confusedCo-author Chance Decker

Here is what we believe is an unusual situation: A gas unit is formed. The gas well ceases to produce. Another gas well produces from an oil unit, but the lease at issue is not included in the oil unit. Is the lease perpetuated by production from the second gas well?

In Yarbrough v. ELC Energy, LLC The answer is, in Texas, Yes.  Read on for why, and decide for yourself  if this result makes sense. Continue Reading An Unusual Way To Hold an Oil and Gas Lease

hysteriaThe climate change debate is too complex, agenda-driven, and politicized to be addressed adequately in these pages. But the hysteria and faux outrage over President Trump’s decision to withdraw from the Paris Climate Accord is enough to incite a bad case of the red-keister. So, if you are in need of ammo to repel those who are experiencing intense displeasure from the decision, here are a few well-considered reasons why the result just might be the correct one. You should read the articles themselves, and you aren’t being asked to agree.

It wasn’t such a big deal to begin with. Foreign Affairs

The US’s pledge is more burdensome relative to baseline projections then the pledges of the other major emitters. Three of the six can increase their emissions. This article is not one-sided, and suggests the best policy would have been to remain in the PCA but revise it so our goals are more consistent with other major emitters. American Action Forum

The agreement would have burdened the US with huge costs and no economic benefits. Americans for Tax Reform Continue Reading Why Leaving the Paris Climate Accord Could Be a Good Thing

shysterAccording to Mr. Bumble, the law is an ass. I disagree (Know a lawyer who’s an ass? That’s another conversation). In Davis v. Mueller the law was not an ass, per se, but as applied by the Texas Supreme Court it showed little mercy.

A refresher on conveyances

  • According to the Statute of Frauds, a writing conveying real property must furnish within itself, or by reference to some other existing writing, the means or data by which the land to be conveyed may be identified with reasonable certainty.
  • A Mother Hubbard clause is a catchall in a deed to capture small, overlooked, or incorrectly described interests.
  • A Mother Hubbard clause is not effective to convey a significant property interest not adequately described in the deed.
  • In Texas a general conveyance of all of a grantor’s property in a geographic area is given effect.

Continue Reading Texas Mineral Deeds Survive the Statute of Frauds

too lateWhen must a neighbor sue for nuisance and trespass or else be barred by limitations? It’s a tricky question. In Town of Dish et al v. Atmos Energy et al, the Texas Supreme Court concluded that the claims were time-barred. The limitations train had left the station.

The rules

Here are factors considered by the court that govern when these cases must be brought:

  • Limitations runs two years from the time the claim accrues.
  • When a claim accrues (and the limitations clock begins to tick) is a question of law for Her Honor, not the jury.
  • Trespass and nuisance claims accrue once a “known injury begins.”
  • Normally, such claims don’t accrue when the source is under construction. However, once operations begin and interference occurs, the clock starts.
  • Once a claimant learns of a wrongful injury, limitations begins to run even if the claimant doesn’t yet know the specific cause of the injury, the party responsible, the extent, or the chances of avoiding it.
  • A claimant’s subjective belief as to the accrual date doesn’t matter. A nuisance is a condition causing unreasonable annoyance to persons of ordinary sensibilities. Its an objective test.

Continue Reading Limitations Runs on Nuisance Claims

Gregg AllmanTrigger warning for Texas readers: This entry will discuss forced pooling. You may now retreat to your “safe space”, where “no guvment-sumbitch-bureaucrat can conspire with [name of large oil company] to steal my stripper well.”

TDX Energy, L.L.C. v. Chesapeake Operating, Inc. doubles down on XXI Oil and Gas v. Hilcorp Energy Company from the Louisiana Third Circuit, while giving a useful tutorial on the purpose and effect of Louisiana forced pooling. Caveat: Pay attention below to the statute as amended. Continue Reading Louisiana Forced Pooling – Timing is Important

Yellow KEEP OUT Barrier TapeCo-author Chance Decker

We know that in Texas the mineral owner has the right to explore for and produce the minerals. What does that leave for the surface owner? In Lightning Oil Company v. Anadarko E&P Onshore, LLC the Texas Supreme Court tells us he owns the right to possess the specific place or space where the minerals are located. Absent pooling or some other contractual arrangement, with that comes the right to grant (for a price) or deny an off-lease operator the right to drill through the mineral estate to reach minerals under an adjacent tract. Continue Reading Texas Subsurface Trespass Law Clarified

certificate of participationCo-author Chance Decker

You are a service company and you’ve been sued for a defective frac job. It looks scary but there’s no detail in the petition and no certificate of merit is attached. What is your response:

  1. “Such a pity; my fifth-grader got one for finishing next-to-last at the track meet”;
  2. He should borrow one from the scarecrow;
  3. Panic, offer a nice settlement to the plaintiff if, for the love of Jesus, Mary and Joseph and your non-exempt ranch in West Texas, he’ll just go away;
  4. Ponder the difference between “shall” and “may”.

Perdenal Energy LLC v. Bruington Engineering, Ltd. asked whether a court must dismiss an engineering defect lawsuit filed without a certificate of merit with prejudice (never to file suit again) or may dismiss without prejudice (to refile once they obtain a certificate). Continue Reading Suit For Bad Frac Job Requires a Certificate of Merit

A Black Rhino running towards the camera, Kruger National Park

Forest Oil Corporation v. El Rucio Land and Cattle Inc. et al deserves your attention for four reasons:

  • You won’t see another one involving damage to a rhinoceros pen.
  • It confirms that the Texas Railroad Commission does not have exclusive or primary jurisdiction over private claims for environmental contamination. Welcome to the courthouse.
  • The South Texas redistributionist approach to civil justice includes arbitrations.
  • For once, the Texas Supreme Court declined to eviscerate a multi-million dollar plaintiff victory.

Continue Reading Oil Field Contamination Award Upheld

railroadCo-author Chance Decker

BNSF v. Chevron Midcontinent LP et al. asked whether a 1903 deed granted BNSF’s predecessor a strip of land in fee simple absolute or only an easement. The result: BNSF holds only an easement. There’s more to the case than an analysis of particular language in one sui generis contract. What else did we learn?

The big picture

  • Is your assignment to determine the intent of the parties in a document? Consider it as a whole; don’t cherry pick phrases and read them in isolation. I doesn’t matter whether you are issuing checks based on ownership or convincing the court of your righteousness.
  • Beware of ancient title documents, in particular a “Right of Way Deed”. Railroads in the early part of the last century had a propensity to present documents that looked like easements but were really deeds in fee simple. Here, 115 years later, if that was the intent it didn’t work.
  • “Beware” translates to “read the document carefully and thoroughly”. Don’t skim the granting clause and call it a day.
  • In a face-off between the granting and habendum clauses, the granting clause prevails. But, as you will see, it’s not that simple.

Dueling deed language

The consideration: “… benefits which will accrue… by reason of the construction of a line of railroad over the land…”

The granting language: “… a right of way, that certain strip of land hereinafter described, …”. The deed then described a line traced by surveyors.

The habendum clause: “To have and to hold the said premises, together with all appurtenances thereto belonging, in fee simple, unto the said … its successors and assigns forever.”

BNSF’s losing arguments (contending the deed conveyed fee simple absolute)

  • “Right-of-way” is not a legal term of art with a set definitive meaning, but rather may be used in two senses: a right of passage, and also a strip of land which railroad take up one upon which to construct a roadbed. The court agreed, but that didn’t carry the day.
  • “For a right-of-way” is a precatory nonrestrictive clause that states a purpose but does not limit the nature of the estate being conveyed. (Don’t even try to say you already know what “precatory” is.)
  • The habendum clause refers to “fee simple”. That alone should  answer the question. But the granting clause controls, and the court wasn’t ready to recognize a Texas doctrine of “an easement in fee simple” as do some other states.

The court – it’s an easement

The granting clause straddled the line between two different types of deeds, making it ambiguous. The court then had to examine the entire deed and harmonize its conflicting provisions. The court followed the basic rule: Assume the parties intended every clause to have effect so that no clause is rendered meaningless. But the focus remained on the granting clause, which controls the disposition.

Chevron offered the only reasonable reading of the deed. The deed as a whole evinces a clear intent to convey only a surface easement. The court noted these factors:

  • The opening recitals show that the grantor would receive benefits if a railroad passed over the land.
  • “Right-of-way” appears in the granting clause directly in front of “that strip of land”. The placement of the statement of purpose means something.
  • The line shaped by the surveyors went “over to and across” various sections.
  • There was a separate grant of the right to use wood, stone and other resources. If the deed conveyed the land in fee simple the right to take and use the natural resources would have passed automatically.
  • The granting clause defines which bundle of rights was transferred; the habendum clause tells the recipients how long and under what conditions they can have and hold those rights.
  • The habendum clause allows the grantee to have and hold the “premises”, which suggests only an easement.

What is the effect of the reference to “fee simple” in the habendum clause? Fee simple is a “durational or conditional qualifier, rather than the expression of an estate’s size”. The operative question of what BNSF actually owns is answered by the granting clause and the “gloss put on that clause by the rest of the deed.”

What is it about trains and prison in country songs?  Know what I mean?

man bites dogSierra Club v. Chesapeake Operating LLC et al is news more shocking than “Man Bites Dog”! A federal court has acknowledged that others are better equipped to address certain issues than the judiciary!

Sierra Club alleged that that deep injection of liquid waste from operations by Chesapeake, Devon and New Dominion has contributed to earthquakes throughout Oklahoma and southern Kansas. Sierra asserted that waste disposal activities present an imminent and substantial endangerment to the public health or environment. This was a citizen suit under the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act.

There is reason to be concerned

Sierra Club alleged:

  • Earthquakes in Oklahoma increased more than 300-fold from before 2009 to 2015, from 167 to 5,838.
  • The severity has increased.
  • Seismologists say a magnitude 7 quake is possible in the Nehama fault.
  • Earthquake risks in Oklahoma are now the highest in the nation.

What the parties wanted

Sierra Club wanted an order requiring defendants to:

  • Reduce “immediately and substantially” the amount of wastes injected into the ground,
  • Reinforce vulnerable structures that would be impacted by a large magnitude earthquakes, and
  • Establish independent earthquake monitoring and prediction.

The defendants urged the court to:

  • Allow the Oklahoma Corporation Commission to take action in response to increased seismicity in the state.
  • Dismiss, because Sierra did not join every company that disposes of liquid wastes, and
  • Dismiss, because the claims fall outside the “zone of interests” Congress intended to protect under RCRA.

The court sided with the defendants, concluding that dismissal is appropriate under the Burford abstention and primary jurisdiction doctrines. Here’s why:

  • In 1981 the EPA gave primary enforcement responsibility for underground injection control to the state of Oklahoma.
  • Oklahoma vests that authority in the Oklahoma Corporation Commission.
  • The OCC exercises exclusive jurisdiction over injections wells.
  • The OCC has an extensive regulatory structure in place for injection well control.

Abstention doctrines explained

The Burford abstention doctrine says that where timely and adequate state court review is available a federal court must decline to interfere with the state agencies where there are difficult questions of state law whose importance transcends the results in the case at bar and where exercise of federal review of the question would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.

Oklahoma has established and is operating its own program to regulate wells, OCC oversight encompasses more wells than just those operated by these defendants, the issue is one of substantial public concern, and timely and adequate state court review is available to the plaintiff.

The primary jurisdiction doctrine protects the administrative process from judicial interference, and it applies here. The court should refer issues not within its conventional experience to the administrative agency having more specialized experience, expertise and insight.

Why is this a big deal?

Essentially, the court recognized that highly complex and technical issues should not be regulated by the courts. This presents fundamental differences between courts and regulatory agencies: The OCC is equipped as a regulatory body to apply continuous, persistent and flexible regulatory power, which the court can’t do. Immediate and substantial reduction in wastewater requires specific scientific and technical expertise, which the OCC has and the court doesn’t.

You don’t need to bite your dog.