April, 2021 | The Law Offices of Gregory D. Jordan

Court Issues Opinion Addressing Accommodation Doctrine in Recent Texas Oil and Gas Case

Earlier this year, a state appellate court issued an opinion in a Texas oil and gas case, discussing the interplay of property rights between large-scale solar power facilities and the owners of the mineral rights to the land on which the solar panels rest.

The Facts of the Case

According to the court’s opinion, the case involves a 315-acre parcel of land in Bezos County, Texas. As is common in Texas, one party owns the mineral estate, and another owns the surface estate. As is relevant to this case, the Lyles own a significant portion of the mineral estate, and Drgac owns the surface estate.

In October 2015, Drgac leased his surface estate to Midway Solar, a company that uses solar panels to generate power. The lease provided Midway with the right “to free and unobstructed use and development of solar energy resources” for up to 55 years. The lease also allowed Midway to place transmission lines, electrical lines, and cable lines, provided they seek his approval first. However, the lease noted that Drgac was not the owner of the mineral rights to the property and that Drgac would work with Midway to obtain surface waivers, if necessary.

Midway developed the land, placing solar panels on 70 percent of the surface. Midway left 17 acres on the south end and 80 acres on the north end for “Designated Drill Sites.” While Midway obtained surface waivers from other parties who owned the mineral rights to portions of the land, they never sought to obtain a surface waiver from the Lyles.

The Lyles later sued Midway for breach of contract, claiming that Midway’s use of the property prevented the Lyles from using their land underneath the solar panels. However, when the Lyles filed suit, they had made no efforts to develop any of the land or extract oil or gas from their estate. They also testified that they had no immediate intention of doing so. Instead, they presented testimony from an expert who explained that Midway’s use of the surface prevents the Lyles from developing the minerals, denying them reasonable access.

Midway responded by claiming that, until the Lyles attempt to develop the land, their claim is not ripe. Midway also explained that, when the Lyles eventually decide to do so, it can accommodate the Lyles’ use.

The Court’s Opinion

In resolving the parties’ dispute, the court had to address several issues. First, whether the accommodation doctrine could apply to the facts of the case.

The accommodation doctrine holds that the owners of mineral and surface rights must generally accommodate each other’s use of the property. Under Texas oil and gas law, the mineral estate the “dominant estate,” meaning that the owners of mineral rights must be afforded a way to access their property by the surface owner. While the lease can negate the application of the accommodation doctrine, or add to the surface owner’s obligations, to do so, the lease must make clear that is the parties’ intention.

Here, the court reviewed the relevant leases, finding that there was nothing in the documents that otherwise limited Midway’s ability to develop the land other than requiring they accommodate the Lyles’ use of the property. In other words, the mere fact that Midway developed the land with solar panels does not, by itself, result in a breach of the contract between the parties.

Next, the court addressed whether the Lyles could bring their case without having attempted to develop the land. The Lyles argued that at the moment Midway constructed the solar panels, they suffered damage to their property rights. The Lyles rely on the fact that Midway placed panels over 70 percent of their land.

However, the court agreed with Midway that, until the Lyles attempt to develop the land and encounter a problem, their claim is not ripe. The court reasoned that, when the Lyles attempt to develop the land, Midway may be able to accommodate their use. Thus, until that is determined not to be the case, Lyles’ case is not ripe for review.

The case illustrates the complex interplay between a surface estate owner and the owner of a mineral estate. Parties facing a dispute regarding these often-competing rights should consult with a dedicated Texas oil and gas lawyer for assistance.

Contact a Dedicated Austin Oil and Gas Lawyer for Immediate Assistance

Oil and gas disputes can be complicated. Not only that, but these disputes often involve very high stakes. Choosing an attorney to represent you or your business is a crucial decision that can save months or even years of litigation and many thousands of dollars. At the Law Offices of Gregory D. Jordan, we have been effectively handling Texas oil and gas cases for over 30 years. To learn more and to schedule an initial consultation, call 512-419-0684. You can also contact me through my online form.

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