(a) Lands and minerals subject to lease.
  (1) Any survey or portion of a survey of the Relinquishment Act land, as this term is uniquely defined in §10.1(a)(9) of this title (relating to Definitions; Exploration and Development Guide), is subject to lease under this section.
  (2) All minerals, as defined in §10.1(a)(5) of this title are subject to lease by the surface owner as agent for the state. Minerals other than oil and gas may be leased together or separately. Oil and gas must be leased under the terms of Chapter 9 of this title (relating to Exploration and Leasing of State Oil and Gas).
(b) Authority and duties of agent.
  (1) Prohibition against self-dealing. A surface owner may not lease to himself, herself, or itself, either directly or indirectly. A surface owner may not acquire by assignment a lease executed by the surface owner. A surface owner will be considered to have engaged in self-dealing if the surface owner leases to the following persons or entities or if the lease executed by the surface owner is assigned to the following persons or entities:
    (A) a nominee;
    (B) any corporation or subsidiary in which the surface owner is a principal stockholder, 5% or more, or an employee of such a corporation or subsidiary;
    (C) a partnership in which the surface owner is a partner, or an employee of such a partnership;
    (D) if the surface owner is a corporation or a partnership, a principal stockholder of the corporation or a partner of the partnership, or any employee of the corporation or partnership;
    (E) a fiduciary representing the surface owner, including, but not limited to, a guardian, trustee, executor, administrator, receiver, or conservator; or
    (F) a family member or to anyone related to the surface owner by marriage, blood, or adoption. within and including the second degree of consanguinity or affinity.
  (2) Fiduciary duty of agent. A surface owner is the state's agent and owes the state a fiduciary duty and a duty of utmost good faith. A surface owner must fully disclose any facts affecting the state's interest and must act in the best interest of the state. Any conflict of interest must be resolved by putting the interests of the state before the interests of the surface owner. In addition to these specific duties, the surface owner owes the state all the common-law duties of a holder of executive rights.
  (3) Consequences of a breach of the surface owner's fiduciary duty or a violation of the prohibition against self-dealing. When a surface owner breaches any duties or obligations owed to the state by law, any suit relating to such breach shall be filed in a district court in Travis County. Such a suit may seek removal of the owner of the soil's agency rights in addition to any other remedies authorized by statute or by common-law.
  (4) Penalty assessment for breach of the surface owner's fiduciary duty. A penalty of 10% shall be imposed on any sums due the state because a surface owner breaches a fiduciary duty. The imposition of this penalty will not limit the right of the state to obtain punitive damages, exemplary damages, or interest. Any punitive damages or exemplary damages assessed by a court shall be offset by the 10% penalty imposed by this subsection.
(c) Lease negotiation procedure.
  (1) The surface owner is authorized to act as the state's leasing agent with any person, firm, or corporation desiring to develop the permanent school fund's minerals.
  (2) The lease shall be negotiated by the surface owner and the prospective lessee on a form prepared and furnished by the GLO, which will incorporate the terms and conditions prescribed by the SLB.
  (3) The proposed lease shall be submitted to the GLO for approval prior to recording the lease in the county records.
(d) Approval and filing of lease.
  (1) The commissioner may reject or refuse for filing any lease deemed not in the best interest of the state.
  (2) Upon rejection of a proposed lease by the commissioner, the prospective lessee will be given written notice, which will specify the reasons for the rejection and any changes, deletions, or additions which would render the lease acceptable. The prospective lessee may request a hearing upon a rejection of a lease under the hearings procedures set out in Chapter 2 of this title (relating to Rules of Practice and Procedure).
  (3) Upon receipt of approval of the lease, the prospective lessee shall finalize the lease and have the lease recorded in the county or counties in which the land lies and shall file a certified copy of the lease with the GLO. Leases are not effective until approved and filed in the GLO.
  (4) The state's share of the approved bonus payment and the filing fee prescribed by §3.31 of this title (relating to Fees) shall be submitted along with the certified copy of the lease within 90 days of execution the lease. Any lease is void unless it recites the actual consideration paid or promised for the lease.
  (5) A surface owner, as the state's agent, owes the state a fiduciary duty. See subsection (b) of this section. This fiduciary responsibility must be of paramount concern when a surface owner enters lease negotiations.
(e) Lease terms and conditions.
  (1) Lessee shall pay bonus, rentals, royalties, and other lease considerations as follows.
    (A) On leases filed before September 1, 1987, lessee shall pay to the state 60% of all bonuses, rentals, and royalties and other considerations agreed upon. Lessee shall pay to the surface owner 40% of all consideration agreed upon.
    (B) On leases filed on or after September 1, 1987, lessee shall pay to the state 80% of all consideration agreed upon. Lessee shall pay to the surface owner 20% of all bonuses, rentals, and royalties.
    (C) On leases filed after September 1, 1999 for the exploration and production by surface mining of coal, lignite, potash, sulphur, thorium or uranium, lessee shall pay to the state 60% of all bonus, rentals, royalties and other considerations agreed upon. Lessee shall pay to the surface owner 40% of all consideration agreed upon.
  (2) In the event of production, the state must receive not less than one-sixteenth of the value of the minerals produced. The combined royalty payable to the surface owner and the state will be expressly provided for in the lease negotiated by the surface owner.
  (3) All royalties and other payments accruing to the state shall be paid to the state through the commissioner at Austin, and shall be deposited to the PSF.
(f) Reports, assignments, releases, inspection, forfeitures, and reinstatements. Leases issued under this section will be governed by all general provisions found in §10.7 of this title (relating to Conduct of Exploration and Mining Operations) and §10.8 of this title (relating to Assignments, Releases, Reports, Royalty Payments, Inspections, Forfeitures, and Reinstatements). However, a lease issued under this section cannot be assigned to the surface owner who executed the lease. See subsection (b)(1) of this section.
(g) Lease by owner of the soil.
  (1) An owner of the soil of lands covered by this subchapter may lease those lands for the purpose of exploring for and producing minerals other than oil and gas in the manner provided by this section.
  (2) An owner of the soil may apply in writing to the board for a lease of a mineral or minerals other than oil and gas.
  (3) The application shall contain the following:
    (A) the name and address of the applicant;
    (B) a complete legal description of the land the applicant seeks to lease;
    (C) the name and address of every owner of the soil of the land the applicant seeks to lease, if the applicant is not the sole owner of the soil;
    (D) a brief letter opinion signed by an attorney licensed in this state setting out the surface ownership of the land sought to be leased;
    (E) a statement of the applicant's experience in the exploration for and production of minerals other than oil and gas, including, without limitation, a list of any State of Texas or federal mineral leases currently or previously held or operated by the applicant or other entity in which the applicant has or had a significant interest during the five-year period preceding the date of the application;
    (F) a statement that the applicant intends to explore for and, if commercially reasonable, produce minerals other than oil and gas or if the applicant plans that another person or firm shall conduct exploration and production:
      (i) the name and address of the person or firm;
Cont'd...