ustxtxb_obs_1983_08_19_50_00005-00000_000.pdf

The final assembly of all U.S. nu clear weapons takes place in the Texas Panhandle. Houston has more oil company headquarters than any other city in the world. The whole state reeks of Sunbelt boosters, strident anti-unionists, political hucksters, and new industry and money. THIS IS THE LOOK OF TEXAS TODAY and the Texas Observer has its independent eye on all of it. We offer the latest in corporate scams and political scandals as well as articles on those who have other, and more humane, visions of what our state can be. Become an Observer subscriber today, order a gift for a friend, or instruct us to enter a library subscription under your patronage. Send the Observer to name address city state zip Othis subscription is for myself Ogift subscription; send card in my name O$20’enclosed for a one-year subscription Obill me for $20 name address city state zip THE TEXAS OBSERVER 600 W. 7th, Austin, Texas 78701 In 1919, the 36th Legislature passed the Relinquishment Act in order to create a partnership between the surface land owner and the state for oil and gas on lands where the state owned the mineral rights. This act was interpreted by the State Supreme Court in Green v. Robison in 1928 to mean the surface owner of minerally-classified lands acts as leasing agent for the state. In return, the owner receives one-half the bonus, one-half the rental, and one-half the royalty from the oil or gas lease. After the surface owner negotiates the lease, it is submitted to the Land Commissioner, who must be satisfied with the terms of the lease, making sure the state is getting true value for the lease. If the Commissioner is satisfied, the lease is then filed. The minerally-classified lands proved a boon for the school funds. Between THE STATE’S case, then, is based on its claims under the Relinquishment Act. According to the attorneys in the Land Office and the Attorney General’s Office, the case is close to being airtight in the state’s favor. The facts, as presented by the state, are as follows: In 1925, the Vacuum Oil Company, later to become part of what is now Mobil, signed as oil lease for both publicly-owned and privately-owned lands making up over 64,000 acres. Since there was a law in effect until 1951 that prohibited unitizing, or pooling, state lands and private lands, the lease as written presents a problem for Mobil Oil. If the law prohibiting unitization is ignored for the sake of the lease, then the state is due its share of the royalties on all the production of the remaining 49,000 acres of privately owned land in the lease, a share it has not received. But, if the law is not ignored, the state land has to be treated separately from the private land. The lease, however, contained development clauses which required that after the first seven years of the lease no more than ninety days could elapse after the drilling of one well was completed before a new well was drilled on the lease. Among the records in the abstract Manges spent several hundred thousand dollars to obtain are those allegedly showing that Mobil had not fulfilled the development clauses on the state land. 1918 and 1920, the General Land Office issued prospecting permits for oil and gas on 5,393,254 acres. Over a half million acres were under lease by 1926. In 1913, the Permanent School Fund was $19,377,000, while sixty years later it amounted to $955,313,665. On May 29, 1931, the Free Royalty Sales and Leasing Act was enacted, eclipsing the Relinquishment Act for the sale of remaining state lands. The Relinquishment Act, therefore, applied to state lands sold between September 1, 1895, and May 29, 1931. 14,720 acres of the 64,646-acre Mobil oil lease on the Duval County Ranch Co. property, a lease signed on March 3, 1925, by oil companies that became part of Mobil, are Relinquishment Act lands, on which the state owns the mineral rights. It is the state’s contention that Mobil can’t have it both ways. Mobil either owes the state money for royalties from oil production on the entire 64,000 acres or Mobil owes the state for not living up to the development clauses for the state lands taken separately. According to Manges’ records, the lease may have lapsed as early as 1932, and so the money owed the state would be considerable. Mobil now pays a one-eighth royalty on its oil lease, as it did in 1925. If it has broken its lease, however, a new lease would require one-fourth royalty under current law. Since all proceeds from the state’s minerally-classified lands were designated to go to the Permanent School Fund, the state’s school systems stand to be the big winners in any large settlement or judgment. Manges says that, in addition, there were many lapses in drilling on the private land and that he is thus owed money for violations of the lease as well as for being the state’s agent on the public lands. Mobil, on the other hand, disputes the alleged 90-day lapses and says both the state and Manges have ratified the lease in various documents signed over the years. One of these “ratifications” is a letter sent by former Land Commissioner Jerry Sadler, while in office, acknowledging the lease. “But that,” says current Commissioner Mauro, “is not legally binding on anybody, and 2. Texas v. Mobil THE TEXAS OBSERVER 5