While the focus may be on the 85th Texas Legislature that is underway, legislation passed by the 84th Legislature is still becoming effective. On September 1, 2017, the following changes in the Texas Natural Resources Code will take effect. Acts 2015, 84th Leg., R.S., ch. 1079, eff. Sept. 1, 2017.
Tex. Nat. Res. Code §32.201 – Preferential right to lease certain land by adjoining mineral owner; allocation & use of payments received from leasing of land owned for county road.
This section was amended to include provisions at §32.201(i) and (j) addressing the “allocation and use of payments received from leasing land owned for county road.” Section 32.201(i) states that “any payment received from the leasing of oil and gas under lands owned by the state that were or may be acquired by a county to construct a county road” will be deposited in the newly established county road oil and gas fund (established by Tex. Nat. Res. Code §32.2015). Section 32.201(j) provides that after September 1, 2017, new leases of oil and gas under land described by §32.201(i) must require payment to be made directly to county authorities to be deposited into the county road and bridge fund. See Tex. Nat. Res. Code §§32.201(j), 32.2015(d).
Tex. Nat. Res. Code §32.2015 – Fund.
This section was enacted to establish the county road oil and gas fund, a trust fund outside of the state treasury, which will collect the payments described by §32.201(i). Tex. Nat. Res. Code §32.2015(a), (b). Without appropriation, the fund will make biannual disbursements to the counties from which the particular payments originated (plus interest). Id. 32.2015(d).
Tex. Nat. Res. Code §52.025 – Disposition of lease payments.
This section was repealed. Until it is repealed September 1, 2017, it requires the comptroller to “credit the permanent school fund with amounts received from unsurveyed school land and with two thirds of the amount received from other areas and shall credit the General Revenue Fund with the remaining one third of the payments from other areas.
Impact of Changes
The changes seek to direct certain state oil-and-gas revenue to counties struggling to maintain county roads heavily used in activities of the oil-and-gas industry. The legislative statement of intent describes the effect and rationale of the statutory changes as follows:
As oil and gas is extracted, companies pay royalties and lease fees to the state for the minerals that reside under state land. Initially, the land commissioner collects these royalty and lease payments that are then deposited into general revenue. [The bill] modifies the Natural Resources Code regarding royalty and lease payments from minerals that reside under lands owned by counties, such as county roads, and directs that the funds be paid to the counties to be used for road maintenance and construction only. In areas of the state experiencing heavy oil and gas development, there is not enough county funding to keep up with the rapid road degradation. Having access to the royalties and lease payments for lands under county roads to maintain those roads will provide a small amount of relief to our energy sector counties.
For selected Natural Resource Code provisions and much more, including annotated Texas Administrative Code titles, make O’Connor’s Texas Oil & Gas Statutes & Regulations your first source for oil & gas law.
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