HBA-SEP C.S.H.B. 3410 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3410 By: McReynolds Land & Resource Management 4/25/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE Vacant land is land that has never been surveyed and patented out of the State of Texas. As a result of antiquated technology and human error, some patents from the Republic or the State of Texas were inaccurately surveyed or the surveys did not describe the land to sufficiently locate it. In addition, the corners of some original surveys are marked by natural objects such as trees or streams that have either disappeared or significantly changed which makes it difficult to reconstruct original patent lines. Today, a vacancy finding generally disrupts what some view as long established chains of title. Several recent cases at the General Land Office have involved individuals whose chain of title at the county courthouse date back over 75 years, but because the land was never patented out of the state the land is considered vacant. The current vacancy process is lengthy, and expensive, and allows no time lines for action at the beginning of the process. C.S.H.B. 3410 simplifies and expedites the vacancy determination process. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of the General Land Office in SECTION 1 (Section 51.174, Natural Resources Code) and the School Land Board in SECTION 1 (Section 51.175, Natural Resources Code) of this bill. ANALYSIS C.S.H.B. 3410 amends the Natural Resources Code to repeal current law regarding the sale and lease of vacant and unsurveyed public school land. The bill sets forth provisions regarding the general powers and duties of the commissioner of the General Land Office (commissioner) and the School Land Board (board). The commissioner is required to adopt rules necessary and convenient to administrate these provisions. The board is required to adopt rules governing the terms and conditions for the sale and lease of a vacancy and is authorized to adopt rules governing mineral classification, royalty reservations, and awards of royalty reservations and preferential rights to an applicant or good-faith claimant (Secs. 51.174 and 51.175). The bill sets forth procedures for and content requirements of an application to purchase or lease land claimed to be vacant and provides that the commissioner set a filing fee in an amount not less than $100 (Sec. 51.176). The commissioner is required to assign a file number to and mark the date of filing on the application, accept any application that is in compliance with this subchapter, and notify the applicant on acceptance or rejection. A rejected application is terminated (Sec. 51.177). A person is authorized to apply for good-faith claimant status at the time of filing or not later than the 60th day after publication of required notices. The commissioner has sole discretion to declare a person a goodfaith claimant. Such an application must include certified copies of applicable county records supporting such status. The commissioner is required to declare whether a person is a good-faith claimant and is authorized to consider any relevant information. The declaration of good-faith claimant status grants a preferential right to purchase or lease the land (Sec. 51.178). The bill provides that the applicant is required to identify and provide notice to necessary parties and sets forth notification procedures (Sec. 51.179). The commissioner is authorized to recover state funds expended in investigations and hearings held in regard to the sale and lease of vacancies. The commissioner is authorized to require the applicant to submit a deposit within a specified time period and in an amount sufficient to pay the costs of any required survey and investigation. If the amount deposited is insufficient, the commissioner may make a written request for a reasonably necessary supplemental deposit. An applicant is prohibited from challenging or appealing the amount of the required deposits and refusal or failure to make the required deposits terminates the application (Sec. 51.180). After proceedings on an application are concluded and all expenditures authorized are paid, the commissioner is required to provide the applicant a complete statement of all deposits and expenditures and is required to remit to the applicant any balance remaining from the deposits made by the applicant (Sec. 51.181). The commissioner is authorized to appoint a licensed state land surveyor, or the county surveyor of the county in which the land claimed to be vacant or part of the land is located, to investigate the applicant's claim. The commissioner is required to mail a notice of intention to survey to each necessary party not later than the 30th day before the date the surveyor begins work. When the fees and expenses are not provided by law, the commissioner is also required to contract for fees and expenses reasonably necessary. The commissioner is authorized to rely on any survey conducted by a licensed state land surveyor or a county surveyor and any documents or public records required to determine whether a vacancy exists (Sec. 51.182). Not later than the 120th day after the date the surveyor is appointed, the surveyor is required to file a written report of the survey unless the commissioner extends the time for filing the report (Sec. 51.183). The commissioner is required to serve a true copy of the survey report filed by the surveyor on each necessary party not later than the tenth business day after the date the survey report is filed with the land office. Any necessary party is authorized to file exceptions to the surveyor's report not later than the 30th day after the date the notice of completion is received. If the commissioner does not appoint a surveyor, a necessary party is authorized to file exceptions to a survey report filed by the applicant during a time established by the commissioner. Any exceptions must be filed with the land office and a copy sent to each necessary party (Sec. 51.184). The commissioner is required to conduct an investigation into the applicant's claim that a vacancy exists and is authorized to conduct a hearing. The bill sets forth provisions regarding notice and the scope of a hearing, scope of an investigation, and the record of the investigation (Sec. 51.185). The bill requires the commissioner to notify each necessary party of the vacancy determination and sets forth the contents of a vacancy determination order. In determining the boundaries and size of a vacancy, the commissioner is not restricted to any description of the land claimed to be vacant and is required to adopt the description of a vacancy that best describes the vacancy and is consistent with an applicable investigation. Such a determination is a final order and may be appealed within 90 days in the district court in the county where the majority of the vacant land is located. The district court is authorized to allow an appeal after 90 days by an interested person who did not receive notice of a proceeding (Secs. 51.186 and 51.187). The district court is required to conduct a de novo review of the commissioner's final order determining that a vacancy exists (Sec. 51.188). The bill authorizes the court to review the commissioner's declaration of good-faith claimant status only in conjunction with review of a final order determining that a vacancy exists (Sec. 51.189). A person who has a present legal interest in the surface or mineral estate at the time an application is filed or who acquires an interest before the date of the commissioner's final order is authorized to appeal the final order (Sec. 51.190). A good-faith claimant who has been notified by the commissioner that a vacancy has been found has a preferential right to purchase or lease the vacancy at the price set by the board and subject to the royalty reservations provided by the board. The preferential right is authorized to be exercised after final judicial determination or after the commissioner's final order when the period for filing an appeal has expired. If the good-faith claimant does not apply for purchase or lease of the land before the 121st day after the date the preferential right may be exercised, then the preferential right expires (Sec. 51.191). If no good-faith claimant exercises the claimant's preferential right within the applicable period, the applicant has a preferential right for 30 days to purchase or lease the vacancy. The board is required to award an applicant, other than a good-faith claimant, a perpetual nonparticipating royalty of not less than 1/32 nor more than 1/16 of the value of oil, gas, and sulphur and one percent of the value of all geothermal and other minerals produced (Sec. 51.192). EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 3410 modifies the original to specify that, except for provisions regarding identification of and notice to necessary parties, a necessary party is not entitled to subsequent notices unless the party so requests (Sec. 51.179). The substitute authorizes the commissioner and applicant to agree to alternative payment methods to recover state funds expended in investigations and hearings (Sec 51.180). The substitute sets forth provisions regarding a surveyor contract (Sec. 51.182). The substitute provides that if the commissioner has not issued a final order on or before the first anniversary of the date the application was accepted, the applicant is authorized to file an action in district court to determine whether a vacancy exists. Such an action terminates the application with the General Land Office (Sec. 51.187).