A WHITE PAPER
TO GUIDE THE HB724
UNCLAIMED MINERAL PROCEEDS COMMISSION
IN ITS HISTORICAL MISSION
March 21, 2014
The work and mission of the HB724 Unclaimed Mineral Proceeds Commission appear to be
complex, but in reality they are simple and attainable. Some general comments are provided
first and then a specific approach is outlined to comply with the mandates contained in House
Bill 724 to study unclaimed land grant mineral proceeds.
The descendants of Spanish and Mexican land grants in South Texas maintain that
Common Law, i.e. Texas Property Law, enacted in 1840, authorizes and gives them the right
to file claims against mineral proceeds from unclaimed oil and gas wells whose owners have
never been found, which are located in the respective land grants awarded their ancestors.
The most important conclusion for the commission to reach is a major legal one,
confirming and validating that these descendants do have a claim to those minerals under
present law as written, that is, that it is intrinsic in the law. For the commission to reach this
consensus may require an independent interpretation of the law because the law neither
specifically authorizes this right, referring to “unknown heirs,” who now have become “known”
by virtue of a declaratory judgment in state district court, nor does it specifically deny it. In a
simplistic viewpoint, if the law does not prohibit something then it must be legal. To be
realistic, the validation of the law might require an official interpretation.
It is interesting to note the following statement in the state comptroller’s website, Window
on State Government, “Unclaimed Property and Mineral Proceeds,” Item (6) states, “If the
owner is deceased, you can provide the Unclaimed Property Division with documentation
proving you are an heir of the reported owner. Such documentation includes copies of wills,
or, if there is no will, a notarized Affidavit of Heirship is required for claims of less than
$10,000 or less. Claims that exceed $10,000 require a court’s Determination of Heirship or a
Small Estates Affidavit of Heirship, both of which require a judge’s signature.” (see
Attachment A). No doubt, the declaratory judgment meets this requirement.
This statement by the state comptroller indicates that her office has accepted formal legal
heirship documents to pay claims for unclaimed mineral proceeds. If so, a precedent has been
established. A review of payments by the comptroller for claims using legal heirship
documents should confirm the claims of descendants of Spanish and Mexican land grants.
Payment of such claims by the comptroller need not necessarily have been made to these
descendants but might have been paid to other Texas citizens. For example, a person in the
Permian Basin might have found out his great grandfather sold the land but not the minerals,
left no will, and never formally passed title to his descendants. With heirship court
documents, the person could claim his or her rights. It also seems very possible that a review
of case law would discover legal challenges ruled in favor of the heirs.
Since this is a state matter the Texas Attorney General is the person to provide an opinion,
which normally takes six months to promulgate. I recommend that one or two lawyers from the
attorney general’s office be assigned to the commission to obtain this opinion and as liaison
personnel to assist in expediting the legal opinion process. This assignment of staff is in keeping
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March 21, 2014
with Section 2(h) of HB724 that states, “On the commission’s request, the comptroller, or any
other state agency, department, or office shall provide any assistance this commission needs to
perform the commission’s duties.” These lawyers can also help scrutinize the related points of
law for an opinion. The other legal points to be clarified include laws about transference of
mineral rights when the contract is silent, current statutes of limitations, if any, the
transference of minerals to owners under the Texas Constitution of 1866, the fiduciary
responsibility of the state for unclaimed funds and its rights to interest on those funds (but not
the principal), etc. It is not the job of the commission to do homework. That is the
responsibility of staff. The idea of a subcommittee to do limited study is a sound one, which I
refer to as an executive committee if it includes the chairman.
One of the other legal points bears clarification. It has been stated that prior to 1866 Texas
landowners did not own the mineral interests on the land, but many of the families of the
original grantee were living on the land. However, Appendix III of the New Guide to Spanish and
Mexican Land Grants in South Texas, Texas General land Office, 2009, “Sal del Rey” and Mineral
Rights in Texas, pages 167-168, states, “This prompted a substitute ordinance with a broad and
contrary effect. The substitute did not refer specifically to “Sal del Rey.’ Instead it proposed
giving away the state’s mineral interest to existing surface owners. The effect was
retrospective. Owners of land granted by the successive sovereigns (Spain, Mexico, Republic
of Texas, and the state of Texas) before adoption of this amendment, would be given
complete ownership of the minerals on their land. “ (see Attachment B)
There seems to be confusion about what constitutes unclaimed mineral proceeds. I divide
them into two categories. The first I call Type One and are abandoned royalties of title holders
who have disappeared. These proceeds come back to the oil and gas companies, and every
three years they come back to the state with an amount and name or best description. This is
the fund maintained by the Texas Comptroller’s Unclaimed Property Division mixed in with
traveler’s checks, bank accounts, and other property. The analysis of these funds indicate that
most of the persons named will never be able to recover their property.
The other unclaimed mineral proceeds are those I categorize as Type Two, those produced
from unclaimed wells whose owners have never been found without a name attached. These
funds come to the state after three years such as the Type One proceeds to be kept in trust by
the state. If, as previously mentioned, the unclaimed wells have the initials of the original land
grantee that practice enforces descendants’ claims.
Oil and gas companies make extensive efforts to find rightful owners for obviously they
need to legally drill for all the benefits of current revenues and payment of royalties to lease
holders. They make exhaustive searches of county and other records. Failing there the oil and
gas companies desire to stake a claim by drilling an unclaimed well at great expense. It is an
investment in the future as they hope and pray that rightful owners will someday come forth.
Drilling an unclaimed well requires a permit from a district judge representing the state,
called a receivership hearing. In granting the request, the judge may require the oil and gas
company to reserve 100% of the funds and pass them on to the state after three years or the
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March 21, 2014
judge may require that the funds be deposited in a county bank account called a registry. If the
rightful owners show up in the future, the oil and gas company can recoup its investment. In
one case I reviewed, the petroleum company could keep 75% and grant the owners a 25%
royalty. This ratio may not be uniform.
This process raises several questions. First, does all the money kept initially by the drilling
company or held by the county find its way ultimately to the state? Second, does the state
monitor these wells, their units and dollars of production, to insure all funds are paid in?
Third, what controls does the state have to insure that all the monies find their way to state
coffers? As a former auditor, a major part of my study was to determine if a company had what
are called good internal controls. The Texas Railroad Commission has all the records and an
analysis of their data should show the number of unclaimed wells and their units and dollars of
production. From this data the state could set up an accounts receivable for each oil company.
Fourth, are the oil and gas companies sending in reports as required to corroborate the Texas
Railroad Commission figures? If the state is accepting the money on faith, human nature will
take the path of least resistance and retain the funds. Fifth, do state agencies have adequate
staff to perform their duties, especially now with the increased production from the Eagle
Ford Shale and forthcoming new mineral discoveries? Sixth, is the state enforcing the 1985
law and are the oil and gas companies meeting their agreements to abide by the law?
The next important question to be raised here is to determine the amount of money that
has been submitted to the state since 1985. The oil and gas companies and the state absolved
themselves of all liabilities before then. The law mandates that these proceeds be deposited
into the General Revenue Fund. What we do not know is what happens after that. Does the
comptroller’s unclaimed property division handle these funds or do they go directly to
another department? Is there a large escrow account holding the fifty million dollars in trust
pledged by Getty Oil and it’s forty-nine fellow plaintiffs to start a new fund, in addition to
thirty-three years of production (since September 1, 1980 as per Compromise Settlement
Agreement) or has the state appropriated and budgeted the funds for other state needs? If
so, it questions the fiduciary responsibility of the state, which can be corrected currently by
starting to deposit Type Two mineral proceeds in a trust account that is visible to all.
The question then must arise as to why there are so many wells with no owner and no name
attached. The answer is simple. The land grantee and his or her family never sold or otherwise
conveyed these mineral interests. The possibility that someone will show up with title in hand
registered in a county that he or she is the owner of a certain unclaimed well is remote. In most
cases, therefore, the descendant heirs maintain that the ownership is still in the estate of the
land grantee, that the rights are still in the family, and the descendants are “de facto”
owners. Webster defines de facto as ” in reality or fact, serving a function without being
legally or officially established, or in practice not necessarily ordained by law.”
On July 8, 2008, my first declaratory judgment was approved by the late 229 th District Judge
Ricardo H. Garcia for the Jacinto de la Peña land grant in Zapata County. During the
proceedings Mrs. Eileen McKenzie Fowler, my attorney, asked Judge Garcia if, in his opinion,
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March 21, 2014
the heirs had a right to these unclaimed minerals. He said, “There is no doubt about it.” It is in
the record. This was one judge’s opinion but from a distinguished jurist with a long résumé. This
was encouraging to me and confirmed what we had been told by Mrs. Fowler. As she
mentioned in her prior report, this was also the opinion of Houston 157 th Civil District Court
Judge Felix Salazar and her former law partner, described posthumously as a “trailblazer.” He
had a major role in kicking off our campaign. Mrs. Fowler and Judge Salazar consulted with
other Houston lawyers for assistance in designing a workable plan to bring justice long-delayed
and long-denied to South Texas families.
There are some misconceptions that need clarification about our cause:
1. That our claim will infringe on the rights of title holders. That is incorrect as they have
full legal rights and contracts with oil and gas companies, many of them generating
lucrative royalties. Our HEIRS brochure on the front page states this very emphatically
so that there is no misunderstanding. As previously stated, we have no claim on land as
the state laws of adverse possession are clear about this.
2. That our descendants will become wealthy by filing claims. Except for a lucky few that
will not be the case. The basic formula will be based upon the amount of production and
the personal percentage interest each claimant has to the whole base of descendants of
that grant. If I am one of a hundred living descendants (called primaries), my declaratory
judgment would show that I can only get 1%. If there are thousands of descendants on
my grant, my percentage goes down. I can only claim my share and no more. However,
we are claiming thirty-three years of back production and for future production, so the
sums received may be slightly more than modest. These funds would be important,
nonetheless, as many descendants are on retirement incomes or are unemployed.
3. That the state escrow funds will be compromised or depleted. That will never happen.
Oil and gas revenues are increasing and the funds will be stimulated. More importantly,
the majority of claimants , here also, will never come forward. Even though thousands
have joined our cause, there are hundreds of thousands and perhaps millions who will
never come forward. The monies are there in perpetuity, if and when any descendant
comes forward. Our experience is that most descendants do not know their ancestry,
they have other personal priorities, and many are simply not interested.
4. That the oil and gas companies are obligated to the heirs certified in court as
legitimate descendants by a declaratory judgment. Not so. The oil and gas companies,
under the law, are obligated to the state for deposits of unclaimed funds. Their direct
obligations are to title holders who have leases. Any noted problems are between them.
The state, in turn, under property law, is obligated to the descendants for payment of
unclaimed minerals. Descendants look to the State of Texas for justice.
I believe with the help of the commission a win-win situation can be achieved. Descendants
should have no adversaries in claiming their rights. The work of the commission will guide the
state to make improvements. It was correctly stated previously that it is not the commission’s
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March 21, 2014
responsibility to audit or correct noted deficiencies in the state system. That is the work of state
agencies and the legislature. However, in the process of its work and hearing testimony from
different parties, the commission can make recommendations that will have substantial weight.
The commission’s ultimate work will benefit the state, the oil and gas companies, always in
need of good public relations, the title holders, and ultimately descendants who have been
disenfranchised. All citizen of Texas will benefit from the commissions deliberations and
conscientious conclusions.
The HEIRS Committee under Mrs. Eileen McKenzie Fowler tried to amend the law in 2013
similar to the HB2611 bill in 2011 spearheaded by Mr. Al Cisneros that did not pass.
Representative Ryan Guillen would not sponsor it again because he said he did not have the
votes, and it would not pass. At the time we found out that he and his staff had filed HB724.
The HEIRS Committee had no input in writing the bill. Representative Guillen said that if he
sponsored a bill recommending a commission to independently review the matter, it had a
better chance of passing. At that point Mrs. Fowler’s clients mobilized to support the bill and
wrote their state representatives and senators in support. Her group of client descendants
(twenty thousand of whom perhaps twelve thousand are registered voters) is the largest, and
their letters, calls, and emails were a deciding factor in its passage. I am certain other
descendants perceived its value and advocated as well.
Mr. Al Cisneros and his colleague and friend, former Senator Hector Uribe, also had a
significant impact with their work and expert testimony getting it out of the state house of
representatives committee. There was a concerted effort in the Senate to kill the bill but was
saved by District 21 Senator Judith Zaffirini from Laredo. It was her skill, perseverance and
long service to Texas which outmaneuvered those bent on its destruction.
Our group also had the help of the HEIRS committee of clients headed by Mrs. Fowler, Mrs.
Rita Lopez Tice, business owner from Laredo, Mr. Miguel Alonso “Al’ Martinez, business owner
from Corpus Christi, Ms. Cecilia Gallardo Vallejo from San Antonio now a case manager for
Mrs. Fowler in La Porte, and our lobbyist Mr. Jimmy Willborn, all descendants. Mr. Willborn
was very instrumental in our success in his visits to Austin. He is a former police officer, past
president of the San Antonio Police Officers Association, and a former Bexar County constable.
He and his wife have worked tirelessly over the years in support of legislation to benefit peace
officers in their critical and dangerous work. He also has the added distinction of having been
Director of the Texas Narcotics Control Program under former Governor Ann Richards. We are
indebted also to the other sponsors of the bill, Texas House of Representative members, Abel
Herrero District 34, J.M. Lozano District 43, Roberto D. Alonso District 104, Philip Cortez
District 117 and in the Senate 20th District Senator Juan “ Chuy” Hinojosa.
The bill passed with one nay vote in the House of Representatives and three nay votes in the
Senate. Representative Guillen called this a “landmark” bill. It is, in my estimation, the most
significant law regarding property law and oil and gas legislation since 1985. It was a minor
miracle. It is an old truism that if you want to pass a bill In Austin, you need money and power.
We had virtually no money, but we did have power in the thousands who wrote their
representatives and senators. For certain there is some conflict and discord among the
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March 21, 2014
descendants regarding the progress and the avenues being followed, but all are united in
seeking the same remedy.
HB724 seems to have passed, I believe, because the legislature saw this commission as
coming into being at a very critical time. The commission’s work has higher implications due to
the revenues that are at stake with burgeoning oil and gas explorations. No doubt the
legislature felt it would be a great opportunity for a responsible and diverse professional group
to help move Texas forward into the 21st century.
To review this matter and to have a broader picture, I recommend invited testimony from
the Texas Railroad Commission, The Texas Oil and Gas Association, a district judge who issues
unclaimed well permits, or, in the alternative, a lawyer who works full-time finding rightful
owners. Carroll Lake and Associates in Kenedy, Texas, employ fifty lawyers for this purpose,
mostly doing work for Marathon Oil Company. Perhaps one of their lawyers could testify.
To get to the heart of the matter I am listing the individual mandates of HB 724 and the
resource necessary to comply:
(A) Section 3(1) the amount of unclaimed original land grant proceeds delivered to the
comptroller that remain unclaimed on December 1, 2014.
Source: The state comptroller’s office can verify the Type One unclaimed mineral
proceeds from their data base by breaking down how much are unclaimed mineral
proceeds from title holders separate from bank accounts, travelers checks and other
property. This is for information and has no significant bearing for most descendants.
Type Two Unclaimed mineral proceeds will be more difficult to determine since the law
apparently only requires the state comptroller to keep records for ten years. An analysis
by the comptroller can be done on unclaimed mineral proceeds that have been
received from oil and gas sources from all property in Texas for the period. Perhaps,
they will be able to break down how much came from the land grants. However, while
not comprehensive it will provide an idea of what has been received and what should
have been deposited in an escrow account.
(B) Section 3(2) recommendations for efficient and effective procedures under which
the state may be required to (A) determine the owners of the proceeds; (B) notify
the owners of the proceeds; and (C) distribute the proceeds to the owners.
Source: Title holder owners of the proceeds cannot be found as oil and gas companies
have been unable to do so. What the commission can do is validate that the
descendants of the original grantee have a vested right and are “ de facto” owners.
Notification can be done through their respective lawyers, but it will not be possible
to notify all eligible. The proceeds can be distributed in the same fashion.
Section 3(3) proposed legislation necessary to implement the recommendation
made in the final report.
Source: Mrs. Fowler in her report on February 28, 2014, included for the public record
proposed amendments to the Texas Property Law, if needed, to make the law more
inclusive but should not be necessary to validate claims.
Section 3(4) any administrative recommendations proposed by the commission.
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March 21, 2014
Source: The testimony and facts gathered during its proceedings will result in natural
recommendations to the state.
Section 3(5) a complete explanation of each of the commission’s recommendations
Source: A task of the writing of the report.
It is worthy to note in closing that payment of claims will, to some degree, stimulate the
Texas economy. The monies will come back to the government in federal Income taxes and
state sales, gasoline, and other taxes. The money will find its way back to Austin in the end.
Mr. Lance K. Bruun, commission chairman, stated correctly at the first meeting on January
31, 2014, that it is not the responsibility of the commission to hear past grievances. However
his patience and that of the commission in allowing public testimony about past injuries to
South Texas families was commendable because it revealed that our cause is not a perfunctory
one but deeply rooted in tragic events experienced for over a century. Recognizing the past, the
descendants look forward to the future and the great opportunity this forum represents for
relief.
In conclusion, the descendants seek accountability and justice by the equitable distribution
of oil and gas revenues. It is hoped that these facts, opinions, and ideas will guide the
commission in its very momentous task. I would be pleased to lend support as needed and
appreciate the willingness of the commissioners to serve and to undertake this historical
mission.
________________________
Signed
_________________________
Date
Biographical Note: George Farias is a retired executive director of a community mental health
center in Bexar County. His hobby is ancestral study and U.S. Borderlands history and is an
online retailer of books in these subject categories. He is a writer of family history books and
genealogical and historical essays. His ancestors had twelve grants in South Texas containing
97,918 acres. Six of these grants have good gas and oil production, and he has been certified for
three of those as a legitimate heir by declaratory judgment. He joined Mrs. Eileen McKenzie
Fowler’s program in 2006 and is member of her HEIRS committee. He is also vice president of
The Land Grant Justice Association, Inc.
SUPPLEMENT #1
DATED MAY 19, 2014 TO
A WHITE PAPER
TO GUIDE THE HB724
UNCLAIMED MINERAL PROCEEDS COMMISSION
IN ITS HISTORICAL MISSION
March 21, 2014/April 25, 2014
TOPIC: DEPOSITS OF MINERALS FROM UNCLAIMED WELLS.
My complaint on April 25, 2014 about deposits into the Texas General Revenue Fund of
minerals from unclaimed wells, appropriated for state expenditures, was not to imply any
malfeasance on the part of the state. I realized after my presentation that Mr. Jim Sheer
confirmed that these monies were being appropriated for expenditures but a reserve is set
aside for timely payment of claims. I am sure all descendants have no complains that the
money is being used for education, infrastructure, for fighting crime etc.
Our concern is the manner in which it is done and the lack of transparency. My
recommendation is, initially, a simple accounting and fiduciary procedure. After deposit into
the Texas General Revenue Fund the money can be transferred to a trust fund to be managed
by the Comptroller’s Unclaimed Property Division separate and apart from the other property
described. I understand the state is entitled to the interest earned from the trust. The interest
can be used to hire additional staff to supervise the fund, and for other administrative costs, as
it grows and as claims are processed and disbursed. This fund can be visible to the public in the
same fashion as the other types of unclaimed property.
I believe the fund will increase dramatically. Assume, for example that it reaches three
billion dollars and the state is facing a budget shortfall of 2 billion. It does not make sense to
ignore this resource. By legislative action the funds can be borrowed to balance the budget. The
balance sheet of the fund will now show one billion dollars in cash and investments and a 2
billion dollar loan to the state. Of course, in directly appropriating the funds, the state loses the
interest earnings but I understand this is a tradeoff. With a little patience the state can earn
interest and utilize legally any available trust funds. The loan can be interest free.
In this transparent method everyone benefits and the use of the funds are maximized. I
hope the HB724 commission will consider this recommendation and include it in their final
report.
George Farias
May 19, 2014
SUPPLEMENT #2
DATED MAY 25, 2014 TO
A WHITE PAPER
TO GUIDE THE HB724
UNCLAIMED MINERAL PROCEEDS COMMISSION
IN ITS HISTORICAL MISSION
March 21, 2014/April 25, 2014
TOPIC: RESPONSE TO MEMORANDUM FROM COMMISSIONERS TRACE BURTON, DONATO RAMOS JR.
AND JAIME RANGEL DATED APRIL 25, 2014 ON LEGAL ISSUES RELATED TO THE OWNERSHIP OF
MINERALS IN TEXAS
Since I am not an attorney I cannot formally respond to this memorandum about mineral
ownership in Texas. However, I can respond from a layman’s point of view and I will ask our
legal advocates to respond later from a professional standpoint. After reviewing the
memorandum and thinking about the impact on our claims from mineral production from
unclaimed wells, I have concluded that these issues are irrelevant to our mission as follows:
1. Ownership of Minerals to Texas Citizens per Constitution of 1866. As stated previously
in testimony, the children and grandchildren of the original land grantee were living on
the lands and the rights were thus awarded to the family of the grantee. The first major
oil discovery was in 1894 in Corsicana and later in the South Texas land grants. Our
families have full rights to those minerals and some descendants still own parcels with
title and are receiving royalties. Therefore it does not make any difference what
happened before 1866 whether the state owned it or gave it retrospectively.
2. Transfer of Minerals by Contract. In the Heirs brochure in the third panel under
“Unclaimed Surface and Mineral Estates,” the opening paragraph says. “Normally under
Texas property law when a person sells a piece of land and no mention is made of the
mineral contained, the rights pass on to the purchaser. In the case of land grants, if no
mention is made of the transference of minerals by sale or conveyance of the land, the
minerals are retained by the seller and pass on to the heirs.” In the brochure I
synthesized the research of others and this passage was taken from the website of the
Lands Grant Justice Association from their history section as footnoted. I believe the
author of this legal interpretation is Attorney Don Tomlinson and you may question him
on this when he testifies June 27th.
Since this statement relates to scrutiny of a contract it has no relevance to our claims
because the reason unclaimed wells exist is that no contract can be found. There is no
paperwork to determine ownership.
These issues, then, have no bearing on our claims.
George Farias
May 25, 2014
SUPPLEMENT #3
DATED JUNE 9, 2014 TO
A WHITE PAPER
TO GUIDE THE HB724
UNCLAIMED MINERAL PROCEEDS COMMISSION
IN ITS HISTORICAL MISSION
March 21, 2014/April 25, 2014
TOPIC: ASSISTANCE TO THE UNCLAIMED LAND GRANT MINERALS COMMISSION BY THE
COMPTROLLER OR ANY OTHER STATE AGENCY PER SECTION 2(h) OF HB724.
Section 2(h) of HB724, A Bill to be Entitled an Act relating to the creation of a commission to
study unclaimed land grant mineral proceeds, states “On the commission’s request the
comptroller or any state agency, department or office shall provide any assistance the
commission needs to perform the commission’s duties. “ It should be clear to every state
agency that this is a mandate of law and it is unthinkable that any agency would refuse the
commission’s request for data, special analyses, and reports.
I recommend the following required data be obtained, at a minimum, from the following
agencies for the commission to make sound recommendations to the legislature:
A. THE TEXAS STATE ATTORNEY GENERAL
1. Opinions on all pertinent points of law.
2. The most important opinion is to corroborate that under present property
law legally designated descendants of Spanish and Mexican land grantees
have a right to file claims for mineral production from unclaimed wells.
B. THE TEXAS STATE COMPTROLLER
1. The total amount of revenue deposits to the General Revenue Fund from
unclaimed wells from September 1, 1980 to December 31, 2013.
2. A breakdown of the deposits by land grant or county.
3. A report on the deposit and disposition of the fifty-million dollar fund
established by the Getty legal agreement.
4. An analysis of current claims paid on the basis on heirship establishing a
precedent for claims by land grantees.
C. THE TEXAS RAILROAD COMMISSION
1. Total unclaimed oil and gas wells in operation in the state.
2. Total unclaimed wells in operation by land grant.
3. Total production in units and dollars from unclaimed wells from September
1, 1980 to December 31, 2013.
Should the state agencies resist these requests, assistance can be requested from State
Representative Ryan Guillen and the other legislative sponsors of HB 724. In addition the
Public Information Act, Texas Government Code Chapter 552, can be invoked.
George Farias
June 9, 2014
SUPPLEMENT # 4
DATED JULY 21, 2014
TO A WHITE PAPER
TO GUIDE THE HB724
UNCLAIMED MINERAL PROCEEDS COMMISSION
IN ITS HISTORICAL MISSION
MARCH 21, 2014/APRIL 25, 2014
TOPIC: COMMISSION MEETING OF JUNE 27, 2014 AND PROPOSED DRAFT OF
LEGISLATIVE REPORT.
At the meeting of June 27, 2014, the commission formed a committee to write a draft of the
final report, required by the HB724 legislation, to be presented at their next meeting on
September 12, 2014. Apparently, the commission intends to make this their final meeting. It is
inconceivable how any credible report can be issued when members have failed to conduct a
single amount of independent research. The commission has been hostile and argumentative to
the land grantee descendants and their representatives who have provided important
information. It is the responsible role of the commission to investigate facts to corroborate
testimony, or nullify it, with a conscientious review of information that can be easily obtained
from state agencies as authorized by HB724. The commission has no excuse or sensible
reason for a perfunctory function of such an important and substantive task. The commission
has completely declined to utilize the tools made available by legislation.
What is more disconcerting is that the commission left out Mr. Al Cisneros from the report
writing committee, the only advocate we have on the commission. The descendants were
allotted two other advocates on the commission but instead the process was subverted and two
other members were chosen who have proven themselves to be inimical to the interests of the
heirs. The whole purpose of the commission seems to deliberately make the claimants look
ridiculous and to block their efforts. In fact, just the opposite has happened. By the sloppy and
malicious work of the commission our base has been energized. We do not intend to fail to
obtain the rights due every Texas citizen and we will ultimately prevail. We are at the point of no
return and as one speaker said on June 27th, “we are here and we are not going away.”
It is an unfortunate characteristic of Hispanics that they fail to unite on many issues to
improve their lot and instead drag themselves down with petty bickering, internecine warfare,
and jealousies. The public saw a classic example of this when the commission allowed a
disgruntled client of Mrs. Eileen McKenzie Fowler to insult her repeatedly wasting everyone's
valuable time. Any man who would consider himself a gentleman would never attack a woman,
publicly or privately, especially in such a vicious manner. I was remorseful, embarrassed, and
ashamed that I did not interrupt the meeting to call out that this vengeful man, with his
invectives, was out of order. However, every man in the room from the commission members to
the participants was diminished in this humiliating process.
The chairman of the commission stated at the first meeting in January that the grievances
would not be permitted in testimony. Yet the attacker was given the floor for over an hour. It was
a low point in the deliberations of this commission and it is a black eye to all the honorable
people working on this very important and historical matter. It took a courageous non-Hispanic
lady lawyer to bring our fractious group together with the added advantage of forming a voting
bloc of 15,000-20,000 eligible voters. This is the American way to obtain results and we will vote
public officials out of office in the future who fail to represent all the people instead of the
privileged few who need no protection.
If it is the intent of the commission to whitewash this matter, first of all, it will be held, for sure,
in contempt of the legislature which voted almost unanimously for passage of HB724.
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July 21, 2014
Secondly, it will be considered a profound blemish on the professional and personal reputations
of the commission members. Such a disastrous situation should be avoided at all costs. No one
should be hurt in the process of authorizing claims as those monies do not belong to anyone but
the rightful owners of unclaimed mineral production from wells located in ancestral properties of
the descendants. As previously stated in my testimony everyone gains by managing oil and gas
revenues properly and in accordance with the law.
The Commission also invoked, on June 27th, the case of Clark v. Strayhorn as justification for
the state to spend unclaimed mineral funds. That is incorrect, as the case only confirms that the
state has the right to keep all interest earnings on the unclaimed minerals principal dollars. Yet
the state fails to set up a legal trust fund for unclaimed minerals and is losing millions of dollars
in Interest earnings by indiscriminately spending the money outright. The millions could be used
to fund more auditor positions for the comptroller and improve the oversight of oil and gas
companies and county registries to insure that all monies owed the state find their way to Austin
coffers. The direct spending of unclaimed minerals revenues is illegal and must stop.
Supplement # 1 to my White Paper details the establishment of a trust fund that benefits all,
allowing the state to borrow the principal by legislative approval to fund other state needs.
I urge the commission to reconsider their perilous course. If all the previous testimony and
documents are to be disregarded, the commission can examine carefully the legal basis for our
claims as stated in excellent fashion by Mrs. Fowler in her “Response to Memorandum”
presented to this body on June 27, 2014, dated June 25, 2014. The subject was “The (Fowler)
Descendants’ Response to Memorandum on “Legal Issues related to the ownership of minerals
in Texas” submitted to the Commission by Commissioners Trace Burton, Donato Ramos Jr.
and Jaime Rangel.” In her memo is the complete justification for the state to accept our claims.
The Commission’s work does not expire until June 1, 2015. There is much work to be done for
a proper and legal outcome and I respectfully request that the commission reconsider their
aimless course and work hand in glove with the legislature and the land grantee descendants
for an honorable and forthright solution to the distribution of unclaimed mineral proceeds.
George Farias
July 21, 2014
SUPPLEMENT # 5
DATED JULY 28, 2014 TO
A WHITE PAPER
TO GUIDE THE HB724
UNCLAIMED MINERAL PROCEEDS COMMISSION
IN ITS HISTORICAL MISSION
MARCH 21, 2014/APRIL 25, 2014
TOPIC: PROPOSED LEGISLATIVE COMMITTEE TO REPRESENT THE INTERESTS
OF THE DESCENDANTS OF LAND GRANTEES.
Land issues have been a historic problem in New Mexico with the descendants of
Spanish and Mexican land grantees accusing the state and the federal government of
appropriating their ancestral lands illegally. Minerals seem to be a minor issue and may
belong to the state.
In 2003, The New Mexico Legislature formed The Interim Land Grant Committee to
advocate for the descendants and to protect their interests. Since then various laws
have been enacted to strengthen the legal rights of descendants. In addition, an
administrative unit of the state was formed called The Land Grant Council with
numerous functions but apparently to also serve as the support unit for the legislature.
Information on the committee and council can be found on the Internet. To locate,
Google Interim Land Grant Committee+New Mexico.
It is proposed that the HB724 Commission recommend that the Texas Legislature
form such a committee to similarly protect the interests of citizens whose ancestors
were land grantees including descendants from Spanish and Mexican land grantees.
Since the HB724 Unclaimed Mineral Proceeds Commission will be abolished June 1,
2015, the proposed legislative committee would assume the responsibilities of the
commission, regardless of the outcome of the present study.
Instead of an administrative unit to support the legislative committee, at an additional
cost to the state, it is proposed that The Land Grant Justice Association Inc., a 501 (c)
(4) non-profit organization, (TLGJA) assume the support role. This aspect of the
legislative unit would be predicated on the inclination of TLGJA to participate and by
approval of their board of directors. It is proposed, that if TLGJA assumes this
responsibility, it will represent the interests of all land grant descendants regardless of
their legal representation.
A visit by a delegation of Texas legislators to their counterparts in New Mexico to
study the Interim Land Grant Committee and its operations might be in order.
George Farias
July 28, 2014
SUPPLEMENT # 6
DATED OCTOBER 6, 2014 TO
A WHITE PAPER
TO GUIDE THE HB724
UNCLAIMED MINERAL PROCEEDS COMMISSION
IN ITS HISTORICAL MISSION
MARCH 21, 2014/APRIL 25, 2014
TOPIC: PROPOSED DRAFT OF THE UNCLAIMED MINERAL PROCEEDS
COMMISSION PRESENTED AND REVIEWED AT THEIR COMMITTEE MEETING
OF SEPTEMBER 12, 2014.
The draft report of the HB724 Commission is welcome for the public to review its
contents and provide feedback for an improved final product, and commendable as this
is a very important step in the process. I have several concerns, comments, and
recommendations after an initial personal review and the review by the commission of
its major sections during the September 12th meeting.
The draft report is lengthy and cumbersome. Sixty pages, even for a final report, is
excessive. I doubt if any legislators, with their busy schedules, will take the time to read
it in its entirety. Perhaps a summary report of 3-5 pages with conclusions and separate
exhibits would be preferable. For example, Conclusion Number One would refer to
HB724 Mandate #1, see Exhibit A for details, Conclusion Number Two, HB724 Mandate
# 2, See Exhibit B, and, so on. What readers will seek is the bottom line of the report
addressing HB724. Everything else is superfluous.
The report should steer away from irrelevant content and especially continuing
personal criticisms bordering on slander. The continued misinformation about attorney
Eileen McKenzie Fowler and her program is deplorable and unprofessional and serves
only to harm her, her clients, and the esteem of commission members. One criticism
concerns her fees and the patently false notions that she has amassed millions and
abused her clients. The facts will show exactly the opposite.
Initially, ten years ago, Mrs. Fowler, was charging $ 100-$200 per person to obtain a
declaratory judgment. When I joined her program in 2006 the fee was $ 250.00. Today I
believe it is $ 375.00. I paid $ 250.00 for my first declaratory judgment. If I never collect
a single mineral royalty the judgment itself is of immense value to me and my
descendants and worth a lot more than what I paid for it. It takes hours of work to
prepare for a court hearing. Some attorneys charge this much for one hour of
consultation and may not even take the case. I read in the newspaper recently that an
attorney in a high profile state case is charging $ 450 an hour perhaps being charged to
taxpayers.
I am not privy to Mrs. Fowler’s finances but as a former accountant, knowing what I
paid, and since she noted a total of 11,000 clients adjudicated in our HEIRS brochure, I
can estimate her annual budget. Assume that her average fee has been $300.00.
Multiplying that rate by 11,000 produces a gross income of $ 3, 300,000. Divide that
number by ten (10) years of operation and her average annual budget is $330,000.
Divide that by 12 months and her monthly budget is $27,500. She has staff of four-five
case managers who confirm genealogical data preparing and copying voluminous court
Page -2White Paper Supplement # 6
October 6, 2014
documents. To that payroll with taxes, add rent, utilities, travel to various judicial
districts, hotel, court costs, legal consultations, and administrative expenses. These
details are private but one can readily see that what is left over for her as income Is
significantly below what an average attorney of her experience would earn. Mrs. Fowler
is in good standing with the Texas Bar Association, and in constant consultation with
them. I would expect more respect and professional courtesy toward her, at least, by
her legal colleagues.
In addition, Mrs. Fowler has never promised her client millions, although statements
can be misinterpreted. Perhaps the mention of the millions of dollars the State of Texas
has misappropriated over 34 years gives some persons the impression that they will
become wealthy. This is a personal misperception and not one that is promised or
promoted. All HEIRS reports and other documents have informed clients that their
recovery may be modest and that they have no claims if their land grants have no
production. In my White Paper I noted the fact that our heirs would not become wealthy
when we obtain the authorization to file claims.
Another example of deficiency in the draft report is rehashing testimony that has no
relevance. In particular I am speaking about the comment in the HEIRS brochure under
“Unclaimed Surface and Mineral Rights,” about transfer of minerals title when the
contract is silent on the matter. My White Paper Supplement # 2 explained that this
clause is irrelevant because, in the minerals we claim, no contract has ever been found
and that is why the wells are designated as “unknown”. This clause has not been
proven right or wrong but to avoid further confusion we will reprint the brochure and
eliminate this offending clause.
One mandate that has been avoided by the commission is the total sum of unclaimed
minerals deposited in the general fund and their disposition. The transparent fund (Type
1) of unclaimed royalties abandoned by their title holders is well recognized and does
not need to be endlessly mentioned in deliberations and reports. What is lacking is the
total sum of unclaimed minerals from wells with no name deposited by the state since
1980. (Type 2). While the monies have been spent, it is incumbent upon the
commission to provide the legislature the total sums deposited during this period. The
comptroller’s office is obliged to provide this data and I request it be presented to the
commission at the October 24th meeting. The commission has requested numerous
pieces of information from descendants to assist the process and now we, in turn, ask
the commission to produce this important record of deposits from Texas as a whole.
There are sections of the draft report indicating that there should be no valid claims in
that this matter was settled 100 years ago. This is completely erroneous. This
commission was created to recommend solutions to resolve this problem which remains
an important and critical issue for land grant heirs. The commission should stop the
obfuscation of issues by repeated references of how well Type I funds are managed by
the comptroller’s office, and how much is paid out annually. In the main, this fund is
meaningless for our cause and valuable time would be saved by mentioning this
Page -3White Paper Supplement # 6
October 6, 2014
separate property only in passing.
Mrs. Fowler has prepared information on the
unclaimed wells by grant and the formula for distribution. She was denied to be put on
the Invited testimony for the meeting of September 12th, but this information will be
presented very soon to the commission. Mr. Bennie Bock was correct in stating that
the formula for distribution of funds needs to be simple to be accepted. Mrs. Fowler’s
formula, with some fine points, essentially takes the unclaimed mineral production since
September 1, 1980 and divides it by the number of oldest living heirs , called primaries,
for each land grant. This formula is also legally based on the laws of distribution and
descent and is also mentioned in the Heirs brochure in the “Spanishlandgrants.com,”
section.
The legal basis for our claims is Common law. If the commission disputes this fact,
we want to know, “ then who are the rightful owners?” We want this answered at the
next meeting of October 24th. It was puzzling on September 12 th to hear statements
that the heirs have no rights to unclaimed funds, yet there followed discussions about a
formula for distribution.
Much ado about nothing has been discussed about the exit of Judge David Peeples
from hearing and approving declaratory judgments. His reasons are personal
but he assigned ad-litem judges to hear Mrs. Fowler’s cases and hearings are being
scheduled currently. The declaratory judgment is a valid legal process and one
definitely required by the comptroller to pay claims.
Statements were also made at the September 12th meeting that Mrs. Fowler has
failed to obtain unclaimed royalties for her clients over the years. The blame lies with
the Texas state bureaucracy, not with her. About five years ago she contacted the
comptroller’s office and explained several initial claims she was about to file. A
representative of the comptroller informed her that these claims could not be paid, that
the law would have to be changed, and that the state had no money to pay these types
of claims.
First of all, the representative was incorrect in her first statement. Present law and
the comptroller’s guidelines detail the steps to claim by heirship. The law does not need
to be changed, but this led to the failed attempt in 2011 to amend the property law. The
bill did not pass and apparently not necessary. Secondly, it was correct that the state
had no money, because for over 34 years the state has balanced the budget on the
backs of the land grant heirs, and in years past prior to 1985. However, as noted, the
state has to stand behind its obligations and, if the money is gone, the state will have to
find the necessary sums to pay our claims. Again, I explain this in the Heirs Brochure in
the section “ The Claims Process and Current Barriers.”
What the commission fails to grasp, or refuses to acknowledge, by not reading and
understanding material presented, is that since our heirs group has no distinct title to
unclaimed wells, it is impossible to match wells with Individual heirs. Our ancestors who
obtained the grants had original titles. What is happening here is that a group of land
grant heirs is laying claim to the oil and gas production in their ancestral lands of a
group of unclaimed wells. This type of claim has never been considered or paid in the
Page -4White Paper Supplement # 6
October 6, 2014
past. This is a new phenomenon (Heirs Brochure, “The Claims Process and Current
Barriers”). What is required singularly to solve this problem is to obtain a formal legal
opinion to confirm that the heirs are correct in their rightful claims under the law, an
opinion this commission refuses to obtain. The solution is simple to clear this barrier.
We do not have to engage in endless, immaterial, misleading and irrelevant points of
view. Most of this commission’s work has been a waste of valuable time for the
commissioners and the heirs who have also spent personal resources to travel to
Austin. Truth is immutable. It never changes. and in time, in spite of artificial barriers,
we expect to prevail in our claims. One advantage to this commission is that our claims
are now in the public record. History will judge who is right and who is wrong here, but
we cannot wait for the judgment of history.
One other item merits a review and comment. Considerable time has been taken in
testimony about the injustices to South Texas families in the past due to murders and
theft of property. This is a separate legal issue and is not an issue the commission is
charged with reviewing. Many families suffered injuries and those abusive acts, as my
daughter, Diane, testified, created a pattern that has been passed down from one
generation to the next permeating every aspect of our lives. If those persons can prove
those illegal acts, that have no statute of limitation, they can seek restitution from the
state. If ignored, lawsuits can be filed in federal court as the State of Texas has violated
the Fourteenth Amendment of the U.S. Constitution numerous times. This constitutional
amendment concerns the responsibilities of the state to protect the life and property of
its citizens. Not only does the State of Texas have a miserable record of protecting the
rights of South Texas families, the state condoned the illegal acts and agents of the
state were complicit in many of these atrocities. Chairman Lance K. Bruun at the
January meeting stated that the commission was not formed to hear grievances. I
commended him for hearing these stories in spite of this rule but the rule should be
enforced now rather than spending valuable time deflecting the unclaimed mineral
issue. These historical crimes of murder and thievery are separate but related to the
issue of minerals, the purview of this commission. In the instance of unclaimed minerals
the state has been legally negligent as well.
In spite of my disenchantment, I see a positive dawn in the state of Texas. Current
generations, as has been noted, did not commit the aforementioned abuses. However,
present day legislators and state officials have the power and the means to provide
relief and ameliorate the excesses of the past. I am not naïve enough to think that bad
habits and bad business practices can be easily changed in a governmental culture but
I am encouraged that more persons of good will are coming into positions of leadership
in our great state. The future bodes well for all Texas citizens as long as we stay
informed, vigilant, and vote to demand our rights under the law.
Finally, I repeat and emphasize my criticism of the commission disregarding the
mandates of HB 724 by not employing staff members of state agencies to provide
important data and not getting pertinent legal opinions from the Texas Attorney
Page -5White Paper Supplement #5
October 6, 2014
General. ( White Paper Supplement # 3). It is not up to the HEIRS group to provide the
commission all the information it needs to deliberate, although substantial material has
been provided. The Commission must do its own independent research, and cannot
finalize any credible report unless they do the work to support the claims of heirs or
produce concrete and unassailable evidence to refute their claims.
In the absence of not performing their specifically charged legal duty the
commissioners run the risk of being in contempt of the legislature.
Respectfully submitted,
George Farías
October 6, 2014