31 TAC §§155.40 - 155.49
The School Land Board proposes new Subchapter C, relating
to Exploration and Development of Geothermal Energy and Associated Resources
on Permanent School Fund Land. In 1999, the 76th Legislature amended Chapter
39 of the Public Utilities Code establishing a goal of January 1, 2009, for
the addition of 2,000 megawatts of generating capacity using renewable energy
technologies including geothermal energy. The School Land Board (SLB) anticipates
that there will be requests from industry for permission to explore and lease
state lands with geothermal energy potential. The SLB intends that the procedures
established in new Subchapter C generally duplicate the procedures used by
the General Land Office (GLO) and found in Part 1, Chapter 10, of this title
(relating to Exploration and Development of Minerals Other Than Oil and Gas).
New §155.40 relating to Definitions; Exploration and Development Guide,
defines terms of art that are used throughout the new Subchapter and describes
how each type of state land (Permanent School Fund (PSF) lands, Relinquishment
Act Lands, and Land Trade Lands) may be explored and leased (by permit, immediate
lease, or sealed bid) for development of geothermal energy and related resources.
New §155.41 relating to Prospect Permits on State Lands, sets forth
the procedure an applicant must follow to obtain a prospect permit. Initially,
the SLB plans to use a prospect permit system instead of a competitive sealed
bid system to explore for geothermal energy on state lands. Permits will be
issued for one year at a cost of $1.00 per acre and may be renewed in one-year
increments for an additional four years. The geothermal energy industry is
new in Texas and the general location of prospective state lands is not yet
known. Using a lower cost permitting system ($1.00 per acre) instead of a
sealed bid system (minimum $2.00 per acre bonus and $1.00 per acre per year
rental payment) will likely encourage more exploration, earlier. At some point
in time when the industry has identified the more prospective trends and fairways,
the SLB may choose to switch to a competitive sealed bid system.
New §155.42 relating to Mining Leases on Properties Subject to Prospect,
defines the requirements and procedures for converting an existing prospecting
permit to a lease. The permittee must demonstrate to the commissioner's satisfaction
that geothermal energy and related resources are located on the state tract
before a prospect permit can be converted to a lease.
New §155.43 relating to Exploration and Mining Leases for Minerals
Subject to Sealed Bid, provides that when the SLB holds sealed bid lease sales
for geothermal energy, they will be held in the same manner as lease sales
for oil, gas, and other minerals. See §9.21 of this title (relating to
Leasing Guide); §9.22 of this title (relating to Leasing Procedures); §10.4
of this title (relating to Exploration and Mining Leases for Minerals Subject
to Sealed Bid).
New §155.44 relating to Mining Leases on Relinquishment Act Lands,
generally duplicates the procedures used for leasing Relinquishment Act lands
for oil, gas, and other minerals. See §9.21 of this title (relating to
Leasing Guide); §9.22 of this title (relating to Leasing Procedures); §10.5
of this title (relating to Mining Leases on Relinquishment Act Land). Because
of the unique relationship created between the "owner of the soil" and the
state under the Relinquishment Act and because geothermal energy and related
resources are explored for and developed in a manner similar to oil and gas,
the SLB believes the procedures for leasing Relinquishment Act lands for oil,
gas, and other minerals will be suitable for use in developing geothermal
energy.
New §155.45 relating to Unit Agreements for Geothermal Energy and
Related Resources, generally duplicates the procedures used for forming units
for the development of oil, gas, and other minerals because geothermal energy
and related resources are produced and developed in a similar manner. See §9.81
of this title (relating to Pooling and Unitizing of State Property; §10.6
of this title (relating to Sulphur Unit Agreements).
New §155.46 relating to Conduct of Exploration and Mining Operations,
sets minimum standards for lessees and permittees with respect to exploration
and development operations for geothermal energy and related resources not
regulated by the Railroad Commission, the Texas Natural Resources Conservation
Commission, the United States Environmental Protection Agency, their successor
agencies, or other appropriate agencies. The new section requires permittees
and lessees to submit a plan of operations prior to the commencement of any
work on the premises. The content of the plan of operations is prescribed
in the new section and the procedure for obtaining approval of the plan. The
SLB believes that these procedures are appropriate for geothermal energy development
because the GLO has had success with these procedures in the context of mineral
mining and development. See §10.7 of this title (relating to Conduct
of Exploration and Mining Operations).
New §155.47 relating to Assignments, Releases, Reports, Royalty Payments,
Inspections, Forfeitures, and Reinstatements, generally duplicates similar
provisions in the GLO rules on development of minerals other than oil and
gas. See §10.8 of this title (relating to Assignments, Releases, Reports,
Royalty Payments, Inspections, Forfeitures, and Reinstatements). The SLB is
generally satisfied with the current methods of administering these leasing-related
matters used by the GLO and believes that they would be appropriate in the
context of geothermal energy development.
New §155.48 relating to Mineral Awards and Patents, was included in
this new Subchapter because mineral awards and patents are administered differently
and carry unique responsibilities compared with other types of state lands.
This new section was included to address the relatively few mineral awards
and patents outstanding. It generally duplicates the requirements placed on
owners of mineral awards by the General Land Office. See §10.9 of this
title (relating to Mineral Awards and Patents).
New §155.49 relating to Consistency with Coastal Management Program,
was included to alert permittees and lessees that all actions taken pursuant
to these new rules must be consistent with the goals and policies identified
in Chapter 16 of this title (relating to Coastal Protection) and that where
conflicts arise, the provisions of Chapter 16 of this title (relating to Coastal
Management) will control.
Jeffrey Pender, Director, Energy Section, Legal Services, General Land
Office, has determined that for each year of the first five years that the
rule will be in effect there will be no additional estimated costs or reduction
in costs to the state or to local governments as a result of enforcing or
administering these proposed new rules. Mr. Pender has also determined that
depending on the level of permitting activity as a result of administering
the proposed new rules there may be a small increase in revenue to the state
for each year of the first five years that they will be in effect.
Mr. Pender also has determined that for each year of the first five years
that the proposed new rules will be in effect the public will benefit in the
form of increased income to the PSF from permit fees, rental payments, bonus
payments, and royalty payments. Additionally, the public will generally benefit
from the encouragement of the development of geothermal energy, a renewable
energy source.
Mr. Pender has also determined that the proposed new rules will not have
an adverse economic effect on small businesses or micro-businesses.
Comments on the proposed new rules may be submitted to Ms. Melinda Tracy,
Texas Register Liaison, Legal Services, General Land Office. P.O. Box 12873,
Austin, Texas 78711-2873 no later than 30 days from the date that these proposed
rules are published in the Texas Register.
The new rules are proposed under authority granted to the SLB
under Texas Natural Resources Code, §§141.073, 141.071, 32.062 (b),
and 32.205. The SLB interprets §141.073 as authorizing the Board to adopt
rules relating to the exploration, development, and production of geothermal
energy and associated resources as the Board determines to be in the best
interest of the state. The SLB interprets §141.071 and §32.062(b)
as authorizing the Board to promulgate rules concerning permits and fees for
the exploration, development, and production of geothermal energy and associated
resources. The SLB interprets §32.205 as additional authority for establishing,
by rule, permit/leasing procedures and reasonable fees necessary to administer
a program for the exploration, development, and production of geothermal energy
and associated resources.
No other statutes, articles, or codes are affected by the proposed new
rules.
§155.40.Definitions; Exploration and Development Guide.
(a)
Definitions. The following words and terms, when used in
this subchapter, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
commissioner -The commissioner of the General Land Office.
(2)
GLO-The General Land Office.
(3)
land trade lands--Lands, the surface of which have been
sold or traded with both mineral rights and leasing rights retained by the
state.
(4)
person--Any individual, partnership, corporation, association,
or other legal entity.
(5)
PSF--The Permanent School Fund.
(6)
Relinquishment Act lands--Any public free school or asylum
lands, whether surveyed or unsurveyed, sold with a mineral classification
or reservation between September 1, 1895, and August 21, 1931. For the purposes
of this chapter and for convenience, the term "Relinquishment Act lands" shall
encompass any other lands, including vacancy lands, patented with all minerals
reserved to the state and expressly made subject to the leasing terms and
procedures governing Relinquishment Act lands.
(7)
Relinquishment Act leases--Leases of Relinquishment Act
land issued for the development of geothermal energy and related resources
pursuant to Texas Natural Resources Code, Chapter 141.
(8)
RRC--The Texas Railroad Commission.
(9)
SLB --The School Land Board.
(10)
TDCJ--The Texas Department of Criminal Justice.
(11)
TPWD--The Texas Parks and Wildlife Department.
(b)
Exploration and development guide. For exploration and
development for oil and gas, see Chapter 9 of this title (relating to Exploration
and Leasing of State Oil and Gas). For exploration and development for minerals
other than oil and gas, see Chapter 10 of this title (relating to Exploration
and Development of State Minerals Other Than Oil and Gas). Geothermal Energy
and related resources are explored for and leased in the following ways, depending
upon the type of land.
(1)
PSF lands: upland, submerged, and state-owned riverbeds
and channels. Under prospect permits and leases issued by the commissioner
and SLB or by sealed bid. See the Texas Natural Resources Code, Chapter 141,
Subchapter C; §155.41 of this title (relating to Prospect Permits on
State Lands); §155.42 of this title (relating to Mining Leases on Properties
Subject to Prospect); and §155.43 of this title (relating to Exploration
and Mining Leases for Minerals Subject to Sealed Bid).
(2)
Relinquishment Act lands: Leased by surface owner as agent
for the state. See the Texas Natural Resources Code, Chapter 53, Subchapter
C; Chapter 141, Subchapter C; and §155.44 of this title (relating to
Mining Leases on Relinquishment Act Lands).
(3)
Land trade lands: Under prospect permits and/or leases
issued by the commissioner and SLB. See the Texas Natural Resources Code,
Chapter 53, Subchapter B; Chapter 141, Subchapter C; §155.41 of this
title (relating to Prospect Permits on State Lands) and §155.42 of this
title (relating to Mining Leases on Properties Subject to Prospect).
§155.41.Prospect Permits on State Lands.
(a)
Lands subject to prospecting. See §155.40 of this
title (relating to Definitions; Exploration and Development Guide) to determine
which lands are subject to prospect permit procedures. Generally, PSF fee
lands and land trade lands are subject to prospecting under this subchapter.
(b)
Application requirements and procedures.
(1)
Any person, firm, or corporation desiring to apply for
a prospect permit shall make written application upon the form prescribed
and furnished by the GLO. The application to prospect shall include:
(A)
A description of the tract of land which identifies it
by the section number, part of section or survey to be prospected, township
number, and/or certificate number, if applicable, survey name, block number,
number of acres to be prospected, and county or counties in which the land
lies and, if land trade lands, the name and address of surface owner of record
in the tax assessor's office; and
(B)
The name, address, phone number, and taxpayer ID number
of the applicant. If the applicant is a corporation, the corporate name, address,
phone number, taxpayer ID number, the name of the officer authorized to execute
applications for permits and leases, and written evidence confirming that
it is not delinquent in paying its franchise taxes.
(2)
The application to prospect may be for a part of a section
if the part is described by field notes of record in the GLO or if the part
can accurately be described as a part of the section such as the NE/4.
(3)
The application to prospect shall be accompanied by the
filing fee prescribed by §1.3 of this title (relating to Fees) and, except
as otherwise provided in §155.44 of this title (relating to Mining Leases
on Relinquishment Act Lands), a prospecting fee payment of $1.00 per acre.
(4)
Within 10 days of receipt of an application for permit
on lands whose surface is owned or leased by TPWD or is subject to a conservation
easement in favor of TPWD, the GLO shall notify the executive director of
the TPWD that an application for permit has been received.
(5)
Permits or immediate leases issued under §155.42(b)(1)
of this title (relating to Mining Leases on Properties Subject to Prospect)
will be issued on the basis of the order in which applications to prospect
are received. An application will be determined to be received on the date
and time receipt is acknowledged by the mailroom staff of the GLO.
(6)
If an application to prospect is received for a tract of
land encumbered by a previously received application or by a valid prospect
permit, the application will be rejected and the applicant will be notified
and all monies tendered will be refunded upon request.
(7)
An applicant may request that the application to prospect
be withdrawn. If the request is received prior to processing of the prospect
permit, all monies tendered will be refunded.
(8)
An applicant may be requested to supplement the application
with information in order that the GLO may determine whether prospecting will
be conducted in good faith and in an orderly and environmentally responsible
manner.
(c)
Prospect permit issuance and requirements.
(1)
After the application requirements have been satisfied
and the commissioner has determined that mineral development is in the best
interest of the state, a prospect permit will be issued on a form prescribed
and furnished by the GLO.
(2)
The prospect permit will be for a term of one year from
the date of application.
(3)
On the same day a permit is issued under this section on
land whose surface is owned or leased by TPWD or is subject to a conservation
easement in favor of TPWD, the GLO will notify TPWD of the issuance of the
permit. The permit issued on such land will state that the surface of such
land is owned or leased by TPWD or is subject to a conservation easement in
favor of TPWD.
(4)
On land trade lands, the GLO will notify the surface owner
that a permit has been issued if the surface owner requests such notice in
writing by furnishing the GLO with a current mailing address and a legal description
of each tract on which he desires such notice. Notice will also be sent to
the surface owner at the address supplied on the application form. Failure
to receive notice will not affect the validity of a permit issued under this
section.
(d)
Prospect permit renewal.
(1)
Permittee may request a renewal of a permit by tendering
the appropriate prospecting fee payment and filing fee before the expiration
date of the current permit. Prospect permit renewals, if granted, will be
issued on a form prescribed and furnished by the GLO and shall extend the
term of the permit for one year from the expiration date.
(2)
Subject to the discretion of the commissioner, a prospect
permit may be renewed up to and including four times, allowing the holder
to retain the permit for five consecutive years from the date of issuance
of the original prospect permit. At the time a permittee requests renewal
of a permit, a determination of whether the permittee has exhibited good faith
in prospecting and whether the permittee has complied with all SLB rules and
regulations will be considered in the decision to grant or deny a renewal.
(3)
If the holder of a prospect permit allows the permit to
expire without filing for renewal, a new application must be submitted. Priority
of competing applications is governed by subsection (b)(5) of this section.
(e)
Assignments and releases. Prospect permits may be assigned
or released in accordance with §155.47 of this title (relating to Assignments,
Releases, Reports, Royalty Payments, Inspections, Forfeitures, and Reinstatements).
The assignment or release must be filed with GLO and must be accompanied by
the filing fee prescribed by §1.3 of this title (relating to Fees).
(f)
Reports and inspections.
(1)
Permittee must comply with all requirements of §155.46
of this title (relating to Conduct of Exploration and Mining Operations) and §155.47
of this title (relating to Assignments, Releases, Reports, Royalty Payments,
Inspections, Forfeitures, and Reinstatements).
(2)
All prospecting operations shall be subject at any time
to inspection by the commissioner or an authorized representative. Information
or data pertaining to prospecting operations shall be furnished to the commissioner
or an authorized representative upon request.
§155.42.Mining Leases on Properties Subject to Prospect.
(a)
Lands subject to lease. Those tracts of land subject to
prospect permit are subject to lease under this section. See §155.40
of this title (relating to Definitions; Exploration and Development Guide).
(b)
Lease application requirements and procedures.
(1)
In an application for prospect permit on a state tract,
an applicant may indicate that geothermal energy and related resources are
located on the state tract and request an immediate issuance of a lease on
that tract. A lease may be issued to the applicant in lieu of a prospect permit
if the commissioner determines that geothermal energy and related resources
are located on the state tract, if applicant's application for prospect permit
was received first under §155.41(b)(5) of this title (relating to Prospect
Permits on State Fee Lands), and if the SLB approves the application.
(2)
At any time during the effective period of a prospect permit,
the permittee may submit an application to lease the area covered by the prospect
permit or a designated portion thereof.
(3)
Application to lease shall include:
(A)
An identification of the applicant's prospect permit(s);
(B)
The date of issuance of the prospect permit(s);
(C)
A description of the tract(s) of land which identifies
the area to be leased by section number, part of the section or survey to
be leased, block number, township number, and/or certificate number, if applicable,
survey name, number of acres contained in the section, and county or counties
in which the land lies and, if land trade lands, the name and address of surface
owner of record in the tax assessor's office;
(D)
The name, address, phone number, and taxpayer ID number
of a non-corporate applicant;
(E)
The corporate name, phone number, taxpayer ID number, address,
the name of the officer authorized to execute permits and leases, and written
evidence confirming that a corporate applicant is not delinquent in paying
its franchise taxes;
(F)
Statement of the applicant's proposed lease terms; and
(G)
Field notes prepared by the county surveyor or a licensed
state land surveyor describing the area to be leased, if such area is less
than that covered by the prospect permit and cannot be accurately described
as a part of the section, such as NE/4.
(4)
The TPWD may review the leasing of lands whose surface
is owned or leased by TPWD or is subject to a conservation easement in favor
of TPWD, but whose minerals are subject to lease under this section. Within
10 days of receipt of an application to lease on such lands, the GLO shall
notify the executive director of TPWD.
(5)
The application to lease shall be accompanied by a filing
fee prescribed by §1.3 of this title (relating to Fees) and the proposed
lease bonus payment that shall not be less than $2.00 per acre.
(6)
In order to fully evaluate the application to lease, GLO
staff may request that an applicant submit additional information, including
information about the proposed mining operation.
(7)
Each application to lease shall be subject to the approval
of SLB in order to determine whether the lease is in the best interest of
the state by considering the following:
(A)
Whether the proposed lease terms and conditions are in
conformity with the Texas Natural Resources Code, §141 et seq., and this
subchapter;
(B)
Whether the proposed lease terms are comparable to the
best leases in the area which cover the same mineral or minerals;
(C)
Whether the proposed lease terms are compatible with other
valuable uses of the leased premises; and
(D)
Whether the lease terms adequately compensate the PSF for
the loss of other valuable uses of the leased premises.
(8)
If the SLB rejects an application to lease, the applicant
will be notified and will be advised of the specific reasons for the denial.
(c)
Issuance of mining lease.
(1)
Leases will be upon a form prescribed and furnished by
the GLO and will include those provisions the commissioner considers necessary
for the protection of the interests of the state.
(2)
Upon approval of an application to lease, a lease will
be prepared with the appropriate terms and conditions, signed by the commissioner,
affixed with the seal of the GLO, and delivered to the lessee.
(3)
On the same day that a lease is issued under this section
on land whose surface is owned or leased by TPWD or is subject to a conservation
easement in favor of TPWD, the GLO shall notify TPWD of the issuance of the
lease. Such lease shall state that the surface of such land is owned or leased
by TPWD or is subject to a conservation easement in favor of TPWD.
(4)
On land trade lands, the GLO will notify the surface owner
that a lease has been issued if the surface owner requests such notice in
writing by furnishing the GLO with a current mailing address and a legal description
of each tract on which he desires such notice. Notice will also be sent to
the surface owner at the address supplied on the application form. Failure
to receive notice will not affect the validity of a lease issued under this
section.
(5)
Leases shall be recorded in each county in which the state's
property is located. After recordation, lessee shall obtain a certified copy
of the recorded lease from the county clerk. Lessee shall send such certified
copies to the GLO within 90 days of the date of recordation.
(d)
Minimum terms and conditions.
(1)
The term of a mining lease for geothermal energy and related
resources shall be determined by the SLB on a case by case basis.
(2)
The lease bonus shall be not less than $2.00 per acre.
(3)
The annual rental payments thereafter during the primary
term shall be not less than $1.00 per acre.
(4)
The royalty shall be not less than one-sixteenth of the
value of the minerals produced under said lease.
(5)
The lease may provide for both an advance royalty provision
and a shut-in royalty. The shut-in royalty provision shall allow the lease
to be maintained in one-year increments for a total of five consecutive years.
(6)
Upland leases must include a provision requiring the payment
of damages for the use of the surface in prospecting for, exploring, developing,
or producing the leased minerals. The amount of damages for use of the surface
will be determined through negotiations with GLO staff, approved by the SLB,
and incorporated in each lease form.
(7)
Lessee shall conduct all mining operations in compliance
with state and federal laws and §155.46 of this title (relating to Conduct
of Exploration and Mining Operations).
(e)
Assignments, releases, reports, inspections, forfeiture,
and reinstatement. Leases issued under this section are subject to all general
provisions covered in §155.47 of this title (relating to Assignments,
Releases, Reports, Royalty Payments, Inspections, Forfeitures, and Reinstatements).
§155.43.Exploration and Mining Leases for Minerals Subject to Sealed Bid.
(a)
Lands subject to lease. PSF lands are subject to lease
by sealed bid for the development of geothermal energy and related resources.
See §155.40 of this title (relating to Definitions; Exploration and Development
Guide) for lands that are subject to lease under these sealed bid procedures.
(b)
Nomination, advertising, and award of tracts.
(1)
Nominations, setting of terms and conditions, evaluation
of sealed bids, advertising, and awards are administered by the SLB under
Chapter 151 of this title (relating to Operations of the School Land Board).
(2)
On land trade lands, the GLO will notify the surface owner
that a lease has been issued if the surface owner requests such notice in
writing by furnishing the GLO with a current mailing address and a legal description
of each tract on which he desires such notice. Failure to receive notice will
not affect the validity of a lease issued under this section.
(3)
TPWD may review the leasing of lands whose minerals are
subject to lease under this section but whose surface is owned or leased by
TPWD or is subject to a conservation easement in favor of TPWD. If such lands
are nominated for lease, the GLO shall notify the executive director of TPWD
of such nomination. On the same day as a lease is issued on such lands, the
TPWD will be notified of the issuance of the lease. Such lease will state
that the surface of such land is owned or leased by TPWD or is subject to
a conservation easement in favor of TPWD.
(c)
Minimum terms and conditions.
(1)
Terms and conditions of leases will be set by the SLB for
each lease sale and will be included in the notice for bids.
(2)
The royalty reserved to the state shall be not less than
one-sixteenth of the value of the geothermal energy and related resources
that may be produced.
(3)
Upland leases issued under this section must include a
provision requiring the payment of damages for the use of the surface in prospecting
for, exploring, developing, or producing the leased minerals. The amount of
damages for use of the surface will be included in the notice for bids and
incorporated in each lease form.
(4)
Lessee shall conduct all mining operations and reporting
requirements in compliance with state and federal laws and §155.46 of
this title (relating to Conduct of Exploration and Mining Operations).
(d)
Assignments, releases, reports, inspections, forfeitures,
and reinstatements. Leases issued under this section are subject to all general
provisions covered in §155.47 of this title (relating to Assignments,
Releases, Reports, Royalty Payments, Inspections, Forfeitures, and Reinstatements).
§155.44.Mining Leases on Relinquishment Act Lands.
(a)
Lands subject to lease.
(1)
Any survey or portion of a survey of Relinquishment Act
land, as this term is uniquely defined in §155.40(a)(6) of this title
(relating to Definitions; Exploration and Development Guide), is subject to
lease under this section.
(2)
All minerals are subject to lease by the surface owner
as agent for the state. For purposes of this section, minerals include all
substances commonly classified as minerals including geothermal energy and
related resources even though they may be extracted by methods that destroy
the surface. Minerals other than oil and gas may be leased together or separately.
Oil and gas must be leased under the terms of Chapter 9 of this title (relating
to Exploration and Leasing of State Oil and Gas).
(b)
Authority and duties of agent. Authority and duties of
the owner of the soil are described in Texas Natural Resources Code §53.074
(Authority and Duties of Agent). The owner of the soil may lease Relinquishment
Act land pursuant to Texas Natural Resources Code §53.081.
(c)
Lease negotiation procedure.
(1)
The surface owner is authorized to act as the state's leasing
agent with any person, firm, or corporation desiring to develop PSF lands
for geothermal energy and related resources.
(2)
The lease shall be negotiated by the surface owner and
the prospective lessee on a form prepared and furnished by the GLO, which
will incorporate the terms and conditions prescribed by the SLB.
(3)
The proposed lease shall be submitted to the GLO for approval
prior to recording the lease in the county records.
(d)
Approval and filing of lease.
(1)
The SLB may reject or refuse for filing any lease deemed
not in the best interest of the state.
(2)
Upon rejection of a proposed lease by the SLB, the prospective
lessee will be given written notice which will specify the reasons for the
rejection and any changes, deletions, or additions which would render the
lease acceptable.
(3)
Upon receipt of approval of the lease, the prospective
lessee shall finalize the lease and have the lease recorded in the county
or counties in which the land lies and shall file a certified copy of the
lease with the GLO. Leases are not effective until approved and filed in the
GLO.
(4)
The state's share of the approved bonus payment and the
filing fee prescribed by §1.3 of this title (relating to Fees) shall
be submitted along with the certified copy of the lease. Any lease is void
unless it recites the actual consideration paid or promised for the lease.
(5)
A surface owner, as the state's agent, owes the state a
fiduciary duty. This fiduciary responsibility must be of paramount concern
when a surface owner enters lease negotiations.
(e)
Lease terms and conditions.
(1)
Lessee shall pay bonus, rentals, royalties, and other lease
considerations as follows.
(A)
On leases executed before September 1, 1987, lessee shall
pay to the state 60% of all bonuses, rentals, and royalties and other considerations
agreed upon. Lessee shall pay to the surface owner 40% of all consideration
agreed upon.
(B)
On leases executed on or after September 1, 1987, lessee
shall pay to the state 80% of all consideration agreed upon. Lessee shall
pay to the surface owner 20% of all consideration agreed upon.
(2)
In the event of production, the state must receive not
less than one-sixteenth of the value of the geothermal energy and related
resources produced. The combined royalty payable to the surface owner and
the state will be expressly provided for in the lease negotiated by the surface
owner.
(3)
All royalties and other payments accruing to the state
shall be paid to the state through the commissioner at Austin, and shall be
deposited to the PSF.
(f)
Reports, assignments, releases, inspection, forfeitures,
and reinstatements. Leases issued under this section will be governed by all
general provisions found in §155.46 of this title (relating to Conduct
of Exploration and Mining Operations) and §155.47 of this title (relating
to Assignments, Releases, Reports, Royalty Payments, Inspections, Forfeitures,
and Reinstatements). However, a lease issued under this section cannot be
assigned to the surface owner who executed the lease.
(g)
Leasing procedure when agent cannot be located. If a potential
lessee cannot locate a surface owner, such lessee can follow the procedures
set out in the Texas Natural Resources Code, §52.186. Once these procedures
have been followed, Relinquishment Act land will be leased for minerals other
than oil and gas through the prospect permit and leasing procedures found
in §155.41 of this title (relating to Prospect Permits on State Lands)
and §155.42 of this title (relating to Mining Leases on Properties Subject
to Prospect). The state will receive all the consideration paid under such
a lease.
(h)
Leasing procedure when agent's rights are forfeited.
(1)
When a surface owner's agency rights have been forfeited,
the land shall be subject to lease for minerals other than oil and gas under
the procedures set out in §155.40 of this title (relating to Definitions;
Exploration and Development Guide) and §155.41 of this title (relating
to Prospect Permits on State Lands).
(2)
When a new lease is executed under subsection (h)(1) of
this section, the surface owner shall not be entitled to any share of the
revenue generated by such lease, but the surface owner's agency rights will
be ipso facto reinstated upon expiration of the new lease.
§155.45.Unit Agreements for Geothermal Energy and Related Resources.
(a)
Application for production agreement. A proposed unit agreement
for geothermal energy and related resources shall set out:
(1)
The total acreage in the unit, the number of state acres
in the unit, and number of privately owned acres in the unit;
(2)
A listing of the leases included within the proposed unit
and recording information for such leases in the public records;
(3)
A plat outlining the entire unit and showing in red the
state acreage included in the unit;
(4)
How production is to be allocated to each lease; and
(5)
For each state lease, the state's royalty interest and
any costs or deductions allowed against that interest.
(b)
Approval of unit agreement.
(1)
Any unit agreement that proposes to commit royalty interests
in PSF lands or state agency lands shall be submitted to the GLO pooling committee
for examination, investigation, and presentation to the SLB or the appropriate
board for lease.
(2)
Upon determination by the SLB that the unit agreement applied
for is in the best interests of the state, the unitization will be approved.
(3)
Any unit agreement that covers lands leased under §155.44
of this title (relating to Mining Leases on Relinquishment Act Lands) shall
be executed by the surface owner before consideration by the SLB. Any such
unit agreement must be approved by the SLB under this section before it is
effective.
(4)
Any unit agreement that proposes to commit royalty interests
in state lands or areas other than PSF lands must be approved by the appropriate
board for lease and must be found to be in the best interests of the state.
(c)
Provisions of unit agreement. A unit agreement may contain
the following provisions:
(1)
That operations incident to the drilling of a well upon
any portion of the unit shall be deemed for all purposes to be the conduct
of such operations upon each tract in the unit;
(2)
That the production allocated by the agreement to each
tract included in a unit shall, when produced, be deemed for all purposes
to have been produced from such tract;
(3)
That the state's royalty interest shall be paid only on
that portion of the production from the unit which is allocated to the tract
in accordance with the agreement;
(4)
That each lease included in the unit shall remain in effect
so long as the agreement remains in effect, and that upon termination of the
agreement each lease shall thereafter continue in effect under its own terms
and provisions;
(5)
Such other terms, conditions, and provisions as may be
deemed to be in the best interest of the state.
(d)
Rule of construction. No term, condition, or provision
of an approved unit agreement shall be read to burden an interest of the state
with any cost, liability, or be read to otherwise adversely impact upon the
state's interest unless such burden or adverse impact was expressly raised
before and approved by the SLB or appropriate board for lease.
§155.46.Conduct of Exploration and Mining Operations.
(a)
Purpose and scope.
(1)
It is the intent of this section to set minimum standards
of conduct for lessees on state properties leased or permitted under this
subchapter with respect to exploration and development operations for resources
associated with geothermal energy that are not regulated by the RRC, Texas
Natural Resources Conservation Commission, the United States Environmental
Protection Agency, their successor agencies, or other appropriate authorities.
(A)
The GLO may include specific and express restrictions and
standards concerning exploration and development in each lease and in each
plan of operations it approves;
(B)
If the minimum standards of conduct in this section conflict
with express provisions in a lease form or in an approved plan of operations,
then the express provisions will control; and
(C)
The commissioner may grant, in accordance with the law,
written exceptions to the minimum standards and procedural rules found in
this section if the commissioner makes a written determination that such exceptions
are in the best interests of the PSF.
(2)
This section shall not apply to leases executed prior to
the date of acceptance of these rules unless the lease specifically requires
a plan of operations. Holders of active permits shall be required to comply
with the provisions of this section regardless of the date of issue.
(3)
Operations for geothermal energy are regulated by the RRC.
However, as a mineral owner, the GLO may need information that is not required
by or submitted to the RRC. Consequently, the GLO reserves the right to request
additional information on operations for the exploration and development of
geothermal energy and related resources. If additional information is needed,
the GLO will notify the lessee or permittee in writing.
(4)
This section references statutes and the rules and regulations
of regulatory agencies that govern mineral development on state lands. By
such references the SLB does not intend to usurp authority or substitute its
judgment for that of the other agencies. These references are included to
put permittees and lessees on notice that state lands are not exempt from
such regulation, including all relevant environmental safeguards.
(5)
If any provision of this section conflicts with state or
federal statutes, regulations, or rules of the RRC, Texas Natural Resources
Conservation Commission, or the United States Environmental Protection Agency,
their successor agencies, or other appropriate authorities, then such other
statutes, regulations, or rules shall control.
(b)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Lease--A mining lease issued under §155.42 of this
title (relating to Mining Leases on Properties Subject to Prospect), §155.43
of this title (relating to Exploration and Mining Leases for Minerals Subject
to Sealed Bid), or §155.44 of this title (relating to Mining Leases on
Relinquishment Act Lands).
(2)
Lessee--The initial holder of a valid lease or a successor,
assignee, devisee, or heir who acquires any right of the initial holder.
(3)
Operations--Any activities other than reconnaissance activities,
associated with mineral exploration or development that require substantially
disturbing or destroying the surface or subsurface of the leased or permitted
areas. Operations shall include drilling test holes or core holes; excavating
test pits; moving heavy machinery over the leased or permitted area; sinking
shafts; and extracting, storing, processing, and shipping minerals.
(4)
Operator--A permittee or lessee or any employee, agent,
servant, contractor, or subcontractor of either a permittee or lessee.
(5)
Permit--A prospect permit issued by the commissioner under §155.41
of this title (relating to Prospect Permits on State Fee Lands).
(6)
Permittee--The initial holder of a valid prospect permit
or a successor, assignee, devisee, or heir who acquires any right of a permittee.
(7)
Premises--Any state property subject to a lease or to a
permit.
(8)
Reconnaissance activities--Hand sampling, geologic mapping,
surveying, and other activities which do not significantly impact the surface
and which are necessary to gather data to formulate the plan of operations.
(9)
TPWD lands--(As used in this section only) premises whose
surface is owned or leased by TPWD or is subject to a conservation easement
in favor of TPWD.
(c)
Overview of exploration and mining procedures.
(1)
Reconnaissance activities. After a permit or lease has
been granted for exploration and development of the premises, an operator
may begin reconnaissance activities. The permits or leases may contain rules
and restrictions on reconnaissance activities. In conducting reconnaissance
activities on state premises, an operator shall also comply with the rules
found in subsection (f) of this section. In conducting reconnaissance activities
on TPWD lands, an operator shall comply with additional rules found in subsection
(g) of this section.
(2)
Operations.
(A)
Before an operator may commence operations on any premises,
the permittee or lessee of those premises must submit an initial plan of operations
to the GLO. Information required to be included in an initial plan will be
controlled by the type of state property involved. If operations extend over
several state properties, permittee or lessee may submit one unified plan
of operations. No operations may commence until such a plan of operations
has been filed with the GLO in accordance with subsection (d) of this section
and approved by the GLO in accordance with subsection (e) of this section.
(B)
The initial plan of operations shall include all reasonably
foreseeable exploration, extraction, mining, and processing activities. Whenever
the permittee or lessee wishes to undertake activities beyond the scope of
the initial plan of operations, a supplemental plan must be filed with the
GLO. Whenever the permittee or lessee wishes to change any activity found
in an approved plan, an amended plan must be filed with the GLO. An amended
or supplemental plan of operation shall have the same requirements and be
subject to the same approval process as the initial plan.
(C)
Operations must be conducted in accordance with an approved
plan of operations and also with the rules found in subsection (f) of this
section.
(D)
Failure to submit a plan before conducting operations,
to submit a supplemental or amended plan before conducting additional or different
operations, or to conduct operations on the premises in compliance with the
approved plan of operations or these rules shall subject the permit or lease
to forfeiture.
(d)
Content of plan of operations.
(1)
For state property permitted or leased under this chapter,
the plan of operations must include the following:
(A)
The name and legal mailing address of the permittee or
lessee and of any operators who will be on the premises;
(B)
A 7 1/2 minute USGS topographic map showing:
(i)
Information sufficient to locate the proposed areas of
operations on the ground;
(ii)
Existing and/or proposed roads or access routes to be
used in connection with the operations; and
(iii)
The approximate location and size of any other areas
where surface resources or improvements might be disturbed;
(C)
Information sufficient to describe or identify:
(i)
The precise nature and extent of all proposed operations
including all prospecting/exploration activities and all mining/processing
activities; and
(ii)
The period during which each proposed activity will take
place;
(D)
If the permittee or lessee proposes to commingle minerals
produced under the permit or lease with privately-owned minerals or with other
state-owned minerals:
(i)
A specification of the proposed manner of commingling;
and
(ii)
A comparison of the quality of the geothermal energy and
related resources produced under the lease or permit to the quality of the
geothermal energy and related resources with which it will be commingled;
(E)
If subsurface excavation is planned, a statement of what
possible effect such excavations could have on water, as defined by Texas
Civil Statutes, Article 8866, §1(11) (Vernon, 1989).
(2)
For state property permitted or leased under this subchapter,
except property leased under §155.44 of this title (relating to Mining
Leases on Relinquishment Act Lands), the plan of operations must also include
the following:
(A)
Type, design, and location of existing and proposed roads
or access routes;
(B)
Transportation equipment and other heavy equipment to be
used on the premises;
(C)
Measures to be taken to protect and preserve environmental
resources;
(D)
A statement of whether operations are planned on steep
slopes that may be subject to erosion and specific plans to control erosion,
the flow of run-off water, landslides, and drainage;
(E)
A specification of what reclamation efforts will be undertaken
to minimize the impact of operations on the surface, including vegetation,
topsoil, wildlife habitats, caused by operations.
(3)
For TPWD lands, the plan of operations must also include
the following:
(A)
A statement of whether any of the drilling muds and fluids
proposed to be used are toxic to fish or wildlife;
(B)
A listing of all known natural historic and prehistoric
resources, archeological resources, and biological resources (including vegetation,
fish, and animal life, especially endangered plants and wildlife) found on
the premises; and
(C)
Specific plans to remove toxic materials, and to rehabilitate
fisheries, wildlife habitats, and vegetation.
(e)
Requirements for approval of plan of operations.
(1)
The proposed plan of operation shall be submitted to the
GLO, which shall promptly acknowledge its receipt to the permittee or lessee.
GLO staff will analyze the proposal and, if necessary, inspect the premises.
In order to evaluate the plan, the GLO staff may require additional information
from the lessee or permittee. Within 90 days after the GLO receives both a
plan and any requested additional information, the GLO shall:
(A)
Notify permittee or lessee that the plan of operations
has been approved; or
(B)
Notify the permittee or lessee of the necessary additions
and/or changes to the plan which are required for approval.
(2)
The GLO may require a permittee or lessee to furnish a
bond as a condition to approval of a plan of operations but only if the lease
or permit has reserved this right to the GLO. The performance bond shall be
in an amount to be determined by and forfeitable to the GLO as a guarantee
for the strict performance of reclamation obligations found in the plan of
operations. In determining the amount of the bond, consideration shall be
given to the estimated cost of reclaiming the land to the condition it would
have been in had the plan of operations or the regulations been strictly followed.
(3)
If subsurface excavations are involved, the commissioner
will issue a finding in the approved plan of operations as to whether such
excavations will affect water as defined by Texas Civil Statutes, Article
8866, §1(11) (Vernon, 1989).
(4)
In evaluating all plans of operations, the GLO will consider
the following factors:
(A)
The general economics of the operations;
(B)
The reasonableness and effectiveness of the plans to develop
the state's geothermal energy and related resources;
(C)
The prevailing industry standards; and
(D)
The methods and standards employed by similar operations
in the same area as the state property.
(5)
In evaluating all plan of operations except those on leases
issued under §155.44 of this title (relating to Mining Leases on Relinquishment
Act Lands) the GLO will also consider:
(A)
The reasonableness of the provisions made for surface resource
protection; and
(B)
The value and uses of the surface of the state property.
(6)
In evaluating plan of operations covering lands leased
under §155.44 of this title (relating to Mining Leases on Relinquishment
Act Lands), the GLO will not evaluate the impact of operations on the surface
but it will evaluate such plans based upon its interests as a mineral owner.
(7)
In evaluating all plan of operations covering TPWD lands,
the GLO will also consider:
(A)
Whether sites and roadways should be adjusted and realigned
to avoid significant disturbance of biological, archeological, or aesthetic
features;
(B)
Whether the methods for disposing of vegetation which must
be cleared and for disposing of topsoil are adequate;
(C)
Whether proposed drilling muds and fluids should be changed
to require use of those muds and fluids that are not toxic to fish or wildlife;
(D)
Whether permittee or lessee should be required to take
action to mitigate any unavoidable impacts to fish and wildlife resources
and habitat caused by operations;
(E)
Whether slope stabilization should be required during operations;
(F)
Whether security fencing to protect the public from hazardous
sites or conditions should be required;
(G)
Whether full restoration, including spreading of topsoil
stockpile, of all areas disturbed during permitted activity to pre-operation
elevations, contours, and substrata should be required;
(H)
Whether steep slopes that are subject to damaging erosion
should be modified to facilitate re-vegetation and prevent erosion;
(I)
Whether replanting of disturbed native vegetation should
be required; and
(J)
Whether seeding and mulching plans should be modified so
that different materials are used or applied at different rates or times.
(f)
Minimum standards of conduct on state premises.
(1)
These minimum standards of conduct will apply whenever
a lessee, permittee, or other operator is on state premises even if only reconnaissance
activities are taking place.
(2)
All activities shall be conducted so as to minimize adverse
environmental impact on surface resources.
(3)
Operator shall comply with applicable federal and state
air quality standards and emission permit requirements.
(4)
Operator shall comply with applicable federal and state
water quality standards and waste water discharge permit requirements and
federal permitting requirements applicable to disturbance of wetlands, watercourses,
and flood plains. Operator shall in its construction activities, to the greatest
extent possible, avoid disturbance within natural water courses and their
immediate flood plains. Operator shall use only so much of underground water
as may be reasonably necessary. If water-bearing strata or underground aquifers
are encountered during drilling activities, shaft construction, or subsurface
excavation, measures shall be taken by the operator to prevent pollution of
such underground water sources. Operator shall comply with all applicable
Texas Natural Resources Conservation Commission and RRC rules for the protection
of usable quality water within the premises.
(5)
Operator shall comply with applicable federal and state
standards for the disposal and treatment of all solid wastes. All garbage,
refuse, or trash shall either be removed from premises or disposed of, or
treated so as to minimize, so far as practicable, its impact on the environment
and surface resources. All waste rock, deleterious materials or substances
and other waste produced by operations shall be deployed, arranged, disposed
of, or treated in accordance with federal and state requirements and so as
to minimize adverse impact upon the environment and surface resources.
(6)
Operator shall comply with the National Historical Preservation
Act of 1966, 16 United States Code §470 (1985 and Supplement 1988) and
the Antiquities Code of Texas, Title 9, Chapter 191, Texas Natural Resources
Code, where applicable.
(7)
Operator shall comply with the United States Endangered
Species Act of 1973, 16 United States Code §§1531-1543 (1985 and
Supplement 1988) and the Texas Parks and Wildlife Code, Chapters 67, 68, and
88, which relate to endangered plants or wildlife and protected non-game.
(8)
Preservation of existing vegetation shall be maximized
at all times.
(9)
These provisions concerning roads do not apply to premises
leased under §155.44 of this title (relating to Mining leases on Relinquishment
Act Lands). Operator shall, if possible, use existing roadways for access
to and across the premises. Operator must justify construction of new roads
by demonstrating that there is no feasible and prudent alternative. Operator
shall construct and maintain all roads so as to assure adequate drainage and
to minimize damage to soil, water, and other natural resources. Roads utilized
shall be left in as good a condition as they were prior to use by operator.
(10)
During all operations the operator shall maintain structures,
equipment, and other facilities in a safe, neat, and workmanlike manner. Hazardous
or dangerous sites or conditions resulting from operations shall be fenced,
marked by signs, or otherwise identified to protect the public in accordance
with all state and federal laws and regulations.
(11)
Unless the RRC or other duly authorized agency regulates
reclamation efforts or unless a written notification to the GLO under subsection
(h) of this section states otherwise, permittee or lessee shall reclaim the
surface as specified in the plan of operations within six months of the expiration
of the permit or lease.
(g)
Minimum standards of conduct on TPWD lands.
(1)
Operators on premises whose surface is owned, or leased
by TPWD or is subject to a conservation easement in favor of TPWD are also
subject to the additional regulations found in this subsection.
(A)
Operator is subject to all TPWD rules in effect for the
park or wildlife management area on which operations are conducted to the
extent that the park or management area rules are not inconsistent with rules
or regulations found in this section or with the reasonable development of
PSF minerals.
(B)
No operations shall be commenced without notification of
the park superintendent or area manager 48 hours in advance of entering TPWD
premises. Permittee or lessee shall allow only those operators that are necessary
for operations to access the TPWD premises.
(C)
No firearms or archery equipment shall be permitted at
any time on TPWD lands by any operator. Permittee or lessee shall be liable
for any taking of fish, wildlife, plants, or archeological resources by any
operator.
(D)
Unless an approved plan of operations provides otherwise,
no materials required for construction of roads shall be taken or borrowed
from TPWD lands. There shall be no vehicular travel off existing roads during
wet weather. Where travel is permitted by drilling buggies and water wagons,
such vehicles shall use high flotation tires.
(E)
Operator shall permanently stake limits of proposed access
roads on the ground a minimum of 30 days prior to and throughout actual operations
or other activities. Each access road is subject to review and approval by
the GLO. The area disturbed during construction activity shall be strictly
minimized. Access roads shall not exceed 30 feet in width and operator shall
use existing roads whenever possible.
(F)
The following rules apply to new roads constructed by or
improved and used by operator unless otherwise requested by TPWD and approved
by the GLO in a plan of operations.
(i)
Roads no longer needed for operations shall be closed to
normal vehicular traffic.
(ii)
Bridges and culverts shall be removed.
(iii)
Cross-drains, dips, or water bars shall be constructed.
(iv)
The road surface shall be shaped to as near a natural
contour as practicable and be stabilized.
(G)
If a diversion between all drilling sites, pads, and all
upslope areas is required in an approved plan of operations, the diversion
shall be constructed with a flared outlet stabilized by rock or other grade
stabilization structures as necessary to prevent erosion. Drilling sites should
be sloped with a minimum grade 0.3-0.5% to drain into such diversions so the
run-off does not flow over the fill area. Sediment shall be cleaned out of
diversion and properly disposed of periodically. A temporary straw bale barrier
containing no noxious weed shall be constructed along the base of the drill
site where it follows a natural water course. A temporary bale barrier shall
be established immediately after the drill site is constructed to prevent
erosion while side slopes are being stabilized. The bale barrier must be maintained,
sediment removed and bales replaced. Sedimentation on areas adjacent to the
drill site shall be minimized. Topsoil to a maximum depth not to exceed 18
inches shall be stockpiled on the upslope edge of each drill pad and separated
from upslope run-off by a diversion, or with other erosion control as necessary.
(H)
Unless an approved plan of operation states otherwise,
no explosives shall be used within 750 feet of any building, utilities, or
water well or within 1, 000 feet of any water retention structures. All proposed
use of explosives shall be specifically described in an approved plan of operations.
(I)
Restoration of the disturbed area to approximate original
contours and revegetation with appropriate native vegetation may be required.
(J)
Operator shall, at all times, keep lands under permit or
lease, access roads, and prospect sites free of trash and litter generated
by operations. No vegetation or topsoil shall be pushed, windrowed, or abandoned
except in preparation for disposal by means approved by the GLO in the plan
of operations. Operator shall keep muds, cuttings, and all other fluids, including
all contaminants and saline fluids, in tanks or containers for removal from
the site. All drilling muds and fluids shall be water-based and nontoxic to
fish and wildlife; provided, however, that other drilling muds and fluids
may be used if, in the plan of operations, the GLO determines that there is
no prudent or feasible alternative. Soil-damaging petroleum and other chemicals
shall be hauled from the TPWD lands and disposed of lawfully. Dumping of any
such materials on TPWD lands is prohibited.
(K)
Operator shall, to the extent practicable, harmonize operations
with scenic values through such measures as the design and location of operating
facilities, including roads and other means of access, screening of operations
by native vegetation, if possible, and construction of structures and improvements
which blend with the landscape.
(L)
In addition to compliance with water quality and solid
waste disposal standards required by this section, operator shall take all
practicable measures to maintain and protect fisheries and wildlife habitat
which may be affected by the operations.
(M)
Operator shall comply with all applicable state and federal
fire laws and regulations and shall take all reasonable measures necessary
to prevent and suppress fires in the area of operations.
(2)
As soon as the GLO receives a plan of operations which
covers TPWD lands and which supplies all the data required in subsection (d)
of this section, the GLO shall mail a copy of the plan of operations to the
TPWD for review and comment.
(3)
TPWD must submit its comments, if any, to the GLO within
30 days of TPWD's receipt of a plan of operations.
(4)
Plan of operations on TPWD land may not be approved until
at least 30 days after the TPWD receives the plan of operations. When the
GLO approves a plan of operations on TPWD land, GLO will send TPWD a copy
of the approved plan on the day the plan is approved.
(h)
Completion of operations and abandonment of premises.
(1)
This subsection shall apply to all exploration and development
operations for resources associated with geothermal energy that are not regulated
by the RRC, Texas Natural Resources Conservation Commission, the United States
Environmental Protection Agency, their successor agencies, or other appropriate
authorities.
(2)
Within two weeks after all operations and all reclamation
activities addressed in the plan of operations have been completed, permittee,
or lessee shall send the GLO the following information:
(A)
Date when operations ceased;
(B)
Date when reclamation activities ceased;
(C)
Problems encountered during reclamation activities;
(D)
Success of reclamation efforts in improving the surface
condition;
(E)
Any additional reclamation activities that permittee or
lessee believes are necessary to restore or improve the surface, vegetation,
topsoil, or wildlife habitat;
(F)
Date on which any proposed additional reclamation activities,
if any, shall begin and end; and
(G)
Date on which the premises shall be ready for initial GLO
inspection.
(3)
The GLO will inspect the premises to verify that the reclamation
required in the plan of operations has been completed. If a performance bond
guaranteeing reclamation has been required in the plan of operations, it will
be returned upon completion of reclamation activities.
§155.47.Assignments, Releases, Reports, Royalty Payments, Inspections, Forfeitures, and Reinstatements.
(a)
Assignments and releases.
(1)
After obtaining written approval of the commissioner, a
lease or permit issued under this chapter, except a Relinquishment Act lease
may be assigned in quantities of not less than 40 acres. If, however, less
than 40 acres remain of the tract originally leased, then the entire remaining
acreage may be assigned. Assignments shall be recorded in each county in which
the state tract is located. Relinquishment Act leases are not subject to these
restrictions and may be assigned at any time.
(2)
After recordation, lessee or permittee shall obtain a certified
copy from the county clerk of each recorded assignment covering the state
lease or permit. Lessee or permittee shall send such certified copies to GLO
within 90 days of the date of recordation, accompanied by the filing fee prescribed
in §1.3 of this title (relating to Fees).
(3)
An assignment of any lease except a Relinquishment Act
lease is not effective until a certified copy of such assignment has been
filed with the GLO. Failure to file a certified copy of an assignment of any
lease, including a Relinquishment Act lease, shall subject the lease to forfeiture.
An assignment shall not have the effect of releasing the assignor from any
liability incurred or claim previously accrued in favor of the state.
(4)
The lessee or permittee may release the lease or permit
back to the state at any time. To release a lease or permit, a lessee or permittee
must record the release in each county where the state tract is located and
mail a certified copy of each recorded release to GLO accompanied by the filing
fee prescribed in §1.3 of this title (relating to Fees).
(5)
A release is not effective until a certified copy of the
release is filed by the GLO. A release shall not have the effect of releasing
lessee or permittee from any liability incurred or claim previously accrued
in favor of the state.
(b)
Reports and payment of royalties.
(1)
A log, sample analysis, or other information obtained from
each test drilled on the area covered by the lease or permit shall be filed
with the GLO upon request. Lessee or permittee shall furnish annually on the
anniversary date of the lease or permit a map or plat showing all activities
on the state lease or permit. In addition, an evaluation map or plat shall
be filed in the GLO within 90 days after any drilling program shall have been
completed or abandoned, and the correctness of such map shall be sworn to
by lessee or permittee or his representative. The map or plat shall show geologic
formations penetrated, the depth, thickness, presence of geothermal energy
and related resources, the water-bearing strata, the elevation and location
of all test holes, and other pertinent information.
(2)
Unless the lease provides otherwise, on or before the last
day of the month after the month when production started, the lessee shall
file a production and royalty report showing production and royalty for the
calendar month when production started. Subsequently, a production and royalty
report shall be filed before the last day of each month for production from
the preceding calendar month. Such report shall be on a form prescribed and
furnished by the GLO and shall show:
(A)
The amount of geothermal energy and related resources produced
during the preceding month;
(B)
If any geothermal energy or related resource has been sold
during the preceding month, then:
(i)
The amount of geothermal energy and related resource sold;
(ii)
The purchaser(s) and if the purchaser(s) is in any way
related to the lessee, the details of such relationship or affiliation;
(iii)
The selling price of geothermal energy and related resources
as shown by copies of gas plant receipts, sale receipts, invoices, or other
sale documents attached thereto; and
(iv)
The method and figures used by lessee to calculate the
value of each mineral sold as shown by any relevant documents, records, or
schedules;
(C)
If any geothermal energy or related resource has been used
as permitted under the terms of the lease during the preceding month, then:
(i)
The amount of such geothermal energy and related resources
used; and
(ii)
The method and figures used by lessee to calculate the
value of each as shown by any relevant documents, records, or schedules.
(3)
Unless otherwise provided by the lease, royalty payments
are to be received in the GLO on or before the last day of the month following
the month in which leased minerals are produced. However, for the purposes
of this paragraph only, "produced" shall mean actually sold or used by lessee.
Upon termination, forfeiture, or release of the lease, unpaid royalty for
any stockpiled leased minerals shall be due and payable within one month of
the effective date of said termination, forfeiture, or release.
(4)
Except when royalty is taken in-kind, and subject to subparagraphs
(A)-(F) of this paragraph, relating to electronic funds transfer, lessees
may pay royalties and other monies due by cash or check, money order, or sight
draft made payable to the commissioner. Lessees may also pay by electronic
funds transfer or in any manner that may be lawfully made to the state comptroller.
Information regarding alternative payment methods may be obtained from the
GLO Royalty Management Division. Payors are required to make payments by electronic
funds transfer in compliance with Title 34, Chapter 15 of this code in the
following circumstances:
(A)
For leases executed or amended after May 11, 1989, but
before September 1, 1991, payors that have made over $500,000 in a category
of payments, defined in subparagraph (D) of this paragraph, to the GLO during
the preceding state fiscal year shall make payments of $10,000 or more in
the current fiscal year for those leases and in that category by electronic
funds transfer.
(B)
For leases executed or amended after August 30, 1991, but
before June 9, 1995, payors that have made over $250,000 in a category of
payments, defined in subparagraph (D) of this paragraph, to the GLO during
the preceding state fiscal year shall make payments of $10,000 or more in
the current fiscal year for those leases and in that category by electronic
funds transfer.
(C)
For leases executed or amended on or after June 9, 1995,
payors that have made over $25,000 in a category of payments, defined in subparagraph
(D) of this paragraph, to the GLO during the preceding state fiscal year shall
make all payments in the current fiscal year for those leases and in that
category by electronic funds transfer.
(D)
For purposes of subparagraphs (A)-(C) of this paragraph,
each of the following is a separate category of payments:
(i)
Royalties (including shut-in and minimum royalties);
(ii)
Penalties;
(iii)
Other payments to the state agency, excluding interest
and extraordinary payments such as payments made in settlement of litigation.
(E)
The GLO anticipates that those payors that have exceeded
the threshold sums set out in subparagraphs (A)-(C) of this paragraph in the
preceding state fiscal year will also exceed those sums in the current state
fiscal year. The application of subparagraphs (A)-(C) to a specific payor
may be waived at the commissioner's discretion to the extent allowed by law,
upon a showing that a payor will not exceed the threshold sums set out in
subparagraphs (A)-(C) in the current fiscal year, or for other good cause.
(F)
The GLO will notify each payor to whom this paragraph applies
in compliance with Title 34, Chapter 15 of this code.
(c)
Inspections.
(1)
The books, accounts, records, contracts, and other documents
pertaining to production, transportation, sale, and marketing of geothermal
energy and related resources leased shall at all times be subject to inspection
and examination by the commissioner, or his authorized representative, and
copies of such records shall be furnished to the commissioner upon request.
(2)
All exploration, development, and processing operations
shall be subject at any time to inspection by the commissioner or his authorized
representative and copies of records or other documents pertaining to these
operations shall be furnished to the commissioner upon written request.
(d)
Forfeiture and reinstatement.
(1)
If the owner of a lease or permit shall fail or refuse
to make payment of any sum due, or if the owner or his authorized agent should
knowingly make any false return or false report concerning the lease or permit,
or if the owner or his agent should refuse the commissioner or his authorized
representative access to the records or other data pertaining to operations
under the lease or permit, or if any of the material terms of the lease or
permit should be violated, the lease or permit shall be subject to forfeiture
by the commissioner.
(2)
A lease or permit shall be considered forfeited when it
has been endorsed "forfeited" and the endorsement signed by the commissioner.
(3)
Upon forfeiture, the commissioner will give written notice
to the lessee or permittee stating the date of forfeiture and the reasons
for the forfeiture. The notice of forfeiture will be sufficient if mailed
to the last known address of the lessee or assignee shown of record in the
GLO.
(4)
A forfeiture may be set aside and all rights under a lease
or permit may be reinstated before the rights of another party intervene,
upon satisfactory evidence to the commissioner of future compliance with the
provisions of the law, of the lease or permit, and of any rules adopted relative
to the lease or permit, and any conditions placed upon the reinstatement.
Lessee or permittee shall offer the evidence required for reinstatement within
30 days after the date the notice of forfeiture was mailed and after such
30 days shall have no future right of reinstatement. If a lease or permit
issued under §155.44 of this title (relating to Mining Leases on Relinquishment
Act Lands) is not reinstated within the 30-day period, the surface owner is
entitled to act as the state's agent for leasing the minerals.
(e)
Reduction of penalty and/or interest. The School Land Board
may reduce penalties and/or interest assessed under the Texas Natural Resources
Code, §52.131, and/or any other penalties or interest relating to delinquent
or unpaid royalties that have been assessed by the commissioner in the following
circumstances:
(1)
When a lessee brings a deficiency to the General Land Office's
attention voluntarily; and/or
(2)
When a lessee and the General Land Office have reached
an agreement regarding the reduction as part of a resolution of an outstanding
audit issue.
§155.48.Mineral Awards and Patents.
(a)
General. Anyone who was issued a mineral award prior to
March 15, 1967, under former Texas Civil Statutes, Articles 5388-5403, may
patent the mineral award upon proper compliance with the statutory requirements
and the rules promulgated by the GLO.
(b)
Lands and minerals subject to patent.
(1)
All valuable mineral-bearing deposits, placers, veins,
lodes, geothermal energy and related resources, and rock carrying metallic
or nonmetallic substances of value except oil, natural gas, coal, and lignite,
shall be subject to patenting.
(2)
Only those lands which are presently encumbered by a mineral
award are subject to patenting.
(c)
Maintaining a mineral award; annual assessment work.
(1)
The owner of an award shall have the exclusive right to
the possession and use of the minerals within the area of the claim so long
as he continues to do or causes to be done the annual assessment work for
each claim.
(2)
The annual assessment work shall consist of an excavation
in the form of a shaft or tunnel or an open cut to the extent of 10 feet in
depth or length and at least four feet by five feet for the other dimensions.
In the event the mineral sought is usually and customarily produced from drilling
holes by means of machinery, except such minerals as oil, natural gas, coal,
or lignite, then the drilling of a hole to such depth or length in lieu of
the digging of a shaft or tunnel or open cut shall constitute the annual assessment
work required.
(3)
During the month of January, the owner of a mineral award
shall file an annual assessment affidavit on a form prescribed and furnished
by the GLO. The affidavit shall be signed and notarized and shall describe
the assessment work which was completed during the previous year. If the assessment
work accomplished is deemed insufficient or if the form is improperly completed,
the owner of the mineral award will be notified.
(4)
The annual assessment work for a contiguous group of mineral
awards may be done on one mineral award.
(d)
Rental payments.
(1)
The owner of a mineral award shall pay annually $.50 per
acre. This annual rental payment shall be due during the month of January
of each year succeeding the year the mineral award was issued.
(2)
Annual rental payments will be applied to the purchase
price of the mineral patent.
(e)
Royalty payments.
(1)
In addition to rental payments, the owner of a mineral
award shall pay a royalty of 6.25% of the value of the production of the minerals
upon such award as shown by the net smelter, mill, mint, or refinery returns
or of the gross sums arising from the sale of the ore or products from the
award and received by the owner.
(2)
Royalty payments arising from the sale of ores, minerals,
or other products shall be due quarterly in January, April, July, and October
for the quarters preceding.
(3)
Royalty payments shall be accompanied by a production and
royalty report filed on a form prescribed and furnished by the GLO.
(f)
Inspection.
(1)
The books, accounts, records, and contracts pertaining
to production, transportation, sale, and marketing of minerals awarded will
at all times be subject to inspection and examination by the commissioner,
or his authorized representative, and copies of such records shall be furnished
to the commissioner upon request.
(2)
All mining, milling, and processing operations shall be
subject at any time to inspection by the commissioner or his authorized representative
and copies of records pertaining to these operations shall be furnished to
the commissioner upon written request.
(g)
Forfeiture of mineral award.
(1)
If the owner of a mineral award shall fail or refuse to
make payment of any sum within 30 days after it becomes due, or if the owner
or his authorized agent should knowingly make any false return or false report
concerning production, mining, or development, or if the owner should fail
or refuse the proper authority access to the records pertaining to the operations,
or if the owner or authorized agent should knowingly fail or refuse to give
correct information to the proper authority, or knowingly fail or refuse to
submit to the GLO all correct reports required by statute, the rights acquired
under the award shall be subject to forfeiture by the commissioner.
(2)
Upon forfeiture of a mineral award, notice shall be mailed
to the person, firm, or corporation shown by the records of the GLO to be
the owner of the mineral award.
(3)
Upon satisfactory evidence of future compliance with the
law and with the GLO rules and regulations, the forfeiture may be set aside
and all rights thereto reinstated.
(4)
If a mineral award is forfeited and not reinstated, the
land covered by the mineral award is not subject to being claimed or patented.
(h)
Patenting a mineral award.
(1)
At any time after five years from the date of a mineral
award, the owner of the award may pay the balance due on the purchase price
of the award and request a patent thereto.
(2)
The owner of the mineral award shall make written request
that the award be patented. The request shall be accompanied by three separate
remittances: the balance of the purchase price, a patenting fee, and a recording
fee. The appropriate patenting and recording fees are found in §1.3 of
this title (relating to Fees).
(3)
The purchase price of the mineral patent shall be $10 per
acre, and the annual payments of $.50 per acre on the mineral award shall
be applied to the purchase price.
(i)
Mineral patent requirements.
(1)
After the issuance of a mineral patent, no further assessment
work will be required.
(2)
The royalty due the state on a mineral patent shall be
perpetual and shall be 6.25% of the value of the production of the minerals
as shown by the net smelter, mill, mint, or refinery returns or of the gross
sum, arising from the sale of the ore or products from the mineral patent
and received by the owner.
§155.49.Consistency with Coastal Management Program.
Except as otherwise provided in §16.1(c) of this title (relating
to Definitions and Scope), an action listed in §16.1(b) of this title
(relating to Definitions and Scope) taken or authorized by the GLO or SLB
pursuant to this chapter that may adversely affect a coastal natural resource
area, as defined in §16.1 of this title (relating to Definitions and
Scope), is subject to and must be consistent with the goals and policies identified
in Chapter 16 of this title (relating to Coastal Protection) in addition to
any goals, policies, and procedures applicable under this chapter. If the
provisions of this chapter conflict with and can not be harmonized with certain
provisions of Chapter 16 of this title (relating to Coastal Protection), such
conflicting provisions of Chapter 16 of this title (relating to Coastal Protection)
will control.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State, on August 9, 2000.
TRD-200005557
Larry R. Soward
Chief Clerk, General Land Office
School Land Board
Earliest possible date of adoption: September 24, 2000
For further information, please call: (512) 305-9129