Untitled Texas Attorney General Opinion ( 1958 )

November 17, 1958
Honorable Bill Allcorn, Commissioner
General Land Office
Austin 14, Texas
Opinion No. WW 540
Re: Whether the primary terms of oil
and gas leases covering tracts in
the Gulf of Mexico beyond three
geographic miles are suspended
because of pending litigation under
the provisions of Art. 54211, VCS
(Acts 1941, 47th Leg., p. 1405,
ch. 637, sec. 1, as amended Acts
1951 52nd Leg., p. 750, ch. 406,
sec. 1) and related questions.
Dear Mr. Commissioner:
You have requested an official opinion regarding the
questions, mentioned in the above caption, which are set out
in full in the body of this opinion.
In your request vou
” . mentioned
``~ the nendencv of lltina-
tion in the Supreme Cc)urt of the United States 1n;olving -
ownership "beyond three geographical miles" in the Gulf of
Mexico. The case to which you refer is styled United States
of America, Plaintiff v. States of Louisiana, Texas,
Mississippi, Alabama and Florida, Defendants, No. 11 Original,
‘C)ctober
Term, 1957 (now No. 10 Original, October Term, 1958.)
Prior to June 24, 1957 the State of Texas filed an
amicus curiae brief in a case brought by the United States
again&Louisiana involving ownership of submerged lands off
the Louisiana coast. The reason for the filing of the amicus
brief by Texas was that it appeared from assertions made in
the briefs of Louisiana and the United States concerning Texas'
submerged lands that the rights of Texas might be adversely
affected in a case to which Texas was not a party.
The United States Supreme Court by its order of June
24, 1957 (as amended by order October 22, 1957) declared that
the issues involved in the Louisiana case were so related to
Hon. Bill Allcorn, page 2 (w 540)
the interests of Texas that the court allowed Texas sixty days
within which to intervene, and, if it failed to do so, the
order permitted the United States sixty days thereafter within
which to add Texas as a party. Texas did not intervene. The
United States filed an amended complaint November 7, 7~957by
which Texas, Mississippi, Alabama and Florida were added as
parties defendant. (This date has been confirmed by letter of
the Clerk of the Supreme Court dated November 6, 1958.)
We deem it of importance to advise you of some of the
relevant portions contained in the Amended Complaint against
Texas, Despite the wording of the Congressional Submerged
Lands Act, 67 Statutes atlarge 29, (1953) the United States
in its Amended Complaint averred that when Texas became a mem-
ber of the Union its,boundaries did not extend into the Gulf
"more than three geographic miles from the ordinary
low-water mark or from the outer limits of the inland
waters, and the Congress...has never approved a boun-
dary for said State extending into the Gulf...more
than three geographic'miles from the ordinary low-
water mark or from the outer limits of inland waters."
The United States alleged that Texas claims some right, title
and interest in the "lands, minerals and other things' seaward
of that line. The complaint averred that the United States
"is now entitled to exclusive possession of and
full dominion and power over the lands,.mLnerals
and other things underlying the Gulf of Mexico,
lying more than three geographic miles seaward
from the ordinary low-water mark and from the
outer limit of inland waters on the coast of
Texas, extending seaward to the edge of the con-
tinental shelf, and is entitled to an accounting
forall sums of money derived therefrom by the
State of Texas after June 5, 1950, which are pro-
perly owing to the United States under the decree
entered by this Court on December 11, 1950, in the
case of United States v. Texas, 340 U.S. 900."
We feel that the rather detailed recitalsabove given
is essential to an understanding of our answers to your ques-
tions.
In your opinfon request you quote Article 54211, V.C.S.,
but only in part. Article 542li wasenacted in 1941, but it
was amended in 1951. We will quote the entire act, the under-
scored portion representing the language of the amendment
incorporated into the actiin 1951.
Ron. Bill Allcorn, page 3 (ww-540)
"The running of the primary term of any oil,
gas or mineral lease heretofore or hereafter issued
by the Commissioner of the General Land Office, which
lease has been, is, or which may hereafter become
involved in litigation relating to the validity of
such lease or to the authority of the Commissioner
of the General Land Office to lease the land covered
thereby, shall be suspended, and all obligations
Imposed by such leases shall be set at rest during
the period of such litigation. After the rendition
of final judgment in any such litigation, the running
of the primary term of such leases shall commence again
and continue for the remainder of the period specified
in such leases, and all obligations and duties im-
posed thereby shall again be operative provided such
litigation has been instituted at least six (6) months
prior to the expiration of the primary term of any such
Your questions will be answered in the sequence in
which you propound them:
(1) ' Are leases beyond the three'geographical mile
line suspended under the provisions of the
above statute?"
After the enactment of the 1941 act original mandamus
proceedings were brought in the Texas Supreme Court prior to
December, 1950 by Ohio Oil Co., et al v. Giles, Commissioner
of the General Land Office, and others, (235 S W.2d 630) t
comae1 refund to the relator oil companies of the amounts iaid
as delay rentals under mineral leases covering submerged lands
in the Gulf issued by the State to Relators on the basis that
there was then pending in the United States Supreme Court an
action by the United States against Texas to recover the sub-
merged lands, and that by the terms of Art. 54211 of 1941 all
obligations were suspended. (see 239 U.S. 707; 340 U.S. 900)
The Supreme Court of Texas held that the annual delay
rentals under such m~ineralleases were "obligations" within
the meaning of Article 5421i (of 1941) and that the requirement
iion.Bill Allcorn, page :I. (l,,:;'-$c
;
t:ogay delay rentals was suspended du~ringthe lft~lgation
Iietweenthe United States and the State of Texas. The Texas
Attorney General urged the !,ropositionthat If the annual
r:?ntalswere "obligations!',and if Article 542li (of 1941)
!:a6interpreted as releasln;;or suspending them, that Article
542li fir 19417 was in vioiation 0; Article 3, Section 55 of
the Texas Con?%itution. The court held:
"Since the part of the act relating to leases
eg&d& rior to the enactment of Article 5421i
1 is not Involved in this case, it is not
necessary to consider and construe that part of the
act. When we consider th::part of the act involved
ir?this case and constrv;:'It!.nthe light OF the
many decisions in this Stati:iiipoint, we find that
;.tis constitutional..,..<,
:,,I-,
further hold that the provi-
&ions of t'hcact involved hiirodo not violate Article
I Section 55, of the Constitution of Texas. Art i-
z.I
cle'5421i relieves the lesseos of the obifgation to
pay delay rentals during the suspended period..."
The Texas Suprer.:~c
Court ::znt,toned
that the Relators
::zL'L'
not partj.esto the Un-',tzdStatzs Supreme Court case, and
stated that after leave to fil.2zandamus had been granted, and
before the Supreme Court of Texas handed down its opinion, a
had b can ren(j.r?p&
?j.naljud:,?r.ent by the Uni.tedStates Supreme
'our% adverse to Texas. The Texas ::l!preme Court stated:
'-T;>e
eff.zctof that jud``.:~it's that the Comrris-
si.onerof the Genera!.il:ar:d
C!X 7~cehad no authori.ty
3as;es in question."
to exmxte the oi;.and ;;;a::
The Texas Su:,rc``s::ourt
r;;used to decide the question
as to when the suit in t!l.,r;(j
m;;i')
After the advers,:ti.:::
:~s:on in the Texas case the Con-
;;i-eSsenacted tile;j,;l'orr,eiv;;~
;.3il;J,s
Act , supra, the purpose of
:{'fl
ii:
h , as to the Gulf Coactcr!~Xates, was to restore to such
s.tatesproprietary rights .i~: ~3
u'cj*rj
e~2;;
$2
d lands in the Gulf out
to setihiardboundaries of ti?crespect:ve states as they existed
prior to or at the time such statc.cbecame members of the
Ur! n , 01,as tllejyetofo;y:
i.c a~l;:);yj.;~:d
3y f:ong:ress.Tncidentally,
',;I,?
;I?;2lublj.c
of Texas r'ij;~.!~.:.
its ciaritimeboundaries at three
:.i~,:yi.n:?
JLcx3.gues
seaward I';,:
,-
,t December 19, 1835, (I Laws Rep.
.;, y;;,
'i$:;:. :;t347 U.S. 272).
. -
lion.Bill Allcorn, page 5 (NW-5&o)
In our opinion the amendment to Article 54211 V.C.S.
in 1951 substantially alters the situation in some respects
from that posed before the Texas State Supreme Court in 1950.
It is true that the primary term of the leases is suspended
as provided in the amended statute, and, though the amended
statute carries forward the language "all obligations imposed
by such leases shall be set at rest durinf the period of such
litigation," yet, the amendment provides that the lessees
shall pay all annual delay rentals and any royalties which
accrue during the period of litigation the same as during any
other period of the extended primary term' and it provides
that the rentals shall be held in suspense and returned to
the lessees in the event the State is unsuccessful in any
such litigation. Thus, under the amendment, the obligation
of the State's lessees to pay delay rentals and royalties
continues during such litigation.
The answer to your first question, then, is:
(1) Leases beyond three geographFc miles seaward from
the low-water mark and from the outer limits of
the inland waters on the Coast of Texas are not
fully suspended in the sense in wh'ichyou stated
your questions;
(2) Lessees holding such leases must continue to pay
all annual delay rentals and any royalties which
accrue during the period of litigation, "such ren-
tals" to be 'hcl.d
in suspense:
(3) The primary terms of such leases are suspended
during the perLod of such litigation, and after
the rendition of final judgment, if such judgment
is favorable to Texas, the running of the primary
terms shall commence again and continue for the
remainder of the period specified in such leases,
and the obligations and duties imnosed there by shall
again be operative provided such lrtigation was
instituted at least six months prior to the expira-
tion of the primary te-rm,and
(4) Ln vietv
Giles
of the holding and language of 0hS.oGil Co.
(235 s.:;'.2d
630) the statutory SLISPenSiOn
V.
of obligations is constitutional as against the con-
tention that the Act (Apt. 9211) is violative of
Section :, ArtiC3.C yj of the Texas Constitution,
-itshou1.dbe 17nrnein mind that Art. 54211 as
thou.rrh
e,menzeddoes not reli.evelessees of their obligation
to pay royalties and delay rentals.
.
Your second question was:
(2) "If your answer to question number 1 is in the affir-
mative, what is the exact date of the beginning of
the period during which the primary terms of those
leases are suspended?"
We have explained that the United States Supreme Court
by its order of June 24, 1957 (as amended) allowed Texas sixty
days within which to intervene, and,,if it failed to do so,
allowed the United States sixty days thereafter within which
to add Texas as a party. By that order Texas was not compelled
to intervene, and it is our opinion that intervention was not
sropcr because the Congress of the United States had not given
tts consent to a suit against the UnLted States. As to that
oortion of the order allowing the United States sixty days
%ereafter within which to add Texas as a party, it is our
opinion that there was then no pending suit against Texas
because the United States, in its discretion, could have
chosen not to sue Texas, (the President having stated Texas
owned her submerged lands) even though it might have elected
to sue other Gulf Coastal States, and therefore there was no
";itigati.on"pending, within the wording of Particle54211 (as
amended), until a suit was actually filed against Texas.
We therefore answer that the '"exactdate of the begin-
ning of the period during which the primary terms' of the
?;easesin question were suspc:ndedis November 7, 1957, the
~.!ate
Texas was made a past:;d?fmdant by the filing of the
Amended Complaint by the 3r:itedStates.
YOUS third questioi \~,'%I.
2:
1 is in the affirma-
I-" "If your answer to question nI&inber
\3:
tive, then as to lease:;where the three geographical
mile line cuts acso::slands covered thereby, is c-he
r>Jnningof the pri.maryterms of those leases suspended
as to all cf the land coy.-ercd
by that lease or only as
to that part of tho land covered by the lease which is
seaward of the three geographical mila line?"
An over-literal or "yper-technical construction of the
act might cause one on :?i.rst impression to think either (a)
"'hat,except as to ?o::al.ty %d rental obligations, since :.
P:?Ttj.l:?>
<>iY
the IEa:i~!j:;zf !‘::(:%ed
:"ylitig+t%on, the remaining
r>bligationsas 'cc,
'c!:ls
, and a portion of the lease lies landward of that line,
the oh1igatj.on.z
of the I.esseesunder,Article 321i are not
suspended as to that portion of the submerged lands lying
landward of that l-inebecause the United States has not sued
for recovery of lands within that area, and there is no "liti-
gation pending which affects that portion of the leases
executed by the Statz. To hold that all or none of the obli-
gations of the entire lease are suspended would be an unreason-
able construction of Article $211. The Courts, in construing
statutes, WI11 nat impute to the legislature an intention to
create an unreasonable result. See 39 Tex. Jur. (Statutes)
Sections 118, 119, and cases there cited.
Under
/ ArtI~cle$21;, WY::, (Acts 1941, 47th Leg., p.
14crj5,c‘n.97, sec. 1, as amended Acts 1951, 52nd Leg., p.
sec. 1 ) 1eS )::?
750, c:1.I!!,.>, S from the state holding oil, gas
:j
and ml~leralleases underlying the Gulf of Mexico lying more
than t'hre2ge0graph~i.c miles seaward from the ordinary low-
v;a';eymarl:and from the outer limit of inland waters on the
Coast of Texas must continlieto pay all annual delay rentals
and any royalties which accrue during the period of litiga-
tion involved in United States v. Louisiana, Texas, et al,
No . 13 OrigInal, October Term, 195?.. The primary terms of
such leases are suspended during such litigation. After
rendition of final JucQgmdnt,if the judgment is favorable
to Texas, the running of the primary terms shall commence and
coritinuzfor the remainder of the period specified in the
respective leases, and the other obligations and duties im-
posed thereby shall again be operative provided the litigation,
above mzntloned, was instituted at least six (6) months prior
to the expiration of the primary term. Because of the holding
of th:?Te;:asSuprer~ii Court in OhLo Oil Co. v. Giles, supra,
';;lestat;:torysuspension under Article 54211 as amended is
constitutional as against the contention that theAct violates
,cact',on;;,Article 55, Texas Constitution, but the lessees
. .
Hon. Bill Allcorn, page 8 ('m-540)
must continue to pay rentals and royalties. The date the
period of suspension commences is November 7, 1957. If a
portion of a lease lies more than three geographic miles
seaward from the ordinary low-water mark or from outer limits
of inland waters, and a portion lies landward of that line,
the obligations of lessee, under Article 54211, are not
suspended as to the portion lying landward of the line, but
are suspended as to the portion lying seaward of the line,
except, that the lessee must continue to pay annual delay
rentals and royalties on the seaward portion.
Very truly yours,
WILL WILSON
Attor@y General of Texas
N. Ludlum
First Assistant
Attorney General
JNL/grb
APPROVED:
``I'N'ONCOMMITTEE
- . ?. Blackburn, Chairman
L. P. Lollar
J. C. Davis, Jr,
John Reeves
.'John
Webster
James Rogers
RWIEWED FOR THE ATTORNEY GENERAL
BY: W. V. Geppert