HISTORY Enacted in 1919, the Relinquishment Act, as interpreted by the Courts, reserves all minerals to the State in those lands sold with a mineral classification between September 1, 1895 and June 29, 1931. Under the Relinquishment Act the, “owner of the soil”, also commonly known as the surface owner, acts as the agent for the State of Texas in negotiating and executing oil and gas leases on Relinquishment Act Lands (RAL). The State surrenders to the surface owner one-half (1⁄2) of any bonus, rental and royalty as compensation for acting as its agent, and in lieu of surface damages. The owner of the soil’s agency power is somewhat limited, however, because the General Land Office publishes a standard RAL lease form which must be used to lease Relinquishment Act Lands. Additionally, the GLO must approve all terms including bonus consideration, royalty rates, and rental amounts, and any additional provisions for any RAL Lease. No lease is effective until it has been approved and a certified copy of the approved lease is accepted for filing in the General Land Office. The following information will provide some guidelines for negotiating an RAL Lease.
That is NOT what I am being told by OXY, fyi. Trust me, that was my first question. Anyway, I’ll tread carefully.
So, what is a “mineral Classified” tract of land. I assume that it is different than PSL tracts. Are there any other types of tracts we need to know?
I am not an expert so thanks for a reply from the experts out there
fred
Not all PSL lands are mineral classified. Not all mineral classified lands are PSL survey. Call Drew Reid at GLO to ask if your tract is mineral classified if you do not know. If it is mineral classified and you sell the surface then you will not receive any bonus and royalties. The landman may or may not know the law. You should not rely on his statements as a legal opinion. Also, some surface-related revenues must be shared 50% with State. For example, a pipeline related to producing well on your mineral classified tract, payment is shared. Pipeline running across the tract and does not carry any gas or oil from wells on mineral classed tract, then you keep all revenues. Again, ask Drew Reid. Be sure to have full legal deecription and all the facts.
BTW, The below paragraph posted yesterday by me was copied from the General Land Office website.
Wade is correct. State of Texas owns minerals unet mineral classified tracts. Surface owner is authorized to negotiate lease terms as agent for State, subject to GLO lease form and minimum terms. Then you receive 50% of bonus and royalties. If you sell surface of mineral classified tract, then purchaser gets all these rights. State law prohibits seller from retaining lease rights. So be very wary of any purchase offers for your surface on mineral classified tracts.
I’m not an atty, take this with a grain of salt. Maybe y’all could work out some sort of 30 year (or more - 99 year) ground lease? Just an idea. I would assume that that wouldn’t impact your status as agent on behalf of the State on your Mineral Classified Lands, but you might ask someone more qualified than me.
The GLO online GIS map is color coded to show which tracts are Relinquishment Act, State, etc. Suggest starting here first. Drew has quite a bit on his plate reviewing and approving the leases where the state has approval rights.
Thanks, Texas Tea.
I’ll report back if negotiations progress.
Following up on Wade’s post, here’s the link to the GLO map: http://gisweb.glo.texas.gov/glomap/index.html
Here’s the link to the color code legend: http://gisweb.glo.texas.gov/webpage/GISWebLegend.pdf
Later – Buzz
Hey Guys!
I just spoke with Walter Talley, my contact at the General Counsel’s Office of the Texas General Land Office (GLO) in Austin.
I have been contacting Walter for years now to request information regarding whether any given Survey is Mineral or otherwise Classified.
His is the only office that can prepare and issue a Classification Letter regarding the issue if you need one of those (I include one with all of my Title Run Sheets packages), not Drew Reid’s Office.
The GLO has a webpage where you can pull up general information on your Survey: http://www.glo.texas.gov/history/archives/land-grants/index.cfm
You can print a General Information Sheet on every Survey in the State and in many cases download the actual Land File, which will contain documentation regarding any Classification.
But you need to note that not all of the Land Files have been scanned in (it’s a tremendous task and will take several more years to complete), so you might not be able to download the actual file.
Walter pulls the file to determine whether a Survey is classified and, if so, as what. Call him or email him with your request and he will call you back with the results of his research. If you need a Classification Letter, you will need to snailmail him (his office) a request in writing and a check for $10. They may require a SASE as well. Turn around time for the Classification Letters will be about 10 days.
Walter explained that, while quite helpful, the RRC’s GIS Mapping is not yet complete. That the only way to definitively determine whether a given Survey’s Classification is to contact his office.
He can answer your questions over the phone for free. But he cannot answer your questions via email without charging you the $10 (anything in writing is considered a letter).
With his premission, his contact information is
Walter Talley
512-475-1859 Desk
Hope this helps -
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
What, not whether.
I just talked to Drew Reed at the GLO and was told that if a lease is producing, the surface may be sold while reserving the rights to royalties for as long as the lease produces. The “gotcha” is if and when the operator ceases producing the lease and the original lease lapses. As such, it seems like the surface should be priced up somewhat, given the eventual loss of royalties down the road.
Any new activity in sec 56-T3-6 or sec 56-16?
Percentage depletion is always allowed under IRS code. Your state may differ with respect to state income tax return.
I have a friend who owns 3.0 acres Block F in Balmorea. I’m trying to see if he has mineral rights. I’m thinking all the minerals were reserved in the Relinquisment Act. His property is close to the canal. Also trying to find out about water rights if he decides to drill a water well. Any info would help me a ton.
You always get percentage depletion. Upon inheritance, your basis is market value at date of death. Upon gift, your basis is donor’s basis. Either way, your basis is reduced by depletion down to zero. You still continge to get percentage depletion. State laws vary and so your state and federal returns may not match.
TennisDaze you continue to amaze me. You are the man. That is what I couldn’t find by searching the web. Are you saying that even once the depletion deductions have equaled the basis I can continue to take the depletion deduction ?
Bob
PLS, RAL, Mineral Classified- interesting. thanks to all. My question is: if it is PLS, but not RAL or classified, and is leased by mineral/surface owner and begins producing what percentage is the royalty split between the State and the owner?
Question for the seasoned owners. If the mineral rights are inherited so there is no capital cost to acquire them, does that mean a depletion rate tax deduction is not legal ?
Thanks Folks