Justia Energy, Oil & Gas Law Opinion Summaries

The Supreme Court reversed in part the judgment of the court of appeals reversing the judgment of the district court affirming the conclusions of the Public Utilities Commission (PUC) that CPS Energy violated both Tex. Util. Code 54.204(c)'s uniform-charge requirement and section 54.204(b)'s prohibition of discrimination, holding that the PUC could reasonably have concluded, as it did, that CPS Energy violated the plain terms of section 54.204(b).The PUC concluded that a utility that invoices different telecommunications providers a uniform rate nevertheless violates section 54.204(b) if it fails to take timely action to ensure that all pole attachers actually pay the uniform rate it invoices. The court of appeals reversed, holding that if a telecommunications provider does not pay the rate the utility uniformly charges, any discriminatory effect is the telecommunication provider's fault, not the utility's. The Supreme Court reversed, holding that the PUC's finding that CPS Energy failed to make any serious or meaningful effort to collect from AT&T Texas was supported by substantial evidence, and the effect on Time Warner Cable was clearly discriminatory. View "Time Warner Cable Texas LLC v. CPS Energy" on Justia Law

The Supreme Court reversed the judgment of the court of appeals ruling that the Texas Commission on Environmental Quality does not have the discretion to deny an ad valorem tax exemption for heat recovery steam generators (HRSGs), devices the Legislature considers "pollution control property," holding that the Legislature did not exceed its constitutional authority in exempting pollution control property from taxation.Brazos Electric Power Cooperative, Inc. filed for an exemption seeking a positive use determination for the HRSG used in two of its facilities. The Commission's Executive Director issued negative use determinations for the applications on the grounds that HRSGs are not eligible for a positive use determination. The Commission eventually affirmed the determinations as to both facilities. The trial court affirmed. The court of appeals affirmed. The Supreme Court reversed, holding (1) under Texas Tax Code 11.31, property that qualifies as pollution control property, is entitled to a tax exemption, and HRSGs qualify, at least in part, as pollution control property; and (2) thus, assuming the applicant otherwise complies with the statute's requirements, the Executive Director may not issue a negative use determination for HRSGs. View "Brazos Electric Power Cooperative, Inc. v. Texas Commission on Environmental Quality" on Justia Law

The Supreme Court affirmed the judgment of the court of appeals reversing the district court's judgment affirming the negative use determinations issued by the Commission on Environmental Quality as to Respondents' applications for tax exemptions for heat recovery steam generators (HRSGs), holding that Texas Tax Code 11.31 does not give the Commission and its Executive Director discretion to deny an ad valorem tax exemption for HRSGs.In Brazos Electric Power Cooperative v. Texas Commission on Environmental Quality, __ S.W.3d __ (Tex. 2019), also issued today, the Supreme Court held that the Legislature has deemed HRSGs to qualify at least in part as "pollution control property" entitled to an exemption. The Court further held in Brazos Electric that the Commission abused its discretion by issuing negative use determinations for two exemption applications involving HRSGs when the applications complied with relevant statutory requirements. In the instant case, the Commission issued negative use determinations for Petitioners' applications for tax exemptions for HRSGs. The court of appeals reversed. The Supreme Court affirmed, holding that the court of appeals correctly held that the Commission may not issue negative use determinations for HRSGs. View "Texas Commission on Environmental Quality v. Brazos Valley Energy, LLC" on Justia Law

The Supreme Court affirmed the decision of the court of appeals affirming the judgment of the trial court finding that the holder of the executive right to lease a mineral estate violated its duty of utmost good faith and fair dealing by refusing to lease in contravention of the non-executive's known wishes, holding that legally sufficient evidence supported the trial court's finding.The executive right inherent in mineral ownership encompasses the right to execute oil and gas leases. The Supreme Court has previously held that the executive's duty owed to the non-executive mineral- or royalty-interest owners of utmost faith and fair dealing requires that the executive not engage in acts of self-dealing that unfairly diminish the value of the non-executive interest. Here, Plaintiff sued the executive, alleging that, as holder of the executive rights to certain mineral interests, the executive breached the duty of utmost good faith and fair dealing by refusing to enter a lease. The trial court rendered judgment for Plaintiffs. The court of appeals affirmed. The Supreme Court affirmed, holding that Plaintiffs met their burden to show that the executive engaged in acts of self-dealing that unfairly diminished the value of Plaintiffs' non-executive interest. View "Texas Outfitters Limited, LLC v. Nicholson" on Justia Law

The Supreme Court reversed the judgment of the court of appeals in this case involving the construction of an “opaquely worded oil and gas agreement,” holding that Burlington Resources may deduct post-production costs when calculating royalty payments due to Amber Harvest on its oil and gas leases.Amber Harvest, an affiliate of Texas Crude Energy, owned overriding royalty interests in the oil and gas leases operated by Burlington. Texas Crude sued Burlington, alleging that the parties’ agreements prohibited Burlington from charging post-production costs to the royalty holder. All parties agreed that the contracts at issue were unambiguous. After construing the agreements based on the language the parties chose the Supreme Court held that Burlington’s construction of the parties’ contracts was correct and that Burlington may deduct post-production costs when calculating royalty payments. View "Burlington Resources Oil & Gas Co. v. Texas Crude Energy, LLC" on Justia Law

In this contract dispute over an offset provision in an oil and gas lease the Supreme Court reversed the judgment of the court of appeals reversing the trial court’s judgment in the lessee’s favor, holding that the court of appeals read a requirement into the lease that its unambiguous language did not support.In reversing, the court of appeals concluded that the lessee did not conclusively prove that it complied with the offset provision. The Supreme Court reversed the court of appeals’ judgment and reinstated the trial court’s judgment s modified to remove the award of appellate attorney’s fees, holding (1) the offset provision contained specific requirements, and the lessee met those requirements; and (2) the court of appeals’ reading of the offset provision to contain a proximity requirement constituted a significant deviation from the language the parties chose. View "Murphy Exploration & Production Co. v. Adams" on Justia Law

The Supreme Court reversed the court of appeals’ judgment that the statute of limitations barred a claim for breach of a recorded right of first refusal to purchase a mineral interest and reinstated the judgment of the trial court rendering judgment for the rightholders, holding that the discovery rule applied to defer accrual.The grantors of the right of first refusal to purchase the mineral interest in this case conveyed the mineral interest to a third party without notifying the rightholders. More than four years later, the holders sued the third party for breach, seeking specific performance. The trial court rendered judgment for the holders. The court of appeals reversed, holding (1) the rightholders’ cause of action accrued when the grantors conveyed the property without notice, and (2) the discovery rule did not apply to defer accrual. The Supreme Court reversed, holding that a grantor’s conveyance of property in breach of a right of first refusal, where the rightholder has no notice of the grantor’s intent to sell, is inherently undiscoverable and that the discovery rule applies to defer accrual of the holder’s cause of action until he knew or should have known of the injury. View "Carl M. Archer Trust No. Three v. Tregellas" on Justia Law

The Supreme Court reversed the judgment of the court of appeals holding that the royalty interest reserved to the grantor in a 1951 deed was fixed - or set at a specific percentage of production - rather than floating - dependent on the royalty amount in the applicable oil and gas lease.Plaintiffs sought a declaratory judgment that the deed reserved a floating one-half royalty interest. The trial court declared that the deed reserved a floating one-half royalty interest. The court of appeals reversed, concluding that the royalty interest was fixed. The Supreme Court reversed in light of the language and structure of the reservation at issue, holding that the deed unambiguously reserved a floating one-half interest in the royalty in all oil, gas, or other minerals produced from the conveyed property. View "U.S. Shale Energy II, LLC v. Laborde Properties, L.P." on Justia Law

The common law rule against perpetuities does not invalidate a grantee’s future interest in the grantor’s reserved non-participating royalty interest (NPRI).Lorene Koopmann and her two children sought declaratory judgment against Burlington Resources Oil & Gas Company, L.P. and Lois Strieber to construe a warranty deed by which Strieber conveyed fee simple title to a tract of land to Lorene and her late husband. Under the deed, Strieber reserved a fifteen-year, one-half NPRI. The Koopmans claimed that they were the sole owners of an NPRI as of December 27, 2011. They also asserted claims against Burlington, which leased the tract from the Koopmanns, for breach of contract and other claims. The trial court granted summary judgment for the Koopmans as to the declaratory action and granted summary judgment for Burlington on the negligence and negligence per se claims. The court of appeals affirmed in part and reversed in part. The Supreme Court held (1) the rule against perpetuities does not invalidate the Koopmann’s future interest in the NPRI; (2) Tex. Nat. Res. Code 91.402 does not preclude a lessor’s common law claim for breach of contract; and (3) the court of appeals properly entered judgment as to attorney’s fees pursuant to Tex. R. Civ. P. 91a. View "ConocoPhillips Co. v. Koopmann" on Justia Law

In this dispute over an offset provision in an oil and gas lease the Supreme Court reversed the judgment of the court of appeals reversing the trial court’s summary judgment in the lessee’s favor on the grounds that the lessee did not conclusively demonstrate compliance with the provision.On appeal, the court of appeals determined that the lessee did not conclusively prove that it complied with the offset provision and thus was not entitled to summary judgment. In reversing, the Supreme Court held (1) the offset provision contained specific requirements, and the lessee met those requirements; and (2) the court of appeals read a requirement into the lease that its unambiguous language did not support. View "Murphy Exploration & Production Co. v. Adams" on Justia Law