An Administrative History
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Donation of Mineral Rights

During the debates over the Guadalupe Mountains park bill, Congressional committee members worried about the problems inherent in acquiring surface rights to the park lands before the mineral rights. The cost of land acquisition was a fairly firm figure, assuming the purchase took place within a few years. The cost of the mineral rights was an unknown. What if the value of the mineral rights increased unexpectedly? What if the cost to acquire the mineral rights was more than the surface rights? To circumvent these possibilities, the park bill had required that all mineral rights be donated.

More than two years before Congress authorized the park, officials of the Park Service began investigating the ownership of the mineral rights to the Hunter ranch. Their search revealed that J. C. Hunter, Jr., owned the rights to only 1,192.50 acres, the Texas Company (Texaco, Inc.) owned the rights to 25,296.83 acres, and the State of Texas owned the rights to 45,489.55 acres. [1] Hunter agreed to donate his mineral interests. By conveying his surface interests in the 45,489.55 acres to which the State owned the mineral rights, Hunter relinquished his right to act as agent for the State for oil and gas leasing. Under the terms of his agreement with the federal government, however, he retained the right to receive all royalties or rentals payable to him under leases which were in effect at the time of the sale.

In February 1964, Donald E. Lee, Chief of Land and Water Rights for the Park Service, visited Texas to investigate mineral rights for the proposed park. He learned that Texaco's mineral rights consisted of alternating sections in the upper two-thirds of the proposed park. The State of Texas owned the rights to the intervening sections. Most of the State's mineral rights in those sections were not leased. The remainder of the ranch land, in the southern portion of the proposed park, had been leased by Hunter in 1959, 1960, and 1961 (see Figure 13). All leases ran for 10 years and could continue in effect after that time if oil and/or gas were being produced in paying quantities.. [2] Lee estimated the cost to buy out the existing leases and investments to be approximately $450,000. Rather than incur that expense, he recommended that existing leases be allowed to run out if the owners agreed to donate their mineral rights. [3]

Although Lee's estimate of the value of the mineral rights was substantial, others believed it should be even more. As discussed in Chapter IV, during the Congressional hearings Texaco officials took exception to Lee's appraisal, saying it was too low, but they also were unable to provide a more realistic figure. Similarly, the Texas land commissioner argued that relinquishment of the State's mineral rights would deprive the school fund of important real and potential income. The crux of the problem was the speculative nature of the oil and gas industry, making objective evaluation of unexplored resources difficult.

mineral rights map
Figure 13. Mineral rights ownership within Guadalupe Mountains National Park boundaries. The ownership of mineral rights on Hunter's land by the State of Texas and Texaco created a checkerboard pattern. On only a few sections of the designated park lands did the owner of the surface rights also own the mineral rights. Legislation authorizing the establishment of a park mandated that all mineral rights be donated rather than purchased.

The amendment to the park bill that granted previous owners preferential rights to repurchase their mineral rights if oil and gas production was ever permitted within the park gave Texaco officials and the Texas legislators the security they desired to make donation of their mineral rights feasible. Both Texaco and the State of Texas conveyed their mineral rights to the federal government within a year after the park was authorized. In March 1967, Texas Governor Connally signed the bill approved by the Texas legislature that donated the State's mineral rights on the Hunter ranch. The legislature reimbursed the school fund $5 per acre (approximately $230,000) for the loss of income-producing rights. [4] In a formal ceremony on November 16, 1967, Connally gave the hand-lettered quitclaim deed to Interior Secretary Stewart Udall. On November 2, 1967, Texaco division manager Joe Markley transferred the company's subsurface rights to the federal government. [5]


Last Updated: 23-Apr-2001