. 1, 1977.

Sec. 53.118. RATIFICATIONS AND OTHER AGREEMENTS. (a) The board

may approve, by rule or order, a ratification or other agreement

that includes in the benefits of production a mineral or royalty

interest in land belonging to the permanent school fund or the

asylum funds.

(b) An agreement approved by the board under this section must

be executed by the commissioner to be effective.

interests listed by Subsection (a) of this section in land not

belonging to the permanent school fund or the asylum funds must

be approved by the board, official, agent, agency, or authority

of the state that has the authority to lease or to approve the

lease of the land for sulphur and must be executed by the

commissioner to be effective.

Added by Acts 1993, 73rd Leg., ch. 897, Sec. 60, eff. Sept. 1,

1993.

SUBCHAPTER E. LEASE OF PUBLIC SCHOOL AND GULF LAND FOR COAL,

LIGNITE, SULPHUR, SALT, AND POTASH

Sec. 53.151. LEASE OF CERTAIN AREAS. (a) Under the provisions

of this subchapter, the board may lease to any person for the

production of coal, lignite, sulphur, salt, and potash:

(1) islands, saltwater lakes, bays, inlets, marshes, and reefs

owned by the state within tidewater limits;

(2) the portion of the Gulf of Mexico within the jurisdiction of

the state;

(3) rivers and channels that belong to the state;

(4) all unsold surveyed and unsurveyed public school land; and

(5) all land sold with a reservation of minerals to the state

under Section 51.054 or 51.086 of this code in which the state

has retained leasing rights.

(b) The lease may not be granted for any land within 2,500 feet

of a military base.

Added by Acts 1979, 66th Leg., p. 49, ch. 29, Sec. 1, eff. April

3, 1979. Amended by Acts 1983, 68th Leg., p. 5245, ch. 965, Sec.

7, eff. June 19, 1983; Acts 2003, 78th Leg., ch. 149, Sec. 17,

eff. May 27, 2003; Acts 2003, 78th Leg., ch. 1276, Sec.

13.002(c), eff. Sept. 1, 2003.

Sec. 53.152. LAWS APPLICABLE TO LEASES. Leases of land

described by Section 53.151 of this code shall be made in the

same procedural manner as leases of that land for oil and gas

under Chapter 52 of this code.

Added by Acts 1979, 66th Leg., p. 49, ch. 29, Sec. 1, eff. April

3, 1979. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 61, eff.

Sept. 1, 1993.

Sec. 53.153. CONDITIONS OF LEASE. (a) Coal, lignite, sulphur,

salt, and potash may be leased together or separately.

(b) A lease granted under this subchapter shall be for a primary

term not to exceed 20 years and as long after that time as the

minerals are produced in paying quantities.

Added by Acts 1979, 66th Leg., p. 49, ch. 29, Sec. 1, eff. April

3, 1979. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 62, eff.

Sept. 1, 1993.

Sec. 53.154. ROYALTY RATE. The board shall set the royalty rate

on production of sulphur, coal, lignite, salt, and potash from

land leased under this subchapter. The royalty rate set must be

at least one-eighth of the gross production or the market value

of the sulphur produced and at least one-sixteenth of the gross

production or the market value of the coal, lignite, salt, and

potash produced.

Added by Acts 1979, 66th Leg., p. 49, ch. 29, Sec. 1, eff. April

3, 1979. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 63, eff.

Sept. 1, 1993.

Sec. 53.155. COMPENSATION FOR DAMAGES FROM USE OF SURFACE. (a)

Leases issued under Subchapter B or E of this chapter for unsold

surveyed or unsurveyed school land, other than land included in

islands, saltwater lakes, bays, inlets, marshes, and reefs owned

by the state in tidewater limits and other than that portion of

the Gulf of Mexico within the jurisdiction of the state, must

include a provision requiring compensation for damages from the

use of the surface in prospecting for, exploring, developing, or

producing the leased minerals.

(b) The commissioner by rule shall set the procedure for

receiving compensation for damages to the surface of land

dedicated to the permanent school fund.

special fund account in the State Treasury to be used for

conservation, reclamation, or constructing permanent improvements

on land that belongs to the permanent school fund.

(d) The special fund account must be an interest-bearing

account, and the interest received on the account shall be

deposited in the State Treasury to the credit of the permanent

school fund.

(e) Money collected under this section and designated for the

construction of permanent improvements as provided by this

section must be used not later than two years after the date on

which the money is collected.

(f) Any money that remains in the special fund account for

longer than two years shall be deposited in the State Treasury to

the credit of the permanent school fund.

(g) Compensation for damages under this section is in addition

to any bonus, rental, royalty, or other payment required by the

lease.

Added by Acts 1985, 69th Leg., ch. 624, Sec. 48, eff. Sept. 1,

1985. Amended by Acts 1987, 70th Leg., ch. 948, Sec. 32, eff.

Sept. 1, 1987; Acts 1993, 73rd Leg., ch. 897, Sec. 64, eff. Sept.

1, 1993; Acts 2003, 78th Leg., ch. 328, Sec. 9, eff. Jan. 1,

2004.

Sec. 53.156. CONTRACTS AND AGREEMENTS. On the land office's

written request, mailed to the lessee's address as shown on its

lease or otherwise properly changed in conformity with the terms

of the lease, a copy of a contract for the sale or processing of

minerals leased under this subchapter and any subsequent

agreement or amendment to the contract shall be filed in the land

office within 30 days after the date the land office mails the

written request. The land office shall treat a contract,

agreement, or amendment filed in the land office as confidential

unless otherwise authorized by the lessee.

Added by Acts 1993, 73rd Leg., ch. 897, Sec. 65, eff. Sept. 1,

1993.

SUBCHAPTER F. GEOPHYSICAL AND GEOCHEMICAL EXPLORATION PERMIT

Sec. 53.161. DEFINITIONS. In this subchapter:

(1) "Mineral(s)" means coal, lignite, sulphur, salt, and potash.

(2) "Geophysical exploration" means a survey or investigation

conducted to discover or locate mineral prospects using magnetic,

gravity, seismic, and/or electrical techniques.

(3) "Geochemical exploration" means a survey or investigation

conducted to discover or locate mineral prospects using

techniques involving soil sampling and analysis.

(4) "Public school land" means land dedicated by the

constitution or laws of this state to the permanent free school

fund, but does not include land with a mineral classification

described in Section 53.061 of this chapter in which the state

has retained the minerals, nor does it include areas within

tidewater limits.

(5) "Permit" means a license issued by the commissioner

authorizing geophysical and/or geochemical exploration on public

school land.

(6) "Permittee" means the holder of a permit.

(7) "Areas within tidewater limits" means islands, saltwater

lakes, bays, inlets, marshes, and reefs within tidewater limits

and that portion of the Gulf of Mexico within the jurisdiction of

Texas.

Added by Acts 1981, 67th Leg., p. 2453, ch. 631, Sec. 2, eff.

Sept. 1, 1981. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 66,

eff. Sept. 1, 1993.

Sec. 53.162. PERMIT REQUIRED FOR EXPLORATION. (a) Except for a

person who has a valid mineral lease on public school land

authorized by this chapter, a person may not conduct geophysical

or geochemical exploration on public school land unless the

person obtains a permit from the commissioner.

(b) Every person who is authorized to conduct a geophysical or

geochemical exploration on public school land shall comply with

the commissioner's rules relating to such exploration. A person

with a valid mineral lease on land subject to this chapter shall

comply with the commissioner's rules concerning exploration.

Added by Acts 1981, 67th Leg., p. 2453, ch. 631, Sec. 2, eff.

Sept. 1, 1981. Amended by Acts 1993, 73rd Leg., ch. 897, Sec. 67,

eff. Sept. 1, 1993.

Sec. 53.163. LAWS APPLICABLE TO PERMITS. Permits for

geophysical and geochemical exploration under this subchapter

shall be issued in the same manner and under the same terms and

conditions as permits for oil and gas under Subchapter I of

Chapter 52 of this code.

Added by Acts 1981, 67th Leg., p. 2453, ch. 631, Sec. 2, eff.

Sept. 1, 1981. Amended by Acts 1985, 69th Leg., ch. 624, Sec. 49,

eff. Sept. 1, 1985.

Sec. 53.1631. GROUNDWATER. (a) Unless otherwise expressly

provided by statute, deed, patent, or other grant from the State

of Texas, groundwater shall not be considered a mineral in any

past or future reservation of title or rights to minerals by the

State of Texas.

(b) Notwithstanding Subsection (a), the State of Texas shall

retain any and all rights to reasonable use of the surface and

groundwater for mineral development and production purposes.

Added by Acts 2003, 78th Leg., ch. 1091, Sec. 32, eff. June 20,

2003.