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Recent NewsTexas Supreme Court Grants Landowner Win in Hlavinka - May 2022 On May 27, the Texas Supreme Court issued an opinion in the HSC Pipeline v. Hlavinka case. The ruling was in part for the pipeline company and in part for the landowner. TLMA filed an amicus in this case supporting the landowner and urged “the Court to rule in favor of Hlavinka and take this opportunity to confirm that a single provision from Business Organizations Code does not create an end run around the Texas Natural Resources Code and common carrier regulations and well-established jurisprudence.” The Court found that the pipeline company has the authority to condemn the pipeline, but most importantly for landowners, that the landowner can provide testimony regarding sales of pipeline easements across their property You can find all case documents, including the TLMA amicus and the opinion, here. Texas Senate Releases Interim Charges - April 2022 Lt. Governor Dan Patrick released the interim charges for the 87th Legislature. Of interest to TLMA members are Natural Resources and Economic Development and Water, Agriculture, and Rural Affairs Committees charges. Charges of interest are included below. Natural Resources and Economic Development Committee
Water, Agriculture, and Rural Affairs Committee
A full list of House scheduled hearings can be found on the House of Representatives website. A full list of Senate scheduled hearings can be found on the Senate website. Texas House Releases Interim Charges - March 2022 Speaker of the Texas House, Dade Phelan, released the 87th Legislature Interim Charges. The Energy Resources Committee's charges are:
You can view Speaker Phelan's press release here and view the full list of charges here. Texas Supreme Court Hears Oral Arguments in Hlavinka v. HSC Pipeline Partnership - February 2022
On Thursday, February 24, the Texas Supreme Court heard oral arguments in the Hlavinka v. HSC Pipeline Partnership case. TLMA filed an amicus brief in support of the petitioners, Hlavinka, asking the Court to confirm that one section of the Business Organizations Code does not give Texas pipelines a run around of the Texas Natural Resources Code and common carrier regulations. “In particular, TLMA takes issue with the Court of Appeals holding that “section 2.105 [of the Texas Business Organizations Code] provides an independent grant of eminent domain authority…When dealing with statutes allowing the taking of private property—a constitutional issue—stricter construction and more thorough and thoughtful examination is required than that undertaken by the Court of Appeals in its interpretation of Texas Business Organization Code Section 2.105.”
TLMA has long supported public policy, through legislation and Supreme Court decisions, that supports landowner’s rights through a fair condemnation process.
You can view the full brief here and the oral arguments can be watched here. Texas Comptroller Celebrates National Unclaimed Property Day - February 2022 February 1 is National Unclaimed Property Day. In Texas, unclaimed royalties because unclaimed property held by the state after 3 years. If you want to search for royalties or any other unclaimed property, visit the Texas Comptrollers website ClaimItTexas.org. Visit the Comptroller's press release here. Learn more about unclaimed royalties from John McFarland here. TLMA Confirms New Chairman of the Board - January 2022 The Texas Land & Mineral Owners Association Board of Directors confirmed Mr. James C. “Jimmy” Broussard as Chairman of the Board. Mr. Broussard has been a member of TLMA since 2000 and served on the Board since 2014. Mrs. Kimberley K. McTee, Immediate Past Chairman, remains on the Board of Directors. We are extremely grateful to Mrs. McTee for her service during the past two years. Her leadership during two years of unexpected events ensured that the Association successfully navigated those times. Mr. Tom Daniel and Mr. Trey Scott continue to serve as Vice-Chairman and Treasurer, respectively. Kiefaber & Olivia Announce 2022 Energy Education Series KO has released the 2022 Energy Education Series topics. They are listed below. You can click here to head to their events page or use the links below to register for the individual events. Each webinar is at 12 noon central time. LITIGATION TRACK:
TRANSACTIONAL TRACK:
Railroad Commission of Texas Releases 2021 Year in Review - December 2021 The Railroad Commission of Texas released their 2021 Year in Review - which includes information on the state managed well plugging program. You can view the document in its entirety here. Candidate Filings Begin for March 2022 Texas Primaries - November 2021 Formal filing for candidates of all political parties began on Saturday, November 13 for the March 2022 Texas Primaries. The filing deadline is December 13, 2021. If you would like to view the candidate list, visit the Secretary of State's Website. Texas Legislature Adjourns Sine Die for the Fourth Time - October 2021 In the early hours of October 19, the Texas Legislature adjourned the third called session sine die. Of the items originally listed and added to the call the following items were passed:
The items that did not pass that were included on the call are:
Governor Abbott has not announced a fourth special session. For information on the bills passed, visit Texas Legislature Online. TLMA Hosts 2021 Statewide Member's Meeting - October 2021 The Texas Land & Mineral Owners Association held the 2021 Statewide Member’s Meeting on Thursday, October 6, 2021 via Zoom Webinar. Thank you to everyone who attended and especially to our sponsors and speakers! The speakers for this year’s meeting were: Senator Dawn Buckingham We would greatly appreciate everyone, even if you did not attend, completing the survey!
87th Texas Legislature Continues Marathon Special Sessions - October 2021 During the first called session, members of the House Democratic Caucus left for Washington, D.C. breaking quorum in the Texas House leaving the House unable to conduct business. They remained out of State for the remainder of the session. Governor Abbott then called a second special session and included all of the first called session issues, as well as appropriating federal funds, public education strategies during COVID-19, modifying election dates for primary elections 2022, and limiting the ability to store and transport high-level radioactive materials in Texas to the call. The second special session began on Saturday, August 7, all but one item passed, and the legislature adjourned on September 2. On September 20, the Legislature began the third called session – the one we knew was required while in the Regular legislative session. Due to the delayed release of Census data, the legislature was unable to complete the redistricting process during the Regular Legislative session. When Governor Abbott announced the third session, he also added appropriating federals funds, youth sports, vaccine mandates, and dog tethering to the call. Since the session began, Governor Abbott added property tax relief, bail reform, and voting penalties to the call. TLMA continues to monitor all legislation during the special sessions.
Railroad Commission Exceeds Legislative Goal for Plugging Orphaned Wells for the Fifth-Straight Year - September 2021 The RRC announced earlier this month that they plugged 1,453 orphaned wells from September 1, 2020 to August 31, 2021. The goal set by the legislature was 1,400 wells. There are still 7,197 orphaned wells to be plugged. You can read the full press release here. The full list of orphaned wells can be found here.
TLMA Joins Landowner and Ag Associations on Letter Urging Congress to Protect Tax Policies - July 2021 In mid July, TLMA joined with many other landowner associations in a letter to urge Congress to protect tax policies that would be detrimental to land and mineral owners. A few of the proposals include changes to:
In addition to these landowner tax proposals, Congress has also proposed eliminating the percentage depletion allowance. Click here to view the letter with Texas & Southwestern Cattle Raisers Association. Click here to view an article by Wade Caldwell, National NARO President, and TLMA member. Click here to view Jack Fleet’s testimony before the Senate Committee on Finance. Jack is the Executive Director of NARO and TLMA member. Shortly after signing onto the letter with Texas and Southwestern Cattle Raisers Association, TLMA joined with other industries of Texas and signed onto a letter to leadership with the Texas Farm Bureau. 87th Legislature's First Called Session Begins - July 2021 On July 8, 2021, the 87th Legislature convened for the first called session. The session will last 30 days and include items listed on the call. The initial call was issued on July 7, 2021, but the Governor can add items as he sees necessary. You can see the list of items and a link to the proclamation in the Governor's press release. Travis County District Court Rules in Allocation Well Permit - May 2021 This week, the Travis County District Court ruled in favor of the mineral owner in the Opiela v. RRC trial court case. They ruled that allocation well permits exceed the Railroad Commission's authority. It is expected that the RRC will appeal the ruling. You can read TLMA's amicus brief and the ruling for more information. Governor Abbott Adds Emergency Items Following Winter Storm - February 2021 Governor Abbott added emergency items for the 87th Legislature following the winter storm this week. Those items include ERCOT reform and winterization of the Texas power system. For more detailed information on the legislative session, join TLMA today to receive our email updates. House Committee Assignments for the 87th Legislature Announced - February 2021 Speaker Dade Phelan announced the House Committee assignments for the 87th Legislature. You can view the assignments by committee or by member. You can find more information on committees on the House website. Below are the committees TLMA is most likely to work with. Energy Resources Chairman Craig Goldman Land and Resource Management Chairman Joe Deshotel Natural Resources Chairman Tracy O. King Governor Abbott gives State of the State Address - February 2021 Last night, Governor Abbott gave his State of the State Address to lay out his emergency items and legislative priorities. Some of his emergency items were not expected and some that were expected were not included. Bills deemed emergency items by the Governor are able to be debated on the floor of either Chamber prior to the constitutionally prohibited 60th legislative day. Governor Abbott’s emergency items for the 87th legislature are:
Other legislative priorities include:
Some of these issues have bills already filed. Lt. Governor Dan Patrick Announces Senate Committees for the 87th Legislative Session - January 2021 On Friday, January 15, Lt. Governor Dan Patrick announced the Senate Committee Assignments for the 87th Legislative Session. You can view all the assignments here. TLMA will most closely work with the Natural Resources and Water, Ag, & Rural Development committees. Those members are listed below and can also be found on the 87th Legislature webpage. Senate Committee on Natural Resources & Economic Development Chairman Brian Birdwell Senate Committee on Water, Agriculture & Rural Affairs Chairman Charles Perry TLMA Board Begins Two-Year Term – January 2021 During the 2020 TLMA Statewide Members Meeting, the members elected a new Board and District Representatives that will serve the 2021-2022 calendar years. The Board began their term on January 1, 2021. Kim McTee, Chairman *Chair-elect Jimmy Broussard will begin his term as Chairman on January 1, 2022. The District Representatives for 2021-2022 are: Dr. John S. Baen, Denton 87th Texas Legislature Begins - January 2021 On Tuesday, January 12, 2021 the 87th Texas Legislature convened at noon for their 140-day legislative session. Lt. Governor Dan Patrick will preside over the Senate and Senator Brian Birdwell (R-Granbury) was elected President Pro Tempore. Representative Dade Phelan (R-Beaumont) was elected the Speaker of the House of Representatives. In addition to passing a balanced budget, the Legislature must also pass the political district maps through a process known as "redistricting". As of today, there are 1,439 bills filed. The bill filing deadline is on the 60th day of the legislative session. Other deadlines for session will be determined through passing the rules resolutions that will be done this week. The regular session will adjourn on Monday, May 31, 2021. Comptroller Glenn Hegar Issues Biennial Revenue Estimate - January 2021 Ahead of each legislative session, the Comptroller issues the Biennial Revenue Estimate (BRE) that provides the legislature with the amount of funds they can appropriate through the budget process for the upcoming biennium. The Texas Legislature is constitutionally required to pass a balanced budget. According to Comptroller Hegar's report, Texas will end the current biennium with a $1 billion deficit and will have $112.5 billion to spend in the 2022-2023 biennium. How does this impact you as a land and mineral owner? Certain portions of the budget are statutorily set on how much money they will receive. Whatever is left, is what can be appropriated to the remaining agencies. The Railroad Commission and TCEQ are two agencies that receive the "leftover" funding - especially the well plugging fund. This is why it is critical for TLMA to support the Railroad Commission in their budgeting efforts. The funds appropriated to the well plugging fund could be moved elsewhere if legislators chose to do so. You can ready the full 2022-2023 BRE for more specific information. TLMA Now Allows Corporate Members - January 2021 During the 2020 TLMA Statewide Members Meeting, the TLMA membership approved a corporate membership for entities that provide services to our members. As of January 1, 2021, TLMA is now accepting corporate members. This new class of membership receives benefits that are only offered to them. If you or someone you know is interested and thinks they meet the qualifications, please visit tlma.org or email [email protected] for more information on the benefits of a corporate membership. Online applications will be available soon or you may send Jennifer Bremer an email to receive an application. Jim Wright Sworn in as Commissioner of Railroad Commission of Texas - January 2021 On January 4, 2021, Jim Wright was sworn in as the newest commissioner of the Railroad Commission of Texas. He replaces Ryan Sitton and will serve a 6 year term. TLMA looks forward to working with Commissioner Wright in his new capacity! Press release from the RRC. Fall 2020 Judicial Update - November 2020 Earlier this year, TLMA filed an amicus brief in the Strickhausen (No. 19-0567) case dealing with the ratification of a pooling clause in a lease. The Court heard oral arguments on October 28, 2020. The Supreme Court has not issued an opinion. In September, TLMA filed an amicus brief in the Bluestone v. Randle (No. 19-0459) case determining if "gross value received" in a lease addendum conflicts with "at the well" in a printed lease form. Oral arguments were heard on September 17, 2020. An opinion has not been issued. The amici can be found on the Texas Supreme Court website or at the following links - Strickhausen and Bluestone. Railroad Commission of Texas Approves Form Changes to Flaring Exception - November 2020 Earlier this month, the Railroad Commission of Texas proposed form changes to the Application for Exception to Statewide Rule 32 to address concerns with the amount of flaring happening in Texas. These concerns were raised during the proration hearings that happened in April 2020. The Commissioners approved the rule changes at the November 4 open meeting and the form became effective immediately. Staff is working on an online exception filing system and expect it to go live March 2021. Operators can use the previous system of filing until April 1, 2021. The R-32 form and attachments can be viewed here. Jim Wright wins General Election to Become Next Railroad Commissioner - November 2020 Last night, Republican Jim Wright won the general election to become the next Commissioner at the Railroad Commission of Texas. Mr. Wright defeated Commissioner Ryan Sitton in the March Republican primary. We look forward to working with Commissioner-Elect Wright in the coming years! See below for a statement from Commissioner-Elect Wright.
STATEMENT FROM JIM WRIGHT "This morning Chrysta Castaneda, the Democratic nominee for Texas Railroad Commission, called to congratulate me on my win for this important seat that will help determine the future of the oil and gas industry in Texas for decades to come. However, this was not my win. This was a win for Texas and our future, a win for Texas jobs and Texas school children who benefit from the money produced by our energy industry. We all understand the importance of our industry, and the importance of protecting our environment and I am excited to have the opportunity to work with sitting Commissioners Wayne Christian and Christi Craddick on these issues over the next few years. Yesterday, Texans sent a message to the radical liberals from New York and California who pumped millions of dollars against conservatives in this race, U.S. House and Senate races and legislative races across our state: Texas is not for sale. Texans will determine its own energy future … and that is a future that includes an all-of-the-above approach for energy led by fossil fuels and that will help us find new ways to improve our climate, our environment and our economy."
TLMA Hosts 2020 Statewide Members Meeting Virtually - October 2020 The Texas Land & Mineral Owners Association hosted the biennial Statewide Members Meeting on October 8, 2020. Attendees heard presentations on royalty auditing, solar development and leasing, bankruptcy, and water regulations. Additionally, attendees were given an update on the upcoming legislative session by Billy Phenix. Chairman Kim McTee conducted the Business Meeting and announced the results of the Board of Directors election, District Representatives election, and the by-law amendment since the vote was conducted by mail. All passed as presented. TLMA Responds to Texas House Land and Resource Management Request for Information - August 2020 In light of the ongoing social distancing requirements, the House Land & Resource Management Committee posted a request for information on their interim charges. TLMA responded to interim charge #2 pertaining to the Landowner's Bill of Rights. Our comments focused primarily on the LBoR being a small part of a much larger process and adding information to a single document is not the fix to establishing fairness in the condemnation process. Two additions that TLMA suggested are :
You can view our full comments here. The House Committee on Land & Resource Management posted all comments filed. You can view the document here. RRC Hears Testimony on Flaring at Open Meeting - June 2020 At the May RRC Open Meeting on prorationing, Chairman Wayne Christian instructed the Blue Ribbon Task Force to continue meeting and bring forth recommendations to reduce flaring in Texas. The Blue Ribbon Task Force (through the Texas Methane & Flaring Coalition) released their report containing recommendations on ways to reduce flaring in Texas. The Commission staff was instructed to review the report and make recommendations for items that can be implemented by this fall and present their findings at the next Commission meeting on August 4, 2020. The following link is the link to the press release and report by the Texas Methane & Flaring Coalition. Below are Chairman Christian’s thoughts on the hearing. https://www.rrc.texas.gov/about-us/commissioners/christian/news/061620a-christian-flaring-report/ TLMA looks forward to hearing what the RRC will propose at next months meeting. Court of Appeals Rules for Landowner in Brazoria County Condemnation Case - June 2020 Last week, the First Court of Appeals ruled in favor of the landowner in Hlavinka v. HSC, finding that HSC cannot use eminent domain to acquire the land for a pipeline easement. The Hlavinkas and HSC could not reach an agreement for the easement, which led to HSC filing condemnation proceedings. The Hlavinkas argued that HSC was not a common carrier, in addition to other things. HSC won at the trial court level, but were successful at the Court of Appeals. You can view the full opinion from the Court of Appeals here. TLMA will continue to monitor this case in the event it is appealed to the Texas Supreme Court. *UPDATED* RRC of Texas Denies Motion Prorationing Oil Production in Texas, Passes Other Motions – May 2020 The Railroad Commission of Texas denied the motion by Pioneer and Parsley Energy to proration oil production in Texas. To provide other measure to assist operators, the Commission passed the following motions:
There will be a more in-depth article of the impacts to land and mineral owners of the changes in our upcoming newsletter. We will continue to watch for rule changes over the coming months and then for legislative changes at the appropriate times. In addition to the article included in our current newsletter, Ryan Lammert put together this powerpoint on the temporary exceptions.
For the first time in 50 years, after a motion filed by Parsley Energy and Pioneer, the Railroad Commission of Texas held an open meeting on prorating production across Texas. The motion was filed in late March and a virtual meeting was held on Tuesday, April 14. TLMA filed comments addressing a few of the many issues discussed and Tom Daniel, Vice Chair, gave verbal comments during the 10 hour hearing. TLMA Asks Texas Supreme Court to Affirm 4th Court of Appeals Opinion in Strickhausen Case - March 2020 TLMA filed an amicus brief in the BPX v. Strickhausen case (No. 19-0567) relating to ratification of pooling mineral ownership interests. “The issue in this case is whether Respondent ratified Petitioner’s breach of the contractual no pooling clause by accepting royalty checks, after she explicitly objected to the unlawfully pooled unit in writing.” Strickhausen immediately objected to the pooling once she was made aware of the pooling. Both parties have filed briefs on the merits. The Court has not decided whether to hear oral arguments in the case. You can read the TLMA amicus here and see other court documents here. RRC Approves Rule Allowing for the Multiple Assignment of Acreage – February 2020 At the February 11 Open Hearing, RRC approved rule amendments to Section 3.40 – Assignment of Acreage to Pooled Development and Proration Units. This rule will allow surface acreage to be assigned to more than one horizontal well. While TLMA is supportive of this change, we filed formal comments asking for unleased mineral owners to receive notice in addition to the operators. The rule requires unleased mineral owners to be notified if the operator does not meet the requirements for multiple assignment of acreage but is seeking an exemption. TLMA asked for this across the board. The Commission declined to make the change because Section 3.40 “addresses acreage assignment and acreage can only be assigned by an operator”. TLMA also filed more detailed comments during the informal process. You can read the formal comments here and the informal comments here.
On December 3, 1999, TLMA was incorporated in the State of Texas. What began as 54 concerned land and mineral owners has flourished into an association of nearly 1,000 members. We are so proud of the past 20 years and look forward to the next 20! Our first 20 years include:
In addition to all of the above, we hosted town hall meetings, began hosting regional meetings, filed amicus briefs, and comments on Railroad Commission rule proposals. We hope that you will join us in our advocacy efforts in the next 20 years! If you haven’t joined, we encourage you to do so today!
In June, the Texas Supreme Court decided the Barrow-Shaver v. Carrizo farmout agreement case in favor of Carrizo, which TLMA supported with an amicus brief in November 2018. In August, Barrow-Shaver filed a motion for rehearing in the case. TLMA filed a letter of support of the Court’s decision and asked they not rehear the case. In the motion for rehearing, Barrow-Shaver relies on Dwyer v. City of Brenham, 7 S.Wl 598, 599 (Tex. 1888) and TLMA does not believe that case applies in Barrow-Shaver v. Carrizo. You can read the letter here. TLMA Files Amicus Brief Defending the Original Intent of the "Division Order" Statute - September 2019 Earlier this year, TLMA joined with the South Texans’ Property Rights Association, Texas and Southwestern Cattle Raisers Association, Texas Cattle Feeders Association, Independent Cattlemen’s Association of Texas, Texas Forestry Association, Texas Wildlife Association, Texas Poultry Federation, Plains Cotton Growers, Inc., and Texas Corn Producers Association in filing a brief supporting the landowners in the overreach of using “blanket easements” in the SWEPCO v. Lynch et. Al case. The Texas Supreme Court has agreed to hear the case. Oral arguments have been set for December 5, 2019. You can watch them live on the Texas Bar Association website. You can read the brief TLMA filed for more information and find all case documents on the Texas Supreme Court website.
Texas Supreme Court rules in Barrow-Shaver v. Carrizo Farmout Agreement Case – June 2019 In November 2018, TLMA filed an amicus brief in the Barrow-Shaver v. Carrizo Supreme Court case on the consent to assign clause in a farmout agreement. TLMA agreed with Carrizo’s position because landowner’s use the consent to assign clause in their oil and gas leases to protect their land. The Supreme Court affirmed the Court of Appeals decision in favor of Carrizo. The Court stated that the language in the contract is “unambiguous” and “the contract imposed no consent obligation on Carrizo and that Carrizo’s right to withhold consent is unqualified.” You can read TLMA’s letter to the Court here. Also available are the opinion and dissent.
On May 27, 2019, the 86th Legislature adjourned sine die – meaning until the 87th legislature begins in January 2021. However, just because session has ended, doesn’t mean the work will stop until next session. The regulatory agencies will begin rulemaking proceedings to implement the legislation that was passed, committees will begin to develop requests for interim charges, Sunset hearings will begin, and much more. Once the Lt. Governor and Speaker release their interim charges, the Committees will then begin to have hearings on those topics. During this session, TLMA passed HB 3838 by Representative Ernest Bailes (Sponsored by Chairman Brian Birdwell) and prevented other harmful legislation from passing. For more details on the successes of our legislative efforts, see the latest newsletter.
On January 23 at the quarterly TLMA Board of Directors meeting, the Directors voted to approve the following slate of officers for the coming years. Chairman Carolyn Frost Keenan, Houston Chairman-Elect Kimberley K. McTee, San Antonio Vice Chairman Thomas H. “Tom” Daniel, Austin Treasurer E.O. “Trey” Scott, III, San Antonio Pursuant to the by-law changes adopted by members at the 2018 Statewide Member’s Meeting, the Chairman and Chairman-elect terms will end January 2020 and the Vice Chairman and Treasurer terms expire January 2021.
Southwest Electric Power Company v. Lynch et al impacts utilities rights to a “blanket easement” that SWEPCO had for electric transmission and distribution lines. SWEPCO notified the landowners 65 years after the signing of the easement that they would be rebuilding the line and would like a supplemental easement. After declining the supplemental easement, SWEPCO claimed a 100 foot easement that contained a house and pond that had been there for over forty years. The respondents were then sued for breach of easement and trespass. It has not been determined if the Court will take this case. TLMA, South Texan’s Property Rights Association, Texas and Southwestern Cattle Raisers Association, Texas Cattle Feeders Association, Independent Cattlemen’s Association of Texas, Texas Forestry Association, Texas Wildlife Association, Texas Poultry Federation, Plains Cotton Growers, Inc., and Texas Corn Producers Association all signed onto the brief.
RRC asks for comments on assignment of acreage; TLMA files comments – November 2018 Earlier this year, the RRC informally proposed a rulemaking to Rule 40 – Assignment of Acreage to Pooled Development and Proration Units. This informal rule would allow acreage at different depths to be leased separately. The rule would also require notice to be given to unleased mineral owners in addition to the operators. While the timelines don’t allow adequate time for mineral owners to request a hearing, TLMA is supportive of the notice provision. You can read more about the rule and TLMA’s thoughts in the letter to the Commissioners.
TLMA filed a brief in support of Carrizo Oil & Gas in the Barrow-Shaver Resources v. Carrizo Oil & Gas Inc. farmout agreement case. The primary issue at hand for TLMA members is the consent requirement in the agreement because similar provisions can be found in many oil and gas leases. As stated in the brief “..not all oil and gas operators exercise the same level of diligence, many land and mineral owners view restrictions on assignability as a very important issue in their oil and gas lease negotiations, especially if the lessor is also the owner of the surface estate of the leased premises…It is therefore important for the landowner to know who will be operating on its property and to have some say in the assignment of those rights and liabilities to another operator.” The Tyler Court of Appeals ruled in favor of Carrizo and TLMA is asking for the Supreme Court to affirm that decision. Oral arguments were held December 4. You can read TLMA’s letter here.
Earlier this year, the Supreme Court of Texas decided the Murphy v. Adams case in favor of Murphy. Because of the potential significant impact to longstanding practices with offset wells and drainage, TLMA joined NARO-TX and a number of oil and gas attorneys in requesting a motion for rehearing. The Supreme Court rejected the motion for rehearing, but did correct their opinion. You can read the amicus letter and the corrected opinion and dissent for more details.
Railroad Commission of Texas Chairman Christi Craddick proposed the next rule changes as part of the Texas Oilfield Relief Initiative earlier this month. The proposed rule would still require the initial well potential test, but would eliminate the annual well tests for oil wells that are reported on the Form W-10 except in the following circumstances:
TLMA submitted comments and also encouraged our members to do the same. After the comment deadline, TLMA was invited to a meeting with commission staff. Our meeting was successful and the Chairman agreed to withdraw the proposal. In her comments while formally withdrawing the rule proposal at an open meeting, Chairman Craddick stated that while the purpose of the initiative is to eliminate the collection of information that is not being used by the RRC, it is clear that the public and industry use the information received from the annual well test. You can read TLMA’s comments here.
The Supreme Court issued an opinion and dissenting opinion in the Murphy v. Herbst offset well case. The case was decided 5-4 in Murphy’s favor. The opinion stated that the lease was ambiguous to the location of the offset well because it didn’t contain a “proximity requirement” and that they “do not read into the lease more stringent obligations than the parties intend.” The dissent stated that the lease required Murphy to drill an offset well “reasonably located” to protect against drainage. As mentioned in a previous news post, TLMA’s brief asked the Court to uphold the Court of Appeals and recognize the definition of and purpose of an offset well. In its brief, TLMA asserts that an offset well, by its commonly understood definition, is meant to protect against drainage. A company cannot simply drill a well anywhere on the lease and call it an offset well; it must show evidence that the well is actually offsetting drainage by the neighboring well. You can read the opinion here and the dissent here. The TLMA amicus brief can be viewed here.
The Supreme Court has granted the petition for review in the Burlington v. Texas Crude case on post-production costs, which is the first case on this issue since Chesapeake v. Hyder. The Burlington v. Texas Crude case deals with the issue of post-production costs in an overriding royalty interest situation. TLMA and NARO-TX jointly filed a brief in this case asking the Supreme Court to deny the petition and allow the decision made by the Court of Appeals to stand. The Supreme Court granted the petition. Oral arguments have not been set, but TLMA will post when the date and time are determined. You can view the amicus brief here.
TLMA filed an amicus curiae brief in BP America v. Red Deer Resources asking the Court to grant the motion for rehearing filed by Red Deer Resources LLC. A trial jury ruled in favor of Red Deer regarding the date that the well was not “capable of producing”. The case made it all the way to the Texas Supreme Court where the Court found in favor of BP America. The Supreme Court decided June 4, the last day the well produced, was the date the shut-in clause would go into effect and the lessor is required to prove that a well is “incapable of production in paying quantities”. In its brief, TLMA asserts that the “operative date for determining a well’s capability to produce gas” is incorrect and it is “inconsistent with the intent and purpose of the shut-in royalty clause” to place that requirement on a lessor. You can read TLMA’s brief here.
The Supreme Court rejected the appellate court’s notion that it should consider Denbury’s intent at the time it began planning to construct the pipeline. Instead, the Court found Denbury’s contracts to transport CO2 entered into after the pipeline was built (and in the case of the only contract that is truly independent of Denbury, entered into after the Court issued its first Denbury opinion in 2012) evidenced a “reasonable probability” that the pipeline would serve the public. It also found that the pipeline’s route in proximity to other CO2 shippers supported a probability of future public use. In addition, the Court stated that the court of appeals got it wrong by requiring a common-carrier pipeline serve a substantial public interest. The Supreme Court held that “evidence establishing a reasonable probability that the pipeline will, at some point after construction, serve even one customer unaffiliated with the pipeline owner is substantial enough to satisfy public use.” |
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