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Texas Lease of Relinquishment Act Lands (3-TX-g)

This flowchart illustrates the process of obtaining a geothermal lease on Relinquishment Act Lands in Texas. The Texas General Land Office (GLO) of Texas handles the leasing process on Relinquishment Act Lands through Title 31 of the Texas Administrative Code 31 TAC 155.44. ‘Relinquishment Act Lands’ are defined in the Texas Administrative Code as “any public free school or asylum lands, whether surveyed or unsurveyed, sold with a mineral classification or reservation between September 1, 1895 and August 21, 1931.’ It also encompasses any other lands, including vacancy lands, patented with all minerals reserved to the state and expressly made subject to the leasing terms and procedures governing Relinquishment Act lands. 31 TAC 155.40

Lease of Relinquishment Act Lands Process

3-TX-g.1 – Can the Surface Owner be Located?

The surface owner acts as the state’s agent in lease negotiations. If the surface owner cannot be located, then special procedures must be taken pursuant to 31 TAC 155.44(g) and TNRC, Title 2, Chapter 52.186 Oil and Gas.

3-TX-g.2 – Have the Surface Owner’s Rights been Forfeited?

If a surface owner's rights have been forfeited, then they are not allowed to serve as the state's agent for leasing purposes. In this situation, the land will be leased based on the procedures outlined in 31 TAC 155.41.

3-TX-g.3 – Initiate State Exploration Process

State Exploration Process:

3-TX-g.4 – Negotiate Lease with Surface Owner

The surface owner of Relinquishment Act Lands is authorized to act as the state’s leasing agent with any person, firm, or corporation seeking to develop for geothermal energy and related resources on these lands. 31 TAC 155.44(c)(1)

A surface owner, as the state’s agent, owes the state a fiduciary duty. This fiduciary responsibility must be of paramount concern when a surface owner enters into lease negotiations. 31 TAC 155.44(d)(5)

The surface owner must negotiate the lease with the prospective lessee on a form prepared and furnished by the GLO, which incorporates the terms and conditions required by the School Land Board (SLB). 31 TAC 155.44(c)(2)

3-TX-g.5 – Proposed Lease and Associated Documents

The surface owner must submit any proposed lease to the GLO for approval prior to recording the lease in the county records. 31 TAC 155.44(c)(3)

3-TX-g.6 – Does GLO Approve the Lease?

The SLB may reject or refuse for filing any lease they deem not to be in the best interest of the state. 31 TAC 155.44(d)(1)

The GLO may consider:

  • Whether the proposed lease terms and conditions are in conformity with the Texas Natural Resources Code;
  • Whether the proposed lease terms are comparable to the best leases in the area which cover the same mineral or minerals;
  • Whether the proposed lease terms are compatible with other valuable uses of the leased premises; and
  • Whether the lease terms adequately compensate for the loss of other valuable uses of the leased premises. 31 TAC 155.42(b)(7)

3-TX-g.7 – Notify Developer of Changes Necessary for Approval of the Lease

The SLB must give the developer written notice upon the rejection of a lease. Such notice must outline the reasons for rejection and specify any changes, deletions, or additions which would render the lease acceptable. 31 TAC 155.44(d)(2)

3-TX-g.8 – Geothermal Lease

The Lease terms and conditions must include:

  • Bonus payment, rentals, and royalties made by the lessee;
  • If there is production, then the state must receive no less than one-sixteenth of the value of the geothermal energy and related resources produced;and
  • All royalties and other payments accruing to the state must be paid to the state through the Commissioner of the GLO (“Commissioner”) at Austin.

3-TX-g.9 – Record Finalized Lease

Once the developer has received approval of the lease, they are required to finalize the lease and have the lease recorded in the county or counties in which the land lies and must file a certified copy of the lease with the GLO.

Leases are not effective until approved and filed in the GLO. 31 TAC 155.44(d)(3).

3-TX-g.10 – Affidavit Claiming Surface Owner’s Unavailability

If the developer cannot locate the surface owner, they must submit a written affidavit to the commissioner stating that the party has been unable to locate the owner. TNRC 52.186(b)(1)

The developer’s affidavit must give the legal description of the land which they have been unable to lease. They must also attest to the fact that they diligently searched the county clerk’s records and the tax assessor’s records to determine the name, identity, and last known place of residence of the owner of the soil who could lease the interest. The prospective lessee must also indicate any other measures taken to locate the surface owner. TNRC 52.186(b)(1)

3-TX-g.11 – Notify Surface Owner of Consequences of Being Unavailable

The commissioner must provide notice to any surface owner identified in the affidavit of the consequences of a finding that the owner is unavailable to act as the state’s leasing agent. The notice must be in writing to the surface owner’s last known address and must also be published. TNRC 52.186(b)(2)

3-TX-g.12 – Has Surface Owner Given Notice of their Ability to Act as Leasing Agent?

If the surface owner does not contact the commissioner within 30 days after the completion of all notice procedures, then the surface owner will be deemed unavailable to act as the state’s agent and the SLB may lease the state’s mineral interest. TNRC 52.186(b)(3)

3-TX-g.13 – Has the Developer Identified Geothermal Resources on the Land?

If the developer identifies geothermal resources on the land, then they will be required to initiate the leasing process.

If the developer has not identified geothermal resources on the land, then they must initiate the State Exploration Process.

State Exploration Process:

3-TX-g.14 – Application to Lease

The developer must provide a completed application. An application to lease must include:

  • An identification of the developer’s prospect permit(s);
  • The date of issuance of the prospect permit(s);
  • A description of the tract(s) of land which identifies the area to be leased by section number, part of the section or survey to be leased, block number, township number, and/or certificate number, if applicable, survey name, number of acres contained in the section, and county or counties in which the land lies;
  • The name and address of the surface owner of record in the tax assessor’s office;
  • The name, address, phone number, and taxpayer ID number of a non-corporate applicant;
  • The corporate name, phone number, taxpayer ID number, address, the name of the officer authorized to execute permits and leases, and written evidence confirming that a corporate applicant is not delinquent in paying its franchise taxes;
  • Statement of developer’s proposed lease terms; and
  • Field notes describing the area to be leased, if such area is less than that covered by the prospect permit and cannot be accurately described as a part of the section. The field notes must be prepared either by a licensed state land surveyor or the elected or appointed county surveyor of the county in which the land is located pursuant to Texas Natural Resources Code Sec. 21.011. 31 TAC 155.42

3-TX-g.15 – Review Application Materials for Completeness

The GLO will review the application materials to ensure that all necessary components are present.

3-TX-g.16 - Is the Application Complete?

The GLO may request that the developer submit additional information in order to fully evaluate the application.

3-TX-g.17 - Is the Lease Determined to be in the Best Interest of the State?

The GLO may reject any lease which it determines is not in the best interest of the state. The GLO will consider:

  • Whether the proposed lease terms and conditions are in conformity with the Texas Natural Resources Code;
  • Whether the proposed lease terms are comparable to the best leases in the area which cover the same mineral or minerals;
  • Whether the proposed lease terms are compatible with other valuable uses of the leased premises; and
  • Whether the lease terms adequately compensate for the loss of other valuable uses of the leased premises. 31 TAC 155.42(b)(7)

3-TX-g.18 – Geothermal Lease

The geothermal lease must be in a form prescribed and furnished by the GLO and must include the provisions the commissioner considers necessary for the protection of the interests of the state. When the application to lease is approved, a lease will be prepared with the appropriate terms and conditions, signed by the commissioner, affixed with the seal of the GLO, and delivered to the developer.

3-TX-g.19 – Report Status of Project to Texas Legislature

During the first 30 days of each regular session of the legislature, the commissioner must report on the status of the exploration, development, and production of geothermal energy and associated resources under the land governed by Tex. Nat. Rec. Code Sec. 141 Subchapter C. ( TNRC Sec. 141.079).

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