Court Opinion

ID: 4135111
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:58:30.96945+00
Date Added: 2024-06-11T14:37:41.367689
License: Public Domain

THEATJFORNEYGENERAL
                     OF   TEXAS

Honorable Jerry Sadler
Commissioner of the General Land Office
  and Chairman of the School Land Board
Austin, Texas
                           Opinion No. C-349
                           Re:    Whether the School Land Board
                                  in fixing the consideration for
                                  an amendment of a term mineral
                                  lease may increase the royalty
Dear Mr. Sadler:                  chargeable under such lease.
       You request our opinion as to the authority of the School
Land Board in granting amendments to existing mineral leases
under Article 5344c, Vernon's Civil Statutes, to increase the
royalty required to be paid.
       We are informed that over the years the State of Texas
issued a considerable number of 25-year term oil and gas leases.
In order to prevent the rapid depletion of reserves under such
areas and to prevent wasteful production practices, and to in-
crease the revenue of the Public Free School J?und,Iiouse.Bill
17, Acts of the 50th Legislature, Regular Session 1947, Chapter
82, page 139, codified in Vernon's as Article 5344c, Vernon's
Civil Statutes, was enacted. (Section 5 of House Bill 17).
This Act authorized the School Land Board, on application made
prior to October 1, 1948,to amend such leases so as to extend
the term thereof for as long as minerals are being produced in
paying quantities and authorized the Board to fix the consideration
for each such amendment. (Section 2 of House Bill 17.).
       Section 2 of House Bill 17, Acts of the 50th Legislature,
Regular Session 1947, was amended in 1963by the enactment of
Senate Bill 196,Acts of the 58th Legislature, Regular Session
1963,Chapter 174, age 485, so as to change the cutoff date
from October 1, 194f; to January 1, 1965. No other change was
made by the 1963amegdment. Section 2, as amended, now provides:
            "Sec. 2. Any lease heretofore granted and
       in good standing covering any of the lands

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Hon. Jerry Sadler, Page 2 (c-349)

      or areas referred to in Section 1 of this Act,
      upon application by any owner thereof to the
      Commissioner of the General Land Office before
      January 1, 1965,may be amended under the terms
      of this Act so as to provide that such lease
      shall remain in effect as long after the~expira-
      tion of its primary term as oil, gas, or other
      mineral covered by ,suchlease is produced there-
      from, provided any amendment executed by virtue
      of this Act shall include only those ,minerals
      covered in the original agreement to which said
      amendment is made; and providing further, that
      in ame'ndingsuch,leases same shall be amended and
      renewed separately as to each mineral thereunder,
      except as to 'oil and gas' which may be contained
      in one lease and each such lease shall remain in
      effect as long after the expiration of its primary
      term as such mineral covered by such lease is pro-
      duced therefrom in paying quantities. The School
      Land Board shall fix the consideration for each
      such amendment; which shall not be less than Two
      Dollars ($2) per acre , 'provided that any such
      amendment shall not change the original consider-.
      atlcnin any lease to the extent that the state
      shall thereafter receive less than the original
      royalty provided in said leases. If the consider-
      ation so fixed is paid in cash within ninety (90)
      days after such consideration has been fixed, the
      Commissioner of the General Land Office shall
      execute and deliver to the owner of such lease
      an instrument evidencing such amendment., If the
      consideration is n&paid    within the ninety (90)
      days, the application shall be conclusively pre-
      sumed to have been withdrawn. This Act shall
      not authorize the Commissioner of the General
      Land Office or the School Land Board to change
      or amend the lease involved in any other respect."
      (Underlined portion only than e,by the amendment -
                                     8).,
      previously read October 1, 19f-i
       The intention of the Legislature is the law. 53 Tex.Jur.
2d 180, Statutes, Sec. 12.5. The Act allows a new consideration
for the benefit of the State in exchange for permitting the ex-
tension amendment. The last sentence in Section 2, supra,
therefore, would not prohibit a change in the consideration.
Had the legislature intended that consideration be only in the
nature of a cash bonus, we believe that it uould have said so.
At least, it would have been pointless to forbid royalty change
only in a downward direction, if it were intended that no royalty
change at'all was to be permitted. Negating a portion of the
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         Hon. Jerry Sadler, Page 3 (c-349)

         right seems by implication to be an affirmation of the remain-
         der of the right. To held otherwise requires that the royalty
         provision in the statute,'for all practical purposes; be,given
         no effect whatever.
                In our opinion, the provision that the consideration
         must be paid in 90 days should be%construed as meaning only the
         "bonus" part of the consideration, as obviously royalties would
         probably be paid over a much longer period.o,ftime. When so
         construed, all parts of the statute are harmonized and every
         part of the statute is given meaning. This accords with standard
         rules of statutory construction. 53 Tex.Jur.2d 227 et seq.,
         Statutes, Sets. 159-60;
                Our conclusion is strengthened by the fact that the iden-
         tical provisions prior to the change of the cutoff date.were
         construed by the School Land Board as authorizing the royalty
         to be increased as part of the consideration for the amendment
         of leases, and the royalty in numerous leases was so increased.
         The Legislature, by the reenactment of these provisions in the
         1963 Act approved such construction. Isbell v. Gulf Union Oil
         co., 147'Ttx. 6, 209 S.W.2d 762 (1948).
                You are therefore advised that the Board, in fixing the
         considera~tionfor a leasesamendment under Article 5344c, Vern-
         on% Civil Statutes, may increase the royalty provided in such
         lease in addition to charging the bonus provided in Article
         5344c.

                                  SUHHARY

                     The,,SchoolLand Beard in permitting an
                     amendment to an existing term least
                     under Article 5344c, Vernon's Civil
                     Statutes, may increase the royalty
                     chargeable under such lease as a part
                     of the censideration for such amtnd-
                     ment.
                                     Yours very truly,
                                     WAGGONER CARR
                                     Attorney General

         JRtms

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                                      --   .

Hon. Jerry Sadler, page 4 (C-349)

APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
Milton Richardson
Malcolm L. Quick
Brady Coleman
APPROVED F'ORTHE ATTORI'WYGENERAL
By: Roger Tyler

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