Most bills filed in each legislative session fail. For the most part we are thankful for that. But today we summarize a few that survived while you weren’t paying attention. As usual, there are winners, losers, and rainouts.

HB 2730 beefs up the “Landowners’ Bill of Rights” in eminent domain negotiations and proceedings. It amends the Property Code, Water Code and Occupations Code. The effective date is January 1, 2022. Winner: Landowners.

SB 885 gives teeth to quitclaim deeds. It used to be that an owner who takes title through a quitclam could not be a bona fide purchaser and would be on notice of unrecorded conveyances and/or instruments not in their chain of title. Winner: Stability of Texas titles.

Civil Practice and Remedies Code §6.025 is amended and §13.006 is added. After the fourth anniversary of the date a quitclaim deed for real property is recorded in the deed records the deed will not affect the question of the good faith of a subsequent purchaser or creditor and is not notice to a subsequent purchaser or creditor of any unrecorded conveyance or transfer or encumbrance of the real property. This change applies only to quitclaims recorded after the effective date of Septmber 1, 2021. Before this amendment, §16.025 applied only to forgeries.

SB1259 hoses (can’t think of a dignified term) royalty owners by amending Natural Resources Code §91.402 to deny a common-law cause of action for breach of contract against a payor who withholds payments for a title dispute. The exception is if the contract requiring payment specifies otherwise (which they rarely ever do because it hasn’t been necessary). It applies to actions filed after the effective date of the Act, which, piling insult upon injury, was immediately upon the May 24th signing by the Governor. This is a legislative “fix”, on the second try, to the 2018 Texas Supreme Court decision in ConocoPhillips et al v. Koopmann.  Loser: Royalty owners.

HB 3648  requires the Public Utilities Commission and the Railroad Commission to adopt rules to designate certain natural gas entities as critical during an energy emergency.  Here is a summary by the House Research Organization. Winner: Consumers, … or a rainout?

SB 2154 requires that members of the Public Utilities Commission be residents of Texas. Winner: Consumers, … or a rainout?

SB 2 reorganized ERCOT. The Texas Tribune can explain it better than I. Winner: Consumers, … or a rainout?

SB 760 requries solar energy operators to clean up after their facilities are decommissioned and to provide financial security to see that it gets done. Winner: Landowners.

Lessees of state lands, pay attention. SB 1258 amends the Natural Resources Code to address a state lessee’s duty to drill an offset well or pay compensatory royalties if horizontal wells treated by hydraulic fracturing are located within 1,000 feet of a state lease. The Act specifies when an offset well would not be required, which depends on the location of the horizontal drainhole. Winner: Taxpayers and the state budget.

Your musical interlude, for old times’ sake. Winner: Black Lung disease. Loser: J. D. Vance’s relatives and pretty much all the characters in Justified.

 

I prepared this post before Ida. It might now be perceived as cynical, or unsympathetic to the plight of those affected in South Louisiana and the Northeast. Is the intensity of hurricanes exacerbated by global warming? Some say it is; some say it isn’t. Regardless, what to know and do about climate change is not going away. So here we go.

If your news about the Intergovernmental Panel on Climate Change comes from the Guardian, or the New York Times, or Miss Thuneburg and you prefer it that way, perhaps you won’t read any further. Otherwise, consider whether there are takeaways from the IPCC’s 3,936-page Sixth Assessment Report other than those by the aforesaid and other MSM’s.

By those accounts the results are scary; it’s “code red for humanity”; we are amidst a world “in parts burning, in parts drowning, and in parts starving”; it’s over, and we’ve lost; the condition is “catastrophic”; we’re gonna soon meet a fiery end; and so on.

Is the hysteria justified?

It’s confusing for sure, and ironic. After canceling the Keystone XL Pipeline, banning leasing and drilling on federal lands, and otherwise doing the Government’s best to hasten the demise of the domestic oil and gas industry, and only three days after the IPCC Assesment, President Biden asked OPEC to produce more oil … without offering the same to our job-creating, tax-paying, domestic producers!! (David Blackmon in Forbes)

Some of the reports are unbalanced, if you consider NPR’s reporting on wildfires.    (Watts Up With That?)

“Climate change” could be overblown. (Bjorn Lomborg)

Fixing climate change is ultimately an economic problem. (John Cochrane in Capital Matters, from National Review)

The claim of unprecedented manmade floods tied to climate change should be investigated (Watts Up With That?)

It appears there was manipulation of data to achieve a desired outcome (Watts Up With That!)

And was July really the world’s hottest month? (Not A Lot of People Know That)

Advocates of the IPCC agenda see an opportunity for the kind of  political and economic reimagination you shoud not want. They advocate socialism (the Guardian), and communism. (Diamondback, the University of Maryland student newspsper, a preview of our leaders of tomorrow)

China is going on a coal spree. (Yale School of Environment) …

… and holding John Kerry and the US’s climate agenda hostage for concessions on other issues, feeling stronger after our missteps in Afghanistan. (Powerline)

Do you know why the polar bear is no longer the poster child for climate change? (Canadian Geographic)

Just as with COVID, we are not in this together. (New York Post)

There are reasons why those in control lie and exagerate (Kevin Williamson, discussing the masterpiece that was Reefer Madness, the San Diego Police, and other examples)

Your musical interlude.

 

 

Co-author David Leonard

McFarland Land & Cattle, Inc. v. Caprock Solar I, LLC considered what is the required under New Mexico law to establish a public prescriptive easement, and brings to life the full meaning of “100 feet of bad road”.

The facts

A state road runs along section lines that divides property owned by McFarland from his neighbor. After a bridge washed out in 1954 the road was rerouted about 100 feet onto McFarland’s land, thereby presenting a problem for Caprock, the solar developer.

McFarland sued to enjoin Caprock from using the 100 feet of road to access a solar project located on adjacent property. McFarland argued the road was private, and had demanded far more compensation from Caprock than Caprock was willing to pay.

Caprock and Quay County (who intervened), claimed the road was public under the doctrines of easement by prescription, easement by implied dedication, and easement by estoppel.  The road (including the 100 foot jog) had never been formally established as a public road using ordinary statutory procedures.

At trial several witnesses testified that the road was only used by neighboring ranchers or their invitees.  There was also testimony, relied upon by the court of appeals, that members of the general public might have used the road five to ten times over a thirty-year period.

The trial court entered judgment in favor of defendants and Quay County, declaring that the road was public.

Requirements for a prescriptive easement

A party wanting to establish an easement by prescription in New Mexico must prove:

  • adverse possession of the land,
  • that is open and notorious,
  • continued without interruption,
  • for the 10-year prescriptive period.

The result

The court of appeals found that the limited use by the general public did not satisfy Caprock and the County’s burden of proof:  To present clear and convincing evidence of public use (a higher standard than the preponderance of the evidence typically required in a civil case).  Use by neighbors and their invitees did not qualify. The court reversed and remanded the case for trial on the other theories that might be used to establish Caprock and Quay County’s right to use the road:  easement by estoppel and easement by implied dedication.

RIP Don Everly

In Lexington Land Development LLC v. Chevron Pipeline Company et al, a Louisiana landowner’s suit for damages to land alleged to have been caused by oil and gas operations failed to survive exceptions of prescription and the subsequent purchaser rule.

The facts

In 1959 the Hoffman heirs granted a mineral gas lease on 343 acres in East Baton Rouge Parish to Chevron’s predecessor. Shell Pipeline owns and operates a pipeline across the property. Hoffman also granted surface leases to Chevron. In 1962 the surface leases expired and in 1963 Chevron relinquished its rights in the mineral lease except for three production units. The lease was assigned to Stone Petroleum and, in 1991, to Zinn Petroleum. Lexington purchased the property in 2005 from the Hoffman heirs for development of a subdivision.

Lexington sued Chevron, its successors, and Shell in 2007 after being notified of a rupture in the Shell pipeline. After adverse rulings, Lexington obtained assignments of rights from the Hoffman heirs and amended its petition.

Liberative Prescription Continue Reading Louisiana Land Damage Claim Can’t Survive Prescription and Subsequent Purchaser Rule

Lollygag: To fool around and waste time; dawdle.  As in, “I lollygagged for 15 years after filing my suit and obtained a less-than-optimal result.”

Gramwich Oil and Gas Corporation et al v. Meng addressed claims for lease termination, repudiation, laches, cessation of production, and failure to produce in paying quantities. The facts are dense and the savings clause at issue is sui generis, so I won’t go into lots of detail. The takeaway: If you have a claim, prosecute it.

The facts Continue Reading Lessor Prevails in Texas Lease Termination Dispute

In Plaquemines Parish et al. v. Chevron et al., the U. S. Fifth Circuit has ruled on whether 42 suits brought by six parishes and the Louisiana Attorney General against a number of oil companies belongs in federal court or state court. The allegations are that the companies’ operations over the years  essentially destroyed the Louisiana coastal marshes. Billions of dollars are at stake. The immediate issue was whether the defendants’ removal was timely. They were, the result of which is that the cases are likely to remain in federal court.

A short history Continue Reading Louisiana Coastal Zone Litigation Likely to Remain in Federal Court

From the “Not-my-circus-not-my-monkeys” department, after the 10th anniversary of the Fukishima disaster last March my curiosity ventured into the nuclear energy debate. See these observations from those who actually know something about the issue (read the articles themselves for the full story). Opinions vary widely: Continue Reading Is There a Problem With Nuclear Energy?

Co-author Brittany Blakey

Yowell v. Granite Op. Co. and Apache Corp. v. Peyton Royalties, L.P. is another Rule Against Perpetuities case. Keep reading. The anti-washout protection for your reserved overriding royalty could be at risk.

The court of appeals (on remand from the Supreme Court) determined that a reserved overriding royalty interest in an oil and gas lease may be reformed under section 5.043 of the Texas Property Code to comply with the Rule. Continue Reading Texas Court Addresses Anti-Washout Clause and Rule Against Perpetuities

Regency Field Services LLC v. Swift Energy Operating LLC, draws one’s attention to the difficult analyses that should be made before bringing a subsurface trespass claim.

A mineral estate lessee (Swift) alleged that H2S (“brimstone” if you follow the Old Testament) injected into the Wilcox formation by an injection well (owned by Regency) migrated and injured its interests in the minerals underlying nearby properties. The issue for the court was when the lessee’s claims accrued. We will ignore parts of the decision discussing pleadings and summary judgment evidence (trial lawyers, pay attention!). Continue Reading Texas Supreme Court Reverses Subsurface Trespass Judgment

Co-author Rees LeMay*

In Apollo Exploration, LLC v. Apache Corp., Texas’ 11th Court of Appeals analyzed several provisions of purchase and sale agreements in a complex oil and gas transaction and demonstrated a measured, text-centered approach to the interpretation of contract language.

Significant parts of the holding hinged on the Court’s reference to defined terms in the contracts, highlighting the importance that contracting parties clearly clarify contract terminology. The lesson for the scrivener is to know and understand two things: The effect of each word in the document, and the “big picture”: What, ultimately, are the parties trying to accomplish? This is as necessary as it is difficult, especially when the document is long and the transaction is complex.

The case is of particular interest in the context of PSAs, which address, and therefore must define, back-ins, “payout”, “leases” and a host of other terms. Apollo and its co-appellants had collectively owned 98% of the working interest in 109 oil and gas leases, covering significant tracts in the Panhandle. Apache purchased 75% of the interests, entering into four separate (but largely identical) PSAs.

The meaning of “all” and “affected leases”

Apache was to provide the sellers with an annual review and commitment for development of the leases in each the coming year. If the contents of the reports would result in the loss or release of any of the leases, Apache would then have to “offer all of [its] interest in the affected Leases” to the seller, and to transfer them to the seller upon the seller’s acceptance.  The fight centered on construction of the simple word “all,” as well as the term “affected leases.” As to the latter, Apollo argued that, to the extent that some leases covered fractional mineral interests in overlapping acreages, the term “affected leases” required Apache to offer all leases covering a given acreage, even if only one would be lost. Apache countered that it need only offer the specific leases that were set to be lost. The court, focusing largely on the definition of “Leases” in the PSAs themselves, agreed with Apache.

As to the construction of “all,” though, the Court, relying on the dictionary definition of the word, concluded that the term expressly required Apache to offer all of its interests in an affected lease to each of the sellers. Apache argued that this interpretation would render compliance functionally impossible. The court disagreed, noting that the interests could potentially be transferred to the sellers collectively, or that only one seller might accept. The court saw this result as an “unavoidable” consequence of the PSAs’ express language. Apache was bound by the documents as they were written.

You will live or die by your defined terms

The second disputed provision preserved to each seller a back-in option for up to one-third of its conveyed interest once the project reached 200% of “Project Payout.” Again, the court gave great weight to the PSA’s defined term.  The PSA definition of “Project Payout” provided a definite formula for the calculation. The court rejected Apache’s argument that it needed to achieve a 2:1 return on its overall investment for the back-in option to trigger, instead holding the parties to the expressly defined terms they had agreed on.

Of special interest to trial lawyers are pages 38 to 58, in which the court resolving disputes over the trial court’s striking of several of Apollo’s expert witnesses for reliability and untimely designation of adjusted opinions.

*Rees is a rising 3L at Duke Law school and was a Gray Reed summer associate.

Your musical interlude … Edwin Edwards, RIP