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Texas Lease of Land Trade Lands (3-TX-f)

This flowchart illustrates the process of leasing Land Trade Lands in Texas. The Texas General Land Office (GLO) administers leases on Land Trade Lands through Title 31 of the Texas Administrative Code 31 TAC 155.42. Land Trade Lands are defined in the Texas Administrative Code as “Lands, the surface of which have been sold or traded with both mineral rights and leasing rights retained by the state.” 31 TAC 155.40(a)(3).

Lease of Land Trade Lands Process

3-TX-f.1 – Has the Mineral Estate Been Severed from the Surface Estate?

All fee tract geothermal leasing must go through a bid sale process. A "fee tract" in Texas means that the mineral estate and the surface estate have been severed (commonly known as a “split estate”). Areas where the estates have not been severed will go through a regular leasing process through the GLO.

3-TX-f.2 – Lease Nomination

The GLO holds four mineral lease sales each year. In order to request that a state-owned tract be offered at a lease sale, the tract must be nominated. The developer must submit nominations in writing by the deadline set prior to each lease sale.

The developer is required to submit a $100 fee with any nomination they submit. Nomination fees are non-refundable. 31 TAC 151.2

3-TX-f.3 – Does GLO/SLB Accept the Nomination?

The GLO may choose to accept or reject a nomination to place a tract up for bid.

3-TX-f.4 – Sealed Bid

After the GLO has received a sealed bid it may not be revoked or withdrawn by the developer. The bid must include a separate check for an amount equal to 1.5% of the bid payable to the commissioner as a special fee. If the developer is unsuccessful in getting the lease, this special fee will be refunded.

If the developer is successful with their bid, but fails or refuses to make payment within 30 days the developer is not entitled to a sale of or lease on the tract covered by the bid and the cash bonus will be forfeited automatically. The SLB then has the option to offer the tract to the next highest bidder. 31 TAC 151.2(d).

3-TX-f.5 – Application to Lease and Associated Documents

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-f.6 – Review Application Materials for Completeness

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

3-TX-f.7 – Is the Application Complete?

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

3-TX-f.8 – Is the Bid/Lease Determined to be in the Best Interest of the State?

The GLO may reject a lease if it determines that it 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-f.9 – 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-f.10 – Notify Surface Owner of Lease, If Necessary

The GLO must notify the surface owner that the lease has been issued if the surface owner requests such notice in writing. 31 TAC 155.43(b)(3)

3-TX-f.11 – 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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