Court Opinion

ID: 4132183
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:23:54.668196+00
Date Added: 2024-06-11T14:35:08.158848
License: Public Domain

The Attorney                General of Texas
                                         June     28,    1978

JOHN L. HILL
Attorney General

                   Honorable Sob Armstrong                       Opinion No. Ii- 1197
                   Commissioner
                   General Land Office                           Re: Responsibility    for enforc-
                   Austin, Texas 78701                           ing section 52.293 of the Natural
                                                                 Resources Code and remedy for
                                                                 breach.

                   Dear Commissioner    Armstrong:

                          You have asked two questions concerning article 5382f, V.T.C.S., now
                   codified as sections 52.291 through 52.296 of the Natural Resources Code.
                   You ask (1) who is responsible for enforcing its terms and (2) what remedies
                   are available if a lessee sells gas out of state in violation of this provision.

                          Section 52.292 makes it illegal for certain public officials, agencies,and
                   boards, including the Commissioner of the General Land Office, to execute an
                   oil, gas, or mineral lease on public land under their custody unless such lease
                   contains the following provision:

                                  No natural gas or casinghead ges, including both
                               associated and nonassociated gas, produced from the
                               mineral estate subject to this lease may be sold or
                               contracted for sale to any person for ultimate use
                               outside the state unless the Railroad Commission of
                               Texas, after notice and hearing as provided in Title 3
                               of this code, finds that:

                                    (1) the person, agency, or entity that executed
                                 the lease in question does not require the natural
                                 gas or casinghead gas to meet its own existing
                                 needs for fuel;

                                    (2) no private or public hospital, nursing home,
                                 or other similar health-care facility in this state
                                 requires the natural gas or casinghead gas to meet
                                 its existing needs for fuel;

                                             p.   4811
Honorable Bob Armstrong       -   Page 2   (B-1197 1.

                 (3) no public or private school in this state that
               provides elementary,     secondary, or higher education
               requires the natural gas or casinghead gas to meet its
               existing needs for fuel;

                 (4) no facility of the state or of any county,
                municipality, or other political subdivision in this state
               requires the natural gas or casinghead gas to meet its
               existing needs for fuel;

                  (5) no producer of food and fiber requires the natural
               gas or casinghead gas necessary to meet the existing
               needs of irrigation pumps and other machinery directly
               related to this production; and

                  (6) no person who resides in this state and who relies
               on natural gas or casinghead gas to provide in whole or
               part his existing needs for fuel or raw material requires
               the natural gas or casinghead gas to meet those needs.

Sec. 52.293.

      State leases executed after the effective date of this statute are null and
void unless they contain the quoted provision. Natural Resources Code, S 52.295.

        The prohibition contained in section 52.293 is not a regulation of general
application.   It is to operate in the form of a specific clause contained in each lease
of state-owned land. Penalties are prescribed for failing to include the prohibition
clause in a lease, but no penalties are specified for violating the prohibition clause
itself.

       It is our opinion that the legislature intended the prohibition clause to be
enforced in the same manner as other material provisions in a lease. The remedies
available in the case of a particular violation are those provided in the lease
involved and in the statutes which authorize it.

       A violation of the prohibition clause contained in your Revised Lease Form
10-75, for example, is governed by the following provision in the lease: “if Lessee
shall knowingly violate any of the material provisions of this lease . . . the rights
acquired under this lease shall be subject to forfeiture by the Commissioner [of the
CL01 . . . (Paragraph 181.” Paragraph 19 describes how forfeitures may be set
aside.   It is clear that the prohibition clause is to be regarded as a “material
provision” of a lease since the legislature declared that leases which fail to include
it are null and void.

                                      p.   4812
    Honorable Bob Armstrong      -    Page 3        (H-11971

          Although the usual legal and equitable remedies, such as a suit for damages or
    for specific performance,     may be theoretically    available, they do not seem
    appropriate  for violations involving unauthorized sales of gas for out-of-state
    consumption.

           No single party Is made responsible for enforcing the prohibition against such
    unauthorized sales.     It is to be enforced in a particular case by the party
    responsible for enforcing the other provisions of the lease involved.             The
    Commissioner     of the General Land Office is responsible for enforcing the
    prohibition clauses contained in your Revised Lease Forms 10-75. Under leases of
    state park lands, authorized by Chapter 35 of the Natural Resources Code, the
    Board of State Park Lands has such responsibility.

           The Railroad Commission has no responsibility for enforcing the prohibition
    against unauthorized gas sales. The role of the commission is confined to making
    findings that the natural gas produced from state-owned lands is, or is not, required
    to meet certain local needs, and to granting exceptions to the prohibition clause in
    certain cases. Sees. 52.293, 52.296.

                                       SUMMARY

               Section 52.293, which operates as a clause in each lease of
               state-owned    land, is to be enforced as other material
               provisions of a lease.     The remedies available are those
               provided in the lease and in the statutes which authorize it.
               The party responsible for enforcing the other provisions of a
               particular lease is also responsible for enforcing the clause
               required by section 52.293.

~                         &Attorney                            General of Texas

    DAVID M. KENDALL, First Assistant

                                               p.     4813
Honorable Eob Armstrong   -   Page 4   (x-1197)

Opinion Committee

                                       p- 4814