I’~E J~TTORNEY GENERAL 

.: ,OF.mXAS’ .: 

January 28, 1948 

Hon. Baaoom Glles 

Comissiqu3r ', 

General Land Office 

Austin, Texas ,', 

ODlnlon ~. No. v-486 

Re : Whether the primary 

term l P Mineral Lekise 

Ro. 22624 1s suspended 

by.wratien of Art. 

5341C) v .c .a. 

Dear Mr. Glles: 

By letter dated lPovemb& 3, 1947, supplementea by letter dated J&nuary lo; 1948, you requested 

theeopInIon of.,this ~office whether the ppimary term of 

Mineral Lease No./22624 expired on Septembe? 20, 1947, 

or whether, the same has been; or. should be, extended 

by~reasoh of the provlhions~ of Article 5341c, Vernon's 

Civil Statutes. The facts'are as follows: 

On September 20, 1937, the Commissioner of 

the General Lend Office isiiued'to the Superior @I1 

Cola)sng Mineral Lease No. 22624 oalerlng Tract No. 

45, containing 320 acres, more or less, out l f Lsguna 

Maare, lVueces'and,ICleberg Counties, Texas. This lease 

was for a primary term of five years. 

Approximately six months prior to the explration of the primary term, on March 24, 1942, Superlor, by letter to the Commissioner, pointed out that 

the War Department had by letter dated March 21, 1942, 

refused to grant a drilling permit on this lease and 

requested that the Commissioner recognize the primary 

term of such lease as extended under the provisions of 

Artlole 5366a, Vernon'8 Civil Statutes, reading as 

follows: 

"Se&Ion 1. In eaah case in which an 

011 aua gas mineral lease haa heretofore 

been granted or may hereafter be granted 

by the State of Texas on an area covered by 

the coastal waters of the State or within 

the Gulf of Mexioo and In whloh the War Department of the united States refuses to 

grant a permit to the lessee or owner of 
Hon. Basaom Glles - Page 2 v-486 

such lease to drill a well thereon for oil, 

gas or other minerals (the are& lncludea~in 

such lease being within the navigable waterse of the United Statea) and in the event 

the prim&g term of such lease should expire 

during !he period of tl&a in which the War 

Dopartmqnt of the United States may oontin+%0 refuse to Issue auoh,*relt, then 

and in auoh eveht the primarg to- of such 

lease is hereby extended for auccoaaive perioda ,of one (l), Jear,from and aftor the 

end of~the orlginal primary term of such 

leaad while and so long aa the War Department may oontinue auch'refuaal to Issue to 

the leadee ,or to the'owner of auah lease a 

permit t6 drill for oil, gas or other mlnerala, on the area eovored thereby; provid- 

,, ed, that in order to make such exte~alo~a~ 

effectual .the losses or tb6 owner of auah 

lease ahaIL, during eaeh,of the annual perLods~durl.hg whlcnh the primary term of the 

loaae is so oxtonaea; applp to ana seek to 

obtain fiym the War Department a permit to 

drill a wall for oil, gas 07 other minerala on tho aroa ooverea by such leas8 and 

be unatio&aaful In fta attempts to obtain 

a pemlt, or, if a~cesaful~in obtain1ng.a 

permlt,~bomaonoe ope,ratioaa 'for arillfng a 

well upon ths'lease premlaea within sixty 

(60) dqa afterKobta.iai.rug such pemlt; and 

provfaea further ,that the less00 or the owner of auoh lease continues to pay the annual 

renewal rentila at the rate provided for in 

amh leaae.for the.psriod of time lnvolvqd 

in auoh extonalona, ShouPd such lease be ao 

oxtendod and bhould the War Department, at 

any tire whlle,~sueh,l~aaa is still in force 

and offeot issue 8 perraft to the loaaee or 

to the owner of stih lease to drill a well 

thereon for ofl, ‘gas or other minerals, such 

lease-ahaii eohtinue in foroe'ana effect If 

the l~aaee eommencea' drflling' OpOratiOnS UPon the leaaeq prenl?ta within afx,tJ (60) 

daya,after obtsinQkg such permit, and so 

long aSr the lessee or the owner of suah lease 

shall continue to eonduct arflling or mining 

operatfohs thereon, dr if oil, gas or other 

mineral be dlaeovered, thereon by the lessee 

or the owner of suck lease, so long aa 011, 
Bon, Baseom Gilss - ?age 3 v -406 

gas or other mineral is produced from such 

leased premises, 8h0da the production of 

oil, g.4s or other mlsrerel on sa.ia leased 

premlaea after once seaurea, oease from any 

cause, svusti lease aball not terminate ,lf 

tRe lessee or owner of such lease commences 

aaaitfona'l drilling, reworking or mining 

operations wi'thfn Shlrty (30) days thereafter or ff 1% be within the orialnal prlmarg term of auoh leaze, eomnrences or resumes the payment or tender of rental on 

or before the rental paying date, if any, 

next ensuing; but If there be no rental paying date next ensuing, the lease shall In 

'no even% %ermXQ,a%e ,prior ,%o the expiration 

of the primary term. 

‘See. 2, TRe Commissioner of the Genoral Lana Office is hereby authorized to Isau0 'to %Re lessee or owner of said lease 

auoh iws.%rumeat in wrftlag i;n the nature of 

an extension of said Pease as may be necessarg'or proper to omarry into effect the 

foregofng provisfons of this Act." 

Thereafter, ~urau~d% to the provisions of 

said Article 5366s, the Commissioner on March 27, 1942, 

executed an instrument cxtmd~kag the primary tern of 

said Lease No. 22624 inn %he language of the statute, 

as followz : I 

" ‘, 0 Y do hereby grae% %o the Superior 

Oil Compmy the preset% owner of such lease 

as showa by the records of the General Land 

Office, an exten3fon ttmwof Fa accordance 

wfth,%he provislolza of E'hapter 287 of the 

Acts of %Re Forfg-mven%h Legislature ana 

do hereby extend sa.fd leaas for successive 

periods of one year from and after the end 

of the orfgfria$ primary term of such lease 

whllo,.and so bag as, the War Department 

may eqtime swti refmal %o fasw to the 

leaoes or %o the owner of said lease a permft tb drill for 011, gas or other mfnerala, on the area covered thereby; provided, 

that'fn order to make su6h extbns10ns effee%ual,tRs lssae~s or the OWBLQP of such 

loose, shall, aurirJg aa.ah of the a~ual periods duping wM@R the primaq term of %he 
I-Ion, Bascom Gfles - Page 4 

. L 

v-486 

lease IS so extended, apply to and seek to 

obtain from the War Department a permit to 

drill ,a well for oil, gas or other minerals 

on the area covered br ,auch lease and be 

unsuoceasful In ita attempts to obtain a 

permit; or, If successful In obtaining a 

permit, commenoe~operationa for drilling 

a well upon the leased premises within alxtg (60) days after obtaining, such permit; 

and provided further that the lessee or the 

owner of such lease continues to pa;r the 

annual renewal rentals at the rate provided 

for in such lease for the period of time 

involved in such extensions." 

As stated In your letter of November 3, 1947, 

Superior repeated Its request to the War Department In 

compliance with the statute and the extension inatrument dated March.27, 1942 each year during the yeara 

1943, 1944, 1945, and 1946. Each of thoso yearly requests was refused by the War Department. During this 

period Superior pala its annual rental as requirea. 

No request was made by Superior to the War 

Department for 

r 

nnlaalon to 61-111 Lease Ho. 22624 during the year 19 7, and the primary term of said lease 

as extonaoa under the provisions of Artlole 5366a and 

the extension instrument dated March 27, 1942, came to 

an end, without drilling operations thereon, on September 20, 1947, unless said primary term has been Mpended as contended by Superior under the provisions 

of Artielo 53410, Vernon's Civil Statutes, reading as 

follows: 

"Sectfon 1, If the owner of any valid 

oil and gas lease granted by the State is 

denied access to or is denied a permit to 

drill upon or produce from the leased premises by any duly constituted authority of 

the United States of America, after a bona 

fide attempt has been made by such owner %o 

obtain access or permit to drill upon or 

produce from the leased premises, such owner 

may file with the School Land Board an application deser+bfng and glvfng %he date of 

the action which deprfves hfm of the right 

of access or the right to drill upon or produce from the premises, and if said Board is 

satisfied that the facts se% forth in the 
Ron, Bascom Gilas - Page 5 v-486 

application are true, tha Board may enter an 

order upon its mi~nutes suspending the running of both the primary and the principal 

term of sursh lease, or suspending any condition, obligation or duty thereunder as of 

the aate’of the origin of the cause of suapension and during the existence of the cause 

of suspensfon, so lomg as the lessee continuea to make on eaah ,anniversarg date of 

such lease t'he annual rea%al paymen%s atipulatea in the lease du1a2.g the period of suapension. Such oil and ga3 lease shall remain in s%a%us quo, and all obligations and 

conditions existing under such lease or suoh 

of .%hem as may be suspended by said Board, 

shall be Inoperative ana of no force and effes%, except the obliga%ion to pay delay rentals as provide& for herein, untfl ninety (90) 

days af%er the School Land Boara shall enter 

an order upon its minu%es reciting that the 

cause for suspension haa oeasea to exist, at 

whieh,time such of1 ana gas.lease shall, provi$ea the rental payments have been made aurlng %he period of suspension, again become 

operatfve and all of the suspended obligations 

ana eonaCll%ions, fnelucTing t.m payment of rentala under same, shall again attach a5a be in 

force, ama in th@ C&S5 of the suapens10n of 

the primary and/or principal berms of the 

lease 9 the lsatse shall %hereaf%er continue 

fa form for aperiod equivalen% to the un- * 

expired %erm oi" %he lease on the date of orlgin of %b aawe for suspension, The Commissioner of %-he &52eral Lar0.d Office shall give 

notfe6 immedfa%aly to the lesse8. or the entry 

of the ordor %ha.t %he muS8 .for saspeusiom 

'has oeasea %o exls%; provided9 however, that 

tb3 anmual,rsa%~.l pape5t3 kmva beam me%;, 

"See. 2, Bothl~g eor&sfned herein shall 

be construed as abrfdgfng any rfgh%s or prlvflegos comveyesd Llg Chap%er 287, Acts of the 

Forty-seventh Legislature, Regular Qesslon," 

I% wfll be noted tha% while Article 5366a provides for the ex%ensfon of the primary term of a lease 

when the War Department refuses to gran% a permit to a 

State lessee %o drill a well %hereon, Article 53410, 
Hon. Dascom Giles - Page 6 v-486 

enacted two years later by'the 48th Legislature, provides that the School Land Board may suseend the running of both the p+mry and principal terms of such 

lease or ,"an~. condition, duty or obligation thereunder" 

as of the date of the origin of the cause of suspension. 

Article 5366a is self-operative as to extensions.the statute providing that when the War Department refuses to permit drllllng, and in the event the 

primary term should expire while the War Department 

continues to refuse, 

hereby extended," 

"the primary term of the lease g 

for successive periods of one year. 

It is provided, however, that such lessees must contlnue to make request of the War Department from year 

to year.and must continue to be refused permission in 

order for the automatic extensions under the statute to 

be operative. 

Article 5341~ is quite different. In order 

to be entitled to the benefits of Article 5341c, it is 

required: 

1) That the lessee have a valid lease; 

2) That the lessee be denied access to, or 

denied permit to drill upon or produce from the leased 

premises by a duly constituted authority of the United 

States of America after a bona fide attemut is made to 

obtain access or permit to drill; 

3) That an application be filed with the 

School Land Board reciting such facts; 

4) That the School Land Board satisfy itself that the facts set forth In the applfcation are 

true; 

5). That the School Land Board enter an order on its minutes suspending the running of the primary or princ.ipal term of the lease or a condition, 

obligation, or duty thereunder. 

It Is to be observed that the School Land 

Board is vested with discretion In the matter. The 

statute requires that the Board be satisfied that the 

matters recited in the application are true. It then 

provides that the Board w9 not shall, enter an order 

suspending the running of the primary term or principa.1 term or other condltlon, obligation, or duty under 
HOQ. Baacom Mles - Page 7 v-486 

the lease. It is only after such an order has been 

entered that the lease and all obligatlons thereunder 

rem,in In status quo (except the payment o? rentals). 

This status quo; the status moated by the entry O? 

such an order, remains until 90 days after the School 

Land Board shall enter a further order upon its minutesrealtlag~that the aause for suspension has ceased 

to exist. Thereupon'tbs lease aontlnues In effeat for 

a period equivalent to the unexpired term of the lease 

as of the date of the,origla of the cause for suapenslon. 

It is clear'that Superior has ,not brought itself within the terms of Article 5341~. On August 15, 

1947, a month and five days ,prlor to the expiration of 

the primary term, aa extended by the provisions of Article 5366a, Superior requested a further "extension" 

,of, said lease beyond September 20, 1947, "until the 

United States of America, by Congress, paeses a proper 

Aot, signed by the,President of the United States dls- 

.clalmlng, unto the respective states all submerged area 

under Inland waters and seas, or in the absenoe of existing legislation, this applfcant asserts its equltable.right that the term of said lease shall extend 

beyond September 20, 1947, and for a reasonable period, and thereafter until the cloud on title fs removed, 

,to be recognized either in Court of Equity or by leglslatfve act of the State of Texas affirming and confirming existfng leases In such cases, and thereafter 

during a reasonable tfme withFn ,whioh %he Lessee may 

begin its operatfons.'P It was sot claimed by this letter %ha% Superior was eetl%led I-o rights under Article 

5341~~ nor was t&e letter an application within the 

terms of tbai? article, Indeed, in this letter Superlor stated, "we are unable to refer you to 5ny specific 

sta%utory provision under which fur%ber extension9 are 

permftted under~safd lease," 

We have also examined oopies of subsequent 

letters of Superior to your office dated August lgth, 

August 2lst, and August 27't.h. By nozie of these letters did Superior make application to the School Land 

Board for the entry of an order on its minutes suspending the'runaing of the primary term of Lease No. 

226240 On the contrary-, by each of t&se letters Superior requested to be informed of 'the date the School 

Land Board bad entered an order on Its minutes reciting 

that the cause for suspe~slo~ of the lease had ceased 

to exist. In its letter of August 27th Superior tendered Its Check in the amou.nt of $80.00 "as rental to 
Hon. Bascom Giles - Page a v-486 

August 19, 1948, when the equivalent of the suspended 

period of the primary term of said lease will expire 

after said ninety days from entry of order In the minutes of the School Land Board that the source of the 

cause of suspension ceased to exist.” 

Apparently, the contention asberted by Superior is that Artlale 5341~ is self-operative and inures 

to the benefit ,of 8 lessee whose primary term has been 

extended pursuant to the provisions of Artlale 5366a 

even though no application for susuenslon of the prlmary term of the lease has been filed with the School 

Land Board under ths provisions of said Article 534l,c, 

and even though the School Land Board has not entered 

an order, pursuant to proper application, Gpendlng 

such primary term. 

We Cannot subscribe to this view. Superior 

applied for and obtained an e&ension of t&e primary 

term of Lease No. 22624 under Artiole 5366a. As long 

as Superior kept within its terms this statute provided 

for automatic yearly extensions of the primary term of 

the lease, conditioned that Superior apply.yearly to 

the War Department for permit to drill the lease, and 

make yearly payment of the rentals O Superior chose not 

to come within the terms of this statute during the year 

1947. Superior did not apply during that year to the 

War Department for permission to drill the lease. Superlor’s rights under Article 5366~1 and the extension 

instrument dated March 27, 1942 therefore terminated 

and expired on Sep~tember 20, 1947. 

Superior is entitled to none of the benefits 

of Article 5341~ for the plain reason that It has made 

no application under that Article to the School Land 

Board resulting in the entry of an order by the Board 

.suspendlng the primary term of its lease, 

It is conceivable that Superior may now contend, although their plain Import does not so reflect, 

that its letters to the Commissioner dated August 19th, 

August 21st, and August 27th should be construed and 

considered as an application to the School Land Board 

for the entry of an order suspending the primary term 

of Lease Ho. 22624. In this event we hold that Artlcles 5366a and 5341~ should be construed together, and 

that in order'-for alessee whose lease has been extended under the provisions of Article 5366a to be entitled 

G an order of suspension from the School Land Board 
- . 

Ron. Bascom Giles - Page 9 v-486 

to permit 

made a bona 

fr~om thmr 

based upon reruaal of ,the War Department 

drilling, the.lessee must have currently 

fide attempt to secure a permit to',drFll 

Department, ,and .have been refused,. ~Artlcle 5341~ 

clearly requfresthat~ the lessee 'makes such a 

fide attemet. Weare not 'prepared to say tha 'Erequest last made'of the"War Department In 1946 Is such 

a’ "bona Fidel attempt" within the,meanlng of Article 

534%~ ,as to ~entltle an applicantin Augtist’ 1947 $a 

secure. an o,rder from the Sohool~~I&nd Board suspending 

the primaryterm of:lts le'ase. 

Uoreover,,,. we have been~ln,formally' advised '..~ 

by you that the War..Departmsnt lifted all drilling 'restrictions ~,onthe'.,area In, question on or.about March 

10, 1947:LWe have ~a180 ascertai,ned ,from the records 

of the Railroad.~Commlsslon thatthe lessee In question hasnotflled'.its Notice of Intention to Drill 

wfth,tbat~%omm~ssion.as~required by Its rules, and regulations,, and that no drill~ng~'activltes have in fact 

been commenced,o,n the leaaed premises. 

: the proUnder the clrcumstanoes we are of the arlnion that:~Dease Ro.' 22624 has terminated undo] 

visions Of paragraph 1 thereof as of September 20,- 

1947 0 ,, 

(I). i 'State' lessee not having applied 

for and' obtained suspensfon of the primary 

term of Its lease under Art., 5341c, V.C.S., 

Is not entitled to the bec.eflts of such 

statute,~ the statute requlriag an appllcatlon for, and order ~of,,suspenslon by the 

,gchool Iand Board. 

(2) A State lessee whose 'lease has 

been extended from year to year until September,20; 1947, by compliance with Art. 

536Sr, voc.s., is not entitled to the benefits of Art..,, 534lc, V'.C.S., without show- 

~, ing a,~curretit bona fide attempt to seoure 
Hon. Bascom Giles - Page 10 v-466 

a drilling permit from the War Department. ‘. 

Yours very truly 

ATTORNEY GENEZ?AL OF TEU3 

JDs:jt 

ATTORNEY GENERAL