QBffice of ttje !&tornep @enera &date of PCexae DAN MORALES December 18, 1995 A-ITORNEY GENERAL
Mr. Wfiiam G. Burnett, P.E. Opiion No. DM-370 Executive Director Texas Department of Transportation Re: Whether article VIII, section 7-a of 125 East 1lth Street the Texas Constitution applies to the Austin, Texas 78701-2483 distribution of oil and gas royalties received from highway rights-of-way (RQ-782)
Dear Mr. Burnett:
We have been informed that the State owq in fee simple, highway rights-of-way in several tracts located within the boundaries of two unitized oil fields.1 Recently, a
'Chspter101 of the NaturalResomwa Codeaothorizes,sobjeUtothoapprovaloftheRaibnad Commission,see Nat Res. Cde fi 101.001, personsowning or controllingintemstsio separateproperty in the same oil or gas field to establish pooled onits. Id. 8 101.011. Establishingpooled units may be accomplishedfor the following pmposes: Pint, pooling may be aweamryto'effact~ndmyrwovery operstion~for oil or gas," and second,pooling maykc nuxsary for the conservationmuIuse of gas. Id.
Prior to approving an agreement for pooledunits, the RailroadCommissionmust find:
(1) ths~theagncnuntisneassarytoaaomplish[thctwopqoscsliacd abavel; (2) that it is in the iotetst of the public welfare as being reasonably wwsmry to preventwaste and to promotethe womrvationof oil or gas or both; (3) thattherightsoftheownersofalltheioterMsinthef&,whether signenoftheunitagr&mcntornot,Woplldk~underitsopaatio~ (4) that the catimstedsdditiord WQ if any, of co~uclhlg the epemtion willnotex~thcvalucofadditionaloilandgasso-~~orankbalfof the several pmons affected, including royalty ownem, owners of overAiog myalti~oilandgas~~~carriedintereas,limc~andothwas well as the I-; (5) that ether a&able or exiatiag methods or t%cilitiesfor samMary rrcovayopcrationsorforihccoascrvationandutiliuuionofgasinthc~ulat mea or field wncerned or forboth am inadequatefor the pmposes;and Mr. William G. Burnett, P.E. - Page 2 (DM-370)
citizen discovered the State's ownership and believes the state lands are inside the boundaries of producing oil fields, although the State never has leased the oil and gas rights to the land.2 If the State pursues a claim for lost royalties, you assert, it may recover a share of the oil and gas royalties earned from wells located in the two fields.
The citizen contracted witb the State to provide information about the State's land in return for a finder's fee of five percent of the amount of any revenue the State recovers as a result of the citizen's information. 3 You suggest, however, that any proceeds the State recovers may be subject to disposition in accordance with article VIII, section 7-a of the Texas Constitution. If so, you believe the State may not pay the citizen a finder's fee from the recovered proceeds. You phrase your question, which is based on these facts, as follows: "whether income from land purchased with constitutionally dedicated funds must be credited to the constitutional fbnd."
Id. 8 101.013(a). The RailroadC~mmission's decision whelher Io approveaa applicationto eatablii a pooled maitis basedupon the applicationaad a hearing. Id. %'ummntto section 101.013(a)(6),see supra note 1, each ownerofan interestwithin the ama to beunitizdmwtrewiveanofkrtojointhemdt. Wemubtand the Departmmtof Traqortation wvar wss wtified that an applicationto unitize the land on which the highway rights-of-wayat issue hem bad bceo filed and that a hearing on the matter WBSimminant. &e Nat. Res. Code Q101.013(a). Fmlhermore, the Departmentof Transportationnever mwived aa offer to join the unit. See id. 8